U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report: September 22, 1999
COMMISSION FILE: 0-14846
BONNEVILLE PACIFIC CORPORATION
(Exact name of registrant, as specified in its charter)
Delaware 87-0363215
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
50 West Broadway, Suite 300
Salt Lake City, UT 84101
(Address of principal executive offices)
Registrant's telephone number, including area code: (801) 363-2520
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT. The Registrant has entered into
a definitive Agreement and Plan of Merger, which if closed
will result in a change in the control of the Registrant. The
closing of the Agreement and Plan of Merger is subject to several
conditions, including the approval of the registrant's
shareholders.
ITEM 2. ACQUISITION OF DISPOSITION OF ASSETS.
Not Applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not Applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANTS.
Not Applicable.
ITEM 5. OTHER EVENTS.
Attached hereto as exhibit 99, is a copy of the Press Release relating
to the Agreement and Plan of Merger described in Item 1. Also attached
hereto as Exhibit 99.1, is a copy of the definitive Agreement and Plan
of Merger.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not Applicable.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial statements of business acquired.
Not Applicable.
(b) Pro forma financial information.
Not Applicable.
(c) Exhibits.
The following exhibits are filed herein. The exhibit
numbers correspond wih Item 5 of Regulation S-K.
Exhibit No. Description
----------- -----------
EX-99 PRESS RELEASE, DATED 09/20/99
EX-99.1 AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 17, 1999
BY AND BETWEEN
BONNEVILLE PACIFIC CORPORATION
AS SELLER,
AND
EL PASO ENERGY CORPORATION,
AS BUYER
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signe on its behalf by6 the
undersigned hereunto duly authorized.
September 22, 1999 BONNEVILLE PACIFIC CORPORATION
________________________________
BY: /s/ Clark M. Mower
Clark M. Mower, President
Principal Executive Officer
________________________________
BY: /s/ R. Stephen Blackham
R. Stephen Blackham
Principal Financial and Accounting
Officer
EL PASO ENERGY CORPORATION ANNOUNCES THE ACQUISITION OF
BONNEVILLE PACIFIC CORPORATION
El Paso Energy and Bonneville Pacific Corporation (OTCBB:BPCO) announced
today that they have entered into an Agreement and Plan of Merger whereby El
Paso will acquire all outstanding shares of Bonneville Pacific Corporation. The
transaction, valued at approximately $63 million, subject to certain
adjustments, is in addition to the value to be realized by the shareholders of
Bonneville Pacific as a result of the company's previously annouced sale of
Bonneville Fuels Corporation. The transaction is expected to close by year-end
or early in the first quarter of 2000, subject to approval by Bonneville
Pacific's stockholders and appurtenant regulatory authorities.
El Paso will close on this transaction subsequent to the sale of Bonneville
Fuels Corporation to CEC Resources. In an August 11, 1999 press release, CEC
Resources and Bonneville Fuels Corporation announced that CEC Resources has
entered into an agreement to acquire all of the stock of Bonneville Fuels
Corporation, an oil and gas exploration and production company located in
Denver, Colorado and wholly owned subsidiary of Bonneville Pacific Corporation.
The purchase price is approximately $24 million in cash, subject to certain
adjustments, plus CEC Resources will assume the debt that remains with
Bonneville Fuels. The Fuels transaction is scheduled to close by October 31,
1999.
The principal business segments of Bonneville Pacific Corporation being
acquired by El Paso are a 50-percent interest, through Bonneville Nevada
Corporation, of Nevada Cogeneration Associates #1 (Garnet Valley), an
85-megawatt power plant that sells power to Nevada Power Company under a
long-term contract, and Bonneville Pacific Services, a wholly owned subsidiary,
which provides operations and maintenance services under long term contract to
the Garnet Valley and Black Mountain cogeneration facilities in the Las Vegas
area.
The Bonneville Pacific acquisition represents our first entry into the
Nevada power market, one of the fastest growing regions in the country, said
Greg Jenkins, president of El Paso Merchant Energy. This continues the
expansion of our power generation platform and brings significant net present
value. We anticipate further expanding our presence in Western United States
power generation projects in the near future.
Although management believes that the Agreement and Plan of Merger will be
completed, there can be no assurance that the transaction will be closed. The
Agreement and Plan of Merger dated September 17, 1999, is attached herein as
Exhibit-99.1.
AGREEMENT AND PLAN OF MERGER
among:
EL PASO ENERGY CORPORATION,
a Delaware corporation;
BPC ACQUISITION CORP.,
a Delaware corporation;
and
BONNEVILLE PACIFIC CORPORATION,
a Delaware corporation
---------------------------
Dated as of September 17, 1999
---------------------------
TABLE OF CONTENTS
SECTION 1.
DESCRIPTION OF THE TRANSACTION
1.1 Merger of Merger Sub into the Company
1.2 Effect of the Merger
1.3 Closing; Effective Time
1.4 Certificate of Incorporation and Bylaws; Directors
and Officers
1.5 Merger Consideration; Conversion of Shares
1.6 Stock Options
1.7 Closing of the Company's Transfer Books
1.8 Exchange of Certificates
1.9 Dissenting Shares
1.10 Further Action
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1 Due Organization, Etc.
2.2 Governing Documents; Records
2.3 Capitalization, Etc
2.4 Financial Statements
2.5 Absence of Changes
2.6 Property
2.7 Receivables
2.8 Contracts
2.9 Liabilities
2.10 Compliance with Legal Requirements to the Knowledge
of the Company
2.11 Governmental Authorizations
2.12 Tax Matters
2.13 Employee and Labor Matters; Benefit Plans
2.14 Environmental Matters
2.15 Insurance
2.16 Related Party Transactions
2.17 Legal Proceedings; Orders
2.18 Authority; Binding Nature of Agreement
2.19 Non-contravention; Consents
2.20 SEC Report
2.21 Advisors' and Brokers' Fees
2.22 Board Action; Vote Required
2.23 Year 2000
2.24 Proxy Statement
2.25 Opinion of Company's Advisor
2.26 Bankruptcy Documentation
2.27 Public Utility Holding Company Act
2.28 Investment Company Act
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB
3.1 Due Organization, Etc
3.2 Authority; Binding Nature of Agreement
3.3 Non-contravention; Consents
3.4 Adequate Financing
SECTION 4. COVENANTS OF THE PARTIES.
4.1 Access and Investigation
4.2 Operation of Business by Company
4.3 Notification; Updates to Company Disclosure Schedule
4.4 Filings And Consents
4.5 Proxy Statement; Company Stockholders' Meeting
4.6 No Solicitation
4.7 Public Announcements
4.8 Regulatory Approvals
4.9 Employee Matters
4.10 Shareholders Representative
4.11 Company Bankruptcy Stock Certificates
4.12 Y2K Testing Access
SECTION 5. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT
AND MERGER SUB
5.1 Accuracy of Representations
5.2 Performance of Covenants
5.3 Stockholder Approval
5.4 Consents
5.5 Agreements and Documents
5.6 No Restraints
5.7 No Legal Proceedings
5.8 HSR Act
5.9 Completion of Bonneville Fuels Transaction
5.10 382(1)(5) Election; NOL Carryback Waiver
5.11 Mexican Facility
5.12 NOL Verification
5.13 Qualifying Facility Status
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
6.1 Accuracy of Representations
6.2 Performance of Covenants
6.3 Stockholder Approval
6.4 Agreements and Documents
6.5 No Restraints
6.6 HSR Act
6.7 Completion of Bonneville Fuels Transaction
SECTION 7. TERMINATION
7.1 Termination Events
7.2 Termination Procedures
7.3 Effect of Termination
SECTION 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
8.1 Survival of Representations, Etc
SECTION 9. GENERAL PROVISIONS
9.1 Further Assurances
9.2 Fees and Expenses
9.3 Notices
9.4 Headings
9.5 Counterparts
9.6 Governing Law
9.7 No Assignment; Binding Effect
9.8 Waiver
9.9 Amendments
9.10 Severability
9.11 Parties in Interest
9.12 Entire Agreement
9.13 Construction
EXHIBITS
Exhibit A - Certain definitions
Exhibit B - Certificate of Incorporation of Surviving Corporation
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered into as
of September 17, 1999, by and among: El Paso Energy Corporation, a Delaware
corporation ("Parent"); BPC ACQUISITION CORP., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"); and BONNEVILLE PACIFIC
CORPORATION, a Delaware corporation (the "Company"). Certain capitalized terms
used in this Agreement are defined in Exhibit A.
RECITALS
Parent, Merger Sub and the Company intend to effect a merger of Merger Sub
into the Company in accordance with this Agreement and the Delaware General
Corporation Law (the "Merger"). Upon consummation of the Merger, Merger Sub will
cease to exist, and the Company will become a wholly owned subsidiary of Parent.
This Agreement has been approved by the respective boards of directors of
Parent, Merger Sub and the Company.
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1. DESCRIPTION OF THE TRANSACTION.
1.1 Merger of Merger Sub into the Company. Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation"). The Parent
has paid to the Company the sum of $3,000,000 as a deposit hereunder (the
"Deposit"), which Deposit will be held by the Company in a segregated
interest-bearing account.
1.2 Effect of the Merger. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the Delaware General
Corporation Law.
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of the Company, at 50 West Broadway, Suite 300, Salt Lake City, Utah 84101, or
such other place as Parent and the Company shall agree, at the later of:
(i)10:00 a.m. local time, on the third business day on which the last to be
satisfied or waived of the conditions set forth in Sections 5 and 6 (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the satisfaction or waiver of those conditions) shall be satisfied or
waived in accordance with this Agreement; or (ii)10:00 a.m. local time, on
December 10, 1999, or such other time and date as Parent and the Company shall
agree. (The date on which the Closing actually takes place is referred to in
this Agreement as the "Closing Date.") Contemporaneously with or as promptly as
practicable after the Closing, a properly executed agreement of merger (or
Certificate of Merger) conforming to the requirements of the Delaware General
Corporation Law shall be filed with the Secretary of State of the State of
Delaware. The Merger shall become effective at the time such agreement of merger
(or Certificate of Merger) is filed with and accepted by the Secretary of State
of the State of Delaware (the "Effective Time").
1.4 Certificate of Incorporation And Bylaws; Directors And Officers. Unless
otherwise determined by Parent and the Company prior to the Effective Time:
(a) the Certificate of Incorporation of the Surviving Corporation shall be
amended and restated as of the Effective Time to conform to Exhibit B;
(b) the Bylaws of the Surviving Corporation shall be amended and restated
as of the Effective Time to conform to the Bylaws of Merger Sub as in effect
immediately prior to the Effective Time; and
(c) the directors and officers of the Surviving Corporation immediately
after the Effective Time shall be the directors and officers of Merger Sub
immediately prior to the Effective Time.
1.5 Merger Consideration; Conversion of Shares.
(a) The aggregate merger consideration for all of the shares of the
Company's common stock, par value $0.01 per share (the "Company Common Stock"),
outstanding immediately prior to the Effective Time, together with all shares
issuable pursuant to Options (as defined in Section 1.6 below) (collectively,
the "Converted Shares"), shall be an amount equal to $63,000,000 (the "Initial
Merger Consideration"), adjusted for any increase or decrease made pursuant to
subsections 1.5(b) and (c) below (the "Aggregate Merger Consideration"). Subject
to Sections 1.8(c) and 1.9, at the Effective Time, by virtue of the Merger and
without any further action on the part of Parent, Merger Sub, the Company or any
stockholder of the Company, each share of Company Common Stock shall be
converted into the right to receive the Merger Consideration.
(b) (i) The Company intends to dispose of its interest in Bonneville Fuels
Corporation, a Colorado corporation ("BFC") prior to the Effective Time pursuant
to a stock sale, and the Company agrees that it shall use its best efforts to
effect such stock sale prior to the Effective Time. The Initial Merger
Consideration shall be increased by the cash proceeds received by the Company
from the disposition of BFC (net of (i)any and all charges related to the
disposition of BFC, including, without limitation, all expenses, fees, Taxes and
other charges (including all obligations or liabilities of the Company or the
Surviving Corporation under Sections 8.13 or 8.15 of the BFC Sale Agreement),
(ii)any other Taxes of BFC for the current taxable year for which the Company
or the Surviving Corporation is liable and (iii) all severance, termination or
other obligations or liabilities of the Company or the Surviving Corporation to
employees or former employees of BFC (the "BFC Net Proceeds"), calculated in
accordance with Exhibit 1.5(b)(i). Any obligation of the Surviving Corporation
to distribute BFC Net Proceeds to the Disbursement Agent (or an escrow agent
affiliated with the Disbursement Agent) on behalf of the holders of Converted
Shares shall be subject to the right of the Surviving Corporation to retain
reasonable reserves for liabilities associated with the sale of BFC. The parties
hereto agree that if there is an Environmental Defect Amount, a Title Defect
Amount or a Deferred Adjustment Claim (each as defined in the BFC Sale
Agreement), a reasonable reserve with respect thereto shall be 100% of the face
amount of such Environmental Defect Amount, Title Defect Amount or Deferred
Adjustment Claim as asserted by the purchaser of BFC (or 150% of the face amount
of the Environmental Defect Amount or Title Defect Amount, if Section 5.5(b)(i)
or 6.2(c)(iii) as applicable, of the BFC Sale Agreement is involved). The
parties further agree that if a reserve is established, retained by the
Surviving Corporation and deducted from the BFC Net Proceeds otherwise
distributable to the Disbursement Agent (or an escrow agent affiliated with the
Disbursement Agent) on behalf of the holders of Converted Shares, and if all
underlying claims and liabilities for which such reserve was established are
finally resolved for an amount less than the amount of the reserve, such excess
shall be promptly distributed by the Surviving Corporation to the Disbursement
Agent (or an escrow agent affiliated with the Disbursement Agent) on behalf of
the holders of Converted Shares (subject to Section 4.10(b). The Shareholders
Representative (as defined in Section 4.10) shall be entitled to participate in
decisions related to the resolution of claims subject to a reserve.
(ii) The Company agrees that it shall notify the Parent of the amount of
the BFC Net Proceeds (and provide Parent with copies of all supporting
documentation) promptly following the consummation of the disposition of BFC,
but in any event not later than 5:00 p.m, New York time, on the business day
immediately following the day on which the BFC sale was consummated.
(iii) The Company agrees that at the closing of the BFC sale all
intercompany agreements relating to BFC will be terminated.
(iv) Notwithstanding anything in this Agreement to the contrary, subject to
any obligation of the Surviving Corporation to distribute reserves as
contemplated above, neither Parent nor the Surviving Corporation shall incur,
assume, be liable for or otherwise be responsible for any costs, liabilities or
risks of BFC or associated with the sale of the capital stock of BFC, except for
the provision to the purchaser of BFC of financial and other information
specific to BFC (at the expense of the purchaser) for a period of twelve (12)
months, in accordance with the terms of Section 8.11 of the Agreement relating
to the disposition of BFC.
(v) Except as set forth in Part 1.5(b)(v) of the Company Disclosure
Schedule, since June 30, 1999, none of the Acquired Companies has (A) guaranteed
any indebtedness or other obligation of BFC; (B) made any loan, advance or
capital contribution to or investment in BFC, or (C) entered into any other type
of intercompany agreement or arrangement with BFC.
(vi) From the date of this Agreement until the Effective Time, except
pursuant to the prior written consent of Parent, the Company shall not, and
shall cause each of the other Acquired Companies not to, (A) guarantee any
indebtedness or other obligation of BFC; (B) make any loan, advance or capital
contribution to or investment in BFC, or (C) enter into any other type of
intercompany agreement or arrangement with BFC, other than agreements in the
ordinary course of business in amounts not totaling more than $50,000, other
than expenditures to cure Title Defects or Environmental Defects (each as
defined in the BFC Sale Agreement), which expenditures shall be treated as
expenses in connection with calculating the BFC Net Sale Proceeds.
