SHARE PURCHASE AGREEMENT
among
GS POWER HOLDINGS, LLC
COGENTRIX ENERGY, INC.,
and
THE SHAREHOLDERS LISTED ON THE SIGNATURE PAGES HERETO,
Dated as of October 17, 2003
TABLE OF CONTENTS
Page
ARTICLE I SALE AND PURCHASE OF SHARES 1
1.1 Sale and Purchase of Shares.............................................1
1.2 Consideration...........................................................1
1.3 Closing.................................................................2
1.4 Closing Deliveries......................................................2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY 3
2.1 Corporate Status, etc...................................................3
2.2 Capitalization..........................................................4
2.3 Conflicts; Consents.....................................................7
2.4 SEC Reports.............................................................8
2.5 Financial Statements....................................................9
2.6 Absence of Undisclosed Liabilities.....................................10
2.7 Absence of Certain Changes.............................................10
2.8 Tax Matters............................................................13
2.9 Litigation.............................................................18
2.10 Compliance with Laws...................................................18
2.11 Employee Benefits......................................................19
2.12 Permits................................................................22
2.13 Personal Property......................................................23
2.14 Real Property..........................................................24
2.15 Contracts..............................................................26
2.16 Insurance..............................................................31
2.17 Environmental Matters..................................................31
2.18 Labor Matters..........................................................34
2.19 Affiliate Transactions.................................................35
2.20 Projects; Regulatory Status............................................35
2.21 Brokers and Finders....................................................37
2.22 Bankruptcy.............................................................37
2.23 Intellectual Property..................................................37
2.24 Books and Records......................................................38
2.25 Form 15................................................................38
2.26 Disclosure.............................................................39
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS 39
3.1 Organization...........................................................40
3.2 Authority..............................................................40
3.3 Conflicts..............................................................40
3.4 Consents...............................................................41
3.5 The Company Common Stock...............................................41
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3.6 [The Trust, the LLC Documents and Related Documents....................41
3.7 Brokers and Finders....................................................42
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER 42
4.1 Corporate Status, etc..................................................43
4.2 Conflicts, Consents....................................................43
4.3 Financing..............................................................44
4.4 Litigation.............................................................44
4.5 Regulatory Status......................................................45
4.6 Brokers and Finders....................................................45
ARTICLE V COVENANTS 45
5.1 Conduct of Business....................................................45
5.2 Efforts to Consummate Transaction......................................49
5.3 Access and Information.................................................52
5.4 Non-Solicitation.......................................................53
5.5 Contact with Customers and Suppliers, etc..............................55
5.6 Publicity..............................................................56
5.7 Employee Matters.......................................................56
5.8 Executive Amendment Agreements.........................................57
5.9 Insurance..............................................................57
5.10 Company Expenses Certificate...........................................58
5.11 Indemnification of Directors and Officers..............................58
5.12 Confidential Information...............................................58
5.13 Certain Notices........................................................59
5.14 Further Assurances.....................................................60
5.15 Financial Statements...................................................61
5.16 Release................................................................61
5.17 Consent Solicitation; Form 15..........................................62
5.18 Estoppels..............................................................64
5.19 Custody Agreement......................................................64
5.20 QF Certification.......................................................64
ARTICLE VI ADDITIONAL COVENANTS OF THE SHAREHOLDERS 64
6.1 Voting of Company Common Stock.........................................64
6.2 Transfers of Company Common Stock; Custody.............................65
6.3 Certain Events.........................................................66
6.4 Additional Shares......................................................66
ARTICLE VII CONDITIONS TO CLOSING 66
7.1 Conditions to the Obligations of the Parties...........................66
7.2 Conditions to the Obligation of Purchaser..............................67
7.3 Conditions to the Obligation of Shareholders...........................70
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ARTICLE VIII SURVIVAL AND INDEMNIFICATION 71
8.1 Survival of Representations and Warranties, Covenants and Agreements...71
8.2 Indemnification by the Shareholders....................................71
8.3 Indemnification by Purchaser...........................................74
8.4 Obligations of the Shareholders........................................74
8.5 Survival of Indemnification Obligations................................74
8.6 Right to Indemnification Not Affected by Knowledge.....................75
8.7 No Right to Contribution...............................................75
8.8 Exclusive Remedy.......................................................75
8.9 Indemnification Procedures.............................................76
8.10 Shareholders' Representative...........................................78
ARTICLE IX TERMINATION 78
9.1 Termination............................................................78
9.2 Effect of Termination..................................................79
ARTICLE X DEFINITIONS AND INTERPRETATION 80
10.1 Definitions............................................................80
10.2 Other Defined Terms....................................................88
10.3 Interpretation.........................................................89
ARTICLE XI GENERAL PROVISIONS 91
11.1 Fees and Expenses; Transfer Taxes.....................................91
11.2 Further Actions.......................................................91
11.3 Certain Limitations...................................................91
11.4 Notices...............................................................92
11.5 Binding Effect........................................................93
11.6 Assignment; Successors; Third-Party Beneficiaries.....................94
11.7 Amendment; Waivers, etc...............................................94
11.8 Entire Agreement......................................................95
11.9 Knowledge; Interpretation; Schedules..................................95
11.10 Severability..........................................................96
11.11 Counterparts..........................................................96
11.12 Governing Law.........................................................96
11.13 Consent to Jurisdiction, etc..........................................96
11.14 Waiver of Punitive and Other Damages and Jury Trial...................97
11.15 Enforcement...........................................................98
11.16 Grant of Irrevocable Proxy; Appointment of Proxy......................98
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SCHEDULES
Schedule 2.1(b) Qualifications to do Business
---------------
Schedule 2.1(c) Organizational Documents
---------------
Schedule 2.2(a) Capitalization of the Company
---------------
Schedule 2.2(b) Wholly-Owned Subsidiaries
---------------
Schedule 2.2(c) Other Managed Companies
---------------
Schedule 2.2(d) Non-Managed Companies
---------------
Schedule 2.2(e) Equity Interests
---------------
Schedule 2.2(f) Excepted Companies
---------------
Schedule 2.2(g) Agreements with Respect to Common Stock
---------------
Schedule 2.3(a) Company Conflicts
---------------
Schedule 2.3(b) Covered Company Consents
---------------
Schedule 2.4 Subsidiary SEC Filers
------------
Schedule 2.6(a) Liabilities
---------------
Schedule 2.6(b) Entities Without Material Liabilities
---------------
Schedule 2.7 Absence of Certain Changes
------------
Schedule 2.8 Tax Matters
------------
Schedule 2.8(d) Tax Return Jurisdictions
---------------
Schedule 2.9 Litigation of Company
------------
Schedule 2.10 Compliance with Laws by Company
-------------
Schedule 2.11(a)(i) Company Plans
-------------------
Schedule 2.11(a)(ii) Company Plan Ownership Interest Benefits
--------------------
Schedule 2.11(d) Company Plan Prohibited Transactions
----------------
Schedule 2.11(e) Company Plan Liabilities
----------------
Schedule 2.11(g) Company Plan Payments or Accelerations
----------------
Schedule 2.11(i) Company Plan Commitments
----------------
Schedule 2.11(m) Company Plan Restricted Amendments
----------------
Schedule 2.11(n) Employee Loans
----------------
Schedule 2.12 Permits
-------------
Schedule 2.13 Exception to Good Title
-------------
Schedule 2.14(a) Owned and Leased Real Property
----------------
Schedule 2.14(d) Status of Other Real Property Interests
----------------
Schedule 2.14(g) Rights with Respect to Owned Real Property
----------------
Schedule 2.14(h) Improvements
----------------
Schedule 2.15(a) Managed Company Material Contracts
----------------
Schedule 2.15(b) Non-Managed Company Material Contracts
----------------
Schedule 2.15(c) Company Material Contracts Defaults
----------------
Schedule 2.16(a) Insurance Policies
----------------
Schedule 2.16(e) Insurance Policy Notices
----------------
Schedule 2.17 Environmental Matters
-------------
Schedule 2.18 Labor Matters
-------------
Schedule 2.19 Affiliate Transactions
-------------
Schedule 2.20(a) Facilities
----------------
Schedule 2.20(b) PUHCA Exceptions
----------------
Schedule 2.20(c) PURPA Exceptions
----------------
Schedule 2.21 Brokers and Finders
-------------
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Schedule 2.23(a) Intellectual Property
----------------
Schedule 2.23(d) Intellectual Property Notices
----------------
Schedule 3.3 Shareholder Conflicts
------------
Schedule 3.4 Shareholder Consents
------------
Schedule 3.5 Company Common Stock
------------
Schedule 4.2(a) Purchaser Conflicts
---------------
Schedule 4.2(b) Purchaser Consents
---------------
Schedule 4.4 Litigation of Purchaser
------------
Schedule 5.1 Conduct of the Company
------------
Schedule 5.4 Non-Solicitation
------------
Schedule 5.18 Estoppels
-------------
Schedule 5.20 QF Certifications
-------------
Schedule 6.1 Prohibited Organizations
------------
Schedule 6.2 Permitted Transfers
------------
Schedule 7.1(b) Project Companies Requiring FERC 203 Orders
---------------
Schedule 7.2(g) Governmental Entity Consents
---------------
Schedule 7.2(h). Closing Condition Consents
---------------
Schedule 10.1(a) Terminated Tolling Agreements
----------------
Schedule 10.1(b) Turbines
----------------
Schedule 10.1(c) Other Permitted Liens
----------------
Schedule 11.9(a) Company Knowledge Group
----------------
Schedule 11.9(b) Purchaser Knowledge Group
----------------
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EXHIBITS
Exhibit 2.11(o)(i)-(vi) Executive Plan Amendments
------------------------
Exhibit 7.2(b) ReUse Asset Purchase Agreement
--------------
Exhibit 7.2(f)(i) Cogentrix Counsel Opinion Matters
-----------------
Exhibit 7.2(f)(ii) Xxx Xxxx Xxxxxxx Opinion Matters
------------------
Exhibit 7.2(f)(iii) Xxxxx & Xxx Xxxxx PLLC Opinion Matters
-------------------
Exhibit 7.3(d) Xxxxxx & Xxxxxxx Opinion Matters
--------------
Exhibit 10.1(a) Shareholder Guaranty
---------------
Exhibit 10.1(b) Employee Guaranty
---------------
vi
SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT, dated as of October 17, 2003, among GS Power
Holdings, LLC, a Delaware limited liability company (the "Purchaser"), Cogentrix
Energy, Inc., a North Carolina corporation (the "Company"), and the shareholders
of the Company listed on the signature pages hereto (each, a "Shareholder" and
collectively, the "Shareholders"). Each of Purchaser, the Company and the
Shareholders are sometimes referred to individually herein as a "Party", and any
two or more of Purchaser, the Company or the Shareholders are sometimes
collectively referred to herein as "Parties".
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Purchaser and the
Company have approved the Share Purchase Agreement upon the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, each Shareholder owns the number of shares of common stock of
the Company (the "Company Common Stock") set forth opposite such Shareholder's
name on Schedule 2.2(a) attached hereto;
WHEREAS, Purchaser desires to purchase from the Shareholders, and the
Shareholders desire to sell to Purchaser, all of the Company Common Stock, upon
the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties made in this Agreement and of the mutual benefits
to be derived therefrom, the Parties agree as follows:
ARTICLE I
SALE AND PURCHASE OF SHARES
1.1 Sale and Purchase of Shares.
Subject to and in accordance with the terms and conditions of this
Agreement, Purchaser shall purchase from the Shareholders, and each Shareholder
shall sell to Purchaser such Shareholder's Company Common Stock (the
"Transaction").
1.2 Consideration.
The consideration to be paid by Purchaser in respect of the purchase of
each share of Company Common Stock shall be an amount in cash payable to the
holder thereof at Closing, determined by dividing (x) the Adjusted Consideration
by (y) the number of shares of Company Common Stock outstanding immediately
prior to the Closing;
provided that the amount of the cash payment to any Shareholder at Closing shall
be reduced by the amount of any and all outstanding principal and accrued but
unpaid interest as of the Closing Date under any loan to such Shareholder from
the Company or one of its Subsidiaries, and such loan shall thereupon be deemed
paid in full.
1.3 Closing.
The closing of the Transaction (the "Closing") shall take place at the
offices of Debevoise & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00
a.m., New York time, as soon as practicable, but in any event not later than
five business days after satisfaction or waiver of the conditions contained in
Article VII, or at such other place, time and date (the "Closing Date") as the
Parties may agree; provided that the Closing shall not occur prior to December
8, 2003.
1.4 Closing Deliveries.
At the Closing:
(a) Each Shareholder (or the custodian under the Custody Agreement)
shall deliver (in accordance with the Custody Agreement) to Purchaser one or
more certificates representing all of such Shareholder's Company Common Stock,
duly endorsed in blank or accompanied by stock powers or other instruments of
transfer duly executed in blank, and bearing or accompanied by all requisite
stock transfer stamps.
(b) Purchaser shall pay to each Shareholder such Shareholder's
Percentage Share of the Adjusted Consideration (as may be adjusted pursuant to
Section 1.2) for the Company Common Stock so delivered by the Shareholders, by
wire transfer of immediately available funds to the account of the Shareholders
designated at least five business days prior to the Closing Date.
(c) Purchaser shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Company Common Stock such amounts as Purchaser is required to deduct and
withhold under the Code, or any provision of state, local or foreign tax law,
with respect to the making of such payment. To the extent that amounts are so
withheld by Purchaser, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of Company Common Stock in
respect of whom such deduction and withholding was made by Purchaser.
Notwithstanding the foregoing, unless there is a change in law, the parties
agree that no deduction or withholding shall be required for federal income Tax
purposes on any amount payable to a holder of Company Common Stock if such
holder delivers to Purchaser (i) Internal Revenue Service Form W-9 and (ii) the
certification of domestic status described in section 1.1445-5(b)(3)(ii)(D) of
the Treasury Regulations.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedules delivered by
the Company to Purchaser concurrently with the execution of this Agreement, the
Company represents and warrants to Purchaser as of the date hereof and as of the
Closing Date as follows in this Article II. Items disclosed on one particular
Company Disclosure Schedule relating to one Section of this Agreement are deemed
to be constructively disclosed or listed on other Company Disclosure Schedules
relating to other sections of this Agreement to the extent it is reasonably
apparent on the face of such other Company Disclosure Schedules that such
disclosure is applicable to such other Company Disclosure Schedules.
2.1 Corporate Status, etc.
(a) Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of North Carolina, and
has full corporate power and authority to own, lease and operate its assets and
properties and to conduct its business as presently conducted. Each of the
Managed Companies and, to the knowledge of the Company, each of the Non-Managed
Companies is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, and has full corporate, limited
liability company or partnership power and authority to own, lease and operate
its assets and properties and to conduct its business as presently conducted.
(b) Qualification. Each of the Managed Companies and, to the knowledge
of the Company, each of the Non-Managed Companies, is duly qualified to do
business and is in good standing as a foreign corporation, limited liability
company or partnership in all jurisdictions in which such qualification is
necessary under applicable Law as a result of the conduct of its business or the
ownership of its properties, except for those jurisdictions where failure to be
so qualified or in good standing would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company. Each
jurisdiction in which each of the Managed Companies is qualified to do business
is listed on Schedule 2.1(b).
(c) Organizational Documents. The Company has delivered or made
available to Purchaser complete and correct copies of the Organizational
Documents of each of the Managed Companies, which Organizational Documents are
in full force and effect. Except as set forth on Schedule 2.1(c), to the
knowledge of the Company, the Company has delivered or made available to
Purchaser complete and correct copies of the Organizational Documents of each of
the Non-Managed Companies, which Organizational Documents are in full force and
effect.
3
(d) Authorization, etc. The Company has full corporate power and
authority to enter into this Agreement and the other Transaction Documents to
which it is a party, to consummate the transactions contemplated hereby and
thereby and to perform its obligations hereunder and thereunder. The execution,
delivery and performance by the Company of this Agreement and the other
Transaction Documents to which it is a party and the consummation by the Company
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all requisite corporate and Shareholder action, as applicable, on
the part of the Company in accordance with the NCBCA and the Organizational
Documents of the Company, and no other corporate proceedings or approvals on the
part of the Company or any of the Shareholders is necessary to authorize this
Agreement or the other Transaction Documents or perform the obligations under
this Agreement or the other Transaction Documents or to consummate the
transactions contemplated hereby or thereby.
(e) Execution. This Agreement has been duly executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
limited by laws affecting the enforcement of creditor's rights generally or by
general equitable principles. Each other Transaction Document to which the
Company is (or will be) a party has been (or will be at Closing) duly executed
and delivered by the Company, and constitutes (or will constitute at Closing) a
legal, valid and binding obligation of the Company, except as limited by laws
affecting the enforcement of creditor's rights generally or by general equitable
principles.
2.2 Capitalization.
(a) The Company. The authorized capital stock of the Company consists
of 300,000 shares of Company Common Stock, of which 282,000 shares are issued
and outstanding. Schedule 2.2(a) lists all Persons owning beneficially and of
record any issued and outstanding shares of Company Common Stock and specifies
for each such Person the number of shares of Company Common Stock owned by such
Person. The Company Common Stock constitutes all of the Equity Interests in the
Company.
(b) Wholly-Owned Subsidiaries. Schedule 2.2(b) sets forth for each
Managed Company that is, directly or indirectly, wholly-owned by the Company:
(i) its name and jurisdiction of incorporation or organization; (ii) its
authorized Equity Interests; and (iii) the number of issued and outstanding
Equity Interests. The Equity Interests of each Subsidiary listed on Schedule
2.2(b) are owned, directly or indirectly, by the Company free and clear of all
Liens or other restrictions or limitations on transfer, other than Permitted
Liens and other than as set forth on Schedule 2.2(b).
(c) Other Managed Companies. Schedule 2.2(c) sets forth for each
Managed Company that is not, directly or indirectly, wholly-owned by the
Company: (i) its name
4
and jurisdiction of incorporation or organization; (ii) its authorized Equity
Interests; (iii) the number of issued and outstanding Equity Interests; and (iv)
the holder or holders of such Equity Interests. The Equity Interests of each
Subsidiary listed on Schedule 2.2(c) that are owned, directly or indirectly, by
the Company, are owned free and clear of all Liens, other than Permitted Liens
and other than as set forth on Schedule 2.2(c)
(d) Non-Managed Companies. Schedule 2.2(d) sets forth for each
Non-Managed Company, to the knowledge of the Company: (i) its name and
jurisdiction of incorporation or organization; (ii) its authorized Equity
Interests; (iii) the number of issued and outstanding Equity Interests; and (iv)
the holder or holders of such Equity Interests. The Equity Interests of each
Person listed on Schedule 2.2(d) that are described as being held by the
Company, directly or indirectly, are owned free and clear of all Liens, other
than Permitted Liens and other than as set forth on Schedule 2.2(d)
(e) Equity Interests. Except for the Covered Companies and as set forth
in Schedule 2.2(e):
(i) the Company does not own, directly or indirectly, any
Equity Interests in any Person; and
(ii) the Company is not, directly or indirectly, a party to
any shareholder agreements, voting trusts or other agreements or
understandings relating to the voting, purchase, redemption or other
acquisition of any Equity Interests in any Person.
The Equity Interests set forth in Schedule 2.2(e) are owned, directly or
indirectly, by the Company, free and clear of all Liens, other than Permitted
Liens.
(f) Valid Issuance.
(i) All of the Equity Interests in the Company and all of the
Equity Interests owned, directly or indirectly, by the Company in each
Covered Company (other than the entities listed on Schedule 2.2(f))
have been duly authorized and are validly issued, fully paid and
nonassessable and have been offered, issued, sold and delivered by the
Company or such Covered Company in compliance in all material respects
with all applicable federal and state securities laws and were not
issued in violation of any preemptive right or other similar right.
(ii) To the actual knowledge of the individuals listed on
Schedule 11.9(a) (without any obligation of reasonable inquiry), all
the Equity Interests owned, directly or indirectly, by the Company in
each entity listed on Schedule 2.2(f) have been duly authorized and are
validly issued, fully paid and nonassessable, and have been offered,
issued, sold and delivered by such entity in
5
compliance in all material respects with all applicable federal and
state securities laws and were not issued in violation of any
preemptive right or other similar right.
(iii) To the actual knowledge of the individuals listed on
Schedule 11.9(a) (without any obligation of reasonable inquiry) all the
Equity Interests not owned, directly or indirectly, by the Company in
each Covered Company have been duly authorized and are validly issued,
fully paid and nonassessable, and have been offered, issued, sold and
delivered by such Covered Company in compliance in all material
respects with all applicable federal and state securities laws and were
not issued in violation of any preemptive right or other similar right.
(g) Agreements with Respect to Company Common Stock and Equity
Interests of the Company. Except as set forth in Schedule 2.2(g), there are no:
(i) preemptive or similar rights on the part of any holders of
any class of securities or other Equity Interests of the Company or any
of the Managed Companies or, to the knowledge of the Company, of any of
the Non-Managed Companies;
(ii) subscriptions, options, warrants, calls, conversion,
exchange, purchase right or other contracts, rights, agreements or
commitments of any kind obligating, directly or indirectly, the Company
or any Managed Company or, to the knowledge of the Company, any other
Person to issue, transfer, sell or otherwise dispose of, or cause to be
issued, transferred, sold or otherwise disposed of, any Equity
Interests of any Covered Company or any securities convertible into or
exchangeable for any such shares or any Equity Interests;
(iii) other than with respect to the wholly-owned Subsidiaries
listed on Schedule 2.2(b), shareholder agreements, limited liability
company agreements, partnership agreements, voting trusts, proxies or
other agreements, instruments or understandings to which the Company or
any Managed Company or, to the knowledge of the Company, any
Non-Managed Company, is a party or by which the Company or any Managed
Company or, to the knowledge of the Company, any Non-Managed Company,
is bound relating to the voting, sale, purchase, redemption or other
acquisition of any shares of the Equity Interests of the Company or any
of the Covered Companies or relating to providing funds or making any
investment (in the form of a loan, capital contribution or otherwise)
in, any Person; or
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(iv) outstanding dividends or other distributions, whether
current or accumulated, declared, due or payable on any of the capital
stock of the Company.
2.3 Conflicts; Consents.
(a) Conflicts. Except as set forth in Schedule 2.3(a), the execution
and delivery of this Agreement and the other Transaction Documents to which it
is a party by the Company, and the consummation of the transactions contemplated
hereby and thereby and the performance of the terms and conditions hereof and
thereof by the Company, will not:
(i) conflict with or result in any violation or breach of or
default under (or constitute an event that, with notice or lapse of
time or both, would constitute a default under), or give rise to a
right of termination, amendment, cancellation or acceleration of any
obligation or to loss of a benefit under, any provision of:
(A) the Organizational Documents of the Company or
any of the Managed Companies or, to the knowledge of the
Company, any of the Non-Managed Companies; or
(B) any lease, mortgage, indenture, loan agreement,
note, bond, deed of trust, other agreement, commitment or
obligation for the borrowing of money or the obtaining of
credit or other Indebtedness or other material agreement,
contract, license, franchise, Permit or instrument to which
the Company or any of the Managed Companies or, to the
knowledge of the Company, any of the Non-Managed Companies, is
a party or by which the Company or any of the Managed
Companies or, to the knowledge of the Company, any of the
Non-Managed Companies, may be bound or any Law or Governmental
Order applicable to the Company or any of the Managed
Companies or, to the knowledge of the Company, any of the
Non-Managed Companies; other than any violations, breaches or
defaults that are not, individually or in the aggregate,
material and adverse to the Company and the Covered Companies
taken as a whole; or
(ii) result in the creation or imposition of any material Lien
on any asset of the Company or the Managed Companies or, to the
knowledge of the Company, the Non-Managed Companies, except for any
Permitted Liens.
(b) Consents. No Consent of or with, and no material action by or in
respect of, any Governmental Entity or third Person is required to be obtained
by the Company,
7
any of the Managed Companies or, to the knowledge of the Company, the
Non-Managed Companies, in connection with the execution and delivery of this
Agreement or the other Transaction Documents or the consummation by the Company
of the transactions contemplated hereby and thereby or the performance of the
terms and conditions hereof or thereof, except (i) as set forth in Schedule
2.3(b), (ii) as may be required under the HSR Act, (iii) Exchange Act filings,
(iv) approvals under Section 203 of the Federal Power Act, as amended (the
"FPA"), as described in Section 7.1(b) and (v) as may be required due to the
regulatory status of Purchaser and (vi) for any Consents where the failure to
obtain such Consents, either in any individual case or in the aggregate, would
not be material and adverse to the Company and the Covered Companies taken as a
whole.
2.4 SEC Reports.
(a) Since January 1, 2000, each of the Company, LS Power Funding
Corporation and, to the knowledge of the Company, Indiantown Cogeneration, L.P.
has timely filed (taking into account permitted extensions) with the SEC all
forms, reports, statements, schedules and other documents (including all
exhibits and other information incorporated in such documents) required to be
filed by the Company, LS Power Funding Corporation and Indiantown Cogeneration,
L.P., as the case may be, with the SEC (whether by statute or contract)
(collectively, the "Company SEC Filings"), and there are no amendments or
modifications that have not been, but which are or will be required to be, filed
with the SEC. Except as set forth on Schedule 2.4, none of the Company's
Subsidiaries are required to file any form, report, statement, schedule or other
document with the SEC (whether by statute or contract).
(b) As of their respective filing dates or, if amended, as of the date
of the last amendment, the Company SEC Filings with respect to the Company and
LS Power Funding Corporation comply, in all material respects, with the
requirements of the Securities Act and the Exchange Act and do not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated in such filings or necessary to make the statements in such filings
not misleading.
(c) As of their respective filing dates or, if amended, as of the date
of the last amendment, to the knowledge of the Company, the Company SEC Filings
with respect to Indiantown Cogeneration, L.P. comply, in all material respects,
with the requirements of the Securities Act and the Exchange Act and do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated in such filings or necessary to make the statements in
such filings not misleading.
8
2.5 Financial Statements.
(a) The audited consolidated financial statements of the Company
included in the Company SEC Filings (the "Company Audited Financial
Statements"), the unaudited consolidated interim financial statements of the
Company included in the Company SEC Filings (the "Company Interim Financial
Statements") and the audited financial statements of Xxxxx Generating Company,
L.P. and Keystone Urban Renewal Limited Partnership included in the Company SEC
Filings (the "Xxxxx Financial Statements" and together with the Company Audited
Financial Statements and the Company Interim Financial Statements, the "Company
Financial Statements") (including, in each case, any related notes thereto):
(i) other than the Xxxxx Financial Statements, comply as to
form in all material respects with applicable accounting
requirements and the published rules and regulations of the
SEC, in each case, in effect at the time of such statements,
with respect to such statements; and
(ii) have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied throughout
the periods indicated (except, in the case of normal,
recurring year-end adjustments in relation to the Company
Interim Financial Statements) and present fairly (within the
meaning of the Xxxxxxxx-Xxxxx Act of 2002), in all material
respects the assets, liabilities and consolidated financial
condition of (i) in the case of the Company Audited Financial
Statements and the Company Interim Financial Statements, the
Company and its Subsidiaries at the respective dates indicated
and the consolidated results of operations, shareholders'
equity and cash flows of the Company and its Subsidiaries for
the respective periods indicated and (ii) in the case of the
Xxxxx Financial Statements, Xxxxx Generating Company, L.P. and
Keystone Urban Renewal Limited Partnership and their
respective Subsidiaries at the respective dates indicated and
the results of operations, shareholders' equity and cash flows
of Xxxxx Generating Company, L.P. and Keystone Urban Renewal
Limited Partnership on a consolidated basis for the respective
periods indicated.
