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TRANSACTION AGREEMENT
among
ENRON CORP.
ENRON CAPITAL & TRADE RESOURCES CORP.
and
RCM HOLDINGS, INC.
COGEN TECHNOLOGIES CAMDEN, INC.
COGEN TECHNOLOGIES CAPITAL COMPANY, X.X.
XXXXX TECHNOLOGIES LIMITED PARTNERS JOINT VENTURE
THE PARTNERS OF COGEN TECHNOLOGIES LIMITED PARTNERS
JOINT VENTURE
THE SHAREHOLDERS OF XXXXXX ENERGY SERVICES CORPORATION
OCTOBER 25, 1998
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TABLE OF CONTENTS
ARTICLE 1
Definitions
Section 1.01. Definitions........................................................................................1
ARTICLE 2
Transactions and Closing
Section 2.01. Acquisition of Interests...........................................................................1
Section 2.02. Linden Acquisition.................................................................................2
Section 2.03. Bayonne Acquisition. ..............................................................................3
Section 2.04. Camden Acquisition.................................................................................5
Section 2.05. Closing............................................................................................5
Section 2.06. Closing Balance Sheets.............................................................................6
Section 2.07. Adjustment of Consideration........................................................................7
Section 2.08. Other Transactions.................................................................................8
Section 2.09. Reimbursement for Certain Tax Payments.............................................................9
ARTICLE 3
Representations and Warranties of Sellers
Section 3.01. Representations and Warranties of XxXxxx...........................................................9
Section 3.02. Representations and Warranties of the XxXxxx Group Sellers and the
Minority Group Sellers..................................................................................10
ARTICLE 4
Representations and Warranties of Buyer Entities
ARTICLE 5
Covenants of the Sellers
Section 5.01 Conduct of Business................................................................................10
Section 5.02 Access to Information; Confidentiality.............................................................12
Section 5.03. Enjoyment of Benefits.............................................................................14
Section 5.04. Notices of Certain Events.........................................................................14
Section 5.05. Maintenance and Enforcement of Insurance Policies.................................................15
Section 5.06. Certain Contracts.................................................................................16
Section 5.07. Non-Solicitation..................................................................................16
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Section 5.08. Dividends and Distributions.......................................................................16
ARTICLE 6
Agreements Related to Parent Shares
Section 6.01. Agreements Related to Parent Shares...............................................................16
ARTICLE 7
Covenants of the Parties
Section 7.01. Further Assurances.................................................................................16
Section 7.02 Public Announcements...............................................................................17
Section 7.03 Indemnification of Directors, Officers, Etc........................................................18
Section 7.04 Amendments of Partnership Agreements; Termination of Management Fee
Agreements; Consents....................................................................................19
Section 7.06 Bayonne Management Services Agreement..............................................................21
Section 7.07 Withdrawal of Registration Statement...............................................................21
Section 7.08 Intercompany Accounts..............................................................................21
Section 7.09 Assigned Contracts.................................................................................21
Section 7.10 Letters of Credit..................................................................................22
ARTICLE 8
Tax Matters
Section 8.01 Tax Matters........................................................................................22
ARTICLE 9
Employment and Employee Benefit Matters
Section 9.01. Employment and Employee Benefit Matters...........................................................22
ARTICLE 10
Conditions to Closing
Section 10.01. Conditions to the Obligations of Each Party......................................................25
Section 10.02. Conditions to Obligations of the Buyer Entities..................................................26
Section 10.03. Conditions to Obligations of Sellers.............................................................27
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ARTICLE 11
Survival; Indemnification
Section 11.01. Survival.........................................................................................28
Section 11.02. Indemnification..................................................................................29
Section 11.03. Procedures for Third Party Claims................................................................31
Section 11.04. Exclusive Remedy; No Waiver Relating to Claims for Fraud. ......................................32
ARTICLE 12
Termination
Section 12.01. Grounds for Termination..........................................................................32
Section 12.02. Effect of Termination............................................................................33
ARTICLE 13
Miscellaneous
Section 13.01. Notices..........................................................................................34
Section 13.02. Amendments; No Waivers...........................................................................36
Section 13.03. Parties in Interest..............................................................................37
Section 13.04. Expenses.........................................................................................37
Section 13.05. Successors and Assigns...........................................................................37
Section 13.06. Governing Law....................................................................................37
Section 13.07. Counterparts; Effectiveness......................................................................38
Section 13.08. Entire Agreement.................................................................................39
Section 13.09. Captions.........................................................................................39
Section 13.10. Conflicts........................................................................................39
Section 13.11. Sellers' Representatives.........................................................................39
Section 13.12. Certain Agreements of Parent.....................................................................40
EXHIBIT I
DEFINITIONS
EXHIBIT II
REPRESENTATIONS AND WARRANTIES OF XXXXXX
II.01. Corporate Existence and Power..........................................................................II-1
II.02. Authorization..........................................................................................II-1
II.03. [Intentionally Omitted]................................................................................II-2
II.04. Noncontravention.......................................................................................II-2
II.05. Capitalization; Etc....................................................................................II-2
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II.06. Consents................................................................................................II-4
II.07 Financial Statements....................................................................................II-4
II.08. Absence of Certain Changes.............................................................................II-5
II.09. No Undisclosed Material Liabilities....................................................................II-6
II.10. Material Contracts or Indebtedness.....................................................................II-6
II.11. Litigation.............................................................................................II-9
II.12. Compliance with Laws...................................................................................II-9
II.13. Properties.............................................................................................II-9
II.14. [Intentionally Omitted]...............................................................................II-10
II.15. Employee Benefit Matters..............................................................................II-10
II.16. Intellectual Property.................................................................................II-12
II.17. Insurance Coverage....................................................................................II-13
II.18. Licenses and Permits..................................................................................II-13
II.19 Certain Regulatory Matters.............................................................................II-13
II.20. Finders' Fees.........................................................................................II-14
II.21. [Intentionally Omitted]...............................................................................II-15
II.22. Environmental Compliance..............................................................................II-15
II.23. Bank Accounts.........................................................................................II-16
EXHIBIT III
REPRESENTATIONS AND WARRANTIES OF THE MCNAIR GROUP SELLERS
AND THE MINORITY GROUP SELLERS
III.01. Corporate Existence and Power........................................................................III-1
III.02. Authorization........................................................................................III-1
III.03. Investment Representations...........................................................................III-1
III.04. Noncontravention.....................................................................................III-2
III.05. Capitalization; Etc. ................................................................................III-2
III.06. Consents.............................................................................................III-3
III.07. Finders' Fees........................................................................................III-3
EXHIBIT IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
IV.01. Corporate Existence and Power; Ownership..............................................................IV- 1
IV.02. Authorization.........................................................................................IV- 1
IV.03. Noncontravention......................................................................................IV- 1
IV.04. Litigation............................................................................................IV- 2
IV.05. Finders' Fees.........................................................................................IV- 2
IV.06. Parent Shares.........................................................................................IV- 2
IV.07 Parent SEC Reports.....................................................................................IV- 2
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EXHIBIT V
PROVISIONS REGARDING PARENT COMMON STOCK
TO BE RECEIVED BY SELLERS
V.01 Definitions...........................................................................................V- 1
V.02 Issuance of Shares; Restrictions and Restrictive Legend...............................................V- 1
V.03 Plan of Distribution..................................................................................V- 2
V.04 Registration Procedures...............................................................................V- 2
V.05 Conditions and Limitations............................................................................V- 4
V.06 Information from and Certain Covenants of Parent Stock Recipients.....................................V- 5
V.07 Registration Expenses.................................................................................V- 5
V.08 Indemnification.......................................................................................V- 5
EXHIBIT VI
TAX MATTERS
VI.01. Tax Definitions.......................................................................................VI- 1
VI.02. Tax Matters...........................................................................................VI- 2
VI.03 Tax Returns, Access to Information and Pre-Closing Acts..............................................VI- 3
ANNEXES:
Annex 2.02-A - Linden Ltd. GP Interest Assignment
Annex 2.02-B - Linden Ltd. LP Interest Assignment
Annex 2.02-C - Form of Xxxxxx Xxxxxxx Note
Annex 2.02-D1 - Assignment of Linden Receivable (RCM Holdings)
Annex 2.02-D2 - Assignment of Linden Receivable (CTLPJV)
Annex 2.02-E1- Consent to Assignment of Partnership Interests
and Admission of Partners (Linden Ltd.)
Annex 2.02-E2 - Partnership Amendment and Redemption Agreement (Linden Ltd.)
Annex 2.03 - Form of Bayonne Seller Note
Annex 2.04-A - CT Camden GP Interest Assignment
Annex 2.04-B - CT Camden LP Interest Assignment
Annex 7.04-A - Amendment to Linden Ltd. Partnership Agreement
Annex 7.04-B - Amendment to Linden Venture Partnership Agreement
Annex 7.04-C1 - Amendment to Camden Cogen Partnership Agreement
Annex 7.04-C2 - Amendment to CT Camden Partnership Agreement
Annex 7.04-D1 - Linden Ltd. Management Fee Termination Agreement
Annex 7.04-D2 - Linden Venture Management Fee Termination Agreement
Annex 7.04-E1 - Camden Cogen Management Fee Termination Agreement
Annex 7.04-E2 - CT Camden Management Fee Termination Agreement
Annex 7.04-F - Consent under NJ Venture Partnership Agreement
Annex 7.04-G - Bayonne Consent
Annex 7.04-H - Linden GE Consent
Annex 7.04-I - Camden GE Consent
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Annex 7.04-J - Linden Bank Consent
Annex 7.04-K - Camden Bank Consent
Annex 7.10 - Letters of Credit
Annex 9.01 - Employee Benefits Matters
Annex 10.02-A - Opinion of Fulbright & Xxxxxxxx
Annex 10.02-B- Opinion of Counsel to Minority Group Sellers
Annex 10.02-C- Opinion of Regulatory Counsel
Annex 10.03-A - Property to be Leased by Buyer
Annex 10.03B - Opinion of Counsel to Buyer Entities
Annex 12.01(g) - Linden Plant Matters
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TRANSACTION AGREEMENT
This Transaction Agreement ("AGREEMENT") is made this 25th day of
October, 1998 between Enron Corp., an Oregon corporation ("PARENT"), Enron
Capital & Trade Resources Corp., a Delaware corporation ("BUYER" and, together
with Buyer Acquisition, Buyer Camden GP, Buyer Camden LP, Buyer Linden GP and
Buyer Linden LP (each as defined herein), the "BUYER ENTITIES"), RCM Holdings,
Inc., a Texas corporation (formerly Cogen Technologies, Inc.) ("RCM HOLDINGS"),
Cogen Technologies Camden, Inc., a Texas corporation ("CTCI"), Cogen
Technologies Capital Company, L.P. ("CT CAPITAL") and the XxXxxx Group Sellers
and Minority Group Sellers (each as defined herein) (RCM Holdings, CTCI, CT
Capital, the XxXxxx Group Sellers and the Minority Group Sellers are
collectively referred to herein as the "SELLERS") with reference to the
following background.
A. The Sellers (other than CT Capital) collectively own the Interests
(as defined herein).
B. The Buyer Entities desire to acquire the Interests from the Sellers,
and the Sellers collectively desire to sell the Interests to the Buyer Entities,
in exchange for the Consideration set forth herein in and accordance with the
terms and provisions set forth in this Agreement.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. Defined terms used in this Agreement shall
have the meanings specified in this Agreement or in EXHIBIT I. Unless the
context otherwise requires, as used in this Agreement: (a) a term has the
meaning ascribed to it; (b) an accounting term not otherwise defined has the
meaning ascribed to it in accordance with generally accepted accounting
principles, (c) "or" is not exclusive; (d) "including" means "including, without
limitation;" (e) words in the singular include the plural; (f) words in the
plural include the singular; (g) words applicable to one gender shall be
construed to apply to each gender; (h) the terms "hereof," "herein," "hereby,"
"hereto" and derivative or similar words refer to this entire Agreement, which
shall include Exhibits I - VI hereto; and (i) the terms "Article" or "Section"
shall refer to the specified Article or Section of this Agreement, including
Exhibits I - VI hereto.
ARTICLE 2
TRANSACTIONS AND CLOSING
SECTION 2.01. Acquisition of Interests. Upon the terms and subject to
the conditions set forth herein and in the other Transaction Documents, the
parties agree that on the Closing Date, the Buyer Entities and the Sellers will
consummate the transactions described in Sections 2.02, 2.03 and 2.04, as a
result of which the Buyer Entities will acquire the Interests. Subject to the
provisions of Section 10.01(d), the aggregate consideration (the
"CONSIDERATION") for the Interests will be $1,066,000,000 consisting of
$816,000,000 in cash and Bayonne Seller Notes (as defined herein)
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and a number of shares of Parent Common Stock having an aggregate value of
$250,000,000, based on the Parent Stock Value (the "PARENT SHARES"). The
Consideration shall be allocated among the Sellers and the various Interests in
the manner set forth in Sections 2.02, 2.03 and 2.04. The aggregate
Consideration shall be delivered to the Sellers as provided in Section 2.05 and
shall be subject to adjustment as provided in Sections 2.05(b) and 2.07.
SECTION 2.02. Linden Acquisition. At the Closing, subject to the terms
and conditions of this Agreement, the following transactions will occur (for the
purposes of the following the "LINDEN VALUE" shall mean the sum of $686,000,000
plus the "RECEIVABLE AMOUNT", which shall mean the outstanding amount of the
Linden Receivable as of December 31, 1998):
(a) Purchase of Initial Interests.
(i) RCM Holdings will sell, assign, transfer and
convey to Buyer Linden GP the RCM Holdings Initial Linden
Interest, free and clear of all Liens, in exchange for the
delivery by Buyer Linden GP to RCM Holdings of (i) an amount
in cash equal to 0.81945 multiplied by the result of (A) 0.475
multiplied by the Linden Value, minus (B) $250,000,000, and
(ii) a number of shares of Parent Common Stock equal to
$204,862,500 divided by the Parent Stock Value. The foregoing
assignment shall be evidenced by an assignment in
substantially the form attached hereto as ANNEX 2.02-A.
(ii) CTLPJV will sell, assign, transfer and convey to
Buyer Linden LP the CTLPJV Initial Linden Interest, free and
clear of all Liens, in exchange for the delivery by Buyer
Linden LP to CTLPJV of (i) an amount in cash equal to 0.18055
multiplied by the result of (A) 0.475 multiplied by the Linden
Value, minus (B) $250,000,000, and (ii) a number of shares of
Parent Common Stock equal to $45,137,500 divided by the Parent
Stock Value. The foregoing assignment shall be evidenced by an
assignment in substantially the form attached hereto as ANNEX
2.02-B.
(iii) RCM Holdings and CTLPJV will execute such other
instruments and take all such further action as shall be
required to cause Buyer Linden GP and Buyer Linden LP to be
admitted as partners in Linden Ltd. in respect of the RCM
Holdings Initial Interest and the CTLPJV Initial Interest
purchased hereunder.
(iv) Notwithstanding the foregoing, no fractional
shares of Parent Common Stock shall be issued in connection
with the transactions contemplated by this Section 2.02. To
the extent the application of the conversion rate specified in
paragraphs (a) and (b) above would result in a fractional
number of shares of Parent Common Stock being issued to RCM
Holdings or CTLPJV, in lieu of issuing fractional shares, the
number of shares of Parent Common Stock issuable to such
entity shall be rounded up to the next whole number of shares
of Parent Common Stock.
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(b) Redemption of Remaining Interests. Immediately following
the transactions contemplated in subsection 2.02 (a) above:
(i) Linden Ltd. will borrow an amount in cash equal
to the result of (A) 0.525 multiplied by the Linden Value,
minus (B) the Receivable Amount, from Xxxxxx Xxxxxxx & Co.
Incorporated (or another third party lender reasonably
acceptable to the parties) to be used to effect the redemption
of the RCM Holdings Remaining Linden Interest and the CTLPJV
Remaining Linden Interest as set forth below, pursuant to a
promissory note substantially in the form attached hereto as
ANNEX 2.02-C. In the event that Sellers are unable to cause
Xxxxxx Xxxxxxx & Co. Incorporated or another reasonably
acceptable lender to make such loan to Linden Ltd., Buyer
shall have the right to obtain such funds through a lender of
its own selection.
(ii) Immediately following the transactions
contemplated by the foregoing paragraph, the parties shall
cause Linden Ltd. to redeem:
(A) the RCM Holdings Remaining Linden
Interest in exchange for (1) the payment by Linden
Ltd. to RCM Holdings of an amount in cash equal to
0.81945 multiplied by the result of (x) 0.525
multiplied by the Linden Value, minus (y) the
Receivable Amount, and (2) the assignment by Linden
Ltd. of an 81.945% interest in the Linden Receivable
as evidenced by an assignment substantially in the
form of ANNEX 2.02-D1 hereto; and
(B) the CTLPJV Remaining Linden Interest in
exchange for (1) the payment by Linden Ltd. to CTLPJV
of an amount in cash equal to 0.18055 multiplied by
the result of (x) 0.525 multiplied by the Linden
Value, minus (y) the Receivable Amount, and (2) the
assignment by Linden Ltd. of an 18.055% interest in
the Linden Receivable as evidenced by an assignment
substantially in the form of ANNEX 2.02-D2 hereto,
in each case in full satisfaction of all amounts owed by
Linden Ltd. in respect of such interests.
(iii) To effect the foregoing redemptions, RCM
Holdings, CTLPJV, Buyer Linden GP and Buyer Linden LP will
execute and deliver the Partnership Amendment and Redemption
Agreement in substantially the form set forth as ANNEX 2.02-E
hereto.
SECTION 2.03. Bayonne Acquisition. At the Closing, subject to the terms
and conditions of this Agreement, the following transactions will occur:
(a) Merger of MESC and NJ Inc. Effective immediately prior to
the Closing, the Bayonne Sellers shall take such actions as shall be
required to cause NJ Inc. to be merged
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with and into MESC (the "MESC/NJ MERGER") in accordance with the
applicable provisions of the TBCA and the DGCL, upon the following
terms:
(i) MESC will be the surviving corporation in such
merger and will succeed to and possess all the rights and
assets of NJ Inc. and MESC and be subject to all of the
liabilities and obligations of NJ Inc. and MESC, all in
accordance with the TBCA.
(ii) The articles of incorporation and bylaws of MESC
will be the articles of incorporation and bylaws of the
surviving corporation until thereafter properly amended.
(iii) Each share of NJ Inc. Common Stock issued and
outstanding immediately prior to the effective time of the
MESC/NJ Merger (the "EFFECTIVE TIME") will be canceled without
payment therefor.
(iv) Each share of MESC Common Stock issued and
outstanding immediately prior to the Effective Time shall
remain outstanding and shall not be affected by the MESC/NJ
Merger.
(b) Redemption of Shares. Immediately following the Effective
Time, MESC will redeem from each Bayonne Seller the Initial MESC Shares
owned by such Bayonne Seller in exchange for the delivery by MESC to
such Bayonne Seller of a promissory note having a principal amount
equal to $1,209.3909 for each Initial MESC Share so redeemed (each, a
"BAYONNE SELLER NOTE"), which Bayonne Seller Notes shall be in
substantially the form set forth as ANNEX 2.03 hereto and shall (i) be
secured pro rata with the other Bayonne Seller Notes by a pledge of
MESC's general partner interest in NJ Venture, which pledge shall be
pursuant to documentation in form and substance reasonably acceptable
to Sellers' Representatives but shall provide for the immediate release
of such pledge upon repayment in full of all obligations under such
Bayonne Seller Note, (ii) bear interest as specified therein, and (iii)
be payable in full upon demand at any time on or after the Business Day
following the Closing Date. Each Bayonne Seller will deliver to MESC in
exchange for such Bayonne Seller Note, a certificate or certificates
representing such Bayonne Seller's Initial MESC Shares, accompanied by
a duly executed stock power and such other documents as Buyer may
reasonably request to evidence the transfer of such shares to MESC.
Upon issuance of such Bayonne Seller Note, each Bayonne Seller will
cease to have any rights with respect to the Initial MESC Shares so
redeemed.
(c) Purchase of Remaining Shares. Following the redemption of
the Initial MESC Shares pursuant to Section 2.03(b), each Bayonne
Seller will sell to Buyer (or its designee) all Remaining MESC Shares
owned by such Bayonne Seller, free and clear of all Liens, in exchange
for a cash payment to such Bayonne Seller of $1,209.3909 for each
Remaining MESC Share. Each Bayonne Seller will deliver to Buyer in
exchange for such cash payment a certificate or certificates
representing such Bayonne Seller's Remaining
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MESC Shares, accompanied by a duly executed stock power and such other
documents as Buyer may reasonably request to evidence the transfer of
such shares to Buyer.
(d) Repayment of Bayonne Seller Notes. Buyer will cause the
Bayonne Seller Notes to be repaid in full upon presentation and
surrender thereof in accordance with their terms.
(e) Other Actions. Upon consummation of the transactions set
forth in Sections 2.03(a), (b) and (c), the Bayonne Sellers will
deliver to Buyer the minute books, stock books, stock ledgers and
corporate seal of MESC and NJ Inc., together with duly executed
resignations, effective as of the Closing, of all officers and
directors of MESC.
SECTION 2.04. Camden Acquisition. At the Closing, subject to the terms
and conditions of this Agreement, the following transactions will occur:
(a) Purchase of CT Camden LP Interest. CTLPJV will sell,
assign, transfer and convey to Buyer Camden LP all of its limited
partnership interest in CT Camden, free and clear of all Liens in
exchange for the payment by Buyer Camden LP to CTLPJV of $25,277,000 in
cash. The foregoing assignment shall be evidenced by an assignment in
substantially the form attached hereto as ANNEX 2.04-A.
(b) Purchase of CT Camden GP Interest. CTCI will sell, assign,
transfer and convey to Buyer Camden GP all of its general partnership
interest in CT Camden, free and clear of all Liens, in exchange for the
payment by Buyer Camden GP to CTCI of $114,723,000 in cash. The
foregoing assignment shall be evidenced by an assignment in
substantially the form attached hereto as ANNEX 2.04-B.
(c) Other. CTCI and CTLPJV will execute such other instruments
and take all such further action as shall be required to cause Buyer
Camden GP and Buyer Camden LP to be admitted as partners in CT Camden
in respect of the partnership interests purchased hereunder.
SECTION 2.05. Closing.
(a) The closing (the "CLOSING") of the transactions
contemplated by this Agreement shall take place at the offices of
Xxxxxx & Xxxxxx L.L.P., Suite 2300, 0000 Xxxxxx, Xxxxxxx, Xxxxx 00000,
on January 4, 1999 (or, at Buyer's option, on December 31, 1998 with
respect to the Closing of the Linden Acquisition and the Camden
Acquisition, provided that the terms of such Closing shall be
reasonably agreeable to each of the parties hereto), or, if any
conditions to the Closing set forth in Article 10 have not been
satisfied by such date, then as soon as possible thereafter, but in no
event later than three Business Days after satisfaction of the
conditions set forth in Article 10, or at such other time or place as
Buyer and the Sellers Representatives may agree; provided that if all
of such conditions are satisfied other than the condition to Closing
set forth in Section 10.03(b), the parties agree
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that Buyer or Parent shall have the right to delay the Closing for up
to 15 days in order to make the disclosures required to satisfy such
condition.
(b) If the Closing occurs after January 15, 1999, then the
Buyer Entities, in addition to the Consideration specified in Sections
2.02, 2.03 and 2.04, will pay to the Sellers at the Closing, as
additional Consideration, for each day from January 15, 1999 through
the day prior to the Closing, a daily amount calculated by multiplying
the value of the Consideration (i.e. $1,066,000,000) by a percentage
equal to the Base Rate plus 1%, divided by 365; provided, however, that
if the Closing has not occurred but all of the conditions to Closing
set forth in Sections 10.01 and 10.02 have been satisfied (or are
immediately capable of being satisfied), then from and after the
satisfaction of such conditions the percentage referred to above shall
be (A) the Base Rate plus 1%, divided by 365, for the period from
January 16, 1999 through February 15, 1999, (B) the Base Rate plus 2%,
divided by 365, for the period from February 16, 1999 through March 15,
1999, and (C) the Base Rate plus 3%, divided by 365, for the period
from March 16, 1999 through April 15, 1999. For purposes of this
Section 2.05(b), the Base Rate shall be determined on January 15, 1999
for the period from January 16, 1999 through February 15, 1999, on
February 15, 1999 for the period from February 16, 1999 through March
15, 1999, and on March 15, 1999 for the period from March 16, 1999
through April 15, 1999.
(c) The parties agree that at the Closing, the applicable
Buyer Entities shall pay to the Sellers the cash portion of the
Consideration (as set forth in Sections 2.02, 2.03, 2.04 and 2.05(b)),
in immediately available funds by wire transfer to one or more accounts
designated by the Sellers, by notice to Buyer, not later than two
Business Days prior to the Closing Date, and shall deliver to the
Sellers certificates representing Parent Shares as set forth in
Sections 2.02 and Exhibit V hereto.
SECTION 2.06. Closing Balance Sheets.
(a) Attached hereto as Section 2.06 of the Disclosure Schedule
is an adjusted combined balance sheet dated June 30, 1998 that reflects
the Latest Balance Sheets on a combined basis, as adjusted to reflect
(i) the acquisition of PSEG Bayonne, Inc. and (ii) the elimination of
prepaid insurance premiums attributable to CT Global (the "ADJUSTED
COMBINED BALANCE SHEET").
(b) As promptly as practicable, but no later than 90 days
after the Closing Date, Buyer (with the assistance of the Sellers to
the extent requested by Buyer) will cause to be prepared and delivered
to Sellers' Representatives the Year-End Balance Sheets (as defined
below), together with unqualified opinions of Xxxxxx Xxxxxxxx LLP
thereon, the Adjusted Combined Year-End Balance Sheet (as defined
below), and a certificate based on such Adjusted Combined Year-End
Balance Sheet setting forth Buyer's calculation of Year-End Working
Capital (as defined below). The "ADJUSTED COMBINED YEAR-END BALANCE
SHEET" shall be prepared on a combined basis from the audited balance
sheet of MESC as of December 31, 1998, the audited balance sheet of CT
Camden as of December 31, 1998 and the audited balance sheet of Linden
Ltd. as of December 31, 1998 (collectively, the "YEAR-
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END BALANCE SHEETS"), as adjusted to reflect the adjustment events
described in clause (ii) of Section 2.06(a). The Adjusted Combined
Year-End Balance Sheet shall not reflect any assets or liabilities
associated with the Turbine Order or the Real Estate Option. The Year-
End Balance Sheets shall (x) present fairly, in conformity with
generally accepted accounting principles, the assets and liabilities of
such respective entities, determined at the close of business on
December 31, 1998 and (y) be prepared, subject to compliance with
generally accepted accounting principles, in the same manner and format
as the Latest Balance Sheets. The excess of the amount of the current
assets over the amount of current liabilities (excluding current
maturities of long term debt) reflected on the Adjusted Combined Year-
End Balance Sheet, determined in accordance with this Section, is
referred to as "YEAR-END WORKING CAPITAL".