(c) The Initial Merger Consideration shall be: (i) increased by the
aggregate exercise price of all Options that are actually exercised between June
30, 1999 and the Effective Time (the Option Exercise Proceeds); (ii) increased
by any amounts distributed to the Disbursement Agent (or an escrow agent
affiliated with the Disbursement Agent) on behalf of the holders of Converted
Shares pursuant to Section 1.5(d) (the Contingent Asset Distribution Amount);
(iii) increased to the extent that unrestricted, unallocated, freely
distributable cash, as of June 30, 1999, as shown on the Unaudited Interim
Balance Sheet (as defined in Section 2.4(a)(i)), is more than $8,000,000 (the
"Unrestricted Cash"); (iv) decreased by closing costs, commissions and expenses
incurred by the Company in connection with the transactions contemplated by this
Agreement (the "Company Transaction Expenses") and (v)decreased by the
aggregate payments made (or that are required to be made) with respect to any
Options not exercised prior to the Effective Time, whether pursuant to Section
1.6 or otherwise (the Option Cancellation Amount).
(d) Parent shall, or shall cause the Surviving Corporation to, use
commercially reasonable efforts, at the expense of holders of Converted Shares,
to collect or liquidate the contingent assets listed in Part1.5(d) of the
Company Disclosure Schedule (the "Contingent Assets") for the benefit of the
holders of Converted Shares (to the extent such Contingent Asset has not already
been liquidated, in which case, if such Contingent Asset has been liquidated
prior to the Effective Time, the net after-tax cash proceeds of such Contingent
Asset (subject to all applicable expenses, Taxes and reserves) shall constitute
a Contingent Asset). The Shareholders' Representative (as defined in
Section 4.10) shall be entitled to participate in decisions related to the
collection and liquidation of the Contingent Assets. All cash proceeds received
by Parent or the Surviving Corporation from the collection or liquidation of the
Contingent Assets, net of expenses, Taxes resulting from receipt of such
proceeds (provided that, for this purpose, Taxes shall be calculated taking into
account only items of income, gain, loss, deduction or credit relating to the
Contingent Asset and as if no net operating losses of the Acquired Companies or
Parent and any of its Subsidiaries were available to offset any income
recognized upon receipt of such proceeds) and reasonable reserves for contingent
liabilities associated with such Contingent Assets (including, in the case of a
Contingent Asset collected or liquidated in connection with receipt of a Tax
refund, a reserve in the amount of the after-tax proceeds received by Parent or
the Surviving Corporation from the collection or liquidation of such Contingent
Asset (net of expenses) to be maintained until the expiration of the statutes of
limitations applying to the Tax items giving rise to the Tax refund), shall be
promptly distributed to the Disbursement Agent (or an escrow agent affiliated
with the Disbursement Agent) (to be held by the Disbursement Agent (or an escrow
agent affiliated with the Disbursement Agent) in an interest bearing account for
the benefit of the holders of Converted Shares). Other than for willful
misconduct, neither Parent nor the Surviving Corporation shall be liable to the
holders of Converted Shares with respect to the Contingent Assets or the
collection or liquidation thereof, in any manner whatsoever, other than with
respect to a failure to distribute funds to the Disbursement Agent (or an escrow
agent affiliated with the Disbursement Agent) as contemplated by the immediately
preceding sentence. The parties hereto agree that if a reserve is established,
retained by the Surviving Corporation and deducted from the net cash proceeds of
the Contingent Assets otherwise distributable to the Disbursement Agent (or an
escrow agent affiliated with the Disbursement Agent) on behalf of the holders of
Converted Shares, and if all underlying claims and liabilities for which such
reserve was established are finally resolved for an amount less than the amount
of the reserve, such excess shall be promptly distributed by the Surviving
Corporation to the Disbursement Agent (or an escrow agent affiliated with the
Disbursement Agent) on behalf of the holders of Converted Shares (subject to
Section 4.10(b)).
(e) In the event that Parent disagrees with the amount of BFC Net Proceeds,
Unrestricted Cash or Company Transaction Expenses reported by the Company (each
of such items is herein referred to individually as a "Disputed Item" or
collectively as "Disputed Items") and the parties are unable to agree as to the
amount of a Disputed Item or Disputed Items within five business days following
Parent's notice to the Company as to such disagreement, the parties agree that
the determination of the Disputed Item or Disputed Items shall be resolved by
final and binding arbitration before a single arbitrator selected by the
president of the American Arbitration Association ("AAA") in accordance with the
then prevailing Commercial Arbitration Rules of the AAA, which arbitration shall
be governed by the Substantive laws of the state of Delaware.
1.6 Stock Options. At the Effective Time, each stock option of the Company
that is then outstanding whether vested or unvested ("Option"), shall vest
immediately and become immediately exercisable in accordance with the terms the
stock option agreements and plans by which such Options are evidenced. All
rights with respect to Company Common Stock under outstanding Options shall
thereupon be converted into a right to receive cash from the Surviving
Corporation, in an amount equal to (i) the dollar amount of the Merger
Consideration times the number of shares of Company Common Stock that were
subject to such Option immediately prior to the Effective Time, minus (ii) the
Option holder's aggregate exercise price for such shares of Company Common
Stock.
1.7 Closing of the Company's Transfer Books. At the Effective Time, holders
of certificates representing shares of the Company's capital stock that were
outstanding immediately prior to the Effective Time shall cease to have any
rights as stockholders of the Company, and the stock transfer books of the
Company shall be closed with respect to all shares of such capital stock
outstanding immediately prior to the Effective Time. No further transfer of any
such shares of the Company's capital stock shall be made on such stock transfer
books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any of such shares of the Company's capital
stock (a "Company Stock Certificate") is presented to the Surviving Corporation
or Parent, such Company Stock Certificate shall be canceled and shall be
exchanged as provided in Section 1.8.
1.8 Exchange of Certificates.
(a) At or as soon as practicable after the Effective Time, BankBoston N.A.
or its designee (the "Disbursement Agent") will send to the holders of Company
Stock Certificates: (i) a letter of transmittal in customary form and containing
such provisions as Parent may reasonably specify and (ii) instructions for use
in effecting the surrender of Company Stock Certificates in exchange for the
Merger Consideration. Upon surrender of a Company Stock Certificate to the
Disbursement Agent for exchange, together with a duly executed letter of
transmittal and such other documents as may be reasonably required by Parent or
the Disbursement Agent, the holder of such Company Stock Certificate shall be
entitled to receive in exchange therefor the Merger Consideration that such
holder has the right to receive pursuant to the provisions of Section 1.5 above,
and the Company Stock Certificate so surrendered shall be canceled. No interest
will be paid or accrued on the cash payable upon the surrender of the Company
Stock Certificates. If payment is to be made to a person other than the person
in whose name the Company Stock Certificate surrendered is registered, it shall
be a condition of payment that the Company Stock Certificate so surrendered be
properly endorsed or otherwise be in proper form for transfer and that the
person requesting such payment pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
Company Stock Certificate surrendered or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 1.8, each Company Stock
Certificate shall be deemed, from and after the Effective Time, to represent
only the right to receive upon such surrender the Merger Consideration as
contemplated by this Section 1. If any Company Stock Certificate shall have been
lost, stolen or destroyed, Parent may, in its discretion and as a condition
precedent to the delivery of the Merger Consideration, require the owner of such
lost, stolen or destroyed Company Stock Certificate to provide an appropriate
affidavit and to deliver a bond (in such sum as Parent may reasonably direct) as
indemnity against any claim that may be made against Parent or the Surviving
Corporation with respect to such Company Stock Certificate.
As of the Effective Time, the Company shall deposit with the Disbursement
Agent (or an escrow agent affiliated with the Disbursement Agent) the total
amount of the Deposit. (The Company shall be entitled to all interest and other
amounts earned on the Deposit and such amounts shall not be applied to the
Aggregate Merger Consideration.) As of the Effective Time, Parent shall deposit
with the Disbursement Agent (or an escrow agent affiliated with the Disbursement
Agent) the total amount of the Initial Merger Consideration plus the BFC Net
Proceeds (subject to any applicable reserves) plus the Option Exercise Proceeds
plus the Contingent Asset Distribution Amount at the Effective Time (subject to
any applicable reserves) plus the Unrestricted Cash minus the Company
Transaction Expenses and minus the Option Cancellation Amount, net of the
Deposit and net of any amount deposited for use by the Shareholders'
Representative pursuant to Section 4.10(b) (such amount, being hereinafter
referred to as the "Disbursement Fund"). The Disbursement Fund shall be
distributed pursuant to an agreement by and among Parent and the Disbursement
Agent in a form reasonably satisfactory to the Company (the "Disbursement Agent
Agreement").
(b) Parent and the Surviving Corporation (or the Disbursement Agent (or an
escrow agent affiliated with the Disbursement Agent) on their behalf) shall be
entitled to deduct and withhold from any consideration payable or otherwise
deliverable to any holder or former holder of capital stock of the Company
pursuant to this Agreement such amounts as Parent or the Surviving Corporation
reasonably determine are required to be deducted or withheld therefrom under the
Internal Revenue Code (the "Code") or under any provision of state, local or
foreign tax law (or, in the alternative, Parent or the Disbursement Agent (or an
escrow agent affiliated with the Disbursement Agent), at Parent's option, may
request tax information and other documentation establishing that no withholding
is necessary). To the extent such amounts are so deducted or withheld, such
amounts shall be treated for all purposes under this Agreement as having been
paid to the Person to whom such amounts would otherwise have been paid.
(c) If any Company Stock Certificates shall not have been surrendered prior
to thirteen (13) months after the Effective Time (or immediately prior to such
time on which any payment in respect hereof would otherwise escheat or become
the property of any governmental unit or agency), the payment in respect of such
Company Stock Certificates shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation (except as provided in
subsection 1.8(e) below), free and clear of all claims or interest of any person
previously entitled thereto. Notwithstanding the foregoing, Neither Parent nor
the Surviving Corporation shall be liable to any holder or former holder of
capital stock of the Company for any cash amounts, delivered to any public
official pursuant to any applicable abandoned property, escheat or similar law.
(d) Any portion of the Disbursement Fund held by the Disbursement Agent (or
an escrow agent affiliated with the Disbursement Agent) pursuant to this Section
1.8 which remains undistributed to the stockholders of the Company thirteen (13)
months after the Effective Time shall be delivered to Surviving Corporation
(except as provided in subsection 1.8(e) below), and any stockholders of the
Company who have not theretofore complied with this Section 1 shall thereafter
look only to Surviving Corporation, and only as general creditors thereof, for
payment of their claim for the Merger Consideration to which such stockholders
may be entitled.
(e) The Merger Consideration with respect to all Company Stock Certificates
issued pursuant to the Trustee's Amended Chapter 11 Plan for the Estate of
Bonneville Pacific Corporation dated April 22, 1998" (the "Bankruptcy Plan")
which are forfeited pursuant to Section 5.9 of the Bankruptcy Plan (the
"Forfeited Plan Shares") shall be distributed as follows: (i)first, the
Disbursement Agent (or an escrow agent affiliated with the Disbursement Agent)
shall distribute to Parent an amount equal to the Taxes owed, if any, by the
Surviving Corporation as a result of the forfeiture of such Forfeited Plan
Shares (provided that for this purpose, Taxes shall be calculated taking into
account only items of income, gain, loss, deduction or credit relating to such
forfeiture and as if no net operating losses of the Acquired Companies or Parent
and any of its Subsidiaries were available to offset any income recognized as a
result of such forfeiture), such amount to be calculated by Parent or the
Surviving Company and set forth in a notice to the Disbursement Agent (or an
escrow agent affiliated with the Disbursement Agent), and (ii) second, any
amounts remaining after the distribution described in clause (i) of this
subsection (e) shall be distributed to the holders of Converted Shares (subject
to the restrictions herein), pro rata, based on the number of shares or share
equivalents each holder surrendered. The portion of the Disbursement Fund
described in clause (ii) of the preceding sentence held by the Disbursement
Agent (or an escrow agent affiliated with the Disbursement Agent) pursuant to
this Section 1.8 on account of the Forfeited Plan Shares shall be delivered by
the Disbursement Agent (or an escrow agent affiliated with the Disbursement
Agent) between thirteen and fourteen months after the Effective Time to the
stockholders of the Company who have surrendered their Company Stock
Certificates to the Disbursement Agent in accordance with Section 1.8(a), pro
rata, based on the number of shares of Company Common Stock or share equivalents
each stockholder surrendered.
(f) All cash received by the Disbursement Agent (or an escrow agent
affiliated with the Disbursement Agent) from the Surviving Corporation on
account of Contingent Assets pursuant to Section 1.5(d), together with any
interest earned thereon after delivery of such cash to the Disbursement Agent
(or an escrow agent affiliated with the Disbursement Agent), shall be delivered
to the holders of Converted Shares who have surrendered their Company Stock
Certificates to the Disbursement Agent in accordance with Section 1.8(a), pro
rata, based on the number of shares of Company Common Stock or share equivalents
each holder surrendered.
1.9 Dissenting Shares.
(a) Notwithstanding anything to the contrary contained in this Agreement,
shares of Company Common Stock that are held by any record holder who has not
voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal rights in accordance with Section 262 of Delaware Law (the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration in accordance with Section 1.5, and the holder
or holders of such shares shall be entitled only to such rights as may be
granted to such holder or holders in the Delaware General Corporation Law;
provided, however, that if the status of any such shares as Dissenting Shares
shall not be perfected, or if any such shares shall lose their status as
Dissenting Shares, then, as of the later of the Effective Time or the time of
the failure to perfect such status or the loss of such status, such shares shall
automatically be converted into and shall represent only the right to receive
(upon the surrender of the certificate or certificates representing such shares)
the Merger Consideration in accordance with Section 1.5.
(b) The Company shall give Parent (i) prompt notice of any Dissenting
Shares and of any other demand, notice or instrument, and of any withdrawal of
such demands, delivered to the Company prior to the Effective Time pursuant to
the Delaware General Corporation Law, and (ii) the opportunity to participate in
all negotiations and proceedings with respect to any such demand, notice or
instrument. The Company shall not make any payment or settlement offer prior to
the Effective Time with respect to any such demand unless Parent shall have
consented in writing to such payment or settlement offer.
1.10 Further Action. If, at any time after the Effective Time, any further
action is determined by Parent to be necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation or Parent with
full right, title and possession of and to all rights and property of Merger Sub
and the Company, the officers and directors of the Surviving Corporation and
Parent shall be fully authorized (in the name of Merger Sub, in the name of the
Company and otherwise) to take such action.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants, to Parent and Merger Sub as
follows:(For purposes of this Section 2, the term "Company Subsidiaries" shall
not include BFC and no representations or warranties set forth in this Section 2
shall be deemed to apply to BFC).
2.1 Due Organization, Etc.
(a) The Company and each of the Company Partnerships and Company
Subsidiaries, as set forth in Part 2.1(a) of the Company Disclosure Schedule
(collectively with the Company, the "Acquired Companies"), that is a
corporation, partnership or limited liability company is duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation or organization. Each of the Acquired Companies has all
necessary corporate power and authority: (i) to conduct its business in the
manner in which its business is currently being conducted; (ii) to own and use
its assets in the manner in which its assets are currently owned and used; and
(iii) to perform its obligations under all Company Contracts.
(b) None of the Acquired Companies is or has been required to be qualified,
authorized, registered or licensed to do business as a foreign corporation in
any jurisdiction other than the jurisdictions identified in Part 2.1(b) of the
Company Disclosure Schedule, except where the failure to be so qualified,
authorized, registered or licensed has not had, and is not reasonably likely to
have, a Material Adverse Effect on the Company. Each of the Acquired Companies
is in good standing as a foreign corporation in each of the jurisdictions
identified in Part 2.1(b) of the Company Disclosure Schedule except where the
failure to be in good standing would not have, and is not reasonably likely to
have, a Material Adverse Effect on the Company.
(c) Except for the equity interests identified in Part 2.1(c) of the
Company Disclosure Schedule, none of the Acquired Companies owns, beneficially
or otherwise, any shares or other securities of, or any direct or indirect
equity interest in, any Entity. None of the Acquired Companies has agreed or is
obligated to make any future investment in or capital contribution to any Entity
not identified and described in Part 2.1(c) of the Company Disclosure Schedule.