(b) The Company's principal executive officer and its principal
financial officer have disclosed, based on their most recent evaluation, to the
Company's independent auditors and the audit committee of the Board of Directors
of the Company (i) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Company's ability to record,
process, summarize and report financial data and have identified for the
Company's auditors any material weaknesses in internal controls and (ii) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Company's internal controls. The Company
9
has established and maintains disclosure controls and procedures (as such term
is defined in Rule 13a-14 under the Exchange Act). Such disclosure controls and
procedures are designed to ensure that material information relating to the
Company, including its consolidated Subsidiaries, is made known to the Company's
principal executive officer and its principal financial officer by others within
those entities, particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared; and such disclosure controls
and procedures are effective in timely alerting the Company's principal
executive officer and its principal financial officer to material information
required to be included in the Company's periodic reports required under the
Exchange Act.
2.6 Absence of Undisclosed Liabilities.
(a) Except for Liabilities reflected or properly reserved against in
the Company Financial Statements (including the notes to such Company Financial
Statements), Liabilities or obligations reflected in Schedule 2.6(a),
Liabilities or obligations expressly disclosed in the Company's Form 10-K dated
December 31, 2002, Form 10-Q dated June 30, 2003, Liabilities or obligations
permitted or required by this Agreement to be incurred after the date hereof,
the Company and the Managed Companies and, to the knowledge of the Company, the
Non-Managed Companies, have no Liabilities or obligations and, to the knowledge
of the Company, there is no existing condition, situation or set of
circumstances that would reasonably be expected to result in such a Liability or
obligation, other than (i) Liabilities or obligations arising in the ordinary
course of business consistent with past practices, (ii) Liabilities or
obligations under Company Material Contracts or under other contracts or
agreements that are not required to be described in Schedule 2.15, and (iii)
Liabilities or obligations which, individually or in the aggregate, are not
material to the Company, the Managed Companies and the Company's Equity
Interests in the Non-Managed Companies taken as a whole. None of the Liabilities
described in clauses (i) and (ii) of the preceding sentence results from, arises
out of, relates to or was caused by any breach of contract or warranty, tort,
infringement or violation of Law or has had or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
(b) Except as set forth on Schedule 2.6(b), the entities listed on
Schedule 2.6(b) have no material Liabilities and no ongoing material
obligations.
2.7 Absence of Certain Changes.
Except as and to the extent set forth in Schedule 2.7 or expressly
disclosed in the Company's Form 10-K dated December 31, 2002 or Form 10-Q dated
June 30, 2003 filed with the SEC, since December 31, 2002, other than in
connection with the transactions contemplated by this Agreement, each of the
Company, the Managed Companies and, to the knowledge of the Company, each of the
Non-Managed Companies has conducted its
10
business only in the ordinary course, in substantially the same manner in which
it has been previously conducted and there has not been any change, event,
condition, circumstance, occurrence or development which has had or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. Without limiting the generality of the foregoing,
except as and to the extent set forth in Schedule 2.7 or expressly disclosed in
the Company's Form 10-K dated December 31, 2002 or Form 10-Q dated June 30, 2003
filed with the SEC, since December 31, 2002, other than as permitted pursuant to
the terms of this Agreement, neither the Company nor any of the Managed
Companies has and, to the knowledge of the Company, none of the Non-Managed
Companies has:
(a) issued, or authorized for issuance, or entered into any commitment
to issue, sold, disposed of, transferred, pledged or otherwise encumbered,
granted, created or incurred a Lien on any Equity Interests of any Covered
Company;
(b) purchased, redeemed or otherwise acquired or committed itself to
acquire, directly or indirectly, any Equity Interests of any Covered Company;
(c) paid or committed to pay or entered into any new agreement,
arrangement or understanding to pay or to become committed or obligated to pay
any bonus or other incentive compensation to any officer, director or employee,
agent or other Person providing services to any Covered Company or granted or
committed to grant or become obligated to grant to any officer, director or
employee, agent or other Person providing services to any Covered Company any
other increase in compensation in whatever form, except salary and profit
sharing participation increases arising in the ordinary course of business
consistent with past practices and disclosed to Purchaser;
(d) (1) entered into, adopted or amended (or committed to enter into,
adopt or amend) or otherwise become obligated under any employment, retention,
change in control, collective bargaining, deferred compensation, severance,
retirement, bonus, profit-sharing, stock option or other equity-based pension or
welfare plan or agreement maintained for the benefit of any officer, director or
employee, agent, or other Person (including any leased employee or contract
employee) providing services to any Covered Company except as required by Law,
or (2) except as required by agreements set forth on the Company Disclosure
Schedules, granted or paid or committed to grant or pay or become obligated to
grant or pay any severance or termination compensation or benefits to any
officer, director or employee, agent, or other Person (including any leased
employee or contract employee) providing services to any Covered Company;
11
(e) (1) split, combined or reclassified any of the Company's or any
Covered Company's Equity Interests or (2) issued or authorized the issuance of
any securities or other Equity Interests in respect of or in substitution for
any of the Company's or any Covered Company's Equity Interests or (3) made or
proposed to make any other change to the capitalization of the Company or any
Covered Company;
(f) except as required or permitted by GAAP, made any change in its
accounting principles or practices or the methods by which such principles are
applied for financial accounting purposes;
(g) amended or changed its Organizational Documents or the
Organizational Documents of any Covered Company;
(h) sold, leased, assigned, transferred or otherwise disposed of any
assets or properties (excluding Equity Interests) having a value in excess of
$250,000 in any individual case or $1,000,000 in the aggregate, other than in
the ordinary course of business consistent with past practices;
(i) incurred any Indebtedness or entered into any agreement or
commitment to incur Indebtedness or guaranteed any Indebtedness in excess of
$250,000 individually or $1,000,000 in the aggregate, other than negative cash
balances and unpaid checks or drafts incurred in the ordinary course of business
consistent with past practices;
(j) made capital expenditures or the execution of any lease involving
payments in excess of $250,000 individually or $1,000,000 in the aggregate,
other than capital expenditures described in the Company's capital budget or any
capital budget relating to any Facility, each as provided to or made available
to Purchaser prior to the date hereof;
(k) cancelled or terminated (other than at the expiration of its stated
term) or modified, assigned or amended in any material respect any contract
(other than assignments for collateral security), which, if in effect on the
date hereof, would be required to be listed on Schedules 2.15(a) or 2.15(b) and
which cancellation, termination, modification, assignment or amendment has had a
material adverse effect on the Company or the Covered Company that was party to
such contract;
(l) incurred damage, destruction or loss (whether or not covered by
insurance) adversely affecting the assets, property or business of the Company
or any Covered Company in excess of $2,000,000;
(m) made a material change to its collection policies or payment terms
applicable to any suppliers, distributors or customers;
12
(n) declared or paid any dividends or any distributions in respect of
any Equity Interests of the Company or any of the Covered Companies or made
payments of any kind (whether in property, assets or cash and in any form), in
each case to the Shareholders or any of their Affiliates (other than the Company
or any of the Company's wholly owned Subsidiaries);
(o) taken any action or made any commitment with respect to or in
contemplation of, or adopted resolutions providing for, any complete or partial
liquidation, dissolution, recapitalization, reorganization or other winding up
of its business or operations;
(p) granted, created or incurred any Lien (other than Permitted Liens)
on any material asset or property;
(q) merged or consolidated with or into, or acquired all or
substantially all or a substantial portion of the business or assets of, any
other Person, or entered into any joint venture, partnership or other similar
arrangement;
(r) formed or caused to be formed, or disposed or contracted to dispose
of, any Covered Company or any Equity Interest in any of the Covered Companies;
(s) made any material tax election or changed any existing material tax
elections or settled or compromised any Tax liability that resulted in a payment
in excess of $500,000;
(t) cancelled, waived or released any right or claim of material value
of any Covered Company or settled or compromised any action, claim, suit or
other proceeding at law or in equity;
(u) written off notes or accounts receivable of inventory in excess of
reserves;
(v) entered into any contract or agreement of the type described in
Sections 2.15(a)(x) or 2.19, other than as set forth on Schedules 2.15 and 2.19,
or any transaction with any Affiliate, director, executive officer or
shareholder of the Company or any Managed Company (other than the Company or a
Covered Company); or
(w) entered into any agreement or commitment, whether or not in
writing, to take any of the actions described in clauses (a) through (v).
2.8 Tax Matters.
(a) For the purposes of this Section 2.8: (i) "Subsidiary" or
"Subsidiaries" shall include only the Wholly-Owned Subsidiaries and Other
Managed Companies, as defined in Section 2.2(b) and Section 2.2(c); (ii) "Tax"
or "Taxes" shall include all
13
federal, state, local, or foreign income, gross receipts, windfall profits,
severance, property, production, sales, use, license, excise, franchise,
employment, occupation, withholding or other similar taxes imposed on the
income, property, or operations of any entity, together with any interest,
additions, or penalties with respect thereto, and any interest with respect to
such additions or penalties; and (iii) a "Reasonable Interpretation" of Tax law
shall mean that penalties could not be imposed on a Person for asserting a
position based on such interpretation, even if the position were not upheld.
(b) Except as set forth in Schedule 2.8:
(i) each of the Company and its Subsidiaries (and to the
knowledge of the Company, each Non-Managed Company) has (A) filed (or
there has been filed on its behalf) with the appropriate governmental
authorities all federal income Tax Returns and all other material Tax
Returns required to have been filed by it, and all such Tax Returns
have been properly completed, and in all material respects accurately
reflect, based on Reasonable Interpretations of the proper Tax
treatment of all relevant amounts, the results of operations of such
entity as recorded on its Books and Records and (B) duly paid in full
or made provision in accordance with GAAP (or there has been paid or
provision has been made on its behalf) for the payment of all material
Taxes for all taxable periods required to have been paid by it;
(ii) no federal, state, local or foreign audits or other
administrative proceedings or court proceedings are, as of the date
hereof, pending with regard to any Taxes or Tax Returns of the Company
or any of its Subsidiaries (or to the knowledge of the Company, any
Non-Managed Company) and neither the Company nor any of its
Subsidiaries have been informed in writing or, to the knowledge of the
Company, orally of the planned commencement of any such audit or
administrative proceedings;
(iii) the federal income Tax Returns of the U.S. federal
consolidated group of which the Company is the common parent have been
examined by the Internal Revenue Service (or the applicable statutes of
limitations for the assessment of federal income Taxes for such periods
have expired) for all periods through and including December 31, 1999,
and no material deficiencies were asserted as a result of such
examinations that have not been resolved and fully paid;
(iv) none of the Company or Subsidiaries is subject to
contractual obligations (including indemnities) under which the Company
or Subsidiary could be required to make material payments to third
parties measured by income Tax imposed on such third parties;
14
(v) none of the Company or Subsidiaries (and to the knowledge
of the Company, none of the Non-Managed Companies) have waived the
applicable statute of limitations for the assessment or collection of
any material Taxes;
(vi) none of the Company or Subsidiaries (and to the knowledge
of the Company, none of the Non-Managed Companies) will be required as
a result of (A) a change in accounting method for a Tax period ending
on or before the Closing, to include any material adjustment under
Section 481(c) of the Code (or any similar provision of state, local,
or foreign law) in taxable income for any Tax period beginning on or
after the Closing Date, or (B) any "closing agreement" as described in
Section 7121 of the Code (or any similar provision of state, local or
foreign law) to include any item of income in or exclude any item of
deduction from any Tax period beginning on or after the Closing;
(vii) there are no Liens on any assets of the Company or
Subsidiaries (or to the knowledge of the Company, any assets of the
Non-Managed Companies) in connection with the failure to pay any Tax,
except to the extent of statutory liens existing for any Taxes accruing
but not yet due and payable;
(viii) the Company has never been a member of an affiliated,
combined consolidated or unitary tax group for purposes of a U.S.
federal income Tax Return or material state Tax Return other than a
group of which the Company or one of its Subsidiaries is or was the
common parent;
(ix) no closing agreements, private letter rulings, technical
advice memorandum or similar agreements have been entered into or
issued by any taxing authority with respect to the Company or
Subsidiaries which (A) have been entered into or issued within the
three-year period preceding the Closing Date, (B) will require the
Company or any Subsidiary to include any item of income in or exclude
any item of deduction from any Tax period beginning on or after the
Closing, or (C) will affect the timing of the recognition of any item
of income, deduction or credit of the Company or any Subsidiary for any
Tax period beginning on or after the Closing;
(x) as of the Closing Date, the U.S. federal consolidated
group of which the Company is the common parent will not have, and, to
the extent a separate determination is relevant, no subgroup of one or
more of the Company and/or any of its Subsidiaries will have, a net
unrealized built-in loss within the meaning of Section 382(h) of the
Code;
(xi) none of the Company or its Subsidiaries has within the
past three years participated in any transaction, the Tax treatment of
which was determined under Section 355 of the Code;
15
(xii) none of the Company or any of its Subsidiaries (and, to
the knowledge of the Company, none of the Non-Managed Companies)
participated in the disclosure process set forth in IRS Announcement
2002-2;
(xiii) none of the Company or its Subsidiaries has made any
disclosure to avoid the imposition of a penalty under the Code for
underreporting tax liability if the position is not upheld, in any Tax
period for which the applicable statute of limitations for the
assessment of federal income Taxes has not expired;
(xiv) none of the Company or its Subsidiaries entered into or
participated in any "listed transaction," within the meaning of
Treasury Regulations ss. 1.6011-4(b)(2) (either before or after the
date on which such transaction was designated as a listed transaction
as prescribed in the regulation), in any Tax period for which the
applicable statute of limitations for the assessment of federal income
Tax has not expired;
(xv) the Company has made available to Purchaser complete and
accurate copies of all federal income Tax Returns for the years 1999 to
2002, as filed or subsequently amended;
(xvi) the Company or one of its Subsidiaries was the tax
matters partner for those entities treated as a partnership for U.S.
federal income Tax purposes in which the Company or a Subsidiary held
an Equity Interest as listed on Schedule 2.8;
(xvii) neither the Company nor any Subsidiary has filed (or,
to the knowledge of the Company as of the Closing Date, failed to file
in circumstances in which it was required by law to do so) IRS Form
8082, with respect to any partnership in which the Company or the
Subsidiary is a partner in any Tax period for which the relevant
statute of limitations for the assessment of federal income Taxes has
not expired;
(xviii) no unrelated party that is a partner in a partnership
in which the Company or a Subsidiary is a partner has notified the
Company or a Subsidiary that the unrelated party has taken a position
on any of its Tax Returns that is inconsistent with the position taken
by such partnership with respect to any Tax period for which the
relevant statute of limitations for the assessment of federal income
Taxes has not expired;
(xix) the amounts of the net operating loss and alternative
minimum tax credit carryforwards of the U.S. federal consolidated group
of which the Company is the common parent, as reflected on its federal
income Tax Return for the year ended December 31, 2002, as filed, were
calculated in a manner that in
16
all material respects accurately reflects, based on a Reasonable
Interpretation of the proper Tax treatment of all relevant amounts, the
results of operations of the members of such group as recorded on their
Books and Records. There are no material deferred intercompany gains
with respect to the U.S. federal consolidated group of which the
Company is the common parent other than deferred intercompany gains
arising as a result of the distribution of Cogentrix of Richmond, Inc.
and Cogentrix of Rocky Mount, Inc. stock from Cogentrix, Inc. in 1996.
The Company has concluded that the aggregate amount of these deferred
intercompany gains is approximately $152.60 million, based on (A) a
Reasonable Interpretation of the proper Tax treatment of all relevant
amounts; (B) a materially accurate determination of the Company's basis
in each such entity; and (C) the factual assumptions used in the
financial projections accompanying a memorandum dated January 30, 1997
from Xxxx X'Xxxxxx to the files, which accurately reflected in all
material respects the contractual terms then applicable to the relevant
entities; and (D) the net present value of the cash flows derived from
the financial projections of Cogentrix of Richmond, Inc. and Cogentrix
of Rocky Mount, Inc. at the time of each such distributions, as
reflected in such memorandum. The financial projections reflected in
such memorandum were also utilized by the Company's bank groups and
independent rating agencies to evaluate the creditworthiness of the
Company;
(xx) none of the Company or any of its Subsidiaries has made
any changes in methods of accounting for Tax purposes within the last
three years;
(xxi) as to each material transaction in which the Company or
any Subsidiary has paid or otherwise provided for the construction of
"intertie" to or for the benefit of a regulated public utility (as
described in Section 1 of Notice 88-129), such payment or other
provision either (A) has been made to or for the benefit of such
utility exclusively in connection with the sale of electricity by the
Company or such Subsidiary to the utility (as described in Section 1 of
Notice 88-129) or (B) at all times to and including the Closing Date,
has qualified and will qualify for the "safe harbor" described in
Section 2 of Notice 88-129, as modified by Notice 2001-82, and the
application of the "safe harbor" has not been (and will not before the
Closing Date be) terminated pursuant to Section 4 of Notice 88-129, as
modified by Notice 90-60 and Notice 2001-82.
(c) Each Shareholder will provide Purchaser with a certification of
non-foreign status described in Treasury Regulations ss. 1.1445-5(b)(3) or
Purchaser will withhold a portion of the Merger Consideration.
(d) Schedule 2.8(d) lists all of the jurisdictions (including foreign,
state, local, provincial and county) in which the Company or a Subsidiary filed
Tax Returns where the Taxes are based on income for the Tax year ending December
31, 2002.
17
2.9 Litigation.
Except as set forth in Schedule 2.9, or expressly disclosed in the
Company's Form 10-K dated December 31, 2002 or Form 10-Q dated June 30, 2003
filed with the SEC, there is no action, claim, suit or other proceeding at law
or in equity pending or, to the knowledge of the Company, threatened against the
Company or any Managed Company or affecting their respective assets or
properties and, to the knowledge of the Company, there is no action, claim, suit
or other proceeding at law or in equity pending or threatened against any
Non-Managed Company or affecting its assets or properties and, to the knowledge
of the Company, there is no investigation pending or threatened against the
Company or any of the Covered Companies or affecting their respective assets or
properties, in each case, before any arbitrator or any Governmental Entity, (i)
that, individually or in the aggregate, seeks damages (other than punitive
damages) from the Company or any Managed Company, or to the knowledge of the
Company, any Non-Managed Company, in excess of $500,000, (ii) that, if adversely
determined, would reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect on the Company or (iii) that challenges, or that
may have the effect of preventing, materially delaying or making illegal or
altering any of the transactions contemplated by the Transaction Documents.
Except as set forth in Schedule 2.9, there are no unsatisfied or unresolved
orders, decrees, notices of responsibility, writs, rulings, decisions, findings,
directives, stipulations, awards, injunctions, judgments or similar acts
(including settlements) of or by any Governmental Entity against the Company or
any of the Managed Companies or, to the knowledge of the Company, any
Non-Managed Company.
2.10 Compliance with Laws.
(a) Except as set forth in Schedule 2.10:
(i) the business of the Managed Companies and, to the
knowledge of the Company, the Non-Managed Companies has not been, and
is not being, conducted in material violation of (A) any applicable Law
or (B) any Governmental Order;
(ii) neither the Company nor any of the Managed Companies or,
to the knowledge of the Company, any Non-Managed Company, has received,
within the last five years, any notice or other communication from any
arbitrator or any Governmental Entity regarding, and the Company has no
knowledge of any, actual, alleged, possible or potential material
violation of, or material failure to comply with any applicable Laws or
any applicable Governmental Order; and
(iii) except as set forth on Schedule 2.20(c), to the
knowledge of the Company, no investigation or review by any
Governmental Entity with respect to
18
a violation by the Company or any of the Covered Companies of any
applicable Law is pending or threatened.
(b) This Section 2.10 does not relate to tax matters, which are instead
the subject of Section 2.8, employee benefits matters, which are instead the
subject of Section 2.11, Company Permits, which are instead the subject of
Section 2.12, or environmental matters, which are instead the subject of Section
2.17.
2.11 Employee Benefits.
(a) Schedule 2.11(a)(i) contains a complete and accurate list of all
"employee benefit plans," within the meaning of section 3(3) of ERISA, currently
maintained by the Company or to which the Company is currently obligated to
contribute or with respect to which the Company has any direct or indirect
liability, whether contingent or otherwise, and all bonus, incentive or deferred
compensation, pension, retirement, profit-sharing, savings, employment,
consulting, compensation, stock purchase, stock option, phantom stock or other
equity-based compensation, severance pay, termination, change-in-control,
retention, salary continuation, vacation, sick leave, disability, death benefit,
group insurance, hospitalization, medical, dental, life (including all
individual life insurance policies as to which the Company is the owner, the
beneficiary, or both), Code section 125 "cafeteria" or "flexible" benefit,
employee loan, educational assistance, and other fringe benefit plans, programs,
agreements and arrangements, whether written or oral, currently maintained or
contributed to by the Company or any Managed Company, or with respect to which
the Company or any Managed Company has any direct or indirect liability, whether
contingent or otherwise (individually, a "Company Plan" and collectively, the
"Company Plans"). Except as set forth in Schedule 2.11(a)(ii), no Company Plan
provides for any benefit based in whole or in part on the value of any ownership
interest in, or any ownership interest owned by, the Company or its Affiliates
or any reference thereto.
(b) Each Company Plan has been established, operated and administered
in all material respects in compliance with its terms and with applicable law,
including ERISA, the Code, and all other applicable federal, state, local or
non-U.S. laws and Governmental Orders pertaining to such Company Plans.
(c) Each Company Plan which is an "employee pension benefit plan"
within the meaning of section 3(2) of ERISA (a "Pension Plan") and which is
intended to be qualified under section 401(a) of the Code is so qualified and
has received a favorable determination letter from the IRS, covering all tax law
changes prior to EGTRRA, to the effect that the Pension Plan satisfies the
requirements of section 401(a) of the Code and that its related trust is exempt
from taxation under section 501(a) of the Code or has applied for such favorable
letter within the applicable remedial amendment period under section 401(a) of
the Code, and no circumstances exist (including, the consummation of
19
the transactions contemplated by this Agreement and the other Transaction
Documents) that could reasonably be expected to result in the revocation of any
such favorable determination letter or cause any such Company Plan or trust to
cease to be so qualified or exempt.
(d) There is no pending or, to the knowledge of the Company, threatened
legal action, suit or claim relating to the Company Plans (other than routine
claims for benefits). No circumstances exist with respect to any Company Plan
that, assuming the taxable period of such transaction expired as of the date of
this Agreement, could reasonably be expected to subject the Company or any other
Person related to the Company to a tax, penalty or Liability for breach of
fiduciary duty imposed by section 4975 of the Code or sections 404, 405, 406,
407, 409, 411, 501, 502 or 510 of ERISA. Except as set forth in Schedule
2.11(d), no transaction has occurred or exists between any Company Plan and
Purchaser or any of Purchaser's Affiliates that after the Closing could
constitute a "prohibited transaction" within the meaning of section 4975 of the
Code or section 406 of ERISA.
(e) No Company Plan or other "employee benefit plan," within the
meaning of section 3(3) of ERISA, which the Company or any of its Subsidiaries
or ERISA Affiliates has maintained or contributed to within the six years
immediately preceding the date hereof (i) could reasonably be expected to
subject the Company to any Liability, whether contingent or otherwise, with
respect to Title IV of ERISA, section 302 of ERISA or section 412 of the Code,
(ii) is or was a "multiemployer plan," within the meaning of section 3(37) of
ERISA, (iii) is a plan maintained by more than one employer within the meaning
of section 413(c) of the Code, or (iv) is a "multiple employer welfare
arrangement" as defined in section 3(40) of ERISA. Except as set forth in
Schedule 2.11(e), neither the Company nor any Managed Company (i) maintains or
could reasonably be expected to have any Liability with respect to any excess
pension or supplemental employee retirement plan or any other unfunded deferred
compensation arrangement (other than with respect to severance benefits that are
disclosed under Schedule 2.11(a)(i)) or (ii) has any obligation to provide or
make available post-employment welfare benefits or welfare benefit coverage for
any employee or former employee, except as may be required under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
and at the expense of the employee or former employee, and no Company Plan is
intended to be part of a voluntary employees' beneficiary association within the
meaning of Section 501(c)(9) of the Code. Provided that the Company continues to
provide group health benefits comparable to those provided by the Company
immediately prior to an employee's termination of employment (or comparable to
those provided immediately prior to the Closing, if more favorable), no
circumstance exists or could reasonably be expected to exist under which a
former employee of the Company or any Affiliate could be entitled, pursuant to
the terms of any Company Plan or otherwise, to a cash payment equal to the
after-tax cost of COBRA premiums for any such group health benefits in lieu of a
right to continued post-
20
employment benefit coverage under the Company Plan pursuant to which such group
health benefits are provided.
(f) All contributions required under ERISA, the Code or any applicable
non-U.S. law to have been made by the Company to each Company Plan have been
timely made or reflected on the Company's financial statements in accordance
with GAAP or any applicable non-U.S. accounting principles. All liabilities or
expenses of the Company in respect of any Company Plan (including workers
compensation, vacation, paid time off plans or arrangements) which have not been
paid, have been properly accrued on the Company's most recent financial
statements in compliance with GAAP or any applicable non-U.S. accounting
principles.
(g) Except as set forth in Schedule 2.11(g), neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (either alone or in combination with another independent event) (i)
entitle any employee to any payment or result in any payment becoming due, or
increase the amount of any compensation due, to any current or former director,
employee or consultant of the Company or any Managed Company; (ii) increase any
benefits otherwise payable under any Company Plan; or (iii) result in the
acceleration of the time of payment or vesting of any such compensation or
benefits. The aggregate payments or other benefits provided pursuant to (i) the
Cogentrix Energy, Inc. Variable Transaction Bonus Program and (ii) the Company's
Non-Management Committee Transaction Bonus Program, as they may be amended from
time to time, shall not exceed $1 million in the aggregate.
(h) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
combination with another event) result in the payment of any amount that could,
individually or in combination with any other such payment, constitute an
"excess parachute payment," as defined in section 280G(b)(1) of the Code
because, inter alia, the exemption set forth in Section 280G(b)(5)(A) for
certain "small business corporations" as defined in Section 1361(b) of the Code
(but without regard to Section 1361(b)(1)(C) thereof) applies with respect to
the Company.
(i) Except as set forth in Schedule 2.11(i), neither the Company nor
any Managed Company has any plan, contract or commitment (and has not
communicated any such plan, contract, or commitment to any employee or other
service provider), whether legally binding or not, to create any additional
employee benefit or compensation plans, policies or arrangements or to modify
any Company Plan.