(c) If the Sellers' Representatives disagree with Buyer's
calculation of Year-End Working Capital delivered pursuant to Section
2.06(b), the Sellers' Representatives may, within 30 days after
delivery of the Adjusted Combined Year-End Balance Sheet, deliver a
notice to Buyer disagreeing with Buyer's calculation of Year-End
Working Capital and setting forth Sellers' Representatives' calculation
of Year-End Working Capital. Any such notice of disagreement shall
specify those items or amounts as to which the Sellers' Representatives
disagree, and the Sellers shall be deemed to have agreed with all other
items and amounts contained in the Adjusted Combined Year-End Balance
Sheet and the calculations of Year-End Working Capital delivered
pursuant to Section 2.06(b).
(d) If a notice of disagreement shall be duly delivered
pursuant to Section 2.06(c), Buyer and the Sellers' Representatives'
shall, during the 30 days following such delivery, use their reasonable
efforts to reach agreement on the disputed items or amounts in order to
determine Year-End Working Capital. If, during such period, Buyer and
Sellers' Representatives are unable to reach such agreement, they shall
promptly thereafter retain KPMG Peat Marwick LLP or such other
nationally recognized accounting firm as they may agree in the event
KPMG Peat Marwick LLP is unwilling to accept such engagement (the
"ACCOUNTING REFEREE") to promptly review this Agreement and the
disputed items or amounts for the purpose of calculating Year-End
Working Capital. In making any such calculation, the Accounting Referee
shall consider only those items or amounts in the Adjusted Combined
Year-End Balance Sheet or Buyer's calculation of Year-End Working
Capital as to which Sellers' Representatives have disagreed. The
Accounting Referee shall deliver to Buyer and the Sellers'
Representatives, as promptly as practicable, a report setting forth
each such calculation. Such report shall be final and binding upon
Buyer and Sellers. The cost of such review and report shall be borne
equally by the Buyer Entities and Sellers.
(e) The Buyer Entities and Sellers agree that they will, and
agree to cause their respective independent accountants to, cooperate
and assist in the preparation of the Year- End Balance Sheets and the
calculation of Year-End Working Capital and in the conduct of the
audits and reviews referred to in this Section 2.06, including, without
limitation, making available to the extent reasonably required books,
records, work papers and personnel.
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SECTION 2.07. Adjustment of Consideration.
(a) If Final Working Capital (as defined below) is less than
negative $4,932,952, Sellers shall pay to Buyer, as an adjustment to
the Consideration, in the manner and with interest as provided in
Section 2.07(b), an amount in cash equal to such difference. If Final
Working Capital is greater than negative $4,932,952, Buyer shall pay to
Sellers, as an adjustment to the Consideration, in the manner and with
interest as provided in Section 2.07(b), an amount in cash equal to
such difference. "FINAL WORKING CAPITAL" means Year- End Working
Capital (i) as shown in Buyer's calculation delivered pursuant to
Section 2.06(b) if no notice of disagreement with respect to Buyer's
calculation is duly delivered pursuant to Section 2.06(c), or (ii) if
such a notice of disagreement is delivered, as agreed by Buyer and the
Sellers' Representatives pursuant to Section 2.06(d) or in the absence
of such agreement, as shown in the Accounting Referee's calculation
delivered pursuant to Section 2.06(d).
(b) Any payment pursuant to Section 2.07(a) shall be made
within ten days after Final Working Capital has been determined, by
delivery by Sellers or Buyer, as the case may be, of immediately
available funds by wire transfer to an account of Sellers or Buyer, as
the case may be, designated by the Seller' Representatives or Buyer, as
the case may be, by notice to the Seller' Representatives or Buyer, as
the case may be, not later than two Business Days prior to the payment
date. The amount of any payment to be made pursuant to this Section
2.07 shall bear interest from and including the Closing Date to but
excluding the date of payment at a rate per annum (based on a 365-day
year) equal to the Specified Rate. Such interest shall be payable at
the same time as the payment to which it relates and shall be
calculated on March 31, June 30, September 30 and December 31 (each, a
"QUARTERLY DATE") of each year (with the rate determined on such date
to be the rate for the three months or portion thereof following such
date). The interest rate for the quarter in which the Closing occurs
will be the interest rate determined by reference to the Quarterly Date
immediately preceding the Closing Date. XxXxxx will be liable to Buyer
for all amounts owed to Buyer by any of the Sellers pursuant to Section
2.07.
SECTION 2.08. Other Transactions.
(a) Turbine Order. Subject to the terms set forth herein, at
the Closing, the Sellers will cause CT Generating to assign to Buyer
(or its designee) all of its rights to purchase from GE Power Systems
three Model 7241FA Packaged Power Plants on the terms indicated in the
letter dated August 12, 1998 from GE Power Systems to Cogen
Technologies bearing the reference "GE IPS #80518" (the "TURBINE
ORDER"), including the benefit of the $1 million purchase price credit
referenced in the letter dated June 10, 1997 from Xxxxxxx X. Xxxxxxxx
of GE Power Systems to X. Xxxxxx, and including CT Generating's rights
(and the rights of any of its Affiliates) under any definitive
agreements entered into in connection with the Turbine Order. Sellers
will cause CT Generating not to enter into any such definitive
agreements without Buyer's prior written consent. Such assignment shall
be subject to Buyer receiving a consent satisfactory to it from GE
Power Systems consenting to the transfer of such Turbine Order and
purchase price credit to Buyer or its designee.
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Sellers agree to use their reasonable efforts to obtain such consent.
Subject to obtaining such consent, at the Closing, Buyer (or its
designee) will (i) pay to CT Generating an amount in cash equal to any
cash deposits or installments paid by or on behalf of CT Generating to
GE Power Systems that are credited to the purchase price pursuant to
the Turbine Order, and (ii) assume the obligations of CT Generating
under the Turbine Order.
(b) Real Estate Option. Subject to the terms set forth herein,
at the Closing, Sellers will cause to be assigned to Buyer or its
designee all rights under the option to purchase certain real property
set forth in the Contract of Sale dated as of September 1, 1998 between
Xxxxxxx Transportation Company and Orange Service Company, L.L.C. (the
"REAL ESTATE OPTION"), subject to any consents required in connection
with such assignment, in exchange for the payment by Buyer or its
designee to a Person designated by the Sellers' Representatives of an
amount in cash equal to the $285,318 deposit thereunder; provided,
however, that:
(i) if the Real Estate Option shall have expired
unexercised prior to the Closing, it shall not be so assigned
and no payment shall be made therefor; and
(ii) if Sellers shall have exercised the Real Estate
Option prior to the Closing with Buyer's consent, the Real
Estate Option shall not be assigned but in lieu thereof the
Sellers shall cause to be sold and conveyed to Buyer or its
designee at Closing the real property covered by the Real
Estate Option in exchange for the payment by Buyer or its
designee to a Person designated by the Sellers'
Representatives of an amount in cash equal to the aggregate
purchase price paid pursuant to such Real Estate Option in
accordance with the terms thereof.
Sellers further agree that they will not permit the Real Estate Option
to be exercised without Buyer's consent and that they will cause the
Real Estate Option to be exercised if Buyer so requests prior to the
Closing.
SECTION 2.09. Reimbursement for Certain Tax Payments. At the Closing,
CTLPJV and CTCI shall pay to Buyer an amount equal to the distribution to be
made pursuant to Section 4.6 of the Camden Cogen Partnership Agreement as a
result of the termination of Camden Cogen under section 708 of the Code caused
by the Contemplated Transactions. Such payment shall be made 81.945% by CTCI and
18.055% by CTLPJV. XxXxxx shall reimburse Buyer for any reduction in future
distributions incurred as a result of the amount paid to Buyer pursuant to this
Section 2.09 being less than the amount of the distributions required to be made
pursuant to Section 4.6 of the Camden Cogen Partnership Agreement as a result of
the termination of Camden Cogen under section 708 of the Code caused by the
Contemplated Transactions.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
SECTION 3.01. Representations and Warranties of XxXxxx. XxXxxx
represents and warrants to the Buyer Entities and Parent as set forth in EXHIBIT
II.
SECTION 3.02. Representations and Warranties of the XxXxxx Group
Sellers and the Minority Group Sellers. The XxXxxx Group Sellers and the
Minority Group Sellers represent and warrant to the Buyer Entities and Parent as
set forth in EXHIBIT III.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER ENTITIES
SECTION 4.01. Representations and Warranties of Buyer Entities. The
Buyer Entities represent and warrant to the Sellers as set forth in EXHIBIT IV.
ARTICLE 5
COVENANTS OF THE SELLERS
SECTION 5.01 Conduct of Business. Except as contemplated by the
Transaction Documents, from the date of this Agreement until the Closing Date,
the Sellers will (in connection with their ownership of the Acquired Entities),
and will cause the Acquired Entities to, conduct their respective businesses in
the ordinary course consistent with past practices, use their reasonable efforts
to preserve intact, in all material respects, the business organizations and
relationships with third parties and keep available the services of the present
employees of the Acquired Entities. In addition, Sellers will not, and will
cause the Acquired Entities not to, willfully take any action that would make
any representation or warranty of any Seller under this Agreement inaccurate in
any material respect at the Closing Date. Without limiting the generality of the
foregoing, except as contemplated by the Transaction Documents, from the date of
this Agreement until the Closing Date, without the prior written consent of
Buyer (which, in the case of clauses (ii) or (iii) of paragraph (c) below will
not be unreasonably withheld), the Sellers will not (in connection with their
ownership of the Acquired Entities) and will cause each Acquired Entity not to:
(a) amend the partnership agreement, charter or bylaws of any
Acquired Entity, or fail to maintain the books and records of any
Acquired Entity in the ordinary course of business consistent with past
practices;
(b) sell, lease, license, create any Lien upon or otherwise
dispose of, or enter into any contract or option to sell, lease,
license, create any Lien upon or otherwise dispose of, any assets that
are material to an Acquired Entity, except in the ordinary course of
business
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consistent with past practices or in compliance with any Material
Contract listed on Section II.10(a) of the Disclosure Schedule;
(c) (i) amend, modify, terminate or restructure, or waive any
material rights, obligations, claims or defaults under, any Material
Contract, or (ii) approve the annual operating plan or the annual
operating budget under the partnership agreements and Operation and
Maintenance Agreements relating to any of the Operating Facilities, or
(iii) approve any modifications or revisions thereto, or any
expenditures not provided for in such operating plans or budgets that
exceed $250,000 individually or $1,000,000 in the aggregate for all
Acquired Entities;
(d) issue, sell, pledge or purchase, or agree to issue, sell,
pledge or purchase, any partnership interest, capital stock or other
equity interest in any Acquired Entity, or any options, rights, or
warrants to acquire, or securities convertible into, any partnership
interest, capital stock or other equity interest in any Acquired
Entity, or split, combine or reclassify or pay any stock dividend in
respect of the shares of capital stock of any Acquired Entity or take
any similar action in connection with the partnership interests of any
Acquired Entity;
(e) change any significant accounting policy of any Acquired
Entity or make or rescind any express or deemed election relating to
Taxes by any Acquired Entity or settle or compromise any claim, action,
litigation, arbitration or investigation that would be material to any
Acquired Entity;
(f) incur any Indebtedness for Borrowed Money in excess of
currently available credit facilities, or guarantee or agree to act as
surety with respect to any obligation of any Seller or any Affiliate of
a Seller, or guarantee or agree to act as surety with respect to any
obligation of any person other than a Seller or Affiliate of a Seller
that exceeds $250,000 in the aggregate;
(g) except as disclosed in Section 5.01(g) of the Disclosure
Schedule, enter into any agreement or arrangement with any Affiliate of
any Seller that would survive or create any obligation on the part of
an Acquired Entity after the Closing;
(h) enter into any agreement, arrangement or understanding
involving a commitment on the part of any Acquired Entity to expend in
excess of $250,000 individually or $1,000,000 in the aggregate for all
Acquired Entities;
(i) fail to take any commercially reasonable action necessary
to maintain the status of any Operating Facility as a "qualifying
cogeneration facility" under the PURPA Requirements or any applicable
state law;
(j) except as disclosed in Section 5.01(j) of the Disclosure
Schedule, increase the compensation payable to or to become payable to
any director or officer of any Acquired Entity, except for increases in
salary or wages payable or to become payable upon promotion to an
office having greater operational responsibilities or otherwise in the
ordinary course of
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business and consistent with past practice; grant any severance or
termination pay (other than pursuant to the severance policies of such
Acquired Entity as in effect on the date of this Agreement) to, or
enter into any employment or severance agreement with, any director,
officer, or employee of any Acquired Entity, either individually or as
part of a class of similarly situated persons; establish, adopt or
enter into any Benefit Plan; or, except as required by applicable law,
amend or take any other actions, including, but not limited to,
acceleration of vesting and waiver of performance criteria, with
respect to any Benefit Plan; or
(k) enter into any contract, agreement or commitment with
respect to any of the foregoing.
The parties further agree that no payments of principal or
interest on, or additional borrowings shall be made under, the Linden
Receivable from December 31, 1998 through the Closing Date, and that
from and after such date through the Closing, Sellers will not permit
any of the Acquired Entities to make or guarantee any loans to any
party.
SECTION 5.02 Access to Information; Confidentiality.
(a) From the date of this Agreement until the Closing Date,
the Sellers will, and will cause each Acquired Entity to, (i) give the
Buyer Entities and their Representatives (which, for purposes of this
Section 5.02(a) shall be deemed to include proposed lenders to the
Buyer Entities) full access, to the extent reasonably requested
thereby, to each Acquired Entity's offices, properties, books, records
and employees, and those of its Affiliates to the extent related to the
Acquired Entities, and to use their reasonable efforts to provide the
Buyer Entities and their Representatives promptly after the date hereof
access to each Acquired Entity's lenders, customers and service
providers, each during normal business hours and upon reasonable prior
notice; provided that any such access by any Buyer Entity or its
Representatives shall not unreasonably interfere with the conduct of
business by such Acquired Entity or Affiliate thereof, and provided,
further, that the Buyer Entities agree that all discussions between the
Buyer Entities and any Acquired Entity's lenders, customers and service
providers (to the extent such discussions relate to the Acquired
Entities) shall be limited to matters reasonably related to continuing
due diligence with respect to the Contemplated Transactions and matters
reasonably related to the satisfaction of any conditions to the
Closing, (ii) permit the Buyer Entities and their Representatives to
conduct non-invasive environmental and other inspections and
investigations with respect to the Real Property and the Operating
Facilities during normal business hours and upon reasonable prior
notice, (iii) furnish to the Buyer Entities and their Representatives
such financial and operating data and other information regarding such
Acquired Entity and such Affiliates (to the extent related to the
Acquired Entities) as such Buyer Entity or Representative may
reasonably request and (iv) instruct its employees and Representatives
to cooperate with the Buyer Entities in connection with such
activities. The parties agree that the Sellers or their Representatives
will initiate the initial contact with lenders, customers and service
providers of the Acquired Entities pursuant to clause (i) above and
that a Representative of the Sellers shall have the opportunity to
participate in such initial discussions. Thereafter, the Buyer
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Entities agree to keep a Representative of the Sellers reasonably
apprised of the progress of any discussions with such entities in
connection with the Contemplated Transactions.
(b) On and after the Closing Date, Sellers will, and will
cause their respective Affiliates to, afford promptly to the Buyer
Entities and their Representatives, as reasonably requested thereby,
reasonable access to their books and records during normal business
hours and upon reasonable prior notice to permit the Buyer Entities and
their Representatives to review the accounting, regulatory,
environmental or tax records relating to any Acquired Entity so that
the Buyer Entities may determine any such issue relevant to them in
connection with the Contemplated Transactions; provided that any such
access by the Buyer Entities or their Representatives shall not
unreasonably interfere with the conduct of the business of such Seller
or Affiliate. For a period of seven (7) years following the Closing
Date, the Sellers will not, without first having offered to deliver the
same to the Buyer Entities, destroy or permit the destruction of any of
such books and records in the possession of the Sellers or their
Affiliates.
(c) On and after the Closing Date, the Buyer Entities will,
and will cause their respective Affiliates to, afford promptly to the
Sellers and their Representatives, as reasonably requested thereby,
reasonable access to the books and records of the Acquired Entities
during normal business hours and upon reasonable prior notice to permit
the Sellers and their Representatives to review the accounting,
regulatory, environmental or tax records relating to any Acquired
Entity on or before the Closing Date so that the Sellers may determine
any such issue relevant to them in connection with the Contemplated
Transactions; provided that any such access by the Sellers or their
Representatives shall not unreasonably interfere with the conduct of
the business of such Buyer Entity, the Acquired Entities or their
Affiliates. For a period of seven (7) years following the Closing Date,
the Buyer Entities will not, without first having offered to deliver
the same to the Sellers, destroy or permit the destruction of any of
such books and records in the possession of the Buyer Entities or their
Affiliates.
(d) Prior to the Closing, any information obtained by either
party pursuant to this Section 5.02 shall be subject to the provisions
of the Confidentiality Agreement. The parties agree that the
Confidentiality Agreement shall terminate upon the Closing.
(e) On and after the Closing Date, the Sellers will hold and
will use their reasonable efforts to cause their respective Affiliates
and Representatives to hold, in confidence, unless compelled to
disclose by Applicable Law, all confidential information concerning any
Buyer Entity or the Acquired Entities, except to the extent that such
information can be shown to have been (i) in the public domain through
no fault of any Seller, its Affiliates or any of its Representatives or
(ii) later lawfully acquired by any Seller on a non-confidential basis
from sources other than a Buyer Entity or Acquired Entity, but only to
the extent that any such source is not bound by a confidentiality
agreement with any Buyer Entity, any Acquired Entity, any Seller or any
Affiliate of a Seller.
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(f) On and after the Closing Date, the Buyer Entities will
hold and will use their reasonable efforts to cause their respective
Affiliates and Representatives to hold, in confidence, unless compelled
to disclose by Applicable Law, all confidential information concerning
any Seller or Affiliate of a Seller (other than any Acquired Entity),
except to the extent that such information can be shown to have been
(i) in the public domain through no fault of any Buyer Entity or any of
its Representatives or (ii) later lawfully acquired by any Buyer Entity
on a non-confidential basis from sources other than the Sellers, but
only to the extent that any such source is not bound by a
confidentiality agreement with any Seller, any Acquired Entity or any
Affiliate of a Seller.
SECTION 5.03. Enjoyment of Benefits.
(a) Except as set forth in this Section 5.03(a), nothing in
this Agreement shall restrict any Seller's right to engage in any
business (whether through ownership, management, consulting or
otherwise) in any location that engages in the development or ownership
of electric power generation facilities or the acquisition or sale or
marketing of electric power. Notwithstanding the foregoing, XxXxxx
agrees that until the fifth anniversary of the Closing Date, he will
not undertake any activities that would directly adversely affect in
any material way the enjoyment by the Buyer Entities of the economic
benefits of the operation of the Operating Facilities and any
Contemplated Expansion, as such plants are being operated or power is
being sold on the Closing Date or as such facilities are operated or
power is sold following any such Contemplated Expansion.
(b) XxXxxx agrees that until the third anniversary of the
Closing Date, he will not, and will cause each of his Affiliates not
to, directly or indirectly, employ, receive or solicit the performance
of services by any Transferred Employee; provided that this Section
5.03(b) shall not prohibit XxXxxx from employing, receiving or
soliciting the performance of services by any Transferred Employee
whose employment relationship with Buyer is terminated by Buyer during
the three-year period without Cause.
(c) XxXxxx acknowledges that the Buyer Entities would be
irreparably harmed by any breach of this Section 5.03 and that there
would be no adequate remedy at law or in damages to compensate the
Buyer Entities for any such breach. XxXxxx agrees that the Buyer
Entities shall be entitled to injunctive relief requiring specific
performance by him of this Section 5.03, and XxXxxx consents to the
entry of such injunctive relief.
SECTION 5.04. Notices of Certain Events. Each Seller shall notify Buyer
as promptly as practicable upon becoming aware of:
(a) any changes or events which, individually or in the
aggregate, have had or could reasonably be expected to have a Material
Adverse Effect;
(b) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection
with the transactions contemplated hereby, other than consents
disclosed in Section II.06 of the Disclosure Schedule;
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(c) any notice or other communication (i) from any
Governmental Authority in connection with the Contemplated
Transactions, (ii) from any party to a Material Contract in connection
with the Contemplated Transactions or in which such party asserts in
writing a breach, default or event of default or other non-performance
by or in respect of any Acquired Entity pursuant to a Material Contract
(whether or not in connection with the Contemplated Transactions) or
(iii) with respect to the status of any Operating Facility as a
"qualifying cogeneration facility" under the PURPA Requirements or any
applicable state law;
(d) any actions, suits, claims, investigations, arbitration or
proceedings commenced or threatened against, relating to or involving
or otherwise affecting the Acquired Entities that, if pending on the
date of this Agreement, would have been required to have been disclosed
pursuant to Section II.11 of Exhibit II or that relate to the
Contemplated Transactions;
(e) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the Acquired Entities in any
material respect;
(f) any notice from the operator under the Operation and
Maintenance Agreements relating to any of the Operating Facilities of
any change in operating procedures with respect to such Operating
Facilities; and
(g) any action or event that constitutes a breach by any such
Seller under this Agreement.
SECTION 5.05. Maintenance and Enforcement of Insurance Policies.
(a) From and after the date of this Agreement (including after
the Closing Date), Sellers shall not, and XxXxxx, RCM Holdings and CTCI
shall cause each of the Acquired Entities not to, take or fail to take
any action if such action or inaction, as the case may be, would
adversely affect the applicability of any insurance in effect on the
date of this Agreement that covers all or any part of the Acquired
Entities with respect to events occurring prior to the Closing
("APPLICABLE INSURANCE").
(b) XxXxxx, RCM Holdings and CTCI agree that, from and after
the Closing Date, except as disclosed in Section 5.05(b) of the
Disclosure Schedule, all Applicable Insurance directly or indirectly
applicable to the Acquired Entities shall be for the benefit of the
Buyer Entities. Without limiting the generality of the foregoing, from
and after the Closing Date and in any manner requested by Buyer,
XxXxxx, RCM Holdings and CTCI shall use their reasonable efforts to
ensure that all Applicable Insurance policies and arrangements are
modified, amended or assigned so that, except as disclosed in Section
5.05(b) of the Disclosure Schedule, the Buyer Entities are the direct
beneficiary of such Applicable Insurance with all rights to enforce,
obtain the benefit of and take all other action in respect of such
Applicable Insurance; provided that, if the modifications, amendments
or assignments contemplated by this Section 5.05(b) are not
permissible, XxXxxx, RCM
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Holdings and CTCI shall enter into such other arrangements as Buyer may
reasonably request to ensure that the Buyer Entities are entitled to
the benefit (to the fullest extent set forth in the relevant policies
and arrangements) of any Applicable Insurance.
(c) Notwithstanding anything to the contrary in this Section
5.05, the term Applicable Insurance shall not include any insurance
provided by CT Global, it being acknowledged and understood by the
parties to this Agreement that immediately following the Closing, all
insurance provided by CT Global and all reinsurance by CT Global to
other carriers covering the Acquired Entities will be terminated.
SECTION 5.06. Certain Contracts. XxXxxx, RCM Holdings and CTCI shall
take all actions reasonably practicable to ensure that all Material Contracts
entered into by any Acquired Entity on or after the date of this Agreement do
not require a consent or other action by any Person as a result of the
execution, delivery or performance of the Transaction Documents or the
consummation of the Contemplated Transactions.
SECTION 5.07. Non-Solicitation. The Sellers agree that neither they nor
any of their respective Representatives, nor any of their respective Affiliates
or any Representatives of their respective Affiliates, will, directly or
indirectly, (i) initiate, solicit, encourage or otherwise facilitate (including
by way of furnishing information or assistance) any Competing Proposal or any
inquiries that may reasonably be expected to lead to a Competing Proposal, or
(ii) engage in any discussion with or provide any confidential information or
data to any Person that may reasonably be expected to lead to a Competing
Proposal or engage in any negotiations concerning, or otherwise facilitate any
effort or attempt to make or implement, a Competing Proposal. The Sellers agree
that they will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any Competing Proposal.
SECTION 5.08. Dividends and Distributions. Except as expressly
contemplated by this Agreement, during the period from December 31, 1998 through
the Closing Date, XxXxxx, RCM Holdings and CTCI shall cause MESC, Linden Ltd.
and CT Camden not to declare, make or pay any dividends or distributions to
their respective shareholders or partners.
ARTICLE 6
AGREEMENTS RELATED TO PARENT SHARES
SECTION 6.01. Agreements Related to Parent Shares. The Parent Stock
Recipients will be entitled to the benefit of the registration rights with
respect to the Parent Shares issued in connection with this Agreement, and agree
to the restrictions on transfer and certain other matters concerning the Parent
Shares, all as set forth in EXHIBIT V.
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ARTICLE 7
Covenants of the Parties
SECTION 7.01. Further Assurances.
(a) The Buyer Entities and XxXxxx, RCM Holdings and CTCI shall
use their reasonable efforts to (i) take, or cause to be taken, all
appropriate action and do, or cause to be done, all things necessary,
proper or advisable under Applicable Law or otherwise to consummate the
Contemplated Transactions as promptly as practicable, (ii) obtain
expeditiously from any Governmental Authorities any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be
obtained or made in connection with the consummation of the
Contemplated Transactions, and (iii) as promptly as practicable, (but
within five Business Days after the expiration of the termination
rights set forth in Sections 12.01(f) and 12.01(h) hereof with respect
to the initial filings under clauses (A) or (B) below) make all
necessary filings and give all required notices, and promptly
thereafter make any other required submissions, with respect to this
Agreement and the Contemplated Transactions required under (A) the HSR
Act and any related governmental request thereunder, (B) ISRA and (C)
any other Applicable Law or agreement with any Governmental Authority;
provided that Buyer and the Sellers shall cooperate with each other,
and furnish to each other all information reasonably required in
connection with the making of all such filings and the giving of all
such notices, including, unless prohibited by Applicable Law, providing
copies of all such documents to the non-filing party and its advisors
prior to filing and, if requested, accepting all reasonable additions,
deletions or changes suggested by the other party in connection
therewith. The Sellers, other than XxXxxx, RCM Holdings and CTCI, shall
use their reasonable efforts to take, or cause to be taken, all
appropriate action and do, or cause to be done, all things necessary,
proper or advisable on their part, under Applicable Law or otherwise,
to consummate the Contemplated Transactions as promptly as practicable.
From the date of this Agreement until the Closing Date, each party
shall promptly notify the other party in writing of any pending or, to
the knowledge of the first party, threatened action, proceeding or
investigation by any Governmental Authority or any other Person (i)
challenging or seeking material damages in connection with consummation
of the Contemplated Transactions or (ii) seeking to restrain or
prohibit the consummation of the Contemplated Transactions or otherwise
limit the right of the Buyer Entities to own or operate all or any
portion of the Acquired Entities.
(b) (i) XxXxxx, RCM Holdings and CTCI shall give (or cause to
be given) any notices to third parties and use, and cause the
Acquired Entities to use, reasonable efforts to obtain any
third party consents (A) necessary, proper or advisable to
consummate the Contemplated Transactions, (B) disclosed or
required to be disclosed in Section II.06 of the Disclosure
Schedule or (C) required to prevent a Material Adverse Effect
from occurring prior to or after the Closing.
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(ii) In the event that XxXxxx, RCM Holdings or CTCI
fail to obtain any third party consent described in subsection
(b)(i) above, they shall use their reasonable efforts, and
shall take any such actions reasonably requested by the Buyer
Entities, to minimize any adverse effect upon the Buyer
Entities, their Subsidiaries, and their respective businesses
resulting, or which could reasonably be expected to result
after the Closing, from the failure to obtain such consent.
