MEMBERSHIP INTEREST PURCHASE AGREEMENT
by and among
MESC CAPITAL, LLC,
a Delaware limited liability company,
and
MOBILE ENERGY SERVICES HOLDINGS, INC.,
an Alabama corporation
Dated as of
January 30, 2004
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TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS; INTERPRETATION ........................................1
SECTION 1.1 Definitions ...............................................1
SECTION 1.2 Rules of Interpretation ...................................9
ARTICLE II. THE PURCHASE AND SALE.............................................10
SECTION 2.1 Purchase and Sale of Interests............................10
SECTION 2.2 Purchase Price and Payment................................10
SECTION 2.3 Available Cash............................................11
SECTION 2.4 Working Capital Balance...................................11
SECTION 2.5 Escrow Account............................................12
ARTICLE III. CLOSING..........................................................14
SECTION 3.1 Time and Place............................................14
SECTION 3.2 Transactions at Closing...................................14
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLER..........................16
SECTION 4.1 Corporate Organization....................................16
SECTION 4.2 Capitalization; Title.....................................16
SECTION 4.3 Subsidiaries and Equity Interests.........................16
SECTION 4.4 Validity of Agreement; Authorization......................16
SECTION 4.5 No Conflict or Violation..................................17
SECTION 4.6 Consents and Approvals....................................17
SECTION 4.7 Absence of Certain Changes or Events......................17
SECTION 4.8 Material Contracts........................................18
SECTION 4.9 Real Property Leases......................................18
SECTION 4.10 Title to Property and Assets.............................19
SECTION 4.11 Condemnation.............................................19
SECTION 4.12 Environmental; Health and Safety Matters.................19
SECTION 4.13 Equipment and Spare Parts................................20
SECTION 4.14 Qualifying Facility Status...............................20
SECTION 4.15 MESC Conduct of Business, Contracts and Liabilities......21
SECTION 4.16 Financial Statements.....................................21
SECTION 4.17 Licenses.................................................22
SECTION 4.18 Bankruptcy Proceedings...................................22
SECTION 4.19 Full Access..............................................22
SECTION 4.20 No Other Representations or Warranties...................22
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER............................23
SECTION 5.1 Corporate Organization....................................23
SECTION 5.2 Validity of Agreement.....................................23
SECTION 5.3 No Conflict or Violation; No Defaults.....................23
SECTION 5.4 Consents and Approvals....................................23
SECTION 5.5 Independent Investigation.................................24
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TABLE OF CONTENTS
Page
ARTICLE VI. COVENANTS.........................................................24
SECTION 6.1 Certain Changes and Conduct of Business ..................24
SECTION 6.2 Available Cash of MESC ...................................25
SECTION 6.3 Equipment and Spare Parts as of the Closing ..............25
SECTION 6.4 Access to Properties and Records .........................25
SECTION 6.5 Advice of Changes ........................................26
SECTION 6.6 Shareholders' Meeting ....................................26
SECTION 6.7 Consents and Approvals ...................................26
SECTION 6.8 Reasonable Efforts .......................................26
SECTION 6.9 Tax Covenants ............................................27
SECTION 6.10 Confidentiality .........................................27
SECTION 6.11 No Fees and Commissions .................................28
SECTION 6.12 No. 8 Power Boiler Casualty Claim .......................29
ARTICLE VII. CONDITIONS TO OBLIGATIONS OF BUYER ..............................30
SECTION 7.1 Representations and Warranties of Seller. ................30
SECTION 7.2 Performance of Seller's Obligations ......................31
SECTION 7.3 Consents and Approvals ...................................31
SECTION 7.4 No Violation of Orders ...................................31
SECTION 7.5 Ownership of MESC Units ..................................31
SECTION 7.6 Conduct of Business and Operations of MESC ...............31
SECTION 7.7 Operation and Maintenance Agreement ......................31
SECTION 7.8 Contract Employee Arrangements ...........................32
SECTION 7.9 Shareholder Approval. ....................................32
SECTION 7.10 Organizational Documents ................................32
SECTION 7.11 Opinions of Counsel.. ...................................32
SECTION 7.12 Required Approvals for Sale of MESC .....................33
SECTION 7.13 Preliminary Closing Statement ...........................33
SECTION 7.14 No Material Adverse Effect. .............................33
SECTION 7.15 FERC Approval. ..........................................33
SECTION 7.16 Tax-Exempt Financing Documents ..........................33
SECTION 7.17 Southern Company and Mirant Parties Liens ...............33
SECTION 7.18 EPA Acid Rain Program Determination .....................33
SECTION 7.19 Tax Certificate .........................................34
SECTION 7.20 Financing ...............................................34
SECTION 7.21 No. 8 Power Boiler Casualty Claim .......................34
SECTION 7.22 Repair and Restoration of No. 8 Power Boiler. ...........34
ARTICLE VIII. CONDITIONS TO OBLIGATIONS OF SELLER ............................35
SECTION 8.1 Purchase Price Payment ...................................35
SECTION 8.2 Deposit of Aggregate Escrow Amount. ......................35
SECTION 8.3 Representations and Warranties of Buyer...................35
SECTION 8.4 Performance of Buyer's Obligations .......................35
SECTION 8.5 Consents and Approvals ...................................35
SECTION 8.6 No Violation of Orders ...................................35
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SECTION 8.7 Shareholder Approval. ....................................36
SECTION 8.8 Member Approval. .........................................36
SECTION 8.9 DTEES Guaranty ...........................................36
SECTION 8.10 Opinions of Counsel .....................................36
SECTION 8.11 Preliminary Closing Statement. ..........................36
SECTION 8.12 Repair and Restoration of No. 8 Power Boiler. ...........36
ARTICLE IX. TERMINATION AND ABANDONMENT ......................................36
SECTION 9.1 Methods of Termination; Upset Date .......................36
SECTION 9.2 Procedure Upon Termination ...............................37
SECTION 9.3 Effect of Termination ....................................38
ARTICLE X. MISCELLANEOUS PROVISIONS ..........................................38
SECTION 10.1 Non-Survival of Representations and Warranties ..........38
SECTION 10.2 Publicity ...............................................38
SECTION 10.3 Successors and Assigns; No Third-Party Beneficiaries ....38
SECTION 10.4 Fees and Expenses .......................................38
SECTION 10.5 Notices .................................................39
SECTION 10.6 Entire Agreement. .......................................40
SECTION 10.7 Waivers and Amendments ..................................40
SECTION 10.8 Severability ............................................40
SECTION 10.9 Titles and Headings .....................................41
SECTION 10.10 Signatures and Counterparts ............................41
SECTION 10.11 Enforcement of this Agreement; Damages .................41
SECTION 10.12 Governing Law ..........................................41
SECTION 10.13 Disclosure .............................................41
SECTION 10.14 Disclaimer of Warranties ...............................42
SECTION 10.15 Consent to Jurisdiction ................................43
SECTION 10.16 No Consequential Damages ...............................43
SECTION 10.17 Non-Recourse Obligations ...............................43
Exhibits
Exhibit 1.1 Contested Liens
Exhibit 8.9 DTEES Guaranty
Disclosure Schedules
Schedule 4.2 MESC Organizational Documents
Schedule 4.5 Conflicts or Violations
Schedule 4.6 Consents and Approvals
Schedule 4.7 Certain Changes or Events
Schedule 4.8 Material Contracts
Schedule 4.9(a) Real Property Leases
Schedule 4.9(b) Enforceability of and Events of Default Under Real
Property Leases
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TABLE OF CONTENTS
Schedule 4.10(a) Permitted Encumbrances
Schedule 4.10(c) Encumbrances and Violations Related to Real Property
Leases
Schedule 4.12(a) Environmental; Health and Safety Matters
Schedule 4.12(b) Environmental Permits
Schedule 4.13(a) MESC Energy Complex
Schedule 4.13(b) Equipment and Spare Parts
Schedule 4.16 Financial Statements
Schedule 4.17 Licenses
Schedule 4.20 Insurance Claims Related to No. 8 Power Boiler Casualty
Claim
Schedule 5.4 Consents and Approvals
Schedule 6.1 Certain Changes and Conduct of Business
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MEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this "Agreement") is
made and entered into as of this 30th day of January, 2004, by and among MESC
CAPITAL, LLC, a Delaware limited liability company ("Buyer"), and MOBILE ENERGY
SERVICES HOLDINGS, INC., an Alabama corporation ("Seller"). Each of Buyer and
Seller are referred to in this Agreement as a "Party" and together as the
"Parties."
RECITALS:
WHEREAS, prior to December 16, 2003 Seller and MESC (as defined in
SECTION 1.1) were involved in a proceeding under Chapter 11 (the "Chapter 11
Proceeding") of the Bankruptcy Code (as defined in SECTION 1.1) in the United
States Bankruptcy Court for the Southern District of Alabama (the "Bankruptcy
Court"); and
WHEREAS, the Bankruptcy Court has confirmed Seller's and MESC's
Third Joint Plan of Reorganization dated October 15,2001, as modified, proposed
by MESC and Seller (the "Joint Plan of Reorganization"), such Joint Plan of
Reorganization has become effective on December 16, 2003, and Seller and MESC
emerged from the Chapter 11 Proceeding and are no longer operating under or at
the direction of the Bankruptcy Court; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, all
of the outstanding membership interests of MESC, upon the terms and subject to
the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual terms, the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I.
DEFINITIONS; INTERPRETATION
SECTION 1.1 Definitions.
When used in this Agreement, the following terms shall have the
respective meanings set forth below:
"Acid Rain Program" shall mean the statutory and regulatory programs
established by Title IV of the Clean Air Act Amendments of 1990.
"Affiliate" of a Person shall mean a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with, the first mentioned Person.
"Aggregate Escrow Amount" shall have the meaning assigned to such
term in SECTION 2.5(a).
"Agreement" shall have the meaning assigned to such term in the Preamble
to this Agreement.
"Amended and Restated Master Operating Agreement" shall mean that certain
Amended and Restated Master Operating Agreement dated as of July 13, 1995, by
and among Xxxxx Paper Company (predecessor in interest to Xxxxxxxx-Xxxxx), S.D.
Xxxxxx Company and Seller.
"Available Cash" shall mean all cash and cash equivalents of MESC, other
than cash and cash equivalents constituting insurance proceeds received by or on
behalf of MESC in respect of the No. 8 Power Boiler Casualty Claim.
"Bankruptcy Code" shall mean Chapter 11 of Title 11 of the United States
Code, 11 U.S.C.ss.ss.101 et seq., as amended.
"Bankruptcy Court" shall have the meaning assigned to such term in the
Recitals to this Agreement.
"Boiler Repair Contract" shall have the meaning assigned to such term in
SECTION 6.12(e).
"Boiler Restoration Plan" shall have the meaning assigned to such term in
SECTION 6.12(d).
"Business Day" shall mean a day other than a Saturday, a Sunday or a day
on which banks are required or authorized to be closed in the state of Alabama.
"Buyer" shall have the meaning assigned to such term in the Preamble to
this Agreement.
"Xxxxxx" shall mean Xxxxxx X. Xxxxxx.
"Xxxxxx Agreement" shall mean that certain letter agreement dated December
18, 2003, by and between MESC and Xxxxxx setting forth the terms and conditions
of Xxxxxx'x engagement by MESC, as amended.
"Xxxxxx Success Fee" shall mean all amounts payable to Xxxxxx as a success
fee or similar fee or compensation under the terms and conditions of the Xxxxxx
Agreement in respect to the consummation of the transactions contemplated by
this Agreement.
"CERCLA" shall have the meaning assigned to such term in the definition of
Environmental Law set forth in SECTION 1.1.
"Chapter 11 Proceeding" shall have the meaning assigned to such term in
the Recitals to this Agreement.
"Closing" shall have the meaning assigned to such term in SECTION 3.1.
"Closing Date" shall have the meaning assigned to such term in SECTION
3.1.
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"Closing Statement" shall have the meaning assigned to such term in
SECTION 2.4(b).
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended.
"Collateral Agent" has the meaning set forth in the Joint Plan of
Reorganization.
"Confidentiality Agreement" shall mean that certain Confidentiality
Agreement dated as of April 12, 2002, by and between DTEES and MESC.
"CPA Firm" shall mean PricewaterhouseCoopers or such other nationally
recognized firm of independent certified public accountants selected jointly by
Buyer and Seller pursuant to SECTION 2.4(b).
"Current Assets" shall mean the current assets of MESC as reflected in the
financial statements of MESC as of the relevant date of determination, excluding
(i) uncollected receivables that are more than 120 days old as of the relevant
date of determination, (ii) inventory, (iii) all insurance proceeds received by
MESC in respect of the No. 8 Power Boiler Casualty Claim, to the extent of the
amount on deposit in a bank account of MESC identified to Buyer as of the
relevant date of determination and (iv) all insurance proceeds to be received by
MESC in respect of the No. 8 Power Boiler Casualty Claim, except to the extent
of any expenses incurred by MESC in connection with the repair and restoration
to service of the No. 8 Power Boiler in excess of the Deductible Amount that
have already been paid by MESC but for which MESC has yet to receive
reimbursement as of the relevant date of determination.
"Current Liabilities" shall mean the current liabilities of MESC as
reflected in the financial statements of MESC as of the relevant date of
determination, excluding all liabilities in connection with or in respect of the
No. 8 Power Boiler Casualty, including, without limitation, all liabilities
related to the repair or restoration to service of the No. 8 Power Boiler.
"Damages" shall mean any and all liabilities, losses, damages, demands,
assessments, claims, costs and expenses, including, without limitation,
interest, awards, judgments, penalties, settlements, fines, costs of
remediation, diminution of value, reasonable fees and expenses of attorneys,
accountants and other professionals sustained or incurred in connection with the
defense or investigation of any claim or cause of action.