(j) Neither the Company nor any Managed Company has incurred any
liability or obligation under the Worker Adjustment and Retraining Notification
Act or any similar state or local law within the last six months which remains
unsatisfied.
21
(k) No conditions exist that could reasonably be expected to result in
any liabilities of the Company or any Managed Company, whether absolute or
contingent, with respect to any misclassification of any person as an
independent contractor rather than as an employee, or with respect to any
employee leased from another employer.
(l) With respect to each Company Plan, the Company has provided or made
available to Purchaser true and complete copies of the following documents, to
the extent applicable: (i) the most recent plan documents and all amendments
thereto; (ii) the most recent trust instrument and insurance contracts; (iii)
the two most recent (A) Forms 5500 and attached schedules and (B) audited
financial statements; (iv) the most recent summary plan description, summary of
material modifications and any other written communication (or a description of
any oral communications) by the Company to its employees concerning the extent
of the benefits provided under a Company Plan; (v) the most recent determination
letter issued by the IRS; (vi) for the last three years, all correspondence with
the IRS, the DOL and any other governmental authority regarding the operation or
the administration of any Company Plan; and (vii) a materially accurate
description as of August 25, 2003 of the location, employment status,
demographics, base salary or wages, bonus, commissions and benefits provided to
each current employee, officer, director, manager, consultant or other
contingent worker of the Company or any Subsidiary.
(m) Except as set forth in Schedule 2.11(m), the Company may amend or
terminate any Company Plan (other than an employment agreement or any similar
agreement between the Company or a Subsidiary and another party that cannot be
amended or terminated without the consent of such other party) at any time
without incurring liability thereunder other than in respect of accrued and
vested obligations and medical or welfare claims incurred prior to such
amendment or termination.
(n) Except as set forth in Schedule 2.11(n), as of the Closing Date,
neither the Company nor any Managed Company will have any outstanding loans or
extensions of credit to any employees (or their family members or dependents).
(o) The Company has entered into agreements (the "Executive Amendment
Agreements") with each of Xxxxx Xxxx, Xxxxxx Xxxxxxxxx, Xxxxx Xxxxxx, Xxxx
Xxxxxx, Xxxxxx Xxxxxxxx and Xxxxx Xxxxx (collectively, the "Executives") in the
forms attached hereto as Exhibits 2.11(o)(i) - (vi).
2.12 Permits.
Except as set forth in Schedule 2.12, with respect to the Company and
the Managed Companies and, to the knowledge of the Company, with respect to the
Non-Managed Companies:
22
(a) Each of the Company and the Covered Companies has all Permits and
waivers that are necessary for it to conduct its operations in the manner in
which they are presently conducted (collectively, "Company Permits"), other than
any such Company Permits the failure of which to have would not, individually or
in the aggregate result in a material Liability of the Company.
(b) No event has occurred and no fact exists with respect to the
Company Permits that allows, or after notice or lapse of time or both would
allow, revocation or termination of any of the Company Permits or would result
in any other material impairment of the rights of the holder of any of the
Company Permits.
(c) There is not pending or, to the knowledge of the Company,
threatened, any application, petition, objection or other pleading with any
Governmental Entity that challenges or questions the validity of or any rights
of the holder under any Company Permit, except for such applications, petitions,
objections or other pleadings that would not be material to the business or
operations of the Company and the Covered Companies taken as a whole.
(d) Each material Company Permit is in full force and effect and the
applicable Covered Company is in compliance in all material respects with all
its obligations with respect thereto. To the Company's knowledge, all other
parties to the Company Permits are in compliance in all material respects with
the Company Permits.
(e) The consummation of the transactions contemplated by the
Transaction Documents will not subject any Company Permits to potential
modification, rescission or termination.
(f) True and correct copies of the Company Permits of the Managed
Companies have been made available to Purchaser prior to the date hereof.
(g) This Section 2.12 does not relate to environmental matters or
Environmental Permits, which are instead the subject of Section 2.17, or the
specific matters that are the subject of Section 2.20.
2.13 Personal Property.
Except as set forth on Schedule 2.13, (i) each of the Managed Companies
and, to the knowledge of the Company, each of the Non-Managed Companies, has
good title to or, in the case of leased assets, a valid leasehold interest in,
free and clear of all Liens (except for Permitted Liens), all of the material
tangible personal property and assets (including furniture, fixtures,
furnishings, machinery, equipment, computer hardware, appliances and vehicles)
owned or leased by the Covered Companies, except for assets, properties and
rights disposed of in the ordinary course of business consistent with past
practices, the disposition of which is otherwise permitted under this Agreement
and
23
(ii) all of the material tangible personal property and assets of the
Managed Companies and, to the knowledge of the Company, all of the material
tangible personal property and assets of the Non-Managed Companies used to
conduct the business of the Covered Companies as currently conducted (a) are in
proper operating condition and repair, subject to normal wear and tear and
normal industry practice with respect to maintenance, (b) are usable in the
ordinary course of business consistent with past practice, and (c) conform in
all material respects to all applicable Laws and all applicable Governmental
Orders relating to their use and operation.
2.14 Real Property.
(a) Schedule 2.14(a) lists, as of the date of this Agreement, the
address and current use of (1) all real property (including any warehouses,
plants and offices) owned, in whole or in part, by the Company or any of the
Managed Companies or, to the knowledge of the Company, the Non-Managed Companies
(together with all buildings, structures, facilities or improvements located
thereon, the "Owned Real Property"), (2) all real property (including any
warehouses, plants and offices) leased, in whole or in part, by the Company or
any of the Managed Companies (together with all buildings, structures,
facilities or improvements located thereon, the "Leased Real Property"), and all
real property leases, subleases, licenses and other similar occupancy agreements
relating to the Leased Real Property (the "Leases").
(b) The Owned Real Property, the Leased Real Property and the Other
Real Property Interests (defined below) include all of the real property used in
connection with, held for use in connection with, or necessary for the operation
of, the businesses of the Company and the Managed Companies and, to the
knowledge of the Company, the Non-Managed Companies taken as a whole as such
businesses are operated as of the date hereof (other than real property used or
held for use in connection with or required to carry on businesses of Persons
that are not Covered Companies).
(c) Either the Company or one of the Managed Companies or, to the
knowledge of the Company, one of the Non-Managed Companies has (i) good and
valid fee simple title to each item of Owned Real Property, free and clear of
all Liens, except Permitted Liens, (ii) good and valid leasehold estates in each
item of Leased Real Property, free and clear of all Liens on such leasehold
estate, except Permitted Liens and (iii) good and valid easement estates in any
appurtenant easements relating to the Owned Real Property or Leased Real
Property for the operation or use of the Facilities (the "Other Real Property
Interests").
(d) The Company has made available to Purchaser correct and complete
copies of the ground leases evidencing the Leased Real Property. Except as set
forth on Schedule 2.14(d):
24
(i) each Lease and, to the knowledge of the Company, each
agreement evidencing Other Real Property Interests, is a legal, binding
and enforceable obligation against the Company or a Managed Company
(or, to the knowledge of the Company, a Non-Managed Company) and is in
full force and effect, and neither the Company nor any of the Managed
Companies nor, to the knowledge of the Company, any of the Non-Managed
Companies, has received written notice from the grantor under any
agreement evidencing other Real Property Interests that such agreement
is not in full force and effect;
(ii) neither the Company nor any of the Managed Companies or,
to the knowledge of the Company, a Non-Managed Company or any other
party, is in violation of or in default under any Lease or any
agreement evidencing Other Real Property Interests, except for such
violations or defaults as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the
Company;
(iii) each Lease grants the tenant under such Lease the right
to use and occupy the premises that each such Lease purports to grant;
and
(iv) each of the Company and the Managed Companies and, to the
knowledge of the Company, the Non-Managed Companies enjoys peaceful and
undisturbed possession under its respective leases for the Leased Real
Property.
(e) Neither the Company nor any of the Managed Companies nor, to the
knowledge of the Company, any of the Non-Managed Companies has received written
notice of a proceeding in eminent domain or other similar proceedings affecting
any Owned Real Property, Leased Real Property or Other Real Property Interests
that would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company. There exists no writ, injunction,
decree, order or judgment outstanding relating to the ownership, lease, use,
occupancy or operation by any Person of any of the Owned Real Property or the
Leased Real Property that would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.
(f) To the knowledge of the Company, the Owned Real Properties and the
Leased Real Properties and the operations of the Company, the Managed Companies
and the Non-Managed Companies on such properties do not violate in any material
respect any applicable building code, zoning requirement or classification. The
use and operation of the Owned Real Property and the Leased Real Property in the
conduct of the businesses of the Company and the Managed Companies and, to the
knowledge of the Company, the Non-Managed Companies, as currently conducted, do
not violate in any material respect any instrument of record or agreement
affecting such property, except for such violations as would not, individually
or in the aggregate, reasonably be expected
25
to have a Material Adverse Effect on the Company. There is no violation of any
covenant, condition, restriction, easement or agreement or order or law of any
Governmental Entity that affects the Owned Real Property or the Leased Real
Property or the ownership, operation, use or occupancy thereof, except for such
violations as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.
(g) There are no easements, licenses, occupancy agreements, options,
rights, concessions, or other operating rights or similar rights of use, written
or oral, to which the Company or any of the Managed Companies or, to the
knowledge of the Company, any of the Non-Managed Companies, is a party, granting
to any Person or entity the right to purchase any of the Owned Real Property,
except as disclosed pursuant to Schedule 2.14(g).
(h) Except as set forth in Schedule 2.14(h): (i) all material
buildings, structures, fixtures, building systems included in the Owned Real
Property, the Leased Real Property and the Other Real Property Interests (the
"Improvements") are in proper condition and repair to operate the Facilities in
the manner in which they are currently being operated; (ii) to the extent
necessary for the operation of the businesses as currently conducted, all
utility services or systems for the Owned Real Property have been installed and
are operational and sufficient in all material respects for the services
conducted at such property, (iii) none of the Improvements encroach on any
property owned by any other Person in any way that materially affects the use of
the Owned Real Property, the Leased Real Property or the Other Real Property
Interests; and (iv) the Company, the Managed Companies and, to the knowledge of
the Company, the Non-Managed Companies, as the case may be, have, and upon the
consummation of this transaction, Purchaser will have, rights of egress and
access to the Owned Real Property necessary for the conduct of the business
thereon either through public rights of way or other irrevocable easements.
(i) None of the Company or any of the Managed Companies or, to the
knowledge of the Company, the Non-Managed Companies, has received written notice
from any governmental authority that any of the Improvements or facilities
located on the Owned Real Property or the Leased Real Property are not presently
used and operated in compliance with all material covenants, easements,
agreements, legal requirements, zoning and restrictions affecting such Owned
Real Property or Leased Real Property.
2.15 Contracts.
(a) Set forth in Schedule 2.15(a) is as of the date hereof and, when
updated pursuant to Section 11.9(d), will be as of the Closing Date, a list of
the following agreements and contracts to which the Company or any Managed
Company is a party or by which any of their properties or assets are bound (the
agreements and contracts set forth or required to be set
26
forth on Schedule 2.15(a) pursuant to this Section 2.15(a) are referred to
herein as the "Managed Company Material Contracts"):
(i) all material gas pipeline interconnection agreements, gas
supply agreements, coal supply agreements, gas purchase and sale
agreements, coal purchase and sale agreements, lime supply agreements,
gas transportation agreements, coal transportation agreements, railroad
transportation agreements and any other fuel, supply or transportation
agreements (including fuel, oil and waste coal transportation
agreements);
(ii) all power purchase agreements (involving more than 10% of
the Facility's nominal capacity) and all material steam purchase
agreements, water supply agreements, wastewater disposal agreements,
ash disposal agreements, any other waste disposal agreements,
electricity transmission agreements and electricity interconnection
agreements;
(iii) all material swap, exchange, commodity option or hedging
agreements;
(iv) all material operating and maintenance agreements,
management agreements, administrative services agreements and long term
service agreements;
(v) all contracts (other than ordinary course maintenance
contracts) requiring a future capital expenditure or known commitment
by the Company or any Managed Company in excess of $500,000 in any
twelve month period;
(vi) all contracts requiring known or liquidated expenditures
or payments to or from the Company or any Managed Company in excess of
$500,000 in any calendar year, other than those that can be terminated
without material penalty to the Company or any of the Managed
Companies, as applicable, upon not more than sixty (60) days' notice;
(vii) all contracts or agreements under which the Company or
any Managed Company is obligated to sell real or personal property
having a value in excess of $500,000;
(viii) all contracts to which the Company or any Managed
Company is party that contain a covenant not to compete applicable to
the Company, the Managed Companies or their respective Affiliates or
otherwise restrict any of the Company, the Managed Companies or their
respective Affiliates from engaging in any line of business in the
electricity, steam or power industry or generating, developing or
distributing, or other rights with respect to, electricity, steam or
power (other than term loan agreements, indentures or similar financing
contracts
27
typical to the electricity, steam or power industry containing
customary restrictive covenants);
(ix) all contracts or agreements under which the Company or
any of the Managed Companies (1) created, incurred, assumed or
guaranteed (or may create, incur, assume or guarantee) Indebtedness,
(2) granted a Lien on its assets, whether tangible or intangible, to
secure such Indebtedness or (3) extended credit or advanced funds to
any Person, in each case, in excess of $1,000,000;
(x) all contracts or agreements between or among the Company
or any of the Managed Companies, on the one hand, and one or more of
the Shareholders or any of their respective Affiliates (other than any
Covered Company), on the other hand;
(xi) all material contracts for the purchase or sale of any
business, corporation, partnership, joint venture, association or other
business organization or any division, material assets, operating unit
or product line thereof;
(xii) all material contracts or agreements establishing any
joint venture, strategic alliance or other collaboration;
(xiii) all contracts not made in the ordinary course of
business or under which the consequences of a default or termination
would reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on the Company;
(xiv) all agreements relating to any Equity Interests of the
Company, or any of the Managed Companies or rights in connection
therewith (including any voting trust or similar agreement);
(xv) all contracts relating to indemnification, whether the
Company or any Managed Company is the beneficiary or the obligated
party thereunder, including contracts providing for indemnification of
any Person with respect to Liabilities relating to any current or
former business of the Company or any Managed Company;
(xvi) any contract or agreement providing for the use of
Intellectual Property to which the Company or any Managed Company is a
party that is material to the Company, the Managed Companies and the
Company's interest in the Non-Managed Companies taken as a whole;
(xvii) any contract or agreement with any retired or other
former Shareholder, stockholder or other owner of the Company or any
Managed Company, including any contract or agreement relating to any
Indebtedness of
28
(A) the Company or any Managed Company to any such Person or (B) such
Person to the Company or any Managed Company; and
(xviii) any other agreement not covered above that is material
to the operation of the business conducted by the Company or any
Managed Company, including any "material contract" (as such term is
defined in item 601(b)(10) of Regulation S-K of the SEC).
(b) Set forth in Schedule 2.15(b) is a list as of the date hereof and,
when updated pursuant to Section 11.9(d), will be as of the Closing Date, of the
following agreements and contracts to which, to the knowledge of the Company,
any Non-Managed Company is a party or by which any of their properties or assets
are bound (the agreements and contracts set forth or required to be set forth on
Schedule 2.15(b) pursuant to this Section 2.15(b) are referred to herein as the
"Non-Managed Company Material Contracts," and, together with the Managed Company
Material Contracts, the "Company Material Contracts"):
(i) all material gas pipeline interconnection agreements, gas
supply agreements, coal supply agreements, gas purchase and sale
agreements, coal purchase and sale agreements, lime supply agreements,
gas transportation agreements, coal transportation agreements,
railroad transportation agreements and any other fuel, supply or
transportation agreements (including fuel, oil and waste coal
transportation agreements);
(ii) all power purchase agreements (involving more than 10%
of the Facility's nominal capacity) and all material steam purchase
agreements, water supply agreements, wastewater disposal agreements,
ash disposal agreements, any other waste disposal agreements,
electricity transmission agreements and electricity interconnection
agreements;
(iii) all contracts or agreements under which any of the
Non-Managed Companies (1) created, incurred, assumed or guaranteed (or
may create, incur, assume or guarantee) Indebtedness in excess of
$1,000,000 or (2) granted a Lien on its assets, whether tangible or
intangible, to secure such Indebtedness;
(iv) all contracts to which a Non-Managed Company is a party
that contain a covenant not to compete applicable to any of the
Non-Managed Companies or their respective Affiliates or otherwise
restrict any of the Non-Managed Companies or their respective
Affiliates from engaging in any line of business in the electricity,
steam or power industry or generating, developing or distributing, or
other rights with respect to, electricity, steam or power (other than
term loan agreements, indentures or similar financing contracts
typical
29
to the electricity, steam or power industry containing customary
restrictive covenants);
(v) all contracts or agreements under which any of the
Non-Managed Companies is obligated to sell real or personal property
having a value in excess of $500,000; and
(vi) all contracts not made in the ordinary course of business
or under which the consequences of a default or termination would
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
(c) The Company has made available to Purchaser complete and correct
copies of all Managed Company Material Contracts. Except as set forth on
Schedule 2.15(c), each Managed Company Material Contract is (i) a legal, valid
and binding obligation against the Company or any Managed Company party to such
Company Material Contract, (ii) enforceable against such party in accordance
with its terms, (iii) to the knowledge of the Company, a legal, valid and
binding obligation of each other party thereto, enforceable against each other
party in accordance with its terms (subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting the
enforcement of creditors' rights generally or general principles of equity); and
(iv) in full force and effect. Except as set forth on Schedule 2.15(c), neither
the Company nor any Managed Company or, to the knowledge of the Company, any
other Person, is in material violation of or default under any Managed Company
Material Contract and no event has occurred and is continuing that after notice
or lapse of time or both, would constitute a material violation of or default
thereunder. To the knowledge of the Company, the Company has made available to
Purchaser complete and correct copies of all Non-Managed Company Material
Contracts. Except as set forth on Schedule 2.15(c), to the knowledge of the
Company, each Non-Managed Company Material Contract is (i) a legal, valid and
binding obligation against the Non-Managed Company party to such Non-Managed
Company Material Contract, (ii) enforceable against such party in accordance
with its terms, (iii) a legal, valid and binding obligation of each other party
thereto, enforceable against each other party in accordance with its terms
(subject to the effect of any applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting the enforcement of creditors' rights
generally or general principles of equity); and (iv) in full force and effect.
Except as set forth on Schedule 2.15(c), to the knowledge of the Company, no
Non-Managed Company or any other Person, is in material violation of or default
under any Non-Managed Company Material Contract and no event has occurred and is
continuing that after notice or lapse of time or both, would constitute a
material violation of or default thereunder.
30
2.16 Insurance.
(a) Schedule 2.16(a) sets forth a complete and correct list of all of
the insurance policies or binders (including fire, liability, errors and
omissions, directors' and officers' liability, workers' compensation, vehicular,
property, casualty, life and unemployment) together with the carriers,
deductibles, applicable termination or renewal dates, copayment, policy limit,
retention or self-insurance amounts, owned, held, maintained or applied for by,
or the premiums of which are paid by, any of the Managed Companies (the
"Insurance Policies").
(b) The Company has delivered or made available to Purchaser: (i) true
and complete copies of the Insurance Policies, including all pending
applications for Insurance Policies and (ii) any written statement, if any, by
the auditors of the Company Audited Financial Statements since December 31, 2001
with regard to the adequacy of the reserves for claims.
(c) Each Insurance Policy is in full force and effect and no notice of
termination, or cancellation or material amendment of any such Insurance Policy,
or any other indication that any Insurance Policy is no longer in effect or that
the issuer of any Insurance Policy is not willing or able to perform its
obligations thereunder, has been received by the Company or any of its
Subsidiaries.
(d) All policy premiums due and payable prior to the Closing have been
or will be (on or prior to the Closing Date) paid up to and through the Closing.
(e) The Insurance Policies are for amounts and against such losses and
risks as are consistent with industry practice in light of the risks attendant
to the respective businesses of the Company and the Managed Companies. None of
the Company nor any of the Managed Companies is in material default with respect
to any Insurance Policies or has failed to properly and timely give any notice
or present any claim under the Insurance Policies. Except as set forth on
Schedule 2.16(e), none of the Managed Companies has, with respect to the
Insurance Policies received any notice since January 1, 2001 from an insurer
under any Insurance Policy refusing, denying, disputing or disclaiming coverage
or reserving rights with respect to a particular claim or any Insurance Policy
in general.
2.17 Environmental Matters.
Except as disclosed in Schedule 2.17, or as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company:
(a) the Company, each of the Managed Companies and, to the knowledge of
the Company, each of the Non-Managed Companies is and, for the preceding five
years has been, in compliance with all applicable Environmental Laws, including
the terms and conditions of all Environmental Permits;
31
(b) to the knowledge of the Company, the Company and each Covered
Company has obtained, and is in compliance with, all Permits currently required
under applicable Environmental Laws ("Environmental Permits") and:
(i) each Environmental Permit of the Company or a Managed
Company has been obtained in the name of the Company or the appropriate
Managed Company, remains in full force and effect and is not subject to
appeal and all applicable time periods for filing such an appeal have
expired;
(ii) to the knowledge of the Company, each Environmental
Permit of a Non-Managed Company has been obtained in the name of the
appropriate Non-Managed Company, remains in full force and effect and
is not subject to appeal and all applicable time periods for filing
such an appeal have expired;
(iii) there are no pending, or to the knowledge of the
Company, threatened administrative or judicial proceedings that would
reasonably be expected to result in the termination, revocation, or
modification of any Environmental Permit held by the Company, the
Managed Companies or, to the knowledge of the Company, a Non-Managed
Company;
(iv) all applications for new, modified, or renewed
Environmental Permits of the Company, the Managed Companies and, to the
knowledge of the Company, any Non-Managed Company, that are presently
pending were submitted on a timely basis under applicable Environmental
Laws and, to the knowledge of the Company, no facts or circumstances
exist upon which a Governmental Entity would be reasonably likely to
refuse to issue any such Environmental Permit in the ordinary course or
would be reasonably likely to issue any such Environmental Permit with
terms and conditions that are inconsistent with the present operation
of the relevant Facility; and
(v) to the knowledge of the Company, none of the transactions
contemplated by this Agreement will require the Company or any Covered
Company to transfer or amend any Environmental Permits or require any
submissions to a Governmental Entity (other than notifications relating
to a change in ownership pursuant to this Agreement and the other
Transaction Documents);
(c) to the Company's knowledge, there is no currently existing fact,
event, condition, circumstance, activity, practice, incident, action or plan
which would, in the ordinary course of the operation of any of the Company's or
any Covered Company's business or facilities, reasonably be expected (i) to
prevent continued compliance with Environmental Laws by the Company or by any
Covered Company; (ii) to result in any Liability of the Company or any Covered
Company under any Environmental Law; or
32
(iii) otherwise to form the basis of any claim that would reasonably be expected
to result in any Liability of the Company or any Covered Company under any
Environmental Law;
(d) as of the date hereof, neither the Company nor any of the Managed
Companies nor, to the knowledge of the Company, any Non-Managed Company (i) has
received from any Governmental Entity any written notice of violation of,
alleged violation of, non-compliance with, or Liability or potential Liability
pursuant to, any Environmental Law (including a Clean Air Act Section 114
notice, a CERCLA Section 104(e) request, or a potentially responsible party or
"PRP" notice), other than notices with respect to matters that have been
resolved and for which the Company or any Covered Company has no further
obligations outstanding or (ii) is subject to any outstanding administrative or
judicial Order, "consent order" or other agreement with regard to any violation,
noncompliance or Liability under any Environmental Law;
(e) as of the date hereof, no judicial proceeding or governmental or
administrative action is pending or, to the knowledge of the Company,
threatened, under any applicable Environmental Law pursuant to which the
Company, any of the Managed Companies or, to the knowledge of the Company, any
Non-Managed Company has been, or, to the knowledge of the Company, is likely to
be, named as a party;
(f) no Hazardous Substance has been released at, on, to or from any of
the Company's, a Managed Company's or, to the knowledge of the Company, any
Non-Managed Company's current or former Facilities, or as a result of the
operation of such Facilities into the air or into, onto or upon the soil or
groundwater at such Facilities or at any other location for which the Company,
any of the Managed Companies or, to the knowledge of the Company, any
Non-Managed Company (i) would be obligated to remediate Releases of such
Hazardous Substances (or reimburse another Person for the cost of remediation)
pursuant to any Environmental Law and (ii) would reasonably be expected to
result in claims against the Company or any Covered Company by other Persons for
Liability under any Environmental Law (including claims for damage or injury to
persons, property or natural resources);
(g) to the knowledge of the Company, no claims for Liability under any
Environmental Law have been asserted against any facilities that may have
received Hazardous Substances generated by the Company or any Covered Company
for which the Company or any Covered Company has been or is reasonably likely to
be named as a potentially responsible party;
(h) there are no underground storage tanks at any of the Facilities or
at any facilities that are otherwise currently owned or operated by the Company,
any of the Managed Companies or, to the knowledge of the Company, any
Non-Managed Company from which there has been a Release of Hazardous Substances
for which the Company,
33
any of the Managed Companies, or, to the knowledge of the Company, any
Non-Managed Company, is obligated to conduct remedial action;
(i) neither the Company nor any of the Managed Companies nor, to the
knowledge of the Company, any Non-Managed Company is a party to any contract,
lease or other agreement with any Governmental Entity or any other Person
pursuant to which the Company, any of the Managed Companies or any Non-Managed
Company has any continuing obligation with respect to the remediation of any
condition resulting from the treatment, storage or Release of Hazardous
Substances; and
(j) all material environmental site assessment reports (including any
Phase I or Phase II reports), remediation studies, audits, assessments or
similar documents prepared by, or on behalf of, the Company and any Covered
Company which are in the possession, custody or control of the Company and
relate to the investigation or remediation of environmental conditions at any
current or former Owned Real Property or any current or former Leased Real
Property, or otherwise relate to the Company's or any Covered Company's
compliance with, or Liability under, Environmental Laws have been made available
to Purchaser.
Notwithstanding any of the representations and warranties contained
elsewhere in this Agreement, all environmental matters shall be governed
exclusively by this Section 2.17.
2.18 Labor Matters.
Except as set forth in Schedule 2.18:
(a) there is no labor strike, material labor dispute, or
concerted work stoppage pending as of the date of this Agreement or, to
the knowledge of the Company, threatened, and, since January 1, 2002,
neither the Company nor any of the Managed Companies, or, to the
knowledge of the Company, any of the Non-Managed Companies, has
experienced any labor strike or material concerted labor dispute;
(b) the Company, the Managed Companies and, to the knowledge
of the Company, each of the Non-Managed Companies, has complied in all
material respects with all applicable labor and employment Laws and
Governmental Orders in connection with the employment of its employees;
(c) neither the Company nor any of the Managed Companies nor,
to the knowledge of the Company, any of the Non-Managed Companies is a
party to or bound by any Contract or other agreement with any labor
union representing its employees; and
34
(d) neither the Company nor any of the Managed Companies nor,
to the knowledge of the Company, any of the Non-Managed Companies, is a
governmental contractor for purposes of any federal, state or local
Law.