SECTION 7.02 Public Announcements. Subject to applicable securities
laws or stock exchange requirements, neither Buyer nor any Seller shall, without
the prior approval of the other parties, issue or permit any of their respective
partners, directors, officers, employees, agents or Affiliates to issue, any
press release or other public announcement with respect to this Agreement or the
transactions contemplated hereby. If a party is required to disclose information
with respect to this Agreement or the transactions contemplated hereby under
applicable securities laws or stock exchange requirements, to the extent
reasonably practicable under the circumstances, such party shall provide the
other party with prior notice of its intent to make the disclosure and the
general content of the disclosure.
SECTION 7.03 Indemnification of Directors, Officers, Etc.
(a) Survival of Indemnity Provisions. The Buyer Entities agree
that, to the fullest extent permitted by Applicable Law, all rights to
indemnification and exculpation now existing or hereafter arising in
favor of the directors, officers, general partners or directors or
officers of the general partners of any Acquired Entity (the "COVERED
PARTIES") with respect to acts or omissions occurring prior to the
Closing that are based on or arise out of such Covered Party's service
to the Acquired Entity in his capacity as such, pursuant to the
articles or certificates of incorporation, bylaws or partnership
agreements of such entities as in effect on the date hereof, shall
survive the Closing and shall continue in full force and effect
thereafter. The provisions of the articles or certificates of
incorporation, bylaws and partnership agreements of the Acquired
Entities that provide for indemnification of the Covered Parties shall
not be amended, repealed or otherwise modified in any manner that would
adversely affect the rights thereunder of the Covered Parties with
respect to acts or omissions occurring on or before the Closing Date.
(b) Buyer Indemnity. To the fullest extent permitted by
Applicable Law, from and after the Closing, Buyer will indemnify and
hold harmless each Covered Party with respect to acts and omissions
occurring prior to the Closing that are based on or arise out of the
Covered Party's service to such Acquired Entity in his capacity as
such, to the extent provided by whichever of the following is most
favorable to the Covered Party: (i) any indemnification provision that
such Acquired Entity has in its articles or certificate of
incorporation, bylaws or partnership agreement for the benefit of such
Covered Party in his capacity as such at the date of this Agreement and
(ii) indemnification to the same extent as would be permitted by
Applicable Law with respect to the directors and officers of Buyer
pursuant to the provisions in Buyer's then-existing certificate of
incorporation or bylaws.
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(c) Insurance. For a period of six years after the Closing
Date, Buyer shall cause to be maintained in effect the policies of
directors' and officers' liability insurance maintained by or on behalf
of the Acquired Entities or their Affiliates as of the date of this
Agreement covering those persons who are currently covered by such
policies in connection with their service to the Acquired Entities with
respect to actions taken or omissions occurring prior to the Closing
(or, at Buyer's option, substitute policies of at least the same
coverage containing terms that are in the aggregate no less favorable
to such insured persons) to the extent such liability insurance can be
obtained at a cost not greater than 200 percent of the current annual
premiums for the policies (or portions thereof) currently maintained by
the Acquired Entities or their Affiliates as of the date of this
Agreement for such insured persons; provided, that if such insurance
coverage cannot be so maintained or obtained at such cost, Buyer shall
maintain or obtain a policy providing the best coverage available, as
determined by the Board of Directors of Buyer, for a premium not
exceeding 200 percent of the current annual premiums for such
insurance.
(d) Disputes Relating to the Contemplated Transactions and
Related Matters. Notwithstanding the other provisions of this Section
7.03 or the provisions of the articles or certificate of incorporation,
bylaws or partnership agreements of the Acquired Entities, no Covered
Party shall have any right to indemnification, and no Covered Party
that is a party to this Agreement will make any claim for or assert his
right to indemnification, from any Acquired Entity or any Buyer Entity
from and after the Closing Date in respect of any litigation, suit,
claim, proceeding or other dispute arising in whole or in part out of
the Contemplated Transactions or under this Agreement (except as
expressly provided in Section 11.02(c) hereof), or in any litigation,
suit, claim, proceeding or other dispute between an Acquired Entity,
Buyer, any Affiliate of any Acquired Entity or Buyer, a partner in any
Acquired Entity or any other Seller or other Covered Party against such
Covered Party.
(e) Benefit of Provisions. The provisions of this Section 7.03
are expressly for the benefit of the Covered Parties, shall be
enforceable by each of them, and shall survive the Closing. If Buyer or
any of its successors or assigns (i) consolidates with or merges into
any other person and shall not be the continuing or surviving entity of
such consolidation or merger, or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such
case, proper provision shall be made so that the successors and assigns
of Buyer assume the obligations of Buyer set forth in this Section
7.03.
SECTION 7.04 Amendments of Partnership Agreements; Termination of
Management Fee Agreements; Consents.
(a) XxXxxx, RCM Holdings and CTCI agree to use their
reasonable efforts to cause the following to occur, each effective
immediately prior to the Closing and, subject to Section 7.04(c), each
at the expense of the Sellers and without recourse to any Buyer Entity
or Acquired Entity:
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(i) the Linden Ltd. Partnership Agreement shall be
amended by execution and delivery by the parties thereto of an
amendment to such agreement in substantially the form of ANNEX
7.04-A hereto;
(ii) the Linden Venture Partnership Agreement shall
be amended by execution and delivery by the parties thereto of
an amendment to such agreement in substantially the form of
ANNEX 7.04-B hereto;
(iii) the Camden Cogen Partnership Agreement and the
CT Camden partnership agreement shall be amended by execution
and delivery by the parties thereto of amendments to such
agreements in substantially the form of ANNEXES 7.04-C1 AND
7.04-C2 hereto;
(iv) Linden Ltd. and Linden Venture shall enter into
the Management Fee Termination Agreements with the other
parties thereto in substantially the form of ANNEXES 7.04-D1
AND 7.04-D2 hereto, and the transactions contemplated thereby
shall be completed;
(v) CT Camden and Camden Cogen shall enter into the
Management Fee Termination Agreements with the other parties
thereto in substantially the form of ANNEXES 7.04-E1 AND
7.04-E2 hereto, and the transactions contemplated thereby
shall be completed; and
(vi) the parties to the NJ Venture Partnership
Agreement shall execute and deliver a consent to the
transactions contemplated by this Agreement and certain other
matters in substantially the form of ANNEX 7.04-F hereto.
The partnership agreement amendments, consents and Management
Fee Termination Agreements described in this Section 7.04(a)
are referred to herein as the "PARTNERSHIP CONSENTS".
(b) XxXxxx, RCM Holdings and CTCI agree to use their
reasonable efforts to obtain prior to the Closing, each at the expense
of the Sellers and not any Buyer Entity or Acquired Entity, the
following consents:
(i) the Bayonne Consent in substantially the form of
ANNEX 7.04-G hereto (the "BAYONNE CONSENT");
(ii) the consent in substantially the form of ANNEX
7.04-H hereto together with the execution and delivery of all
documents referred to therein by GE or the Owner Trustee and
any consent or agreement of GE or the Owner Trustee required
in Annex 7.04-J (collectively, the "LINDEN GE CONSENT"); and
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(iii) the consent in substantially the form of ANNEX
7.04-I hereto together with any consent or agreement of GE
required in Annex 7.04-K (collectively, the "CAMDEN GE
CONSENT").
provided, however, that the provisions of this Section 7.04(b) do not
impose any obligation on the part of XxXxxx, RCM Holdings or CTCI in
respect of obtaining the consents described in Section 7.04(c) below.
(c) The Buyer Entities agree to use their reasonable efforts
to obtain prior to the Closing the following consents:
(i) the consent in substantially the form of ANNEX
7.04-J hereto other than any consent or agreement of GE or the
Owner Trustee contemplated therein (the "LINDEN BANK
CONSENT"); and
(ii) the consent in substantially the form of ANNEX
7.04-K hereto other than any consent or agreement of GE
contemplated therein (the "CAMDEN BANK CONSENT").
The Buyer Entities will pay all fees and expenses payable to
such lenders in connection with obtaining the Linden Bank Consent and
the Camden Bank Consent in excess of the $540,000 of fees that have
been paid or have been previously agreed to be paid by CT Capital with
respect to consents as of the date of this Agreement.
(d) The Buyer Entities and the Sellers acknowledge and agree
that the forms of amendments, agreements, waivers and consents referred
in this Section 7.04 are in form and substance satisfactory to Buyer
and the Sellers. Any amendments or modifications to such documents
shall be approved by Buyer and the Sellers' Representatives, which
approval shall not be unreasonably withheld.
SECTION 7.05 Buyer Insurance. The Buyer Entities shall cause to be put
in place as of the Closing Date insurance policies covering the Acquired
Entities with coverage amounts and containing terms and conditions that are
sufficient to meet the obligations of the Acquired Entities under their
respective partnership agreements and loan agreements.
SECTION 7.06 Bayonne Management Services Agreement. The Buyer Entities
acknowledge and agree that the Management Services Agreement, dated September 1,
1989, among Cogen Technologies Management Company, NJ Inc. and XxXxxx, as
assigned pursuant to the Assignment and Assumption Agreement, dated January 1,
1994, among Cogen Technologies Management Company, Cogen Technologies Management
Services, L.P. (now known as RCM Management Services L.P. ("RCM MANAGEMENT")),
NJ Inc. and XxXxxx, will continue in effect after the Closing and that MESC (as
successor to NJ Inc. in the MESC/NJ Merger) will continue to perform the
services required under such agreement in accordance with its terms and RCM
Management shall have no further obligations thereunder but shall be entitled to
receive from MESC the fees set forth in accordance with the terms and conditions
of such agreement. Buyer agrees not to take any action
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that would cause NJ Venture to be terminated prior to the scheduled expiration
of the NJ Venture Partnership Agreement, without either making provision for the
continuation of the payment of such fees to RCM Management through such
scheduled expiration or otherwise reaching a mutually agreeable settlement with
respect to such fees with RCM Management.
SECTION 7.07 Withdrawal of Registration Statement. At or prior to
Closing, Sellers shall cause to be filed with the SEC a request to withdraw the
S-1 Registration Statement under the Securities Act in accordance with the rules
and regulations of the SEC thereunder.
SECTION 7.08 Intercompany Accounts. The parties agree to cause the
intercompany balances owed between the Sellers and their Affiliates (other than
the Acquired Entities) on the one hand, and the Acquired Entities, on the other
hand, to the extent they are reflected on the Year-End Balance Sheets, to be
paid promptly after the Closing.
SECTION 7.09 Assigned Contracts. In the event that Buyer reasonably
determines that there are any Material Contracts or other contracts or
agreements relating to the Acquired Entities or their businesses to which any
Seller or any Seller's Affiliate (other than an Acquired Entity) is a party and
to which the Acquired Entities are not a party or pursuant to which there are
rights or benefits that should be assigned to an Acquired Entity in order for
Buyer and its Affiliates to acquire the full benefits of ownership of the
Interests and the other Contemplated Transactions (an "ASSIGNED CONTRACT"),
XxXxxx, RCM Holdings and CTCI will use their reasonable efforts to cause such
contracts or agreements to be assigned to Buyer or its designee at Closing. Each
such assignment will be subject to Buyer receiving evidence satisfactory to it
of the consents necessary to effect such an assignment without conflict with,
violation or default under the terms of such Assigned Contract and of the
absence of any defaults under such Assigned Contract. If a consent necessary to
transfer an Assigned Contract has not been obtained prior to Closing, XxXxxx,
RCM Holdings and CTCI agree to continue to use their reasonable efforts to
obtain such consent after the Closing and to assign such Assigned Contract to
Buyer or its designee promptly after the receipt of such consent.
SECTION 7.10 Letters of Credit.
(a) Buyer will take such actions as shall be required to cause
Old Cogen Technologies Financial Services, L.P. to be released from any
obligations under the letters of credit included in ANNEX 7.10, or
shall indemnify and hold harmless Old Cogen Technologies Financial
Services, L.P. in connection therewith pursuant to documentation
reasonably acceptable to the Sellers' Representatives, in each case
effective as of the Closing.
(b) Prior to Closing, Sellers will obtain any necessary
consents, waivers and amendments, and provide any necessary notices,
under the Letter of Credit and Reimbursement Agreement dated as of
September 17, 1992, as amended, between Linden Venture and GE in order
to permit the Closing of the Contemplated Transactions on the terms and
conditions contemplated herein.
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ARTICLE 8
TAX MATTERS
SECTION 8.01 Tax Matters. The parties agree as to Tax matters as set
forth in EXHIBIT VI.
ARTICLE 9
EMPLOYMENT AND EMPLOYEE BENEFIT MATTERS
SECTION 9.01. Employment and Employee Benefit Matters.
(a) Immediately prior to the Closing Date, each individual
identified in ANNEX 9.01 will be transferred to the employ of NJ Inc.
at the rate of base annual salary and bonuses described with respect to
such individual in a schedule previously provided to Buyer and in a
position commensurate with such individual's experience and abilities.
Those individuals and the individuals who are currently employed by NJ
Inc. and are listed in ANNEX 9.01 who accept such employment offers are
hereinafter referred to jointly as the "TRANSFERRED EMPLOYEES" and
singly as a "TRANSFERRED EMPLOYEE." For a period of one year following
the Closing Date, the sum of the cash base annual salary and cash bonus
amounts of the individuals identified in ANNEX 9.01, other than the
individuals whose post- Closing employment is referred to in Section
9.01(c) below, shall not be reduced below the sum of such amounts as
specified in the schedule referred to in the first sentence of this
paragraph.
(b) With respect to the Transferred Employees, Buyer or
Parent, as appropriate, agrees as follows:
(i) except as specifically provided herein, they
shall be eligible to participate in Buyer's employee benefit
plans and programs, including but not limited to vacation and
sick time policies, on the same basis as similarly situated
employees of Buyer and their service with the Acquired
Entities shall be considered as service with Buyer for all
purposes of such employee benefit plans and programs save and
except for pension plan benefit accrual purposes and retiree
medical coverage eligibility purposes;
(ii) Buyer shall permit each of them and his or her
eligible dependents to be covered under Buyer's group health
plan as modified as necessary to provide medical and dental
coverage to each of them and their eligible dependents
effective on the Closing Date to the extent that they were
covered under a group health plan maintained by RCM Holdings,
NJ Inc., MESC or one of their Affiliates immediately prior to
the Closing Date provided that they complete and submit
application for coverage forms; and for purposes of Buyer's
welfare benefit plans, Buyer shall waive any waiting periods
and limitations regarding pre-existing conditions and cause
such plans to recognize any out-of-pocket expenses incurred by
them or their eligible
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dependents during the portion of the plan year prior to
Closing Date for purposes of determining their annual
deductible and out-of-pocket maximums and ceilings or
limitations on benefits;
(iii) as soon as reasonably practicable after the
Closing Date, Buyer will take such actions as are necessary to
cause the Enron Corp. Savings Plan to accept a transfer of
Cogen Technologies 401(k) Savings Plan assets attributable to
the Transferred Employees who elect such transfer with such
election to be a one-time election, including outstanding
loans to participants, in a direct trustee-to-trustee transfer
that is subject to the requirements of section 414(1) of the
Code; provided, however, that Buyer shall have no obligation
to cause the Enron Corp. Savings Plan to accept such transfer
if Buyer does not receive from CT Capital proof which is
satisfactory to Buyer that the Cogen Technologies 401(k)
Savings Plan will be fully qualified under Code Section 401 at
the time of such transfer.
(c) Buyer and CT Capital have agreed by separate documentation
with respect to certain employment matters pertaining to Messrs. Xxxxxx
Xxxxxxxxx, Xxxx Ain and Xxxxx Xxxxxx. Buyer and CT Capital have also
agreed by separate documentation with respect to certain employment
matters pertaining to Xxxx Xxxxxxx Xxxxx. In addition, Buyer and CT
Capital have entered into a Consulting Services Agreement, subject to
the Closing.
(d) Buyer shall assume the consulting agreement with Xxxxxxxx
Associates, Inc. subject to its consent and agreement in substitution
for CT Capital.
(e) With respect to the Transferred Employees, the Sellers
and/or CT Capital, as appropriate, agree as follows:
(i) their participation in all Benefit Plans shall
terminate as of Closing Date, the Sellers and/or CT Capital,
as appropriate, shall retain all responsibilities, rights,
liabilities and obligations with respect to such Benefit Plans
and such Benefit Plans shall be fully responsible for benefits
earned, accrued or incurred by the Transferred Employees prior
to Closing Date (including specifically but not by way of
limitation welfare plan and educational plan benefits
resulting from expenses incurred and events occurring prior to
the Closing Date but not submitted for payment until after the
Closing Date);
(ii) for the portion of the calendar year following
the Closing Date in which the Closing Date occurs, the
vacation and sick pay provided by Buyer to the Transferred
Employees shall be determined with appropriate debits for
vacation and sick pay days taken by such Transferred Employees
for the portion of such calendar year preceding the Closing
Date under the vacation and sick pay programs of Sellers
and/or CT Capital;
(iii) from and after Closing Date, they shall no
longer be permitted to make pre-tax contributions to their
flexible spending accounts under the Cogen
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Technologies, Inc. Cafeteria Plan but shall be permitted to
submit claims against such accounts through the remainder of
the calendar year including the Closing Date for qualifying
expenses incurred prior to the end of such calendar year to
the extent that such expenses, when added to the aggregate
expenses previously reimbursed from their accounts during the
calendar year, do not exceed the amount of their pre-tax
contributions to their accounts during the calendar year;
(iv) to the extent that they qualify for or
potentially could qualify for incentive payments under the
Cogen Technologies, Inc. Development Program Bonus Plan, the
Sellers and/or CT Capital, as appropriate, shall make cash
payments to them so as to satisfy in full any liabilities for
such payments and shall obtain from them releases in the form
included in ANNEX 9.01;
(v) the Sellers and/or CT Capital, as appropriate,
shall be solely responsible and liable for any payments owed
or potentially owed to them pursuant to any agreements,
contracts or other arrangements providing for the payment of
amounts contingent upon or conditioned upon a "change of
control" of or other corporate event or restructure affecting
Cogen Technologies, Inc. or any owner of such entity;
(vi) their rights to use club memberships owned by
the Sellers and/or CT Capital, as appropriate, shall terminate
as of the Closing Date and the Sellers and/or CT Capital, as
appropriate, shall retain sole ownership of all such club
memberships;
(vii) the Sellers and/or CT Capital, as appropriate,
shall cause their accounts under the Cogen Technologies 401(k)
Savings Plan to become fully vested and nonforfeitable and as
soon as reasonably practicable after the Closing Date and
provided such transfer is to be effected, Sellers and/or CT
Capital, as appropriate will take such actions as are
necessary to cause the trustee of the Cogen Technologies
401(k) Savings Plan to transfer to the trustee of the Enron
Corp. Savings Plan the transfer described in Section
9.01(b)(iii); and
(viii) for all Transferred Employees other than the
individuals whose post-Closing employment is addressed in
paragraph (c) above, for a period of eighteen months following
the Closing Date, Buyer shall provide them with the protection
of severance benefits that are not less in amount than the
amount described in ANNEX 9.01, or, if greater, the amount
which would be payable pursuant to the Enron Corp. Severance
Pay Plan, such severance benefits to be payable to a
Transferred Employee if his employment with Buyer is
terminated by Buyer during such eighteen month period unless
such employment relationship is terminated by Buyer for Cause.
(f) Buyer and the Sellers and CT Capital shall cooperate with
each other to effectuate the provisions of this Section 9.01. Prior to
or promptly after the Closing Date, as appropriate, the Sellers shall
furnish to Buyer and Buyer shall furnish to the Sellers any and
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all data, information and records as are reasonably necessary to enable
such parties to fulfill their obligations under the provisions of this
Section 9.01.
ARTICLE 10
CONDITIONS TO CLOSING
SECTION 10.01. Conditions to the Obligations of Each Party. The
obligations of the parties to consummate the Contemplated Transactions are
subject to the satisfaction of the following conditions:
(a) There shall be no provision of Applicable Law that
prohibits the consummation of the Contemplated Transactions.
(b) The Parent Shares shall have been authorized for listing
on the New York Stock Exchange, subject to notice of issuance.
(c) There shall not be pending any action, proceeding or
investigation before any Governmental Authority or pursuant to any
arbitration agreement (i) challenging, or seeking material damages in
connection with, the Contemplated Transactions, or (ii) seeking to
restrain, prohibit or limit the exercise of full rights of ownership or
operation by the Buyer Entities or their Affiliates of all or any
portion of the Acquired Entities.
(d) Any right of first refusal arising in connection with the
Bayonne Acquisition pursuant to Article 12 of the Amended and Restated
Joint Venture Agreement of NJ Venture (the "BAYONNE RIGHT OF FIRST
REFUSAL") shall have either expired in accordance with its terms or
been waived in form reasonably satisfactory to Buyer and the Sellers'
Representatives; provided, however, that if any holder of such right of
first refusal properly elects to exercise its right to acquire MESC in
accordance with such right, then the parties agree that (i) the Bayonne
Acquisition shall not occur and all of Section 2.03 of this Agreement
shall be disregarded, (ii) all references in this Agreement to the
Bayonne Acquisition, the Bayonne Plant, MESC or any matter or provision
directly related to any of the foregoing shall be disregarded (to the
extent so related), but (iii) the condition set forth in this Section
10.01(d) shall be deemed waived and, subject to the other conditions
set forth in this Agreement, the parties shall nonetheless consummate
the Camden Acquisition and the Linden Acquisition in accordance with
their terms.
(e) The Bayonne Consents, the Linden GE Consent, the Camden GE
Consent and the Partnership Consents shall have been obtained, each in
the manner contemplated by Section 7.04 with such changes thereto as
may be reasonably proposed by Buyer based upon requirements of the
parties to the Linden Bank Consent or the Camden Bank Consent;
provided, however that no such proposed change shall be deemed to be
reasonably proposed by Buyer if the effect thereof is to adversely
affect, in other than a de minimus manner, the rights of the Owner
Trustee or GE under, and benefits to the Owner Trustee or GE of, the
Camden Cogen Partnership Agreement, the Linden Venture Partnership
Agreement or the
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Linden GP Term Loan; and provided, further that Buyer shall have the
right to waive, without the consent of the Sellers, the conditions to
Closing relating to any provision in such consents related to obtaining
liens on partnership interests in favor of the Buyer Entities' lenders
and related intercreditor matters.
SECTION 10.02. Conditions to Obligations of the Buyer Entities. The
obligations of the Buyer Entities to consummate the Contemplated Transactions
are subject to the satisfaction of the following further conditions:
(a) (i) Each Seller shall have performed in all material
respects all of its obligations under this Agreement required to be
performed by it on or prior to the Closing Date, (ii) the
representations and warranties of Sellers contained in this Agreement
and in any certificate or other writing delivered by Sellers pursuant
to this Agreement, disregarding all qualifications and exceptions
contained in such representations and warranties relating to
materiality or Material Adverse Effect, shall be true in all respects
at and as of the Closing Date, as if made at and as of such date, it
being understood and agreed (x) that the condition set forth in clause
(ii) of this Section 10.02(a) shall be deemed to have been satisfied
unless any failure to be true has had, or reasonably could be expected
to have, individually or in the aggregate with all other failures
relating to various representations and warranties, a Material Adverse
Effect, and (y) that representations and warranties made as of a
specific date need be true only as of that date, and (iii) the Buyer
Entities shall have received certificates signed by executive officers
of RCM Holdings, CT Capital and CTCI on behalf of such entities and by
each of the other Sellers to the foregoing effect.
(b) There shall not have occurred a Material Adverse Effect.
(c) Either (i) Linden Venture, with the consent of all limited
partners and lenders whose consent is required in connection therewith,
shall have entered into an amended steam agreement with Exxon
Corporation and a steam agreement with Bayway Refining Company, in each
case on terms that are not materially less favorable to Linden Venture
than the terms set forth in the drafts of such agreements dated August
14, 1998 and August 12, 1998, respectively, true and complete copies of
which have been provided to Buyer, pursuant to which steam from the
Linden Plant will be purchased and used in aggregate amounts sufficient
for the continued qualification of the Linden Plant as a qualifying
cogeneration facility under the PURPA Requirements, or (ii) the lenders
to Linden Ltd. and the partners in Linden Venture shall have agreed in
writing, in form reasonably satisfactory to Buyer, not to assert any
claim of past, present or future defaults (or similar events) or
breaches of fiduciary duty relating to the steam sale arrangements for
Linden Venture.
(d) The Buyer Entities shall have received written
confirmation (in the form of a reasonably acceptable letter from the
NJDEP to the counsel to the Acquired Entities or other reasonably
acceptable written evidence) that the NJDEP will require no further
action to be taken pursuant to ISRA in connection with or arising out
of the Contemplated Transactions. With respect to the Linden Plant,
such "no further action" letter or other written evidence reasonably
acceptable to the Buyer Entities shall be based upon a negative
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declaration, a preliminary assessment report and other information
submitted by the Sellers to the NJDEP that does not subject to review
under ISRA or otherwise make the provisions of ISRA applicable to any
of "Exxon's Property other than the Demised Premises (and perhaps a
butane supply line extending to the Demised Premises and the electrical
interconnect lines from the Cogeneration Facility and the ground
underlying those lines)" within the meaning of the Linden Ground Lease.
(e) The Sellers shall have caused to be repaid in full the CT
Camden Term Loan.
(f) Any applicable waiting period under the HSR Act relating
to the Contemplated Transactions shall have expired or been terminated
without the imposition of any material requirements or restraints on
the ability of the Buyer Entities to conduct the business of the
Acquired Entities after the Closing.
(g) The Buyer Entities shall have received (i) the opinion of
Fulbright & Xxxxxxxx L.L.P., as counsel to the XxXxxx Group Sellers,
CTCI and RCM Holdings, in substantially the form set forth on ANNEX
10.02-A hereto, (ii) one or more opinions of counsel to the Minority
Group Sellers reasonably satisfactory to Buyer, in substantially the
form set forth on ANNEX 10.02-B hereto, and (iii) the opinion of one or
more regulatory counsel to the Sellers reasonably acceptable to Buyer,
in substantially the form set forth on ANNEX 10.02-C hereto.
SECTION 10.03. Conditions to Obligations of Sellers. The obligations of
the Sellers to consummate the Contemplated Transactions are subject to the
satisfaction of the following further conditions:
(a) (i) The Buyer Entities shall have performed in all
material respects all of their obligations under this Agreement
required to be performed by them on or prior to the Closing Date, (ii)
the representations and warranties of the Buyer Entities contained in
this Agreement and in any certificate or other writing delivered by the
Buyer Entities pursuant to this Agreement shall be true in all material
respects at and as of the Closing Date, as if made at and as of such
date, it being understood and agreed that representations and
warranties made as of a specific date need be true only as of that
date, and (iii) the Sellers shall have received certificates signed by
executive officers of Buyer to the foregoing effect.
(b) There shall not be any matter that would be materially
adverse to the business, results of operations, conditions (financial
or otherwise), assets or liabilities of Parent and its subsidiaries,
taken as a whole, that has not been publicly disclosed for ten Business
Days or more prior to the Closing Date.