2.2 Governing Documents; Records. The Company has delivered or made
available to Parent accurate and complete copies of: (1) the Company's
Certificate of Incorporation and bylaws, including all amendments thereto, and
all charter documents, certificates of limited partnership, certificates of
formation, bylaws, partnership agreements and limited liability agreements, and
all amendments thereto, relating to the other Acquired Companies; (2) the stock
records of each of the Acquired Companies; and (3) except as set forth in Part
2.2 of the Company Disclosure Schedule, the minutes and other records of the
meetings and other proceedings (including any actions taken by written consent
or otherwise without a meeting) of the stockholders of each of the Acquired
Companies, the board of directors of each of the Acquired Companies and all
committees of the board of directors of each of the Acquired Companies. There
has not been any violation of any of the provisions of the Company's Certificate
of Incorporation or, except as would not have, and is not reasonably likely to
have, a Material Adverse Effect on the Company, the bylaws or other charter
documents, partnership agreements or limited liability agreements of any of the
Acquired Companies, and none of the Acquired Companies has taken any action that
is inconsistent in any material respect with any resolution adopted by its
stockholders, its board of directors or any committee of its board of directors.
The books of account, stock records, minute books and other records of each of
the Acquired Companies are accurate, up-to-date and complete in all material
respects.
2.3 Capitalization, Etc.
(a) The authorized capital stock of the Company consists of: (i) 25,000,000
shares of Common Stock (with par value $.01), of which 7,275,390 shares have
been issued and are outstanding as of the date of this Agreement; and (ii)
5,000,000 shares of Preferred Stock (with par value $.01), of which none are
issued or outstanding. All of the outstanding shares of Company Common Stock
have been duly authorized and validly issued, and are fully paid and
non-assessable.
(b) The Company has reserved a total of 237,000 shares of Company Common
Stock for issuance under Company Options, consisting of 45,000 vested options
with an average exercise price of $9.44 per share and 192,000 unvested options
with an exercise price of $5.00 per share. Part 2.3 (b) of the Company
Disclosure Schedule accurately sets forth, with respect to each Company Option
that is outstanding as of the date of this Agreement: (i) the name of the holder
of such Company Option; (ii) the total number of shares of Company Common Stock
that are subject to such Company Option; (iii) the exercise price per share of
Company Common Stock purchasable under such Company Option; and (iv) whether
such Company Option has been designated an "incentive stock option" as defined
in Section 422 of the Code.
Except as set forth in Part 2.3 (b) of the Company Disclosure Schedule,
there is no: (i) outstanding subscription, option, call, warrant or right
(whether or not currently exercisable) to acquire any shares of the capital
stock or other securities of the Company; (ii) outstanding security, instrument
or obligation that is or may become convertible into or exchangeable for any
shares of the capital stock or other securities of the Company; (iii) Contract
under which the Company is or may become obligated to sell or otherwise issue
any shares of its capital stock or any other securities; or (iv) to the
Knowledge of the Company, condition or circumstance that could reasonably be
expected to give rise to or provide a basis for the assertion of a claim by any
Person to the effect that such Person is entitled to acquire or receive any
shares of capital stock or other securities of the Company.
(c) All outstanding shares of Company Common Stock and all outstanding
Company Options have been issued and granted in compliance with (i) all
applicable securities laws and other applicable Legal Requirements, and (ii) all
material requirements set forth in applicable Contracts.
(d) Except as set forth in Part 2.3 (d) of the Company Disclosure Schedule,
all of the outstanding shares of capital stock of each of the Company
Subsidiaries are validly issued (in compliance with all applicable securities
laws and other Legal Requirements and applicable Company Contracts), fully paid
and nonassessable and are owned beneficially by the Company, free and clear of
any Encumbrance. The interests of the Company in each of the Company
Partnerships are owned beneficially by the Company, free and clear of any
Encumbrance.
2.4 Financial Statements.
(a) The Company has delivered to Parent the following financial statements
and notes (collectively, the "Company Financial Statements"), copies of which
are attached as part 2.4(a) of the Company Disclosure Schedule:
(i) The audited consolidated balance sheet of the Company as of December
31, 1998, the audited consolidated balance sheet of the Company as of December
31, 1997, and the related audited consolidated income statements, statements of
stockholders' equity and statements of cash flows of the Company for the years
then ended, together with the notes thereto and the unqualified report and
opinion of Hein + Associates, LLP relating thereto; and
(ii) the unaudited consolidated balance sheet of the Company as of June 30,
1999 (the "Unaudited Interim Balance Sheet"), and the related unaudited
consolidated income statement, statement of stockholders' equity and statement
of cash flows of the Company for the six (6) month period then ended.
(iii) the unaudited pro forma consolidated balance sheet of the Company as
of June 30, 1999 (the "Unaudited Interim Pro Forma Balance Sheet"), and the
related unaudited pro forma consolidated income statement, statement of
stockholders' equity and statement of cash flows of the Company for the six (6)
month period then ended. The Unaudited Interim Pro Forma Balance Sheet assumes
that the disposition of BFC was consummated by June 30, 1999.
(iv) the audited balance sheet of NCA #1 as of December 31, 1998, and the
related audited income statements, statements of stockholders' equity and
statements of cash flows of NCA #1 for the year then ended, together with the
notes thereto and the unqualified report and opinion of Arthur Andersen LLP
relating thereto; and
(v) the unaudited balance sheet of NCA #1 as of June 30, 1999 (the "NCA#1
Unaudited Interim Balance Sheet"), and the related unaudited income statement,
statement of stockholders' equity and statement of cash flows of the Company for
the three (3) month period then ended.
(b) The Company Financial Statements present fairly, in all material
respects, the consolidated financial position of the Company and the other
Acquired Companies as of the respective dates thereof and the consolidated
results of operations of the Company and the other Acquired Companies for the
periods covered thereby. The Company Financial Statements have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods covered, except as may be indicated in
the notes to such financial statements (except that the financial statements
referred to in Section 2.4(a)(ii) do not contain footnotes and are subject to
normal and recurring year-end audit adjustments, which will not, individually or
in the aggregate, be material in magnitude).
(c) Part 2.4(c) of the Company Disclosure Schedule sets forth a complete
listing of NCA #1's outstanding indebtedness for borrowed money as of the date
set forth on such Schedule.
2.5 Absence of Changes. Except as set forth in Part 2.5 of the Company
Disclosure Schedule, since December 31, 1998:
(a) there has not been any Material Adverse Effect in the business,
condition, assets, liabilities, operations or financial performance of the
Acquired Companies, considered as a whole, and, to the Knowledge of the Company,
no event has occurred that will, or could reasonably be expected to, have a
Material Adverse Effect on the Company;
(b) except as would not, individually or in the aggregate have, or be
reasonably likely to have, a Material Adverse Effect on the Company, there has
not been any loss, damage or destruction to, or any interruption in the use of,
any of the Acquired Companies' properties or assets (whether or not covered by
insurance);
(c) the Company has not declared, accrued, set aside or paid any dividend
or made any other distribution in respect of any shares of capital stock, and
none of the Acquired Companies has repurchased, redeemed or otherwise reacquired
any shares of capital stock or other securities;
(d) none of the Acquired Companies has sold, issued or authorized the
issuance of (i) any capital stock or other security (except for Company Common
Stock issued upon the exercise of outstanding Company Options), (ii) any option
or right to acquire any capital stock or any other security (except for Company
Options described in Part 2.3 (b) of the Company Disclosure Schedule), or (iii)
any instrument convertible into or exchangeable for any capital stock or other
security;
(e) the Company has not amended or waived any of its rights under any
provision of its Stock Option Agreements or its Plans (as defined in Section
2.13(a) below);
(f) there has been no amendment to the Company's Certificate of
Incorporation or bylaws, and the Company has not effected or been a party to any
Company Acquisition Transaction, recapitalization, reclassification of shares,
stock split, reverse stock split or similar transaction;
(g) none of the Acquired Companies has formed any subsidiary or acquired
any equity interest or other interest in any other Entity;
(h) none of the Acquired Companies has made any capital expenditure which,
when added to all other capital expenditures made on behalf of the Acquired
Companies since December 31, 1998, exceeds the amounts set forth in the
Company's capital expenditures budget set forth in Part 2.5(h) of the Company
Disclosure Schedule other than expenditures in the ordinary course of business
in accordance with the 1999 Operating Plan of NCA #1 set forth in part 2.5(h) of
the Company Disclosure Schedule (the "Operating Plan").
(i) none of the Acquired Companies has (i), except as set forth in the
Operating Plan, entered into or permitted any of the properties or assets owned
or used by it to become bound by any Contract that is or would constitute a
Material Contract (as defined in Section 2.8(a)), or (ii) amended or prematurely
terminated, or waived any material right or remedy under, any such Material
Contract;
(j) none of the Acquired Companies has (i), except as set forth in the
Operating Plan, acquired, leased or licensed any right, real or personal
property or other asset from any other Person having a value in excess of
$100,000, (ii) sold or otherwise disposed of, or leased or licensed, any right,
real or personal property or other asset to any other Person having a value in
excess of $100,000, or (iii) waived or relinquished any right, except for
immaterial rights or other immaterial properties or assets acquired, leased,
licensed or disposed of in the ordinary course of business and consistent with
the Acquired Companies' past practices, taken as a whole;
(k) none of the Acquired Companies has written off as uncollectible, or
established any extraordinary reserve with respect to, any material amount of
account receivables or other indebtedness;
(l) none of the Acquired Companies has made any pledge of any of its
properties or assets, except for pledges of immaterial properties or assets made
in the ordinary course of business and consistent with the Acquired Companies'
past practices, taken as a whole;
(m) none of the Acquired Companies has (i) lent money to any Person, other
than pursuant to routine travel advances made to employees in the ordinary
course of business and other than loans made in the ordinary course of business
and consistent with past practice in an amount not in excess of $25,000 to any
one Person (other than BFC or the Acquired Companies), or (ii) incurred or
guaranteed any indebtedness for borrowed money (other than intercompany debt
between or among the Acquired Companies);
(n) none of the Acquired Companies has (i) established, adopted, amended or
entered into, any employee benefit plan, program, agreement or arrangement, (ii)
paid any bonus or made any profit-sharing or similar payment to, or increased
the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
employees other than in the ordinary course of business and consistent with past
practice, (iii) hired any new employee having an annual salary in excess of
$100,000 or (iv) adopted or amended any severance plan or arrangement or entered
into any employment or severance agreement, or entered into or amended any other
plan, arrangement or agreement providing for the payment of any benefit or
acceleration of any options upon a change in control or a termination of
employment, or (v) committed to do any of the foregoing.
(o) the Company has not changed any of its methods of accounting or
accounting practices in any material respect;
(p) the Company has not made any Tax election;
(q) none of the Acquired Companies has commenced or settled any material
Legal Proceeding;
(r) none of the Acquired Companies has entered into any material
transaction or taken any other material action outside the ordinary course of
business or inconsistent with its past practices; and
(s) none of the Acquired Companies has agreed or committed to take any of
the actions referred to in clauses "(c)" through
"(r)" above.
2.6 Property.
(a) Property. Part 2.6(a) of the Company Disclosure Schedule contains a
complete and accurate list of all real property owned, leased or occupied by
each of the Acquired Companies (the "Land"). The Land, together with all
fixtures and improvements located on, and/or below the surface of the Land,
including without limitation the structures located thereon commonly known by
the property addresses indicated in Part 2.6(a) of the Company Disclosure
Schedule (the "Improvements"), together with all rights, easements,
rights-of-way and appurtenances to the Land, is referred to collectively herein
as the "Real Property." Part 2.6(a) of the Company Disclosure Schedule also
indicates which of the Real Property is leased or occupied by any of the
Acquired Companies (individually, a "Leased Property" and collectively, the
"Leased Properties"). All presently effective leases, lease amendments or
modifications, work letter agreements, improvement agreements, subleases,
assignments, licenses, concessions, guarantees and other agreements relating to
the Acquired Companies' use or occupancy of the Leased Property are collectively
referred to herein as the "Leases." True and complete copies of the Leases have
been delivered or made available to Parent. All furnishings, fixtures,
equipment, appliances, signs, personal property and other assets owned by the
Acquired Companies and located in or about the Real Property or used in
connection with the management and operation of the Real Properties are
hereinafter referred to as the "Personal Property." All management agreements,
maintenance contracts, service contracts and equipment leases pertaining to the
Real Property or the Personal Property, and all other presently effective
contracts, agreements, warranties and guaranties relating to the ownership,
leasing, advertising, promotion, design, construction, management, operation,
maintenance or repair of the Real Property are herein collectively referred to
as the "Real Property Plans and Contracts." The Real Property, the Leased
Properties, the Personal Property and the Real Property Plans and Contracts are
referred to collectively as the "Property."
(b) Title. The Acquired Companies own, or will at the Closing own, fee
simple title to all Real Property other than the Leased Properties (the "Owned
Properties"). The Acquired Companies have, or will at the Closing have, good
title to the Owned Properties, free and clear from all Encumbrances other than
(i) liens for current real property taxes not yet due and payable and for which
adequate reserves have been established in the NCA#1 Unaudited Interim Balance
Sheet or the Unaudited Interim Balance Sheet in accordance with GAAP, (ii)
municipal and zoning ordinances and easements for public utilities, (iii) those
matters listed in Part 2.6(b) of the Company Disclosure Schedule, none of which
materially interfere with the continued use of Owned Property as currently
utilized and (iv) pledges to secure the Company's obligations under its credit
facilities (the "Permitted Liens"). Except as listed on Part 2.6(b) of the
Company Disclosure Schedule, none of the Acquired Companies has entered into any
contracts for the sale of any of the Owned Property, nor do there exist any
rights of first offer or first refusal or options to purchase all or any part of
the Owned Property. The Acquired Companies have, or will at the Closing have,
good leasehold title to the Leased Properties, free and clear from all
Encumbrances, other than the Leases and Permitted Liens. Each of the Leases is
in full force and effect. None of the Acquired Companies is in material breach
or default under, nor has any event occurred that, with the giving of notice or
the passage of time or both, would constitute a material breach or event of
default by any of the Acquired Companies, under any of the Leases and, to the
Knowledge of the Company, no other party to any of the Leases is in breach or
default under, nor, to the Knowledge of the Company, has any event occurred
that, with the giving of notice or the passage of time or both, would constitute
a breach or event of default by such other party under any of the Leases.
(c) Personal Property. Except as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, the Acquired Companies
have good title to the Personal Property, free and clear of all Encumbrances
(except for Leases and Permitted Liens). The Personal Property is in good
operating condition and repair, ordinary wear and tear excepted.
2.7 Receivables. Part 2.7 of the Company Disclosure Schedule provides an
accurate and complete breakdown and aging of all accounts receivable, notes
receivable and other receivables of the Acquired Companies, as of June 30, 1999.
Except as set forth in Part 2.7 of the Company Disclosure Schedule, all existing
accounts receivable of the Acquired Companies (including those accounts
receivable reflected on the Unaudited Interim Balance Sheet or the NCA#1
Unaudited Interim Balance Sheet that have not yet been collected and those
accounts receivable that have arisen since June 30, 1999 and have not yet been
collected) represent valid obligations of customers arising from bona fide
transactions.