2.19 Affiliate Transactions.
Except as set forth in Schedule 2.19, none of the Company, the Managed
Companies or, to the knowledge of the Company, the Non-Managed Companies, is a
party to any material agreement or arrangement with (i) any Shareholder or any
director or officer or any Person controlled by a Shareholder or any director or
officer, or (ii) any Affiliate of the Company or any Managed Company (other than
the Covered Companies). No director, executive officer or Affiliate of the
Company or any Managed Company (other than the Company or the Covered Companies)
has any direct or indirect ownership interest in any Person with which the
Company or any of the Managed Companies competes other than an ownership
interest that represents less than five percent (5%) of the outstanding equity
interests in a publicly traded company; and, except as set forth on Schedule
2.15(a), there are no contracts with any such director, officer or Affiliate to
which the Company or any of the Managed Companies or, to the knowledge of the
Company, any of the Non-Managed Companies is bound.
2.20 Projects; Regulatory Status.
(a) Schedule 2.20(a) sets forth, the name, location, nominal capacity
and the Company's direct or indirect ownership of each cogeneration or other
generating facility owned directly or indirectly, in whole or in part, by the
Company or any Covered Company (collectively, the "Facilities"). Schedule
2.20(a) identifies: (i) which of the Facilities are "qualifying facilities" (the
"QF Facilities") within the meaning of the Public Utility Regulatory Policies
Act of 1978, as amended ("PURPA") and the FERC's implementing regulations, (ii)
which of such Facilities are "eligible facilities" owned and/or operated by
"exempt wholesale generators" (the "EWG Facilities") within the meaning of the
Energy Policy Act of 1992, as amended ("EPA") and the Public Utility Holding
Company Act of 1935, as amended ("PUHCA"), and (iii) which of such Facilities
are "foreign utility companies" within the meaning of PUHCA (the "FUCO
Facilities").
(b) Neither the Company nor any of its Subsidiaries is a "holding
company", or a "public utility company" and, except as set forth on Schedule
2.20(b), neither the Company nor any of its Subsidiaries is an "affiliate" or a
"subsidiary company" of a holding company or public utility company, all within
the meaning of PUHCA.
(c) Except as set forth on Schedule 2.20(c), each Facility identified
as a QF Facility on Schedule 2.20(a) is currently a "qualifying facility",
within the meaning of PURPA and the rules and regulations promulgated
thereunder, has maintained its status
35
as a QF Facility at all times since its initial certification or
self-certification as a QF Facility, and is not currently subject to any pending
inquiry, investigation, or challenge relating to its status as a QF Facility.
(d) Each Facility identified as an EWG Facility on Schedule 2.20(a) is
currently an "exempt wholesale generator" within the meaning of PUHCA and its
implementing regulations, and is not currently subject to any pending inquiry,
investigation, or challenge relating to its status as an EWG Facility.
(e) Each Facility identified as an EWG Facility on Schedule 2.20(a),
along with every other Affiliate of the Company selling power at market-based
rates other than a QF Facility or a FUCO Facility has a validly-issued order
from FERC, not subject to any pending challenge, investigation, proceeding, or
company-specific rate cap or mitigation measure, authorizing it to engage in
wholesale sales of electricity, and, to the extent permitted under its
market-based rate tariff, other products and services, including ancillary
services at market-based rates.
(f) Each Facility identified as a FUCO Facility on Schedule 2.20(a) is
currently a "foreign utility company" within the meaning of PUHCA and its
implementing regulations, and is not currently subject to any pending inquiry,
investigation, or challenge relating to its status as a FUCO Facility.
(g) The Company and each Subsidiary has filed or caused to be filed
with the applicable state or local utility commissions or regulatory bodies and
the FERC, all material forms, statements, reports and documents (including all
exhibits, amendments and supplements thereto) required to be filed by it with
respect to the Company and each Subsidiary's business and each Facility under
all applicable Laws and each of the FPA, PUHCA, PURPA, and the respective rules
and regulations thereunder, all of which complied in all material respects with
all applicable requirements of the appropriate act and the rules and regulations
thereunder in effect on the date each such report was filed.
(h) No order, judgment or decree shall have been issued or proposed to
be issued by any Governmental Entity that, as a result of the construction,
ownership, leasing or operation of any Facility by the Company or any of its
Subsidiaries, the sale of electricity therefrom by the project owner, or any
transaction contemplated hereby, could reasonably be expected to cause or deem
the Company or any of its Subsidiaries to be subject to, or not exempted from,
regulation under PUHCA, or, solely with respect to QF Facilities as a public
utility under state laws and regulations, respecting the rates or the financial
or organizational regulation of electric utilities.
(i) The Company has disclosed to Purchaser all information regarding
the Company and each Covered Company, their respective businesses, financial
conditions and corporate governance, directors, officers and affiliates, any
agreements and
36
arrangements among such Persons regarding their direct and indirect interests in
the Company and each Covered Company and the allocation among such Persons of
economic and management rights relating to the Company and each Covered Company
that could be reasonably expected to affect the ability of the parties to obtain
any approval, Consent or authorization of any Governmental Entity under PURPA,
the FPA or any other federal, state or local energy law or regulation (including
any Section 203 approval) or to make any requisite filing with any Governmental
Entity under PURPA, the FPA or any other federal, state or local energy law or
regulation, in any case necessary for or required as a result of the execution,
delivery and performance of this Agreement.
2.21 Brokers and Finders.
Except as set forth on Schedule 2.21, neither the Company nor any of
the Covered Companies has employed any broker, investment banker, or finder in
connection with the negotiation, preparation, execution or delivery of this
Agreement or any other Transaction Document or the consummation or performance
of the transactions contemplated hereby or thereby so as to give rise to any
claim against the Company, any of the Covered Companies or Purchaser for any
commission, fee or similar compensation.
2.22 Bankruptcy.
There are no bankruptcy, reorganization, arrangement, insolvency or
similar proceedings pending against, being contemplated by or, to the knowledge
of the Company, threatened against the Company or any of the Managed Companies.
2.23 Intellectual Property.
(a) Schedule 2.23(a) contains a complete and accurate list as of the
date hereof of the material patents and patent applications, trademark, service
xxxx and trade name registrations and applications, copyright registrations and
domain name registrations owned by the Company or any of the Managed Companies
and any material computer software owned by the Company as of the date hereof.
Except as set forth on Schedule 2.23(a), each of the Company and the Managed
Companies solely owns the Intellectual Property listed on Schedule 2.23(a) as
owned by it free and clear of all Liens other than Permitted Liens. The Company
and the Managed Companies each own or have the right to use all Intellectual
Property necessary for the operation of their respective businesses, except to
the extent the failure to have such rights would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Company.
37
(b) Each of the Company and the Managed Companies has taken
commercially reasonable actions to maintain the material Intellectual Property
owned by it.
(c) There are no claims pending against the Company or any of the
Managed Companies asserting the invalidity, misuse or unenforceability of any
material Intellectual Property owned by any of them.
(d) To the knowledge of the Company: (i) the conduct of the business of
the Company and each Managed Company does not infringe or misappropriate any
Intellectual Property rights of others, except for such infringements or
misappropriations as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on the Company, and (ii) except as
set forth on Schedule 2.23(d), neither the Company nor any Managed Company has
received any written notice within the two (2) year period preceding the Closing
Date asserting that the conduct of the business of the Company or any Managed
Company infringes or misappropriates any Intellectual Property rights of others.
(e) To the knowledge of the Company, the Intellectual Property owned by
the Company and each Managed Company has not been infringed or misappropriated
by others, except for such infringements or misappropriations as would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Company.
(f) The transactions contemplated by this Agreement and the other
Transaction Documents will not materially adversely affect the right, title,
license or interest of the Company or any Managed Company in and to any of the
Intellectual Property that is: (i) owned by the Company or any Managed Company,
or (ii) licensed by, and material to the business of, the Company or any Managed
Company.
2.24 Books and Records.
The Books and Records, accounts and ledgers of the Company and each of
the Managed Companies and, to the knowledge of the Company, each of the
Non-Managed Companies, are true and complete in all material respects and have
been maintained in accordance with good business and bookkeeping practices in
all material respects. The minute books of the Company and each of the Managed
Companies are true and complete in all material respects and have been
previously made available to Purchaser.
2.25 Form 15.
To the knowledge of the Company, (i) none of the Company or any of its
Subsidiaries is subject to any contractual obligation to file periodic reports
under the Exchange Act other than Section 3.7 of the Trust Indenture for the
2004 Notes and
38
Section 7.04(1) of the Trust Indenture for the 2008 Notes and is eligible
(subject to filing with the SEC a notice on Form 15 pursuant to Rule 15d-6 or
Rule 12h-3 promulgated under the Exchange Act or making any other necessary
filings with the SEC) as of the date hereof to suspend any duty the Company may
have to file SEC Reports under the Exchange Act and (ii) the filing of a Form 15
pursuant to Rule 15d-6 or Rule 12h-3 under the Exchange Act and the Company's
suspension of filing SEC Reports with the SEC under the Exchange Act following
such filing would not conflict with in any material respect or result in a
material violation or material breach of or a material default under any
Applicable Law or any Company Material Contract (other than the Trust Indentures
described in (i) above) to which the Company or any Managed Company is a party.
To the knowledge of the Company (i) LS Power Funding Corporation ("LS Power") is
not subject to any contractual obligation to file reports under the Exchange Act
and is eligible (subject to filing with the SEC a notice on Form 15 pursuant to
Rule 15d-6 or Rule 12h-3 promulgated under the Exchange Act or making any other
necessary filings with the SEC) as of the date hereof to suspend any duty LS
Power may have to file SEC Reports under the Exchange Act and (ii) the filing of
a notice on Form 15 and LS Power's suspension of filing SEC Reports with the SEC
under the Exchange Act following such filing would not conflict with in any
material respect or result in a material violation or material breach or a
material default under any Applicable law or any Company Material Contract to
which the Company, LS Power or any Managed Company is a party.
2.26 Disclosure.
Taking into account the Company Disclosure Schedules, as updated
through the Closing Date as permitted pursuant to this Agreement, none of the
representations and warranties relating to the Company or the Covered Companies
in this Agreement or the other Transaction Documents provided by or on behalf of
the Company, contains any untrue statement of a material fact, or omits to state
any material fact that is necessary to make the statements contained herein or
therein, in light of the circumstance in which they were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SHAREHOLDERS
Each Shareholder hereby, severally and not jointly, represents and
warrants to Purchaser as of the date hereof and as of the Closing Date in
respect of himself, herself or itself as follows in this Article III:
39
3.1 Organization.
If such Shareholder is not an individual, it has been duly formed or
organized, is validly existing and in good standing under the laws of the
jurisdiction of its formation or organization.
3.2 Authority.
Each Shareholder that is not either an individual or an estate has all
requisite limited liability company or trust power and authority, as the case
may be, and such Shareholder that is an individual or an estate has the
capacity, to enter into this Agreement and any other Transaction Document to
which it is a party and to consummate the transactions contemplated hereby and
thereby and to perform its obligations hereunder and thereunder. This Agreement
has been and each other Transaction Document to which it is a party has been or,
if executed and delivered after the date hereof, will be, duly and validly
executed and delivered by such Shareholder (and if such Shareholder is a married
individual and his or her shares of Company Common Stock constitute community
property, by his or her spouse) and constitutes, or will constitute when
executed and delivered, the legal, valid and binding obligation of such
Shareholder (and if applicable, his or her spouse) enforceable against such
Shareholder (and if applicable, his or her spouse) in accordance with their
terms. The execution, delivery and performance by such Shareholder of this
Agreement and any other Transaction Document to which it is a party and the
consummation by such Shareholder of the transactions contemplated hereby and
thereby and the performance by such Shareholder of its obligations hereunder and
thereunder have been duly and validly authorized by all requisite action on the
part of such Shareholder in accordance with the Organizational Documents and the
governing trust and estate documents of such Shareholder, as applicable, and no
other proceedings or approvals on the part of such Shareholder is necessary to
perform such Shareholder's obligations under this Agreement or any other
Transaction Document to which it is a party or to consummate the transactions
contemplated hereby and thereby.
3.3 Conflicts.
Neither the execution and delivery by such Shareholder of this
Agreement or any other Transaction Document to which it is a party, the
consummation by such Shareholder of the transactions contemplated hereby and
thereby, nor the performance of such Shareholder's obligations hereunder and
thereunder by such Shareholder, will conflict with or result in any violation or
breach of or default under (or any event that, with notice or lapse of time or
both, would constitute a default under), or give rise to a right of termination,
amendment, cancellation or acceleration of any obligation or to loss of a
benefit under, any provision of (A) the Organizational Documents or the
governing trust and estate documents of such Shareholder that is not an
individual; or (B) any lease,
40
mortgage, indenture, loan agreement, note, bond, deed of trust, other agreement,
commitment or obligation for the borrowing of money or the obtaining of credit,
material lease or other material agreement, contract, license, franchise, permit
or instrument to which such Shareholder is a party or by which such Shareholder
or any of their respective assets is bound, or any Law or Governmental Order
applicable to a Shareholder; other than, with respect to the consummation of the
transactions contemplated hereby, conflicts, violations, defaults, rights of
termination, cancellation or acceleration or losses of benefits listed on
Schedule 3.3 to this Agreement, each of which shall have been cured as of the
Closing.
3.4 Consents.
Except as set forth on Schedule 3.4, no Consent of or with and no
material action by or in respect of any Governmental Entity or third Person is
required to be obtained by such Shareholder in connection with the execution and
delivery of this Agreement or any other Transaction Document to which it is a
party by such Shareholder or the consummation by such Shareholder of the
transactions contemplated hereby or thereby or the performance of such
Shareholder's obligations hereunder or thereunder, other than filings required
under the HSR Act.
3.5 The Company Common Stock.
Except as set forth on Schedule 3.5 and except for estate tax liens
which terminate upon a bona fide sale for full and adequate consideration, (i)
such Shareholder is the record and beneficial owner of, or is a trust or an
executor of the will of a decedent that is the record holder of, and whose
beneficiaries are the beneficial owners of, and has good title to, the Company
Common Stock set forth opposite such Shareholder's name on Schedule 2.2(a), free
and clear of any Liens (including any proxy, right of first refusal, right of
first offer, or restriction on use, voting, transfer, receipt of income or
exercise of any other attribute of ownership), other than as created by this
Agreement and the other Transaction Documents, (ii) such Shareholder does not
own, of record or beneficially, any shares of capital stock or other Equity
Interests of the Company other than the Company Common Stock set forth opposite
his, her or its name on Schedule 2.2(a) attached hereto and (iii) such
Shareholder has the sole right and power to vote such Company Common Stock, and
none of such Company Common Stock is subject to any voting trust or other
agreement, arrangement or restriction with respect to the voting of such Company
Common Stock.
3.6 The Trust, the LLC Documents and Related Documents.
(a) A true and correct copy of the Revocable Declaration of Trust of
Xxxxxx X. Xxxxx, Xx., dated June 28, 1985 and all documents relating to the
rights of trustee and the beneficiaries thereunder, and any and all amendments
thereto (the "Trust"), certified as
41
true and correct by each trustee thereof has been delivered to Purchaser. The
Trust has not been revoked, disclaimed, terminated, altered, amended or modified
in any manner whatsoever. The sole and exclusive beneficiaries of the Trust are
(i) natural persons or (ii) organizations described in section 501(c)(3) of the
Code. True and correct copies of the Articles of Organization of Xxxxxx X.
Xxxxx, Xx. Investment LLC and all other documents relating to the organization,
operation and the rights of the members of Xxxxxx X. Xxxxx, Xx. Investment LLC,
and any and all amendments thereto (the "LLC Documents") have been delivered to
Purchaser. True and correct copies of the Agreement dated August 15, 1994
between Xxxxx X. Xxxxx and Xxxxxx X. Xxxxx, Xx. (the "Xxxxx Agreement") and the
power of attorney of Xxxxxx X. Xxxxx, Xx. have been delivered to Purchaser.
Except for the Trust, the LLC Documents, the Xxxxx Agreement and related
documents and the xxxxx of Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxx, there are no
shareholder agreements, limited liability company agreements, partnership
agreements, voting trusts, proxies or other agreements, instruments or
undertakings to which a Shareholder is a party or by which a Shareholder is
bound relating to the Company Common Stock or interests therein or the Trust or
Xxxxxx X. Xxxxx, Xx. Investment LLC or the interests therein.
(b) A certified copy of a Certificate of Appointment as issued by the
Norfolk Probate Court proving and allowing the will of Xxxxxx X. Xxxxx dated
March 6, 2002 and appointing M. Xxxxxx Xxxxx as executor thereto has been
delivered to Purchaser. M. Xxxxxx Xxxxx, as the executor, is duly appointed by
the Norfolk Probate Court, has full power and authority to enter into this
Agreement, and there is no action pending to remove her from the office of
executor.
3.7 Brokers and Finders.
Except as set forth on Schedule 2.21, such Shareholder has not employed
any broker, investment banker or finder in connection with the negotiation,
preparation, execution or delivery of this Agreement or the other Transaction
Documents or the consummation or performance of the transactions contemplated
hereby or thereby so as to give rise to any claim against the Company, any of
its Subsidiaries, or Purchaser for any commission, fee or similar compensation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PURCHASER
Except as set forth on the Purchaser Disclosure Schedules delivered by
Purchaser to the Company concurrently with the execution of this Agreement,
Purchaser represents and warrants to the Company and to each Shareholder as
follows in this Article IV:
42
4.1 Corporate Status, etc.
(a) Organization. Purchaser is a limited liability company, validly
existing and in good standing under the laws of Delaware, and is, directly or
indirectly, wholly-owned by the Purchaser Guarantor.
(b) Qualification. Purchaser is duly qualified to do business and in
good standing as a foreign corporation in all jurisdictions in which the failure
to be so qualified would have a Material Adverse Effect on Purchaser.
(c) Organizational Documents. Purchaser has provided to the Company
complete and correct copies of the Organizational Documents of Purchaser.
(d) Authorization, etc. Purchaser has full limited liability company
power and authority to execute and deliver this Agreement and the other
Transaction Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. The execution, delivery and performance by Purchaser of this
Agreement and the other Transaction Documents to which it is a party and the
consummation by Purchaser of the transactions contemplated hereby and thereby
have been duly authorized by all requisite limited liability company action on
the part of Purchaser and no other limited liability company proceedings or
approvals on the part of Purchaser are necessary to authorize this Agreement or
the other Transaction Documents, to perform the obligations under this Agreement
or the other Transaction Documents or to consummate the transactions
contemplated hereby or thereby.
(e) Execution. This Agreement has been duly executed and delivered by
Purchaser and constitutes the legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, except as limited by
laws affecting the enforcement of creditors' rights generally or by general
equitable principles. Each other Transaction Document to which Purchaser is (or
will be) a party has been (or will be at Closing) duly executed and delivered by
Purchaser and constitutes (or will constitute at Closing) a legal, valid and
binding obligation of Purchaser, except as limited by laws affecting the
enforcement of creditors' rights generally or by general equitable principles.
4.2 Conflicts, Consents.
(a) Conflicts. Except as set forth in Schedule 4.2(a), the execution
and delivery of this Agreement and the other Transaction Documents to which it
is a party by Purchaser, and the consummation by Purchaser of the transactions
contemplated hereby and thereby, will not conflict with or result in any
violation or breach of or default under (or constitute an event that, with
notice or lapse of time or both, would constitute a
43
default under), or give rise to a right of termination, amendment, cancellation
or acceleration of any obligation or to loss of a benefit under, any provision
of:
(i) the Organizational Documents of Purchaser; or
(ii) any mortgage, indenture, loan agreement, note, bond, deed
of trust, other agreement, commitment or obligation for the borrowing
of money or the obtaining of credit, material lease or other material
agreement, contract, license, franchise, Permit or instrument to which
Purchaser is a party or by which Purchaser may be bound, or any Law or
Governmental Order applicable to Purchaser, other than any conflicts,
violations or defaults that, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on
Purchaser.
(b) Consents. No Consent of or with, and no material action by or in
respect of, any Governmental Entity or third Person is required to be obtained
by Purchaser prior to the consummation of the transactions contemplated by this
Agreement or the other Transaction Documents in connection with the execution
and delivery by Purchaser of this Agreement or the other Transaction Documents
or the consummation by Purchaser of the transactions contemplated hereby and
thereby or the performance of the terms and conditions hereof or thereof, except
(i) as set forth on Schedule 4.2(b), (ii) as may be required under the HSR Act,
(iii) Exchange Act filings, (iv) approvals under Section 203 of the FPA, (v) any
state regulatory agency approvals required for the transfer of assets used to
generate electricity and (vi) for any Consents where the failure to obtain such
Consents, either in any individual case or in aggregate, would not reasonably be
expected to have a material adverse effect on the ability of Purchaser to
consummate the transactions contemplated by this Agreement.
4.3 Financing.
Purchaser will have sufficient funds available (through existing credit
arrangements or otherwise) at the Closing to pay the Adjusted Consideration and
to perform their obligations hereunder.
4.4 Litigation.
Except as set forth in Schedule 4.4, there is no action, claim, suit or
proceeding at law or in equity pending or, to the knowledge of Purchaser,
threatened against Purchaser or any of its Subsidiaries and, to the knowledge of
Purchaser, there is no investigation pending or threatened against Purchaser or
any of its Subsidiaries, in each case, before any Governmental Entity, that
would reasonably be expected to have a material adverse effect on the ability of
Purchaser to consummate the transactions contemplated by this Agreement.
44
4.5 Regulatory Status.
(a) Neither Purchaser nor any of its Subsidiaries is a "holding
company", "public utility company" or "affiliate" or "subsidiary company" of a
holding company or public utility company within the meaning of PUHCA.
(b) Neither the execution of this Agreement or any other Transaction
Document nor the consummation of the transactions contemplated hereby or thereby
shall affect the status of the QF Facilities as "qualifying facilities" within
the meaning of PURPA, the status of the EWG Facilities as "exempt wholesale
generators" within the meaning of the EPA and PUHCA, or the status of the FUCO
Facilities as "foreign utility companies" within the meaning of PUHCA.
(c) Purchaser has disclosed to the Company all information regarding
Purchaser, its respective businesses, financial conditions and corporate
governance, Purchaser's directors, officers and affiliates, any agreements and
arrangements among such Persons regarding their direct and indirect interests in
Purchaser and the allocation among such Persons of economic and management
rights relating to Purchaser that could be reasonably expected to affect the
ability of the Parties to obtain any approval, Consent or authorization of any
Governmental Entity under PURPA, the FPA or any other federal, state or local
energy law or regulation (including any Section 203 approval) or to make any
requisite filing with any Governmental Entity under PURPA, the FPA or any other
federal, state or local energy law or regulation, in any case necessary for the
execution, delivery and performance of this Agreement.
4.6 Brokers and Finders.
Neither Purchaser nor any of its Subsidiaries has employed any broker,
investment banker or finder in connection with the negotiation, preparation,
execution or delivery of this Agreement or any other Transaction Document or the
consummation of the performance of the transactions contemplated hereby or
thereby so as to give rise to any claim against the Company or any Covered
Companies for any commission, fee or similar compensation.
ARTICLE V
COVENANTS
5.1 Conduct of Business.
(a) Except (w) as set forth in Schedule 5.1, (x) for entering into and
performing this Agreement and the other Transaction Documents as required or
taking actions expressly permitted by this Agreement, (y) as contemplated by the
Company's budgets previously provided or made available to Purchaser, or (z) as
otherwise
45
consented to by Purchaser in writing, such consent not to be unreasonably
withheld or delayed (it being understood that Purchaser shall respond to any
request to take action within two business days of receipt of such request),
from the date of this Agreement to the Closing the Company shall, shall cause
the Managed Companies to, and shall exercise the voting, governance and
contractual powers available to it to cause the Non-Managed Companies to,
conduct their respective businesses in the ordinary course consistent with past
practices and shall cause the Managed Companies not to, and shall exercise the
voting, governance and contractual powers available to it to cause the
Non-Managed Companies not to, take any action inconsistent therewith, with this
Agreement, with the other Transaction Documents or with the consummation of the
transactions contemplated hereby and thereby. Without limiting the generality of
the foregoing, the Company shall, shall cause each of the Managed Companies to,
and shall exercise the voting, governance and contractual powers available to it
to cause each of the Non-Managed Companies to:
(i) maintain its corporate existence;
(ii) use its commercially reasonable efforts to keep available
the services of current employees so that such employees will remain
available to Purchaser on and after the Closing Date;
(iii) preserve its business organizations intact, retain the
Company Permits, and use its commercially reasonable efforts to
preserve the existing contracts and goodwill of its customers,
distributors, suppliers, lenders, licensors, licensees and others
having business relations with it;
(iv) use commercially reasonable efforts to have in effect and
maintain at all times all insurance of the kinds, in the amounts and
with the insurers as is presently in effect;
(v) keep in working condition and proper order and repair all
of its material machinery, equipment, assets and other properties,
normal wear and tear excepted, and operate and maintain the Facilities,
all in the ordinary course of business consistent with past practices;
(vi) maintain its Books and Records and accounts in its usual,
regular and ordinary manner in compliance with all applicable Laws and
Governmental Orders;
(vii) pay and discharge when due all Taxes, assessments and
governmental charges imposed upon it or any of its properties, or upon
the income or profit therefrom in the ordinary course of business
consistent with past practices;
46
(viii) comply in all material respects with all Laws and all
Governmental Orders applicable to its assets, properties and its
businesses;
(ix) maintain each QF Facility's status as a "qualifying
facility" within the meaning of PURPA, each EWG Facility's status as an
"exempt wholesale generator" within the meaning of the EPA and PUHCA,
and each FUCO Facility's status as a "foreign utility company" within
the meaning of PUHCA;
(x) perform and satisfy obligations of the Covered Companies
in all material respects under all Company Material Contracts, each in
the ordinary course of business consistent with past practices; and
(xi) maintain levels of inventory and working capital, each in
the ordinary course of business consistent with past practices.
(b) Without limiting the generality of the foregoing, except (w) as set
forth in Schedule 5.1, (x) for entering into and performing this Agreement and
the other Transaction Documents as required or taking actions expressly
permitted by this Agreement, (y) as contemplated in the Company's budgets
previously provided or made available to Purchaser or (z) as otherwise consented
to by Purchaser in writing (it being understood that Purchaser shall respond to
any request to take action within two business days of receipt of such request),
such consent not to be unreasonably withheld or delayed, from the date of this
Agreement to the Closing the Company shall not, shall cause the Managed
Companies not to, and shall exercise the voting, governance and contractual
powers available to it to cause the Non-Managed Companies not to:
(i) engage in any transaction or take or omit to take any
action that would have resulted in a breach of Section 2.7(a)-(k) or
(m)-(w) had such transaction or action been taken prior to the date of
this Agreement, except as would otherwise be specifically permitted
under this Section 5.1(b);
(ii) engage in any transaction or take or omit to take any
action that could reasonably be anticipated to (A) subject the Company
or any of its Subsidiaries to regulation under PUHCA or, (B) with
respect to QF Facilities, regulation as a public utility under the laws
and regulations of any state, respecting the rates or the financial or
organizational regulation of electric utilities;
(iii) enter into any agreements or contracts, or cancel,
terminate, materially modify, assign or materially amend any existing
agreements or contracts, or enter into any transaction with, or make,
directly or indirectly, any payments or transfers of any funds or other
property to or on behalf of any director, executive officer or
shareholder of the Company or any director or
47
executive officer of any Covered Company or any Affiliate of any
Managed Company, other than in the ordinary course of business
consistent with past practice;
(iv) (A) enter into any material agreements or contracts that
had they been in effect on the date hereof, would have been required to
be listed on Schedule 2.15(a) or (b), or (B) cancel, terminate,
materially modify, assign or materially amend any Company Material
Contracts or any agreements or contracts described in clause (iv)(A);
(v) grant or pay any year-end discretionary Bonus (as defined
in Section 3.2 of the Company's employment agreement with Xxxxx X.