(c) Subject to Sellers having obtained any necessary consents,
Buyer or an Affiliate thereof shall have entered into a new lease,
sublease or lease assignment with respect to each leased property
described on ANNEX 10.03A, which new lease, sublease or lease
assignment shall provide to Buyer or its Affiliate terms similar to
those enjoyed by the current lessee thereof and shall otherwise be on
terms reasonably satisfactory to Buyer.
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(d) Any applicable waiting period under the HSR Act relating
to the Contemplated Transactions shall have expired or been terminated.
(e) The Sellers shall have received written confirmation (in
the form of a reasonably acceptable letter from the NJDEP to the
counsel to the Acquired Entities or other reasonably acceptable written
evidence) that the NJDEP will require no further action to be taken
pursuant to ISRA in connection with or arising out of the Contemplated
Transactions.
(f) The Sellers shall have received the opinions of the
respective general counsels of Parent and Buyer or Xxxxxx & Xxxxxx
L.L.P., substantially to the effect set forth on ANNEX 10.03B hereto.
ARTICLE 11
SURVIVAL; INDEMNIFICATION
SECTION 11.01. Survival. The representations and warranties of the
parties contained in this Agreement or in any other Transaction Document or in
any certificate or other writing delivered pursuant to any Transaction Document
shall terminate at and not survive the Closing; provided that (a) the
representations and warranties contained in Sections II.01, II.02 and II.20 of
Exhibit II, Exhibit III and Exhibit IV shall each survive the Closing
indefinitely, and (b) the representations and warranties contained in Sections
II.05, II.06, II.10(a), (b) and (c), II.11(a), II.13(b) and II.22(e) of Exhibit
II shall survive the Closing for eighteen months following the Closing Date.
Notwithstanding the preceding sentence, with respect to any representation or
warranty that survives the Closing in respect of which indemnity may be sought
under this Agreement, such representation or warranty shall survive the time at
which it would otherwise terminate pursuant to the preceding sentence, if
written notice of the inaccuracy of such representation or warranty giving rise
to such right of indemnity (including the specific nature of such inaccuracy)
shall have been given to the party against whom such indemnity may be sought
prior to such time. The covenants and agreements of the parties (including,
without limitation, the covenants and agreements of the parties set forth in
this Article 11) contained in this Agreement or in any other Transaction
Document shall survive the Closing.
SECTION 11.02. Indemnification.
(a) XxXxxx hereby agrees to defend, indemnify and hold
harmless each of the Buyer Entities and Parent, their Affiliates and
their respective Representatives against any and all damages, losses,
liabilities and expenses (including, without limitation, reasonable
expenses of investigation and reasonable attorneys' fees and expenses
in connection with any action, suit or proceeding) ("DAMAGES") incurred
or suffered by them arising out of:
(i) any misrepresentation or breach of a
representation or warranty in Exhibit II (provided that, from
and after the Closing, such representations and warranties
shall be interpreted disregarding all qualifications and
exceptions contained in such representations and warranties
relating to materiality or Material
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Adverse Effect) or any covenant or agreement made or to be
performed by RCM Holdings, CT Capital or CTCI pursuant to any
of the Transaction Documents;
(ii) any Environmental Liabilities of MESC not
directly related to the Bayonne Plant, including liabilities
relating to the lawsuit styled Carlton Xxxx Xxxxxxxxx, et al.
v. Ciba Geigy Corporation, et al. pending in the United States
District Court for the Middle District of Louisiana and any
other liabilities relating to the facts or circumstances that
gave rise to such litigation;
(iii) any MESC Pre-Closing Taxes;
(iv) any operations, liabilities or activities of
MESC (other than Environmental Liabilities or MESC Pre-Closing
Taxes) not directly related to the Operating Facilities; or
(v) the enforcement of their rights under this
Section 11.02;
provided that, no claim for indemnification pursuant to Section
11.02(a)(i) may be made after Closing with respect to any
misrepresentation or breach of any representation or warranty that does
not survive Closing pursuant to Section 11.01 or with respect to any
misrepresentation or breach of any other representation or warranty
unless written notice of the inaccuracy or breach of such
representation or warranty giving rise to such right of indemnity shall
have been given to XxXxxx prior to the time that such representation or
warranty terminates in accordance with Section 11.01; and provided
further that (A) no claim for indemnification pursuant to Section
11.02(a)(i) or 11.02(a)(iv) may be made after Closing with respect to
any misrepresentation or breach of any representation or warranty or
any matter referred to in Section 11.02(a)(iv) unless the aggregate
amount of Damages with respect to all such misrepresentations or
breaches referred to in Section 11.02(a)(i) and matters referred to in
Section 11.02(a)(iv) exceeds $10,000,000 and then only to the extent of
such excess and (B) XxXxxx'x maximum liability for indemnification with
respect to misrepresentations or breaches of any representations or
warranties pursuant to an indemnification claim under Section
11.02(a)(i) or with respect to matters referred to in Section
11.02(a)(iv) shall be $150,000,000 in the aggregate (except that the
limitations on liability set forth in clauses (A) and (B) of this
proviso shall not apply to indemnification claims based upon
misrepresentations or breaches of any representation or warranty set
forth in Section II.01, II.02 or II.20 of Exhibit II); and provided
further that no claim for indemnification pursuant to Section
11.02(a)(i) may be made with respect to any breach of a covenant or
agreement by RCM Holdings, CT Capital or CTCI pursuant to any of the
Transaction Documents (other than under the covenants set forth in
Sections 2.09, 5.02(b)-(f) and Articles IX, XI and XIII of this
Agreement) unless written notice of the breach giving rise to such
right of indemnity shall have been given to XxXxxx prior to the date
which is eighteen months after the Closing Date; and provided further
that XxXxxx'x maximum liability for indemnification pursuant to an
indemnification claim under Section 11.02(a)(ii) shall be $100,000,000
and such $100,000,000 limit shall be reduced by $10,000,000 on each
anniversary of the Closing Date (until it reaches $0), such reduction
being effective only with
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respect to any claims written notice of which is given to XxXxxx after
such anniversary; and provided further that no claim for
indemnification pursuant to Section 11.02(a)(iii) may be made unless
written notice of the breach giving rise to such right of indemnity
shall have been given to XxXxxx prior to December 31, 1999, which
notice may not be delivered unless MESC has received written notice
from the Internal Revenue Service of its intention to conduct a Tax
Audit (as defined in Exhibit VI); and provided further, that no claim
for indemnification pursuant to Section 11.02(a)(iv) may be made unless
written notice of the claim giving rise to such right of indemnity
shall have been given to XxXxxx prior to the date which is eighteen
months after the Closing Date.
(b) Each XxXxxx Group Seller and each Minority Group Seller
hereby severally, and not jointly, agrees to defend, indemnify and hold
harmless each of the Buyer Entities, their Affiliates and their
respective Representatives against any and all Damages incurred or
suffered by them arising out of:
(i) any misrepresentation or breach of a
representation or warranty in Exhibit III or any covenant or
agreement made or to be performed by such XxXxxx Group Seller
or Minority Group Seller pursuant to any of the Transaction
Documents; or
(ii) the enforcement of their rights under this
Section 11.02;
provided that no claim for indemnification pursuant to Section
11.02(b)(i) may be made with respect to any breach of a covenant or
agreement by such XxXxxx Group Seller or Minority Group Seller pursuant
to any of the Transaction Documents (other than under the covenants set
forth in Sections 5.02, 5.03 and Articles IX, XI and XIII of this
Agreement) unless notice of the breach giving rise to such right of
indemnity shall have been given to such XxXxxx Group Seller or Minority
Group Seller prior to the date which is eighteen months after the
Closing Date; and provided further that for the purposes of this
Section 11.02 (b), each Minority Group Seller other than CTLPJV shall
only be liable with respect to liabilities of CTLPJV severally in
proportion to such Minority Group Seller's proportionate ownership
interest in CTLPJV.
(c) The Buyer Entities hereby agree to defend, indemnify and
hold harmless each of the Sellers, their Affiliates and their
respective Representatives against any and all Damages incurred or
suffered by them arising out of:
(i) any misrepresentation or breach of a
representation or warranty in Exhibit IV or any covenant or
agreement made or to be performed by the Buyer Entities
pursuant to this Agreement; or
(ii) the enforcement of their rights under this
Section 11.02;
provided that no claim for indemnification pursuant to Section
11.02(c)(i) may be made with respect to any breach of a covenant or
agreement by the Buyer Entities pursuant to any of the
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Transaction Documents (other than under the covenants set forth in
Sections 5.02 and 7.03 and Articles IX, XI and XIII of this Agreement)
unless notice of the breach giving rise to such right of indemnity
shall have been given to Buyer prior to the date which is eighteen
months after the Closing Date.
SECTION 11.03. Procedures for Third Party Claims.
(a) The parties seeking indemnification under Section 11.02
(the "INDEMNIFIED PARTIES") agree to give prompt notice to the parties
against whom indemnity is sought (the "INDEMNIFYING PARTIES") of the
assertion of any claim, or the commencement of any suit, action or
proceeding in respect of which indemnity may be sought under Section
11.02 (the "THIRD PARTY CLAIMS"). The failure by any Indemnified Party
so to notify the Indemnifying Parties shall not relieve any
Indemnifying Party from any liability which it may have to such
Indemnified Party with respect to any claim made pursuant to this
Section 11.03, except to the extent such failure shall actually
prejudice an Indemnifying Party.
(b) Upon receipt of notice from the Indemnified Parties
pursuant to Section 11.03(a), the Indemnifying Parties will, subject to
the provisions of Section 11.03(c), assume the defense and control of
such Third Party Claims but shall allow the Indemnified Parties a
reasonable opportunity to participate in the defense of such Third
Party Claims with their own counsel and at their own expense (except as
provided in Section 11.03(c)). The Indemnifying Parties shall select
counsel, contractors and consultants of recognized standing and
competence after consultation with the Indemnified Parties; shall take
all steps necessary in the defense or settlement of such Third Party
Claims; and shall at all times diligently and promptly pursue the
resolution of such Third Party Claims. The Indemnified Parties shall,
and shall cause each of their Affiliates and Representatives to,
cooperate fully with the Indemnifying Parties in the defense of any
Third Party Claim defended by the Indemnifying Parties.
(c) The Indemnifying Parties shall be authorized to consent to
a settlement of, or the entry of any judgment arising from, any Third
Party Claim, without the consent of any Indemnified Party, but only if
the Indemnifying Parties shall pay or cause to be paid all amounts
arising out of such settlement or judgment concurrently with the
effectiveness of such settlement; not encumber any of the assets of any
Indemnified Party or agree to any restriction or condition that would
apply or adversely affect any Indemnified Party or to the conduct of
any Indemnified Party's business; and obtain, as a condition of any
settlement or other resolution, a complete release of any Indemnified
Party potentially affected by such Third Party Claim.
(d) The Indemnifying Parties shall also be liable for the
reasonable fees and expenses of counsel incurred by each Indemnified
Party in defending any Third Party Claim if such Third Party Claim, if
successful, is likely to result in a judgment, decree or order of
injunction or other equitable relief or relief for other than money
Damages against such Indemnified Party.
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SECTION 11.04. Exclusive Remedy; No Waiver Relating to Claims for
Fraud.
(a) Each party hereto acknowledges and agrees that, except as
set forth in Section 11.04(b), the provisions of this Article 11 shall
be the exclusive remedy of such party with respect to any matter
arising under this Agreement or any other Transaction Document;
provided, however, that the foregoing shall not limit the right of any
such party to seek any equitable remedy available to enforce the rights
of such party under this Agreement or any other Transaction Document in
accordance with the terms of this Agreement.
(b) Notwithstanding any other provision of this Agreement, the
liability of any party under Article 11 of this Agreement shall be in
addition to, and not exclusive of any other liability that such party
may have at law or equity based on such party's fraudulent acts or
omissions. Notwithstanding any other provision of this Agreement, none
of the provisions set forth in this Agreement, including the provisions
set forth in Section 11.02 relating to limitations on amounts
recoverable under indemnity provisions or limitations on periods of
time during which a claim for indemnification may be brought, shall be
deemed a waiver by any party to this Agreement of any right or remedy
that such party may have at law or equity, based on any other party's
fraudulent acts or omissions, nor shall any such provisions limit, or
be deemed to limit, (i) the amounts of recovery sought or awarded in
any such claim for fraud, (ii) the time period during which a claim for
fraud may be brought, or (iii) the recourse which any such party may
seek against another party with respect to a claim for fraud.
ARTICLE 12
TERMINATION
SECTION 12.01. Grounds for Termination. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual written agreement of Buyer and the Sellers'
Representatives;
(b) by either Buyer or the Sellers' Representatives if the
Closing shall not have been consummated by April 15, 1999 (the "END
DATE"); provided, however, that Sellers' Representatives may not
terminate this Agreement pursuant to this Section 12.01(b) if the
Closing shall not have been consummated by the End Date by reason of
any Seller's failure to perform in all material respects any of its
respective covenants or agreements contained in this Agreement; and
provided, further, that Buyer may not terminate this Agreement pursuant
to this Section 12.01(b) if the Closing shall not have been consummated
by the End Date by reason of any Buyer Entity's failure to perform in
all material respects any of its respective covenants or agreements
contained in this Agreement;
(c) by Buyer, if a breach of any representation, warranty,
covenant or agreement on the part of the Sellers set forth in this
Agreement shall have occurred which would cause any of the conditions
set forth in Sections 10.01 or 10.02 not to be satisfied, and such
breach is incapable of being cured or, if capable of being cured, shall
not have been cured within 30
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41
Business Days following receipt by the Sellers' Representatives of
notice of such breach from Buyer;
(d) by the Sellers, if a breach of any representation,
warranty, covenant or agreement on the part of the Buyer Entities set
forth in this Agreement shall have occurred which would cause any of
the conditions set forth in Sections 10.01 or 10.03 not to be
satisfied, and such breach is incapable of being cured or, if capable
of being cured, shall not have been cured within 30 Business Days
following receipt by Buyer of notice of such breach from Sellers;
(e) by either Buyer or the Sellers if there shall be any
Applicable Law that makes consummation of the Transactions contemplated
hereby illegal or otherwise prohibited or if consummation of the
Transactions contemplated hereby would violate any nonappealable final
order, decree or judgment of any Governmental Authority having
competent jurisdiction;
(f) by Buyer at any time prior to 5:00 p.m. Central Time on
the tenth Business Day after the date of this Agreement if Buyer
determines, in its sole discretion, that it is unlikely to be able to
obtain the Linden Bank Consent or the Camden Bank Consent or any other
consents or arrangements necessary to satisfy Buyer's lenders in
connection with the Contemplated Transactions, or that the Sellers will
be unable to obtain the Bayonne Consents or the Partnership Consent
referred to in Annex 7.04F hereto, all on terms reasonably acceptable
to Buyer;
(g) by Buyer at any time prior to 5:00 p.m. Central Time on
the fifth Business Day after the date of this Agreement if either (i)
the matters addressed in paragraph 1 of ANNEX 12.01(G) were not
included in the 1999 capital budget and operating forecasts previously
provided to Buyer or (ii) Buyer determines, in its sole discretion,
that the estimated costs set forth in paragraph 2 of ANNEX 12.01 (G)
are not maintenance expenses arising in the ordinary course of business
of the Linden Plant; provided, however, in the event Buyer notifies the
Sellers of its intention to terminate this Agreement pursuant to this
Section 12.01(g), the Sellers shall have the option to either (i)
covenant to make the necessary repairs and improvements needed to
resolve the matters described on ANNEX 12.01(G), at the Seller's
expense, the satisfaction of which covenant would itself be a condition
to the obligations of the Buyer Entities to close the Contemplated
Transactions or (ii) amend this Agreement to provide that the cost of
such repairs and improvements, as reasonably determined by Buyer, would
be added to the negative $4,932,952 in Section 2.07(a) for purposes of
calculating the adjustment to the Consideration provided for therein;
or
(h) by XxXxxx, on behalf of all of the Sellers, at any time
prior to 5:00 p.m. Central Time on the tenth Business Day after the
date of this Agreement if XxXxxx determines, in his sole discretion,
that the Sellers will be unlikely to be able to obtain the Linden GE
Consents or the Camden GE Consents on terms reasonably acceptable to
Sellers.
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The party desiring to terminate this Agreement pursuant to Sections
12.01(b)-(h) shall give notice of such termination to the other parties.
SECTION 12.02. Effect of Termination.
(a) Except as set forth in Section 12.02(b), if this Agreement
is terminated as permitted by Section 12.01, such termination shall be
without liability of any party (or any Affiliate or Representative of
such party) to any other party to this Agreement, except that if such
termination shall result from (i) the willful failure of any party to
this Agreement to fulfill a condition to the performance of the
obligations of the other parties that is within the control of such
party, (ii) the willful failure of any party to this Agreement to
perform a covenant or agreement contained in this Agreement or (iii)
the willful breach by any party to this Agreement of any representation
or warranty contained in this Agreement, such party shall be fully
liable for any and all Damages incurred or suffered by any other party
as a result of such failure or breach. The provisions of Sections
11.02, 13.01, 13.04, and 13.06 and this Section 12.02 shall survive any
termination of this Agreement pursuant to Section 12.01.
(b) If this Agreement is terminated as a result of the failure
of the Sellers to have obtained the Linden GE Consent, the Camden GE
Consent or any of the Partnership Consents to which GE or the Owner
Trustee is a party on or prior to the End Date (and all other
conditions to the Closing have been satisfied or are immediately
capable of being satisfied), then the Sellers shall, promptly following
such termination, pay to Buyer in cash an amount sufficient to
reimburse the Buyer Entities in full for any bank commitment fees
incurred in connection with this Agreement and the Contemplated
Transactions and any other fees and expenses incurred in connection
therewith after the expiration of the provisions set forth in Sections
12.01 (f) and (h), provided that the maximum liability of Sellers to
Buyer pursuant to this Section 12.02(b) shall be $2,500,000; and
provided further that the Sellers shall not owe any expense
reimbursement pursuant to this Section 12.02(b) if the failure to
obtain the consents referred to herein is solely the result of either
the Owner Trustee or GE being required to obtain any required consents
of lenders.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. Notices. All notices, requests and other communications
to any party under this Agreement shall be in writing (including telecopy or
similar writing) and shall be given,
if to RCM Holdings, CT Capital, CTCI or any XxXxxx Group Seller:
c/o Cogen Technologies Capital Company, L.P.
000 Xxxxxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx.
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Telecopy: (000) 000-0000
with a copy to:
Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Still
Telecopy: (000) 000-0000
if to any Minority Group Seller:
H. Xxxx Xxxxxx
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
and
Xxxx X. Xxxxxx
00000 Xxxxxx Xxxx Xxxx
Xxxxxxx, Xxxxx 00000-0000
with copies to:
Xxxx X. Xxxxxxxxx
Schlanger, Mills, Xxxxx & Xxxxxxxxx, L.L.P.
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
and
Xxxx X. Xxxx
Mayor, Day, Xxxxxxxx & Xxxxxx, L.L.P.
0000 XxxxxxxXxxx Xxxxxx
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
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if to Parent or any Buyer Entity:
c/o Enron Capital & Trade Resources Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: W. Xxxxx Xxxxx and Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxxxx
Telecopy: (000) 000-0000
or to such other address or telecopy number and with such other copies, as such
party may hereafter specify for the purpose by notice to the other parties. Each
such notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section and evidence of receipt is received or (ii) if given by any other
means, upon delivery or refusal of delivery at the address specified in this
Section.
SECTION 13.02. Amendments; No Waivers.
(a) Except as set forth in Section 13.11, any provision of
this Agreement may be amended or waived if, and only if, such amendment
or waiver is in writing and signed, in the case of an amendment, by
each party to this Agreement, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right,
power or privilege under this Agreement shall operate as a waiver of
such right, power or privilege nor shall any single or partial exercise
of any right, power or privilege preclude any other or further exercise
of such right, power or privilege or the exercise of any other right,
power or privilege. No waiver by any party of any condition to its
obligations to consummate the Contemplated Transactions shall operate
as a waiver of such party's rights to indemnification under Article 11
with respect to the same or any other matter, and no investigation by
the Buyer Entities or their Representatives pursuant to Section 5.02 or
otherwise shall operate as a waiver or otherwise affect any
representation, warranty, covenant or agreement given or made by
Sellers in this Agreement, the right of the Buyer Entities not to
consummate the transactions contemplated hereby pursuant to Section
10.02 or the rights of any party to indemnification under Article 11;
provided, however, that if the Sellers' Representatives give written
notice to the Buyer Entities at the Closing of a breach of a
representation or warranty (including the specific nature of the breach
and the basis therefor), other than a willful breach, and such breach
would cause the closing condition in Section 10.02(a) not to be capable
of being satisfied, then if the Buyer Entities elect to waive the
condition to Closing
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related to such breach (which waiver shall be conclusively evidenced by
the Closing) and Closing occurs, the Buyer Entities shall not be
entitled to make an indemnification claim under Article 11 for such
breach. The rights and remedies provided under this Agreement shall be
cumulative and not exclusive of any rights or remedies provided by law.
(c) The parties acknowledge that the Sellers intend to seek a
waiver of the Bayonne Right of First Refusal. If the Sellers'
Representatives notify the Buyer that Sellers have been unsuccessful in
obtaining such waiver and so request, the parties agree to amend this
Agreement to provide for the Bayonne Acquisition in a separate
agreement, it being understood that the closing of the Bayonne
Acquisition would be subject to the closing of the other Contemplated
Transactions, the closing of the other Contemplated Transactions would
be subject to the closing of the Bayonne Acquisition (other than as
provided in Section 10.01(d)) and such amendment would be in form and
substance reasonably acceptable to the Buyer Entities and the Sellers'
Representatives.
SECTION 13.03. Parties in Interest. Except as set forth in Section 7.03
and Article 11, nothing in this Agreement or in any other Transaction Document
is intended to confer any rights or remedies under or by reason of this
Agreement on any Persons other than the Buyer Entities, Parent or the Sellers
and their respective successors and permitted assigns. Nothing in this Agreement
is intended to relieve or discharge the obligations or liability of any such
third Persons to the Buyer Entities or the Sellers. No provision of this
Agreement or any other Transaction Document shall give any such third Persons
any right of subrogation or action over or against the Buyer Entities or the
Sellers.
SECTION 13.04. Expenses. Except as otherwise provided in this
Agreement, all costs and expenses incurred in connection with the Contemplated
Transactions shall be paid by the party incurring such cost or expense. Without
limiting the foregoing, Sellers agree that they (and not the Acquired Entities)
will be responsible for the fees and expenses of any financial advisor, lawyers,
accountants or other consultants or advisors retained by either the Sellers or
the Acquired Entities in connection with the Contemplated Transactions as well
as any fees and expenses associated with obtaining on behalf of Linden Ltd. the
loan referred to in Section 2.02(b)(i).
SECTION 13.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party, except that the Buyer Entities may
transfer or assign, in whole or from time to time in part, to one or more of
their Affiliates or lenders, their rights under this Agreement, but no such
transfer or assignment will relieve the Buyer Entities of their obligations
under this Agreement, including Section 7.03 of this Agreement. The Sellers and
Buyer Entities expressly acknowledge that Buyer contemplates assigning various
of its rights hereunder to Buyer Acquisition, Buyer Camden GP, Buyer Camden LP,
Buyer Linden GP and Buyer Linden LP or other Affiliated designees in the manner
set forth herein, and the Sellers hereby consent (as between the Sellers and the
Buyer Entities) to such assignments. Each of such parties shall become a party
to this Agreement by executing a counterpart signature page to this Agreement,
in the form attached hereto, prior to Closing.
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SECTION 13.06. Governing Law; Arbitration.
(a) This Agreement (including, but not limited to, the
validity and enforceability hereof and thereof) shall be governed by,
and construed in accordance with, the laws of the State of Texas, other
than the conflict of laws rules thereof.
(b) Except as contemplated by Sections 2.06 and 5.03 of this
Agreement, any and all claims, counterclaims, demands, cause of action,
disputes, controversies, and other matters in question arising under
this Agreement or the alleged breach of any provision hereof, (all of
which are referred to herein as "DISPUTED CLAIMS"), whether such
Disputed Claims arise at law or in equity, under State or federal law,
for damages or any other relief, shall be resolved by binding
arbitration.
(c) The validity, construction, and interpretation of this
agreement to arbitrate, and all procedural aspects of the arbitration
conducted pursuant to this agreement to arbitrate and the rules
governing the conduct of the arbitration (including the time for filing
an answer, the time for the filing of counter Disputed Claims, the
times for amending the pleadings, the specificity of the pleadings, the
extent and scope of discovery, the issuance of subpoenas, the times for
the designation of experts, whether the arbitration is to be stayed
pending resolution of related litigation involving third parties not
bound by this Agreement, the receipt of evidence, and the like), shall
be decided by the arbitrators. In deciding the substance of the
parties' Disputed Claims, the arbitrators shall refer to the
substantive laws of the State of Texas for guidance (excluding Texas
choice-of-law principles that might call for the application of some
other state's law).
(d) The arbitration proceedings shall be conducted in Houston,
Texas by three arbitrators in accordance with the CPR Institute for
Dispute Resolution Non-Administered Arbitration rules in effect on the
date of this agreement. Within 30 days of the notice of initiation of
the arbitration procedure, the parties shall select three arbitrators.
If the parties are unable to agree upon the identity of the three
arbitrators, within the time set forth herein, the vacancies in the
selection of agreed arbitrators shall be filled by CPR in the manner
specified in CPR Rule 6. The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. Section 1-16, as such Act is
modified by this Agreement and judgment upon the award rendered by the
arbitrators may be entered by any court having jurisdiction thereof.
(e) All fees of the arbitrators and other administrative
charges related to the arbitration shall be borne equally by the
parties.
(f) The parties hereby agree that the arbitration proceeding
and the arbitrators' award are to remain confidential and none of the
parties or their counsel will divulge or discuss, directly or
indirectly, in the newspaper, electronic media, or other public or
private forum, or with any third parties, the arbitration proceeding
and/or the arbitrators' award except: (1) to the extent required by a
court of law or any federal, state, or local government, agency or
regulatory body or to the extent required to comply with applicable
securities laws or stock exchange requirements; (2) to the extent
further agreed to by the parties hereto,
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which consent will not be unreasonably withheld; or (3) to the extent
necessary under subsection (g) below.
(g) The award of the arbitrators shall be final and binding on
the parties, and judgment thereon may be entered in a court of
competent jurisdiction.
SECTION 13.07. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart of this Agreement signed by the other parties hereto, except as
otherwise provided by Section 13.05.
SECTION 13.08. Entire Agreement. This Agreement and the other
Transaction Documents constitute the entire agreement among the parties with
respect to the subject matter of such documents and supersede all prior
agreements, understandings and negotiations, both written and oral, between the
parties with respect to the subject matter of such documents.
SECTION 13.09. Captions. The captions in this Agreement are included
for convenience of reference only and shall be ignored in the construction or
interpretation of the provisions of this Agreement.
SECTION 13.10. Conflicts. In the event of a conflict between any term
of this Agreement and information contained in the Disclosure Schedule, the
terms included in this Agreement shall govern.
SECTION 13.11. Sellers' Representatives.