2.8 Contracts.
(a) Part 2.8(a) of the Company Disclosure Schedule identifies:
(i) each Company Contract relating to the employment of, or the performance
of services by, any employee, consultant or independent contractor that is not
terminable on 60 days or less notice or involves payments or other liabilities
in excess of $150,000 per year;
(ii) each Company Contract imposing any restriction on any Acquired
Company's right or ability (A) to compete with any other Person or (B) to
acquire any product or other asset or any services from any other Person, to
sell any product or other asset to or perform any services for any other Person
or to transact business or deal in any other manner with any other Person;
(iii) each Company Contract involving the acquisition, issuance or transfer
of any equity securities (other than those that have been fully performed);
(iv) each Company Contract involving the creation of any Encumbrance (other
than Permitted Liens) with respect to any material property or asset of any
Acquired Company;
(v) each Company Contract involving or incorporating any material guaranty,
any material pledge, any material performance or completion bond, any material
indemnity or any material surety arrangement;
(vi) each Company Contract creating any partnership or joint venture or any
sharing of revenues, profits, losses, costs or liabilities;
(vii) each Company Contract involving the purchase or sale of any product
or other asset by or to, or the performance of any services by or for, any
Related Party (as defined in Section 2.16);
(viii) each Company Contract involving the purchase or sale of any real or
personal property having a value in excess of $250,000;
(ix) any other Company Contract of any Acquired Company that was entered
into outside the ordinary course of business or was inconsistent with such
Acquired Company's past practices, that has a term of greater than one year and
that may not be terminated without penalty, within 90 days;
(x) any other Company Contract of any Acquired Company that (A) has a term
of more than 90 days and that may not be terminated by such Acquired Company
(without penalty) within 90 days after the delivery of a termination notice by
such Acquired Company; and (B) involves the payment or delivery of cash or other
consideration in an amount or having a value, or the performance of services
having a value, in excess of $250,000 in any one year; and
(xi) any other Company Contract of any Acquired Company which is material
to the business of the Company or any other Acquired Company requiring
expenditures by the Company in excess of $250,000 in any one year.
(Contracts in the respective categories described in clauses "(i)" through
"(xi)" above are referred to in this Agreement as "Company Material Contracts.")
(b) The Company has delivered or made available to Parent accurate and
complete copies of all written Company Material Contracts identified in Part
2.8(b) of the Company Disclosure Schedule, including all amendments thereto.
Part 2.8(b) of the Company Disclosure Schedule provides an accurate description
of the terms of each Company Material Contract that is not in written form.
Except as set forth in Part 2.8(b) of the Company Disclosure Schedule, each
Company Material Contract identified in Part 2.8(b) of the Company Disclosure
Schedule is valid and in full force and effect, and is enforceable by the
applicable Acquired Company in accordance with its terms, subject to (i) laws of
general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
(c) Except as set forth in Part 2.8(c) of the Company Disclosure Schedule:
(i) none of the Acquired Companies has violated or breached, or committed
any default under, any Company Material Contract, and, to the Knowledge of the
Company, no other Person has violated or breached, or committed any default
under, any Company Material Contract;
(ii) no event has occurred, and no circumstance or condition exists, that
(with or without notice or lapse of time) will, or could reasonably be expected
to, (A) result in a violation or breach by any Acquired Company (or, to the
Knowledge of the Company, any other Person) of any of the provisions of any
Company Material Contract, (B) give any Acquired Company (or, to the Knowledge
of the Company, any other Person) the right to declare a default or exercise any
remedy under any Company Material Contract, (C) give any Acquired Company (or,
to the Knowledge of the Company, any other Person) the right to accelerate the
maturity or performance of any Company Material Contract, or (D) give any Person
the right to cancel, terminate or modify any Company Material Contract;
(iii) since November 2, 1998, none of the Acquired Companies has received
any notice or other communication regarding any actual or alleged violation or
breach of, or default under, any Company Material Contract that has not been
cured or is of a continuing or repetitive nature; and
(iv) none of the Acquired Companies has waived any of its material rights
under any Company Material Contract.
(d) Part 2.8(d) of the Company Disclosure Schedule identifies and provides
a brief description of each proposed Company Material Contract as to which any
bid, offer, award, written proposal, term sheet or similar document has been
submitted or received by any of the Acquired Companies since the date of the
Unaudited Interim Balance Sheet.
2.9 Liabilities. None of the Acquired Companies has any accrued, contingent
or other liabilities of any nature, either matured or unmatured (whether or not
required to be reflected in financial statements in accordance with GAAP, and
whether due or to become due), except for: (a) liabilities identified as such in
the "liabilities" column of the Unaudited Interim Balance Sheet or the NCA#1
Unaudited Interim Balance Sheet; (b) accounts payable or accrued salaries that
have been incurred by any Acquired Company since June 30, 1999 in the ordinary
course of business and consistent with such Acquired Company's past practices;
(c) liabilities under the Company Material Contracts identified in Part 2.8(a)
of the Company Disclosure Schedule, to the extent the nature and magnitude of
such liabilities can be specifically ascertained by reference to the text of
such Company Material Contracts; and (d) the liabilities identified in Part 2.9
of the Disclosure Schedule.
2.10 Compliance With Legal Requirements to the Knowledge of the Company.
Except as set forth in Part 2.10 of the Company Disclosure Schedule, each of the
Acquired Companies is, and has at all times since November 2, 1998 been, in
compliance with all applicable Legal Requirements, except where the failure to
comply with such Legal Requirements has not had, and is not reasonably likely to
have, a Material Adverse Effect on the Company. Except as set forth in Part 2.10
of the Company Disclosure Schedule, since November 2, 1998, none of the Acquired
Companies has received any notice or other communication from any Governmental
Body regarding any actual or possible violation of, or failure to comply with,
any Legal Requirement that could have, or be reasonably likely to have, a
Material Adverse Effect on the Company; provided, however, that with respect to
any Acquired Company that was acquired by the Company since November 2, 1998,
with respect to the operations of such company prior to such acquisition, such
representation shall be made only to the Knowledge of the Company.
2.11 Governmental Authorizations. Part 2.11 of the Company Disclosure
Schedule identifies each Governmental Authorization held by any Acquired
Company, the absence of which would have, or be reasonably likely to have, a
Material Adverse Effect on the Company, and the Company has delivered or made
available to Parent accurate and complete copies of all Governmental
Authorizations identified in Part 2.11 of the Company Disclosure Schedule. To
the Knowledge of the Company, the Governmental Authorizations identified in Part
2.11 of the Company Disclosure Schedule are valid and in full force and effect.
The Governmental Authorizations identified in Part 2.11 of the Company
Disclosure Schedule collectively constitute all Governmental Authorizations
necessary to enable each Acquired Company to conduct its business in the manner
in which its business is currently being conducted, except as would not have, or
be reasonably likely to have, a Material Adverse Effect on the Company. To the
Knowledge of the Company, each of the Acquired Companies is, and at all times
since November 2, 1998 has been, in substantial compliance with the terms and
requirements of the respective Governmental Authorizations identified in Part
2.11 of the Company Disclosure Schedule except for any failure to comply that
would not have, or be reasonably likely to have, a Material Adverse Effect on
the Company. Since November 2, 1998, none of the Acquired Companies has received
any notice or other communication from any Governmental Body regarding (a) any
actual or possible violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (b) any actual or possible
revocation, withdrawal, suspension, cancellation, termination or modification of
any Governmental Authorization, except for any of the foregoing that would not
have, or be reasonably likely to have, a Material Adverse Effect on the Company.
2.12 Tax Matters.
(a) Except as set forth in Part 2.12(a) of the Company Disclosure Schedule,
all Tax Returns required to be filed by or on behalf of any Acquired Company
with any Governmental Body with respect to any taxable period ending on or
before the Closing Date (the "Company Returns") (i) have been or will be filed
on or before the applicable due date (including any extensions of such due
date), and (ii) have been, or will be when filed, accurately and completely
prepared in all material respects in compliance with all applicable Legal
Requirements. All amounts shown on the Company Returns to be due on or before
the Closing Date have been or will be paid on or before the Closing Date. The
Company has delivered or made available to Parent accurate and complete copies
of all Company Returns that have been requested by Parent. The Company shall
give Parent an opportunity to review and comment upon any Company Returns to be
filed after the date of this Agreement, and the Company shall not file any such
Company Returns until they have been approved in writing by Parent (such
approval not to be unreasonably withheld).
(b) The Company Financial Statements fully accrue all actual and contingent
liabilities for Taxes with respect to all periods through the dates thereof in
accordance with GAAP. The Company will establish, in the ordinary course of
business and consistent with its past practices, reserves adequate for the
payment of all Taxes through the Closing Date, and the Company will disclose the
dollar amount of such reserves to Parent on or prior to the Closing Date.
(c) Except as set forth in Part 2.12(c) of the Company Disclosure Schedule,
there have been no examinations or audits of any Company Return by any
Governmental Body. The Company has delivered or made available to Parent
accurate and complete copies of all audit reports and similar documents (to
which the Company has access) relating to the Company Returns. Except as set
forth in Part 2.12(c) of the Company Disclosure Schedule, no extension or waiver
of the limitation period applicable to any of the Company Returns has been
granted (by any Acquired Company or any other Person), and no such extension or
waiver has been requested from any Acquired Company.
(d) Except as set forth in Part 2.12(d) of the Company Disclosure Schedule,
no claim or proceeding is pending or, to the Knowledge of the Company, has been
threatened against or with respect to any Acquired Company in respect of any
Tax. There are no liens for Taxes upon any of the assets of any Acquired Company
except liens for current Taxes not yet due and payable. None of the Acquired
Companies has entered into or become bound by any agreement or consent pursuant
to Section 341(f) of the Code.
(e) Except as listed in Part 2.12(e), none of the Acquired Companies is, or
has been, a party to or bound by any tax indemnity agreement, tax sharing
agreement, tax allocation agreement or similar Contract.
(f) Except as set forth in Part 2.12(f) of the Company Disclosure Schedule,
the Company has received no written notice of any claim by any authority in a
jurisdiction where any of the Acquired Companies does not file Tax Returns that
any of the Acquired Companies is or may be subject to taxation in that
jurisdiction.
(g) As of the Effective Time, the net operating losses of the Acquired
Companies for federal income tax purposes will be not less than $30,000,000.
(h) The alternative minimum tax credit of the Acquired Companies for
federal income tax purposes as of the Effective Time will be not less than
$2,000,000.
2.13 Employee And Labor Matters; Benefit Plans.
(a) Part 2.8(a)(i) and 2.13(a) of the Company Disclosure Schedule identify
each written or unwritten salary, employment, bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance pay, termination
pay, hospitalization, medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension or retirement plan, program,
arrangement or agreement (collectively, the "Plans") sponsored, maintained,
contributed to or required to be contributed to by any Acquired Company for the
benefit of any current or former employee or director (or any beneficiary of the
foregoing) of any Acquired Company (each, an "Employee"), or pursuant to which
any Acquired Company may have liability (contingent or otherwise).
(b) Except as set forth in Part 2.13(b) of the Company Disclosure Schedule,
none of the Acquired Companies maintains, sponsors or contributes to, or has at
any time in the past maintained, sponsored or contributed to, any employee
pension benefit plan (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), whether or not excluded from
coverage under specific Titles or Subtitles of ERISA).
(c) Each of the Acquired Companies maintains, sponsors or contributes to
(or has liability (contingent or otherwise) with respect to) only those employee
welfare benefit plans (as defined in Section 3(1) of ERISA, whether or not
excluded from coverage under specific Titles or Subtitles of ERISA) which are
set forth in Part 2.13(c) of the Company Disclosure Schedule (the "Welfare
Plans").
(d) With respect to each Plan, the Company has delivered to Parent:
(i) an accurate and complete copy of such Plan (including all amendments
thereto);
(ii) an accurate and complete copy of the annual report, if required under
ERISA, with respect to such Plan for the last five years;
(iii) an accurate and complete copy of the most recent prospectus and
summary plan description, together with each subsequent Summary of Material
Modifications, if required under ERISA, with respect to such Plan, and all
material employee communications relating to such Plan;
(iv) if such Plan is funded through a trust or any third party funding
vehicle, an accurate and complete copy of the trust or other funding agreement
(including all amendments thereto) and accurate and complete copies the most
recent financial statements thereof;
(v) accurate and complete copies of all Contracts relating to such Plan,
including service provider agreements, insurance contracts, minimum premium
contracts, stop-loss agreements, investment management agreements, trust
agreements, subscription and participation agreements and record keeping
agreements; and
(vi) an accurate and complete copy of the most recent determination letter
received from the Internal Revenue Service with respect to such Plan (if such
Plan is intended to be qualified under Section 401(a) of the Code).
(e) None of the Acquired Companies is required to be, and, to the Knowledge
of the Company, has ever been required to be treated as a single employer with
any other Person under Section 4001(b)(1) of ERISA or Section 414(b), (c), (m)
or (o) of the Code. None of the Acquired Companies has ever been a member of an
"affiliated service group" within the meaning of Section 414(m) of the Code.
None of the Acquired Companies has ever made a complete or partial withdrawal
from a multiemployer plan, as such term is defined in Section 3(37) of ERISA,
resulting in "withdrawal liability," as such term is defined in Section 4201 of
ERISA (without regard to subsequent reduction or waiver of such liability under
either Section 4207 or 4208 of ERISA).
(f) Except as listed in Part 2.13(f) of the Company Disclosure Schedule,
none of the Acquired Companies has any plan or commitment to create any
additional employee benefit plan or program, or to modify or change any existing
Welfare Plan or other Plan (other than to comply with applicable law) in a
manner that would affect the rights or obligations of any current or former
Employee or any Acquired Company thereunder.
(g) Except as set forth in Part 2.13(g) of the Company Disclosure Schedule,
no Plan provides death, medical or health benefits (whether or not insured) with
respect to any Employee (or his or her dependents) after any such Employee's
termination of service (other than (i) benefit coverage mandated by statute,
including coverage provided pursuant to Section 4980B of the Code, (ii) deferred
compensation benefits accrued as liabilities on the Unaudited Interim Balance
Sheet or the NCA#1 Unaudited Interim Balance Sheet, and (iii) benefits the full
cost of which is borne by such Employee (or his or her dependents)).
(h) With respect to each of the Welfare Plans constituting a group health
plan within the meaning of Section 4980B(g)(2) of the Code, the provisions of
Section 4980B of the Code ("COBRA") have been complied with in all material
respects.
(i) Each of the Plans has been operated and administered in all material
respects in accordance with applicable Legal Requirements, including, but not
limited to, ERISA and the Code. There are no actions, proceedings, arbitrations,
suits, claims, audits or investigations pending, or to the knowledge of any
Acquired Company threatened or anticipated (other than routine claims for
benefits) in connection with a Plan and pursuant to which any Plan or any
Acquired Company could incur a material liability.
(j) Each of the Plans intended to be qualified under Section 401(a) of the
Code is so qualified and the Company is not aware of any reason why such
qualified status should be revoked.
(k) Except as set forth in Part 2.13(k) of the Company Disclosure Schedule,
neither the execution, delivery or performance of this Agreement, nor the
consummation of the Merger or any of the other transactions contemplated by this
Agreement (whether alone or upon the occurrence of any other event), will result
in any payment (including any bonus, golden parachute or severance payment) to
any current or former Employee or director of any Acquired Company (whether or
not under any Plan), materially increase the benefits payable under any Plan,
result in any acceleration of the time of payment or vesting of any such
benefits, or result in the material loss of deduction by reason of Section 280G
of the Internal Revenue Code.
(l) None of the Acquired Companies is a party to any collective bargaining
contract or other Contract with a labor union involving any of its Employees.
Except as listed in Part 2.13(l) of the Company Disclosure Schedule, all of the
Acquired Companies' employees are "at will" employees. No Acquired Company
contributes to or is required to contribute to, or has ever contributed to or
been required to contribute to, any "multi-employer plan" (within the meaning of
Sections 3(37) or 4001(a)(3) of ERISA).
(m) Except where the failure to comply has not had and will not have a
Material Adverse Effect on the Company, to the Knowledge of the Company, each of
the Acquired Companies is, and has at all times since November 2, 1998 been, in
compliance with all applicable Legal Requirements and Contracts relating to
employment, employment practices, wages, bonuses and terms and conditions of
employment, including employee compensation matters; provided, however, that
with respect to any Acquired Company that was acquired by the Company since
November 2, 1998, with respect to the operations of such company prior to such
acquisition, such representation shall be made only to the Knowledge of the
Company.
2.14 Environmental Matters.
(a) Except as disclosed in Part 2.14(a) of the Company Disclosure Schedule
and except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company taken as a whole:
(i) Each of the Acquired Companies is, and to the Knowledge of the Company
has at all times been, in compliance with all applicable Environmental Laws (as
hereinafter defined);
(ii) None of the Acquired Companies has received any written communication
from any person or Governmental or Regulatory Authority that alleges that such
Acquired Company or any predecessor is not in such compliance with applicable
Environmental Laws.