Xxxxx dated as of August 14, 2003) to Xxxxx X. Xxxxx in respect of the
Company's fiscal year ending December 31, 2003 in excess of $100,000;
(vi) enter into, establish, adopt, materially amend or modify
or renew, or communicate in writing or orally any intention to take
such action, any Company Plan, including any material employment,
consulting, severance, supplemental pension or health, change in
control or similar contracts, arrangements, agreements or practices
with any current or former partner, stockholder, manager, director,
officer or employee or any trust agreement (or similar arrangement)
related thereto, or grant any salary, wage or other compensation
increase, increase any wage, payment, benefit or perquisite (including
incentive or bonus payments), take any action to accelerate the
payment, funding, vesting or exercisability of options (or similar
rights), any pension, retirement, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other compensation
or benefit payable under any Company Plan, or forgive any outstanding
loans or extensions of credit to any employee, except (1) for normal
individual increases in base salary to employees in the ordinary course
of business consistent with past practice, (2) for changes that may be
required by applicable law, rule or regulation, provided that Purchaser
is notified in writing in advance of such change and (3) to satisfy
contractual obligations to the extent existing as of the date hereof
that have been previously disclosed;
(vii) take or agree to take any action that would (1) make any
representation or warranty of the Shareholders or the Company contained
in this Agreement or any other Transaction Document untrue or
inaccurate in any material respect (or, if such representation or
warranty is qualified by materiality or Material Adverse Effect, in any
respect) at the Closing Date or (2) impair or prevent the Shareholders
or the Company from performing or consummating the transactions
contemplated by this Agreement and the other Transaction Documents;
48
(viii) make or agree to make any political contribution to any
political party or organization or to any Person who is, or has been
publicly identified as, a candidate for any political office; or
(ix) agree or commit to do any of the foregoing.
(c) Notwithstanding anything to the contrary in Section 5.1(a) or (b)
hereof, the Company and each of the Covered Companies may take (or not take, as
the case may be) any of the actions described in Sections 5.1(a) and (b) without
the consent of Purchaser if necessary (i) to prevent imminent, material damage
to a Facility or the property or assets of the Company or a Covered Company,
(ii) to prevent imminent, material harm to individuals providing services for
the Company or a Covered Company, or (iii) to comply with applicable Laws;
provided that in each case Purchaser is notified in writing promptly following
the taking (or failure to take, as the case may be) of any such action.
5.2 Efforts to Consummate Transaction.
(a) Each of the Shareholders (but only with respect to such
Shareholder's obligations under this Agreement), Purchaser and the Company shall
use its commercially reasonable efforts in good faith to take or cause to be
taken all actions, and to do, or cause to be done as promptly as practicable,
all actions necessary, proper or advisable under applicable Law to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement and the other Transaction Documents, including the execution of
documents, instruments or conveyances of any kind that may be reasonably
necessary or advisable to carry out any of the transactions contemplated by the
Transaction Documents. Neither Purchaser shall nor any Affiliate of Purchaser
shall enter into or complete any transaction that would cause the Transaction
(i) to be disapproved under Section 203 of the FPA, (ii) to contravene PUHCA,
PURPA, the FPA or state energy regulatory Laws relating to utilities or utility
holding companies or (iii) to contravene federal or state antitrust Laws.
(b) Each of Purchaser and the Company shall file or supply, or cause to
be filed or supplied as soon as practicable following the execution of this
Agreement, all material applications, notifications and information required to
be filed or supplied by them pursuant to applicable Law in connection with the
transactions contemplated by this Agreement and the other Transaction Documents,
including such applications, notifications and information required to be filed
pursuant to Section 5.2(c).
(c) In furtherance of Section 5.2(b), each Party hereto covenants to:
(i) prepare and file any notification and report form (each, a
"Report") required to be filed by it under the HSR Act with respect to
the consummation of
49
the transactions contemplated by the Transaction Documents, as soon as
practicable following the date of this Agreement;
(ii) cooperate with the other Party to the extent necessary to
assist each other Party in the preparation of its Report;
(iii) make, and cooperate with the other Party in making, any
required filings under Section 203 of the FPA and in providing any
other notifications required to be filed with FERC or any state
regulatory agency regarding the transactions contemplated by the
Transaction Documents;
(iv) cooperate with regard to the Company's application to the
New Jersey Department of Environmental Protection for a letter of
nonapplicability under the New Jersey Industrial Site Recovery Act
("ISRA") and, to the extent that ISRA is determined to be applicable to
the transactions contemplated by the this Agreement and the Transaction
Documents, make, and cooperate with the other Party in making, any
required filings under ISRA; and
(v) subject to Section 5.2(h), contest and resist any action,
claim or suit, whether judicial or administrative and whether brought
derivatively or on behalf of third parties, seeking to have imposed any
Governmental Order (whether temporary, preliminary, or permanent) that
would prevent or materially delay the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents.
(d) Purchaser shall use commercially reasonable efforts to obtain all
Consents, Permits, exemptions and waivers from Governmental Entities and third
Persons required to be obtained by Purchaser and necessary to authorize, approve
or permit the performance by Purchaser of its obligations hereunder and under
the other Transaction Documents, including all such Consents, Permits,
exemptions and waivers set forth in Schedule 4.2(b).
(e) Each of the Shareholders and the Company shall use commercially
reasonable efforts to obtain all Consents, Permits, exemptions and waivers from
Governmental Entities and third Persons required to be obtained by it and
necessary to authorize, approve or permit the performance by each of the
Shareholders and the Company of its obligations hereunder and under the other
Transaction Documents, including all such Consents, Permits, exemptions and
waivers set forth in Schedule 2.3(b).
(f) Each of the Purchaser and the Company and, to the extent necessary,
each of the Shareholders, shall cooperate in good faith with the other in
obtaining all Consents, Permits, exemptions and waivers from Governmental
Entities and third Persons required
50
to be obtained and necessary to authorize, approve or permit the performance by
the Parties of their obligations hereunder and under the other Transaction
Documents, and in providing any other required notifications regarding the
contemplated transactions.
(g) No material amendment or modification shall be made to any Company
Material Contract to obtain any required Consent, Permit, exemption or waiver
without the prior written consent of Purchaser, not to be unreasonably withheld
or delayed, and no consideration (other than the payment of any standard filing
fees), whether such consideration shall consist of the payment of money or shall
take any other form, for any such Consent, Permit, exemption or waiver required,
necessary or advisable for the consummation of the transactions contemplated
hereby and by the other Transaction Documents shall be given or promised by the
Company or any Covered Company and no material expenses shall be incurred with
respect to such Consents, Permits, exemptions or waivers in each case without
the prior written approval of Purchaser and the Company.
(h) Notwithstanding the foregoing, nothing contained herein shall
require any of Purchaser or its Affiliates to (A) defend any lawsuit should it
determine, in its sole discretion, that it is not in its business interest to do
so, (B) sell, transfer, divest or otherwise dispose of any of its business
assets or properties or any of the business or assets of any Covered Company in
connection with this Agreement or any other Transaction Documents or any of the
transactions contemplated hereby or thereby or (C) give or promise any
consideration, whether such consideration shall consist of the payment of money
or shall take any other form, or incur any expenses for any Consent, Permit,
exemption or waiver required, necessary or advisable for the consummation of the
transactions contemplated hereby and by the other Transaction Documents.
(i) Each of the Shareholders, Purchaser and the Company shall provide
to the other copies of all filings made by such Party with any Governmental
Entity and, upon reasonable request, each of Purchaser and the Company shall
provide to the other any other information supplied by such Party to any
Governmental Entity in connection with the performance of this Agreement and the
other Transaction Documents.
(j) The Company acknowledges that Purchaser or its Affiliates may after
the Closing, engage in capital markets financing transactions and that any such
process could necessitate the creation and, after the Closing, dissemination to
potential investors of customary offering materials as well as the filing of one
or more registration statements with the SEC as part of such process or,
following such process, pursuant to customary registration rights arrangements.
Prior to Closing, the Company agrees to, and will cause the Managed Companies
and their representatives to, and will exercise the voting, governance and
contractual powers available to it to cause the Non-Managed Companies and their
representatives to, provide all reasonably necessary support and cooperation in
connection with such transactions, including (i) providing all information,
including financial information, reasonably requested by Purchaser for inclusion
in its offering
51
materials or any related governmental filings and (ii) participating in
meetings, due diligence sessions and helping to prepare offering memoranda and
similar documents provided that any such support and cooperation shall not, in
the Company's reasonable discretion, unreasonably interfere with the conduct of
the business of the Company and the Covered Companies, and any costs of such
support and cooperation will be borne by Purchaser. The Company will, and will
cause the Managed Companies to, and will exercise the voting, governance and
contractual powers available to it to cause the Non-Managed Companies to use
their respective commercially reasonable efforts to cause their accountants to
provide all reasonably necessary support and cooperation in the preparation of
audited financial statements, including (x) consents to the use of the Company's
and the Covered Companies' audited and unaudited financial statements in
relevant offering documents and any related governmental filings, (y) consents
to the use of their name in a customary manner in any such offering materials
and related governmental filings and (z) customary comfort letters in connection
with financial information of the Company and the Covered Companies included in
any such offering materials and related governmental filings; provided that the
cost and expense of any such support and cooperation will be borne by Purchaser.
5.3 Access and Information.
(a) Prior to the Closing, the Company shall permit, shall cause the
Managed Companies to permit, and shall exercise the voting, governance and
contractual powers available to it to cause the Non- Managed Companies to
permit, Purchaser, its Affiliates and their respective employees, counsel,
accountants and other representatives after the date of execution of this
Agreement to (i) have reasonable access, during regular business hours, to the
assets, employees, properties, Books and Records, businesses and operations
relating to the Company and the Covered Companies as Purchaser may reasonably
request, (ii) to inspect and make copies of Books and Records and all other
documents and information, from time to time, reasonably requested by Purchaser,
its Affiliates and their respective employees, counsel, accountants and other
representatives, including financial, tax and operating documents and
information and (iii) without limiting the foregoing, to meet with designated
employees and representatives. Notwithstanding the foregoing, neither Purchaser,
nor any of its Affiliates or representatives, shall conduct any environmental
site assessment, compliance evaluation or investigation with respect to the
Company or any of the Managed Companies without prior consultation with the
Company or such Managed Company and, with respect to any other Covered Company,
without prior approval from such Covered Company, and, in each case, without
ongoing consultation with the Company with respect to any such activity. The
Company shall, shall cause the Managed Companies to, and shall exercise the
voting, governance and contractual powers available to it to cause the Non-
Managed Companies to, provide Purchaser, its Affiliates and their respective
employees, counsel, accountants and other representatives access to all real
property as is reasonably necessary to conduct any assessments, evaluations or
investigation as Purchaser deems necessary or advisable,
52
including a Phase I environmental site assessment, though under no circumstances
shall any subsurface investigation or testing of any environmental media be
conducted. The Company shall, shall cause the Managed Companies to, and shall
exercise the voting, governance and contractual powers available to it to cause
the Non- Managed Companies to, furnish to Purchaser promptly upon its reasonable
request (a) all additional documents and information with respect to the affairs
of the Company and the Covered Companies and (b) access, as Purchaser, its
Affiliates or their respective employees, accountants, counsel and other
representatives may from time to time reasonably request, to the Company's, and
the Covered Companies' and their respective Affiliates' employees, accountants,
counsel and other representatives, and shall instruct such employees,
accountants, counsel and other representatives to cooperate with Purchaser, its
employees, counsel, accountants and other representatives, and to provide such
documents and information as Purchaser, its Affiliates and their respective
employees, counsel, accountants and other representatives may reasonably
request.
(b) All information provided or obtained under Section 5.3(a) shall be
held by Purchaser in accordance with and subject to the terms of the
Confidentiality Agreement, and Purchaser hereby agrees that the provisions of
the Confidentiality Agreement will apply to any properties, Books and Records,
data, documents and other information relating to the Company and the Covered
Companies that is provided to Purchaser or its Affiliates or any of their
employees, counsel, accountants or other representatives pursuant to this
Agreement, in each case subject to Section 5.12.
5.4 Non-Solicitation.
(a) Each of the Shareholders and the Company shall not and, if
applicable, shall cause their respective shareholders, members, managers,
directors, officers, employees, agents, advisors and representatives (including
any investment banker, attorney or accountant retained by the Shareholders or
the Company, as applicable) not to, and the Company shall cause the Managed
Companies and their respective directors, officers, employees, agents, advisors
and representatives (including any investment banker, attorney or accountant
retained by the Managed Companies) not to, and the Company shall exercise the
voting, governance and contractual provisions available to it to cause the
Non-Managed Companies and their respective managers, directors, officers,
employees, agents, advisors and representatives (including any investment
banker, attorney or accountant retained by the Non-Managed Companies) not to,
directly or indirectly, through any agent or otherwise:
(i) enter into, initiate, facilitate, conduct, continue,
solicit or encourage, directly or indirectly, any inquiries or the
making of any proposal or offer (including any proposal or offer to any
Shareholder) with respect to (A) a merger, consolidation, acquisition,
business combination, recapitalization, liquidation, dissolution or
similar transaction involving the Company or any of the
53
Covered Companies, (B) any purchase of any Equity Interests of the
Company or any Equity Interests owned directly or indirectly by the
Company in the Covered Companies or of any business of the Company or
any of the Covered Companies or all or any material portion of the
assets or any material asset of the Company or any of the Covered
Companies or (C) any other business combination transaction involving
the Company or the Covered Companies (any such proposal or offer (other
than specifically permitted by this Agreement), an "Acquisition
Proposal" and any such transaction, a "Proposed Acquisition
Transaction", provided that none of the transactions described on
Schedule 5.4 shall be deemed to be an Acquisition Proposal or a
Proposed Acquisition Transaction); or
(ii) engage in or encourage or respond to any negotiations
concerning, or provide any information or data to, or have any
discussions with, or otherwise cooperate in any other way with any
Person relating to an Acquisition Proposal or a Proposed Acquisition
Transaction, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal or a Proposed Acquisition
Transaction.
(b) Each of the Shareholders and the Company shall and, if applicable,
shall cause their respective shareholders, members, managers, directors,
officers, employees, agents, advisors and representatives (including any
investment banker, attorney or accountant retained by the Shareholders or the
Company, as applicable) to, and the Company shall cause the Managed Companies
and their respective shareholders, members, managers, directors, officers,
employees, agents, advisors and representatives of the Managed Companies
(including any investment banker, attorney or accountant retained by a Managed
Company) to, and the Company shall exercise the voting, governance and
contractual provisions available to it to cause the Non-Managed Companies and
their respective shareholders, members, managers, directors, officers,
employees, agents, advisors and representatives (including any investment
banker, attorney or accountant retained by a Non-Managed Company) to immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any Parties conducted prior to the date of this Agreement with
respect to any Acquisition Proposal or Proposed Acquisition Transaction. Each of
the Shareholders, the Company, the Managed Companies and, to the Company's
knowledge, the Non-Managed Companies and, if applicable, their respective
shareholders, members, managers, directors, officers, employees, agents and
representatives (including any investment banker, attorney or accountant
retained by any of them) are not now engaged in activities, discussions or
negotiations with any Person other than Purchaser with respect to any
Acquisition Proposal or Proposed Acquisition Transaction. Each of the
Shareholders and the Company shall not and, if applicable, shall cause their
respective shareholders, members, managers, directors, officers, employees,
agents, advisors and representatives (including any investment banker, attorney
or accountant retained by the Shareholders, or the Company, as applicable) not
to, and the Company shall cause the Managed Companies
54
and their respective shareholders, members, managers, directors, officers,
employees, agents, advisors and representatives of the Managed Companies
(including any investment banker, attorney or accountant retained by the Managed
Companies) not to and the Company shall exercise the voting governance and
contractual provisions available to it to cause the Non-Managed Companies and
their directors, officers, employees, agents, advisors and representatives
(including any investment banker, attorney or accountant retained by the
Non-Managed Companies) not to release any Person or other third party from, or
amend or waive any provision of, any confidentiality or standstill agreement to
which they (or any of them) are a party.
(c) Before responding to any Acquisition Proposal, which response shall
consist solely of informing such Person of the restrictions contained in this
Section 5.4, each of the Shareholders and the Company shall and, if applicable,
shall cause their respective shareholders, members, managers, directors,
officers, employees, agents, advisors and representatives (including any
investment banker, attorney or accountant retained by the Shareholders or the
Company, as applicable) to, and the Company shall cause the Managed Companies
and their respective shareholders, members, managers, directors, officers,
employees, agents, advisors and representatives of the Managed Companies
(including any investment banker, attorney or accountant retained by the Managed
Companies) to, and shall exercise the voting, governance and contractual
provisions available to it to cause the Non-Managed Companies and their
respective shareholders, members, managers, directors, officers, employees,
agents, advisors and representatives (including any investment banker, lawyer or
accountant retained by the Non-Managed Companies) to, (i) immediately notify
Purchaser if any offer is made, any discussions or negotiations are sought to be
initiated, any inquiry, proposal or contact is made or any information is
requested with respect to any Acquisition Proposal or Proposed Acquisition
Transaction, (ii) promptly provide Purchaser with a copy of any such Acquisition
Proposal or Proposed Acquisition Transaction, if written, or a written summary
(in reasonable detail) of such offer, if not in writing, including the identity
of the prospective buyer or soliciting party and (iii) promptly keep Purchaser
informed of the status of such offer and the offeror's efforts and activities
with respect thereto.
5.5 Contact with Customers and Suppliers, etc.
From the date of execution of this Agreement, Purchaser (and all of
their agents and Affiliates and any of their employees, directors and officers)
may contact and communicate with the customers, suppliers, licensors, partners,
lenders and contractors of the Company or any of the Covered Companies in
connection with the transactions contemplated by this Agreement only with the
prior written consent of the Company, which consent shall not be unreasonably
withheld but which may be conditioned upon an officer or other representative of
the Company being present at any such meeting or other communication.
55
5.6 Publicity.
Except as required by applicable Law or rules or regulations of, or any
listing agreement with, any relevant securities exchange or quotation system,
Purchaser, the Shareholders, the Company and the Managed Companies may not, and
the Company shall exercise the voting, governance and contractual powers
available to it to cause the Non-Managed Companies not to, directly or
indirectly, make or cause any agent or Affiliate of such party to make any
public announcement or issue any notice in respect of this Agreement or the
other Transaction Documents or the transactions contemplated hereby and thereby
without the prior written consent of Purchaser (in the case of any such
announcement or notice by the Shareholders, the Company or any Covered Company)
or the Company (in the case of any such announcement or notice by Purchaser),
which consent will not be unreasonably withheld or delayed; provided that to the
extent any such announcement or notice is so required by applicable Law or rules
or regulations of, or any listing agreement with, any relevant securities
exchange or quotation system, prior to making such announcement or issuing such
notice, the party intending to make such announcement or issue such notice shall
use commercially reasonable efforts consistent with such applicable Law or stock
exchange or quotation system rules or regulations or listing agreement to
consult and discuss in good faith with Purchaser (in the case of any such
announcement or notice by the Shareholders, the Company or a Covered Company) or
the Company (in the case of any such announcement or notice by Purchaser) with
respect to the form and content thereof prior to its release and incorporate any
reasonable changes which are suggested by such party or parties prior to
issuing, releasing or making the announcement or notice.
5.7 Employee Matters.
(a) From and after the Closing Date, Purchaser shall cause the Company
(and any successor in interest to the Company) to honor, pay, perform and
satisfy any and all liabilities, obligations and responsibilities to or in
respect of each of the employees of the Company and its Subsidiaries (the
"Employees"), former Employees or directors of the Company and its Subsidiaries
under the terms of any Company Plan, in each case, as in effect immediately
prior to the Closing, subject to Purchaser's rights to amend or terminate any
such Company Plan in accordance with its terms.
(b) Purchaser will cause each employee benefit plan of Purchaser or any
of its Subsidiaries in which Employees are (or become) eligible to participate
to (i) take into account for purposes of eligibility and vesting thereunder the
service of such Employees with the Company as if such service were with
Purchaser or any of its Subsidiaries, to the same extent that such service was
credited under a comparable plan of the Company and (ii) with respect to any
such medical or dental plan, to the extent permitted under the plan, (A) waive
any pre-existing condition or eligibility limitations (to the extent such
condition or limitation was covered under similar plans maintained by the
Company as of
56
the date hereof) and (B) give effect, in determining any deductible and maximum
out-of-pocket limitations, to claims incurred and amounts paid by, and amounts
reimbursed to, such Employees during such plan year under similar plans
maintained by the Company immediately prior to the Closing Date.
(c) The Parties acknowledge and agree that Purchaser reserves the right
to determine, through its standard screening, and employment processes, which
employees and/or contingent workers (including consultants, independent
contractors and temporary workers) of the Company and its Subsidiaries shall be
retained by the Company and its Subsidiaries following the Closing Date. Such
processes may include pre- and post-Closing background, reference, credit,
criminal, education and other checks, as well as a drug screening procedure;
provided, however, that neither the Company, nor any of its Subsidiaries or
Employees shall be required to provide Purchaser with any information or submit
to any testing prior to the Closing, except to the extent permitted under and
consistent with applicable Law and the Company's policies and practices as in
effect as of the date hereof.
5.8 Executive Amendment Agreements.
In addition to any limitations set forth in Section 5.1(b)(vi), except
as may otherwise be consented to in writing in advance by Purchaser, from the
date of this Agreement to the Closing the Company shall not amend, modify or
supersede any of the Executive Amendment Agreements.
5.9 Insurance.
The Company shall use its commercially reasonable efforts to obtain,
prior to the Closing Date, an insurance policy or insurance policies ("ReUse
Insurance Policies") covering claims relating to, or pursuant to, any
Environmental Law arising out of the Company's ownership or operation of, or
relating to any potential Liability pursuant to any Environmental Law for any
action or omission taken by, ReUse Technology, Inc. prior to the disposition of
the assets of ReUse Technology, Inc. as contemplated in Section 7.2(c). Any such
ReUse Insurance Policy (i) shall name Purchaser as an additional insured, (ii)
shall have a term of 10 years (except for a term of 5 years for product
liability coverage), minimum coverage of $25 million, and a maximum deductible
of $250,000 (except for the Swift Creek site which by policy endorsement will be
$1,000,000), and (iii) must be (x) issued by a carrier, (y) in a form, and (z)
subject only to conditions that are, in each case, reasonably acceptable to
Purchaser and that receive Purchaser's written consent, which consent shall not
be unreasonably withheld or delayed. All policy premiums for such ReUse
Insurance Policies must be paid prior to the Closing Date.
57
5.10 Company Expenses Certificate.
No later than two business days before the Closing Date, the Company
shall deliver to Purchaser a certificate of the Company signed by a duly
authorized officer of the Company, certifying as to the total amount of the
Company Expenses paid by the Company, directly or indirectly, at or prior to the
Closing Date and the total amount of Company Expenses payable by the Company,
directly or indirectly, after the Closing Date (the "Company Expenses
Certificate") along with such supporting documentation as reasonably may be
required by Purchaser.
5.11 Indemnification of Directors and Officers.
(a) For the six year period following the date of Closing, Purchaser
shall cause the Company not to amend or otherwise modify the provisions of its
Organizational Documents in effect on the date of this Agreement with respect to
indemnification and exculpation of present and former directors and officers of
the Company for all losses, claims, damages, expenses or liabilities arising out
of actions or omissions or alleged actions or omissions occurring at or prior to
the Closing; provided that, notwithstanding the foregoing, except with respect
to indemnity obligations that are mandatory under the NCBCA, the Organizational
Documents or otherwise, the Company shall not be required to indemnify any
individual present or former director or officer in an amount in excess of the
sum of (a) $25 million and (b) any additional amount that is actually recovered
by the Company under the insurance coverage described in Section 5.11(b).
(b) For not less than six years after the Closing, Purchaser shall use
its commercially reasonable efforts to maintain in effect directors' and
officers' liability insurance covering the current and former officers,
directors and employees of the Company and its Subsidiaries who are currently
covered by the Company's existing directors' and officers' liability insurance,
on terms and conditions no less favorable in any material respect to such
directors and officers than those in effect on the date of this Agreement.
5.12 Confidential Information.
(a) From and after the Closing Date, each of the Shareholders shall,
and shall cause their respective controlled Affiliates and representatives to
(i) maintain in confidence any and all confidential information concerning the
Company and any Covered Companies and (ii) refrain from using any and all such
information for its own benefit or to compete with or otherwise to the detriment
of Purchaser, the Company, any of the Covered Companies or any of their
Affiliates. It is understood that no Shareholder shall have any Liability
hereunder with respect to information that (i) is in or, through no
58
fault of such Shareholder or any of its Affiliates or representatives, comes
into the public domain or (ii) the Shareholder is required by any Governmental
Entities to disclose.
(b) In the event that a Shareholder or any of its controlled Affiliates
or representatives is required by any Governmental Entities to disclose any such
information, such Shareholder shall promptly notify Purchaser in writing so that
Purchaser may seek a protective order and/or other motion to prevent or limit
the production or disclosure of such information. If such motion has been
denied, then the Person required to disclose such information may disclose only
such portion of such information which, based on advice of such Person's legal
counsel, is required by applicable Law to be disclosed (provided that the Person
required to disclose such information shall use all commercially reasonable
efforts to preserve the confidentiality of the remainder of such information).
Each Shareholder shall continue to be bound by such Shareholder's obligations
pursuant to this Section 5.12 for any information that is not required to be
disclosed, or that has been afforded protective treatment, pursuant to such
motion.
(c) Notwithstanding anything to the contrary set forth herein or in any
other written or oral understanding or agreement to which the Parties are
parties or by which they are bound (including the Confidentiality Agreement),
each Party authorizes each other Party (and the employees, representatives, and
other agents of each other Party) to disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transactions
contemplated by this Agreement and the other Transaction Documents, and all
materials (including tax opinions and other tax analyses) provided to such other
Party by such authorizing Party (and its employees, representatives, and other
agents); provided that nothing herein shall be construed as a waiver of any
applicable attorney-client privilege or privilege in respect of a confidential
communication with a federally authorized tax practitioner under Section 7525 of
the Code, or as requiring any Person to waive such a privilege. For this
purpose, "tax treatment" means U.S. federal income tax treatment, and "tax
structure" is limited to any facts that may be relevant to that treatment.