(a) Each XxXxxx Group Seller hereby irrevocably appoints
XxXxxx as a Sellers' Representative, and each Minority Group Seller
hereby irrevocably appoints Xxxx Xxxxxx and H. Xxxx Xxxxxx, jointly, as
Sellers' Representatives. Each Seller agrees that the Sellers'
Representatives, acting jointly, shall have full power to act as their
agent and attorney-in-fact to take all actions on behalf of such Seller
that are expressly set forth in this Agreement, and to approve on
behalf of such Seller any amendment to the Transaction Documents (or
waivers of provisions of the Transaction Documents) that do not
adversely affect the interest of such Seller. Any action permitted to
be taken under this Agreement by the Sellers' Representatives must be
taken by both of them acting jointly and neither of the Sellers'
Representatives shall have any power to bind any Seller unless acting
jointly with the other Sellers' Representative. The XxXxxx Group
Sellers agree that if XxXxxx (or his replacement pursuant to this
Section 13.11) becomes unable to serve as a Sellers' Representative,
the remaining XxXxxx Group Sellers will promptly appoint a successor to
act as a Sellers' Representative and will notify Buyer of such
appointment. The Minority Group Sellers agree that if either of Xxxx
Xxxxxx or H. Xxxx Xxxxxx (or their replacements pursuant to this
Section 13.11) becomes unable to serve as a Sellers' Representative,
the remaining Minority Group Sellers will promptly appoint a successor
to act as a Sellers' Representative and will notify Buyer of such
appointment. Any successor Sellers' Representative appointed pursuant
to this Section shall be reasonably acceptable to Buyer. In the event
that for any reason the Sellers'
40
48
Representatives are unable to take any action specified in this
Agreement to be taken by the Sellers' Representatives, such action may
be taken by all of the Sellers.
(b) The powers of attorney granted pursuant to this Section
13.11 and all authority conferred hereby are granted and conferred
subject to and in consideration of the interests of the Buyer Entities
and for the purposes of completing the Contemplated Transactions. Such
powers of attorney are an agency coupled with an interest and all
authority conferred hereby shall be irrevocable, and shall not be
terminated by any act of any Seller or by operation of law, including,
without limiting the foregoing, the death or incapacity of any Seller,
the termination of any trust or estate, the death or incapacity of one
or more trustees, guardians, executors or administrators under such
trust or estate, the dissolution or liquidation of any corporation,
limited liability company or partnership or the occurrence of any other
event.
SECTION 13.12. Certain Agreements of Parent. Parent hereby irrevocably
and unconditionally guarantees the timely payment when due of any financial
obligations of the Buyer under this Agreement (including financial obligations
arising out of any indemnification provisions of this Agreement) to the extent
Buyer fails to pay such obligations. Parent also agrees to make available to the
applicable Buyer Entities the Parent Shares to be delivered in connection with
the Linden Acquisition.
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49
The parties have caused this Agreement to be duly executed individually
or by their authorized representatives on the day and year first above written.
ENRON CORP.
By: /s/ J. XXXXXXXX XXXXXX
---------------------------------
J. Xxxxxxxx Xxxxxx
Senior Vice President
ENRON CAPITAL & TRADE RESOURCES CORP.
By: /s/ XXXXXXX X. XXXXXXX, XX.
---------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
Vice President
RCM HOLDINGS, INC.
By: /s/ XXXXXXX X. XXXXXXXX, XX.
---------------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
Senior Vice President and
Chief Financial Officer
COGEN TECHNOLOGIES CAMDEN, INC.
By: /s/ XXXXXXX X. XXXXXXXX, XX.
---------------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
Senior Vice President and
Chief Financial Officer
COGEN TECHNOLOGIES CAPITAL COMPANY,
L.P.
By: Cogen Technologies GP Capital
Corporation, its General Partner
By: /s/ XXXXXXX X. XXXXXXXX, XX.
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx, Xx.
Title: Senior Vice President and
Chief Financial Officer
50
THE XXXXXX GROUP SELLERS:
/s/ XXXXXX X. XxXXXX
-------------------------------------
Xxxxxx X. XxXxxx
/s/ XXXXXX XXXX XxXXXX, XX.
-------------------------------------
Xxxxxx Xxxx XxXxxx, Xx.
/s/ XXXXXX XXXXXXX XxXXXX
-------------------------------------
Xxxxxx Xxxxxxx XxXxxx
/s/ XXXXXX XXXX XxXXXX, XX.,
-------------------------------------
Xxxxxx Xxxx XxXxxx, Xx.,
as Trustee of the Xxxxxx Xxxx XxXxxx,
Xx. Trust UTA dated 11/14/88, as
amended
/s/ XXXXXX XXXXXXX XxXXXX
-------------------------------------
Xxxxxx Xxxxxxx XxXxxx,
as Trustee of the Xxxxxx Xxxxxxx
XxXxxx Trust UTA dated 11/14/88, as
amended
/s/ XXXX XxXXXX XXXXX
-------------------------------------
Xxxx XxXxxx Xxxxx,
as Co-Trustee of the Xxxx XxXxxx Xxxxx
Trust UTA dated 11/14/88, as amended
/s/ XXXXXXX XXXXXX XxXXXX XXXXXXXX
-------------------------------------
Xxxxxxx Xxxxxx XxXxxx Xxxxxxxx,
as Co-Trustee of the Xxxxxxx Xxxxxx
XxXxxx Xxxxxx Trust UTA dated
11/14/88, as amended
/s/ M. XXXXXX XXXXXXX
-------------------------------------
M. Xxxxxx Xxxxxxx
as Co-Trustee of (1) the Xxxx XxXxxx
Xxxxx Trust UTA dated 11/14/88, as
amended and (2) the Xxxxxxx Xxxxxx
XxXxxx Xxxxxx Trust UTA dated
11/14/88, as amended
51
THE MINORITY GROUP SELLERS:
COGEN TECHNOLOGIES LIMITED
PARTNERS JOINT VENTURE
By: /s/ X. XXXXXX VAN WART
----------------------------------
Name: X. Xxxxxx Van Wart
Title: General Partner
/s/ XXXXXXX X. XXXX, TRUSTEE
-------------------------------------
Xxxxxxx X. Xxxx, as Trustee of the
Xxxxxxx X. Xxxx Family Trust-A and the
Xxxxxxx X. Xxxx Family Trust-B under
the Will of Xxxxxxx X. Xxxx
/s/ XXXXXX X. XXXXXX
-------------------------------------
Xxxxxx X. Xxxxxx
Evergreen Partnership Energy, Ltd.
By: /s/ H. XXXX XXXXXX
----------------------------------
Name: H. Xxxx Xxxxxx
--------------------------------
Title: General Partner
-------------------------------
The 1989 Energy Trust
By: /s/ XXXXXX XXXX XxXXXX, XX.
----------------------------------
Xxxxxx Xxxx XxXxxx, Xx., Trustee
(and not in his individual
capacity)
/s/ XXXXX X. XXXXXXX
----------------------------------
Xxxxx X. Xxxxxxx, Trustee
(and not in his individual
capacity)
/s/ X. XXXXXX VAN WART
-------------------------------------
X. Xxxxxx Van Wart
52
Hansfam Three, a Trust
By: /s/ XXXX X. XXXXXX
----------------------------------
Xxxx X. Xxxxxx, Trustee
(and not in his individual
capacity)
/s/ X. XXXXXX VAN WART
----------------------------------
X. Xxxxxx Van Wart, Trustee
(and not in his individual
capacity)
/s/ XXXXX X. XXXXXX
-------------------------------------
Xxxxx X. Xxxxxx
53
COUNTERPART SIGNATURE PAGE FOR BUYER ACQUISITION, BUYER
CAMDEN GP, BUYER CAMDEN LP, BUYER LINDEN GP, BUYER
LINDEN LP AND OTHER AFFILIATES OF BUYER PURSUANT TO SECTION
13.05.
Pursuant to Section 13.05 hereof, the undersigned hereby executes and
delivers and becomes party to this Agreement as of the date set forth below.
Name of Entity:
------------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Date:
---------------------------------
54
EXHIBIT I
DEFINITIONS
The following terms, as used in this Agreement, have the following
meanings:
"ACCOUNTING REFEREE" has the meaning set forth in Section 2.06(d).
"ACQUIRED ENTITIES" means MESC, Linden Ltd. and CT Camden and each of
their respective Subsidiaries.
"ADJUSTED COMBINED BALANCE SHEET" has the meaning set forth in Section
2.06(a).
"ADJUSTED COMBINED YEAR-END BALANCE SHEET" has the meaning set forth in
Section 2.06(b).
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such other Person.
"APPLICABLE INSURANCE" has the meaning set forth in Section 5.05(a).
"APPLICABLE LAW" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment, decree
or other requirement of any Governmental Authority (including any Environmental
Law) applicable to such Person or any of its Affiliates or any of their
respective properties, assets or Representatives (in connection with such
Representative's activities on behalf of such Person or any of its Affiliates).
"ASSIGNED CONTRACT" has the meaning set forth in Section 7.09.
"BASE RATE" means a percentage equal to the 30-day London Interbank
Offered Rate as published in the Wall Street Journal, Eastern Edition, in effect
from time to time.
"BAYONNE ACQUISITION" means the redemption and acquisition of shares of
MESC Common Stock and the other transactions all as set forth in Section 2.03.
"BAYONNE BALANCE SHEET" means the balance sheet of MESC dated as of
June 30, 1998, included in Section II.07 of the Disclosure Schedule.
"BAYONNE CONSENT" has the meaning set forth in Section 7.04(b).
"BAYONNE PLANT" means the 176 megawatt gas-fired, combined cycle
cogeneration facility owned by NJ Venture and located on the site of the IMTT
Facility in Bayonne, New Jersey.
"BAYONNE RIGHT OF FIRST REFUSAL" has the meaning set forth in Section
10.01(d).
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"BAYONNE SELLERS" means the Sellers who are shareholders of MESC.
"BAYONNE SELLER NOTES" has the meaning set forth in Section 2.03(a).
"BENEFIT PLANS" means any employee pension benefit plan (whether or not
insured), as defined in Section 3(2) of ERISA, any employee welfare benefit plan
(whether or not insured) as defined in Section 3(1) of ERISA, any plans that
would be employee pension benefit plans or employee welfare benefit plans if
they were subject to ERISA, such as foreign plans and plans for directors, any
stock bonus, stock ownership, stock option, stock purchase, stock appreciation
rights, phantom stock, or other stock plan (whether qualified or nonqualified),
and any bonus or incentive compensation plan sponsored, maintained, or
contributed to by any of the Acquired Entities for the benefit of any of the
present or former directors, officers, employees, agents, consultants, or other
similar representatives providing services to or for such Acquired Entity in
connection with such services or any such plans which have been so sponsored,
maintained, or contributed to within six years prior to the date of this
Agreement; provided, however, that such term shall not include (a) routine
employment policies and procedures developed and applied in the ordinary course
of business and consistent with past practice, including wage, vacation,
holiday, and sick or other leave policies, (b) workers compensation insurance,
and (c) directors and officers liability insurance.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day
on which commercial banks in Houston, Texas or New York, New York are authorized
or required by law to close.
"BUYER" has the meaning set forth in the introductory paragraph to this
Agreement.
"BUYER ACQUISITION" means a limited liability company or other entity
to be owned directly or indirectly by JEDI II or Buyer's other designee and
designated as such prior to the Closing for the purposes of this Agreement,
which designation shall be evidenced by the execution by such entity of this
Agreement in the manner contemplated by Section 13.05.
"BUYER CAMDEN GP" means a limited liability company or other entity to
be owned directly or indirectly by Buyer Acquisition and designated as such
prior to the Closing for the purposes of this Agreement, which designation shall
be evidenced by the execution by such entity of this Agreement in the manner
contemplated by Section 13.05.
"BUYER CAMDEN LP" means a limited liability company or other entity to
be owned directly or indirectly by Buyer Acquisition and designated as such
prior to the Closing for the purposes of this Agreement, which designation shall
be evidenced by the execution by such entity of this Agreement in the manner
contemplated by Section 13.05.
"BUYER ENTITIES" has the meaning set forth in the introductory
paragraph to this Agreement.
"BUYER LINDEN GP" means a limited liability company or other entity to
be owned directly or indirectly by Buyer Acquisition and designated as such
prior to the Closing for the purposes of
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56
this Agreement, which designation shall be evidenced by the execution by such
entity of this Agreement in the manner contemplated by Section 13.05.
"BUYER LINDEN LP" means a limited liability company or other entity to
be owned directly or indirectly by Buyer Acquisition and designated as such
prior to the Closing for the purposes of this Agreement, which designation shall
be evidenced by the execution by such entity of this Agreement in the manner
contemplated by Section 13.05.
"CAMDEN ACQUISITION" means the acquisition of all of the partnership
interests in CT Camden and the other transactions all as set forth in Section
2.04.
"CAMDEN BALANCE SHEET" means the balance sheet of CT Camden dated as of
June 30, 1998, included in Section II.07 of the Disclosure Schedule.
"CAMDEN BANK CONSENT" has the meaning set forth in Section 7.04(c).
"CAMDEN COGEN PARTNERSHIP AGREEMENT" means the Agreement of Limited
Partnership of Camden Cogen, as amended to the date hereof.
"CAMDEN COGEN" means Camden Xxxxx XX, a Delaware limited partnership.
"CAMDEN GE CONSENT" has the meaning set forth in Section 7.04(b).
"CT CAMDEN TERM LOAN" means all outstanding principal, interest and
penalties or premium (if any) due under the Term Loan Agreement dated as of
February 4, 1992 and amended as of April 1, 1993 between CT Camden as borrower
and General Electric Capital Corporation as lender.
"CAMDEN PLANT" means the 146 megawatt gas-fired, combined cycle
cogeneration facility owned by Camden Cogen and located in Camden, New Jersey.
"CAUSE" means a Person's continued failure to perform diligently his or
her reasonably assigned duties, fraud, theft or embezzlement by such Person or
the commission by such Person of any fraudulent activity against or involving
any Acquired Entity, any Buyer Entity or any Affiliate of any of the foregoing,
the commission by such Person of a felony, any willful or negligent act or
omission by such Person which is injurious (including, without limitation,
reputational injuries) to any Acquired Entity, any Buyer Entity or any Affiliate
of any of the foregoing or such Person's violation of Buyer's work rules or
policies to the extent such violation is, in the ordinary course, considered by
Buyer to constitute just cause for dismissal for similarly situated employees.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, and any rules or regulations promulgated
under such Act.
"CLOSING" has the meaning set forth in Section 2.05.
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"CLOSING DATE" means the date of the Closing.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPETING TRANSACTION" means any proposal or offer with respect to a
merger, consolidation, acquisition of an equity interest, share exchange,
business combination, reorganization, recapitalization, liquidation, dissolution
or similar transaction involving, or any purchase or sale of all or any
significant portion of the assets of, any Acquired Entity or any Affiliate of an
Acquired Entity.
"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement dated
as of June 15, 1998 by and between CT Capital and Buyer.
"CONSIDERATION" has the meaning set forth in Section 2.01.
"CONTEMPLATED EXPANSIONS" means (i) an up to approximate 500-megawatt
combined cycle plant at or in the vicinity of the Bayonne Plant, (ii) an up to
approximate 250-megawatt combined cycle plant or an up to approximate
300-megawatt peaking plant at or in the vicinity of the Linden Plant, and (iii)
an up to approximate 150-megawatt combined cycle or peaking plant located at or
in the vicinity of the Camden Plant.
"CONTEMPLATED TRANSACTIONS" means the acquisitions of the Interests and
the other transactions contemplated by this Agreement.
"COVERED PARTIES" has the meaning set forth in Section 7.03(a).
"CT CAMDEN" means Cogen Technologies Camden GP Limited Partnership, a
Delaware limited partnership.
"CT CAPITAL" has the meaning set forth in the introductory paragraph to
this Agreement.
"CT GENERATING" has the meaning set forth in Section 2.08(a).
"CT GLOBAL" means CT Global Insurance, Ltd., a company organized under
the laws of Bermuda.
"CTCI" has the meaning set forth in the introductory paragraph to this
Agreement.
"CTLPJV" means Cogen Technologies Limited Partners Joint Venture, a
Texas general partnership.
"CTLPJV INITIAL LINDEN INTEREST" means an undivided 47.5% of the
limited partnership interest owned by CTLPJV in Linden Ltd.
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"CTLPJV REMAINING LINDEN INTEREST" means an undivided 52.5% of the
limited partnership interest owned by CTLPJV in Linden Ltd.
"CURRENT BENEFIT PLANS" shall mean Benefit Plans that are sponsored,
maintained, or contributed to (directly or indirectly) by the Acquired Entities
as of the date of this Agreement.
"DAMAGES" has the meaning set forth in Section 11.02(a).
"DGCL" means the Delaware General Corporation Law.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule delivered by
Sellers relating to this Agreement, which contains the disclosures required to
be made by the Sellers under the various terms and provisions of this Agreement.
The Disclosure Schedule constitutes an integral part of this Agreement and
modifies the respective representations, warranties, covenants or agreements of
the Sellers contained herein to the extent that such representations,
warranties, covenants or agreements expressly refer specifically to the
applicable section of the Disclosure Schedule. Each item of disclosure set forth
in the Disclosure Schedule specifically refers to the article and section of the
Agreement to which such disclosure responds, and shall not be deemed to be
disclosed with respect to any other article or section of the Agreement.
"DISPUTED CLAIMS" has the meaning set forth in Section 13.06(b).
"EFFECTIVE TIME" has the meaning set forth in Section 2.03(b).
"END DATE" has the meaning set forth in Section 12.01(b).
"ENVIRONMENTAL LAWS" means any federal, state, local or foreign law
(including, without limitation, common law), treaty, judicial decision,
regulation, rule, ordinance, judgment, order, decree, injunction, permit or
governmental restriction or any agreement with any Governmental Authority or
other third party, in effect on or prior to the date of this Agreement, relating
to the environment, human health and safety or to the discharge, release, use,
treatment, transportation, storage or handling of pollutants, contaminants,
wastes or chemicals or any toxic, radioactive, ignitable, corrosive, reactive or
otherwise Hazardous Substances.
"ENVIRONMENTAL LIABILITIES" means any and all liabilities arising in
connection with or in any way relating to the Acquired Entities, any property
now or previously owned, leased or operated by the Acquired Entities or any
activities or operations occurring or conducted at the Real Property (including,
without limitation, offsite transportation or disposal of Hazardous Substances
or arrangements for transport or disposal of Hazardous Substances), whether
accrued, contingent, absolute, determined, determinable or otherwise, which
arise under or relate to any Environmental Law and relate to actions occurring
or conditions existing on or prior to the Closing Date (including, without
limitation, any matter disclosed or required to be disclosed in Section II.22 of
the Disclosure Schedule).
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"ENVIRONMENTAL PERMITS" means all permits, licenses, franchises,
certificates, approvals, exemptions and other similar authorizations of any
Governmental Authority relating to or required by Environmental Laws and
affecting, or relating in any way to, the Acquired Entities.
"GE" means General Electric Capital Corporation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"FERC" means the Federal Energy Regulatory Commission.
"FINAL WORKING CAPITAL" has the meaning set forth in Section 2.07(a).
"GOVERNMENTAL AUTHORITY" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"HAZARDOUS SUBSTANCES" means any hazardous or toxic substance, material
or waste regulated by any Environmental Law, including, without limitation,
whether or not so regulated, petroleum, including crude oil or any fraction
thereof, any radioactive material, radon gas, polychlorinated biphenyls and any
asbestos in any form or condition.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"INDEMNIFIED PARTIES" has the meaning set forth in Section 11.03(a).
"INDEMNIFYING PARTIES" has the meaning set forth in Section 11.03(a).
"INDEBTEDNESS FOR BORROWED MONEY" means all obligations for borrowed
money, including (a) any obligation owed for all or any part of the purchase
price of property or other assets or for services or for the cost of property or
other assets constructed or of improvements to such property or other assets,
other than current trade accounts payable included in current liabilities and
incurred in respect of property or services purchased in the ordinary course of
business, (b) any capital lease obligation, (c) any obligation (whether fixed or
contingent) to reimburse any bank or other Person in respect of amounts paid or
payable under a standby letter of credit (other than obligations under standby
letters of credit securing performance under Material Contracts), (d) any
guarantee with respect to indebtedness for borrowed money (of the kind otherwise
described in this definition) of another Person, (e) any factored or sold
receivables, (f) any progress payments in excess of specifically related
inventory (net of accounts payable) and (g) an amount equal to the excess of (i)
the aggregate amount of all past due accounts payable of the Acquired Entities
as of the Closing Date over (ii) the aggregate amount of all past due accounts
payable of the Acquired Entities as of June 30, 1998.
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"INITIAL MESC SHARES" means, with respect to each Bayonne Seller, a
number of shares of MESC Common Stock equal to 90% of the shares of MESC Common
Stock owned by such Bayonne Seller, rounded down to the nearest whole share.
"INTELLECTUAL PROPERTY RIGHT" means any trademark, service xxxx,
service name, trade name, mask work, invention, patent, process, trade secret,
copyright, technology, proprietary data, formula, research and development data,
computer software program, know-how (including any registrations or applications
for registration of any of the foregoing) or any other similar type of
proprietary intellectual property right.
"INTERESTS" means all of the outstanding capital stock of MESC, all of
the outstanding limited and general partnership interests in CT Camden, the RCM
Holdings Initial Linden Interest and the CTLPJV Initial Linden Interest.
"ISRA" means the New Jersey Industrial Site Recovery Act, as amended,
previously known as the New Jersey Environmental Cleanup Responsibility Act,
also referred to as ECRA.
"JEDI II" means Joint Energy Development Investments II Limited
Partnership, a Delaware limited partnership.
"LATEST BALANCE SHEETS" means the Bayonne Balance Sheet, the Linden
Balance Sheet and the Camden Balance Sheet.
"LIEN" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset, other than (i) Liens for current
taxes and assessments not yet due, (ii) inchoate workmen, repairmen,
warehousemen and carriers Liens arising in the ordinary course of business and
(iii) Liens created by any Buyer Entity. For the purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset which it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
"LINDEN ACQUISITION" means the acquisition of certain partnership
interests in Linden Ltd. and the other transactions all as set forth in Section
2.02.
"LINDEN BALANCE SHEET" means the balance sheet of Linden Ltd., dated
June 30, 1998, included in Section II.07 of the Disclosure Schedule.
"LINDEN BANK CONSENT" has the meaning set forth in Section 7.04(c).
"LINDEN GE CONSENT" has the meaning set forth in Section 7.04(b).
"LINDEN GP TERM LOAN" means the Amended and Restated Term Loan
Agreement, dated as of September 15, 1992 (as amended by the First Amendment to
GP Term Loan Agreement dated as of April 30, 1993), between Linden Ltd. and the
Owner Trustee.
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"LINDEN GROUND LEASE" has the meaning set forth in Section II.22(d) of
Exhibit II.
"LINDEN LTD." means Cogen Technologies Linden, Ltd., a Texas limited
partnership.
"LINDEN LTD. PARTNERSHIP AGREEMENT" means the Agreement of Limited
Partnership of Linden Ltd. dated June 28, 1989 between RCM Holdings and CTLPJV,
as amended to the date of this Agreement.
"LINDEN PLANT" means the 715 megawatt gas-fired, combined cycle
cogeneration facility owned by Linden Venture and located in Linden, New Jersey
on the site of the Bayway Refinery facility.
"LINDEN RECEIVABLE" means the amounts owed by Cogen Technologies
Financial Services, L.P., a Delaware limited partnership (currently called Old
Cogen Technologies Financial Services, L.P.) to Linden Ltd. as evidenced by the
$115,000,000 term promissory note and the revolving promissory note each dated
as of January 1, 1994 and each amended as of January 1, 1997 and July 28, 1998,
executed by Cogen Technologies Financial Services, L.P. as maker in favor of
Linden Ltd.
"LINDEN STEAM AGREEMENT" means the Agreement between Cogen Technologies
Linden Venture, L.P. and Exxon Corporation for the Sale of Steam dated August 1,
1990.
"LINDEN VALUE" has the meaning set forth in Section 2.02.
"LINDEN VENTURE" means Cogen Technologies Linden Venture, L.P., a
Delaware limited partnership.
"LINDEN VENTURE PARTNERSHIP AGREEMENT" means the Amended and Restated
Agreement of Limited Partnership dated as of September 15, 1992, between Linden
Ltd. and the Owner Trustee under a Trust Agreement dated as of December 28,
1990, between the Owner Trustee and Linden Owners Partnership, a Delaware
partnership, as amended to the date of this Agreement.
"MATERIAL ADVERSE EFFECT" means any effect or change that is or would
be materially adverse to the business, results of operations, condition
(financial or otherwise), assets or liabilities of the Acquired Entities, when
taken as a whole.
"MATERIAL CONTRACT" has the meaning set forth in Section II.10(a) of
Exhibit II.
"XXXXXX" means Xxxxxx X. XxXxxx.
"XXXXXX GROUP SELLERS" means Xxxxxx X. XxXxxx; Xxxxxx Xxxx XxXxxx, Xx.;
Xxxxxx Xxxxxxx XxXxxx; Xxxxxx Xxxx XxXxxx, Xx. Trust UTA dated 11/14/88, as
amended; Xxxxxx Xxxxxxx XxXxxx Trust UTA dated 11/14/88, as amended; Xxxx XxXxxx
Xxxxx Trust UTA dated 11/14/88, as amended; and Xxxxxxx Xxxxxx XxXxxx Xxxxxx
Trust UTA dated 11/14/88, as amended.
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"MESC" means XxXxxx Energy Services Corporation, a Texas corporation.
"MESC COMMON STOCK" means the common stock, par value $1.00 per share,
of MESC.
"MESC/NJ MERGER" has the meaning set forth in Section 2.03(a).
"MESC PRE-CLOSING TAXES" has the meaning set forth in Section VI.01 of
Exhibit VI.
"MINORITY GROUP SELLERS" means CTLPJV; the Xxxxxxx X. Xxxx Family
Trust-A and the Xxxxxxx X. Xxxx Family Trust-B under the Will of Xxxxxxx X.
Xxxx; Xxxxxx X. Xxxxxx; Evergreen Partnership Energy, Ltd.; The 1989 Energy
Trust; X. Xxxxxx Van Wart; Hansfam Three, a Trust; and Xxxxx X. Xxxxxx.
"NJDEP" means the New Jersey Department of Environmental Protection.
"NJ INC." means Cogen Technologies NJ, Inc., a Delaware corporation.
"NJ INC. COMMON STOCK" means the common stock, par value $.01 per
share, of NJ Inc.
"NJ VENTURE" Cogen Technologies NJ Venture, a New Jersey general
partnership.
"NJ VENTURE PARTNERSHIP AGREEMENT" means the Amended and Restated Joint
Venture Agreement of NJ Venture dated as of August 25, 1986.
"OPERATING FACILITIES" means the Linden Plant, the Bayonne Plant and
the Camden Plant.
"OWNER TRUSTEE" means State Street Bank and Trust Company of
Connecticut, National Association, as trustee of an owner trust under the Linden
Venture Partnership Agreement.
"PARENT" has the meaning set forth in the introductory paragraph to
this Agreement.
"PARENT COMMON STOCK" means the common stock, without par value, of
Parent.
"PARENT SEC REPORTS" has the meaning set forth in Section III.03(a) of
Exhibit III.
"PARENT SHARES" has the meaning set forth in Section 2.01.