(iii) Each of the Acquired Companies has obtained all environmental, health
and safety permits and governmental authorizations (collectively, the
"Environmental Permits") necessary for the construction of its existing
facilities and the conduct of its operations, as applicable, and all such
Environmental Permits are in good standing or, where applicable, a renewal
application has been timely filed and is pending agency approval, and the
Acquired Companies are in compliance with all terms and conditions of the
Environmental Permits.
(iv) There is no Environmental Claim (as hereinafter defined) pending or,
to the Knowledge of the Company, threatened
(A) against the Acquired Companies;
(B) against any person or entity whose liability for any such Environmental
Claim the Acquired Companies has or may have retained or assumed either
contractually or by operation of law; or
(C) against any real or personal property or operations which any of the
Acquired Companies owns, leases or manages, in whole or in part.
(v) To the Knowledge of the Company, there have not been any Releases (as
hereinafter defined) of any Hazardous Material (as hereinafter defined) and
there are no other circumstances that would be reasonably likely to form the
basis of any material Environmental Claim against any of the Acquired Companies,
or against any person or entity whose liability for any Environmental Claim any
of the Acquired Companies have or may have been retained or assumed either
contractually or by operation of law.
(vi) To the Knowledge of the Company, with respect to any predecessor of
the Company or any of the Acquired Companies, there is no Environmental Claim
pending or threatened in writing, and there has been no Release of Hazardous
Materials that would be reasonably likely to form the basis of any Environmental
Claim.
(vii) None of the properties presently or formerly owned, leased or
operated by any of the Acquired Companies are now, or were in the past, listed
or proposed for listing, on the National Priorities List of Superfund Sites
("NPL"), the Comprehensive Environmental Response, Compensation, and Liability
Information System ("CERCLIS") or any analogous state list.
(viii) As used in this Section 2.14:
(A) "Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, directives, claims, liens,
investigations, proceedings or written notices of noncompliance, liability or
violation by any person or entity (including any Governmental or Regulatory
Authority) alleging potential liability (including, without limitation,
potential responsibility or liability for enforcement, investigatory costs,
cleanup costs, governmental response costs, removal costs, remedial costs,
natural resources damages, property damages, personal injuries or penalties)
arising out of, based on or resulting from
(1) the presence, or Release or threatened Release into the environment, of
any Hazardous Materials at any location, whether or not owned, operated, leased
or managed by any of the Acquired Companies; or
(2) circumstances forming the basis of any violation, or alleged violation,
of any Environmental Law; or
(3) any and all claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
the presence or Release of any Hazardous Materials;
(B) "Environmental Laws" means all federal, state and local laws, statutes,
ordinances and regulations, now or at the Effective Time in effect, and in each
case as amended or supplemented from time to time, any judicial or
administrative interpretation thereof, and any judicial or administrative
decision order, consent decree or judgment relating to the regulation and
protection of human health, safety, the environment or natural resources
(including, without limitation, ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species and
vegetation) or protection of human health as it relates to the environment
including, without limitation, laws and regulations relating to Releases or
threatened Releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials. Environmental Laws include but are
not limited to the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. 9601 et seq.) ("CERCLA"); the
Hazardous Materials Transportation Act, as amended (49 U.S.C. 1801 et seq.);
the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C.
136 et seq.); the Resource Conservation and Recovery Act, as amended (42
U.S.C. 6901 et seq.) ("RCRA"); the Toxic Substances Control Act, as amended
(15 U.S.C. 2601 et seq.); the Clean Air Act, as amended (42 U.S.C. 7401 et
seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. 1251 et
seq.); the Occupational Safety and Health Act, as amended (29 U.S.C.651 et
seq.); and the Safe Drinking Water Act, as amended (42 U.S.C. 300f et seq.),
and their state and local counterparts or equivalents and any transfer of
ownership notification or approval statute, including, without limitation, the
New Jersey Environmental Cleanup Responsibility Act (N.J. Stat. Ann. 13:1K-6
et seq.) ("ECRA");
(C) "Hazardous Materials" means (i) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, and transformers or other equipment that
contain dielectric fluid containing polychlorinated biphenyls; and (ii) any
chemicals, materials or substances which are now defined as or included in the
definition of "hazardous substances", "hazardous wastes", "hazardous materials",
"extremely hazardous wastes", "restricted hazardous wastes", "toxic substances",
"toxic pollutants", or words of similar import, under any Environmental Law; and
(iii) any other chemical, material, substance or waste, exposure to which or the
transport, storage, disposal or Release of which is now prohibited, limited or
regulated under any Environmental Law in a jurisdiction in which any of the
Acquired Companies operates or any jurisdiction which has received such
chemical, material, substance or waste from any of the Acquired Companies; and
(D) "Release" means any release, spill, emission, leaking, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
atmosphere, soil, surface water, groundwater or property.
(b) All costs (including capital costs), expenses, damages or liabilities
relating to the matter entitled U.S.A. v. Texaco Clark County Cogeneration
Company, Et al. and any of the facts or allegations on which that matter is
based have previously been paid, or have been accrued as of June 30, 1999;
provided, however, certain costs and expenses for attorneys fees associated with
such matter, in an amount not to exceed $10,000, are still accruing and have not
been paid.
2.15 Insurance. Part 2.15 of the Company Disclosure Schedule identifies all
insurance policies maintained by, at the expense of or for the benefit of the
Acquired Companies and identifies any material claims currently outstanding
thereunder, and the Company has delivered or made available to Parent accurate
and complete copies of the insurance policies identified in Part 2.15 of the
Company Disclosure Schedule. Each of the insurance policies identified in Part
2.15 of the Company Disclosure Schedule is in full force and effect. Since
November 2, 1998, none of the Acquired Companies has received any notice or
other communication regarding any actual or possible (a) cancellation or
invalidation of any insurance policy, (b) refusal of any coverage or rejection
of any covered claim under any insurance policy, or (c) material adjustment in
the amount of the premiums payable with respect to any insurance policy.
2.16 Related Party Transactions. Except as set forth in Part 2.16 of the
Company Disclosure Schedule and except pursuant to ownership of the Company's
outstanding securities: (a) no Related Party has, and no Related Party has at
any time since November 2, 1998 had, any direct or indirect interest in any
material asset used in or otherwise relating to the business of any Acquired
Company; (b) no Related Party is, or has at any time since November 2, 1998
been, indebted to any Acquired Company; (c) since November 2, 1998, no Related
Party has entered into, or has had any direct or indirect financial interest in,
any Company Material Contract, transaction or business dealing involving any
Acquired Company; (d) no Related Party is competing, or has at any time since
November 2, 1998 competed, directly or indirectly, with any Acquired Company;
and (e) to the Knowledge of the Company, no Related Party has any claim or right
against any Acquired Company (other than rights under Company Options and rights
to receive compensation for services performed as an employee of any such
Acquired Company). (For purposes of the Section 2.16 each of the following shall
be deemed to be a "Related Party": (i) each of the Principal Stockholders; (ii)
each individual who is an executive officer or director of any Acquired Company;
(iii) each member of the immediate family of each of the individuals referred to
in clauses "(i)" and "(ii)" above; and (iv) any trust or other Entity (other
than the Acquired Companies) in which any one of the individuals referred to in
clauses "(i)", "(ii)" and "(iii)" above holds (or in which more than one of such
individuals collectively hold), beneficially or otherwise, a material voting,
proprietary or equity interest.)
2.17 Legal Proceedings; Orders.
(a) Except as set forth in Part 2.17(a) of the Company Disclosure Schedule,
there is no pending Legal Proceeding, and (to the Knowledge of the Company) no
Person has threatened to commence any Legal Proceeding: (i) that involves any
Acquired Company or any of the properties or assets owned or used by any
Acquired Company; or (ii) that challenges, or that could reasonably be expected
to have the effect of preventing, delaying, making illegal or otherwise
interfering with, the Merger. To the Knowledge of the Company, except as set
forth in Part 2.17(a) of the Company Disclosure Schedule, no event has occurred,
and no claim, dispute or other condition or circumstance exists, that will, or
that could reasonably be expected to, give rise to or serve as a basis for the
commencement of any such Legal Proceeding.
(b) Except as set forth in Part 2.17(b) of the Company Disclosure Schedule,
there is no order, writ, injunction, judgment or decree to which any Acquired
Company, or any of the properties or assets owned or used by any Acquired
Company, is subject, that will have, or reasonably likely to have, a Material
Adverse Effect on the Company. To the Knowledge of the Company, no officer or
other employee of any Acquired Company is subject to any order, writ,
injunction, judgment or decree that prohibits such officer or other employee
from engaging in or continuing any conduct, activity or practice relating to the
business of any Acquired Company that will have, or be reasonably likely to
have, a Material Adverse Effect on the Company.
2.18 Authority; Binding Nature of Agreement. The Company has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder; provided, however, that
the Company cannot consummate the Merger unless and until it receives the
Requisite Company Stockholder Approval. The execution and delivery of this
Agreement by the Company and the performance by it of its obligations hereunder
have been approved by the Board of Directors of the Company, and no other
corporate proceedings on the part of the Company are necessary to authorize the
execution and delivery of this Agreement or, except for the approval of the
Company's stockholders with respect solely to the Merger, the consummation by
the Company of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Company and this Agreement constitutes the
valid and legally binding obligation of the Company, enforceable in accordance
with its terms and conditions subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other equitable
remedies.
2.19 Non-contravention; Consents. Except as set forth in Part 2.19 of the
Company Disclosure Schedule, neither (1) the execution, delivery or performance
of this Agreement or any of the other agreements referred to in this Agreement,
nor (2) the consummation of the Merger or any of the other transactions
contemplated by this Agreement, will directly or indirectly (with or without
notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of the
provisions of the Company's Certificate of Incorporation or bylaws, or (ii) any
resolution adopted by the Company's stockholders, the Company's board of
directors or any committee of the Company's board of directors;
(b) contravene, conflict with or result in a violation of any Legal
Requirement or any order, writ, injunction, judgment or decree to which the
Company, or any of the properties or assets owned or used by any of the Acquired
Companies, is subject;
(c) contravene, conflict with or result in a violation of any of the terms
or requirements of any Governmental Authorization that is held by any of the
Acquired Companies or that otherwise relates to the business or to any of the
properties or assets owned or used by any of the Acquired Companies which, in
any event, would have a Material Adverse Effect on the Company or the ability to
consummate the Merger or the other transactions contemplated hereby;
(d) except as would not have, or be reasonably likely to have, a Material
Adverse Effect on the Company, contravene, conflict with or result in a
violation or breach of, or result in a default under, any provision of any
Company Material Contract, or give any Person the right to (i) declare a default
or exercise any remedy under any such Company Material Contract, (ii) accelerate
the maturity or performance of any such Company Material Contract, or (iii)
cancel, terminate or modify any such Company Material Contract; or
(e) result in the imposition or creation of any lien or other Encumbrance
upon or with respect to any property or asset owned or used by any Acquired
Company (except for minor liens that will not, in any case or in the aggregate,
materially detract from the value of the properties or assets subject thereto or
materially impair the operations of any such Acquired Company).
Except as set forth in Part 2.19 of the Company Disclosure Schedule, none
of the Acquired Companies is or will be required to make any filing with or give
any notice to, or to obtain any Consent from, any Person in connection with (x)
the execution, delivery or performance of this Agreement or any of the other
agreements referred to in this Agreement, or (y) the consummation of the Merger
or any of the other transactions contemplated by this Agreement.
2.20 SEC Report. Except as set forth in Part 2.20 of the Company Disclosure
Schedule the Company has made all filings with the SEC that it has been required
to make within the past two years under the Securities Act and the Securities
Exchange Act (collectively the "Public Reports"). Each of the Public Reports has
complied with the Securities Act and the Securities Exchange Act in all material
respects. None of the Public Reports, as of their respective dates, contained
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Company has
delivered to Parent a correct and complete copy of each Public Report (together
with all exhibits and schedules thereto and as amended to date).
2.21 Advisors' and Brokers' Fees. The Company has engaged CIBC World
Markets Corp. as its financial advisor in connection with the transactions
contemplated by this Agreement. An accurate copy of any fee agreement with CIBC
World Markets Corp. has been provided to Parent. The Company has not retained
any other advisor or broker in respect to the transactions contemplated by this
Agreement for which the Company or Parent are liable or shall incur any
liability.
2.22 Board Action; Vote Required.
(a)The Company's Board of Directors has unanimously approved this
Agreement and the transactions contemplated hereby, has determined that the
transactions contemplated hereby are fair to and in the best interests of
Company and its stockholders and has resolved to recommend to stockholders that
they vote in favor of approving and adopting this Agreement and the Merger.
(b) Requisite Company Stockholder Approval is necessary to approve and
adopt this Agreement and the Merger. Such vote is the only vote or approval of
holders of shares of any class or series of the Company's capital stock required
in connection with this Agreement and the transactions contemplated hereby.
2.23. Year 2000. The Company's Year 2000 (Y2K) compliance efforts (which
efforts will include implementation of the recommendations of Parent attached
hereto in Part 2.23 of the Company Disclosure Schedule) with regard to the NCA
#1 project (the Y2K Compliance Program) are ongoing. Furthermore, the Company
has dedicated, or has caused the Acquired Companies to dedicate, resources
(including computer and engineering facilities, laboratories, personnel and
money) necessary to complete the Y2K Compliance Program by November 5, 1999, or
they have made a diligent investigation to determine, that failure of any item
of Software will not effect any material aspect of any NCA #1 project output,
safety or environmental components, or the ability to account for revenues from
or costs incurred by the Company. As such, the Company has communicated with
certain key vendors and has determined that all are making progress toward their
respective Y2K compliance. The financial institutions with whom the Company has
its material relationships have each asserted to the Company that their
respective Y2K compliance programs are on schedule, and the Company is unaware
of any facts that contradict such assertions.
2.24 Proxy Statement. The Company's Proxy Statement with respect to seeking
the Requisite Company Stockholder Approval will not, in the case of any
document, any amendments thereof or supplements thereto, at the time of the
mailing thereof and any amendments or supplements thereto, and at the time of
the meeting of stockholders of the Company to be held in connection with the
transactions contemplated by this Agreement, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The Proxy Statement
will comply, as of its mailing date, as to form in all material respects with
all applicable laws, including the provisions of the Exchange Act and the rules
and regulations promulgated thereunder, except that no representation is made by
the Company with respect to information, if any, supplied by Parent, Merger Sub
or any stockholder of Parent for inclusion therein.
2.25 Opinion of Company's Advisor. The board of directors of the Company
has received the opinion of CIBC World Markets Corp. to the effect that, subject
to the qualifications and limitations contained therein, as of the date of this
Agreement, the Initial Merger Consideration is fair to the holders of Converted
Shares from a financial point of view.
2.26 Bankruptcy Documentation. The Company has delivered to Parent true and
complete copies of the Bankruptcy Plan, the Disclosure Statement (as amended)
for the Plan dated April 22, 1998 (the "Disclosure Statement"), the Order
Confirming the Trustee's Amended Chapter 11 Plan for the Estate of Bonneville
Pacific Corporation dated August 26, 1998 (the "Confirmation Order") and the
Final Decree dated March 22, 1999 (the "Final Decree," and, together with the
Bankruptcy Plan, the Disclosure Statement and the Confirmation Order, the
"Bankruptcy Documents"). The Confirmation Order is final and non-appealable and
no Person has sought to revoke such order. The Bankruptcy Plan has been
substantially consummated and (except as set forth in Part 2.26 of the Company
Disclosure Schedule) any required distributions thereunder have been made.
2.27 Public Utility Holding Company Act. The Company is not a "holding
company" or a "subsidiary company" of a "holding company" in each case within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
2.28 Investment Company Act. The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, and is not
required to register under the Investment Company Act of 1940, as amended.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to the
Company as follows:
3.1 Due Organization, Etc.
(a) The Parent and Merger Sub, are corporations, duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation. Each of the Parent and the Merger Sub has all necessary
corporate power and authority: (i) to conduct its business in the manner in
which its business is currently being conducted; and (ii) to own and use its
assets in the manner in which its assets are currently owned and used.