5.13 Certain Notices.
(a) Between the date hereof and the Closing Date, each of the
Shareholders (but only with respect to such Shareholder's obligations under this
Agreement) and the Company shall promptly notify Purchaser of the following
matters it has knowledge of: (i) the occurrence or non-occurrence of any fact or
event that would reasonably be likely (x) to cause any representation or
warranty of the Company or any Shareholder contained in this Agreement or any
other Transaction Document to be untrue or inaccurate in any material respect or
(y) to cause any covenant or condition of the Company or the Shareholders
contained in this Agreement or any other Transaction Document not to be complied
with or satisfied in any material respect; (ii) any failure of the Company or
any
59
Shareholder to comply with or satisfy any covenant or condition to be complied
with or satisfied by such party or parties hereunder or under any other
Transaction Document in any material respect; (iii) any notice or other
communication from any Person alleging that the Consent or approval of such
Person is or may be required in connection with the transactions contemplated by
this Agreement or the other Transaction Documents or that such transactions
otherwise may violate the rights of or confer remedies upon such Person; (iv)
any notice or other communication from any Governmental Entity in connection
with the transactions contemplated by this Agreement or the other Transaction
Documents; and (v) any actions commenced relating to the Shareholders, Purchaser
or any of its Affiliates, the Company or any Covered Company that, if pending on
the date of this Agreement, would have been required to have been disclosed to
Purchaser pursuant to this Agreement. Notwithstanding the foregoing, such
notices shall not be deemed to cure, or to relieve the Shareholders or their
Affiliates from any liability or obligation with respect to, any breach of or
failure to satisfy any representation, warranty, covenant, condition or
agreement made hereunder or under any other Transaction Document. The Company
shall furnish to Purchaser copies of all reports filed by the Company with the
SEC on or after the date hereof.
(b) Between the date hereof and the Closing Date, Purchaser will
promptly notify the Company in writing of the following matters it has knowledge
of: (i) the occurrence or non-occurrence of any fact or event that would
reasonably be likely (x) to cause any representation or warranty of Purchaser
contained in this Agreement or any other Transaction Document to be untrue or
inaccurate in any material respect or (y) to cause any covenant or condition of
Purchaser contained in this Agreement or any other Transaction Document not to
be complied with or satisfied in any material respect; (ii) any failure of
Purchaser to comply with or satisfy any covenant or condition to be complied
with or satisfied by such party or parties hereunder or under any other
Transaction Document in any material respect; (iii) any notice or other
communication from any Person alleging that the Consent or approval of such
Person is or may be required in connection with the transactions contemplated by
this Agreement or the other Transaction Documents or that such transactions
otherwise may violate the rights of or confer remedies upon such Person; and
(iv) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement or the other
Transaction Documents. Notwithstanding the foregoing, such notices shall not be
deemed to cure, or to relieve Purchaser from any liability or obligation with
respect to, any breach of or failure to satisfy any representation, warranty,
covenant, condition or agreement made hereunder or under any other Transaction
Document as of the date hereof.
5.14 Further Assurances.
The Company, each Shareholder (but only with respect to such
Shareholder's own obligations) and Purchaser each agree that from time to time
before and after the Closing
60
Date, they will execute and deliver, or cause the Managed Companies to execute
and deliver, or use their commercially reasonable efforts to cause their
respective Affiliates (including the other Covered Companies) to execute and
deliver such further instruments, and take, or cause their respective
Affiliates, including the Covered Companies, to take such other action, as may
be reasonably necessary to carry out the purposes and intents of this Agreement
and the other Transaction Documents.
5.15 Financial Statements.
Until the Closing Date, as soon as practicable after the end of each
month but in no event later than 25 days following the end of each month, the
Company shall provide Purchaser with Interim Financial Statements relating to
the most recent month. Such Interim Financial Statements shall, (a) be in
accordance with the respective Books and Records of the Company and each of its
Subsidiaries (as applicable), (b) be prepared in accordance with GAAP,
consistently applied throughout the periods covered thereby, except for any
footnotes and year-end adjustments related thereto, and (c) present fairly in
accordance with GAAP the assets, liabilities (including all reserves) and
financial condition of the Company and each of the Managed Companies as of the
respective dates thereof. "Interim Financial Statements" shall mean any
operating and financial reports prepared by the Company and the Managed
Companies and any operating and financial reports, to the extent made available
to the Company, prepared by the Non-Managed Companies, in each case, for each
month beginning with September 2003.
5.16 Release.
For and in consideration of the amounts payable to each Shareholder and
the release from the Company under this Agreement, effective as of the Closing
Date, each Shareholder and its controlled Affiliates (other than the Company and
the Covered Companies), solely in such Shareholder's capacity as a Shareholder
and not such Shareholder's capacity as a present or former officer, director or
employee of the Company and its Subsidiaries, hereby waives, releases, and
forever discharges each of Purchaser, the Company and the Covered Companies,
each of their present and former officers, directors, attorneys, agents,
representatives, trustees, Affiliates, Subsidiaries and employees and each of
their respective heirs, executors, administrators, successors and assigns, of
and from any and all claims, demands, rights, damages, debts, dues, sums of
money, accounts, costs, expenses, responsibilities, covenants, contracts,
controversies and agreements whatsoever, whether known or unknown, of every name
and nature, both in law and in equity, which each Shareholder, solely in such
Shareholder's capacity as a Shareholder, or such Shareholder's successors and
assigns ever had, now have, or which they or their successors or assigns
hereafter may have or shall have against Purchaser, the Company and any of the
Covered Companies or any other Person referred to above arising out of any
matters, causes, acts, conduct, claims, circumstances or events arising or
occurring on or prior to the Closing, including with respect to the Transaction
61
("Claims"); provided that nothing in this Section 5.16 shall release any Person
from Claims related to or arising out of such Person's indemnity obligations
under Article VIII or out of any breach of this Agreement and the other
Transaction Documents by Purchaser or its Affiliates. For and in consideration
of the foregoing release, the Company hereby waives, releases, and forever
discharges each Shareholder, solely in such Shareholder's capacity as a
Shareholder and not such Shareholder's capacity as a present or former officer,
director or employee of the Company and its Subsidiaries, and each of their
respective heirs, executors, administrators, successors and assigns, of and from
any and all claims, demands, rights, damages, debts, dues, sums of money,
accounts, costs, expenses, responsibilities, covenants, contracts, controversies
and agreements whatsoever, whether known or unknown, of every name and nature,
both in law and in equity, which the Company or its successors and assigns ever
had, now have, or which they or their successors or assigns hereafter may have
or shall have against such Shareholder arising out of any matters, causes, acts,
conduct, claims, circumstances or events arising or occurring on or prior to the
Closing, including with respect to the Transaction ("Shareholder Claims");
provided that nothing in this Section 5.16 shall release any Shareholder from
Shareholder Claims related to or arising out of Claims related to or arising out
of such person's indemnity obligations under Article VIII or out of any breach
of this Agreement and the other Transaction Documents by such Shareholder, or
from any obligation to repay any indebtedness for money borrowed owing to the
Company by such Shareholder.
5.17 Consent Solicitation; Form 15.
(a) If requested by Purchaser, the Company shall commence, as promptly
as practicable after the date of such request, a consent solicitation of the
holders of the Senior Notes and/or the holders of bonds of LS Power for the
purpose of amending the indenture relating thereto, effective only upon Closing,
to permit the Company to amend, modify, delete or add certain covenants or other
provisions to such indenture with such terms and conditions as determined by
Purchaser. After affording the Company a reasonable opportunity to review and
comment on the consent solicitation statement and all documents relating thereto
(including amendments or supplements) and approve (such approval not to be
unreasonably withheld or delayed) the consent solicitation statement and all
documents relating thereto (including amendments or supplements) solely for the
purpose of protecting the Company against liability, Purchaser shall instruct
the Company to, and the Company shall, distribute the consent solicitation
statement and all other necessary documents to the holders of the Senior Notes
and/or bonds of LS Power, including any amendments or supplements thereto
(collectively, the "Consent Documents"). The Purchaser and the Company shall use
commercially reasonable efforts to consummate the consent solicitation, subject
to the terms and conditions thereof.
(b) Without the prior consent of Purchaser, the Company shall not make
any amendments to the Consent Documents. The consent solicitation shall remain
open until
62
the date that is 10 business days after the commencement of the consent
solicitation, unless Purchaser shall have elected to extend the period of time
for which the consent solicitation is open pursuant to, and in accordance with,
the terms of the indenture relating to the Senior Notes or as may be required by
applicable Law, provided that (i) any amendment, modifications, deletions or
additions to the indenture shall not become operative until immediately after
the Closing and (ii) the Purchaser may elect to terminate the consent
solicitation at any time.
(c) Each of Purchaser and the Company agree, as to itself and its
Affiliates, that none of the information supplied or to be supplied by it or its
Affiliates for inclusion or incorporation by reference in the Consent Documents,
on the date the Consent Documents are first mailed to holders of the Senior
Notes or at the expiration of the consent solicitation, will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of Purchaser
and the Company and their respective Affiliates agree promptly to correct any
information provided by any of them for use in the Consent Documents if and to
the extent that it shall have become false or misleading, and the Company
further agrees to take all steps necessary to cause the Consent Documents as so
corrected to be disseminated to the holders of the Senior Notes, in each case as
and to the extent required by applicable federal securities laws and the
indenture relating to the Senior Notes.
(d) To the extent the Company is permitted under the Senior Notes, the
relevant governing instruments and other contracts of the Company's
Subsidiaries, and the rules and regulations under the Exchange Act, the Company
shall, and shall cause LS Power to, at the election of Purchaser, (i) promptly
upon request file with the SEC a Form 15 pursuant to Section 15(d) and Rule
15d-6 or Rule 12h-3 of the Exchange Act and (ii) take such other action in
connection therewith to suspend the Company's and LS Power's obligation to file
Company SEC Filings under the Exchange Act. The Company shall consult with
Purchaser concerning all aspects of the Form 15 filing process and shall act as
reasonably instructed by Purchaser with respect to the filing and such
subsequent actions.
(e) All out-of-pocket costs and expenses of conducting the consent
solicitation, including preparation of the Consent Documents and consent fees,
and preparing and filing the Form 15 will be borne by Purchaser. The Company
shall enter into a customary solicitation agency agreement with Xxxxxxx, Xxxxx &
Co., which shall include a customary indemnity for Xxxxxxx, Sachs & Co. (and
related Persons customarily covered) for liability arising out of the consent
solicitation.
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5.18 Estoppels.
The Company shall use commercially reasonable efforts (it being
understood that such efforts shall not require the payment of any consideration
or any offer or grant of any financial accommodation) to obtain estoppels, in
form and substance reasonably satisfactory to Purchaser, from each ground lessor
of any Leased Real Property set forth on Schedule 5.18.
5.19 Custody Agreement.
The Shareholders and Purchaser shall deliver a joint written
instruction to the custodian pursuant to the Custody Agreement upon satisfaction
or waiver of the conditions contained in Article VII hereof, which joint written
instruction shall direct the custodian to deliver the shares of Company Common
Stock to Purchaser at the Closing. Immediately upon termination of this
Agreement in accordance with Section 9.1, the Shareholders and Purchaser shall
deliver a joint written instruction to the Custodian pursuant to the Custody
Agreement, which joint written instruction shall direct the Custodian to deliver
the shares of Company Common Stock to the Shareholders.
5.20 QF Certification.
With respect to each QF Facility listed on Schedule 5.20 (other than
the Facility located in Indiantown, Florida), the Company shall promptly prepare
and file (and shall exercise the voting, governance and contractual powers
available to it to cause the Facility located at Indiantown, Florida, to
promptly prepare and file) within thirty (30) days of the date hereof, a notice
of self-certification of QF status under 18 C.F.R. ss. 292.207(a). The notice of
self-certification shall be based on the QF Facility's most recent
configuration, the proposed ownership of the QF Facility by the Purchaser as of
the Closing Date, and shall otherwise be in form and substance reasonably
satisfactory to Purchaser.
ARTICLE VI
ADDITIONAL COVENANTS OF THE SHAREHOLDERS
6.1 Voting of Company Common Stock.
At any meeting of Shareholders of the Company or at any adjournment
thereof or in any other circumstances upon which the Shareholders' vote, consent
or other approval is sought, each Shareholder shall vote (or cause to be voted)
or otherwise take action with respect to its shares of Company Common Stock
against (i) any Acquisition Proposal or any other extraordinary corporate
transaction, (ii) any change in the persons who constitute the Company's Board
of Directors (other than with respect to a vacancy created on the Company's
Board of Directors due to the death, incapacitation or
64
resignation of a director; provided that in such event such Shareholder shall
not vote (or cause to be voted) its shares of Company Common Stock to elect any
director, officer, employee, agent, advisor or representative of any
organization listed on Schedule 6.1), (iii) any change in the Company's
authorized capital stock, (iv) any amendment of the Company's Organizational
Documents or other proposal, transaction or action involving the Company or the
Managed Companies, which amendment or other proposal, transaction or action is
intended, or would reasonably be expected to impede, frustrate, interfere with,
prevent, nullify or materially impair the Transaction, this Agreement, or any of
the other transactions contemplated by this Agreement or (v) any change in the
voting rights of the Company Common Stock. Each Shareholder shall not enter into
any agreement inconsistent with the foregoing.
6.2 Transfers of Company Common Stock; Custody.
Except as set forth on Schedule 6.2, each Shareholder shall not, except
as contemplated in Schedule 6.2, prior to the earlier of (i) the Closing Date
and (ii) the termination of this Agreement in accordance with its terms, (x)
sell, transfer, give, pledge, assign or otherwise dispose of (collectively,
"Transfer"), or consent to any Transfer of, any or all of such Shareholder's
Company Common Stock or any interest therein or enter into any contract, option
or other arrangement (including any profit sharing arrangement), written or
oral, with respect to the Transfer of, the Company Common Stock to any Person
other than pursuant to the terms of the Transaction or (y) deposit the Company
Common Stock in a voting trust or enter into any voting arrangement, whether by
proxy, power of attorney, voting agreement or otherwise, with respect to the
Company Common Stock (except for any voting trust or voting arrangement
established by the Shareholders for the purpose of consummating the Transaction;
provided that any power of attorney entered into by a Shareholder solely
authorizes the attorney-in-fact to consummate the Transaction and requires the
attorney-in-fact to make an undertaking to comply with the terms hereof) or (z)
agree or commit to take any of the foregoing actions. At all times from the date
hereof until the Closing, the stock certificates representing the shares of
Company Common Stock held by the Shareholders shall be placed with an
independent third party pursuant to the Custody Agreement. If a Shareholder
requests a Transfer of the Shareholder's Company Common Stock to a permitted
transferee listed and meeting the qualifications set forth in Schedule 6.2, the
Shareholders and Purchaser shall deliver a joint written instruction to the
Custodian as necessary to effect such Transfer (including with respect to the
exchange of certificates), provided that replacement certificates representing
such Company Common Stock (owned as applicable by the Transferring Shareholder
or the permitted transferee) shall remain in the custody of the Custodian unless
and until delivered pursuant to Section 5.19.
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6.3 Certain Events.
Each Shareholder agrees that this Agreement and the obligations
hereunder shall attach to such Shareholder's Company Common Stock and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Company Common Stock shall pass, whether by operation of law or otherwise,
including such Shareholder's heirs, guardians, administrators or successors.
6.4 Additional Shares.
Without limiting the provisions hereof, in the event (i) of any stock
dividend, stock split, recapitalization, reclassification, combination or
exchange of shares of capital stock of the Company on, of or affecting the
Company Common Stock or (ii) a Shareholder becomes the record owner of any
additional shares of Company Common Stock or other Equity Interests entitling
the holder thereof to vote or give consent with respect to the matters set forth
in this Article VI, then the terms of this Article VI shall apply to the shares
of Company Common Stock or other Equity Interests of the Company held by such
Shareholder immediately following the effectiveness of the events described in
clause (i) of this Section 6.4 or such Shareholder becoming the record owner
thereof, as described in clause (ii) of this Section 6.4, as though they were
shares of Company Common Stock hereunder. Each Shareholder hereby agrees to
promptly notify Purchaser of the number of any new shares of Company Common
Stock or other Equity Interests of the Company acquired by such Shareholder, if
any, after the date hereof, and immediately deposit those shares with the
custodian under the Custody Agreement.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to the Obligations of the Parties.
The obligations of the Parties to consummate the Transaction and the
other transactions contemplated by this Agreement shall be subject to the
satisfaction or waiver (to the extent permitted by Law) by Purchaser and the
Shareholders, on or prior to the Closing Date, of each of the following
conditions precedent:
(a) HSR Act. The waiting period required by the HSR Act applicable to
the consummation of the transactions contemplated by this Agreement shall have
expired or been terminated by the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice and there shall not have
been issued and be in effect any order, decree or judgment of or in any court or
tribunal of competent jurisdiction which makes the consummation of the
transactions contemplated by this Agreement illegal.
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(b) FPA Orders. Orders under Section 203 of the FPA shall have been
issued in a form reasonably acceptable to each of Purchaser and the Company by
FERC in connection with this Agreement and the transactions contemplated by this
Agreement with respect to each of the applications filed by the project
companies listed on Schedule 7.1(b).
(c) No Injunction. No preliminary or permanent injunction, temporary
restraining order or other decree of any Governmental Entity and no applicable
Law shall exist that enjoins, prohibits or restrains the consummation of the
transactions contemplated by this Agreement and the other Transaction Documents.
7.2 Conditions to the Obligation of Purchaser.
The obligation of Purchaser to consummate the Transaction and the other
transactions contemplated hereby shall be subject to the satisfaction or waiver
by Purchaser on or prior to the Closing Date of each of the following
conditions:
(a) Representations, Warranties and Covenants. Each of the
representations and warranties of the Company contained in Article II hereof and
in the other Transaction Documents and each of the representations and
warranties of the Shareholders contained in Article III hereof and in the other
Transaction Documents, disregarding all qualifications and exceptions contained
in such representations and warranties relating to knowledge, materiality or
Material Adverse Effect (and, accordingly, all references in such
representations and warranties to "material," "Material Adverse Effect," "in all
material respects," "knowledge," and similar terms and phrases (including
references to the dollar thresholds therein) shall be deemed to be deleted
therefrom), shall be true and correct as of the date of this Agreement and as of
the Closing Date with the same effect as though made on and as of the date of
this Agreement and the Closing Date (except to the extent that any such
representation or warranty relates to a specified date in which case such
representation or warranty shall be true and correct as of such date), except
where the untruth or incorrectness of such representations and warranties has
not had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company; each of the covenants and
agreements of the Company and of the Shareholders to be performed on or prior to
the Closing Date shall have been duly performed in all material respects; and
Purchaser shall have received at the Closing certificates certifying as to the
fulfillment of the foregoing dated as of the Closing Date and executed on behalf
of (i) the Company by its President or a Vice President with respect to the
Company's representations, warranties and covenants and (ii) the Shareholders by
their authorized representative with respect to the Shareholders'
representations, warranties and covenants.
(b) Material Adverse Effect. No event, change, development, condition
or circumstance shall have occurred since the date hereof that, individually or
in the
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aggregate, has had or would reasonably be expected to have a Material Adverse
Effect on the Company.
(c) Disposition of Assets of ReUse Technology, Inc. ReUse Technology,
Inc. shall have disposed of all or substantially all of the assets and assumed
liabilities related to its business pursuant to an asset purchase agreement
substantially in the form attached hereto as Exhibit 7.2(c) and the Company
shall have delivered to Purchaser executed policies of insurance covering the
matters described in Section 5.9, and such policies shall be in full force and
effect.
(d) Transaction Documents. Each of the Company, the Covered Companies
and the Shareholders, as applicable, shall have executed and delivered to
Purchaser and the other parties thereto each of the Transaction Documents
required to be executed and delivered by the Company, the Covered Companies and
the Shareholders, as applicable, on or prior to the Closing hereunder.
(e) No Action. On the Closing Date, no action, suit or proceeding by,
or before, any Governmental Entity of competent jurisdiction (excluding any such
matter initiated by Purchaser or any of its Affiliates) shall be pending or
threatened in writing seeking to (A) enjoin, prohibit or restrain the
consummation of the Transaction or the other transactions contemplated by the
Transaction Documents or recover damages (and that is reasonably likely to
result in material damages) from Purchaser, any Affiliate of Purchaser, the
Company or the Covered Companies with respect thereto or (B) require Purchaser
to dispose of or hold separately any Equity Interests or assets of the Company
or any of the Covered Companies.
(f) Opinions of Counsel. Purchaser shall have received the opinion of
counsel to the Company containing substantially the matters set forth on Exhibit
7.2(f)(i), an opinion from Xxx Xxxx Xxxxxxx containing substantially the matters
set forth on Exhibit 7.2(f)(ii) and an opinion of Xxxxx & Xxx Xxxxx PLLC
containing substantially the matters set forth on Exhibit 7.2(f)(iii), each such
opinion shall be in form and substance reasonably satisfactory to Purchaser.
(g) Consents. All Consents, licenses, Permits, or expirations of
waiting periods imposed by, any Governmental Entity set forth on Schedule 7.2(g)
shall have been obtained, made or filed or shall have occurred, in each case,
without the imposition of conditions, the requirement of divestiture of assets
or property or the requirement of expenditure of money by Purchaser or the
Company to a third party (other than filing and similar fees required to be paid
to a Governmental Entity) in exchange for any such Consent, approval, license,
Permit, order, authorization, registration, declaration, filing or expiration of
waiting periods.
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(h) Third Party Consents. The Company and the Covered Companies shall
have obtained all Consents from third parties set forth on Schedule 7.2(h).
(i) Resignations. Purchaser shall have received resignations, effective
as of the Closing, of each director of the Company and each of its Subsidiaries.
(j) Physical Deliveries. Purchaser shall have received:
(i) a certificate executed by the Secretary of the Company,
certifying as of the Closing a true and correct copy of the
organizational documents and all amendments thereto, of the Company;
(ii) a certificate of the Secretary of State of the state of
North Carolina certifying the good standing of the Company;
(iii) from each Shareholder an Internal Revenue Service Form
W-9 and certification of domestic status described in section
1.1445-5(b)(3)(ii)(D) of the Treasury Regulations;
(iv) the Company Expenses Certificate;
(v) all of the certificates for the Company Common Stock as
contemplated in Section 1.4(a) and the Custody Agreement; and
(vi) other documents and certificates required to be delivered
to Purchaser pursuant to the terms of this Agreement or the other
Transaction Documents.
(k) Estoppels. Purchaser shall have received estoppels, in form and
substance reasonably satisfactory to Purchaser, from any ground lessor of a
Facility located in Richmond, Virginia; provided that such ground lessors are
required to deliver estoppels by the terms of the relevant ground lease; and
provided further that any such estoppel shall be deemed acceptable by Purchaser
if it is in the form required in the applicable ground lease.
(l) QF Facility Certification. With respect to any QF Facility listed
on Schedule 5.20 that is a Managed Company, Purchaser shall have received a
copy, in form and substance reasonably satisfactory to Purchaser, of all such
notices of self-certification as filed with FERC.
(m) Casualty Loss. None of the Facilities located in (i) Birchwood,
Virginia, (ii) Logan, New Jersey (iii) Richmond, Virginia, (iv) Rocky Mount,
North Carolina or (v) Indiantown, Florida, or the respective properties and
assets thereof, shall have suffered
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any damage by fire or other casualty that would reasonably be expected to
require expenditures of $25,000,000 or more to repair or replace.
7.3 Conditions to the Obligation of Shareholders.
The obligation of the Shareholders to consummate the Transaction and
the other transactions contemplated by this Agreement shall be subject to the
satisfaction or waiver by the Shareholders on or prior to the Closing Date of
each of the following conditions:
(a) Representations, Warranties and Covenants. Each of the
representations and warranties of Purchaser contained in Article IV hereof and
in the other Transaction Documents disregarding all qualifications and
exceptions contained in such representations and warranties relating to
knowledge, materiality or Material Adverse Effect (and, accordingly, all
references in such representations and warranties to "material," "Material
Adverse Effect," "in all material respects," "knowledge," and similar terms and
phrases (including references to the dollar thresholds therein) shall be deemed
to be deleted therefrom), shall be true and correct as of the date of this
Agreement and as of the Closing Date with the same effect as though made on and
as of the date of this Agreement and on the Closing Date (except to the extent
that any such representation or warranty relates to a specified date, in which
case such representation or warranty shall be true and correct as of such date),
except where the untruth or incorrectness of such representations and warranties
has not had and would not reasonably be expected to have a Material Adverse
Effect on Purchaser; each of the covenants and agreements of Purchaser to be
performed on or prior to the Closing Date shall have been duly performed in all
material respects in accordance with this Agreement and the other Transaction
Documents; and the Company shall have received at the Closing certificates
certifying as to the fulfillment of the foregoing dated as of the Closing Date
and executed on behalf of Purchaser by its President or a Vice President.
(b) Transaction Documents. Purchaser and, if applicable, Purchaser
Guarantor shall have executed and delivered to the Company, the Shareholders,
and the other parties thereto each of the Transaction Documents required to be
executed and delivered by Purchaser and, if applicable, Purchaser Guarantor, on
or prior to the Closing hereunder.
(c) Other Documents. The Company shall have received all other
documents and certificates required to be delivered to the Company pursuant to
the terms of this Agreement or the other Transaction Documents.
(d) Opinion of Counsel. The Company shall have received the opinion of
Xxxxxx & Xxxxxxx LLP containing substantially the matters set forth on Exhibit
7.3(d).
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ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
8.1 Survival of Representations and Warranties, Covenants and
Agreements.
(a) Notwithstanding anything in this Agreement to the contrary, all of
the representations and warranties made in the Transaction Documents (other than
as provided in this Section 8.1) shall terminate and expire at the time of the
Closing; provided that the representations and warranties in Sections 2.2 (other
than Section 2.2(f)(iii) and any other representation or warranty in Section 2.2
that relates to the ownership of Equity Interests by any Person other than the
Company or any Covered Company or any agreement or arrangement entered into by
any Person other than the Company or any Covered Company) (Capitalization) and
3.5 (The Company Common Stock) (the "Surviving Representations") shall survive
the Closing indefinitely.
(b) Notwithstanding anything in this Agreement to the contrary, all
covenants and agreements in the Transaction Documents (other than the Purchaser
Employee Guaranty or as provided in this Section 8.1(b)) shall terminate and
expire immediately upon Closing; provided that (i) the covenants and agreements
in Sections 5.1(a)(v), (a)(vii), (a)(viii), (a)(ix), (a)(x), (a)(xi) and Section
5.1(b) (except Section 5.1(b)(v), Section 5.1(b)(viii) and Section 5.1(b)(ix)
(but only as it applies to Section 5.1(b)(v) and Section 5.1(b)(viii))) (the
"Surviving Conduct of Business Covenants") shall survive the Closing for one
year and then expire, (ii) the covenants and agreements in the Transaction
Documents (other than those described in clause (i) above) which by their terms
are to be performed by the Purchaser or the Shareholders after the Closing
(together with the Surviving Conduct of Business Covenants, the "Surviving
Covenants") shall survive until the expiration of all applicable statutes of
limitation with respect to the matters covered thereby and (iii) the covenants
and agreements in Section 5.1(b)(v) shall survive the Closing for one year and
then expire.