"Deductible Amount" means the aggregate total of all deductibles and/or
self-insurance payable by MESC in connection with the No. 8 Power Boiler
Casualty under all policies of insurance, binders and other evidences of
insurance coverage covering the No. 8 Power Boiler Casualty.
"DTEES" shall mean DTE Energy Services, Inc., a Michigan corporation.
"DTEES Guaranty" means a guaranty to be issued by DTEES at Closing in
substantially the form of Exhibit 8.9.
"Easement Agreements" shall have the meaning assigned to such term in
SECTION 4.9(a).
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"Effective Date" shall have the meaning assigned to such term in the Joint
Plan of Reorganization.
"Encumbrances" shall mean, any pledges, options, restrictions on transfer,
proxies and voting or other agreements, liens, claims, charges, mortgages,
security interests, defects, judgments, abstracts or other legal or equitable
encumbrances, limitations or restrictions of any nature whatsoever.
"Environmental Indemnity Agreements" means collectively the: (i) the Pulp
Mill Environmental Indemnity Agreement by and between MESC and Xxxxxxxx-Xxxxx
(as successor to Xxxxx Paper Company, a Pennsylvania corporation ("Xxxxx
Paper")) dated December 12, 1994; (ii) the Tissue Mill Environmental Indemnity
Agreement by and between MESC and Xxxxxxxx-Xxxxx (as successor to Xxxxx Paper)
dated December 12, 1994; (iii) the Paper Mill Environmental Indemnity Agreement
by and between MESC and S.D. Xxxxxx Company a Pennsylvania corporation dated
December 12, 1994; and (iv) the Xxxxx Environmental Indemnity Agreement by and
between MESC and Xxxxxxxx-Xxxxx (as successor to Xxxxx Paper) dated as of
December 12, 1994.
"Environmental Law" shall mean current local, county, state, federal,
and/or foreign law (including common law), statute, code, ordinance, rule,
regulation or other legal obligation relating to the protection of human health
or safety, the environment or natural resources and in effect from time to time,
including, without limitation, the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. section 9601 et seq.), as amended
("CERCLA"), the Resource Conservation and Recovery Act (42 U.S.C. section 6901
et seq.), as amended, the Federal Water Pollution Control Act (33 U.S.C. section
1251 et seq.), as amended, the Clean Air Act (42 U.S.C. section 7401 et seq.),
as amended ("Clean Air Act"), the Toxic Substances Control Act (15 U.S.C.
section 2601 et seq.), as amended, the Occupational Safety and Health Act (29
U.S.C. section 651 et seq.), as amended, the Safe Drinking Water Act (42 U.S.C.
section 300(f) et seq.), as amended, the Hazardous Materials Transportation Act
(49 U.S.C. 5101 et seq), as amended, analogous state, tribal or local laws, and
any similar, implementing or successor law, and any amendment, rule, regulation,
or directive issued thereunder.
"Environmental Permits" shall have the meaning assigned to such term in
SECTION 4.12(a)(v).
"EPA" shall have the meaning assigned to such term in SECTION 4.12(c).
"Escrow Account" shall have the meaning assigned to such term in SECTION
2.5(a).
"Escrow Agent" shall mean a Person to be determined by mutual agreement of
Buyer and Seller.
"Escrow Agreement" shall mean that certain Escrow Agreement by and among
Buyer, Seller and the Escrow Agent to be executed at or before the Closing as
provided herein.
"FERC" shall mean the U.S. Federal Energy Regulatory Commission.
4
"Final Closing Statement" shall have the meaning assigned to such term in
SECTION 2.4(b).
"Final Working Capital Balance" shall have the meaning assigned to such
term in SECTION 2.4(b).
"GAAP" shall mean generally accepted accounting principles in the United
States.
"Governmental Authority" shall have the meaning assigned to such term in
SECTION 4.5.
"Hazardous Material" shall mean any substance, material or waste which is
regulated by any Environmental Law as hazardous, toxic, a pollutant, contaminant
or words of similar meaning, including, without limitation, petroleum, petroleum
products, asbestos, urea formaldehyde and polychlorinated biphenyls.
"HRSG" shall mean the heat recovery steam generator manufactured by
Deltak, LLC owned by MESC.
"IDB" shall mean the Industrial Development Board of the City of Mobile,
Alabama.
"IDB Lease Agreement" shall mean the Amended and Restated Lease and
Agreement dated as of August 1, 1995 among MESC, Seller and the IDB, as amended.
"Intercreditor Agreement" shall mean the Amended and Restated
Intercreditor and Collateral Agency Agreement dated as of November 1, 2003 among
MESC, IDB, the Tax-Exempt Trustee, The Southern Company, the Mirant Parties and
the Collateral Agent, as amended.
"IRS" shall mean the United States Internal Revenue Service.
"Joint Plan of Reorganization" shall have the meaning assigned to such
term in the Recitals.
"Xxxxxxxx-Xxxxx" or "KC" shall mean Xxxxxxxx-Xxxxx Corporation, a Delaware
corporation.
"Knowledge" shall mean the actual knowledge, after reasonable inquiry, of
either of Xxxxxxx or Xxxxxx.
"License" or "Licenses" shall mean licenses, permits, certificates,
franchises, authorizations and approvals issued or granted by any Governmental
Authority necessary for the conduct of the business of Seller or MESC as
currently conducted.
"Material Adverse Effect" shall mean a material adverse effect on the
assets, properties, business, operations or financial condition of MESC, taken
as a whole, it being understood that none of the following shall be deemed to
constitute a Material Adverse Effect: (i) any effect resulting from entering
into this Agreement or the announcement of the transactions contemplated
5
by this Agreement, (ii) any effect resulting from changes in general economic
conditions in the industry in which MESC operates, and (iii) any effect
resulting from changes in the United States or global economy as a whole.
"Material Contract" shall mean any contract, agreement or commitment
(other than the Real Property Leases) to which MESC is a party that (i) involves
the payment or receipt by MESC of amounts in excess of $50,000, (ii) has a
remaining term as of the Closing Date in excess of 6 months or (iii) is
reasonably expected to be material to the business or operations of MESC or the
MESC Energy Complex.
"MESC" shall mean Mobile Energy Services Company, LLC., an Alabama limited
liability company and a wholly-owned subsidiary of Seller.
"MESC Energy Complex" means the energy and chemical recovery complex owned
by MESC and located at the Mobile Facility, as more fully described in Schedule
4.13(a).
"MESC Units" shall mean one-hundred percent (100%) of the outstanding
membership units of MESC.
"Mirant Parties" shall mean Mirant Corporation, a Delaware corporation,
and Mirant Services L.L.C., a Delaware limited liability company.
"Mobile Facility" means, collectively, the tissue mill, pulp mill and
paper mill complex and related assets which are owned by KC and the MESC Energy
Complex located in Mobile, Alabama.
"Negative Working Capital Adjustment" shall have the meaning assigned to
such term in SECTION 2.5(b)(iii).
"Notice of Special Meeting" shall have the meaning assigned to such term
in SECTION 6.6.
"Notice of Self-Certification" shall have the meaning assigned to such
term in SECTION 4.14(a).
"No. 8 Power Boiler" means the No. 8 Power Boiler comprising a part of the
MESC Energy Complex and the equipment and facilities of the MESC Energy Complex
pertaining to the No. 8 Power Boiler.
"No. 8 Power Boiler Casualty" means the casualty event that occurred at
the MESC Energy Complex on November 5, 2003, pursuant to which the No. 8 Power
Boiler was severely damaged, and all damage to persons or property incurred by
MESC in connection therewith.
"No. 8 Power Boiler Casualty Claim" means collectively, all insurance
claims of MESC under all policies of insurance, binders and other evidences of
insurance coverage covering the No. 8 Power Boiler Casualty.
"O&M Agreement" shall have the meaning assigned to such term in SECTION
7.7(a).
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"Objection" shall have the meaning assigned to such term in SECTION
2.4(b).
"OEC" means Operational Energy Corp.
"OPCO" shall have the meaning assigned to such term in SECTION 7.7(b).
"OPCO Agreement" shall have the meaning assigned to such term in SECTION
7.7(b).
"Organizational Documents" shall mean articles or certificates of
incorporation, bylaws, articles or certificates of formation or organization,
limited liability company operating agreements or regulations, partnership or
limited partnership agreements or other formation or governing documents of a
particular entity.
"Owner's Title Policy" shall mean an owners policy of title insurance
issued to MESC by the Title Company at Buyer's sole cost and expense, pursuant
to which the Title Company insures MESC's leasehold interests under the Real
Property Leases, subject only to Permitted Encumbrances. The Owner's Title
Policy shall be acceptable in form and substance to Buyer.
"Party" shall have the meaning assigned to such term in the Preamble to
this Agreement.
"Permitted Encumbrance" shall mean: (i) liens, encumbrances or
imperfections of title that do not materially detract from the value of, or the
present use or marketability of the property affected thereby; (ii) mortgage and
security interests granted pursuant to the Tax-Exempt Financing Documents, which
have been subordinated to the liens granted to Buyer's financing parties on
terms and conditions satisfactory to Buyer and such financing parties; (iii)
minor imperfections of title which are not, individually or in the aggregate,
reasonably expected to have a Material Adverse Effect; (iv) liens for current
Taxes that are not yet due and payable; (v) mechanics, materialmans or other
similar statutory liens arising in the ordinary course of MESC's business and
securing obligations that are not yet due and payable, or that are being
contested in good faith pursuant to appropriate proceedings and that are
specifically identified on Exhibit 1.1; (vi) liens specifically identified on
the financial statements set forth in Schedule 4.16 or on any other Schedule to
this Agreement; and (vii) zoning, building, use and other applicable
governmental ordinances, if any, that do not impair the present use of the
property affected thereby.
"Person" shall mean an individual, corporation, association, trust,
limited liability company, limited partnership, limited liability partnership,
partnership, incorporated organization, other entity or group (as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended).
"Preliminary Working Capital Balance" shall have the meaning assigned to
such term in SECTION 2.4(a).
"Project Documents" shall have the meaning assigned to such term in
Exhibit A of the Amended and Restated Master Operating Agreement.
"PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
amended, and the rules and regulations promulgated pursuant thereto.
7
"Purchase Price" shall have the meaning assigned to such term in SECTION
2.2(a), as adjusted pursuant to SECTION 2.2(b) and SECTION 2.5.
"PURPA" shall mean The Public Utility Regulatory Policies Act of 1978.
"Qualifying Facility" shall have the meaning set forth in 18 C.F.R. Sec.
292.101 (b)(1) or such successor regulation(s) as FERC may promulgate from time
to time hereafter.
"Real Property Leases" shall have the meaning assigned to such term in
SECTION 4.9(a).
"Remaining Deductible Amount" shall mean the portion of the Deductible
Amount that remains unpaid as of the Closing, if any.
"Review Period" shall have the meaning assigned to such term in SECTION
2.4(b).
"Seller" shall have the meaning assigned to such term in the Preamble of
this Agreement.
"Shareholder Mailing" shall have the meaning assigned to such term in
SECTION 6.6.
"Shareholder Materials" shall have the meaning assigned to such term in
SECTION 6.6.
"Shareholders" shall mean all of the holders of the Shares as of the
Closing.
"Shareholders' Meeting" shall have the meaning assigned to such term in
SECTION 6.6.
"Shares" shall mean all of the outstanding shares of the capital stock of
Seller.
"Xxxxxxx" shall mean Xxxxx X. Xxxxxxx.
"Xxxxxxx Agreement" shall mean that certain letter agreement dated
December 18, 2003, by and between MESC and Xxxxxxx setting forth the terms and
conditions of Xxxxxxx'x engagement as the Chief Executive Officer of MESC, as
amended.
"Xxxxxxx Success Fee" shall mean all amounts payable to Xxxxxxx as a
success fee or similar fee or compensation under the terms and conditions of the
Xxxxxxx Agreement in respect to the consummation of the transactions
contemplated by this Agreement.
"Tax" or "Taxes" shall mean any and all federal, state, local and foreign
taxes and other governmental levies, fees, imposts and duties of whatever kind
(including any interest, penalties or additions to the tax imposed in connection
therewith or with respect thereto), including, without limitation, taxes imposed
on, or measured by, income, franchise, profits or gross receipts, and also ad
valorem, value added, sales, use, service, real or personal property, capital
stock, license, payroll, withholding, employment, social security, workers'
compensation, unemployment compensation, utility, severance, production, excise,
stamp, occupation, premium, windfall profits, transfer and gains taxes and
customs duties.
"Tax-Exempt Debt" shall have the meaning assigned to such term in SECTION
2.2(c).
8
"Tax-Exempt Financing Documents" shall mean the Tax-Exempt Indenture, the
IDB Lease Agreement, the Intercreditor Agreement and the security documents
securing the same in favor of the Collateral Agent.
"Tax-Exempt Indenture" shall mean the Amended and Restated Trust Indenture
dated as of August 1, 1995 between the IDB and the Tax-Exempt Trustee, as
amended.
"Tax-Exempt Trustee" has the meaning set forth in the Joint Plan of
Reorganization.
"Tax Returns" shall mean returns, reports, exhibits, schedules,
information statements and other documentation (including any additional or
supporting material) filed or maintained, or required to be filed or maintained,
in connection with the calculation, determination, assessment or collection of
any Tax and shall include any amended returns required as a result of
examination adjustments made by the IRS or other Tax authority.
"Title Company" shall mean a title insurance company selected by Buyer and
authorized to conduct a title insurance business in the State of Alabama.
"Transaction Documents" shall mean this Agreement, the Escrow Agreement
and the DTEES Guaranty.
"Transfer Taxes" shall have the meaning assigned to such term in SECTION
6.9(c).
"Underlying Real Property Leases" shall mean, with respect to each Real
Property Lease under which MESC is the sublessee, the real property leases or
subleases directly or indirectly between the lessor under such Real Property
Lease and the fee owner of the real property subject to such Real Property
Lease.