(b) Each of the Parent and Merger Sub is qualified to transact business and
is in good standing in each jurisdiction in which the properties owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified and in good
standing would not reasonably be expected to have a Material Adverse Effect on
the Parent.
3.2 Authority; Binding Nature of Agreement. Each of the Parent and the
Merger Sub has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by the Parent and Merger
Sub and the performance by each of its obligations hereunder have been duly
authorized by all necessary corporate action on the part of the Parent and
Merger Sub. This Agreement has been duly executed and delivered by the Company
and Merger Sub and this Agreement constitutes the valid and legally binding
obligation of the Parent and Merger Sub, enforceable in accordance with its
terms and conditions subject to (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
3.3 Non-contravention; Consents. Except as set forth in Part 3.3 of the
Parent Disclosure Schedule and except as contemplated by Section 4.4, neither
(1) the execution, delivery or performance of this Agreement or any of the other
agreements referred to in this Agreement, nor (2) the consummation of the Merger
or any of the other transactions contemplated by this Agreement, will directly
or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of the
provisions of the Parent's or Merger Sub's Certificate of Incorporation or
bylaws, or (ii) any resolution adopted by the Parent's or Merger Sub's
stockholders, the Parent's or Merger Sub's board of directors or any committee
of the Parent's or Merger Sub's board of directors;
(b) contravene, conflict with or result in a violation of any Legal
Requirement or any order, writ, injunction, judgment or decree to which the
Parent or Merger Sub is subject;
(c) contravene, conflict with or result in a violation of any of the terms
or requirements of any Governmental Authorization that is held by the Parent or
Merger Sub or that otherwise relates to the business or to any of the properties
or assets owned or used by the Parent or Merger Sub which, in any event, would
have an effect on the ability of the Parent or Merger Sub to consummate the
Merger or the other transactions contemplated hereby;
(d) except as would not have a Material Adverse Effect on the Parent,
contravene, conflict with or result in a violation or breach of, or result in a
default under, any provision of any Parent material contract.
Except as set forth in Part 3.3 of the Parent Disclosure Schedule, neither
of the Parent or Merger Sub is or will be required to make any filing with or
give any notice to, or to obtain any Consent from, any Person in connection with
(x) the execution, delivery or performance by Parent or Merger Sub of this
Agreement or any of the other agreements referred to in this Agreement, or (y)
the consummation by Parent or Merger Sub of the Merger or any of the other
transactions contemplated by this Agreement.
3.4 Adequate Financing. Parent has obtained, and is able to satisfy all
conditions to disbursement of, all financing necessary to enable Parent to pay,
at the Effective Time, the total Merger Consideration.
SECTION 4. COVENANTS OF THE PARTIES
4.1 Access And Investigation. During the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period"), the Company
shall, and shall cause its Representatives to: (i) provide the Parent and its
Representatives with reasonable access to the Company's personnel, properties
and assets and to all existing books, records, Tax Returns, work papers and
other documents and information relating to the Acquired Parties (including all
reports, studies, analyses, tests or monitoring data related to Hazardous
Materials); and (ii) provide Parent and its Representatives with copies of such
existing books, records, Tax Returns, work papers and other documents and
information, and with such additional financial, operating and other data and
information may be reasonably requested.
4.2 Operation of Business By Company. During the Pre-Closing Period, except
pursuant to prior written consent of Parent, the Company shall, and shall cause
each of the other Acquired Companies to:
(a) conduct its business and operations in the ordinary course and in
substantially the same manner as such business and operations have been
conducted prior to the date of this Agreement, except that the Company shall
not, without the consent of Parent (which consent shall not be unreasonably
withheld), support the entry into any additional excess sale agreement by NCA
#1;
(b) use reasonable efforts (which shall not include or require the
expenditure of any funds, except consistent with the ordinary course of
business) to preserve intact its current business organization, keep available
the services of its current officers and employees and maintain its relations
and goodwill with all suppliers, customers, landlords, creditors, employees and
other Persons having business relationships with it;
(c) pay the premiums required by, and use its best efforts to keep in full
force, all insurance policies identified in Part 2.15 of the Company Disclosure
Schedule, including the premium associated with director and officer liability
insurance to cover the six year period following the Effective Date, in a form
reasonably acceptable to Parent;
(d) not declare, accrue, set aside or pay any dividend or make any other
distribution in respect of any shares of capital stock, and shall not
repurchase, redeem or otherwise reacquire any shares of capital stock or other
securities or other equity;
(e) not sell, issue or authorize the sale or issuance of (1) any capital
stock or other security, (2) any option or right to acquire any capital stock or
other security, or (3) any instrument convertible into or exchangeable for any
capital stock or other security (except that the Company shall be permitted to
issue Company Common Stock upon the exercise of outstanding stock options (all
options shall vest and become immediately exercisable at the Effective Time
pursuant to Section 1.6 above);
(f) not amend or waive any of its rights under (1) any provision of the
Company's stock option plans, (2) any provision of any agreement evidencing any
outstanding stock option or warrant, or (3) any provision of any restricted
stock purchase agreement;
(g) not amend or permit the adoption of any amendment to the Company's
Certificate of Incorporation or bylaws, or, except as set forth in Part 4.2(g)
of the Company Disclosure Schedule, not effect or permit Company to become a
party to any recapitalization, reclassification of shares, stock split, reverse
stock split or similar transaction;
(h) except for the contemplated sale of Bonneville Fuels Corporation
referred to in Section 1.5 above, not (1) enter into, or permit any of the
properties or assets owned or used by it to become bound by, any Company
Material Contract, or (2) amend or prematurely terminate, or waive any material
right or remedy under, any such Company Material Contract (other than the
contemplated amendments to the NCA#1 and NCA#2 Operation and Maintenance
Agreements to clarify the incentive payment calculations, which amendments shall
be satisfactory to Parent);
(i) not, except in the ordinary course of business, (1) acquire, lease or
license any right, personal or real property or other asset from any other
Person or, (2) sell or otherwise dispose of, or lease or license, or waive or
relinquish any right with respect to, any right, personal or real property or
other asset to any other Person (other than the contemplated sale of Bonneville
Fuels Corporation referred to in Section 1.5 above);
(j) not lend money to any Person except in the ordinary course of business
consistent with past practice and not to exceed $25,000;
(k) not incur, become contingently liable for or guarantee any indebtedness
for borrowed money in excess of $100,000 (except that the Acquired Companies may
(1) make routine borrowings in the ordinary course of business under their
existing lines of credit and (2) incur intercompany indebtedness in the ordinary
course of business consistent with past practice, not to exceed $50,000;
(l) except as set forth in Part 4.2(l) of the Company Disclosure Schedule,
not: (i) establish, adopt, or enter into any employee benefit plan, program,
agreement, or arrangement, or to amend any Plan; (ii) except in the ordinary
course of business consistent with past practice, pay any bonus or make any
profit-sharing payment, cash incentive payment or similar payment to, or
increase the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its employees (but excluding
employees who are officers of the Company); (iii) hire any new employee other
than to replace an existing employee at a salary not to exceed 120% of the
salary of the employee being replaced; or (iv) adopt any severance plan or
arrangement or enter into any severance agreement, or enter into any other plan,
arrangement or agreement providing for the payment of any benefit or
acceleration of any options upon a change in control or a termination of
employment;
(m) not change any of its methods of accounting or accounting practices in
any material respect;
(n) not commence or settle any material Legal Proceeding (other than
settlement of the EPA action entitled U.S.A. v. Texaco Clark County Cogeneration
Company, Et al., in accordance with the Consent Decree dated March 22, 1999)
provided, however, that consent by Parent with respect to the commencement of
any Legal Proceeding shall not be unreasonably withheld or delayed;
(o) not make capital expenditures in excess of amounts specified in Part
4.2(o) of the Company Disclosure Schedule;
(p) not make, change or revoke any election relating to taxes unless
required by law (and excluding the election described in Section 5.10) or make
any material agreement or settlement regarding Taxes with any taxing authority;
(q) not amend or waive any of the provisions of any "standstill" or similar
agreement that any third party has entered into with respect to any Acquired
Company; and
(r) not agree or commit to take any of the actions described in clauses
"(d)" through "(q)" above.
4.3 Notification; Updates to Company Disclosure Schedule.
(a) During the Pre-Closing Period, the Company shall promptly notify Parent
in writing of:
(i) the discovery by the Company of any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this Agreement
and that caused or constitutes a material inaccuracy in or material breach of
any representation or warranty made by the Company in this Agreement;
(ii) any event, condition, fact or circumstance that occurs, arises or
exists after the date of this Agreement and that would cause or constitute a
material inaccuracy in or material breach of any representation or warranty made
by the Company in this Agreement if (A) such representation or warranty had been
made as of the time of the occurrence, existence or discovery of such event,
condition, fact or circumstance, or (B) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement; and
(iii) any breach of any covenant or obligation of the Company.
(b) If any event, condition, fact or circumstance that is required to be
disclosed pursuant to Section 4.3(a) requires any change in the Company
Disclosure Schedule, or if any such event, condition, fact or circumstance would
require such a change assuming the Company Disclosure Schedule were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then the Company shall promptly deliver to Parent an
update to the Company Disclosure Schedule specifying such change. No such update
shall be deemed to supplement or amend the Company Disclosure Schedule for any
purpose.
(c) During the Pre-Closing Period, Parent shall promptly notify the Company
in writing of:
(i) the discovery by Parent of any event, condition, fact or circumstance
that occurred or existed on or prior to the date of this Agreement and that
caused or constitutes a material inaccuracy in or material breach of any
representation or warranty made by Parent in this Agreement;
(ii) any event, condition, fact or circumstance that occurs, arises or
exists after the date of this Agreement and that would cause or constitute a
material inaccuracy in or material breach of any representation or warranty made
by Parent in this Agreement if (A) such representation or warranty had been made
as of the time of the occurrence, existence or discovery of such event,
condition, fact or circumstance, or (B) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement; and
(iii) any breach of any covenant or obligation of Parent.
(d) If any event, condition, fact or circumstance that is required to be
disclosed pursuant to Section 4.3(c) requires any change in the Parent
Disclosure Schedule, or if any such event, condition, fact or circumstance would
require such a change assuming the Parent Disclosure Schedule were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then Parent shall promptly deliver to the Company an
update to the Parent Disclosure Schedule specifying such change. No such update
shall be deemed to supplement or amend the Parent Disclosure Schedule for any
purpose.
4.4 Filings And Consents. As promptly as practicable after the execution of
this Agreement, each party to this Agreement (a) shall make all filings (if any)
and give all notices (if any) required to be made and given by such party in
connection with the Merger and the other transactions contemplated by this
Agreement, including any filings required under the Securities Act and the HSR
Act and (b) shall use all commercially reasonable efforts to obtain all Consents
(if any) required to be obtained (pursuant to any applicable Legal Requirement
or Contract, or otherwise) by such party in connection with the Merger and the
other transactions contemplated by this Agreement. The Company shall promptly
deliver to Parent a copy of each such filing made, each such notice given and
each such Consent obtained during the Pre-Closing Period. Subject to
confidentiality provisions reasonably satisfactory to Parent, Parent shall
promptly deliver to the Company a copy of each such filing made, each such
notice given and each such Consent obtained during the Pre-Closing Period.
4.5 Proxy Statement; Company Stockholders' Meeting.
(a) The Company shall promptly prepare and file with the SEC a preliminary
proxy statement relating to the Merger and this Agreement and use its best
efforts (x) to obtain and furnish the information required to be included by the
SEC in the Proxy Statement (as hereinafter defined) and, after consultation with
the Parent, to respond promptly to any comments made by the SEC with respect to
the preliminary proxy statement (the "Proxy Statement") and cause a definitive
proxy statement to be mailed to its stockholders, (y) to obtain the necessary
approvals of the Merger and this Agreement by its stockholders and (z) to obtain
an accountant's comfort letter from the Company's independent outside
accountants (in form and substance standard for accountant's comfort letters
delivered in connection with proxy statements).
(b) The Company shall take all action necessary under all applicable Legal
Requirements to call, give notice of, convene and duly hold a meeting of the
holders of Company Common Stock (the "Company Stockholders' Meeting") to
consider and vote upon this Agreement and the Merger. The Company Stockholders'
Meeting will be held as promptly as practicable and in any event within sixty
(60) days after the Proxy Statement is approved by the SEC.
(c) The board of directors of the Company shall unanimously recommend that
the Company's stockholders vote in favor of and adopt and approve this Agreement
and approve the Merger at the Company Stockholders' Meeting; the Proxy Statement
shall include a statement to the effect that the board of directors of the
Company has unanimously recommended that the Company's stockholders vote in
favor of and adopt and approve this Agreement and approve the Merger at the
Company Stockholders' Meeting; provided, however, that nothing contained in
Section 4.6(b) or this Section 4.5 shall require the Board of Directors of the
Company to make any recommendation or refrain from making any recommendation
with respect to a Superior Proposal, which such Board of Directors, after
considering such matters as such Board of Directors deems relevant (including
the written advice of outside counsel), determines in good faith would result in
a breach of its fiduciary duty under applicable law.
4.6 No Solicitation. (a) From the date hereof and through the Closing, the
Company shall not, nor shall it permit its Subsidiaries to, or authorize any of
its officers, directors, employees, accountants, counsel, investment bankers,
financial advisors and other representatives ("Representatives") to,
(i) directly or indirectly, initiate, solicit or encourage, or take any action
to facilitate the making of any Takeover Proposal (defined below), or
(ii) directly or indirectly engage in negotiations or provide any confidential
information or data to any person relating to any Takeover Proposal; provided,
however, that at any time prior to the date of the Company Stockholders Meeting
contemplated by Section 4.5 (the "Applicable Period"), the Company may, in
response to a Superior Proposal (as defined below) which was not solicited by it
and which did not otherwise result from a breach of this Section 4.6(a), and
subject to providing prior written notice of its decision to take such action to
Parent (the "Notice") and compliance with Section 4.6(c) following delivery of
the Notice (x) furnish information with respect to the Company and/or its
Subsidiaries to any person making a Superior Proposal pursuant to a customary
confidentiality agreement (as determined by such party after consultation with
its outside counsel) and (y) participate in discussions or negotiations
regarding such Superior Proposal.
(b) Neither the Board of Directors of the Company nor any committee thereof
shall (x) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Parent, the approval or recommendation by the Board of Directors of
the Company or any such committee of the Merger or this Agreement, (y) approve
any letter of intent, agreement in principle, acquisition agreement or similar
agreement (other than a confidentiality agreement in connection with a Superior
Proposal which is entered into by such party in accordance with Section 4.6(a))
relating to any Takeover Proposal (each, an "Acquisition Agreement"), or
(z)approve or recommend, or propose to approve or recommend, any Takeover
Proposal. Notwithstanding the foregoing, in response to a Superior Proposal
which was not solicited by the Company and which did not otherwise result from a
breach of Section 4.6(a), the Board of Directors for the Company may (subject to
this sentence) terminate this Agreement (and concurrently with or after such
termination, if it so chooses, cause the Company to enter into any Acquisition
Agreement with respect to any Superior Proposal), but only at a time that is
during the Applicable Period and is after the fifth business day following
Parent's receipt of written notice advising Parent that the Board of Directors
of the Company has resolved to accept a Superior Proposal (subject to such
termination), specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal.
(c) The Company promptly shall advise the Parent orally and in writing of
any Takeover Proposal or any inquiry with respect to or that could reasonably be
expected to lead to any Takeover Proposal, the identity of the person making any
such Takeover Proposal or inquiry and the material terms of any such Takeover
Proposal or inquiry. The Company shall keep the Parent fully informed of the
status and material terms of any such Takeover Proposal or inquiry.
(d) The Company and the Acquired Companies shall each immediately cease and
cause to be terminated all existing discussions and negotiations, if any, with
any other persons conducted heretofore with respect to any Takeover Proposal.