"PARENT STOCK RECIPIENT" means any Seller who receives Parent Shares
pursuant to this Agreement, including each stockholder, partner, beneficiary or
donee by gift of such Seller.
"PARENT STOCK VALUE" means the average of the closing prices of the
Parent Common Stock as reported on the New York Stock Exchange Composite Tape
for the ten trading days ending on and including the third trading day prior to
the Closing Date.
"PARTNERSHIP CONSENTS" has the meaning set forth in Section 7.04(a).
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"PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a Governmental Authority.
"PROJECT ENTITIES" has the meaning set forth in Section II.19(b) of
Exhibit II.
"PURPA" means the Public Utility Regulatory Policies Act of 1978, as
amended.
"PURPA REQUIREMENTS" has the meaning set forth in Section II.19(a) of
Exhibit II.
"QUARTERLY DATE" has the meaning set forth in Section 2.07(b).
"RCM HOLDINGS" has the meaning set forth in the introductory paragraph
to this Agreement.
"RCM HOLDINGS INITIAL LINDEN INTEREST" means an undivided 47.5% of the
general partnership interest owned by RCM Holdings in Linden Ltd.
"RCM HOLDINGS REMAINING LINDEN INTEREST" means an undivided 52.5% of
the general partnership interest owned by RCM Holdings in Linden Ltd.
"REAL ESTATE OPTION" has the meaning set forth in Section 2.08(b).
"REAL PROPERTY" has the meaning set forth in Section II.13(a) of
Exhibit II.
"RECEIVABLE AMOUNT" has the meaning set forth in Section 2.02.
"REMAINING MESC SHARES" means, with respect to each Bayonne Seller, all
shares of MESC Common Stock owned by such Bayonne Seller that are not redeemed
pursuant to the provisions of Section 2.03(b).
"REPRESENTATIVES" means with respect to any Person, the officers,
directors, employees, accountants, counsel, consultants, advisors and agents of
such Person.
"REQUIRED CONSENTS" has the meaning set forth in Section II.06 of
Exhibit II.
"S-1 REGISTRATION STATEMENT" means to the Registration Statement on
Form S-1 of Cogen Technologies, Inc. filed with the SEC under the Securities Act
(File No. 333-53533), as amended.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLERS" has the meaning set forth in the introductory paragraph of
this Agreement.
"SELLERS' REPRESENTATIVES" means (i) Xxxxxx X. XxXxxx and (ii) Xxxx
Xxxxxx and H. Xxxx Xxxxxx, acting jointly, or any successor appointed in
accordance with the provisions of Section 13.11.
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"SPECIFIED RATE" means the 90-day London Interbank Offered Rate as
published in the Wall Street Journal, Eastern Edition, in effect from time to
time.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation or
other entity of which 50% or more of the securities or other ownership interests
having ordinary voting power are at the time directly or indirectly owned by
such Person or by a Subsidiary of such Person, or (ii) any limited partnership
of which such Person (or a Subsidiary of such Person) is a general partner or of
which 50% or more of the limited partnership interests are at the time owned
directly or indirectly by such Person or a Subsidiary of such person, or (iii)
any general partnership of which 50% or more than of the equity interests are
owned directly or indirectly by such Person or by a Subsidiary of such Person.
"TBCA" means the Texas Business Corporation Act.
"TERMINATED BENEFIT PLANS" means Benefit Plans that were sponsored,
maintained, or contributed to (directly or indirectly) by the Acquired Entities
within six years prior to the date of this Agreement but which have been
terminated prior to the date of this Agreement.
"THERMAL HOST" has the meaning set forth in Section II.19(c) of Exhibit
II.
"THIRD PARTY CLAIMS" has the meaning set forth in Section 11.03(a).
"TRANSACTION DOCUMENTS" means this Agreement and any other agreements
to be entered into in accordance with the terms hereof.
"TRANSFERRED EMPLOYEE" has the meaning set forth in Section 9.01(a).
"TURBINE ORDER" has the meaning set forth in Section 2.08(a).
"YEAR-END BALANCE SHEETS" has the meaning set forth in Section 2.06(b).
"YEAR-END WORKING CAPITAL" has the meaning set forth in Section
2.06(b).
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EXHIBIT II
REPRESENTATIONS AND WARRANTIES OF XXXXXX
XxXxxx represents and warrants to the Buyer Entities and the Parent as
of the date of this Agreement and as of the Closing Date as follows:
II.01. Corporate Existence and Power.
(a) Each of RCM Holdings, CTCI, CT Capital and the Acquired
Entities is a corporation, partnership or other entity duly
incorporated or organized, validly existing and (other than with
respect to partnerships) in good standing under the laws of its
jurisdiction of incorporation or organization, has all corporate or
other similar powers required to carry on its business as now
conducted, is duly qualified to do business and (other than with
respect to partnerships) is in good standing in each jurisdiction where
such qualification is necessary, except for those jurisdictions where
failure to be so qualified would not, individually or in the aggregate,
have a Material Adverse Effect. Included in Section II.01 of the
Disclosure Schedule are true and complete copies of the organizational
documents of Camden Xxxxx, Xxxxxx Venture and NJ Venture.
(b) Except as disclosed in Section II.01(b) of the Disclosure
Schedule, each of NJ Inc., PSEG Bayonne, Inc., and NJ Venture were
formed in connection with the development, construction, financing,
ownership and operation of the Bayonne Plant and have not conducted any
operations, incurred any liabilities or been parties to any agreements
except in connection with such activities. Except as disclosed in
Section II.01(b) of the Disclosure Schedule, each of CTCI, CT Camden
and Camden Cogen were formed in connection with the development,
construction, financing, ownership and operation of the Camden Plant
and have not conducted any operations, incurred any liabilities or been
parties to any agreements except in connection with such activities.
Except as disclosed in Section II.01(b) of the Disclosure Schedule,
each of RCM Holdings, Linden Ltd. and Linden Venture were formed in
connection with the development, construction, financing, ownership and
operation of the Linden Plant and have not conducted any operations,
incurred any liabilities or been parties to any agreements except in
connection with such activities.
II.02. Authorization. The execution, delivery and performance by RCM
Holdings, CTCI, CT Capital and each Acquired Entity of the Transaction Documents
to which it is a party and the consummation of the Contemplated Transactions to
which it is a party are within its corporate or other similar powers and have
been duly authorized by all necessary corporate or other similar action on the
part of such entity. Each Transaction Document to which RCM Holdings, CTCI, CT
Capital or any Acquired Entity is a party has been duly and validly executed and
delivered by or on behalf of such entity and constitutes a valid and binding
agreement of such entity, enforceable against such entity in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or equity). There is no vote
or other approval of any shareholders of RCM
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Holdings or CTCI required in connection with consummation of the Contemplated
Transactions, except those disclosed in Section II.02 of the Disclosure
Schedule, each of which have been obtained.
II.03. [Intentionally Omitted].
II.04. Noncontravention. Except as disclosed in Section II.04 or II.06
of the Disclosure Schedule, the execution, delivery and performance by each of
RCM Holdings, CTCI, CT Capital or any Acquired Entity of the Transaction
Documents to which it is a party and the consummation of the Contemplated
Transactions do not and will not (i) violate the certificate or articles of
incorporation, bylaws, partnership or other organizational documents of RCM
Holdings, CTCI, CT Capital or any Acquired Entity, (ii) assuming compliance with
the matters referred to in the last sentence of this Section II.04, violate any
Applicable Law, (iii) assuming the obtaining of all Required Consents,
constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of RCM Holdings, CTCI,
CT Capital or any Acquired Entity or to a loss of any benefit to which such
entity is entitled under any provision of any agreement or other instrument
binding upon such entity or by which such entity is or may be bound or (iv)
result in the creation or imposition of any Lien on any assets of RCM Holdings,
CTCI, CT Capital or any Acquired Entity, other than Permitted Liens, except for
such violations referred to in clause (ii), defaults, rights of termination,
cancellation or acceleration or losses referred to in clause (iii) or
impositions of Liens referred to in clause (iv) that could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect or to
interfere or conflict with the consummation of the Contemplated Transactions.
The execution, delivery and performance by RCM Holdings, CTCI, CT Capital and
each Acquired Entity of the Transaction Documents to which it is a party and the
consummation of the Contemplated Transactions require no material action by or
in respect of, or material filing with, any Governmental Authority other than
compliance with any applicable requirements of the HSR Act and ISRA and filings
with the Secretaries of State of Delaware and Texas in connection with the
MESC/NJ Merger.
II.05. Capitalization; Etc.
(a) The authorized capital stock of MESC consists of 1,000,000
shares of common stock ("MESC COMMON STOCK"), of which 198,447 shares
are issued and outstanding (no shares being held in treasury). Each
outstanding share of MESC Common Stock has been duly authorized, is
validly issued, fully paid and nonassessable and was not issued in
violation of any preemptive rights of any Person. Set forth in the
Section II.05(a) of the Disclosure Schedule are the names of each
record holder of MESC Common Stock, together with the number of shares
held by each such person. The authorized capital stock of NJ Inc.
consists of 1,000 shares of NJ Inc. Common Stock, of which 100 shares
are issued and outstanding, all of which are owned by MESC, free and
clear of any Lien. Each outstanding share of NJ Inc. capital stock has
been duly authorized, is validly issued, fully paid and nonassessable
and was not issued in violation of any preemptive rights of any Person.
NJ Inc. owns a 91.75% general partner interest in NJ Venture, free and
clear of any Lien. Section II.05(a) of the Disclosure Schedule sets
forth a complete list of each other
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holder of a partnership interest in NJ Venture, including the
percentage equity ownership held by each such owner.
(b) The authorized capital stock of RCM Holdings consists of
10,000 shares of common stock, of which 1,131 shares are issued and
outstanding (no shares being held in treasury). Each outstanding share
of RCM Holdings common stock has been duly authorized, is validly
issued, fully paid and nonassessable and was not issued in violation of
any preemptive rights of any Person. Set forth in the Section II.05(b)
of the Disclosure Schedule are the names of each record holder of the
common stock of RCM Holdings, together with the number of shares held
by each such person. RCM Holdings is the sole general partner of Linden
Ltd. RCM Holdings holds such general partner interest, which comprises
the RCM Holdings Initial Linden Interest and the RCM Holdings Remaining
Linden Interest, free and clear of any Lien. CTLPJV is the sole limited
partner of Linden Ltd. Upon consummation of the Contemplated
Transactions, Buyer Acquisition and Buyer Linden LP shall be the record
and beneficial owner of the RCM Holdings Initial Linden Interest, free
and clear of any Lien, and the CTLPJV Initial Linden Interest, which
together shall constitute all of the partnership interests in Linden
Ltd., and in each case with full right to admission as a partner.
Linden Ltd. is the sole general partner of Linden Venture with all
rights given to it as such pursuant to the Linden Venture Partnership
Agreement, and, except as set forth in Section II.05(b) of the
Disclosure Schedule, holds such general partner interest free and clear
of any Lien.
(c) The authorized capital stock of CTCI consists of 10,000
shares of common stock (the "CTCI COMMON STOCK"), of which 1,000 shares
are issued and outstanding (no shares being held in treasury). Each
outstanding share of CTCI Common Stock has been duly authorized, is
validly issued, fully paid and nonassessable and was not issued in
violation of any preemptive rights of any Person. Set forth in the
Section II.05(c) of the Disclosure Schedule are the names of each
record holder of CTCI Common Stock, together with the number of shares
held by each such person. CTCI is the sole general partner of CT
Camden. Except as set forth in Section II.05(c) of the Disclosure
Schedule, CTCI holds such general partner interest (the "CT CAMDEN GP
INTEREST") free and clear of any Lien. CTLPJV is the sole limited
partner of CT Camden. Upon consummation of the Contemplated
Transactions, Buyer Acquisition and Buyer Camden LP shall be the record
and beneficial owner of the CT Camden GP Interest, free and clear of
any Lien, and the CT Camden LP Interest, which together shall
constitute all of the partnership interests in CT Camden, in each case
with full right to admission as a partner. CT Camden is the sole
general partner of Camden Cogen with all rights given to it as such
pursuant to the Camden Cogen Partnership Agreement. Except as set forth
in the Section II.05(c) of the Disclosure Schedule, CT Camden holds
such general partner interest free and clear of any Lien.
(d) Except as contemplated by this Agreement, there is not
outstanding any option, warrant or right, entitling the holder thereof
to purchase or otherwise acquire any shares of capital stock or
partnership or other equity interests in any of the Acquired Entities,
and there are no contracts, agreements, commitments or arrangements
obligating any Acquired Entity (i) to issue, sell, pledge, dispose of
or encumber any shares of capital stock
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or partnership or other equity interests of, or any options, warrants
or rights of any kind to acquire, or any securities that are
convertible into or exercisable or exchangeable for, any shares of
capital stock or partnership or other equity interests in any Acquired
Entity or (ii) to redeem, purchase or acquire or offer to acquire any
shares of capital stock or partnership or other equity interests of, or
any outstanding option, warrant or right to acquire, or any securities
that are convertible into or exercisable or exchangeable for, any
shares of capital stock or partnership or other equity interests in any
Acquired Entity. Except as set forth in Section II.05(d) of the
Disclosure Schedule, none of XxXxxx, RCM Holdings or CTCI is party to,
or has any knowledge of, any agreement or arrangement relating to or
affecting the Interests in which RCM Holdings, CTCI or XxXxxx have an
interest, including any agreement relating to the voting of such
Interests, any right of first refusal or first offer or any obligation
to sell or otherwise transfer such Interests.
II.06. Consents. Section II.06 of the Disclosure Schedule sets forth
each Material Contract binding upon RCM Holdings, CTCI, CT Capital or any
Acquired Entity or any Permit, in each case requiring a consent or other action
by any Person as a result of the execution, delivery and performance of the
Transaction Documents or the consummation or the Contemplated Transactions (the
"REQUIRED CONSENTS").
II.07 Financial Statements. Included as Section II.07 of the Disclosure
Schedule are:
(a) True and complete copies of the financial statements of
MESC consisting of (i) audited balance sheets of MESC as of December
31, 1996 and 1997, and the related audited statements of income,
changes in shareholders' equity and cash flows for the three calendar
years ended December 31, 1997 (including the notes thereto) (the
"BAYONNE AUDITED FINANCIAL STATEMENTS"), which financial statements
have been audited, and are accompanied by the audit opinion of Xxxxxx
Xxxxxxxx LLP, and (ii) an unaudited balance sheet of MESC as of June
30, 1998, and the related unaudited statements of income, changes in
shareholders' equity and cash flows for the six months then ended and
for the corresponding period of MESC's prior calendar year (the
"BAYONNE INTERIM FINANCIAL STATEMENTS," and, collectively with the
Bayonne Audited Financial Statements, the "BAYONNE FINANCIAL
STATEMENTS"). The Bayonne Financial Statements present fairly the
financial position of Bayonne and the results of its operations and
changes in financial position as of the dates and for the periods
indicated therein in conformity with generally accepted accounting
principles applied on a consistent basis, except as disclosed in the
notes thereto (subject, in the case of the Bayonne Interim Financial
Statements, to normal year-end audit adjustments on a basis comparable
with past periods). The Bayonne Financial Statements do not omit to
state any liabilities, absolute or contingent, required to be stated
therein in accordance with generally accepted accounting principles
consistently applied.
(b) True and complete copies of the financial statements of
Linden Ltd. consisting of (i) audited balance sheets of Linden Ltd. as
of December 31, 1996 and 1997, and the related audited statements of
income, changes in partners' equity and cash flows for the three
calendar years ended December 31, 1997 (including the notes thereto)
(the "LINDEN AUDITED FINANCIAL STATEMENTS"), which financial statements
have been audited, and are accompanied
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by the audit opinion of Xxxxxx Xxxxxxxx LLP, and (ii) an unaudited
balance sheet of Linden Ltd. as of June 30, 1998, and the related
unaudited statements of income, changes in partners' equity and cash
flows for the six months then ended and for the corresponding period of
Linden Ltd.'s prior calendar year (the "LINDEN INTERIM FINANCIAL
STATEMENTS," and, collectively with the Linden Audited Financial
Statements, the "LINDEN FINANCIAL STATEMENTS"). The Linden Financial
Statements present fairly the financial position of Linden Ltd. and the
results of its operations and changes in financial position as of the
dates and for the periods indicated therein in conformity with
generally accepted accounting principles applied on a consistent basis,
except as disclosed in the notes thereto (subject, in the case of the
Linden Interim Financial Statements, to normal year-end audit
adjustments on a basis comparable with past periods). The Linden
Financial Statements do not omit to state any liabilities, absolute or
contingent, required to be stated therein in accordance with generally
accepted accounting principles consistently applied.
(c) True and complete copies of the financial statements of CT
Camden consisting of (i) audited balance sheets of CT Camden as of
December 31, 1996 and 1997, and the related audited statements of
income, changes in partners' equity and cash flows for the three
calendar years ended December 31, 1997 (including the notes thereto)
(the "CAMDEN AUDITED FINANCIAL STATEMENTS"), which financial statements
have been audited, and are accompanied by the audit opinion of Xxxxxx
Xxxxxxxx LLP, and (ii) an unaudited balance sheet of CT Camden as of
June 30, 1998, and the related unaudited statements of income, changes
in partners' equity and cash flows for the six months then ended and
for the corresponding period of CT Camden's prior calendar year (the
"CAMDEN INTERIM FINANCIAL STATEMENTS," and, collectively with the
Camden Audited Financial Statements, the "CAMDEN FINANCIAL
STATEMENTS"). The Camden Financial Statements present fairly the
financial position of CT Camden and the results of its operations and
changes in financial position as of the dates and for the periods
indicated therein in conformity with generally accepted accounting
principles applied on a consistent basis, except as disclosed in the
notes thereto (subject, in the case of the Camden Interim Financial
Statements, to normal year-end audit adjustments on a basis comparable
with past periods). The Camden Financial Statements do not omit to
state any liabilities, absolute or contingent, required to be stated
therein in accordance with generally accepted accounting principles
consistently applied.
II.08. Absence of Certain Changes. Since December 31, 1997, except as
set forth in Section II.08 of the Disclosure Schedule, the Acquired Entities
have conducted their respective businesses in the ordinary course consistent
with past practices and there has not been:
(a) any event, occurrence, development or state of
circumstances or facts which, individually or in the aggregate, has had
or could reasonably be expected to have a Material Adverse Effect;
(b) any creation or other incurrence of any Lien, except for
Permitted Liens, on any material asset of the Acquired Entities;
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(c) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the Acquired Entities which,
individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect or has been or could
reasonably be expected to be material to the Bayonne Plant, the Camden
Plant or the Linden Plant;
(d) any material transaction or commitment made, or, except as
disclosed in Section II.10(a) of the Disclosure Schedule, any Material
Contract entered into, by any Acquired Entity (including the
acquisition or disposition of any assets) or any relinquishment by any
Acquired Entity of any material contract or other right, other than
transactions and commitments in the ordinary course of business
consistent with past practices and those contemplated by the
Transaction Documents;
(e) except as contemplated by this Agreement and except for
any such change after the date of this Agreement required by reason of
a concurrent change in generally accepted accounting principles, any
change in any method of accounting or accounting practice with respect
to the Acquired Entities;
(f) except as set forth in Sections II.10(a) and II.10(c) of
the Disclosure Schedule, any (i) employment, deferred compensation,
severance, welfare, retirement or other similar agreement or
arrangement entered into with any officer or employee of any Acquired
Entity (or any amendment to any such existing agreement), (ii) grant of
any severance or termination pay to any officer or employee of any
Acquired Entity, (iii) grant of annual compensation or other benefits
to any new employee of any Acquired Entity in excess of the comparable
amounts paid to the individual previously serving in the position in
which such new employee is to serve or (iv) change in compensation or
other benefits payable to any officer or employee of any Acquired
Entity pursuant to any severance, welfare or retirement plans or
policies of such plans, other than in the ordinary course of business
consistent with past practices; or
(g) any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or
Representative of a labor union to organize any employees of an
Acquired Entity, or any lockouts, strikes, slowdowns, work stoppages
or, to the knowledge of XxXxxx, RCM Holdings, CTCI or any Acquired
Entity, threats of any of the foregoing by or with respect to employees
of any Acquired Entity.
II.09. No Undisclosed Material Liabilities. There are no liabilities of
the Acquired Entities of any kind whatsoever, whether known or unknown, accrued,
absolute, contingent, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability, other than:
(a) liabilities provided for in the Latest Balance Sheets; or
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(b) liabilities incurred after June 30, 1998 in the ordinary
course of business consistent with past practices that, individually or
in the aggregate, have not had and could not reasonably be expected to
have a Material Adverse Effect.
II.10. Material Contracts or Indebtedness.
(a) Except as set forth in Section II.10(a) of the Disclosure
Schedule, none of the Acquired Entities is a party to or bound by (each
of the following being referred to herein as a "MATERIAL CONTRACT"):
(i) any site lease with respect to an Operating
Facility and any other lease (whether of real or personal
property) providing for annual rentals of $250,000 or more;
(ii) any power purchase agreement, power marketing
agreement, fuel supply agreement, steam sales agreement,
operating and/or maintenance agreements and spare parts
purchase agreements and discount arrangements relating to an
Operating Facility;
(iii) any agreement or contract that would be a
"material contract" with respect to the Acquired Entities
(taken as whole) within the meaning of Item 601(b)(10) of
Regulation S-K under the Securities Act;
(iv) any partnership, joint venture, debt or equity
interest or investment in any Person (other than Acquired
Entities) or other similar agreement or arrangement;
(v) any agreement (other than the Transaction
Documents) relating to the acquisition or disposition of a
Subsidiary of such entity or any material asset outside the
ordinary course of business (whether by merger, sale of stock,
sale of assets or otherwise);
(vi) any agreement or series of related agreements
relating to Indebtedness for Borrowed Money in excess of
$250,000 and any Lien related thereto;
(vii) any agreement that limits the freedom of such
Acquired Entity to compete in any line of business or with any
Person or in any area or to own, operate, sell, transfer,
pledge or otherwise dispose of or encumber any material asset;
(viii) any agreement or arrangement with or for the
benefit of any Affiliate of any Seller or Acquired Entity;
(ix) any employment, consulting or similar agreement
and any agreement pursuant to which any Acquired Entity could
be obligated, in each case providing for payments to any
Person upon a change of control or severance or similar event
in excess of $100,000;
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(x) any agreement pursuant to which any Acquired
Entity could be obligated to pay management, consulting, fuel
management, owners' representative, development, broker's,
finders or similar fees or compensation to any Person in
excess of $100,000; or
(xi) any other agreement, commitment, arrangement or
plan not related to the business of the Operating Facilities
or not made in the ordinary course of business consistent with
past practices that is material to the Acquired Entities.
True and complete copies of each such Material Contract have
been made available to Buyer.
(b) Except as set forth in Section II.10(b) of the Disclosure
Schedule, there has been no agreement, correspondence, waiver or
similar documentation pursuant to which any Acquired Entity or any
Affiliate of an Acquired Entity has canceled, qualified, waived or
released any of its claims, rights or interests under the Linden Steam
Agreement.
(c) Each Benefit Plan is listed in Section II.10(c) of the
Disclosure Schedule. True and correct copies of each of the following,
to the extent applicable, have been made available to the Buyer with
respect to each Current Benefit Plan: the most recent annual report
(Form 5500) filed with the Internal Revenue Service, the plan document,
the trust agreement, the underlying insurance contract, or other
funding vehicle the most recent summary plan description and the most
recent determination letter issued by the IRS with respect to any
Current Benefit Plan intended to be qualified under Section 401 of the
Code. Except as set forth in Section II.10(c) of the Disclosure
Schedule, none of the Acquired Entities is a party to or is bound by
any severance agreement, program, or policy. True and correct copies of
all employment agreements with employees of the Acquired Entities and
all vacation, overtime, and other compensation policies of the Acquired
Entities relating to their employees have been made available to the
Buyer. There are no Terminated Benefit Plans. None of the ERISA
Affiliates (as defined below) sponsors, maintains or contributes to or
has at any time during the six-year period ending on the date of this
Agreement sponsored, maintained or contributed to a plan subject to
Title IV of ERISA or a "multiemployer plan," within the meaning of
Section 3(37) of ERISA. The term "ERISA Affiliates" shall mean the
Acquired Entities and each corporation, trade, business or entity under
common control with any of the Acquired Entities within the meaning of
Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986,
as amended, or Section 4001 of the ERISA.
(d) Except as disclosed in Section II.10(d)of the Disclosure
Schedule, each Material Contract is a legal, valid and binding
obligation of each Acquired Entity that is a party thereto and, to the
knowledge of XxXxxx, RCM Holdings, CTCI, CT Capital or the Acquired
Entities, each other party to such Material Contract, enforceable
against such Acquired Entity and, to the knowledge of XxXxxx, RCM
Holdings, CTCI, CT Capital or the Acquired Entities, each such other
party in accordance with its terms (except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating
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to or affecting creditors' rights generally and general equitable
principles (regardless of whether such enforceability is considered in
a proceeding at law or in equity)), and neither such Acquired Entity
nor, to the knowledge of XxXxxx, RCM Holdings, CTCI, CT Capital or the
Acquired Entities, any other party to such Material Contract is in
material default or has failed to perform any material obligation under
such Material Contract (other than payment delinquencies under accounts
receivable), and there does not exist any event, condition or omission
which would constitute a material breach or material default (whether
by lapse of time or notice or both), except for any such defaults,
failures or breaches as, individually or in the aggregate, have not had
and could not reasonably be expected to have a Material Adverse Effect.
(e) True and complete copies of all agreements,
questionnaires, internal reports and analyses and material
correspondence relating to the Year 2000 issue at any of the Operating
Facilities (including such materials received from or relating to any
power purchaser, gas supplier, steam purchaser, operations and
maintenance contractor or other material vendor at any Operating
Facility) have been made available to Buyer.
II.11. Litigation.
(a) Except as set forth in Section II.11(a) of the Disclosure
Schedule, there is no action, suit, claim, investigation (of which
XxXxxx, RCM Holdings, CTCI or any Acquired Entity has received notice
or is aware) or proceeding pending or threatened in writing against any
Acquired Entity before any Governmental Authority or pursuant to any
agreement to arbitrate, including any action, suit, claim,
investigation or proceeding against or with respect to any Benefit Plan
or its assets or arising out of or relating to any Environmental Laws.
(b) Except as set forth in Section II.11(b) of the Disclosure
Schedule, none of the matters listed in Section II.11(a) of the
Disclosure Schedule, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect or could reasonably be
expected to prevent, enjoin, alter or materially delay consummation of
the Contemplated Transactions.
II.12. Compliance with Laws. None of the Acquired Entities is in
violation of, has violated, or, to the knowledge of XxXxxx, RCM Holdings, CTCI,
CT Capital or the Acquired Entities, is under investigation with respect to or
has been threatened to be charged with or given notice of any material violation
of any Applicable Law applicable to the Acquired Entities. It is understood that
this Section II.12 does not address matters under Environmental Laws, which
matters are addressed in Section II.22.
II.13. Properties.
(a) Section II.13 of the Disclosure Schedule correctly
describes all real property (the "REAL PROPERTY") which any Acquired
Entity owns, leases, operates or subleases, any title insurance
policies and surveys with respect to such Real Property, and any Liens
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thereon, specifying in the case of leases or subleases, the name of the
lessor or sublessor, the lease term and the basic annual rent.