"Underwriter" means Lloyd's and Companies, the underwriter for all
insurance policies, binders and other evidences of insurance coverage covering
the No. 8 Power Boiler Casualty.
"Working Capital" shall mean Current Assets less Current Liabilities.
"Working Capital Baseline Amount" shall mean Zero Dollars ($0).
SECTION 1.2 Rules of Interpretation.
Unless the context clearly requires otherwise, in this Agreement:
(i) all references to Articles, Sections, Schedules and Exhibits shall be
construed as references to Articles and Sections of and Schedules and Exhibits
to this Agreement; (ii) all references to agreements, documents or other
instruments shall include all amendments, modifications and supplements thereto
and replacements thereof; (iii) a reference to any Person shall include such
Person's successors and permitted assigns; and (iv) the words "include" or
"including" shall be construed to mean "including, but not limited to."
9
ARTICLE II.
THE PURCHASE AND SALE
SECTION 2.1 Purchase and Sale of Interests.
On and subject to the terms and conditions of this Agreement, Seller
agrees to sell, convey, transfer and assign all of its right, title and interest
in the MESC Units to Buyer, and Buyer agrees to purchase, accept and receive
from Seller, the MESC Units.
SECTION 2.2 Purchase Price and Payment.
(a) Purchase Price. The purchase price for the sale, conveyance, transfer
and assignment of the MESC Units to Buyer (the "Purchase Price") shall be an
amount equal to Thirty Million Dollars ($30,000,000), less the Remaining
Deductible Amount, which Purchase Price shall be subject to further adjustment
in accordance with SECTION 2.2(b) and SECTION 2.5.
(b) Purchase Price Adjustments.
The Purchase Price determined in accordance with SECTION 2.2(a)
shall be further adjusted pursuant to this SECTION 2.2(b).
(i) If MESC sells or otherwise disposes of the HRSG and associated
inventoried components prior to the Closing, the Purchase Price shall be
reduced by Nine Hundred Fifty Thousand Dollars ($950,000).
(ii) If the Preliminary Working Capital Balance determined as of the
Closing Date in accordance with SECTION 2.4(a) is less than or equal to
the Working Capital Baseline Amount, the Purchase Price shall be decreased
by the amount by which the Preliminary Working Capital Balance is less
than the Working Capital Baseline Amount.
(iii) If the Preliminary Working Capital Balance determined as of
the Closing Date in accordance with SECTION 2.4(a) exceeds the Working
Capital Baseline Amount, the Purchase Price shall be increased by the
amount of such excess.
(iv) If the quantity and quality of equipment and spare parts owned
by MESC and located at the MESC Energy Complex as of the Closing Date are
determined by Buyer to be less than the quantity and quality of equipment
and spare parts shown on Schedule 4.13(b), the Purchase Price shall be
reduced by the difference between the value of the equipment and spare
parts shown on Schedule 4.l3(b) (excluding those spare parts specified as
such on Schedule 4.13(b) consisting of inventoried components associated
with the HRSG if MESC sells or otherwise disposes of the HRSG prior to the
Closing in accordance with SECTION 2.2(b)(i)) and the value of the
equipment and spare parts as of the Closing Date.
10
(v) If the Closing occurs after April 30, 2004, in addition to the
adjustments to the Purchase Price set forth in SECTIONS 2.2(b)(i)-(iv),
the Parties shall negotiate in good faith further appropriate adjustments
to the Purchase Price.
(c) Payment. On the Closing Date Buyer shall wire transfer to Seller in
immediately available funds, to the account or accounts specified by Seller to
Buyer on or prior to the Business Day immediately preceding the Closing Date, an
amount equal to: (i) the Purchase Price as adjusted in accordance with SECTION
2.2(b), less (ii) One Million Dollars ($1,000,000) as a credit to the Purchase
Price relating to the One Million Dollars ($1,000,000) principal amount of 6.95%
Solid Waste Revenue Refunding Bonds Series 1995 due 2020 (the "Tax-Exempt Debt")
with respect to which MESC then remains obligated to pay pursuant to the IDB
Lease Agreement; and less (iii) the Aggregate Escrow Amount, which amount shall
be deposited with the Escrow Agent in accordance with SECTION 2.5.
SECTION 2.3 Available Cash.
At any time, and from time to time, prior to the Closing, Seller
may, to the extent available and permitted to be used for such purpose under
applicable law and the Tax-Exempt Financing Documents and other Contracts
applicable to MESC or its properties, cause MESC to distribute or pay all or any
portion of Available Cash held by MESC to Seller or to the creditors of MESC,
and no adjustment of the Purchase Price shall be made in respect of any such
distribution or payment except to the extent effected as part of any Working
Capital adjustments made pursuant to and in accordance with SECTION 2.2(b) and
SECTION 2.5.
SECTION 2.4 Working Capital Balance.
(a) Prior to the Closing, Buyer and Seller shall in good faith, using
their reasonable efforts, prepare a statement (the "Preliminary Closing
Statement"), which shall set forth in reasonable detail an estimate of the
amount of Working Capital of MESC as of the Closing Date based upon a pro forma
balance sheet as of Closing prepared no more than 10 days prior to the
anticipated Closing Date. The Working Capital balance shown on the Preliminary
Closing Statement shall be referred to as the "Preliminary Working Capital
Balance."
(b) Within 60 days following the Closing, Buyer shall prepare and deliver
to Seller a statement (the "Closing Statement"), which shall set forth in
reasonable detail the amount of Working Capital of MESC as of the Closing Date
(calculated before giving effect to any changes to Working Capital effected
after the Closing). Following its receipt from Buyer of the Closing Statement,
Seller shall have 30 Business Days to review the Closing Statement and to inform
Buyer in writing of any disagreement (the "Objection") which it may have with
the Closing Statement, which Objection shall specify in reasonable detail
Seller's disagreement with the Closing Statement. Buyer agrees to cause MESC to
give Seller and its authorized representatives reasonable access to such
employees, offices and other facilities and such books and records of MESC as
are reasonably necessary to allow Seller and its authorized representatives to
examine and evaluate the Closing Statement. If Buyer does not receive the
Objection within such 30 Business Day period, the amount of Working Capital set
forth on the Closing Statement delivered pursuant to this SECTION 2.4(b) shall
be deemed to have been
11
accepted by Seller and shall become binding upon Seller. If Seller timely
delivers an Objection to Buyer, Buyer shall then have 15 Business Days from the
date of receipt of such Objection (the "Review Period") to review and respond to
the Objection. Buyer and Seller shall attempt in good faith to resolve any
disagreements with respect to the determination of Working Capital of MESC as of
the Closing Date. If they are unable to resolve all of their disagreements with
respect to the determination of Working Capital of MESC as of the Closing Date
within 15 Business Days following the expiration of the Review Period, they may,
at the option of either Buyer or Seller, refer their differences to the CPA
Firm, or if the CPA Firm declines to accept such engagement, a nationally
recognized firm of independent certified public accountants selected jointly by
Buyer and Seller (which jointly selected firm shall then constitute the "CPA
Firm"), who shall determine only with respect to the differences so submitted,
whether and to what extent, if any, the amount of Working Capital of MESC as of
the Closing Date as set forth in the Closing Statement requires adjustment.
Buyer and Seller shall direct the CPA Firm to use its reasonable efforts to
render its determination within 30 Business Days after the issue is first
submitted to the CPA Firm. The CPA Firm's determination shall be conclusive and
binding upon Buyer and Seller. The fees and disbursements of the CPA Firm shall
be shared equally by Buyer and Seller. Buyer and Seller shall make readily
available to the CPA Firm all relevant books and records relating to the Closing
Statement and all other items reasonably requested by the CPA Firm. The Closing
Statement as agreed to by Buyer and Seller or as determined by the CPA Firm
shall be referred to as the "Final Closing Statement," shall be executed by
Buyer and Seller and a copy thereof shall be delivered to the Escrow Agent. The
Working Capital balance shown on the Final Closing Statement shall be referred
to as the "Final Working Capital Balance."
(c) The Preliminary Closing Statement, the Closing Statement and the Final
Closing Statement shall be prepared in accordance with GAAP and on a basis
consistent with MESC's financial statements attached hereto as Schedule 4.16,
using the same accounting methods, policies, practices, procedures and
adjustments as were used in the preparation of such financial statements.
Notwithstanding the foregoing, to the extent the accounting policies and
practices used in preparing the Preliminary Closing Statement and MESC's
financial statements attached hereto as Schedule 4.16 are not in accordance with
GAAP, the accounting policies and practices used in preparing the Preliminary
Closing Statement and MESC's financial statements attached hereto as Schedule
4.16 will be used in preparing the Closing Statement and the Final Closing
Statement.
SECTION 2.5 Escrow Account.
(a) At the Closing, Buyer shall deposit with the Escrow Agent an amount
equal to the greater of (i) the Preliminary Working Capital Balance and (ii) One
Million Five Hundred Thousand Dollars ($1,500,000) (the "Aggregate Escrow
Amount"), which Aggregate Escrow Amount shall be held by the Escrow Agent in an
interest bearing account (the "Escrow Account") and distributed by the Escrow
Agent in accordance with the Escrow Agreement.
(b) The Aggregate Escrow Amount and all accrued interest and other
earnings thereon shall be distributed by the Escrow Agent in accordance with the
Escrow Agreement, which shall provide, among other things, as follows:
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(i) The Escrow Agent shall hold the Aggregate Escrow Amount until such
time as the Working Capital of MESC as of the Closing Date has been finally
determined pursuant to the Final Closing Statement in accordance with the
provisions of SECTION 2.4 and the Escrow Agent has received a copy of such Final
Closing Statement executed by both Buyer and Seller.
(ii) Final Working Capital Balance exceeds Preliminary Working Capital
Balance.
(A) If the Final Working Capital Balance of MESC exceeds the
Preliminary Working Capital Balance, the Purchase Price shall be
increased by the amount of such excess (the "Positive Working
Capital Adjustment"), and the Escrow Agent shall immediately pay to
Seller the entire Aggregate Escrow Amount and all accrued interest
and other earnings thereon. In addition, Buyer shall wire transfer
to Seller to the account or accounts specified by Seller immediately
available funds in an amount equal to the Positive Working Capital
Adjustment.
(iii) Preliminary Working Capital Balance exceeds Final Working Capital
Balance.
(A) If the Preliminary Working Capital Balance exceeds the
Final Working Capital Balance of MESC, the Purchase Price shall be
decreased by the amount of such excess (the "Negative Working
Capital Adjustment"), and the Escrow Agent shall immediately pay to
Buyer in cash out of the Escrow Account the amount of the Negative
Working Capital Adjustment and all accrued interest and other
earnings which have accrued thereon up to the amount available in
the Escrow Account. Within five (5) Business Days following the
aforementioned payment to Buyer, the Escrow Agent shall distribute
to Seller all funds remaining in the Escrow Account after such
payment. If funds are insufficient in the Escrow Account to make
such payment to Buyer, because for example, the Final Working
Capital Balance is less than zero, then Seller shall wire transfer
to Buyer to the account or accounts specified by Buyer immediately
available funds in an amount equal to the difference between the
Negative Working Capital Adjustment and the Aggregate Escrow Amount.
(iv) Preliminary Working Capital Balance equals Final Working Capital
Balance.
(A) If the Preliminary Working Capital Balance equals the
Final Working Capital Balance of MESC, the Escrow Agent shall
immediately pay to Seller the entire Aggregate Escrow Amount and all
accrued interest and other earnings thereon.
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(c) Each of Buyer and Seller shall be responsible for and shall pay 50% of
all fees, costs and expenses payable to the Escrow Agent pursuant to the Escrow
Agreement.
ARTICLE III.
CLOSING
SECTION 3.1 Time and Place.
Subject to the provisions of ARTICLE IX hereof as to termination of
this Agreement, the purchase and sale of the MESC Units will take place at a
closing (the "Closing") at the offices of Hunton & Xxxxxxxx at 11:00 a.m. local
time on the earliest practicable date after all of the conditions precedent to
each Party's obligations hereunder as specified in ARTICLE VII and ARTICLE VIII
have been satisfied or waived or such other time and place as Buyer and Seller
may mutually agree in writing. The date on which the Closing is actually held is
the "Closing Date."
SECTION 3.2 Transactions at Closing.
At the Closing, the following shall occur:
(a) The Purchase Price shall be payable to Seller in accordance with the
provisions of SECTION 2.2;
(b) Seller shall assign and transfer the MESC Units to Buyer, free of any
Encumbrances, by execution and delivery of a xxxx of sale with respect to such
MESC Units and such other instruments of transfer or documents necessary to
effect transfer of the title of the MESC Units to be sold by Seller to Buyer and
to permit registration of such transfer in the registry of members of MESC in
accordance with this Agreement.
(c) Buyer, Seller and the Escrow Agent shall execute and deliver the
Escrow Agreement contemplated by SECTION 2.5(b);
(d) Buyer shall deposit the Aggregate Escrow Amount with the Escrow Agent
in accordance with the provisions of SECTION 2.5(a);
(e) Seller shall cause MESC to deliver to Buyer evidence reasonably
satisfactory to Buyer that the Xxxxxx Agreement and the Xxxxxxx Agreement and
all other agency and employment arrangements with MESC have been terminated and
that all of MESC's obligations therein and claims against MESC arising
therefrom, if any, have been fully discharged and paid in full, waived or
released;
(f) Seller shall cause MESC to deliver to Buyer evidence reasonably
satisfactory to Buyer that the O&M Agreement has been terminated and that all of
MESC's obligations therein and claims against MESC arising therefrom, if any,
have been fully discharged and paid in full, waived or released;
14
(g) Buyer shall cause DTEES to execute and deliver to Seller the DTEES
Guaranty;
(h) Seller shall cause MESC to deliver to Buyer written resignations,
effective as of the Closing, by Seller, Xxxxxxx, Xxxxxx and each other Person,
if any, who, immediately prior to the Closing, is a manager, a director or an
officer of MESC;
(i) Seller shall deliver to Buyer a certificate of Seller certifying as to
(i) MESC's articles of organization, limited liability company agreement and
incumbency of officers immediately prior to the Closing; (ii) Seller's articles
of incorporation, by-laws, and incumbency of officers immediately prior to the
Closing; and (iii) the resolutions of the board of directors of Seller approving
this Agreement and the transactions contemplated hereby and the vote of the
Shareholders of Seller approving this Agreement and the transactions
contemplated hereby as required under applicable law;
(j) Seller shall deliver to Buyer a certificate of Seller certifying as to
the matters set forth in SECTION 7.1 and SECTION 7.2;
(k) Buyer shall deliver to Seller a certificate of Buyer certifying as to
Buyer's certificate of formation, limited liability company agreement and
incumbency of officers immediately prior to the Closing and the resolutions of
Buyer's managing member or board of directors approving this Agreement and the
transactions contemplated hereby as required under applicable law;
(l) Buyer shall deliver to Seller a certificate of Buyer certifying as to
the matters set forth in SECTION 8.3 and SECTION 8.4.