For purposes of this Agreement, a "Takeover Proposal" with respect to the
Company means any inquiry, proposal or offer from any person relating to (i) any
direct or indirect acquisition or purchase of a business (other than BFC) that
constitutes 25% or more of the net revenues, net income or the assets of the
Company and its Subsidiaries (other than BFC), taken as a whole, or 25% or more
of any class of equity securities of the Company or any of its Subsidiaries
(other than BFC), (ii) any tender offer or exchange offer that if consummated
would result in any person beneficially owning 25% or more of any class of
equity securities of the Company or any of its Subsidiaries (other than BFC), or
(iii) any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its Subsidiaries (other than BFC) that constitutes 25% or more of the net
revenues, net income or the assets of the Company and its Subsidiaries (other
than BFC) taken as a whole, in each case other than the transactions
contemplated by this Agreement. Each of the transactions referred to in
clauses(i)-(iii) of the foregoing definition of Takeover Proposal, other than
the transactions contemplated by this Agreement, is referred to herein as an
"Acquisition Transaction."
For purposes of this Agreement, a "Superior Proposal" with respect to the
Company means any proposal made by a third party to acquire, directly or
indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction, for consideration consisting of cash and/or securities,
more than 50% of the combined voting power of the shares of Company Common Stock
then outstanding or at least 50% of the assets of the Company and its
Subsidiaries, taken together, and if (x) the proposal is otherwise on terms
which the Board of Directors of the Company determines in its good faith
judgment (after consultation with the Company's independent financial advisor
and consideration of such other matters as the Board of Directors of the Company
deems relevant) to be more favorable to the Company's stockholders than the
Merger and for which financing, to the extent required, is then committed or
which, in the good faith judgment of the Board of Directors of the Company is
reasonably capable of being obtained by such third party and (y) such Board of
Directors, after considering such matters as such Board of Directors deems
relevant (including the written opinion of outside counsel), determines in good
faith that, in the case of the Company, furnishing information to the third
party, participating in discussions or negotiations with respect to the Superior
Proposal or withdrawing or modifying its recommendation or recommending a
Takeover Proposal, as applicable, or terminating this Agreement, is required for
the Board of Directors of the Company to comply with its fiduciary duties to the
Company and its stockholders under applicable law.
(e) Nothing contained in this Agreement shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule 14d 9
and Rule 14e 2 promulgated under the Exchange Act.
4.7 Public Announcements. The parties agree that the initial press release
with respect to this Agreement and the transactions contemplated hereby shall be
a joint press release (to include such text as the parties may mutually agree).
Thereafter, subject to their respective legal obligations (including
requirements of securities exchanges and other similar regulatory bodies),
Parent and the Company shall consult with each other and use their reasonable
best efforts to agree upon the text of any press release before issuing any such
press release or otherwise making public statements with respect to the
transactions contemplated hereby and in making any public statement or
disclosure required by any Governmental Entity, securities exchange or other
similar regulatory body with respect thereto.
4.8 Regulatory Approvals. The Company and Parent shall, promptly after the
date of this Agreement, prepare and file the notifications, if any, required
under the HSR Act or other applicable statutes or regulations in connection with
the Merger. The Company and Parent shall respond as promptly as practicable to
(i) any inquiries or requests received from the Federal Trade Commission or the
Department of Justice for additional information or documentation and (ii) any
inquiries or requests received from any state attorney general or other
Governmental Body in connection with antitrust or related matters. Each of the
Company and Parent shall (1) give the other party prompt notice of the
commencement of any Legal Proceeding by or before any Governmental Body with
respect to the Merger or any of the other transactions contemplated by this
Agreement, (2) keep the other party informed as to the status of any Legal
Proceeding, and (3) promptly inform the other party of any communication to or
from the Federal Trade Commission, the Department of Justice or any other
Governmental Body regarding the Merger. The Company and Parent will consult and
cooperate with one another, and will consider in good faith the views of one
another, in connection with any analysis, appearance, presentation, memorandum,
brief, argument, opinion or proposal made or submitted in connection with any
Legal Proceeding under or relating to the HSR Act or any other federal or state
antitrust or fair trade law. In addition, except as may be prohibited by any
Governmental Body or by any Legal Requirement, in connection with any Legal
Proceeding under or relating to the HSR Act or any other federal or state
antitrust or fair trade law or any other similar Legal Proceeding, each of the
Company and Parent agrees to permit authorized Representatives of the other
party to be present at each meeting or conference relating to any such Legal
Proceeding and to have access to and be consulted in connection with any
document, opinion or proposal made or submitted to any Governmental Body in
connection with any such Legal Proceeding.
4.9 Employee Matters. As of the Effective Time, the Employees of the
Acquired Companies shall continue employment in the same positions and at the
same level of base wages and/or base salary and without having incurred a
termination of employment or separation from service; provided, however, except
as may be specifically required by applicable law or any contract, neither the
Parent and its Affiliates, on the one hand, nor any Employee, on the other hand,
shall be obligated to continue any employment relationship or any specific terms
of employment for any specific period of time. For at least two years following
the Effective Time, each Employee covered by the severance policy set forth in
Part 4.9 of the Company Disclosure Schedule shall, upon termination of his or
her employment by Parent, one of its Affiliates or one of the Acquired Companies
(whichever may apply) other than for cause (a "Qualifying Termination"), receive
the severance payment set forth in such Schedule. For purposes of this
paragraph, cause means termination for reason of: (i) willful misconduct or
illegal acts by the Employee, or (ii) violation of Parent and its Affiliates'
Code of Conduct and applicable policies relating to work rules and personal
conduct. For purposes of this Section 4.9, an Employee will be deemed to have
incurred a Qualifying Termination if Parent, the Surviving Corporation or any
Acquired Company (whichever may apply) requires that such Employee, as a
condition to continued employment, change the principal location of his or her
employment to a location outside a 50-mile radius from the principal location of
his or her employment at the Effective Time and such employee is not willing to
relocate. To the extent any employee benefit plan, program or policy of Parent
and its Affiliates (other than the Acquired Companies) is made available
following the Effective Time to any person who is an Employee of the Acquired
Companies immediately prior to the Effective Time: (i) service with Acquired
Companies by any Employee prior to the Effective Time shall be credited for
eligibility and vesting purposes for purposes of qualifying for any additional
benefits tied to periods of service under such plan, program or policy, but not
for benefit accrual purposes, and (ii) with respect to any welfare benefit plans
in which such Employees may participate, Parent and such Affiliates shall cause
such plans to provide credit for any co-payments or deductibles by such
Employees and waive all pre-existing condition exclusions and waiting periods,
other than limitations or waiting periods that have not been satisfied under
applicable welfare benefit plans maintained by the Acquired Companies for their
Employees prior to the Effective Time.
4.10 Shareholders' Representative. (a) At least fifteen days prior to the
Effective Time, the Company shall appoint a Representative and an alternate
Representative (the Shareholders Representative). The Shareholders
Representative shall, by virtue of the Merger, be irrevocably appointed
Representative of the holders of Converted Shares and authorized and empowered
to act for and on behalf of any or all of the holders of Converted Shares in
connection with the provisions of Sections 1.5(c) and 1.5(d) of the Agreement
(the above named representative, as well as any subsequent representatives of
the Stockholders elected by vote of holders owning a majority of the Converted
Shares outstanding immediately prior to the Effective Time being referred to
herein as the "Stockholders' Representative"). Notwithstanding any statement
contained in this Agreement to the contrary, Parent may rely conclusively, and
shall be protected in so acting, upon any written order, notice, demand,
certificate, statement, document or instruction (not only as to its due
execution and the validity and effectiveness of its provisions, but also as to
the truth and acceptability of any information therein contained) executed and
delivered by the Shareholders' Representative whether delivered in original
form, by facsimile or otherwise. The Stockholders' Representative shall not be
liable to any Stockholder with respect to any action taken or omitted to be
taken by any of the Stockholders' Representative acting in his capacity as
Stockholders' Representative under or in connection with this Agreement, unless
such action or omission results from or arises out of fraud, willful misconduct
or criminal action on the part of the Stockholders' Representative. Parent and
Merger Sub shall be entitled to rely on such appointments and treat the
Stockholders' Representatives as the duly appointed representatives of each
holder of Converted Shares. Each Stockholder who votes in favor of the Merger
and the transactions contemplated by this Agreement, by such vote, without any
further action, and each holder of Converted Shares who receives Merger
Consideration in connection with the Merger, by acceptance thereof and without
any further action, confirms such appointment and authority of the Stockholders'
Representative and acknowledges and agrees that such appointment is irrevocable
and coupled with an interest.
(b) The holders of Converted Shares shall be solely responsible for all
fees, costs and expenses incurred by the Stockholders' Representative (including
his outside advisors) in connection with serving as a representative of the
holders of Converted Shares hereunder and such fees, costs and expenses may be
deducted from amounts otherwise distributed to holders of Converted Shares. At
the Effective Time, at the election of the Company, an amount not to exceed
$100,000 which would otherwise be distributed to the Disbursement Agent (or an
escrow agent affiliated with the Disbursement Agent) may be deposited in a trust
account for use by the Shareholders' Representative to cover fees, costs and
expenses as provided in this Section 4.10.
4.11 Company Bankruptcy Stock Certificates. The Company shall use its best
efforts to cause the Company Stock Certificates issued pursuant to the
Bankruptcy Plan not to be forfeited pursuant to Section 5.9 of the Bankruptcy
Plan.
4.12 Y2K Testing Access. The Company shall allow Parent's employees,
consultants and agents reasonable access to the facilities of the Acquired
Companies and information during and related to all testing done by the Acquired
Companies or by the employees, consultants or agents of the Acquired Companies',
in each case with respect to efforts of the Acquired Companies to become Y2K
Compliant.
SECTION 5. CONDITIONS PRECEDENT TO OBLIGATIONS
OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions:
5.1 Accuracy of Representations. Each of the representations and warranties
made by the Company in this Agreement not qualified by materiality shall have
been accurate in all material respects. All such representations and warranties
qualified by materiality individually and in the aggregate shall have been
accurate, as of the date of this Agreement, and on and as of the Closing Date as
if made on the Closing Date (without giving effect to any update to the Company
Disclosure Schedule not consented to in writing by Parent).
5.2 Performance of Covenants. All of the covenants and obligations that the
Company is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
5.3 Stockholder Approval. The Merger and this Agreement shall have been
duly approved and adopted by Requisite Company Stockholder Approval in
accordance with Delaware General Corporation Law.
5.4 Consents. All Consents required to be obtained in connection with the
Merger and the other transactions contemplated by this Agreement (including the
Consents identified in Part 2.19 of the Company Disclosure Schedule and in Part
3.19 of the Parent Disclosure Schedule) shall have been obtained and shall be in
full force and effect.
5.5 Agreements and Documents. Parent shall have received the following
documents, each of which shall be in full force and effect:
(a) written resignations of all directors and officers of the Company (as
requested by Parent), effective as of the Effective Time; and
(b) customary closing certificates.
5.6 No Restraints. No temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the Merger shall have
been issued by any court of competent jurisdiction and remain in effect, and
there shall not be any Legal Requirement enacted or reasonably deemed applicable
to the Merger that (i) makes consummation of the Merger illegal or (ii) as a
whole, is reasonably expected to have a material adverse effect on the business,
condition, assets, liabilities, operations or financial performance of Parent or
the Surviving Corporation following the consummation of the Merger.
5.7 No Legal Proceedings. No Person shall have commenced or threatened to
commence any Legal Proceeding (i) challenging or seeking the recovery of damages
in connection with the Merger or (ii) seeking to prohibit or limit the exercise
by Parent of any right pertaining to its ownership of stock of the Surviving
Corporation, in each case which is reasonably expected to have a material
adverse effect on the business, condition, assets, liabilities, operations or
financial performance of Parent or the Surviving Corporation following the
consummation of the Merger.
5.8 HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act and any other applicable statutes or regulations shall
have expired or been terminated.
5.9 Completion of Bonneville Fuels Transaction. The sale of Bonneville
Fuels Corporation described in Section 1.5(b) above shall have been completed in
accordance with the terms of the BFC Sale Agreement as in effect on the date
hereof and the Shareholders' Representative, on behalf of the holders of
Converted Shares, shall have acknowledged the binding nature of the provisions
of Section 1.5(b) (including the provisions relating to the BFC Sale Agreement
or the BFC Net Proceeds).
5.10 382(1)(5) Election; NOL Carryback Waiver. The Company shall have filed
a valid and timely election pursuant to Section 382(l)(5)(G) of the Code and the
Regulations thereunder not to have the provisions of Section 382(l)(5) of the
Code apply to any ownership change (as defined in Section 382 of the Code)
resulting from the bankruptcy reorganization of Company that occurred in 1998.
The Company shall elect to waive the carryback period for net operating losses
arising in 1998 on its 1998 Federal income Tax Return in accordance with Section
172(b)(3) of the Code.
5.11 Mexican Facility. The Company shall terminate or otherwise dispose of
its interest in the CONAV, PESCO and ENIMEX facilities in Mexico (collectively
the "Mexican Operation") without risk, liability or continued cost after the
Effective Time to the Company (in form and substance satisfactory to Parent), or
the Company shall cause the Mexican Operation to be shut down such that all
contracts related to the Mexican Operation shall have been terminated without
cost, risk or liability to the Company (in form and substance satisfactory to
Parent) and all employees employed by the Mexican Operation shall have been
severed without cost, liability or risk to the Company (in form and substance
satisfactory to Parent).
5.12 NOL Verification. $30.0 million of net operating losses (as calculated
for federal tax purposes) and approximately $2.0 million of alternative minimum
tax credits (as calculated for federal tax purposes) shall be available for use
by Parent after giving effect to the BFC sale and any other relevant
circumstances as of the Effective Time.
5.13 Qualifying Facility Status. The Company shall demonstrate, to Parent's
and Merger Sub's reasonable satisfaction, that:
(a) for a period of time commencing on September 1, 1996 and concluding on
the date of the Closing, all of Company's electric generating facilities that
continued to be owned by the Company at the time of the Merger satisfied all of
the requirements for qualifying facility (QF) status under the Public Utility
Regulatory Policies Act of 1978, as amended, and the Federal Energy Regulatory
Commission's (FERC) rules and regulations promulgated pursuant thereto, and
(b)each of such generating facilities has been properly certified as a QF
pursuant to Section 292.207 of the FERC's rules (18 C.F.R. 292.207) under facts
and circumstances consistent with the current operations of such generating
facilities.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
6.1 Accuracy of Representations. Each of the representations and warranties
made by Parent and Merger Sub in this Agreement not qualified as to materiality
shall have been accurate in all material respects, and all such representations
and warranties qualified by materiality shall have been accurate as of the date
of this Agreement, and on and as of the Closing Date as if made on the Closing
Date (without giving effect to any update to the Parent Disclosure Schedule not
consented to in writing by the Company).
6.2 Performance of Covenants. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all material
respects.
6.3 Stockholder Approval. The Merger and this Agreement shall have been
duly approved and adopted by Requisite Company Stockholder Approval in
accordance with Delaware General Corporation Law.
6.4 Agreements and Documents. The Company shall have received the following
documents:
(a) the Disbursement Agent Agreement executed by the Disbursement Agent and
Parent and in full force and effect; and
(b) customary closing certificates.
6.5 No Restraints. No temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the Merger shall have
been issued by any court of competent jurisdiction and remain in effect, and
there shall not be any Legal Requirement enacted or deemed applicable to the
Merger that (i) makes consummation of the Merger illegal (each party agreeing to
use its best efforts, including appeals to higher courts, to have any judgment,
injunction, order or decree lifted).
6.6 HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act and any other applicable statutes or regulations shall
have expired or been terminated.
6.7 Completion of Bonneville Fuels Transaction. The sale of Bonneville
Fuels Corporation described in Section 1.5(b) above shall have been completed in
accordance with the terms of the BFC Sale Agreement.