8.2 Indemnification by the Shareholders.
(a) Following the Closing, the Shareholders shall severally, in
proportion to each Shareholder's Percentage Share (but not jointly) indemnify,
defend and hold harmless Purchaser and each Subsidiary and Affiliate of
Purchaser (including the Covered Companies but excluding any Person who owns
Equity Interests in any Covered Company other than the Purchaser, the Company or
any Covered Company) and their respective permitted assigns and their respective
officers, directors, partners, shareholders (except any Person who owns Equity
Interests in any Covered Company other than the Purchaser, the Company or any
Covered Company), employees and agents (collectively, the "Purchaser Indemnified
Group") from and against any and all obligations, losses, Liabilities, claims,
costs, interest, awards, judgments, penalties and damages (including reasonable
expenses of investigation and reasonable attorney's fees and expenses in
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connection with any action, suit or proceeding) (collectively, "Damages")
incurred or suffered by any member of the Purchaser Indemnified Group based upon
or arising out of or in connection with or related to (i) any breach or
inaccuracy of the Surviving Representations or the Surviving Covenants of the
Company, (ii) the Company Expenses to the extent the actual amount thereof
incurred by the Company and the Covered Companies exceeds the aggregate amount
of Company Expenses set forth on the Company Expenses Certificate or (iii) any
Liability with respect to Swift Creek that is incurred or suffered by any member
of the Purchaser Indemnified Group that would have been covered by the ReUse
Insurance Policies but for the policy endorsement providing for a $1,000,000 (as
opposed to a $250,000) deductible in respect of Swift Creek.
(b) (i) Following the Closing, each Shareholder shall indemnify, defend
and hold harmless each member of the Purchaser Indemnified Group from and
against any and all Damages incurred or suffered by such member of the Purchaser
Indemnified Group based upon or arising out of or in connection with or related
to any breach by such Shareholder or inaccuracy of such Shareholder's Surviving
Representations or Surviving Covenants.
(ii) Following the Closing, Xx. Xxxxx X. Xxxxx shall indemnify, defend
and hold harmless each member of the Purchaser Indemnified Group from and
against any and all Damages incurred or suffered by such member of the Purchaser
Indemnified Group based upon or arising out of or in connection with or related
to any breach of Section 5.1(b)(v).
(c) Notwithstanding anything contained herein to the contrary, (i) the
Shareholders shall only be obligated to make indemnification payments for
Damages in respect of breaches of the Capped Surviving Covenants of the Company
and the Shareholders to the extent the aggregate Damages sustained by the
Purchaser Indemnified Group with respect to such breaches exceed on a cumulative
basis $500,000, (ii) the Shareholders shall only be obligated to make
indemnification payments for Damages sustained by the Purchaser Indemnified
Group with respect to Liabilities described in Section 8.2(a)(iii) to the extent
the aggregate of such Damages sustained by the Purchaser Indemnified Group
exceeds on a cumulative basis $250,000, (iii) the Shareholders' aggregate
obligation to make indemnification payments for Damages, in respect of all such
breaches of the Capped Surviving Covenants of the Company and the Shareholders
shall not exceed the Capped Amount, (iv) the Shareholders' aggregate maximum
obligation to make indemnification payments for Damages in respect of
Liabilities described in Section 8.2(a)(iii) shall not exceed $750,000, and (v)
the Shareholders' aggregate maximum obligation to make indemnification payments
for Damages in respect of all breaches of the Surviving Covenants of the Company
and the Shareholders shall not exceed $115.5 million.
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(d) (i) For purposes of this Article VIII, the term "Capped Surviving
Covenants" shall mean the covenants and agreements in Sections 5.1(a)(v),
(a)(vii), (a)(viii), (a)(ix), (a)(x) (except with respect to power purchase
agreements listed on or required to be listed on Schedule 2.15(a) or Schedule
2.15(b)), (a)(xi), (b)(i) (except with respect to the Uncapped Section 2.7
Provisions), (b)(ii), (b)(iv), (b)(vi) (except as it relates to executive
officers, directors or shareholders of the Company), (b)(vii) (except as it
relates to Section 2.19) and (b)(viii) (except to the extent it relates to any
Surviving Covenant that is not a Capped Surviving Covenant).
(ii) For purposes of this Article VIII, the term "Uncapped Section 2.7
Provisions" shall mean the provisions in Sections 2.7(a), (b), (c) (but only as
it relates to executive officers, directors or shareholders of the Company), (d)
(but only as it relates to executive officers, directors or shareholders of the
Company), (e), (k) (but only with respect to power purchase agreements required
to be listed on Schedule 2.15(a) or as it relates to executive officers,
directors of shareholders of the Company), (n), (o), (q), (r), (s), (v) (but
only as it relates to executive officers, directors or shareholders of the
Company), and (w) (but only as it relates to any of the Uncapped Section 2.7
Provisions).
(iii) For purposes of this Article VIII, the term "Capped Amount" shall
mean $10 million if the Closing shall occur on or prior to December 31, 2003, or
$25 million if the Closing shall occur after December 31, 2003.
(e) (i) For purposes of this Article VIII, and without limitation, the
Surviving Conduct of Business Covenant shall not be deemed to be violated, and
no Damages shall be deemed to have been incurred or suffered, as a result of any
action taken by the Company or the Shareholders which was consented to by the
Purchaser pursuant to Section 5.1(a)(z) or 5.1(b)(z) or was taken pursuant to
and in accordance with Section 5.1(c).
(ii) For purposes of this Article VIII only, the words "omit to take"
in Sections 5.1(b)(i) and 5.1(b)(ii) shall be omitted.
(iii) For purposes of this Article VIII only, the words "take or agree
to take any actions that would" in Section 5.1(b)(vii) shall be replaced in
their entirety with the following: "take or agree to take any action with the
intention that such action would", and Section 5.1(b)(vii)(2) shall read as
follows: "prevent the Shareholders or the Company from performing or
consummating the transactions contemplated by this Agreement and the other
Transaction Documents."
(iv) For purposes of this Article VIII only, the words "or incurred"
shall be omitted from Sections 2.7(a) and (p).
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(v) Any waiver of any closing condition based on the accuracy of any
representation or warranty or the compliance with any covenant shall eliminate
the right of the Purchaser Indemnified Group to obtain any indemnification with
respect to such representation, warranty or covenant.
8.3 Indemnification by Purchaser.
Following the Closing, Purchaser shall indemnify, defend and hold
harmless each Shareholder and their respective permitted assigns (the
"Shareholders Indemnified Group") from and against any and all Damages incurred
or suffered by any Shareholder based upon or arising out of or in connection
with or related to any breach of the Surviving Covenants of Purchaser.
8.4 Obligations of the Shareholders.
(a) Subject to Section 8.10, no Shareholder shall have any liability or
obligation under this Agreement for any act, omission or breach by any other
Shareholder, and no Shareholder shall have any right or authority to assume,
create or incur in any manner any obligation or other liability of any kind,
express or implied, against, or in the name or on behalf of, any other
Shareholder.
(b) Subject to Section 8.2(c), no Shareholder shall have any obligation
under Section 8.2(a) in excess of its Percentage Share of any Damages
indemnifiable hereunder.
(c) Each Shareholder, to the extent of its Percentage Share, hereby
agrees to reimburse, indemnify, defend and hold harmless any other Shareholder
who has made indemnity payments pursuant to this Agreement that are greater than
the Percentage Share of such other Shareholder, except to the extent that the
Damages arose from any act, omission or breach by the Shareholder seeking
reimbursement.
8.5 Survival of Indemnification Obligations.
After the Closing Date, the obligations to indemnify, defend and hold
harmless the Purchaser Indemnified Group, in the case of the Shareholders, and
the Shareholders Indemnified Group, in the case of Purchaser, shall terminate
upon the expiration of all applicable statutes of limitations (including
extensions thereto) with respect to the matters covered thereby; provided, that
such obligations to indemnify, defend and hold harmless shall not terminate with
respect to any individual item as to which the Shareholders Indemnified Group or
the Purchaser Indemnified Group shall have, before the expiration of the
applicable period, previously made a claim by delivering a written notice
(stating in reasonable detail the basis of such claim) to the Shareholders or
Purchaser, as applicable; provided, further, that the Shareholders'
indemnification obligations to the Purchaser Indemnified Group pursuant to
Sections 8.2(a)(i) and Section 8.2(b) with
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respect to Surviving Representations and Section 8.2(a)(ii) hereof shall survive
the Closing Date indefinitely and shall not expire.
8.6 Right to Indemnification Not Affected by Knowledge.
The right to indemnification based upon breaches or inaccuracies of the
Surviving Representations or the Surviving Covenants shall not be affected by
any investigation conducted with respect to, or knowledge acquired (or capable
of being acquired) at any time by the party seeking indemnification, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of any such representation and
warranty or the compliance with any such covenant.
8.7 No Right to Contribution.
The Shareholders acknowledge and agree that, after the Closing Date, no
Covered Company shall have any Liability or responsibility for Damages to the
Shareholders or any of their Affiliates on account of any claim made by any
member of the Purchaser Indemnified Group under this Agreement or any other
Transaction Document, and the Shareholders shall not have any right of
contribution against any Covered Company with respect to any such claim made by
any member of the Purchaser Indemnified Group.
8.8 Exclusive Remedy.
From and after the Closing, except for claims grounded in fraud or
deceit, the indemnification provisions of this Article VIII shall be the sole
and exclusive remedy of each Party (i) for any breach of any Party's
representations, warranties, covenants or agreements contained in this Agreement
or any of the Transaction Documents (other than the Purchaser Guaranty
Agreements) or (ii) otherwise with respect to this Agreement or the transactions
contemplated by the Transaction Documents (other than the Purchaser Guaranty
Agreements). Nothing contained in this Agreement shall limit any rights to
injunctive relief with respect to the matters set forth in this Agreement or
rights or remedies which, as a matter of applicable Law or public policy, cannot
be limited or waived or rights or remedies with respect to claims of fraud or
deceit. In furtherance of the foregoing, each Party hereby waives, to the
fullest extent permitted under applicable Law, any and all rights, claims and
causes of action it or any of its Affiliates may have against another Party
(except as otherwise provided for in this Agreement or any other Transaction
Document (other than the Purchaser Guaranty Agreements)) to the extent relating
to this Agreement and the other Transaction Documents.
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8.9 Indemnification Procedures.
A party entitled to indemnification hereunder shall herein be referred
to as an "Indemnitee." A party obligated to indemnify an Indemnitee hereunder
shall herein be referred to as an "Indemnitor."
(a) Within 20 days after an Indemnitee receives written notice of any
third party claim or notice of the commencement of any action by any third party
that such Indemnitee reasonably believes may give rise to a claim for
indemnification from an Indemnitor hereunder, such Indemnitee shall, if a claim
in respect of such third party claim or action is to be made against an
Indemnitor under Article VIII, deliver notice of such third party claim or
action to the Indemnitor, specifying with reasonable detail the basis on which
indemnification is being asserted and include with such notice copies of all
notices and documents (including court papers) served on or received by the
Indemnitee from such third party; provided that the failure to deliver notice of
any such third party claim or action within the 20 day period specified above
shall not relieve the Indemnitor of its indemnification obligations under this
Agreement except to the extent the Indemnitor is actually prejudiced by such
failure. Upon receipt of such notice, the Indemnitor shall be entitled at its
sole cost and expense to participate in such third party claim or action, to
assume the defense thereof with counsel reasonably satisfactory to the
Indemnitee, and to settle or compromise such third party claim or action,
provided that (i) the Indemnitor may only assume the defense of and settle or
compromise such third party claim or action (or any portion thereof) if it has
acknowledged its obligation to indemnify the Indemnitee for all Damages with
respect to such claim or action (or any portion thereof) (subject to the
limitations set forth herein) and (ii) that any settlement or compromise shall
be effected only with the consent of the Indemnitee, which consent shall not be
unreasonably withheld or delayed (it being understood and agreed that the
Indemnitee may withhold its consent if such settlement or compromise would, in
the reasonable opinion of such Indemnitee, materially adversely affect the
Indemnitee). The Indemnitor shall act reasonably and in accordance with its good
faith business judgment with respect to such defense. After the Indemnitor has
given notice to the Indemnitee of the Indemnitor's election to assume the
defense of such third party claim or action, the Indemnitor shall not be liable
to the Indemnitee under Section VIII for any legal or other expenses
subsequently incurred by the Indemnitee in connection with the defense thereof
other than reasonable costs of investigation, provided that the Indemnitee shall
have the right to employ counsel to represent it if either (x) such third party
claim or action involves remedies other than monetary damages and such remedies,
in the Indemnitee's reasonable judgment, could have a material adverse effect on
such Indemnitee, (y) the Indemnitee may have available to it one or more
defenses or counterclaims that are inconsistent with one or more defenses or
counterclaims that may be alleged by the Indemnitor or (z) the Indemnitee
believes in its reasonable discretion that a conflict of interest exists between
the Indemnitor and the Indemnitee with respect to such third party claim or
action, and in any such event the fees and expenses of such separate counsel
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shall be paid by the Indemnitee. If the Indemnitor elects to assume the defense
of such third party claim or action, the Indemnitee may at its sole cost and
expense participate in (but not control) the defense of such third party claim
or action . If the Indemnitor does not elect to assume the defense of such third
party claim or action within 30 days of the Indemnitee's delivery of notice of
such third party claim or action, the Indemnitee shall be entitled to assume the
defense thereof. Unless it has been conclusively determined through a final
judicial determination (or settlement tantamount thereto) that the Indemnitor is
not liable to the Indemnitee under this Section 8.9, the Indemnitee shall act
reasonably and in accordance with its good faith business judgment with respect
to such defense, and shall not settle or compromise any such third party claim
or action without the consent of the Indemnitor, which consent shall not be
unreasonably withheld or delayed. The party controlling the defense of any third
party claim or action pursuant to this Section 8.9(a) shall keep the other party
advised of the state of such third party claim or action and the defense
thereof. The parties hereto agree to render to each other such assistance as may
reasonably be requested in order to insure the proper and adequate defense of
any such third party claim or action, including making employees available on a
mutually convenient basis to provide additional information and explanation of
any relevant materials or to testify at any proceedings relating to such third
party claim or action.
(b) Other Claims. Within 20 days after an Indemnitee sustains any
Damages not involving a third party claim or action that such Indemnitee
reasonably believes may give rise to a claim for indemnification from an
Indemnitor hereunder, such Indemnitee shall, if a claim in respect of such
Damages is to be made against an Indemnitor under Article VIII, deliver notice
of such claim to the Indemnitor, specifying with reasonable detail (i) the basis
on which indemnification is being asserted and (ii) the amount of such Damages;
provided that the failure to deliver notice of any such Damages within the 20
day period specified above shall not relieve the Indemnitor of its
indemnification obligations under this Agreement except to the extent the
Indemnitor is actually prejudiced by such failure. If the Indemnitor does not
notify the Indemnitee within 45 days following its receipt of such notice that
the Indemnitor disputes its liability to the Indemnitee under this Section 8.9,
such claim specified by the Indemnitee in such notice shall be conclusively
deemed a liability of the Indemnitor under this Section 8.9 and the Indemnitor
shall pay the amount of such claim to the Indemnitee on demand or, in the case
of any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined. If the Indemnitor has timely disputed its
liability with respect to such claim, as provided above, the Indemnitor and the
Indemnitee shall proceed in good faith to negotiate a resolution of such dispute
and, if not resolved through negotiations, such dispute shall be resolved by
litigation in an appropriate court of competent jurisdiction in accordance with
Section 11.13 of this Agreement.
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8.10 Shareholders' Representative.
(a) The Shareholders irrevocably nominate, constitute and appoint Xxxxx
X. Xxxxx as their representative (the "Shareholders' Representative"), and Xxxxx
X. Xxxxx hereby accepts his appointment as the Shareholders' Representative.
Purchaser shall be entitled to deal exclusively with the Shareholders'
Representative on all matters relating to this Agreement or any other
Transaction Document, and shall be entitled to rely conclusively (without
further evidence of any kind whatsoever) on any document executed or purported
to be executed on behalf of any Shareholder by the Shareholders' Representative,
as fully binding upon such Shareholder; provided, that in respect of
indemnification claims under this Article VIII that relate to one or more
Shareholders, but not all of the Shareholders, Purchaser shall deal with the
Shareholder or Shareholders subject to the indemnification claims and may not
rely solely on actions taken by the Shareholders' Representative. If the
Shareholders' Representative shall die, become disabled or otherwise be unable
to fulfill his responsibilities as representative of the Shareholders, the
Shareholders shall, within twenty days after such death or disability, appoint a
successor representative and, promptly thereafter, shall notify Purchaser of the
identity of such successor. Any such successor shall become the "Shareholders'
Representative" for purposes of this Agreement and the other Transaction
Documents. If for any reason there is no Shareholders' Representative at any
time, all references herein or in any other Transaction Document to the
Shareholders' Representative shall be deemed to refer to the Shareholders.
(b) The Shareholders agree that the actions taken by the Shareholders'
Representative pursuant to the terms of this Section 8.10 shall be fully binding
on them. The Shareholders' Representatives shall not be liable to any
Shareholder or any other party for any action taken or omitted to be taken by
him as a Shareholders' Representative except in the case of willful misconduct
or gross negligence. The Shareholders shall jointly indemnify each Shareholders'
Representative and hold it harmless from and against any loss, liability or
expense of any nature incurred by such Shareholders' Representative, including
reasonable legal fees and other costs and expenses of defending or preparing to
defend against any claim or liability in the premises, unless such loss,
liability or expense shall be caused by such Shareholders' Representative's
willful misconduct or gross negligence.
ARTICLE IX
TERMINATION
9.1 Termination.
This Agreement may be terminated at any time prior to the Closing Date
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(a) By the mutual written agreement of Purchaser on the one hand, and
the Company and the Shareholders, on the other hand;
(b) By the Company and the Shareholders, on the one hand, or Purchaser,
on the other hand, by written notice to the other Party after 5:00 p.m. New York
City time on March 31, 2004, if the transactions contemplated by this Agreement
have not been consummated, unless such date is extended by the mutual written
consent of the Company and the Shareholders, on the one hand, and Purchaser, on
the other hand; provided that if all conditions to the consummation of the
Transaction and the other transactions contemplated by this Agreement, other
than the conditions in Section 7.1(b), Section 7.1(c), Section 7.2(k) and any
condition not satisfied as a result of any outstanding order or decree of any
Governmental Entity or the effects of any applicable Law, have been satisfied or
waived by such outside date, such outside date shall be automatically extended
to December 31, 2004 (with Purchaser and the Company and the Shareholders (but
only with respect to their own obligations or the conditions applicable to them
under this Agreement) taking commercially reasonable efforts to cause such
conditions to be satisfied); and provided further that the right to terminate
this Agreement under Section 9.1(b) shall not be available to any Party whose
failure to fulfill in any material respect any obligations under this Agreement
has caused or resulted in the failure of the Closing to occur on or before such
date;
(c) By either Purchaser, on the one hand, or the Company and the
Shareholders, on the other hand, by written notice to the other Party if:
(i) the other Party has (and the terminating Party shall not
have) failed to perform and comply with, in any material respect, any
material agreement, covenant or condition hereby required to have been
performed or complied with by such Party prior to the time of such
termination, and such failure shall not have been cured within 30 days
following notice of such failure; or
(ii) any event occurs or any condition exists after the date
of this Agreement that makes it impossible to satisfy a condition
precedent to the terminating party's obligations to consummate the
transactions contemplated by this Agreement, unless the occurrence of
such event is due to the failure of the terminating party to perform or
comply with any of the agreements, covenants or conditions of this
Agreement to be performed or complied with by such party prior to the
Closing.
9.2 Effect of Termination.
(a) In the event of the termination of this Agreement in accordance
with Section 9.1, written notice thereof shall promptly be given by the
terminating Party to the other Parties and this Agreement shall become void and
have no effect, without any
79
liability to any Person in respect of this Agreement or of the transactions
contemplated by this Agreement on the part of any Party, or any of its
directors, officers, representatives, shareholders or Affiliates, except as
provided in Section 5.3(b), and Article XI and this Section 9.2, and except that
nothing in this Agreement shall relieve any Party of liability for fraud or
deceit or intentional misrepresentations, or for any breach of or failure to
perform any of its agreements and covenants contained in this Agreement or the
other Transaction Documents.
(b) In the event this Agreement shall be terminated and at such time
any Party is in material breach of or in default under any term or provision
hereof, such termination shall be without prejudice to, and shall not effect,
any and all rights to damages that any other Party may have hereunder or
otherwise under applicable Law. The damages recoverable by the non-defaulting
Party shall include all attorneys' fees reasonably incurred by such Party in
connection with the transactions contemplated hereby.
(c) If the transactions contemplated by this Agreement are terminated
under this Section 9.2, Purchaser shall return to the Company all documents and
other materials received from the Company, its Affiliates or their agents as
provided in the Confidentiality Agreement and all confidential information
received by Purchaser with respect to the Company and its Affiliates shall be
treated in accordance with the Confidentiality Agreement, which shall remain in
full force and effect notwithstanding the termination of this Agreement.
ARTICLE X
DEFINITIONS AND INTERPRETATION
10.1 Definitions.
As used in this Agreement and the Schedules, the following terms have
the following meanings:
Adjusted Consideration: $115.5 million, reduced by (A) the
aggregate amount of any and all cash dividends paid by the Company to
the Shareholders after the date of this Agreement and prior to the
Closing (it being understood that no cash dividends shall be paid by
the Company to the Shareholders other than as permitted by this
Agreement) and (B) the amount by which the aggregate amount of Company
Expenses set forth on the Company Expenses Certificate exceeds the
Company Expenses Cap.
Affiliate: (i) with respect to any Person or group of Persons:
a Person that directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control
with such Person or group of Persons; (ii) with respect to any natural
person: a parent, immediate family member or lineal
80
descendant of any of the foregoing, and a trust of which such natural
person or any of the foregoing is a settlor or beneficiary or trustee;
and (iii) with respect to any trust: a settlor or beneficiary or
trustee of such trust, and a Person that is an Affiliate of such
settlor or beneficiary or trustee under clauses (i) or (ii) of this
paragraph; provided that any Person (other than the Company or any
Covered Company) that owns Equity Interests in any Managed Company or
any of the entities which constitute the facilities located in
Indiantown, Florida or Xxxxx, New Jersey shall not be deemed to be an
Affiliate of the Company or any of the Covered Companies. "Control"
(including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management policies of a Person, whether
through the ownership of voting securities or other Equity Interests,
by contract or credit arrangement, as trustee or executor, or
otherwise. For purposes of this Agreement, each Covered Company shall,
(i) prior to the Closing, be treated as an Affiliate of the Company and
the Shareholders and not be treated as an Affiliate of Purchaser and
(ii) from and after the Closing be treated as an Affiliate of Purchaser
(for so long as Purchaser, directly or indirectly controls, is
controlled by or is under common control with such Covered Company).
Agreement: this Share Purchase Agreement, including the
Schedules and Exhibits and all certificates delivered in connection
herewith.
Books and Records: any and all of the books, records and files
of a Person, existing on or after the date of this Agreement, and all
increases and additions thereto after the Closing Date, including
computer records and electronic copies of such information (but
excluding electronic mail and other computer-based communications),
whether maintained by such Person or any of its respective Affiliates.
Capital Stock: means (i) in the case of a corporation,
corporate stock, (ii) in the case of a partnership or limited liability
company, partnership or membership interests or units (whether general
or limited), and (iii) any other interest or participation that confers
on a Person the right to receive a share of the profits and losses of,
or distribution of assets of, the issuing entity.
CERCLA: the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. ss. 9601 et seq.
Code: the Internal Revenue Code of 1986, as amended.
Company Disclosure Schedules: the Schedules setting forth
disclosures of the Company, or qualifications or exceptions to, any of
the Company's
81
representations and warranties set forth in Article II or the Company's
covenants set forth in Section 5.1.
Company Expenses: any and all fees and out-of-pocket costs and
expenses of Deutsche Bank Securities Inc., Debevoise & Xxxxxxxx, Xxx
Xxxx Xxxxxxx and Xxxxx & Xxx Xxxxx PLLC incurred by the Company or any
Covered Company and all fees and out-of-pocket costs and expenses
(including any fees and expenses of investment bankers, brokers,
finders, counsel, advisors, experts or other agents) of the
Shareholders to the extent paid for or reimbursed by the Company, in
each case incident to or in connection with the negotiation,
preparation and performance of this Agreement and any other Transaction
Document and the transactions (other than the matters contemplated in
Section 5.17) contemplated hereby and thereby (whether payable prior
to, at or after the Closing Date), and all fees and out-of-pocket
expenses (including any fees and expenses of counsel) that the Company
incurs or reimburses to the purchasers of the assets of ReUse
Technology, Inc. and the cost of obtaining, and premiums paid for,
insurance covering the matters described in Section 5.9.
Company Expenses Cap: $4,500,000.
Confidentiality Agreement: the Confidentiality Agreement,
dated January 22, 2003, between Purchaser and the Company.
Consent: any consent, approval, authorization, order, filing,
registration or qualification of, by or with any Person.
Covered Companies: the Managed Companies and the Non-Managed
Companies.
Custody Agreement: the Custody Agreement dated as of the date
hereof among the Shareholders, Xxxxx X. Xxxxx, as agent to the
Shareholders, Purchaser and The Bank of New York, as custodian.
EGTRRA: Economic Growth and Tax Relief Reconciliation Act of
2001, as amended.
Environmental Law: any foreign, federal, state, or local Law
relating to (a) the manufacture, generation, processing, transport,
distribution, use, treatment, storage, handling, disposal, emission,
discharge, Release or threatened Release of, or human exposure to,
Hazardous Substances or (b) the preservation and protection of the
environment (including natural resources, air and surface or subsurface
land or waters) or the health of Persons (to the extent relating to
exposure to Hazardous Substances).
82
Equity Interests: (i) shares of Capital Stock or other equity
interests, (ii) subscriptions, calls, warrants, options or commitments
of any kind or character relating to, or entitling any Person to
purchase or otherwise acquire, any Capital Stock or other equity
interests and (iii) securities or other interests convertible into or
exercisable or exchangeable for shares of Capital Stock or other equity
interests.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
Exchange Act: the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated under such act.
FERC: the Federal Energy Regulatory Commission and its
successors.
Governmental Entity: any supranational, national, federal,
state, municipal or local governmental or quasi-governmental or
regulatory authority, agency, court, commission or other similar
entity, domestic or foreign.