(m) Seller shall deliver to Buyer a certificate from the Alabama
Department of Revenue confirming that all Taxes owed in relation to MESC have
been paid or that no Taxes are due; and
(n) The Parties shall execute and deliver any and all other certificates,
documents and instruments as may be reasonably required to consummate the
transactions contemplated by this Agreement.
The foregoing transactions shall be deemed to occur simultaneously
at the Closing.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLER
As of the date hereof, Seller hereby represents and warrants to
Buyer the following:
SECTION 4.1 Corporate Organization.
Seller is a corporation duly organized, validly existing and in good
standing under the laws of Alabama. MESC is a limited liability company, duly
organized, validly existing and in good standing under the laws of Alabama. Each
of Seller and MESC has all requisite power and authority and all governmental
licenses, authorizations, permits, consents and approvals to own its properties
and assets and to conduct its business as now conducted, except where the
failure to have such licenses, authorizations, permits, consents or approvals
would not have a Material Adverse Effect. MESC is duly qualified to do business
as a foreign entity and is in good standing in each jurisdiction where the
character of the properties owned or leased by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified or in good standing would not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 4.2 Capitalization; Title.
All of the MESC Units are owned of record and beneficially by
Seller. All of the MESC Units have been validly issued, and are fully paid and
nonassessable. The MESC Units represent all of the membership units in MESC.
Except for this Agreement, there are no outstanding options, warrants,
agreements, conversion rights, preemptive rights or other rights to subscribe
for, purchase or otherwise acquire the MESC Units or other membership units or
equity interests in MESC. There are no voting trusts or other agreements or
understandings to which Seller is a party with respect to the voting of the MESC
Units. There is no indebtedness of Seller or MESC having general voting rights
issued and outstanding. Except for this Agreement, there are no outstanding
obligations of any Person to repurchase, redeem or otherwise acquire outstanding
MESC Units or any securities convertible into or exchangeable for any MESC
Units. Seller has valid and marketable title to the MESC Units free and clear of
any Encumbrances. Upon the transfer of the MESC Units to Buyer at the Closing in
accordance with SECTION 3.2(b), Buyer will constitute a protected purchaser with
respect to the MESC Units under Article 8 of the Uniform Commercial Code as
enacted and in effect in the State of New York. True and correct copies of the
Organizational Documents of MESC with all amendments thereto to the date hereof
are attached at Schedule 4.2.
SECTION 4.3 Subsidiaries and Equity Interests.
MESC has no subsidiaries and does not own, directly or indirectly,
any shares of capital stock, voting rights or other equity interests or
investments in any other Person.
SECTION 4.4 Validity of Agreement; Authorization.
16
Seller has the full corporate power to enter into this Agreement and
each of the other Transaction Documents to which Seller is a party. The
execution and delivery by Seller of this Agreement and each of the other
Transaction Documents to which Seller is a party and the performance of Seller's
obligations hereunder and thereunder have been duly authorized by the board of
directors of Seller and, as of the Closing, will have been duly authorized by
the Shareholders, and no other proceedings on the part of Seller are necessary
to authorize such execution, delivery and performance. This Agreement has been
duly executed by Seller and constitutes Seller's valid and binding obligation
enforceable against Seller in accordance with its terms (except to the extent
that its enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar law affecting the enforcement of creditors'
rights generally or by general equitable principles).
SECTION 4.5 No Conflict or Violation.
Except as set forth on Schedule 4.5, the execution, delivery and
performance by Seller of this Agreement does not and will not (a) violate or
conflict with any provision of the Organizational Documents of Seller, (b)
violate any applicable provision of law, statute, judgment, order, writ,
injunction, decree, award, rule or regulation of any foreign, federal, tribal,
state or local government, court, arbitrator, agency or commission or other
governmental or regulatory body or authority ("Governmental Authority"), (c)
violate, result in a breach of, constitute (with due notice or lapse of time or
both) a default or cause any obligation, penalty or premium to arise or accrue
under any contract, lease, loan agreement, mortgage, security agreement, trust
indenture or other agreement or instrument to which MESC or Seller is a party or
by which MESC or Seller is bound or to which any of MESC's or Seller's
properties or assets is subject, (d) result in the creation or imposition of any
Encumbrance upon any of the properties or assets of MESC or (e) result in the
cancellation, modification, revocation or suspension of any License of MESC,
except, in the case of clauses (b), (c) and (e), such as is not reasonably
expected to have a Material Adverse Effect.
SECTION 4.6 Consents and Approvals.
Except as disclosed on Schedule 4.6, no consent, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person (on the part of Seller or MESC) is
required as a condition to the execution and delivery of this Agreement by
Seller or the performance of its obligations hereunder, except where the failure
to obtain or make any such consent, approval, authorization, filing,
registration or qualification is not reasonably expected to have a Material
Adverse Effect.
SECTION 4.7 Absence of Certain Changes or Events.
Except as set forth in Schedule 4.7, from and including the
Effective Date, the business and operations of MESC have been conducted in the
ordinary course consistent with past practices, and MESC has not taken any
action that, if taken after the date hereof, would constitute a breach of the
covenants set forth in SECTION 6.1. From and including the Effective Date, there
has not been any event or condition that has had, or is reasonably expected to
have, a Material Adverse Effect.
17
SECTION 4.8 Material Contracts.
Schedule 4.8 sets forth a true and complete list of all Material
Contracts to which MESC is a party. Each Material Contract is valid, binding
upon and enforceable against MESC and, to Seller's Knowledge, each of the other
parties thereto in accordance with its terms, and is in full force and effect on
the date hereof, except where a failure to be so valid, binding or enforceable
or in full force or effect is not reasonably expected to have a Material Adverse
Effect. Except as set forth on Schedule 4.8, neither MESC nor, to the Knowledge
of Seller, any other party to any Material Contract is in violation or breach
of, or default under (and no event has occurred that with notice or the lapse of
time or both would constitute a violation or breach of, or a default under) any
term, condition or provision of such Material Contract, except where such
violation, breach or default is not, individually or in the aggregate,
reasonably expected to have a Material Adverse Effect. True, correct and
complete copies of all contracts and agreements listed on Schedule 4.8 have
previously been provided or made available by Seller to Buyer as of the date of
this Agreement. To Seller's Knowledge, MESC is not a party to any contracts,
agreements or commitments not listed on Schedule 4.8 which, in the aggregate,
involve the payment or receipt by MESC of more than $100,000.
SECTION 4.9 Real Property Leases.
(a) To the Knowledge of Seller, Schedule 4.9(a) lists all real property
leases in Seller's or MESC's possession under which MESC is a lessee, sublessee,
lessor or sublessor, together with all agreements in Seller's or MESC's
possession related to such real property leases (the "Real Property Leases"),
all Underlying Real Property Leases in Seller's or MESC's possession with
respect to the real property subject to the Real Property Leases, and all
easement agreements in Seller's or MESC's possession pursuant to which
beneficial easements in favor of MESC or easements appurtenant to the real
property subject to the Real Property Leases have been granted (the "Easement
Agreements"). To the Knowledge of Seller, MESC owns no material fee, leasehold
or other possessory interest in real property other than pursuant to the
agreements identified on Schedule 4.9(a) or as otherwise identified on Schedule
4.9(a).
(b) To the Knowledge of Seller, except as set forth in Schedule 4.9(b):
(i) all Real Property Leases and Easement Agreements are valid, binding and
enforceable against MESC and each other party thereto (or in the case of the
Easement Agreements, the real property burdened thereby) in accordance with
their terms; (ii) there are no existing defaults by MESC or any other party
thereunder; and (iii) no event has occurred which (whether with or without
notice, lapse of time or both) would constitute a default by MESC or any other
party thereunder.
(c) Seller has delivered or made available to Buyer true, correct and
complete copies of each of the Real Property Leases, Underlying Real Property
Leases and Easement Agreements that are in the possession of Seller or MESC.
Copies of any current surveys pertaining to the real property subject to Real
Property Leases in MESC's or Seller's possession have heretofore been made
available to Buyer.
18
SECTION 4.10 Title to Property and Assets.
(a) Except for Permitted Encumbrances and as set forth on Schedule
4.10(a), MESC owns its personal properties and assets, free and clear of any
Encumbrances. To Seller's Knowledge, there is no material risk of imminent
foreclosure with respect to any Permitted Encumbrance.
(b) Copies of any title abstracts, title insurance commitments, title
insurance policies and title opinions in MESC's or Seller's possession relating
to the Real Property Leases, Easement Agreements or MESC's or Seller's lenders'
interest in the real property subject to the Real Property Leases and Easement
Agreements have heretofore been made available to Buyer.
(c) Except for the Underlying Real Property Leases, the Real Property
Leases, the Permitted Encumbrances and the Encumbrances identified on the
attached Schedule 4.10(c), to Seller's Knowledge, (i) there are no Encumbrances
on the real property subject to the Real Property Leases or the Easement
Agreements and (ii) there are no present violations by MESC or Seller, or to
Seller's Knowledge, any other party to the Real Property Leases, on the real
property subject to the Real Property Leases of any enforceable covenants,
conditions or restrictions nor do any of the existing improvements located
thereon violate any applicable zoning ordinances, except for such violations as
would not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 4.11 Condemnation.
Neither Seller nor MESC has received any written notices of, and
neither Seller nor MESC has any Knowledge of, any pending or threatened
proceedings or actions by any Governmental Authority to condemn or take by power
of eminent domain all or any part of the real property subject to the Real
Property Leases or other assets owned by MESC.
SECTION 4.12 Environmental; Health and Safety Matters.
(a) Except as set forth on Schedule 4.12(a):
(i) MESC's operations are in compliance with all applicable
Environmental Laws, except where failure to comply is not, individually or
in the aggregate, reasonably expected to have a Material Adverse Effect;
(ii) Neither Seller nor MESC has received any written request for
information, or any written notification that it is a potentially
responsible party, under CERCLA or any similar state law with respect to
any site allegedly connected to the activities or operations of MESC;
(iii) There are no material writs, injunctions, decrees, orders or
judgments outstanding, or any actions, suits, proceedings or
investigations pending or, to Seller's Knowledge, threatened involving
MESC relating to (A) its compliance with any Environmental Law, (B) the
release, disposal, discharge, spill, treatment, storage or
19
recycling of Hazardous Materials into the environment at any location, or
(C) the exposure or alleged exposure of any person to Hazardous Materials;
(iv) There has been no release, disposal discharge, or spill of, or
exposure of any person to, Hazardous Materials at any location which is
reasonably expected to result in MESC incurring in the future any material
liability under Environmental Laws or any future liability under the
Environmental Indemnity Agreements:
(v) MESC has obtained and currently maintains all Licenses which are
required under Environmental Laws for the operation of its business
(collectively, "Environmental Permits"), is in compliance with all such
Environmental Permits, except to the extent that any failure to comply,
individually or in the aggregate, is not reasonably expected to have a
Material Adverse Effect, and to Seller's Knowledge, all such Environmental
Permits are in effect and no appeal or any other action is pending to
revoke any such Environmental Permit.
(b) To the Knowledge of Seller, a complete list of the Environmental
Permits is set forth on Schedule 4.12(b), and Seller has provided or made
available to Buyer a true, correct and complete copy of each such Environmental
Permit.
(c) To the Knowledge of Seller, all information provided to the United
States Environmental Protection Agency ("EPA") by or on behalf of MESC in
connection with the request for and determination issued by EPA on August 8,
2003, regarding the applicability of Title IV of the Clean Air Act to facilities
owned and operated by MESC is accurate.
SECTION 4.13 Equipment and Spare Parts
(a) Schedule 4.13(a) sets forth an accurate description of the MESC Energy
Complex, including the major equipment comprising such MESC Energy Complex.
(b) Schedule 4.13(b) sets forth a list of all material spare parts and
equipment MESC will have on hand at the MESC Energy Complex on the Closing Date.
SECTION 4.14 Qualifying Facility Status.
(a) MESC filed a notice of self-certification with the FERC with respect
to the MESC Energy Complex, certifying the MESC Energy Complex as a Qualifying
Facility, in accordance with 18 C.F.R. Sec. 292.207(a) on September 26, 2003
("Notice of Self-Certification") that accurately describes the equipment
configuration of the MESC Energy Complex and the ownership and operation of the
MESC Energy Complex, and the MESC Energy Complex has been configured, owned and
operated as described in such Notice of Self-Certification in all material
respects at all times from and including the Effective Date.
(b) At all times from and including the Effective Date, the MESC Energy
Complex has been, and is, a Qualifying Facility.
20
SECTION 4.15 MESC Conduct of Business, Contracts and Liabilities
(a) MESC (i) has not engaged in any business other than the acquisition,
ownership and operation of the MESC Energy Complex, (ii) is not a party to any
Material Contract other than the Material Contracts listed on Schedule 4.8, and
(iii) has no liability in respect of any indebtedness for borrowed money other
than the Tax-Exempt Debt in the principal amount of $1 million in accordance
with the Tax-Exempt Financing Documents.