(b) Each Acquired Entity has good and indefeasible title to,
or in the case of leased Real Property or personal property, valid
leasehold interests in, all material assets (whether real, personal,
tangible or intangible) reflected on its respective Latest Balance
Sheet or acquired after June 30, 1998, except for properties and assets
sold since June 30, 1998 in the ordinary course of business consistent
with past practices. Except as set forth on Section II.13 of the
Disclosure Schedule, no material asset of any Acquired Entity is
subject to any Lien, except:
(i) Liens disclosed on the Latest Balance Sheets;
(ii) Liens for taxes not yet due or being contested
in good faith (and for which adequate accruals or reserves
have been established on the Latest Balance Sheets); or
(iii) Liens which do not materially detract from the
value of such asset, or materially interfere with any present
or intended use of such asset (Liens referred to in clauses
(i) - (iii) of this Section II.13(b) are, collectively, the
"PERMITTED LIENS").
(c) The plants, buildings, structures and equipment owned by
the Acquired Entities, including the Operating Facilities, have no
material defects, are in good operating condition and repair and have
been reasonably maintained consistent with standards generally followed
in the industry (giving due account to the age and length of use of
same, ordinary wear and tear excepted), are adequate and suitable for
their present or intended uses and, in the case of plants, buildings
and other structures, are structurally sound.
(d) The plants, buildings and structures owned by the Acquired
Entities, including the Operating Facilities, currently have access to
(i) public roads or valid easements over private streets or private
property for such ingress to and egress from all such plants, buildings
and structures and (ii) water supply, storm and sanitary sewer
facilities, telephone, gas and electrical connections, fire protection,
drainage and other public utilities, in each case as is necessary for
the conduct of their respective businesses as previously conducted.
None of the structures on the Real Property encroaches upon real
property of another Person, and no structure of any other Person
substantially encroaches upon any Real Property.
(e) The Real Property, and its continued use, occupancy and
operation as currently used, occupied and operated, does not constitute
a nonconforming use under any applicable building, zoning, subdivision
and other land use and similar laws, regulations and ordinances.
II.14. [Intentionally Omitted].
II.15. Employee Benefit Matters.
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(a) With respect to each Benefit Plan, no event has occurred
and there exists no condition or set of circumstances in connection
with which the Acquired Entities could be subject to any liability
under the terms of such Benefit Plan (other than for benefits owed
pursuant to its terms), ERISA, the Code, or any other applicable Law,
other than any condition or set of circumstances that could not
reasonably be expected to have a Material Adverse Effect on the
Acquired Entities.
(b) The Cogen Technologies 401(k) Savings Plan, the only
Current Benefit Plan that is intended to be qualified under Section 401
of the Code, satisfies in form the requirements of such Section except
to the extent that amendments are not required by law to be made until
a date after the Closing Date and has been operated in all material
respects in compliance with the requirements of Section 401(a) of the
Code. The National Office of the Internal Revenue Service has ruled
that the terms of the standardized prototype plan documents that have
been adopted in connection with the Cogen Technologies 401(k) Savings
Plan satisfy the requirements of Section 401(a) of the Code.
(c) Except as specified below, there has been no termination
or partial termination of any Current Benefit Plan within the meaning
of Section 411(d)(3) of the Code. During the 1997 fiscal year of the
Cogen Technologies 401(k) Savings Plan such plan was partially
terminated and the benefits of all affected participants in such plan
were fully vested as required by the Code.
(d) There are no actions, suits, or claims pending (other than
routine claims for benefits) or threatened against, or with respect to,
any Benefit Plan or its assets that could reasonably be expected to
have a Material Adverse Effect. There is no matter pending (other than
routine qualification determination filings) with respect to any
Benefit Plan before the Internal Revenue Service, the Department of
Labor or other Governmental Authority.
(e) All contributions required to be made to Benefit Plans
pursuant to their terms and the provisions of ERISA, the Code, or any
other applicable law have been timely made.
(f) In connection with the consummation of the transactions
contemplated by this Agreement, no payments of money or other property,
acceleration of benefits, or provision of other rights have been or
will be made hereunder, under any agreement contemplated herein, or
under any Current Benefit Plans or any of the programs, agreements,
policies, or other arrangements described in Section II.10(c) of the
Disclosure Schedule that would be reasonably likely to be nondeductible
under Section 280G of the Code, whether or not some other subsequent
action or event would be required to cause such payment, acceleration,
or provision to be triggered.
(g) Except as expressly provided by this Agreement or required
by Section 411 of the Code, the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
will not (i) require the Acquired Entities to make a larger
contribution to, or pay greater benefits or provide other rights under,
any Current Benefit Plan or any of the programs, agreements, policies,
or other arrangements described in Section
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II.10(c) of the Disclosure Schedule than otherwise would be the case,
whether or not some other subsequent action or event would be required
to cause such payment or provision to be triggered, or (ii) create or
give rise to any additional vested rights or service credits under any
Current Benefit Plan or any of such programs, agreements, policies, or
other arrangements, whether or not some other subsequent action or
event would be required to cause such creation or acceleration to be
triggered.
(h) Except as set forth in Section II.10(c) of the Disclosure
Schedule, no Benefit Plan provides retiree medical or retiree life
insurance benefits to any Person and none of the Acquired Entities is
contractually or otherwise obligated (whether or not in writing) to
provide any Person with life insurance or medical benefits upon
retirement or termination of employment, other than as required by the
provisions of Sections 601 through 608 of ERISA and Section 4980B of
the Code. No termination of any Benefit Plan or other arrangement
described in Section II.10(c) of the Disclosure Schedule would result
in liability for the Acquired Entities except as to benefits accrued
thereunder prior to such termination.
(i) The vacation and sick pay policies of the Acquired
Entities and its Subsidiaries do not provide for carryover of vacation
or sick pay from one calendar year to the next.
(j) No collective bargaining agreement is being negotiated by
the Acquired Entities. There is no pending or threatened labor dispute,
strike, or work stoppage against the Acquired Entities. None of the
Acquired Entities nor any representative or employee of any of the
Acquired Entities has in the United States committed any unfair labor
practices in connection with the operation of the business of the
Acquired Entities and there is no pending or threatened charge or
complaint against the Acquired Entities by the National Labor Relations
Board or any comparable agency of any state of the United States.
II.16. Intellectual Property.
(a) Section II.16 of the Disclosure Schedule contains a list
of all Intellectual Property Rights owned or licensed by any Acquired
Entity that are material to the Acquired Entity ("MATERIAL INTELLECTUAL
PROPERTY RIGHTS"), specifying as to each, as applicable: (i) the nature
of such Intellectual Property Right, (ii) the jurisdictions by or in
which such Intellectual Property Right (A) is recognized (without
regard to registration) or (B) has been issued or registered or in
which an application for such issuance or registration has been filed,
(iii) the registration or application numbers and (iv) the termination
or expiration dates.
(b) Section II.16 of the Disclosure Schedule sets forth a list
of all licenses, sublicenses and other agreements as to which any
Acquired Entity is a party and pursuant to which any Person is
authorized to use any Material Intellectual Property Right, including
the identity of all parties to such licenses, sublicenses and other
agreements.
(c) The Acquired Entities own, free and clear of all Liens
other than Permitted Liens, all right, title and interest in the
Material Intellectual Property Rights.
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(d) Except as set forth in Section II.16 of the Disclosure
Schedule, the Acquired Entities own, or possess licenses or other valid
rights to use, all material Intellectual Property Rights necessary for
the continued operation of their respective businesses in substantially
the same manner as its operations have previously been conducted.
(e) (i) Except as set forth in Section II.16 of the Disclosure
Schedule, since January 1, 1995, none of the Acquired Entities has been
a defendant in any action, suit, investigation or proceeding relating
to, or otherwise has been notified of, any alleged claim of
infringement of any Intellectual Property Right, and none of XxXxxx,
RCM Holdings, CTCI or any Acquired Entity has any knowledge of any
other such infringement by any Acquired Entity, and (ii) none of the
Acquired Entities has any outstanding claim or suit for, and has no
knowledge of, any continuing infringement by any other Person of any
Intellectual Property Rights. No Material Intellectual Property Right
is subject to any outstanding judgment, injunction, order, decree or
agreement restricting the use of such Intellectual Property Right by
any Acquired Entity or restricting the licensing of such Intellectual
Property Right by any Acquired Entity to any Person. None of the
Acquired Entities has entered into any agreement to indemnify any other
Person against any charge of infringement of any Intellectual Property
Right.
II.17. Insurance Coverage. The Sellers have furnished to Buyer a list
of all insurance policies and fidelity bonds relating to the Acquired Entities
and their respective businesses and operations and officers and employees,
except those provided by CT Global. Except as set forth in Section II.17 of the
Disclosure Schedule, there is no claim by any Acquired Entity pending under any
of such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds or in respect of which
such underwriters have reserved their rights. All premiums payable under all
such policies and bonds have been timely paid and each Acquired Entity has
otherwise complied fully with the terms and conditions of all such policies and
bonds. Except as set forth in Section II.17 of the Disclosure Schedule, such
policies of insurance and bonds (or other policies and bonds providing
substantially similar insurance coverage) have been in effect since January 1,
1995 and remain in full force and effect. Such policies and bonds are of the
type and in amounts customarily carried by Persons conducting businesses similar
to the business conducted by the Acquired Entities. Except as contemplated by
this Agreement, none of XxXxxx, RCM Holdings, CTCI or any Acquired Entity knows
of any threatened termination of, premium increase with respect to, or material
alteration of coverage under, any of such policies or bonds. Except as
contemplated by this Agreement, or as set forth in Section II.17 of the
Disclosure Schedule, after the Closing the Acquired Entities shall continue to
have coverage under such policies and bonds with respect to events occurring
prior to the Closing.
II.18. Licenses and Permits. Section II.18 of the Disclosure Schedule
correctly describes each material license, franchise, permit, certificate,
approval or other similar authorization affecting, or relating in any way to,
the Acquired Entities or their respective businesses and operations (the
"PERMITS") together with the name of the government agency or entity issuing
such Permit. Except as set forth in Section II.18 of the Disclosure Schedule,
(i) the Permits are valid and in full force and effect, (ii) none of the
Acquired Entities is in default, and no condition exists that with notice or
lapse of time or both would constitute a default, under the Permits and (iii)
none of the Permits will,
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assuming the related Required Consents have been obtained prior to the Closing
Date, be terminated or impaired or become terminable, in whole or in part, as a
result of consummation of the Contemplated Transactions. It is understood that
this Section II.18 does not address Permits granted under Environmental Laws,
which matters are addressed in Section II.22.
II.19 Certain Regulatory Matters.
(a) Each Operating Facility is, and since the commencement of
power generation at each Operating Facility, has continuously been, a
"qualifying cogeneration facility" within the meaning of Section
3(18)(B) of the Federal Power Act, as amended, and the FERC's
regulations thereunder, at 18 C.F.R. Part 292, interpretations thereof
by the FERC and courts of competent jurisdiction of PURPA and such
regulations (collectively, PURPA, the regulations and all such
interpretations, the "PURPA REQUIREMENTS").
(b) Each of Linden Venture, Camden Cogen and NJ Venture (the
"PROJECT ENTITIES") is, and has continuously been, since the
commencement of power generation at the Operating Facility owned by
such Project Entity, in compliance with the Federal Power Act, as
amended, and the FERC's regulations thereunder.
(c) Except as set forth in Section II.19 of the Disclosure
Schedule, each of the Operating Facilities has in effect a contract
with an entity under which such entity (the "THERMAL HOST") has agreed
to purchase steam from such Operating Facility and use such steam for
an industrial or commercial process or for heating or cooling, or has
agreed to obtain cooling or chilling service from such Operating
Facility, or both, in aggregate amounts which equal or exceed the
projected amount of "useful thermal energy output" required for
continued qualification of the facility as a qualifying cogeneration
facility under the PURPA Requirements. All such uses of steam satisfy
the requirements to be "useful thermal energy output" as defined in the
PURPA Requirements, and, except as set forth in Section II.19 of the
Disclosure Schedule, each such contract runs for a period of at least
as long as the power purchase agreement of such Operating Facility,
subject only to the specific termination provisions therein. None of
the Operating Facilities has materially breached any agreement with a
Thermal Host, or, except as specifically disclosed on Section II.19 of
the Disclosure Schedule, has been informed of any alleged material
breach by the Operating Facility of an agreement with a Thermal Host,
or, to the knowledge of XxXxxx, RCM Holdings, CTCI or any Acquired
Entity, has learned of any material breach or threatened breach by a
Thermal Host of any agreement with such Operating Facility.
(d) None of the Acquired Entities or any "affiliate" thereof,
as defined in the Public Utility Holding Company Act of 1935, as
amended ("PUHCA") is subject to regulation: (i) as a "public utility"
under the Federal Power Act, other than as contemplated by 18 C.F.R.
Section 292.601(c); (ii) as a "public-utility company," a "holding
company," or a "subsidiary company," "associate company," or
"affiliate" of a "public-utility company" or a "holding company" or an
"affiliate" of a "subsidiary company" of a "holding company", as each
such term is defined in PUHCA or the regulations of the SEC thereunder;
or
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(c) under any state law or regulation with respect to rates or the
financial or organizational regulation of electric utilities, other
than as contemplated by 18 C.F.R. Section 292.602(c)(2).
(e) None of the Project Entities is subject to regulation as a
"public utility" under the laws of the State of New Jersey or as an
"electric corporation" under the laws of the State of New York.
II.20. Finders' Fees. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of RCM Holdings, CTCI, CT Capital or any Acquired Entity or any of their
respective Affiliates who might be entitled to any fee or commission from
Parent, any Buyer Entity or any Acquired Entity in connection with the
Contemplated Transactions.
II.21. [Intentionally Omitted].
II.22. Environmental Compliance.
(a) Except as set forth in Section II.22 of the Disclosure
Schedule:
(i) in connection with or relating to the Acquired
Entities, no notice, notification, demand, request for
information, citation, summons or order has been received, no
complaint has been filed, no penalty has been assessed and no
investigation, action, claim, proceeding or review is pending,
or to the knowledge of XxXxxx, RCM Holdings, CTCI or any
Acquired Entity, threatened by any Governmental Authority or
other Person with respect to matters arising out of or
relating to any applicable Environmental Law that could,
individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect;
(ii) there are no Environmental Liabilities arising,
or, to the knowledge of XxXxxx, RCM Holdings, CTCI or any
Acquired Entity, threatened, in connection with or in any way
relating to the Acquired Entities arising under or relating to
any applicable Environmental Law and there are no facts,
conditions, situations or set of circumstances which could
reasonably be expected to result in or be the basis for any
such liability, in each case that could reasonably be expected
to result in a Material Adverse Effect;
(iii) no incinerator, sump, surface impoundment,
lagoon, landfill, septic, wastewater treatment or other
disposal system or underground storage tank (active or
abandoned) is or, to the knowledge of XxXxxx, RCM Holdings,
CTCI or any Acquired Entity, has been present at, on, under or
in any property now or previously owned, leased or operated by
any Acquired Entity in a manner or location that would trigger
any investigation or remedial action obligations under
Environmental Laws;
(iv) no Hazardous Substance has been discharged,
disposed of, dumped, injected, pumped, deposited, spilled,
leaked, emitted or released at, on, under or
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from any Real Property or any other property now or previously
owned, leased or operated by any Acquired Entity in a
concentration, amount or location that would trigger any
material investigation or remedial action obligations under
applicable Environmental Laws;
(v) no property now or, to the knowledge of XxXxxx,
RCM Holdings, CTCI or any Acquired Entity, previously owned,
leased or operated by any Acquired Entity nor any property to
or at which Hazardous Substances located on or resulting from
the operations of any Acquired Entity have been transported,
disposed or arranged for transportation or disposal is listed
or, to the knowledge of XxXxxx, RCM Holdings, CTCI or any
Acquired Entity, proposed for listing on the National
Priorities List promulgated pursuant to CERCLA, on CERCLIS (as
defined in CERCLA) or on any similar federal, state, local or
foreign list of sites requiring investigation or cleanup; and
(vi) each Acquired Entity is in compliance in all
material respects and has at all times in the past complied in
all material respects with all Environmental Laws and has and
is in compliance in all material respects with all
Environmental Permits; such Environmental Permits are valid
and in full force and effect and, assuming the related
Required Consents have been obtained prior to the Closing
Date, are transferable and will not be terminated or impaired
or become terminable as a result of consummation of the
Contemplated Transactions.
(b) There has been no environmental investigation, study,
assessment, audit, test, review or other analysis conducted of which
XxXxxx, RCM Holdings, CTCI or any Acquired Entity has knowledge in
relation to any Acquired Entity or any property or facility now or
previously owned, leased or operated by any Acquired Entity that
discloses Environmental Liabilities which has not been delivered by the
Sellers to Buyer at least ten days prior to the date of this Agreement.
Any such environmental investigation, study, assessment, audit, test,
review or other analysis conducted after the date of this Agreement
that discloses Environmental Liabilities will be promptly delivered by
Sellers to Buyer.
(c) For purposes of this Section, the term "Acquired Entity"
shall include any entity which is, in whole or in part, a "predecessor"
of such Acquired Entity as such term is used in any applicable
Environmental Law.
(d) Neither the execution and delivery of the Transaction
Documents nor the closing of the Linden Acquisition and the other
Contemplated Transactions shall result in the provisions of ISRA
becoming applicable with respect to any of "Exxon's Property other than
the Demised Premises (and perhaps a butane supply line extending to the
Demised Premises and the electrical interconnect lines from the
Cogeneration Facility and the ground underlying those lines)" within
the meaning of the Ground Lease between Linden Venture and Exxon
Corporation, dated August 1, 1990, as amended (the "LINDEN GROUND
LEASE") or otherwise result in a default or event of default under the
Linden Ground Lease.
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(e) There shall be no materially misleading statement or
omission in the filings with the NJDEP in connection with the
Contemplated Transactions relating to the Linden Plant.
II.23. Bank Accounts. Section II.23 of the Disclosure Schedule includes
the names and locations of all banks in which any Acquired Entity has an account
or safe deposit box and the names of all persons authorized to draw thereon or
to have access thereto.
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EXHIBIT III
REPRESENTATIONS AND WARRANTIES OF THE MCNAIR GROUP SELLERS
AND THE MINORITY GROUP SELLERS
Each XxXxxx Group Seller and Minority Group Seller severally represents
and warrants to the Buyer Entities and the Parent as of the date of this
Agreement and as of the Closing Date as follows (it being understood that (i)
with respect to representations herein concerning any XxXxxx Group Seller or
Minority Group Seller (including as a Parent Stock Recipient), such
representations are made by each such XxXxxx Group Seller or Minority Group
Seller only with respect to itself and not with respect to the other XxXxxx
Group Sellers or Minority Group Sellers, and (ii) with respect to
representations herein relating to CTLPJV (including in its capacity as a
Minority Group Seller, such representations are made severally only by the
Minority Group Sellers who are partners in CTLPJV):
III.01. Corporate Existence and Power. CTLPJV is a general partnership
duly organized, validly existing under the laws of its jurisdiction of
organization, has all partnership powers required to carry on its business as
now conducted, and is duly qualified to do business and is in good standing in
each jurisdiction where such qualification is necessary, except for
jurisdictions where the failure to be so qualified would not, individually or in
the aggregate, have a Material Adverse Effect. The Minority Group Sellers have
made available to Buyer true and complete copies of the partnership agreement
and any other organizational documents of CTLPJV as currently in effect.
III.02. Authorization. The execution, delivery and performance by each
XxXxxx Group Seller or Minority Group Seller of the Transaction Documents to
which it is a party and the consummation of the Contemplated Transactions to
which it is a party are within its partnership, trust or other powers and have
been duly authorized by all necessary partnership, trust or other action on the
part of entity. Each Transaction Document to which each XxXxxx Group Seller or
Minority Group Seller is a party has been duly and validly executed and
delivered by or on behalf of such party and constitutes a valid and binding
agreement of such party, enforceable against such party in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or equity). There is no vote
or other approval of or with respect to the partners, beneficiaries or owners of
any XxXxxx Group Seller or Minority Group Seller required in connection with
consummation of the Contemplated Transactions, except those that have been
received.
III.03. Investment Representations.
(a) Each Parent Stock Recipient is capable of evaluating the
merits and risks of its investment in the Parent Shares, and has the
capacity to protect its own interests in connection with the
acquisition of the Parent Shares hereunder. Each Parent Stock Recipient
is an "accredited investor" as defined in Rule 501 of Regulation D
promulgated pursuant to the Securities Act. Each Parent Stock Recipient
is taking the Parent Shares for such Seller's own account and not with
a view to or for sale in connection with any distribution of such
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securities as such terms are defined under the Securities Act. Each
Parent Stock Recipient has reviewed Buyer's Annual Report on Form 10-K
for the year ended December 31, 1997, Buyer's Quarterly Reports on Form
10-Q for the quarters ended March 31, 1998 and June 30, 1998, and any
Form 8-K's filed subsequent thereto and prior to the date of this
Agreement and the Proxy Statement relating to Buyer's 1998 Annual
Meeting of Shareholders (the "PARENT SEC REPORTS"). Each Parent Stock
Recipient is familiar with the business and financial condition,
properties, operations and prospects of Buyer, and has had an
opportunity to discuss Buyer's business and financial condition,
properties, operations and prospects with Buyer's management and to ask
questions of officers of Buyer, which questions, if any, were answered
to such Seller's satisfaction.
(b) Each Parent Stock Recipient understands that (i) the
Parent Shares will be "restricted securities" under the applicable
federal securities laws, (ii) that the Securities Act and the rules of
the SEC provide in substance that such shareholder may dispose of the
Parent Shares only pursuant to an effective registration statement
under the Securities Act or in a transaction exempt from the
registration requirements of the Securities Act, and (iii) that, except
as set forth in Exhibit V to this Agreement, neither Parent nor Buyer
has any obligation or intention to register the sale of the Parent
Shares pursuant to the Securities Act, and that, accordingly, such
Seller may be required to bear the economic risk of the investment in
the Parent Shares for a substantial period of time.
III.04. Noncontravention. Except as disclosed in Section III.04 of the
Disclosure Schedule, the execution, delivery and performance by each XxXxxx
Group Seller or Minority Group Seller of the Transaction Documents to which it
is a party and the consummation of the Contemplated Transactions do not and will
not (i) violate the partnership or trust agreement or other organizational
documents of such XxXxxx Group Seller or Minority Group Seller, (ii) to its
knowledge and assuming compliance with the matters described in the last
sentence of Section II.04, violate any Applicable Law, (iii) assuming the
obtaining of all Required Consents, constitute a default under or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of any XxXxxx Group Seller or Minority Group Seller or, to its
knowledge, give rise to a loss of any benefit to which such XxXxxx Group Seller
or Minority Group Seller is entitled under any provision of any agreement or
(iv) result in the creation or imposition of any Lien on any assets of such
XxXxxx Group Seller or Minority Group Seller, other than Permitted Liens, except
for such violations referred to in clause (ii), defaults, rights of termination,
cancellation or acceleration or losses referred to in clause (iii) or
impositions of Liens referred to in clause (iv) that could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect or to
interfere with or conflict with consummation of the Contemplated Transactions.
III.05. Capitalization; Etc.
(a) All of the shares of MESC Common Stock that are owned by
any XxXxxx Group Seller or Minority Group Seller are held by such
holder free and clear of any Lien.
(b) CTLPJV holds its limited partner interest in Linden Ltd.,
which comprises the CTLPJV Initial Linden Interest and the CTLPJV
Remaining Linden Interest, free and clear
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of any Lien. Upon consummation of the Contemplated Transactions, Buyer
Linden LP shall be the record and beneficial owner of the CTLPJV
Initial Linden Interest, free and clear of any Lien and with full right
to admission as a partner. CTLPJV holds its interest in CT Camden (the
CT Camden LP Interest) free and clear of any Lien. Upon consummation of
the Contemplated Transactions, Buyer Camden LP shall be the record and
beneficial owner of the CT Camden LP Interest, free and clear of any
Lien and with full right to admission as a partner. Set forth in the
Section III.05(b) of the Disclosure Schedule are the names of each
owner of any partnership or other equity interest in CTLPJV, in each
case together with the percentage equity ownership held by each such
owner.
(c) Except as set forth in Section III.05(c) of the Disclosure
Schedule, none of the XxXxxx Group Sellers or Minority Group Sellers is
party to, or has any knowledge of, any agreement or arrangement
relating to or affecting the Interests in which such XxXxxx Group
Seller or Minority Group Seller has an interest, including any
agreement relating to the voting of such interests, any right of first
refusal of first offer or any obligation to sell or otherwise transfer
such Interests, or any options, warrants or rights of any kind to
acquire, or any securities that are convertible into or exercisable or
exchangeable for, any Interests.
III.06. Consents. Section III.06 of the Disclosure Schedule sets forth
any Required Consent required to be obtained by or with respect to any XxXxxx
Group Seller or Minority Group Seller as a result of the execution, delivery and
performance of the Transaction Documents or the consummation or the Contemplated
Transactions. All of such consents have been obtained.
III.07. Finders' Fees. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of the XxXxxx Group Sellers or Minority Group Sellers, or any of their
respective Affiliates, who might be entitled to any fee or commission from
Parent, any Buyer Entity or any Acquired Entity in connection with the
Contemplated Transactions.
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EXHIBIT IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER ENTITIES
The Buyer Entities jointly and severally represent and warrant to the
Sellers as of the date of this Agreement (except that, with respect to all
representations and warranties set forth herein concerning any Buyer Entity that
has not yet been formed and made a party to this Agreement, such representations
and warranties are not made as of the date of this Agreement but are made as of
the date that such Buyer Entity becomes a party to this Agreement pursuant to
Section 13.05) and as of the Closing Date that:
IV.01. Corporate Existence and Power; Ownership. Each of the Buyer
Entities and Parent is a corporation or limited liability company duly
incorporated or organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization and has all corporate or
other similar powers required to carry on its business as now conducted. Buyer
is a wholly owned subsidiary of Parent. Buyer Acquisition is an Affiliate of
Buyer, and Buyer Camden GP, Buyer Camden LP, Buyer Linden GP and Buyer Linden LP
are each wholly owned direct or indirect subsidiaries of Buyer Acquisition. Each
of Buyer Acquisition, Buyer Camden GP, Buyer Camden LP, Buyer Linden GP and
Buyer Linden LP have not conducted any material operations except with respect
to the transactions contemplated hereby.
IV.02. Authorization. The execution, delivery and performance by Parent
and each Buyer Entity of the Transaction Documents to which it is a party and
the consummation of the Contemplated Transactions are within the corporate or
other similar powers of such entity and have been duly authorized by all
necessary corporate or other similar action on the part of such entity. Each
Transaction Document to which Parent or any Buyer Entity is a party has been
duly and validly executed and delivered by such entity and constitutes a valid
and binding agreement of such entity, enforceable against such entity in
accordance with its terms (except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or equity)).