Governmental Order: any order, decree, notice of
responsibility, writ, ruling, decision, finding, directive,
stipulation, award, injunction, judgment or similar act (including
settlements) of or by any Governmental Entity. =
Hazardous Substance: (a) any material, substance or waste
(whether liquid, gaseous or solid) that: (i) requires removal,
remediation or reporting under any Environmental Law, or is listed,
classified or regulated as a "hazardous waste" or "hazardous substance"
(or other similar term) pursuant to any applicable Environmental Law or
(ii) is regulated under applicable Environmental Laws as being, toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous, (b) any petroleum product or
by-product, petroleum-derived substances wastes or breakdown products,
asbestos or polychlorinated biphenyls and (c) any ash, scrubber
residue, boiler slag, coal combustion byproducts or waste and flue
desulfurization.
HSR Act: the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated under such
statute.
Indebtedness: with respect to any Person, (i) all indebtedness
of such Person, whether or not contingent, for borrowed money, (ii) all
obligations of such Person for the deferred purchase price of property
or services (other than trade accounts payable determined in accordance
with GAAP and arising in the ordinary course of business and paid in
accordance with customary practice), (iii) all obligations of such
Person evidenced by notes, bonds, debentures or other similar
instruments, (iv) all indebtedness created or arising under any
conditional
83
sale or other title retention agreement with respect to property
acquired by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the
ordinary course of business), (v) all obligations of such Person as
lessee under leases that have been or should be, in accordance with
GAAP, recorded as capital leases, (vi) all obligations, contingent or
otherwise, of such Person under acceptance, letter of credit or similar
facilities, (vii) all obligations of such Person to purchase, redeem,
retire, defease or otherwise acquire for value any Equity Interests of
such Person, (viii) any interest, make-whole amounts, or premiums
related to all Indebtedness referred to in clauses (i) through (vii),
(ix) all Indebtedness (to the extent of the guarantee) of others
referred to in clauses (i) through (viii) above guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed
directly or indirectly by such Person and (x) all Indebtedness referred
to in clauses (i) through (viii) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including accounts
and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness.
Intellectual Property: patents and patent applications,
trademarks, service marks, trade names and registrations and
applications thereof, domain names and registrations thereof,
copyrights and registrations thereof, computer software, trade secrets,
know-how and confidential business and technical information.
IRS: the Internal Revenue Service.
Laws: any law, statute, ordinance, regulation or rule of or by
any Governmental Entity or any arbitrator.
Liabilities: any and all known liabilities or Indebtedness of
or by any Person or any nature (whether direct or indirect, absolute or
contingent, liquidated or unliquidated, due or to become due, accrued
or unaccrued, matured or unmatured, asserted or unasserted, determined
or determinable and whenever or however arising).
Lien: any mortgage, pledge, deed of trust, hypothecation,
security interest, title defect, encumbrance, option, easement,
encroachment or other adverse claim.
Managed Companies: means (i) the Subsidiaries of the Company,
(ii) with respect to the representations and warranties of the Company
in Article II (other than Section 2.11(a)) and the satisfaction of the
condition set forth in Section 7.2(a) with respect to such
representations and warranties (and not for any other purpose,
including, without limitation, Section 5.1, Section 5.4 and Article
84
VIII), the respective entities which constitute the Facilities located
in Indiantown, Florida and Logan, New Jersey (iii) each partnership in
which the Company or a Subsidiary of the Company is the managing
partner or which the Company otherwise operates, manages or controls
(whether by contract, through ownership of partnership interests or
otherwise) or (iv) each limited liability company in which the Company
or a Subsidiary of the Company is the managing member or which the
Company otherwise operates, manages or controls (whether by contract,
through ownership of membership interests or otherwise); provided, that
the respective entities which constitute the Facility located at Jenks,
Oklahoma (Green Country) shall be Managed Companies with respect to all
periods ending on or before June 10, 2003.
Material Adverse Effect: in relation to any Person, any fact,
event, change, development, circumstance or effect that individually or
in the aggregate with other facts, events, changes, developments,
circumstances or effects, is or would reasonably be expected to be
materially adverse to (a) the business, condition (financial or
otherwise), properties, assets, liabilities or results of operations of
that Person and its Affiliates and their respective Subsidiaries taken
as a whole or (b) with respect to the Company, the business, condition
(financial or otherwise), properties, assets, liabilities or results of
operations of the Company and its Affiliates and their respective
Subsidiaries and the Managed Companies, as well as the Company's
interests in the other Covered Companies, taken as a whole, or (c) to
the ability of that Person or its shareholders to consummate the
transactions contemplated by the Transaction Documents or otherwise
perform its obligations hereunder or thereunder, other than, for
purposes of clauses (a) and (b), any fact, event, change, development,
circumstance or effect that results or arises (i) from or relates to
changes in general economic conditions or prevailing interest rates in
the United States, except to the extent that Person is affected in a
disproportionate manner as compared to other Persons in industries in
which that Person operates, (ii) from or relates to changes in industry
conditions in general in which that Person operates, except to the
extent that Person is affected in a disproportionate manner as compared
to other Persons in industries in which that Person operates, (iii)
from or relates to changes in accounting standards, principles or
interpretations, (iv) solely from the announcement of this Agreement or
the consummation of the Transaction, (v) from or relates to the
termination of the Tolling Agreements set forth on Schedule 10.1(a),
(vi) from or relates to any change in the market value of the Company's
turbines identified on Schedule 10.1(b), (vii) from or relates to
actions taken or not taken solely at the request of Purchaser, (viii)
from or relates to the termination, amendment or replacement of the
Company's revolving credit facility pursuant to the Third Amended and
Restated Credit Agreement, dated as of September 14, 2000, between the
Company, Australia and New Zealand Banking Group Limited, and the other
parties thereto or (ix) from or relates to any Facility located in (A)
Sterlington,
85
Louisiana, (B) Caledonia, Mississippi, (C) Southaven, Mississippi or
(D) the Dominican Republic, except, in each case, to the extent the
Company and its Affiliates and Subsidiaries (other than the project
company for such Facility), taken as a whole, are adversely affected in
a material manner (without regard to the loss of cash flow from such
Facility).
NCBCA: the North Carolina Business Corporation Act.
Non-Managed Companies: each Person that is not a Managed
Company, but in which the Company owns, directly or indirectly, any
Equity Interests.
Organizational Documents: with respect to any corporation, its
articles or certificate of incorporation and by-laws; with respect to
any limited liability company, its articles or certificate of
organization or formation and its operating agreement or limited
liability company agreement or documents of similar substance; with
respect to any limited partnership, its certificate of limited
partnership and partnership agreement or documents of similar
substance; and with respect to any other entity, documents of similar
substance to any of the foregoing.
Percentage Share: with respect to each Shareholder, a
percentage determined by dividing the number of shares of Company
Common Stock set forth opposite such Shareholder's name on Schedule
2.2(a) by the total number of shares of Company Common Stock
outstanding immediately prior to the Closing Date.
Permits: means all permits, licenses, franchises,
registrations, variances, authorizations, Consents, orders,
certificates and approvals obtained from or otherwise made available by
any Governmental Entity or Person or pursuant to any Law.
Permitted Liens: (a) Liens for Taxes (i) not due and payable
or (ii) which are being contested in good faith by appropriate
proceeding and for which adequate reserves have been established, (b)
Liens of warehousemen, mechanics and materialmen and other similar
statutory Liens incurred in the ordinary course of business, (c) any
Liens that, individually or in the aggregate, do not materially detract
from the value of any of the applicable property, rights or assets of
the businesses or materially interfere with the use thereof as
currently used and (d) Liens listed on Schedule 10.1(c).
Person: any natural person, firm, partnership, association,
corporation, company, joint venture, trust, business trust,
Governmental Entity or other entity.
86
Purchaser Disclosure Schedules: the Schedules setting forth
disclosures of Purchaser, or qualifications or exceptions to any of
Purchaser's representations and warranties set forth in Article III.
Purchaser Guarantee Agreements: means the agreements in the
form of Exhibits 10.1(a) ("Purchaser Shareholder Guarantee") and
10.1(b) ("Purchaser Employee Guarantee") executed and delivered by
Purchaser Guarantor on the date hereof.
Purchaser Guarantor: means The Xxxxxxx Xxxxx Group, Inc., a
Delaware corporation.
Release: the release, spill, emission, leaking, pumping,
pouring, emptying, escaping, dumping, injection, deposit, disposal,
discharge, dispersal, leaching or migrating of any Hazardous Substance
into the indoor or outdoor environment.
SEC: the Securities and Exchange Commission.
Securities Act: the Securities Act of 1933, as amended, and
the rules and regulations promulgated under such act.
Senior Notes: collectively (i) the 8.10% Senior Notes Due 2004
issued by the Company pursuant to the Indenture, dated as of March 15,
1994, between the Company and First Union National Bank of North
Carolina, as trustee, as amended, amended and restated, supplemented or
otherwise modified from time to time and (ii) the 8.75% Senior Notes
Due 2008 issued by the Company pursuant to the Indenture, dated as of
October 20, 1998, between the Company and First Union National Bank of
North Carolina, as trustee, as supplemented by the First Supplemental
Indenture thereto, dated as of October 20, 1998 and as otherwise
amended, amended and restated, supplemented or modified from time to
time.
Subsidiary: with respect to any Person (for the purposes of
this definition, the "parent"), (i) any other Person (other than a
natural person), whether incorporated or unincorporated, of which at
least a majority of the securities or ownership interests having by
their terms ordinary voting power to elect a majority of the Board of
Directors or other persons performing similar functions is directly or
indirectly owned or controlled by the parent or by one or more of its
respective Subsidiaries or by the parent and any one or more of its
respective Subsidiaries or (ii) whose financial statements are or
should be consolidated with parent consolidated financial statements in
accordance with GAAP.
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Tax Returns: all federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and
information returns and any amendments to any of the foregoing relating
to Taxes.
Taxes: all federal, state, local and foreign taxes, and other
assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties
applicable thereto.
Transaction Documents: this Agreement, the Custody Agreement,
the Purchaser Guarantee Agreements and all exhibits and schedules
attached thereto and certificates delivered in connection therewith.
Treasury Regulations: the regulations prescribed under the
Code.
10.2 Other Defined Terms.
The following terms are defined in the corresponding Sections of this
Agreement:
Defined Term Section Reference
------------ -----------------
Acquisition Proposal Section 5.4(a)
--------------
Claims Section 5.16
------------
Closing Section 1.3
-----------
Closing Date Section 1.3
-----------
COBRA Section 2.11(e)
---------------
Company Preamble
--------
Company Audited Financial Statements Section 2.5
-----------
Company Common Stock Recitals
--------
Company Expenses Certificate Section 5.10(a)
---------------
Company Financial Statements Section 2.5
-----------
Company Interim Financial Statements Section 2.5
-----------
Company Material Contracts Section 2.15
------------
Company Permits Section 2.12(a)
---------------
Company Plans Section 2.11(a)
---------------
Company SEC Filings Section 2.4(a)
--------------
Consent Documents Section 5.17
------------
Damages Section 8.2
-----------
Employees Section 5.7(a)
--------------
Environmental Permits Section 2.17(b)
---------------
EPA Section 2.20(a)
---------------
EWG Facilities Section 2.20(a)
---------------
Executive Amendment Agreements Section 2.11(o)
---------------
Executives Section 2.11(o)
---------------
88
Defined Term Section Reference
------------ -----------------
Facilities Section 2.20(a)
---------------
FPA Section 2.3(b)
--------------
FUCO Facilities Section 2.20(a)
---------------
GAAP Section 2.5(a)
--------------
Improvements Section 2.14(h)
---------------
Insurance Policies Section 2.16(a)
---------------
Interim Financial Statements Section 5.15
------------
ISRA Section 5.2(c)
--------------
Knowledge Section 11.9(a)
---------------
Leased Real Property Section 2.14(a)
---------------
Xxxxx Financial Statements Section 2.5(a)
--------------
LS Power Section 2.25
------------
Managed Company Material Contracts Section 2.15(a)
---------------
Non-Managed Company Material Contracts Section 2.15(b)
---------------
Other Real Property Interests Section 2.14(c)
---------------
Owned Real Property Section 2.14(a)
---------------
Party Preamble
--------
Pension Plan Section 2.11(c)
---------------
Proposed Acquisition Transaction Section 5.4(a)(i)
-----------------
PUHCA Section 2.20(a)
---------------
Purchaser Preamble
--------
Purchaser Indemnified Group Section 8.2(a)
--------------
PURPA Section 2.20(a)
---------------
QF Facilities Section 2.20(a)
---------------
Report Section 5.2(c)
--------------
ReUse Insurance Policies Section 5.9
-----------
Shareholder Preamble
--------
Shareholders Indemnified Group Section 8.3
-----------
Surviving Conduct of Business Covenant Section 8.1(b)
--------------
Surviving Covenants Section 8.1(b)
--------------
Surviving Representations Section 8.1(a)
--------------
Transaction Section 1.1
-----------
Transfer Section 6.2(x)
--------------
Trust Section 3.6
-----------
10.3 Interpretation.
In this Agreement, unless otherwise specified, the following rules of
interpretation apply:
89
(a) references to Sections, Schedules, Annexes, Exhibits and Parties
are references to sections or sub-sections, schedules, annexes and exhibits of,
and parties to, this Agreement;
(b) the section and other headings contained in this Agreement are for
reference purposes only and do not affect the meaning or interpretation of this
Agreement;
(c) references to any law, regulation or statutory provision include
references to such law or regulation or provision as modified, codified,
re-enacted or replaced;
(d) references to any Person include references to such Person's
successors and permitted assigns;
(e) words importing the singular include the plural and vice versa;
(f) words importing one gender include the other gender;
(g) references to the word "including" do not imply any limitation;
(h) references to months are to calendar months;
(i) the words "hereof", "herein" and "hereunder" and words of similar
import, when used in this Agreement, refer to this Agreement as a whole and not
to any particular provision of this Agreement; and
(j) references to "$" or "dollars" refer to U.S. dollars.
(k) unless the context otherwise requires: use of any of "law,"
"statute," "rule," "regulation," or "ordinance" includes any and all of such
terms; use of any of "judgment," "order," "decree," "injunction," or "writ"
includes any and all of such terms; use of any of "action," "claim," "suit,"
"proceeding," "arbitration," or "mediation" includes any and all of such terms;
and use of any of "permit," "license," "waiver," "authorization," "application,"
"variance," "exemption," "consent," "approval" or "registration" includes any
and all of such terms.
(l) a defined term has its defined meaning throughout this Agreement
and in each Exhibit and Schedule to this Agreement, regardless of whether it
appears before or after the place where it is defined.
90
ARTICLE XI
GENERAL PROVISIONS
11.1 Fees and Expenses; Transfer Taxes.
(a) If the Closing shall occur, the Shareholders shall bear the cost of
the Company Expenses set forth on the Company Expenses Certificate in excess of
the Company Expenses Cap, if any, by way of adjustment to the Adjusted
Consideration pursuant to the definition of "Adjusted Consideration" under
Section 10.1.
(b) Subject to Sections 11.1(c) and 5.17, Purchaser shall pay all fees,
costs and expenses, including fees and expenses of counsel, financial advisors
and accountants and payments made in connection with obtaining Consents
(including software license consents), Permits, exemptions and waivers incurred
by Purchaser incident to or in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement and the other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby, whether or not the Closing shall have occurred.
(c) Subject to Section 5.17, the Shareholders and Purchaser shall share
equally in the payment of (i) transfer Taxes arising from the Transaction and
the transactions contemplated by the other Transactions Documents and (ii) any
out-of-pocket fees, costs and expenses incurred in connection with (A) any
filings required under the HSR Act and Section 203 of the FPA or (B) obtaining
Consents (including software license consents), Permits, exemptions or waivers
of third parties required to consummate the Transaction or to consummate the
transactions contemplated in the other Transaction Documents.
11.2 Further Actions.
Each Party shall execute and deliver such certificates and other
documents and take such other actions as may reasonably be requested by the
other Party in order to consummate or implement the transactions contemplated by
this Agreement and the other Transaction Documents.
11.3 Certain Limitations.
(a) It is the explicit intent and understanding of each of the Parties
that no Party nor any of its Affiliates, representatives or agents is making any
representation or warranty whatsoever, oral or written, express or implied,
other than those set forth in the Transaction Documents and no Party is relying
on any statement, representation or warranty, oral or written, express or
implied, made by another Party or such other Party's Affiliates, representatives
or agents, except for the representations and warranties set forth in the
Transaction Documents.
91
(b) The Parties agree that this is an arm's-length transaction in which
the Parties' undertakings and obligations are limited to the performance of
their obligations under this Agreement and the other Transaction Documents.
11.4 Notices.
All notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given if (a) delivered personally, (b) mailed,
certified or registered mail with postage prepaid, (c) sent by next-day or
overnight mail or delivery or (d) sent by fax or telegram, as follows:
(a) if to the Company,
Cogentrix Energy, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
Attention: General Counsel
with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxx, Esq.
(b) if to Purchaser,
Xxxxxxx, Sachs & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq
92
with a copy to:
Xxxxxx & Xxxxxxx LLP
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxx Xxxxx Xxxxx, Esq
(c) if to the Shareholders,
c/o Cogentrix Energy, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
Attention: General Counsel
with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxx, Esq
or, in each case, at such other address as may be specified in writing to the
other Parties.
All such notices, requests, demands, waivers and other communications
shall be deemed to have been received, if by personal delivery, certified or
registered mail or next-day or overnight mail or delivery, on the day delivered
or, if by fax or telegram, on the next business day following the day on which
such fax or telegram was sent, provided that a copy is also sent by certified or
registered mail.
11.5 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective heirs, successors and permitted assigns.
93
11.6 Assignment; Successors; Third-Party Beneficiaries.
(a) This Agreement is not assignable by any Party without the prior
written consent of all of the other Parties and any attempt to assign this
Agreement without such consent shall be void and of no effect; provided that
Purchaser may, upon written notice to the Shareholders and the Company, (i)
assign any of its rights and obligations, in whole or in part, hereunder to an
Affiliate of Purchaser to the extent that such assignment does not result in a
legal impediment to the consummation of the transactions contemplated by this
Agreement, (ii) following the Closing assign any of its rights and obligations
hereunder, in whole or in part, to a third party in connection with a sale of
all or substantially all of the business of the Company and (iii) collaterally
assign, in whole or in part, any of its rights hereunder as security to one or
more lenders; provided that any assignment by Purchaser under this Section 11.6,
other than pursuant to Section 11.6(a)(ii), shall not relieve Purchaser or
Purchaser Guarantor of any of their obligations under this Agreement or any
other Transaction Document.
(b) This Agreement shall inure to the benefit of, and be binding on and
enforceable by and against, the successors and permitted assigns of the
respective Parties, whether or not so expressed. Nothing in this Agreement,
expressed or implied, is intended or shall be construed to confer upon any
Person other than the Parties hereto and the successors and assigns permitted by
this Section 11.6, any right, remedy or claim under or by reason of this
Agreement and no Person, other than the Parties, their successors and permitted
assigns, is entitled to rely on any representation, warranty, covenant or
agreement contained herein, provided that each present and former director and
officer of the Company shall be a permitted third party beneficiary solely in
connection with Section 5.11 hereof.
11.7 Amendment; Waivers, etc.
(a) No amendment, modification or discharge of this Agreement, and no
waiver under this Agreement, shall be valid or binding unless set forth in
writing and duly executed by the Party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the Party granting such waiver
in any other respect or at any other time. The waiver by any of the Parties of a
breach of or a default under any of the provisions of this Agreement or to
exercise any right or privilege under this Agreement, shall not be construed as
a waiver of any other breach or default of a similar nature, or as a waiver of
any of such provisions, rights or privileges under this Agreement.
(b) The rights and remedies in this Agreement provided are cumulative
and none is exclusive of any other, or of any rights or remedies that any Party
may otherwise have at law or in equity.
94
11.8 Entire Agreement.
This Agreement (including the Schedules and Exhibits referred to in or
delivered under this Agreement), the other Transaction Documents and the
Confidentiality Agreement constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, between the Parties
with respect to their subject matters.
11.9 Knowledge; Interpretation; Schedules.
(a) For the purposes of the representations and warranties of the
Company contained in Article II that are qualified by the Company's "knowledge",
the knowledge of the Company will be deemed to consist of the actual knowledge
of any fact, circumstance or condition, after due and reasonable inquiry and
investigation in the course of their respective duties, by those individuals
listed on Schedule 11.9(a) obtained in the normal course of their respective
duties as Shareholders, directors, managers or officers, as the case may be, of
the Company or any of its Subsidiaries.
(b) For the purposes of the representations and warranties of Purchaser
contained in Article IV, the knowledge of Purchaser will be deemed to consist
solely of the actual knowledge of any fact, circumstance or condition, after due
and reasonable inquiry and investigation in the course of their respective
duties by those individuals listed in Schedule 11.9(b).
(c) Items disclosed on one particular Company Disclosure Schedule
relating to one section of this Agreement shall be deemed to be constructively
disclosed or listed on other Company Disclosure Schedules relating to other
sections of this Agreement to the extent it is reasonably apparent on the face
of such other Company Disclosure Schedules that such disclosure is applicable to
such other Company Disclosure Schedules. The fact that any item of information
is contained in a Schedule shall not be construed as an admission of liability
under any applicable Law, or to mean that such information is required to be
disclosed in or by this Agreement, or to mean that such information is material.
Such information shall not be used as a basis for interpreting the term
"material", "materially", "materiality" or "Material Adverse Effect", or any
similar qualification in this Agreement.
(d) The Company shall, from time to time prior to the Closing by
written notice to Purchaser, supplement the Schedules to this Agreement, or add
a Schedule to this Agreement, with a corresponding reference to be added in this
Agreement (such added Schedule to be deemed a supplement hereunder) to disclose
any matter which, if occurring prior to the date hereof, would have been
required to be set forth or described on the Schedules to this Agreement. None
of such Schedule supplements shall be deemed to cure the representations and
warranties to which such matters relate and,
95
except as explicitly described in this Agreement, shall not otherwise affect
this Agreement in any respect including with respect to satisfaction of the
conditions set forth in Section 7.2(a) hereof.
11.10 Severability.
If any provision, including any phrase, sentence, clause, section or
subsection, of this Agreement is invalid, inoperative or unenforceable for any
reason, such circumstances shall not have the effect of rendering such
provisions in question invalid, inoperative or unenforceable in any other case
or circumstance, or of rendering any other provision in this Agreement contained
invalid, inoperative, or unenforceable to any extent whatsoever, and such other
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to a Party. Upon such
determination that any provision is invalid, inoperative or unenforceable, the
Parties shall negotiate in good faith to modify this Agreement so as to give
effect to the original intent of the Parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
11.11 Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be deemed an original and all of which shall together constitute one and
the same instrument.
11.12 Governing Law.
OTHER THAN THE APPLICATION OF THE NCBCA TO THE TRANSACTION, THIS
AGREEMENT SHALL BE CONSTRUED, PERFORMED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF
CONFLICT OF LAWS (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK).
11.13 Consent to Jurisdiction, etc.
(a) Each of the Parties hereby irrevocably and unconditionally submits,
for itself and its property, to the exclusive jurisdiction of the Supreme Court
of the State of New York, New York County or the United States District Court
for the Southern District of New York and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement, the
other Transaction Documents or the transactions contemplated by this Agreement
or the other Transaction Documents or for recognition or enforcement of any
judgment relating to the transactions contemplated by this Agreement or the
other Transaction Documents, and each of the
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Parties hereby irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in such court of
the State of New York or, to the extent permitted by law, in such Federal court.
Each of the Parties agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
(b) Each of the Parties hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated by this Agreement in any New York State or Federal court. Each of
the Parties hereby irrevocably waives, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court. The Parties agree that any or all of them may file
a copy of this Section with any court as written evidence of the knowing,
voluntary and bargained agreement between the Parties irrevocably to waive any
objections to venue or to convenience of forum.
(c) Each of the Parties hereby irrevocably and unconditionally consents
to service of process in the manner provided for notices in Section 11.4.
Nothing in this Agreement will affect the right of any Party to this Agreement
to serve process in any other manner permitted by law.
11.14 Waiver of Punitive and Other Damages and Jury Trial.
(a) THE PARTIES TO THIS AGREEMENT EXPRESSLY WAIVE AND FOREGO ANY RIGHT
TO RECOVER PUNITIVE, EXEMPLARY, LOST PROFITS, CONSEQUENTIAL OR SIMILAR DAMAGES
IN ANY ARBITRATION, LAWSUIT, LITIGATION OR PROCEEDING ARISING OUT OF OR
RESULTING FROM ANY CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.
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(c) EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
EITHER OF THE FOREGOING WAIVERS, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVERS, (iii) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (iv)
IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.14.
11.15 Enforcement.
The Parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement or the other Transaction Documents were
not to be performed in accordance with their specific terms. It is accordingly
agreed that the Parties shall be entitled to specific performance of the terms
hereof, this being in addition to any other right and remedy to which they are
entitled under this Agreement or, subject to this Agreement, at law or in
equity.
11.16 Grant of Irrevocable Proxy; Appointment of Proxy.
Each Shareholder hereby irrevocably (subject to Article IX hereof)
grants to, and appoints, Purchaser and Xxxxxx X. Xxxxxxx in his or her capacity
as an officer of Purchaser, and any individual who shall hereafter succeed to
such office of Purchaser, and each of them individually, such Shareholder's
proxy and attorney-in-fact (with full power of substitution), for and in the
name, place and stead of such Shareholder, to vote such Shareholder's Company
Common Stock, or grant a consent, approval or waiver in respect of such Company
Common Stock in connection with any Acquisition Proposal or similar transaction.
Each Shareholder represents that any proxies heretofore given in
respect of such Shareholder's Company Common Stock are not irrevocable, and that
any such proxies are hereby revoked.
Each Shareholder hereby affirms that the irrevocable proxy set forth in
this Section 11.7 is given in connection with the execution of this Agreement to
secure the performance of the obligations of the Shareholder under this
Agreement. Each Shareholder hereby further affirms that the irrevocable proxy is
coupled with an interest and may under no circumstances be revoked. Such
irrevocable proxy shall remain in full force and effect from the date hereof
until the earlier to occur of (i) the termination of this Agreement and (ii) the
Closing Date (regardless of whether such early event occurs within 11 months of
the date hereof). Each Shareholder hereby ratifies and confirms all that such
irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such
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irrevocable proxy is executed and intended to be irrevocable in accordance with
the provisions of Sections 55-7-22 and 55-7-31 of the NCBCA.
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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of
the date first above written.
GS POWER HOLDINGS, LLC
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
COGENTRIX ENERGY, INC.
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Executive Officer
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SHAREHOLDERS:
Xxxxxx X. Xxxxx, Xx. Investment LLC
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Xxxxx X. Xxxxx, Manager
The Revocable Declaration of Trust by
Xxxxxx X. Xxxxx, Xx. dated June 28, 1985
As Amended and Restated
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Xxxxx X. Xxxxx, Trustee
/s/ Xxxxx X. Xxxxx
-----------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx
-----------------------------------------
Xxxxx X. Xxxxx
Estate of Xxxxxx X. Xxxxx
By: /s/ M. Xxxxxx Xxxxx
------------------------------------
M. Xxxxxx Xxxxx, Executor of the Will
of Xxxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx
-----------------------------------------
Xxxxx X. Xxxxx
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