(b) Since the Effective Date, all Tax Returns that are or were required to
be filed by or with respect to MESC, either separately or as a member of a group
of companies, have been filed on a timely basis in accordance with applicable
legal requirements and are true, correct and complete in all material respects.
All Taxes due as shown on such returns, by assessment or otherwise for which
MESC is or prior to Closing could become liable have been paid. There are no
audits or other proceedings pending or, to the Knowledge of Seller or MESC,
threatened with any governmental authority with respect to any such Taxes or
returns.
(c) To the Knowledge of Seller, MESC is and at all times has been either
(i) a "pass-through" entity, taxed as a partnership for federal and state income
tax purposes or (ii) disregarded for federal and state income tax purposes as a
single member limited liability company. From and after the Effective Date,
there will be no tax sharing agreement to which MESC is a party or by which it
is bound or pursuant to which MESC is or could become liable for any payment
with respect to Taxes since the Effective Date.
SECTION 4.16 Financial Statements
(i) The unaudited annual balance sheet, statements of income and
retained earnings and statements of changes in cash flow of MESC (collectively
the "Financial Statements") for the fiscal year ended December 31, 2003 are set
forth on Schedule 4.16, or will be supplied by MESC upon the completion of such
December 31, 2003 Financial Statements and in all events prior to Closing, (ii)
if the Closing takes place after completion of preparation of the Financial
Statements for the quarterly period ending March 31, 2004 (using MESC's
customary accounting practices, methods, policies and procedures), the unaudited
quarterly Financial Statements for the period ended March 31, 2004 will be set
forth on Schedule 4.16 as of the Closing, and (iii) if the Closing occurs prior
to completion of preparation of the Financial Statements for the quarterly
period ending March 31, 2004 (using MESC's customary accounting practices,
methods, policies and procedures), the unaudited monthly Financial Statements
for each of January and February 2004 will be set forth in Schedule 4.16(a) as
of the Closing. Such Financial Statements accurately present in all material
respects the financial condition of MESC as at the date of such Financial
Statements, subject in the case of the unaudited quarterly or monthly Financial
Statements, as the case may be, to normal period ending adjustments, and there
has been no material adverse change in the financial condition of MESC since the
date of such Financial Statements. There is no liability or obligation with
respect to MESC of any nature whatsoever (whether accrued, contingent or
otherwise and whether or not due) which is not reflected in such Financial
Statements but which has had or, is reasonably expected to have, a Material
Adverse Effect.
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SECTION 4.17 Licenses.
All Licenses (other than the Environmental Permits, which are
subject to SECTION 4.12) required to be held or made on the part of MESC from or
with any Governmental Authority to conduct its business as currently conducted
are listed on Schedule 4.17. All such Licenses have been obtained or made by
MESC, are in full force and effect and are final and non-appealable, and MESC is
in compliance with such Licenses, except to the extent that any failure to
comply, individually or in the aggregate, is not reasonably expected to have a
Material Adverse Effect. Seller has provided or made available to Buyer on or
before the date of this Agreement a true, correct and complete copy of each such
License.
SECTION 4.18 Bankruptcy Proceedings.
The Joint Plan of Reorganization has been substantially consummated
within the meaning of Section 1101 of the Bankruptcy Code, the Effective Date
has occurred, and each of Seller and MESC has performed all its obligations and
fully discharged all its liabilities arising under the Joint Plan of
Reorganization (other than those obligations in respect of the Tax-Exempt Debt
which continue after the Effective Date).
SECTION 4.19 Full Access.
Seller and MESC have provided Buyer with full access to all books,
records, statements, documents and other information regarding MESC, the MESC
Energy Complex and the business and operations of MESC in the possession of
Seller or MESC of which Seller or MESC has Knowledge.
SECTION 4.20 No. 8 Power Boiler Casualty.
To Seller's Knowledge, the No. 8 Power Boiler Casualty did not
result in any physical injury or harm to any individual. No claim for
compensation, reimbursement, coverage, indemnification or damages with respect
to the No. 8 Power Boiler Casualty has been made by MESC or, to Seller's
Knowledge, any other Person, except for those insurance claims identified on
Schedule 4.20.
SECTION 4.21 No Other Representations or Warranties.
Except as and to the extent set forth in this ARTICLE IV and in any
certificate delivered by Seller as of Closing, Seller makes no representations
or warranties whatsoever to Buyer and hereby disclaims all liability and
responsibility for any representation, warranty, statement or information made,
communicated or furnished (orally or in writing) to Buyer or its representatives
(including any opinion, information, projection or advice that may have been or
may be provided to Buyer by any shareholder, director, officer, employee, agent
consultant or representative of Seller or any Affiliate of Seller). Seller makes
no representations or warranties whatsoever to Buyer regarding the probable
success or profitability of MESC or any of MESC's businesses.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BUYER
As of the date hereof, Buyer hereby represents and warrants to
Seller as follows:
SECTION 5.1 Corporate Organization.
Buyer is a limited liability company, duly organized, validly
existing and in good standing under the laws of the state of Delaware. Buyer has
all requisite power and authority to own its properties and assets and to
conduct its business as now conducted. Buyer is duly qualified to do business as
a foreign entity in every jurisdiction where the character of the properties
owned or leased by it or the nature of the business conducted by it makes such
qualifications necessary.
SECTION 5.2 Validity of Agreement.
Buyer has all corporate power to enter into this Agreement and each
of the other Transaction Documents to which Buyer is a party and to consummate
the transactions and to carry out Buyer's obligations hereunder and thereunder.
The execution and delivery by Buyer of this Agreement and each of the other
Transaction Documents to which Buyer is a Party and the performance of Buyer's
obligations hereunder and thereunder has been duly authorized by Buyer, and no
other proceedings on the part of Buyer are necessary to authorize such
execution, delivery and performance. This Agreement has been duly executed by
Buyer and constitutes the valid and binding obligation of Buyer enforceable
against Buyer in accordance with its terms (except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar law affecting the enforcement of creditors'
rights generally or by general equitable principles).
SECTION 5.3 No Conflict or Violation; No Defaults.
The execution, delivery and performance by Buyer of this Agreement
does not and will not (a) violate or conflict with any provision of its
Organizational Documents, (b) violate any applicable provision of law, or any
order, judgment or decree of any Governmental Authority, (c) violate or result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which Buyer is a party or by
which Buyer is bound or to which any of Buyer's properties or assets is subject
or (d) result in the creation or imposition of any Encumbrance upon any of
Buyer's properties or assets, except, in the case of clauses (b) and (c), such
as is not reasonably expected to have a material adverse effect on the ability
of Buyer to fulfill its obligations under this Agreement or on the transactions
contemplated hereby.
SECTION 5.4 Consents and Approvals.
Except as disclosed on Schedule 5.4, no consent, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person (on the
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part of Buyer) is required as a condition to the execution and delivery of this
Agreement by Buyer or the performance by Buyer of its obligations hereunder,
except where the failure to obtain or make any such consent, approval,
authorization, filing, registration or qualification is not reasonably expected
to have a material adverse effect on the ability of Buyer to fulfill its
obligations under this Agreement or on the transactions contemplated hereby.
SECTION 5.5 Independent Investigation.
Buyer has conducted its own independent investigation, review and
analysis of the business, operations, assets, liabilities, results of
operations, financial condition and prospects of MESC, which investigation,
review and analysis was done by Buyer and its Affiliates and, to the extent
Buyer deemed necessary or appropriate, by Buyer's representatives. Buyer
acknowledges that it and its representatives have been provided adequate access
to the personnel, properties, premises and records of MESC for such purposes. In
entering into this Agreement, Buyer acknowledges that it has relied solely upon
the aforesaid investigation, review and analysis and not on any factual
representations of Seller, MESC or any of Seller's or MESC's representatives
other than the specific representations and warranties of Seller set forth in
this Agreement and the other Transaction Documents to which Seller or MESC is a
party.
ARTICLE VI.
COVENANTS
SECTION 6.1 Certain Changes and Conduct of Business.
(a) Except as required or permitted pursuant to the terms of this
Agreement or as set forth on Schedule 6.1, from and after the date of this
Agreement and until the Closing Date, Seller shall cause MESC to conduct MESC's
business and operations in the ordinary course in accordance with good
engineering and operating practices (including maintaining MESC's coal bins
located at the MESC Energy Complex at least three-quarters (3/4) full, which the
Parties hereby acknowledge and agree constitutes an adequate fuel inventory for
normal operations of the MESC Energy Complex) and the requirements of the O&M
Agreement or OPCO Agreement, as applicable, and other Project Documents, and,
without the prior written consent of Buyer (which consent will not be
unreasonably withheld, conditioned or delayed), Seller will not cause or permit
MESC to, except as required or permitted pursuant to the terms of this Agreement
or except as set forth on Schedule 6.1, take any action that would cause any of
the representations or warranties of Seller set forth in ARTICLE IV to be untrue
in any material respect or fail to take any commercially reasonable action
necessary to prevent any of the representations or warranties of Seller
contained in ARTICLE IV from becoming untrue in any material respect.
(b) At all times from and including the Effective Date up to and including
the Closing Date, the MESC Energy Complex will be configured, and Seller will
cause MESC to own and operate the MESC Energy Complex, as described in the
Notice of Self-Certification in all material respects and Seller shall take or
cause MESC to take all steps to assure that the MESC Energy Complex is a
Qualifying Facility at all times during such period.
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SECTION 6.2 Available Cash of MESC.
Notwithstanding the provisions of SECTION 6.1 of this Agreement or
any other provision of this Agreement, each of Buyer and Seller hereby agrees
that, at any time, and from time to time, prior to the Closing, Seller may cause
MESC to distribute or pay all or any portion of Available Cash held by MESC to
Seller or to the creditors of MESC as and to the extent permitted in SECTION
2.3, and no adjustment of the Purchase Price shall be made in respect of any
such distribution or payment except to the extent effected as part of any
Working Capital adjustments made pursuant to and in accordance with SECTION
2.2(b) and SECTION 2.5.
SECTION 6.3 Equipment and Spare Parts as of the Closing.
Each of Buyer and Seller hereby acknowledges and agrees that the
list of equipment and spare parts set forth on Schedule 4.13(b) constitutes a
list of equipment and spare parts that, as of the date of this Agreement, are
adequate for the conduct of MESC's business and operations consistent with good
engineering and operating practices.
SECTION 6.4 Access to Properties and Records.
(a) Seller shall afford, and shall cause MESC to afford, to Buyer and
Buyer's accountants, counsel and representatives upon reasonable advance notice
reasonable access during normal business hours throughout the period commencing
on the date hereof and ending on the Closing (or the earlier termination of this
Agreement pursuant to ARTICLE IX) to all of MESC's properties, books, contracts,
and records and, during such period, shall furnish promptly to Buyer all
information concerning MESC's respective business, properties, liabilities and
personnel as Buyer may request, provided that no investigation or receipt of
information pursuant to this SECTION 6.4(a) shall affect any representation or
warranty of Seller or the conditions to the obligations of Buyer. Buyer shall
have no right of access to, and Seller shall have no obligation to provide to
Buyer, (i) bids received from others in connection with the transactions
contemplated by this Agreement and information and analysis (including financial
analysis) relating to such bids or (ii) any information the disclosure of which
Seller has concluded may jeopardize any privilege available to Seller or MESC
relating to such information or would cause Seller or MESC to breach a
confidentiality obligation. Buyer further agrees that if Seller or MESC
inadvertently furnishes to Buyer copies of or access to information that is
subject to clause (ii) of the preceding sentence, Buyer will, upon Seller's
request, promptly return same to Seller together with any and all extracts
therefrom or notes pertaining thereto (whether in electronic or other format).
Buyer shall indemnify, defend, and hold harmless Seller, MESC and their
respective Affiliates from and against any Damages asserted against or suffered
by Seller, MESC or any of their respective Affiliates resulting from or arising
out of the negligence or willful misconduct or Buyer or any of Buyer's agents,
consultants or representatives during the course of any such examinations or
inspections made by Buyer or any of Buyer's agents, consultants or
representatives pursuant to this SECTION 6.4(a).
(b) Buyer shall preserve and keep all books and records relating to the
business or operation of MESC on or before the Closing in Buyer's possession for
a period of at least six (6) years after the Closing. Notwithstanding the
foregoing, Buyer shall preserve and keep all books
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and records of MESC relating to any audit or investigation instituted by a
Governmental Authority or any litigation (whether or not existing on the
Closing) if it is reasonably likely that such investigation or litigation may
relate to matters occurring prior to the Closing, without regard to the 6-year
period set forth in this SECTION 6.4(b).
SECTION 6.5 Advice of Changes.
Prior to the Closing, each Party shall promptly advise the other in
writing with respect to any matter arising after execution of this Agreement of
which that Party obtains knowledge (or Knowledge, in the case of Seller) and
which, if existing or occurring at the date of this Agreement, would have been
required to be disclosed by such Party in or pursuant to this Agreement,
including any of the Schedules or Exhibits hereto, or which would cause any of
its representations or warranties in ARTICLE IV or ARTICLE V, as applicable, not
to be true and correct at such time as if such representation or warranty had
been given at and as of such time; provided, however, that delivery of any such
notice by a Party pursuant to this SECTION 6.5 shall not limit or otherwise
affect the remedies available hereunder to the other Party.
SECTION 6.6 Shareholders' Meeting.