IV.03. Noncontravention. The execution, delivery and performance by
Parent and each Buyer Entity of the Transaction Documents to which such entity
is a party and the consummation of the Contemplated Transactions do not and will
not (i) violate the certificate of incorporation or bylaws or other
organizational documents of such entity or (ii) assuming compliance with the
matters referred to in Section IV.02, violate any Applicable Law. Except as
provided in the following sentence, and assuming that each Operating Facility
is, and since the commencement of power generation at such Operating Facility,
has continuously been, a "qualifying cogeneration facility" within the meaning
of the PURPA Requirements, the execution, delivery and performance by Parent and
each Buyer Entity of the Transaction Documents to which such entity is a party
and the consummation of the Contemplated Transactions require no material action
by or in respect of, or material filing with, any Governmental Authority other
than compliance with any applicable requirements of the HSR Act and ISRA. The
following filings must be submitted to the FERC as promptly as practicable
following the consummation of the Contemplated Transactions: (1) notices
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of self-certification for the Bayonne Plant, the Camden Plant and the Linden
Plant, pursuant to 18 C.F.R. Section 292.207; (2) filings required under 18
C.F.R. Part 46; and (3) notifications of changes in facts regarding market-rate
authority granted by FERC to certain Affiliates of the Buyer Entities.
IV.04. Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Buyer, threatened against or
affecting, Parent or any Buyer Entity before any Governmental Authority or
pursuant to any arbitration agreement, which in any manner challenges or seeks
to prevent, enjoin, alter or materially delay consummation of the Contemplated
Transactions.
IV.05. Finders' Fees. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of Parent or any Buyer Entity who might be entitled to any fee or commission in
connection with the Contemplated Transactions.
IV.06. Parent Shares. The Parent Shares to be issued pursuant to this
Agreement have been duly authorized for issuance and, when they have been issued
in accordance with the terms of this Agreement, will be validly issued, fully
paid and nonassessable.
IV.07 Parent SEC Reports. Parent has, since December 31, 1997, filed
with the SEC all reports on forms 10-K, 10-Q or 8-K required to be filed by it
pursuant to the Securities Exchange Act of 1934. The Parent SEC Reports, at the
time they were filed (including at the time of filing of any amendments
thereto), (i) complied as to form in all material respects with the rules and
regulations of the SEC under the Securities Exchange Act of 1934 and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
IV.08 QF Status. Provided that each Operating Facility is as of the
Closing Date, and since the commencement of power generation at each Operating
Facility has continuously been, a "qualifying cogeneration facility" within the
meaning of the PURPA Requirements, consummation of the Contemplated Transactions
by the Buyer Entities and Parent will not result in the loss of such status for
such Operating Facility.
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EXHIBIT V
PROVISIONS REGARDING PARENT COMMON STOCK
TO BE RECEIVED BY SELLERS
V.01 Definitions. The following terms, as used in this Exhibit V, have
the following meanings:
"REGISTRATION EXPENSES" means all expenses incident to
Parent's performance of or compliance with Exhibit V, including,
without limitation, all registration and filing fees, messenger and
delivery expenses incurred by Parent, internal expenses incurred by
Parent (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), all
expenses relating to the preparation, printing, distribution and
reproduction of the registration statement and the prospectus, the fees
and expenses incurred in connection with the listing of the shares of
Parent Common Stock on any securities exchange, and fees and
disbursements of counsel for Parent and of its independent public
accountants; provided, however, that the fees and disbursements of
counsel for the Parent Stock Recipients who are selling Parent Shares
pursuant to the Resale Registration Statement shall not be considered
"Registration Expenses."
"REGISTRATION INDEMNIFIED PARTY" means any Person asserting a
claim for indemnification under Section V.08.
"REGISTRATION INDEMNIFYING PARTY" means any Person against
whom a claim for indemnification is asserted under Section V.08.
"RESALE REGISTRATION STATEMENT" has the meaning set forth in
Section V.04(a).
"RESTRICTED STOCK" means all Parent Shares, all shares of
Parent Common Stock evidenced by certificates delivered upon reissue or
transfer of Parent Shares (other than certificates representing shares
sold pursuant to the Resale Registration Statement or shares sold or
disposed of in accordance with the terms of this Agreement which may,
in the opinion of counsel for Parent, after such sale or disposition be
transferred by the transferee thereof without registration under the
Securities Act) and all shares of Parent Common Stock evidenced by
certificates delivered in connection with stock dividends and stock
splits attributable to Parent Shares.
V.02 Issuance of Shares; Restrictions and Restrictive Legend. On the
Closing Date, certificates representing the Parent Shares shall be delivered to
the applicable Sellers pursuant to the Linden Acquisition and in accordance with
the terms of this Exhibit V. All certificates representing Parent Shares issued
hereunder shall initially be Restricted Stock. The Parent Stock Recipients agree
that, during the time that such stock is Restricted Stock, such stock shall be
subject to appropriate stop-transfer instructions to be given by Parent to its
transfer agents and shall have endorsed thereon a legend substantially as
follows:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER ANY APPLICABLE STATE LAW, AND MAY NOT BE TRANSFERRED WITHOUT
REGISTRATION UNDER THE ACT OR SUCH APPLICABLE STATE LAW UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE THEREUNDER.
Such Parent Shares shall cease to be Restricted Stock on the date two years
after their date of issuance, except for such shares then held by Affiliates of
Parent which shall cease to be Restricted Stock after the later of two years
after the date of their issuance and three months after such person ceases to be
an Affiliate of Parent. At any time that Parent Shares are not Restricted Stock
and in connection with a sale of such shares pursuant to the Resale Registration
Statement, stop transfer instructions given pursuant to this Section V.02 shall
be rescinded and the legend endorsed on the certificates representing such
shares shall be removed upon the presentation of such certificate to the
transfer agent for such purpose.
V.03 Plan of Distribution. In order to provide liquidity to Parent
Stock Recipients receiving Parent Shares in connection with the transactions
contemplated by this Agreement, Parent has agreed to file the Resale
Registration Statement. Such Parent Stock Recipients acknowledge that Parent
will be required in the Resale Registration Statement to provide a description
of the methods and plans by which such Parent Stock Recipients may distribute
and resell the Parent Shares acquired pursuant to this Agreement. Accordingly,
such Parent Stock Recipients have advised Parent, acknowledging that Parent will
rely thereon in preparation of the Resale Registration Statement, that Parent
Shares may be sold by or on behalf of such Parent Stock Recipients through or to
brokers or dealers, or directly to investors pursuant to the prospectus
contained in the Resale Registration Statement (or another prospectus contained
in and forming a part of an effective registration statement under the
Securities Act) or in transactions that are exempt from the requirements of
registration under the Securities Act, at a fixed price or prices, which may be
changed from time to time, at market prices prevailing at the time of such sale,
at prices related to such market prices or at negotiated prices, and in
connection therewith distributors' or sellers' commissions may be paid or
allowed. Brokers or dealers may act as agents for such Parent Stock Recipients,
or may purchase shares from such Parent Stock Recipients as principal and
thereafter resell such shares from time to time in or through transactions or
distributions (which may involve crosses and block transactions) on the New York
Stock Exchange, the London Stock Exchange or other United States or foreign
stock exchanges where trading privileges are available, in the over-the-counter
market, in private transactions or in some combination of the foregoing. Each
such Parent Stock Recipient agrees that if Parent Shares are sold through
brokers or dealers acting as such, only one broker or dealer at a time will be
used by such Parent Stock Recipient.
V.04 Registration Procedures. Parent will, subject to the provisions of
this Section V.04 and of Section V.05, use all reasonable efforts to effect the
registration and the sale of the Parent Shares by Parent Stock Recipients under
the Resale Registration Statement in accordance with the intended method of
disposition thereof described in Section V.03. In connection therewith, Parent
will:
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(a) prepare and file with the SEC within 60 days of the
Closing Date (the "REQUIRED FILING DATE"), a "shelf" registration
statement on Form S-3 (or other appropriate form) pursuant to Rule 415
under the Securities Act providing for the resale from time to time of
the Parent Shares by the Parent Stock Recipients in accordance with the
intended method of distribution thereof described in Section V.03 (the
"RESALE REGISTRATION STATEMENT"), and shall use its reasonable efforts
to cause such registration statement to become effective; provided,
that Parent may defer the filing of the Resale Registration Statement
until a date not later than 60 days after the Required Filing Date if
(i) Parent or its Subsidiaries are engaged in confidential negotiations
or other confidential business activities, disclosure of which would be
required in such registration statement (but would not be required if
such registration statement were not filed), or (ii) prior to filing
the registration statement, the Parent has determined to effect a
registered underwritten public offering of securities and has taken
substantial steps to effect such offering;
(b) prepare and file with the SEC such amendments and
supplements to such Resale Registration Statement and the prospectus
contained therein as may be necessary to keep such Resale Registration
Statement effective for a period ending on the first anniversary of the
Closing Date or such shorter period as shall terminate when all Parent
Shares covered by such registration statement have been sold;
(c) as soon as reasonably practicable, furnish to each Parent
Stock Recipient, prior to filing the Resale Registration Statement,
copies of such registration statement as proposed to be filed, and
thereafter furnish to such Parent Stock Recipient such number of copies
of such Resale Registration Statement, each amendment and supplement
thereto (in each case, if specified by such Parent Stock Recipient,
including all exhibits thereto), the prospectus included in such Resale
Registration Statement (including each preliminary prospectus) and such
other documents as such Parent Stock Recipient may reasonably request
in order to facilitate the disposition of Parent Shares owned by such
Parent Stock Recipient;
(d) promptly notify the Parent Stock Recipients at any time
when a prospectus relating thereto is required to be delivered under
the Securities Act within the period that Parent is required to keep
the Resale Registration Statement effective of the happening of any
event as a result of which the prospectus included in such Resale
Registration Statement (as then in effect) contains an untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances then existing, not misleading, and Parent will
promptly prepare and file a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such Parent
Shares, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances then existing, not misleading; provided, however, that
notwithstanding the foregoing, if Parent determines in its good faith
judgment that the filing of any supplement or amendment to the Resale
Registration Statement to keep such Resale Registration Statement
available for use by the Parent Stock Recipients for resales of Parent
Shares would require the disclosure of material information
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that Parent has a bona fide business purpose for preserving as
confidential, then upon written notice of such determination by Parent
to each Parent Stock Recipient, the obligation of Parent to supplement
or amend the Resale Registration Statement will be suspended until
Parent notifies the Parent Stock Recipients in writing that the reasons
for suspension of such obligations on the part of Parent no longer
exist and Parent amends or supplements the Resale Registration
Statement as may be required; provided that the aggregate number of
days (whether or not consecutive) during which Parent may delay the
filing of any such supplement or amendment shall in no event exceed 60
days;
(e) promptly notify each Parent Stock Recipient of any stop
order issued by the SEC and take all reasonable actions to obtain the
removal of any such stop order; and
(f) use its reasonable efforts to cause all such Parent Shares
to be listed on the New York Stock Exchange (or the principal stock
exchange on which the Parent Shares are then listed).
V.05 Conditions and Limitations. Parent's obligations under Section
V.04 shall be subject to the following limitations:
(a) Parent shall not be required to file more than one Resale
Registration Statement pursuant to this Agreement.
(b) The Resale Registration Statement may, at Parent's option,
cover securities other than the Parent Shares.
(c) Parent shall have received the information and documents
specified in Section V.06 and each Parent Stock Recipient shall have
observed or performed its other covenants and conditions contained in
such section; provided that the failure of a Parent Stock Recipient to
have observed and performed such other covenants and conditions shall
not excuse Parent's obligations hereunder with respect to Parent Stock
Recipients who have so observed and performed such covenants and
conditions.
(d) Each Parent Stock Recipient agrees that, upon receipt of
any notice from Parent of the happening of any event of the kind
described in Section V.04(d), such Parent Stock Recipient will
forthwith discontinue disposition of Parent Shares until such Parent
Stock Recipient's receipt of the copies of the supplemented or amended
prospectus contemplated by Section V.04(d) hereof, and, if so directed
by Parent, such Parent Stock Recipient will deliver to Parent (at
Parent's expense) all copies, other than permanent file copies then in
such Parent Stock Recipient's possession, of the prospectus covering
such Parent Shares at the time of receipt of such notice.
(e) Each Parent Stock Recipient agrees that, upon receipt of
any notice from Parent stating that Parent has determined to effect a
registered underwritten public offering of securities and has taken
substantial steps to effect such offering, such Parent Stock Recipient
will forthwith discontinue disposition of Parent Shares until such
Parent Stock
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Recipient's receipt of notice from the Parent that such dispositions
may be continued, provided that the aggregate number of days (whether
or not consecutive) during which Parent may suspend use of the Resale
Registration Statement pursuant to this Section shall in no event
exceed 60 days.
(f) Notwithstanding anything to the contrary in this Article
V, any notice required to be given by Parent to any Parent Stock
Recipient shall be deemed given for the purposes hereof if given to the
Sellers' Representatives.
V.06 Information from and Certain Covenants of Parent Stock Recipients.
Parent may require the Parent Stock Recipients to furnish to Parent such
information regarding the Parent Stock Recipients and the distribution of such
Parent Shares as Parent may from time to time reasonably request in writing to
carry out its obligations as to the Resale Registration Statement. Each Parent
Stock Recipient agrees to notify Parent as promptly as practicable of any
inaccuracy or change in information previously furnished by such Parent Stock
Recipient to Parent or of the occurrence of any event in either case as a result
of which any prospectus relating to such registration contains an untrue
statement of a material fact regarding such Parent Stock Recipient or the
distribution of such Parent Shares or omits to state any material fact regarding
such Parent Stock Recipient or the distribution of such Parent Shares required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing, and promptly to furnish to Parent
any additional information required to correct and update any previously
furnished information or required so that such prospectus shall not contain,
with respect to such Parent Stock Recipient or the distribution of such Parent
Shares, an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances then existing, not misleading. Each Parent Stock
Recipient shall execute all consents, powers of attorney and other documents
reasonably required to be signed by it in order to cause such registration
statement to become effective. Each Parent Stock Recipient covenants that, in
disposing of its Parent Shares, it will comply with all applicable securities
laws, including the prospectus delivery requirements under the Securities Act.
V.07 Registration Expenses. All Registration Expenses will be borne by
Parent. Any broker's fee, underwriting discount and commission applicable to the
sale of Parent Shares shall be borne by the Parent Stock Recipient of the Parent
Shares to which such broker's fee, discount or commission relates, and each
Parent Stock Recipient shall be responsible for all fees and expenses incurred
by such Parent Stock Recipient in connection with any registration under this
Exhibit V other than Registration Expenses.
V.08 Indemnification.
(a) Indemnification by Parent. Parent agrees to indemnify and
hold harmless each Parent Stock Recipient who has sold Parent Shares
pursuant to the Resale Registration Statement and, if applicable, its
officers, directors and agents and each Person, if any, who controls
such Parent Stock Recipient within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and against
any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and
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defense) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Resale
Registration Statement or the final prospectus contained therein
relating to the Parent Shares or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or expenses arise
out of, or are based upon, any such untrue statement or omission or
allegation thereof based upon information furnished in writing to
Parent by such Parent Stock Recipient or on such Parent Stock
Recipient's behalf expressly for use therein.
(b) Indemnification by Parent Stock Recipients. Each Parent
Stock Recipient agrees to indemnify and hold harmless Parent, its
officers, directors and agents and each Person, if any, who controls
Parent within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs
of investigation and defense) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact by such Parent
Stock Recipient contained in the Resale Registration Statement or the
prospectus contained therein and relating to the Parent Shares or in
any amendment or supplement thereto, or arising out of or based upon
any omission or alleged omission by such Parent Stock Recipient to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that
such losses, claims, damages, liabilities or expenses arise out of, or
are based upon, any such untrue statement or omission or allegation
thereof based upon information furnished in writing to Parent by such
Parent Stock Recipient or on such Parent Stock Recipient's behalf
expressly for use therein.
(c) Conduct of Indemnification Proceedings. If any action or
proceeding (including any governmental investigation) shall be brought
or asserted against any Registration Indemnified Party in respect of
which indemnity may be sought from a Registration Indemnifying Party,
the Registration Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such
Registration Indemnified Party, and shall assume the payment of all
expenses. Such Registration Indemnified Party shall have the right to
employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Registration Indemnified Party unless (i) the
Registration Indemnifying Party has agreed to pay such fees and
expenses, or (ii) the Registration Indemnifying Party shall have failed
to assume the defense of such action or proceeding or employ counsel
reasonably satisfactory to such Registration Indemnified Party or (iii)
the named parties to any such action or proceeding (including any
impleaded parties) include both such Registration Indemnified Party and
such Registration Indemnifying Party, and such Registration Indemnified
Party shall have been advised by counsel that there may be one or more
legal defenses available to such Registration Indemnified Party which
are different from or additional to those available to the Registration
Indemnifying Party (in which case if such Registration Indemnified
Party notifies the Registration Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Registration
Indemnifying Party, the Registration Indemnifying Party shall not have
the right to assume the defense of
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such action or proceeding on behalf of such Registration Indemnified
Party, it being understood, however, that the Registration Indemnifying
Party shall not, in connection with any one such action or proceeding
or separate but substantially similar or related actions or proceedings
in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one
separate firm of attorneys at any time for such Registration
Indemnified Party, which firm shall be designated in writing by such
Registration Indemnified Party). The Registration Indemnifying Party
shall not be liable for any settlement of any such action or proceeding
effected without its written consent, not to be unreasonably withheld,
but if settled with its written consent, or if there is a final
judgment for the plaintiff in any such action or proceeding, the
Registration Indemnifying Party agrees to indemnify and hold harmless
such Registration Indemnified Party from and against any loss or
liability (to the extent stated above) by reason of such settlement or
judgment.
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EXHIBIT VI
TAX MATTERS
VI.01. Tax Definitions. The following terms, as used in this Agreement,
have the following meanings:
"CODE" means the Internal Revenue Code of 1986, as amended.
"MESC PRE-CLOSING TAXES" means (i) any federal income Taxes imposed
with respect to the consolidated federal income Tax Return of the "affiliated
group" (as such term is defined in Section 1504 of the Code) of which MESC is
the common parent (within the meaning of Section 1504 of the Code) for the
taxable year ended December 31, 1995 (the "1995 Federal Consolidated Return")
and any prior taxable years, as a result of a Tax Audit, and (ii) any state or
local income Taxes imposed with respect to any separate or consolidated,
combined, affiliated or unitary state or local income Tax Return of, or which
includes, MESC and/or NJ Inc. for the taxable year ended December 31, 1995
(each, a "1995 State Income Tax Return") as a result of any adjustments thereto
resulting from a Tax Audit.
"PARTNERSHIP ACQUIRED ENTITIES" means the Acquired Entities other than
MESC and NJ Inc.
"PRE-CLOSING TAX PERIOD" means (i) any Tax period ending on or before
the Closing Date and (ii) with respect to a Tax period that commences on or
before but ends after the Closing Date, the portion of such period up to and
including the Closing Date.
"PROPERTY TAXES" is defined in Section VI.03.
"TAX" means (i) all taxes or other levies imposed by any Governmental
Authority, domestic or foreign (a "TAXING AUTHORITY") including, without
limitation, any net income, alternative or add-on minimum tax, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, license, registration, recording, documentary, conveyancing, gains,
withholding on amounts paid to or by the Business, the Sellers or the Acquired
Entities, payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom duty or other tax or
other like assessment, together with any interest, penalty, addition to tax or
additional amount imposed by any Taxing Authority, or (ii) liability for the
payment of any amounts of the type described in (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group or being a
party to any agreement under which liability is determined or taken account with
reference to the liability of any other Person; or (iii) liability for the
payment of any amounts of the type described in (i) as a result of any express
or implied obligation to indemnify any other Person or as a result of being
party to any other arrangement or agreement.
"TAX AUDIT" means an audit of the 1995 Federal Consolidated Return or
any prior tax return, written notice of the commencement of which is received by
MESC from the Internal Revenue Service on or before September 15, 1999, and the
commencement of which was not the result of, or caused by, any action taken by
any of the Buyer Entities or their Affiliates.
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"TAX ASSET" means any net operating loss, net capital loss, investment
tax credit, foreign tax credit, charitable deduction or any other credit or tax
attribute which could reduce Taxes (including without limitation deductions and
credits related to alternative minimum Taxes).
"TAX SHARING OR INDEMNITY AGREEMENT" means all Tax sharing or Tax
indemnity agreements or arrangements (whether or not written) created or entered
into before the Closing and binding any of the Acquired Entities, including
without limitation any agreements or arrangements which (i) afford any other
person the benefit of any Tax Asset of any of the Acquired Entities; (ii)
require any Acquired Entities to take into account any income, revenues,
receipts, gain, or any Tax items of any other person in determining the Acquired
Entities' Tax liability; or (iii) require any Acquired Entities to make any
payment to or otherwise indemnify any other person in respect of any Tax.
"TAX RETURNS" means all Tax returns, statements, reports and forms
(including estimated tax or information returns and reports) required to be
filed with any Taxing Authority with respect to any Pre-Closing Tax Period.
"TRANSFER TAXES" is defined in Section VI.03.
VI.02. Tax Matters. XxXxxx hereby represents and warrants to the Buyer
Entities and the Parent as of the date of this Agreement and as of the Closing
Date that:
(a) Except as set forth in Section VI.02 (a) of the Disclosure
Schedule, (i) all material Tax Returns of or with respect to any Tax
which is required to be filed on or before the Closing Date by or with
respect to any Acquired Entity have been or will be duly and timely
filed, (ii) all items of income, gain, loss, deduction and credit or
other items required to be included in each such Tax Return have been
or will be so included and all information provided in each such Tax
Return is true, correct and complete in all material respects, (iii)
all material Taxes which have become or will become due with respect to
the period covered by each such Tax Return have been or will be timely
paid in full, and (iv) all withholding Tax requirements imposed on or
with respect to any Acquired Entity have been or will be satisfied in
full in all material respects.
(b) Except as set forth in Section VI.02(b) of the Disclosure
Schedule there is not in force any extension of time with respect to
the due date for the filing of any Tax Return of or with respect to any
Acquired Entity or any waiver or agreement for any extension of time
for the assessment or payment of any Tax of or with respect to any
Acquired Entity.
(c) The total amounts set up as liabilities for current and
deferred Taxes in the Latest Balance Sheets are sufficient to cover the
payment of all Taxes, whether or not assessed or disputed, which are,
or are hereafter found to be, or to have been, due by or with respect
to any Acquired Entity up to and through the periods covered thereby.
(d) Except as set forth in Section VI.02(d) of the Disclosure
Schedule, no Acquired Entity will be required to include any amount in
income for any taxable period
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beginning after December 31, 1997 as a result of a change in accounting
method occurring on or before the Closing Date or pursuant to any
agreement with any Tax authority executed on or before the Closing
Date.
(e) Since formation each of the Partnership Acquired Entities
has properly been classified as a partnership for federal income tax
purposes and no position has been taken by any of the Sellers or any
Acquired Entity inconsistent with such classification.
(f) Section VI.02(f) of the Disclosure Schedule contains a
list of all jurisdictions (whether foreign or domestic) to which any
material Tax is properly payable by any Acquired Entity.
(g) There is no contract, plan or arrangement (written or
otherwise) covering any employee or former employee of any Acquired
Entity or business of a Acquired Entity that, individually or
collectively, is likely to give rise to the payment by any Buyer Entity
or the Acquired Entities of any amount that would not be deductible
under Section 280G of the Code.
(h) There is no claim, audit, action, suit, proceeding, or
investigation now pending or threatened in writing against or with
respect to any Acquired Entity or business of a Acquired Entity in
respect of any Tax.
(i) Section VI.02(i) of the Disclosure Schedule sets forth all
requests for rulings or determinations in respect of any Tax or Tax
Asset relating to any Acquired Entity or business of a Acquired Entity
that have been filed with any Taxing Authority.
(j) None of the property of any Acquired Entity or used in the
business of an Acquired Entity is subject to a safe-harbor lease
(pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954 as
in effect after the Economic Recovery Tax Act of 1981 and before the
Tax Reform Act of 1986) or is "tax-exempt use property" (within the
meaning of Section 168(h) of the Code) or "tax-exempt bond financed
property" (within the meaning of Section 168(g)(5) of the Code).
(k) None of the Acquired Entities has entered into any
agreement or consent pursuant to Section 341(f) of the Code.
(l) Except as set forth in Section VI.02 (d) of the Disclosure
Schedule, none of the Acquired Entities (i) has been a member of an
affiliated, consolidated, combined or unitary group or (ii) has entered
into or has been subject to any Tax Sharing or Indemnity Agreement
which imposes any obligation on the Buyer Entities or any Acquired
Entity after the Closing.
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VI.03 Tax Returns, Access to Information and Pre-Closing Acts.
(a) With respect to each Tax Return that is required to be
filed with respect to a Tax period ending before the Closing Date for,
by or with respect to any Acquired Entity, Sellers shall cause such Tax
Returns to be prepared and timely filed and shall cause to be included
in such Tax Return all items of income, gain, loss, deduction and
credits or other items required to be included therein. With respect to
each Tax Return that is required to be filed after the Closing Date
for, by or with respect to any Acquired Entity with respect to a Tax
period ending on or after the Closing Date, Buyer shall cause such Tax
Return to be prepared and timely filed, and shall cause to be included
in such Tax Return all items of income, gain, loss, deduction and
credit or other items required to be included therein. Any partnership
Tax Return covering a taxable period during which the Closing occurs
shall allocate income, gains, losses, deductions and credits between
the transferors and transferees based upon an interim closing of the
partnership's books.
(b) Sellers shall grant to the Buyer (or its designees) access
at all reasonable times to all of the information, books and records
relating to any Acquired Entity within the possession of Sellers
(including workpapers and correspondence with taxing authorities), and
shall afford Buyer (or its designees) the right (at Buyer's expense) to
take extracts therefrom and to make copies thereof, to the extent
reasonably necessary to permit Buyer (or its designees) to prepare Tax
Returns, to conduct negotiations with Tax authorities, and to implement
the provisions of, or to investigate or defend any claims between the
parties arising under, the Transaction Documents.
(c) Buyer shall grant or cause the Acquired Entities to grant
to Sellers (or its designees) access at all reasonable times to all of
the information, books and records relating to any Acquired Entity
within the possession of Buyer or any Acquired Entity (including
workpapers and correspondence with taxing authorities), and shall
afford Sellers (or their designees) the right (at Sellers' expense) to
take extracts therefrom and to make copies thereof, to the extent
reasonably necessary to permit Sellers' (or its designees) to prepare
Tax Returns, to conduct negotiations with Tax authorities, and to
implement the provisions of, or to investigate or defend any claims
between the parties arising under, the Transaction Documents.
(d) Each of the parties hereto will preserve and retain all
schedules, workpapers and other documents relating to any Tax Returns
of or with respect to any Acquired Entity or to any claims, audits or
other proceedings affecting any Acquired Entity until the expiration of
the statute of limitations (including extensions) applicable to the
taxable period to which such documents relate or until the final
determination of any controversy with respect to such taxable period,
and until the final determination of any payments that may be required
with respect to such taxable period under this Agreement.
(e) Without the prior written consent of Buyer, neither the
Sellers nor Sellers' Affiliates nor the Acquired Entities shall make or
change any tax election, change an annual tax accounting period, adopt
or change any method of tax accounting, file any amended Tax
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Return, enter into any closing agreement, settle any Tax claim or
assessment, surrender any right to claim a Tax refund, consent to any
extension or waiver of the limitations period applicable to any Tax
claim or assessment or take any other action or omit to take any other
action, if any such action or omission would have the effect of
increasing the Tax liability or reducing any Tax Asset of any Acquired
Entity after Closing.
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