As promptly as is reasonably practicable following the execution and
delivery of this Agreement, Seller, acting through its board of directors, shall
duly call, give notice of (the "Notice of Special Meeting"), convene and hold a
special meeting of the Shareholders (the "Shareholders' Meeting") for the
purpose of considering and taking action on this Agreement and the transactions
contemplated hereby. The Notice of Special Meeting shall include the
recommendation of the board of directors of Seller that the Shareholders approve
and adopt this Agreement and the transactions contemplated hereby and shall be
accompanied by appropriate proxy materials and all other materials required by
applicable law (collectively with the Notice of Special Meeting, the
"Shareholder Materials"). Seller shall mail or deliver the Shareholder Materials
to all of the Shareholders (the "Shareholder Mailing") at Seller's expense.
Seller shall use its commercially reasonable efforts to obtain the approval and
adoption of this Agreement and the transactions contemplated hereby by the
Shareholders.
SECTION 6.7 Consents and Approvals.
Buyer and Seller shall each use commercially reasonable efforts to
obtain, and in the case of Seller, cause MESC to obtain, all necessary consents,
waivers, authorizations and approvals of and to make all necessary filings with
all Governmental Authorities, and of all other Persons, required in connection
with the execution, delivery and performance by them of this Agreement, and each
of Buyer and Seller shall cooperate fully with the other in promptly seeking to
obtain all such authorizations, consents, orders, and approvals, giving such
notices, and making such filings.
SECTION 6.8 Reasonable Efforts.
Upon the terms and subject to the conditions of this Agreement, each
of Seller and Buyer will use commercially reasonable efforts to take, or cause
to be taken, all action, and
26
to do, or cause to be done, all things necessary, proper or advisable,
consistent with applicable law, to consummate and make effective in the most
expeditious manner practicable the transactions contemplated hereby. Without
limiting the generality of the foregoing, Buyer will use commercially reasonable
efforts to obtain third-party, limited recourse financing for the MESC Energy
Complex satisfactory to Buyer and to otherwise satisfy the conditions to Buyer's
obligations hereunder set forth in SECTION 7.20, and Seller will use
commercially reasonable efforts to cause MESC to enter into a Boiler Repair
Contract that is, or is deemed (pursuant to SECTION 6.12(e)) to be, satisfactory
to Buyer in Buyer's sole discretion and to otherwise satisfy the conditions to
Seller's obligations hereunder set forth in SECTION 8.12.
SECTION 6.9 Tax Covenants.
(a) Seller shall, or shall cause MESC to, prepare and file all Tax Returns
relating to MESC with the appropriate federal, state, local and foreign
governmental agencies, and pay the Taxes shown to be due thereon, for which Tax
Returns are due and Taxes are payable prior to the Closing. For periods ending
on or prior to the Closing, but for which Tax Returns are not due and Taxes are
not payable as of the Closing, Seller shall prepare and submit to Buyer for
review, signature, and filing all such Tax Returns required to be filed by MESC,
and Seller shall, or shall cause MESC to, pay the Taxes shown to be due thereon
prior to the Closing.
(b) Seller will cause any tax sharing agreement or similar arrangement
with respect to Taxes involving MESC to be terminated effective as of or before
the Closing, to the extent any such agreement or arrangement relates to MESC,
and after the Closing MESC shall not have any obligation under any such
agreement or arrangement for any past, present or future period.
(c) All excise, sales, use, transfer (including real property transfer or
gains), stamp, documentary, filing, recordation and other similar taxes,
together with any interest additions or penalties with respect thereto and any
interest in respect of such additions or penalties, resulting directly from the
transactions contemplated by this Agreement (the "Transfer Taxes") shall be
borne by the party on which such Transfer Taxes are imposed by applicable law.
Notwithstanding anything to the contrary in this SECTION 6.9, any Tax Returns
that must be filed in connection with Transfer Taxes shall be prepared and filed
when due by the party primarily or customarily responsible under the applicable
local law for filing such Tax Returns, and such party will use reasonable
commercial efforts to provide such Tax Returns to the other parties at least 10
Business Days prior to the due date for such Tax Returns.
SECTION 6.10 Confidentiality.
(a) The Parties acknowledge and agree that Affiliates of the Parties
entered into a letter agreement dated April 12, 2002 (the "Confidentiality
Agreement") in relation to the acquisition of MESC. The terms of the
Confidentiality Agreement are hereby incorporated into this Agreement by
reference, and the Parties agree, for and on behalf of themselves and their
Affiliates, that they will be bound by the terms of such Confidentiality
Agreement, subject to the modifications provided herein, each reference therein
to MESC being deemed to be a reference to Seller and its Affiliates, and each
reference therein to DTEES being deemed to be a reference to Buyer and its
Affiliates. For all purposes of the Confidentiality Agreement (including as
27
incorporated into this Agreement), the existence and terms of this Agreement and
any notices, agreements, documents or other information supplied or delivered in
connection with this Agreement, shall be deemed to be Information under and as
defined in the Confidentiality Agreement. The obligations of the Parties under
the Confidentiality Agreement (as incorporated into this Agreement) shall
survive the Closing or the earlier termination of this Agreement until the date
on which such Confidentiality Agreement expires in accordance with its terms or,
if the Closing has occurred, the date which is two (2) years after the Closing
Date. After the Closing Date, the restrictions set forth herein in respect of
Proprietary Information (as defined in the Confidentiality Agreement), to the
extent related to MESC and its operations after the Closing Date, shall no
longer apply to Buyer. Notwithstanding any obligations set forth in the
Confidentiality Agreement, Seller, MESC and their Affiliates agree that prior to
the Closing, DTEES, Buyer and each of their Affiliates may reveal or disclose
Proprietary Information to any other prospective lenders or investors and their
representatives and advisors in connection with Buyer's financing of its
purchase of the MESC Units or the MESC Energy Complex. Notwithstanding any
obligations set forth in the Confidentiality Agreement, DTEES, Buyer and their
Affiliates agree that prior to the Closing, Seller, MESC and each of their
Affiliates may reveal or disclose to the Shareholders this Agreement, any other
Transaction Document and any other Proprietary Information as, in the reasonable
judgment of Seller, may be necessary or advisable in order to properly obtain
the consent and approval of the Shareholders of this Agreement, the other
Transaction Documents and the transactions contemplated hereby and thereby as
required by this Agreement or by applicable law.
(b) Furthermore any of the Parties may provide Proprietary Information of
the other Parties to the SEC, FERC, the State PUCs or any other Governmental
Authority with jurisdiction or any stock exchange, as may be necessary to obtain
consents or regulatory approvals or to comply generally with any relevant law or
regulation. The disclosing Party will seek confidential treatment for the
Proprietary Information provided to any Governmental Authority and the
disclosing Party will notify the other applicable Party as far in advance as is
practicable of its intention to release to any Governmental Authority any
Proprietary Information.
(c) Notwithstanding any obligations set forth in the Confidentiality
Agreement, each of the Parties and their respective members, shareholders,
Affiliates and representatives may, at any time after the execution of this
Agreement or the public announcement of the transactions contemplated hereby,
disclose to any and all Persons without limitation of any kind the Tax treatment
and Tax structure of the transactions contemplated hereby and all materials of
any kind (including opinions or other Tax analyses) that are provided to either
Party or any of their respective members, shareholders, Affiliates or
representatives relating to such Tax treatment or Tax structure; provided,
however, that any such information relating to the Tax treatment or Tax
structure shall be kept confidential to the extent necessary to comply with
applicable federal or state securities laws.
SECTION 6.11 No Fees and Commissions.
Each of Seller and Buyer represents and warrants to the other that
no broker, finder or other Person is entitled to any fees, commissions or other
amounts in connection with the transactions contemplated hereby by reason of any
action taken by the Party making such
28
representation for which the other Party could become liable or obligated, other
than the Xxxxxxx Success Fee and the Xxxxxx Success Fee, both of which shall be
the sole obligation and responsibility of Seller. Seller and Buyer shall each
discharge, and shall indemnify and hold the other Party harmless from and
against, any and all claims or Damages for all such fees, commissions and other
amounts incurred by reason of any action taken by the indemnifying Party.
SECTION 6.12 No. 8 Power Boiler Casualty Claim.
(a) As soon as reasonably practicable, and in any event at least 5
Business Days prior Seller delivering the items required in SECTION 6.12(c),
Seller shall provide or cause MESC to provide to Buyer accurate and complete
copies of (i) all insurance policies, binders and other evidences of insurance
coverage related to the No. 8 Power Boiler Casualty and the insurance claim
folder related to the No. 8 Power Boiler Casualty Claim (including all claims
identified on Schedule 4.20), (ii) all reports with respect to the No. 8 Power
Boiler Casualty prepared by or on behalf of MESC or, to the extent MESC has been
provided copies thereof, by any other Person and (iii) all filings or
notifications with any Governmental Authority made by or on behalf of MESC with
respect to the No. 8 Power Boiler Casualty. Seller shall keep Buyer reasonably
informed of the discussions and negotiations with the Underwriter regarding the
No. 8 Power Boiler Casualty Claim, and shall provide to Buyer copies of any
proposals or drafts of any change of control or assignment provisions or of any
written acknowledgment of the Underwriter with respect to the No. 8 Power Boiler
Casualty Claim.
(b) The insurance policies, binders and/or other evidence of insurance
covering the No. 8 Power Boiler Casualty (copies of which shall be provided by
Seller to Buyer pursuant to SECTION 6.12(a) after the date hereof) shall contain
assignment and change of control provisions satisfactory to Buyer in Buyer's
sole discretion. Buyer shall respond in writing to Seller within 5 Business Days
after receipt by Buyer of accurate and complete copies of all such insurance
policies, binders and/or other evidence of insurance, indicating whether or not
such assignment and change of control provisions in such insurance policies,
binders and/or other evidence of insurance are satisfactory to Buyer, and if
not, identifying in reasonable detail the manner in which such provisions are
unsatisfactory to Buyer. If Buyer fails to so respond to Seller in writing
within such 5 Business Day period, all such provisions shall be deemed to be
satisfactory to Buyer for all purposes under this Agreement.
(c) As soon as reasonably practicable, and in any event at least 5
Business Days prior to the proposed Closing Date, Seller shall deliver to Buyer
written evidence, satisfactory to Buyer in Buyer's sole discretion, that the
Underwriter has acknowledged the No. 8 Power Boiler Casualty Claim and has
agreed to pay the No. 8 Power Boiler Casualty Claim in full (less any applicable
deductible) up to the applicable policy limits. Buyer shall respond in writing
to Seller within 5 Business Days after receipt by Buyer of such written
evidence, indicating whether or not such written evidence is satisfactory to
Buyer, and if not, identifying in reasonable detail the manner in which such
written evidence is unsatisfactory to Buyer. If Buyer fails to so respond to
Seller in writing within such 5 Business Day period, such written evidence shall
be deemed to be satisfactory to Buyer for all purposes under this Agreement.
29
(d) As soon as reasonably practicable, but in any event at least 10
Business Days prior to entering into the Boiler Repair Contract, MESC shall
develop and deliver to Buyer a plan for the repair and restoration to service of
the No. 8 Power Boiler (the "Boiler Restoration Plan"), which Boiler Restoration
Plan shall be satisfactory to Buyer in Buyer's sole discretion. Buyer shall
respond in writing to Seller within 5 Business Days after receipt by Buyer of
such Boiler Restoration Plan, indicating whether or not such Boiler Restoration
Plan is satisfactory to Buyer, and if not, identifying in reasonable detail the
manner in which such Boiler Restoration Plan is unsatisfactory to Buyer. If
Buyer fails to so respond to Seller in writing within such 5 Business Day
period, such Boiler Restoration Plan shall be deemed to be satisfactory to Buyer
for all purposes under this Agreement.
(e) As soon as reasonably practicable, but in any event at least 15
Business Days prior to the proposed Closing Date, MESC shall deliver to Buyer
the proposed final draft of a contract to rebuild the No. 8 Power Boiler (the
"Boiler Repair Contract") that MESC intends to enter into, which Boiler Repair
Contract shall be satisfactory to Buyer in Buyer's sole discretion. Buyer shall
respond in writing to Seller within 10 Business Days after receipt by Buyer of
such Boiler Repair Contract, indicating whether or not such Boiler Repair
Contract is satisfactory to Buyer, and if not, identifying in reasonable detail
the manner in which such Boiler Repair Contract is unsatisfactory to Buyer. If
Buyer fails to so respond to Seller in writing within such 10 Business Day
period, such Boiler Repair Contract shall be deemed to be satisfactory to Buyer
for all purposes under this Agreement. Seller shall keep Buyer reasonably
informed of the discussions and negotiations with any proposed contractor
regarding the terms and conditions of any proposed Boiler Repair Contract.
ARTICLE VII.
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement are subject to the fulfillment, at or before the Closing, of the
following conditions, anyone or more of which may be waived by Buyer in its sole
discretion:
SECTION 7.1 Representations and Warranties of Seller.
All representations and warranties made by Seller in this Agreement
that are qualified as to materiality and all representations and warranties made
by Seller in SECTIONS 4.1, 4.2, 4.3, 4.4, 4.10(a), 4.11 and 4.14 shall be true
and correct on and as of the Closing Date, and all representations and
warranties made by Seller in this Agreement that are not qualified as to
materiality (other than those specifically listed in this SECTION 7.1) shall be
true and correct in all material respects on and as of the Closing Date, in each
case as if given on and as of such date, and Buyer shall have received a
certificate dated as of the Closing and signed by an authorized officer of
Seller certifying the foregoing.
30
SECTION 7.2 Performance of Seller's Obligations.
Seller shall have in all material respects performed and complied
with all obligations, covenants and agreements required under this Agreement to
be performed by it on or before the Closing, and Buyer shall have received a
certificate dated as of the Closing and signed by an authorized officer of
Seller to that effect.
SECTION 7.3 Consents and Approvals.
The consents, waivers, authorizations and approvals set forth on
Schedule 4.6 shall have been duly obtained and shall be in full force and effect
on the Closing.
SECTION 7.4 No Violation of Orders.
No preliminary or permanent injunction or other order issued by any
Governmental Authority, which declares this Agreement invalid or unenforceable
in any respect or which prevents the consummation of the transactions
contemplated hereby shall be in effect; and no action or proceeding before any
Governmental Authority shall have been instituted by a Governmental Authority or
other Person or threatened by any Governmental Authority which seeks to prevent
or delay the consummation of the transactions contemplated by this Agreement or
which challenges the validity or enforceability of this Agreement.
SECTION 7.5 Ownership of MESC Units.
As of the Closing, Seller shall own one hundred percent (100%) of
the MESC Units, and Seller shall have transferred to Buyer pursuant to this
Agreement one hundred percent (100%) of the MESC Units free and clear of any
Encumbrances.
SECTION 7.6 Conduct of Business and Operations of MESC.
From and after the date of this Agreement and until the Closing,
MESC shall have conducted, and Seller shall have caused MESC to conduct, MESC's
business and operations in the ordinary course in accordance with good
engineering and operating practices and the requirements of SECTION 6.1.
SECTION 7.7 Operation and Maintenance Agreement.
(a) Prior to the Closing, Seller shall have terminated or caused MESC to
terminate that certain Operation and Maintenance Agreement (the "O&M Agreement")
by and between MESC and Operational Energy Corp. dated as of February 6, 2001,
and either MESC or Seller shall have provided to Buyer at or before the Closing
evidence of such termination and evidence that all of MESC's obligations under
the O&M Agreement and all claims related to the O&M Agreement have been fully
discharged and paid in full, waived or released, which evidence shall be in form
and substance reasonably satisfactory to Buyer. Any costs and liabilities
related to such termination shall have been paid by MESC prior to the Closing.
31
(b) MESC shall have entered into an operation and maintenance agreement
with DTEES or an Affiliate of DTEES ("OPCO") for the operations and maintenance
of the MESC Energy Complex (the "OPCO Agreement") on substantially the same
pricing, terms and conditions as the O&M Agreement and with such other
reasonable and conforming changes as the parties may agree.
SECTION 7.8 Contract Employee Arrangements.
Prior to the Closing, Seller shall have terminated or caused MESC
totem1inate all contract, agency and employment arrangements with officers,
contract employees, agents and or employees of MESC, including, but not limited
to, Xxxxxxx and Xxxxxx, effective immediately prior to the Closing, and shall
have provided to Buyer as of the Closing evidence of such termination and
evidence of full discharge or release of obligations, liabilities and claims
related to such arrangements, including the Xxxxxxx Agreement and the Xxxxxx
Agreement, which evidence shall be in form and substance reasonably satisfactory
to Buyer.
SECTION 7.9 Shareholder Approval.
The Shareholders shall have duly approved and adopted this Agreement
and the transactions contemplated hereby at the Shareholders' Meeting.
SECTION 7.10 Organizational Documents.
Buyer shall have received a copy of the Organizational Documents of
Seller and resolutions of the board of directors, evidence of the Shareholders
approval at the Shareholders' Meeting (or other authorizing actions or
instruments) authorizing the execution, delivery and performance by Seller of
this Agreement and the transactions contemplated by this Agreement, each in form
and substance reasonably satisfactory to Buyer and certified by the secretary or
an assistant secretary of Seller (or another responsible officer of Seller) as
of the Closing Date. Such certification shall state that such Organizational
Documents, resolutions and Shareholders vote (or other authorizing actions or
instruments) have not been amended, modified, revoked or rescinded and are in
full force and effect on and as of the Closing Date.
SECTION 7.11 Opinions of Counsel.
Buyer shall have received opinions of counsel with respect to this
Agreement in form and substance customary for transactions of the kind
contemplated by this Agreement and reasonably satisfactory to Buyer, from
Xxxxxxx Xxxxx LLP, counsel to Seller and MESC, and from Alabama counsel to
Seller and MESC.
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SECTION 7.12 Required Approvals for Sale of MESC.
Seller and/or MESC shall have obtained and provided copies to Buyer
of all contractual, legal and regulatory approvals of the FERC, any other
Governmental Authority or Person required for the sale of MESC or all or
substantially all of the assets of MESC, including but not limited to the
consent of Xxxxxxxx-Xxxxx pursuant to the terms of the Amended and Restated
Master Operating Agreement.
SECTION 7.13 Preliminary Closing Statement.
The Parties shall have agreed on the Preliminary Working Capital
Balance set forth in the Preliminary Closing Statement prepared pursuant to
SECTION 2.4(a) as a reasonable estimate of the Working Capital balance as of the
Closing Date.
SECTION 7.14 No Material Adverse Effect.
During the period commencing on the Effective Date and ending as of
the Closing, no event or circumstance shall have occurred which has had or is
reasonably expected to have a Material Adverse Effect.
SECTION 7.15 FERC Approval.
FERC shall have issued an order pursuant to 18 C.F.R. Sec.
292.207(b), which is final and non-appealable, certifying the MESC Energy
Complex as a Qualifying Facility upon consummation of the Closing on the basis
set forth in an application submitted by or on behalf of Buyer pursuant to 18
C.F.R. Sec. 292.207(b), without modification or condition.
SECTION 7.16 Tax-Exempt Financing Documents.
The Tax-Exempt Financing Documents have been or on the Closing Date
will be modified on terms and conditions satisfactory to Buyer.
SECTION 7.17 Southern Company and Mirant Parties Liens.
Any Encumbrances on the property of MESC or the MESC Units,
including but not limited to the Encumbrances in favor of the Southern Company
and the Mirant Parties created pursuant to the Cogeneration Development
Agreement, shall have been released or subordinated and the beneficiaries of any
such Encumbrances, if continuing after the Closing, shall have entered into
intercreditor arrangements with the financing parties providing financing to
Buyer, all in a manner satisfactory to Buyer in Buyer's sole determination.
SECTION 7.18 EPA Acid Rain Program Determination.
Seller shall have provided to Buyer copies, certified by an
authorized officer of Seller to be true and correct copies, of all documents
submitted to the EPA related to the EPA's August 8, 2003 determination of
applicability under the Acid Rain Program, including, but not limited to, the
documents referenced in the final paragraph of said August 8 determination.
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SECTION 7.19 Tax Certificate.
Seller shall have delivered to Buyer a certificate from the Alabama
Department of Revenue confirming that all Taxes owed in respect of MESC have
been paid or that no Taxes are due.
SECTION 7.20 Financing.
Buyer will have obtained third party, limited recourse financing for
the MESC Energy Complex satisfactory to Buyer in its sole discretion, and funds
are available to be disbursed under such financing to pay the Purchase Price or
to reimburse Buyer for the payment of the Purchase Price.
SECTION 7.21 No. 8 Power Boiler Casualty Claim.
(a) Buyer shall have received all of the documents and other information
required to be provided to Buyer pursuant to SECTIONS 6.12(a), (b) and (c), and
the items identified in SECTIONS 6.l2(b) and (c) shall be, or shall be deemed to
be, satisfactory to Buyer in Buyer's sole discretion.
(b) The Boiler Restoration Plan shall have been approved, or shall be
deemed to have been approved, by Buyer pursuant to SECTION 6.l2(d).
(c) The Boiler Repair Contract, in form and substance approved or deemed
to have been approved by Buyer pursuant to SECTION 6.l2(e), shall have been
entered into by MESC.
(d) All insurance proceeds received by MESC in respect of the No. 8 Power
Boiler Casualty Claim shall have been used by MESC to pay expenses incurred in
connection with the repair of the No. 8 Power Boiler or shall be in a bank
account of MESC identified to Buyer as of the Closing and remain in such account
following the Closing, and Buyer shall have received satisfactory evidence
thereof.
SECTION 7.22 Title Insurance.
MESC's leasehold interests under the Real Property Leases shall be
insurable by the Title Company, subject only to Permitted Encumbrances, and the
Title Company shall have issued the Owner's Title Policy to MESC at Buyer's sole
cost and expense; provided, however, that if, as of the proposed Closing Date,
the Title Company shall not have issued the Owner's Title Policy to MESC solely
by reason of Buyer's failure to payor cause to be paid all costs and expenses
thereof, this condition to Buyer's obligations shall be deemed to have been
satisfied for all purposes of this Agreement.
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ARTICLE VIII.
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated by
this Agreement are subject to the fulfillment, at or before the Closing, of the
following conditions, anyone or more of which may be waived by Seller in its
sole discretion:
SECTION 8.1 Purchase Price Payment.
Buyer shall have paid and delivered, or be standing ready to pay and
deliver, the Purchase Price in accordance with the terms of this Agreement.
SECTION 8.2 Deposit of Aggregate Escrow Amount.
Buyer shall have delivered, or be standing ready to deliver, the
Aggregate Escrow Amount to the Escrow Agent in accordance with the terms of this
Agreement.
SECTION 8.3 Representations and Warranties of Buyer.
All representations and warranties made by Buyer in this Agreement
that are qualified as to materiality and all representations and warranties made
by Buyer in SECTIONS 5.1 and 5.2 shall be true and correct on and as of the
Closing Date, and all representations and warranties made by Buyer in this
Agreement that are not qualified as to materiality (other than those
specifically listed in this SECTION 8.3) shall be true and correct in all
material respects on and as of the Closing Date, in each case as if given on and
as of such date, and Seller shall have received a certificate dated as of the
Closing and signed by an authorized officer of Buyer certifying the foregoing.
SECTION 8.4 Performance of Buyer's Obligations.
Buyer shall have in all material respects performed and complied
with all obligations, covenants and agreements required under this Agreement to
be performed by it on or before the Closing, and Seller shall have received a
certificate dated as of the Closing and signed by an authorized officer of Buyer
to that effect.
SECTION 8.5 Consents and Approvals.
The consents, waivers, authorizations and approvals set forth on
Schedule 5.4 shall have been duly obtained and shall be in full force and effect
as of the Closing.
SECTION 8.6 No Violation of Orders.
No preliminary or permanent injunction or other order issued by any
Governmental Authority, that declares this Agreement invalid or unenforceable in
any respect or which prevents the consummation of the transactions contemplated
hereby shall be in effect; and no action or proceeding before any Governmental
Authority, shall have been instituted by a
35
Governmental Authority or other person or threatened by any Governmental
Authority which seeks to prevent or delay the consummation of the transactions
contemplated by this Agreement or which challenges the validity or
enforceability of this Agreement.
SECTION 8.7 Shareholder Approval.
The Shareholders shall have duly approved and adopted this Agreement
and the transactions contemplated hereby at the Shareholders' Meeting.
SECTION 8.8 Member Approval.
Buyer's members shall have duly approved and adopted this Agreement
and the transactions contemplated hereby in accordance with Buyer's
Organizational Documents and the laws applicable to such approval and adoption.
SECTION 8.9 DTEES Guaranty.
Buyer shall have delivered to Seller the DTEES Guaranty
substantially in the form of Exhibit 8.9, guaranteeing to Seller the full and
prompt payment of any Positive Working Capital Adjustment payable to Seller in
accordance with this Agreement.
SECTION 8.10 Opinions of Counsel.
Seller shall have received opinions of counsel with respect to this
Agreement in form and substance customary for transactions of the kind
contemplated by this Agreement and reasonably satisfactory to Buyer, from Hunton
& Xxxxxxxx, counsel to Buyer and DTEES.
SECTION 8.11 Preliminary Closing Statement.
The Parties shall have agreed on the Preliminary Working Capital
Balance set forth in the Preliminary Closing Statement prepared pursuant to
SECTION 2.4(a) as a reasonable estimate of the Working Capital balance as of the
Closing Date.
SECTION 8.12 Repair and Restoration of No. 8 Power Boiler.
MESC shall have entered into the Boiler Repair Contract, which
Boiler Repair Contract shall be, or shall be deemed (pursuant to SECTION
6.12(e)) to be, satisfactory to Buyer in Buyer's sole discretion.
ARTICLE IX.
TERMINATION AND ABANDONMENT
SECTION 9.1 Methods of Termination; Upset Date.
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time before the Closing:
36
(a) by the mutual written consent of Buyer and Seller:
(b) by Seller, if Buyer fails to comply with any of its material
obligations contained herein, or has breached in any material respect any of its
representations or warranties contained herein, which failure to comply or
breach is continuing and is not cured within thirty (30) days after receipt by
Buyer from Seller of written notice specifying particularly such failure to
comply or breach; provided, however, that if Buyer has commenced a cure within
such thirty (30) day period and is diligently pursuing such cure, the foregoing
period of thirty (30) days shall be extended for such additional period (not to
exceed 30 days) as is reasonably required to effect such cure;
(c) by Buyer, if Seller fails to comply with any of its material
obligations contained herein, or has breached in any material respect any of its
representations or warranties contained herein, which failure to comply or
breach is continuing and is not cured within thirty (30) days after receipt by
Seller from Buyer of written notice specifying particularly such failure to
comply or breach, provided, however, that if Seller has commenced a cure within
such thirty (30) day period and is diligently pursuing such cure, the foregoing
period of thirty (30) days shall be extended for such additional period (not to
exceed 30 days) as is reasonably required to effect such cure;
(d) by Buyer or Seller, if a Governmental Authority shall have issued an
order, decree or ruling or taken any other action (which order, decree or ruling
the Parties hereto shall use their commercially reasonable efforts to lift),
which materially and permanently restrains, enjoins or otherwise prohibits the
transactions contemplated by this Agreement and which order, decree, ruling or
other action is not subject to appeal; or
(e) by Buyer or Seller by three (3) days prior written notice to the other
if the Closing does not occur on or before April 30, 2004; provided, however,
that neither Party shall have the right to terminate this Agreement pursuant to
this Section 9.1 (e) if such Party is itself in breach of any of its material
obligations under this Agreement; but provided further that the failure by one
Party to satisfy a condition to the obligations of the other Party, the
satisfaction of which is subject, in whole or in part, to such other Party's
sole discretion, shall not be deemed to be a breach of such Party's obligations
under this Agreement for any purposes, including, without limitation,
termination of this Agreement pursuant to this Section 9.1(e).
SECTION 9.2 Procedure Upon Termination.
In the event of termination and abandonment of this Agreement
pursuant to SECTION 9.1, written notice thereof shall forthwith be given by the
terminating Party to the other Party hereto, and this Agreement shall terminate
and the transactions contemplated hereby shall be abandoned, without further
action by the Parties hereto. In such event, neither Party to this Agreement
shall have any liability or further obligation to the other Party to this
Agreement, except as provided in SECTION 9.3.
37
SECTION 9.3 Effect of Termination.
Each Party's right of termination under SECTION 9.1 is in addition
to any other rights it may have under this Agreement or otherwise, and the
exercise of a right of termination will not be an election of remedies. If this
Agreement is terminated pursuant to SECTION 9.1, all further obligations of the
Parties under this Agreement will terminate; provided, however, that (i) the
provisions of this ARTICLE IX shall survive such termination, and (ii) the
rights and remedies of each Party arising out of fraud or willful or intentional
misconduct by the other Party will survive such termination unimpaired.
ARTICLE X.
MISCELLANEOUS PROVISIONS
SECTION 10.1 Non-Survival of Representations and Warranties.
None of the representations or warranties of the Parties contained
in this Agreement shall survive the Closing, and after the Closing, no Party
shall have any further obligation with respect thereto. Notwithstanding the
foregoing, this SECTION 10.1 shall not limit any covenant or agreement of the
Parties hereto which by its terms contemplates performance after the Closing.
SECTION 10.2 Publicity.
On or prior to the Closing, neither Party to this Agreement shall,
nor shall either Party permit its Affiliates to, issue or cause the publication
of any press release or other announcement with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the other
Party hereto.
SECTION 10.3 Successors and Assigns; No Third-Party Beneficiaries.
This Agreement shall inure to the benefit of, and be binding upon,
the Parties hereto and their respective successors and assigns; provided,
however, that no Party shall assign or delegate any of the obligations created
under this Agreement without the prior written consent of the other Party.
Nothing in this Agreement shall confer upon any Person not a party to this
Agreement, or the legal representatives of such Person, any rights or remedies
of any nature or kind whatsoever under or by reason of this Agreement.
SECTION 10.4 Fees and Expenses.
Except as otherwise expressly provided in this Agreement, all legal,
accounting and other fees, costs and expenses of a Party hereto incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the Party incurring such fees, costs or expenses.
38
SECTION 10.5 Notices.
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made if
delivered personally, sent by overnight courier, sent by facsimile (with
evidence of confirmation of receipt) or mailed via the U.S. Postal Service,
postage-paid, certified mail with return receipt requested, to the Parties at
the following addresses:
If to Buyer, to:
MESC Capital, LLC
c/o DTE Energy Services
000 Xxxxx Xxxx Xxxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Facsimile: 000-000-0000
Attention: President
with a copy to:
MESC Capital, LLC
c/o DTE Energy Services
000 Xxxxx Xxxx Xxxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Facsimile: 000-000-0000
Attention: Vice President and General Counsel
If to Seller, to:
Mobile Energy Service Holdings, Inc.
00 Xxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxx X. Xxxxxxx, President
with a copy to:
Xxxxxxx Xxxxx LLP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: G. Xxxxxxx X'Xxxxx
or to such other Persons or at such other addresses as shall be furnished by a
Party by like notice to the other Party, and such notice or communication shall
be deemed to have been given or made as of the date of receipt. No change in any
of such addresses shall be effective insofar as
39
notices under this SECTION 10.5 are concerned unless such changed address is
located in the United States of America and notice of such change shall have
been given to the other Party hereto as provided in this SECTION 10.5.
SECTION 10.6 Entire Agreement.
This Agreement, together with the Disclosure Schedules and the
exhibits hereto, represent the entire agreement and understanding of the Parties
regarding the transactions set forth herein, and no representations or
warranties have been made in connection with this Agreement other than those
expressly set forth herein or in the Disclosure Schedules, exhibits,
certificates and other documents delivered in accordance herewith. This
Agreement supersedes all prior negotiations, discussions, correspondence,
communications, understandings and agreements between the Parties relating to
the subject matter of this Agreement and all prior drafts of this Agreement, all
of which are merged into this Agreement. No prior drafts of this Agreement and
no words or phrases from any such prior drafts shall be admissible into evidence
in any action or suit involving this Agreement.
SECTION 10.7 Waivers and Amendments.
Either Party to this Agreement may, by written notice to the other:
(a) extend the time for the performance of any of the obligations or other
actions of the other; (b) waive any inaccuracies in the representations or
warranties of the other contained in this Agreement or in any document delivered
pursuant to this Agreement by the other; (c) waive compliance with any of the
covenants of the other contained in this Agreement; (d) waive performance of any
of the obligations of the other created under this Agreement; or (e) waive
fulfillment of any of the conditions to its own obligations under this Agreement
or in any documents delivered pursuant to this Agreement by the other. The
waiver by a Party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach, whether or not
similar, unless such waiver specifically states that it is to be construed as a
continuing waiver. This Agreement may be amended, modified or supplemented only
by a written instrument executed by the Parties hereto.
SECTION 10.8 Severability.
The provisions of this Agreement shall be deemed to be severable,
and if one or more of the provisions of this Agreement are at any time found to
be invalid by a court, tribunal or other forum of competent jurisdiction, or
otherwise rendered unenforceable, such decision shall not have the effect of
invalidating or voiding the remainder of this Agreement. In such event, this
Agreement shall be deemed amended by modifying or severing such provision or
provisions as necessary to render it valid, legal and enforceable while
preserving its intent, or if that is not possible, by substituting another
provision that is valid, legal and enforceable which materially effectuates the
Parties' intent. Any such invalid or unenforceable provision or provisions shall
be severable from this Agreement, so that the validity or enforceability of the
remaining provisions of this Agreement, or the validity of the provision(s) in
question in any other jurisdiction, shall not be affected thereby.
40
SECTION 10.9 Titles and Headings.
The Article and Section headings and any table of contents contained
in this Agreement are solely for convenience of reference and shall not affect
the meaning or interpretation of this Agreement or of any term or provision
hereof.
SECTION 10.10 Signatures and Counterparts.
Facsimile transmission of any signed original document and/or
retransmission of any signed facsimile transmission shall be the same as
delivery of an original. At the request of either Party to this Agreement, the
Parties will confirm facsimile transmission by signing a duplicate original
document. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall be considered
one and the same agreement.
SECTION 10.11 Enforcement of this Agreement; Damages.
The Parties hereto agree that irreparable damage would occur if any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
Parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereto, this
being in addition to any other remedy to which they are entitled at law or in
equity.
SECTION 10.12 Governing Law.
This Agreement shall be governed by and construed in accordance with
the internal and substantive laws of New York and without regard to any
conflicts of laws concepts which would apply the substantive law of any other
jurisdiction.
SECTION 10.13 Disclosure.
Information set forth in the Disclosure Schedules is included solely
for informational purposes in connection with the representations and warranties
and other provisions of this Agreement and is not an admission of liability with
respect to the matters covered by the information. Each Schedule in the
Disclosure Schedules shall be deemed to include and incorporate all disclosures
made in other Schedules in the Disclosure Schedules. The specification of any
dollar amount in the representations and warranties contained in this Agreement
or the inclusion of any specific item in the Disclosure Schedules is not
intended to imply that such amounts (or higher or lower amounts) are or are not
material, and neither Party shall use the fact of the setting of such amounts or
the fact of the inclusion of any such item in the Disclosure Schedules in any
dispute or controversy between the Parties as to whether any obligation, item or
matter not described herein or included in a Disclosure Schedule is or is not
material for purposes of this Agreement.
41
SECTION 10.14 Disclaimer of Warranties.
(a) INFORMATION. EXCEPT AS PROVIDED IN ARTICLE IV OF THIS AGREEMENT,
SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED, AT COMMON LAW,
STATUTORY OR OTHERWISE, WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE
INFORMATION, RECORDS AND DATA NOW, HERETOFORE OR HEREAFTER MADE AVAILABLE TO
BUYER IN CONNECTION WITH THIS AGREEMENT (INCLUDING, BUT NOT LIMITED TO, ANY
DESCRIPTION OF SELLER OR MESC OR THEIR RESPECTIVE FACILITIES OR EQUIPMENT,
REVENUE, PRICE AND EXPENSE ASSUMPTIONS, FORECASTS, ENVIRONMENTAL INFORMATION OR
ANY OTHER INFORMATION FURNISHED TO BUYER BY SELLER, MESC OR ANY AFFILIATE OF
SELLER OR MESC OR ANY SHAREHOLDER, DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, AGENT
OR ADVISOR THEREOF).
(b) FACILITIES. NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY
OTHER PROVISION OF THIS AGREEMENT, IT IS THE EXPLICIT INTENT OF EACH PARTY TO
THIS AGREEMENT THAT NEITHER SELLER NOR BUYER IS MAKING ANY REPRESENTATIONS OR
WARRANTIES WHATSOEVER, EXPRESS, IMPLIED, AT COMMON LAW, STATUTORY OR OTHERWISE,
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES GIVEN IN THIS AGREEMENT. BUYER
ACKNOWLEDGES AND AGREES THAT THE FACILITIES, EQUIPMENT AND OTHER ASSETS OF MESC
ARE BEING TAKEN BY BUYER, SUBJECT TO ALL FAULTS, "AS IS" AND "WHERE IS." WITHOUT
LIMITING THE GENERALITY OF THE IMMEDIATELY PRECEDING SENTENCE, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES GIVEN IN THIS AGREEMENT, SELLER HEREBY EXPRESSLY
DISCLAIMS AND NEGATES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT
COMMON LAW, STATUTORY, OR OTHERWISE, RELATING TO (i) THE CONDITION OF THE
FACILITIES, EQUIPMENT AND OTHER ASSETS OF MESC (INCLUDING ANY IMPLIED OR EXPRESS
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR THE PRESENCE OR ABSENCE OF ANY
HAZARDOUS MATERIALS IN OR ON, OR DISPOSED OR DISCHARGED FROM, SUCH FACILITIES,
EQUIPMENT AND OTHER ASSETS) OR (ii) ANY INFRINGEMENT BY SELLER, MESC OR ANY OF
THEIR AFFILIATES OF ANY PATENT OR PROPRIETARY RIGHT OF ANY THIRD PARTY. BUYER
HAS AGREED NOT TO RELY ON ANY REPRESENTATION MADE BY SELLER WITH RESPECT TO THE
CONDITION, QUALITY, OR STATE OF THE FACILITIES, EQUIPMENT AND OTHER ASSETS OF
MESC EXCEPT FOR THOSE IN THIS AGREEMENT, BUT RATHER, BUYER HAS AGREED, EXCEPT AS
PROVIDED IN THIS AGREEMENT, TO RELY SOLELY AND EXCLUSIVELY UPON ITS OWN
EVALUATION OF MESC AND THE FACILITIES, EQUIPMENT AND OTHER ASSETS OF MESC. THE
PROVISIONS CONTAINED IN THIS AGREEMENT ARE THE RESULT OF EXTENSIVE NEGOTIATIONS
BETWEEN BUYER AND SELLER, AND NO OTHER ASSURANCES, REPRESENTATIONS OR WARRANTIES
ABOUT THE QUALITY CONDITION, OR STATE OF MESC OR THE FACILITIES, EQUIPMENT OR
OTHER
42
ASSETS OF MESC WERE MADE BY SELLER IN THE INDUCEMENT THEREOF, EXCEPT AS PROVIDED
HEREIN.
SECTION 10.15 Consent to Jurisdiction.
Each of the Parties hereby irrevocably submits to the non-exclusive
jurisdiction of the federal courts of the United States of America located in
either the Southern District of Texas or the Eastern District of Michigan over
any dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby. Each of the Parties hereby irrevocably waives,
to the fullest extent permitted by applicable law, any objection which it may
now or hereafter have to the laying of venue of any dispute arising out of or
relating to this Agreement or any of the transactions contemplated hereby in
such court or any defense of inconvenient forum for the maintenance of such
dispute in such court. Each of the Parties agrees that a judgment in any such
dispute may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by applicable law.
SECTION 10.16 No Consequential Damages.
Notwithstanding any other provision of this Agreement, under no
circumstances shall either Party be liable to the other for consequential,
incidental, indirect, punitive, exemplary or special damages resulting from any
cause whatsoever under or in connection with this Agreement or the transactions
contemplated by this Agreement, whether arising in contract, warranty, tort
(including negligence), strict liability, indemnity or otherwise.
SECTION 10.17 Non-Recourse Obligations.
Notwithstanding anything to the contrary provided in this Agreement,
it is specifically understood and agreed that, except as and to the extent
provided in the DTEES Guaranty, there shall be absolutely no liability on the
part of any of the members, partners, shareholders, owners or Affiliates of
either Party or any of their respective directors, managers, officers, employees
or agents (each, a "Non-Recourse Person") for the payment of any amount due or
the performance of any obligation by such Party under this Agreement. Except as
and to the extent provided in the DTEES Guaranty, in the event of any breach of
this Agreement by a Party, recourse shall be had only from and to the extent of
the assets of such Party and subject to the other limitations contained in this
Agreement, and each Party agrees that it shall neither seek nor obtain, nor be
entitled to seek or obtain, any deficiency or other judgment against any
Non-Recourse Person in respect of such breach.
(SIGNATURE PAGE FOLLOWS)
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[Signature Page to Membership Purchase Agreement]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
"SELLER"
MOBILE ENERGY SERVICES HOLDINGS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
"BUYER"
MESC CAPITAL, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxx
----------------------------------
Title: President
---------------------------------
[Signature Page to Membership Purchase Agreement]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
"SELLER"
MOBILE ENERGY SERVICES HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------------
Title: President
---------------------------------
"BUYER"
MESC CAPITAL, LLC
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