SECTION 7. TERMINATION
7.1 Termination Events. This Agreement may be terminated prior to the
Closing:
(a) by the mutual written consent of Parent and the Company;
(b) by Parent if the Effective Time shall not have occurred by March 31,
2000 (the "Termination Date"); provided, however, that if on the Termination
Date the sole conditions to closing that remain unsatisfied (other than
conditions to be satisfied at the Closing) are the conditions specified in
Sections 5.3 and 5.9, or either of them, Parent may extend the Termination Date
for successive thirty (30) day periods by providing to the Company written
notice of such extension not less than one (1) business day prior to the
Termination Date or the date upon which a thirty (30) day extension period
expires, as the case may be, provided that the Termination Date may not be
extended by the Parent pursuant to this proviso beyond June 30, 2000 (the "Final
Termination Date"); provided further, however, that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to Parent if the
Parent's failure to fulfill any of its obligations under this Agreement has been
the cause of, or resulted in, the failure of the Effective Time to occur on or
before the Final Termination Date;
(c) by the Company if the Effective Time shall not have occurred by the
Termination Date; provided, however, that if on the Termination Date the sole
conditions to closing that remain unsatisfied (other than conditions to be
satisfied at the Closing) are the conditions specified in Sections 6.3 and 6.7,
or either of them, the Company may extend the Termination Date for successive
thirty (30) day periods by providing to Parent written notice of such extension
not less than one (1) business day prior to the Termination Date or the date
upon which a thirty (30) day extension period expires, as the case may be,
provided that the Termination Date may not be extended by the Company pursuant
to this proviso beyond the Final Termination Date; provided further, however,
that the right to terminate this Agreement under this Section 7.1(c) shall not
be available to the Company if the Company's failure to fulfill any of its
obligations under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before the Final Termination Date;
(d) by Parent or the Company, if a Governmental Entity shall have issued an
order, decree or injunction or taken any other action (in each case, which the
terminating party has used reasonable best efforts to resist, resolve or lift,
as applicable) having the effect of making the transactions contemplated hereby
illegal or permanently prohibiting the consummation thereof, and such order,
decree or injunction shall have become final and nonappealable (but only if such
party shall have used all reasonable best efforts to cause such order, decree or
injunction to be lifted or vacated);
(e) by Parent, if the Board of Directors of the Company or any authorized
committee of the Board of Directors of the Company, whether or not permitted
pursuant to the terms hereof, (w) shall fail to reaffirm its approval or
recommendation of this Agreement and the Merger within 15 days after a request
by Parent, (x) shall withdraw or modify in any manner adverse to Parent its
approval or recommendation of this Agreement and the Merger, (y) shall approve
or recommend any Takeover Proposal or Acquisition Transaction involving the
Company or (z) shall resolve to take any of the actions specified in clause(w),
(x) or(y) above;
(f) by either Parent or the Company, if the required approval and adoption
of this Agreement and the Merger by the stockholders of the Company shall not
have been obtained at a duly held stockholders meeting called for the purpose of
obtaining such approval, including any adjournments or postponements thereof;
and
(g) by the Company, in accordance with Section 4.6(b); provided, however,
in order for the termination of this Agreement pursuant to this Section(g) to
be deemed effective, the Company shall have complied with all provisions
contained in Sections 4.6(a), (b) and (c), including the notice provisions
therein, and with applicable requirements of Section 7.3, including the payment
of the Company Termination Fee.
7.2 Termination Procedures. If Parent wishes to terminate this Agreement
pursuant to Section 7.1, Parent shall deliver to the Company a written notice
stating that Parent is terminating this Agreement and setting forth a brief
description of the basis on which Parent is terminating this Agreement. If the
Company wishes to terminate this Agreement pursuant to Section 7.1, the Company
shall deliver to Parent a written notice stating that the Company is terminating
this Agreement and setting forth a brief description of the basis on which the
Company is terminating this Agreement.
7.3 Effect of Termination.
(a) In the event that (w) any person shall have made a Takeover Proposal to
the Company or to its stockholders by June 30, 2000 and within 12 months after
the termination of this Agreement the Acquisition Transaction contemplated by
the Takeover Proposal shall have been consummated or the Acquisition Agreement
contemplated by the Takeover Proposal with respect to the Acquisition
Transaction contemplated by the Takeover Proposal shall have been entered into,
or (x) this Agreement is terminated by Parent pursuant to Section 7.1(e), (y)
this Agreement is terminated by the Company pursuant to Section 7.1(g), or
(z) the Company willfully and affirmatively breaches this Agreement in a
material manner and thereafter the Agreement is terminated then, in any such
case, the Company shall in no event later than (i) the date an Acquisition
Agreement is entered into with respect to such Acquisition Transaction involving
the Company, or if no such agreement is entered into, upon the date of
consummation of such Acquisition Transaction involving the Company, in the case
of a termination described in clause (w), (ii) two days after such termination,
in the case of a termination described in clause (x) or (iii) concurrently with
such termination, in the case of a termination described in clause (y) or (z),
pay Parent a fee of $2.0 million in the case of clause (w) or $3.0 million in
the case of clauses (x), (y) or (z) (the "Company Termination Fee"), which
amount shall be payable by wire transfer of same day funds to a bank account
designated by Parent; provided, however, with respect to a Company Termination
Fee arising under clause (w), the Company Termination Fee shall not exceed the
excess of the aggregate consideration received pursuant to the applicable
Acquisition Transaction over the aggregate consideration to have been received
pursuant to this Agreement.
(b) If the Effective Time has failed to occur by the Termination Date (or
the Final Termination Date, as applicable) as a result of any breach by the
Company of any representation, warranty, covenant or other term of this
Agreement, the Parent, at its sole option, may (i) enforce specific performance
of this Agreement or (ii) terminate this Agreement and receive back the Deposit,
together with all interest and other amounts earned thereon; provided, however,
that the Company shall not be relieved of any obligation or liability arising
from any prior breach by the Company of any provision of this Agreement.
(c) If the Effective Time has failed to occur by the Termination Date (or
the Final Termination Date, as applicable) as a result of any breach by the
Parent of any representation, warranty, covenant or other term of this
Agreement, the Company, at its sole option, may (i) enforce specific performance
of this Agreement or (ii) terminate this Agreement and retain the Deposit,
together with all interest and other amounts earned thereon as liquidated
damages, as the Company's sole and exclusive remedy for such breach, all other
remedies being expressly waived by the Company. The Company and the Parent agree
upon the Deposit amount together with all interest and other amounts earned
thereon, as liquidated damages due to the difficulty and inconvenience of
measuring actual damages and the uncertainty thereof, and the Company and the
Parent agree that such amount is a reasonable estimate of the Company's loss in
the event of any such failure by the Parent.
(d) Each of the parties acknowledges that the agreements contained in this
Section 7.3 are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, the parties would not enter into
this Agreement; accordingly, if either party fails to promptly pay the amount
due from it pursuant to this Section 7.3, and in order to obtain such payment
the other party commences a suit which results in a judgment for the fees and
expenses set forth in this Section 7.3, the other party shall pay to the party
bringing such suit its costs and expenses (including reasonable attorneys' fees)
in connection with such suit.
(e) If this Agreement is terminated pursuant to Section 7.1, all further
obligations of the parties under this Agreement (other than as set forth in this
Section 7.3) shall terminate and each party shall return all documents received
from the other party; provided, however, that the parties shall, in all events,
remain bound by and continue to be subject to the provisions set forth in
Section 9 of this Agreement.
(f) Parent, Merger Sub and the Company hereby expressly agree that the
remedies provided in this Section 7.3 shall be the sole and exclusive remedies
for any other claim arising out of or relating to the negotiation, execution,
delivery or performance of this Agreement or the Merger.
SECTION 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
8.1 Survival of Representations, Etc.
(a) The representations and warranties made by the Company, the Parent and
Merger Sub (including the representations and warranties set forth in Sections 2
and 3 and the representations and warranties set forth in any certificate
delivered at Closing by an officer of the Company, Parent or Merger Sub) shall
not survive the Closing.
(b) The representations, warranties, covenants and obligations of Parent,
Merger Sub and the Company, and the rights and remedies that may be exercised by
such parties, shall not be limited or otherwise affected by or as a result of
any information furnished to, or any investigation made by or knowledge of, any
of the such parties or any of their Representatives.
(c) For purposes of this Agreement, (i) each statement or other item of
information set forth in the Company Disclosure Schedule shall be deemed to be a
part of the representations and warranties made by the Company in this Agreement
and (ii) each statement or other item of information set forth in the Parent
Disclosure Schedule shall be deemed to be a part of the representations and
warranties made by Parent and Merger Sub in this Agreement.
SECTION 9. GENERAL PROVISIONS.
9.1 Further Assurances. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.
9.2 Fees And Expenses.
(a) Except as provided in Section 7.3, each party to this Agreement shall
bear and pay all fees, costs and expenses (including legal fees and accounting
fees) that have been incurred or that are incurred by such party in connection
with the transactions contemplated by this Agreement, including all fees, costs
and expenses incurred by such party in connection with or by virtue of: (i) the
investigation and review conducted by Parent and its Representatives with
respect to the business of the Acquired Companies (and the furnishing of
information to Parent and its Representatives in connection with such
investigation and review), (ii) the negotiation, preparation and review of this
Agreement (including the Company Disclosure Schedule and the Parent Disclosure
Schedule) and all agreements, certificates, opinions and other instruments and
documents delivered or to be delivered in connection with the transactions
contemplated by this Agreement, (iii) the preparation and submission of any
filing or notice required to be made or given in connection with any of the
transactions contemplated by this Agreement, and the obtaining of any Consent
required to be obtained in connection with any of such transactions, and (iv)
the consummation of the Merger.
9.3 Notices. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to Parent:
El Paso Energy Corporation
1001 Louisiana Street
Houston, Texas 77002
Attn: Larry Kellerman and
Gregory W. Jones
with a copy to:
Gary P. Cooperstein
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
if to the Company:
Clark M. Mower, President
Bonneville Pacific Corporation
50 West Broadway, Suite 300
Salt Lake City, Utah 84101
with a copy to:
A.O. Headman, Jr.
Cohne, Rappaport & Segal, P.C.
525 East 100 South, 5th Floor
Salt Lake City, Utah 84102
9.4 Headings. The underlined headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
9.5 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement.
9.6 Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of Delaware
(without giving effect to principles of conflicts of laws).
9.7 No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto without the
prior written consent of the other parties hereto and any attempt to do so will
be void except that Parent and Merger Sub may assign all or any of their
respective rights and obligations hereunder to any direct or indirect wholly or
partially owned subsidiary, subsidiaries, or other affiliates of the Parent
without the consent of the Company, provided that no such assignment shall
relieve the assigning party of its obligations hereunder if such assignee does
not perform such obligations. This Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
9.8 Waiver.
(a) No failure on the part of any Person to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any Person
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or
remedy.
(b) No Person shall be deemed to have waived any claim arising out of this
Agreement, or any power, right, privilege or remedy under this Agreement, unless
the waiver of such claim, power, right, privilege or remedy is expressly set
forth in a written instrument duly executed and delivered on behalf of such
Person; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
9.9 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
9.10 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
9.11 Parties in Interest. Except for the provisions of Sections 1.5 and
1.6, none of the provisions of this Agreement is intended to provide any rights
or remedies to any Person other than the parties hereto and their respective
successors and assigns (if any).
9.12 Entire Agreement. This Agreement and the other agreements referred to
herein set forth the entire understanding of the parties hereto relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter hereof and thereof; provided, however, that the Confidentiality Agreement
dated May 5, 1999, between the Company and El Paso Power Services, shall not be
superseded by this Agreement and shall remain in effect in accordance with its
terms until the earlier of (a) the Effective Time, or (b) the date on which such
Confidentiality Agreement is terminated in accordance with its terms.
9.13 Construction.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include the
masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be
applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including," and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
In Witness Whereof, the parties have executed this Agreement as of the date
first above written.
EL PASO ENERGY CORPORATION, a Delaware corporation
By:________________________________
BPC ACQUISITION CORP.,
a Delaware corporation
By:________________________________
BONNEVILLE PACIFIC CORPORATION,
a Delaware corporation
By: ________________________________
Clark M. Mower, President
The undersigned, being the Secretary of BPC Acquisition Corp., does hereby
certify that the foregoing Agreement was adopted The undersigned, being the
Secretary of BPC Acquisition Corp., does hereby certify that the foregoing
Agreement was adopted on behalf of BPC Acquisition Corp. by its Board of
Directors and Sole Stockholder pursuant to the provisions of Section 251 of the
DGCL.
BPC ACQUISITION CORP.
By:
Name:
Title:
The undersigned, being the Secretary of Bonneville Pacific Corporation,
does hereby certify that the foregoing Agreement was adopted on behalf of
Bonneville Pacific Corporation by its Board of Directors and Stockholders
pursuant to the provisions of Section 251 of the DGCL.
BONNEVILLE PACIFIC CORPORATION
By:
Name:
Title:
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
"Agreement" shall mean the Agreement and Plan of Merger to which this
Exhibit A is attached (including the Company Disclosure Schedule, the Parent
Disclosure Schedule and all Exhibits), as it may be amended from time to time.
"BFC Sale Agreement" shall mean the Stock Purchase Agreement, dated as of
August 11, 1999, by and between Bonneville Pacific Corporation, a Delaware
corporation and CEC Resources Ltd., a company organized under the laws of the
Province of Alberta, Canada.
"Company Contract" shall mean any Contract: (a) to which any of the
Acquired Companies is a party; (b) by which any of the Acquired Companies or any
of their properties or assets is bound or under which any of the Acquired
Companies has any obligation; or (c) under which any of the Acquired Companies
has any right or interest.
"Company Disclosure Schedule" shall mean the schedule (dated as of the date
of the Agreement) delivered to Parent on behalf of the Company.
"Company Partnerships" shall mean all of the partnerships, joint ventures,
limited liability companies, or other entities, other than the Company
Subsidiaries, with respect to which the Company has any direct or indirect
partnership, membership, or other interest as of the Effective Time.
"Company Subsidiaries" shall mean all of the corporate entities with
respect to which the Company has the direct or indirect right to vote shares
representing fifty percent (50%) or more of the votes eligible to be cast in the
election of directors of each such entity; provided, however, that BFC shall not
be deemed a "Company Subsidiary" for purposes of this Agreement.
"Consent" shall mean any approval, consent, ratification, permission,
waiver or authorization (including any Governmental Authorization).
"Contract" shall mean any written, oral or other agreement, contract,
subcontract, lease, understanding, instrument, note, warranty, insurance policy,
benefit plan or legally binding commitment or undertaking of any nature.
"Encumbrance" shall mean any lien, pledge, hypothecation, charge, mortgage,
deed of trust, license, equity, conditional sales contract, lease, assessment,
covenant, condition or restriction, right-of-way, reservation, security
interest, encumbrance, claim, infringement, interference, option, right of first
refusal, preemptive right, community property interest, any other matter
affecting title or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
property or asset, any restriction on the receipt of any income derived from any
property or asset, any restriction on the use of any property or asset and any
restriction on the possession, exercise or transfer of any other attribute of
ownership of any property or asset).
"Entity" shall mean any corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Facilities" shall mean any real property, leaseholds, or other interests
currently owned or operated (or owned or operated since November 3, 1998) by any
of the Acquired Companies and any buildings, plants, structures, or equipment
(including motor vehicles, tank cars, and rolling stock) currently owned or
operated by any of the Acquired Companies.
"Government Contract" shall mean any prime contract, subcontract, letter
contract, purchase order or delivery order executed or submitted to or on behalf
of any Governmental Body or any prime contractor or higher-tier subcontractor,
or under which any Governmental Body or any such prime contractor or
subcontractor otherwise has or may acquire any right or interest.
"Governmental Authorization" shall mean any: permit, license, certificate,
franchise, permission, clearance, registration, qualification or authorization
issued, granted, given or otherwise made available by or under the authority of
any Governmental Body or pursuant to any legal Requirement.
"Governmental Body" shall mean any: (a) nation, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction of any
nature; (b) federal, state, local, municipal, foreign or other government; or
(c) governmental or quasi-governmental authority of any nature (including any
governmental division, department, agency, commission, instrumentality,
official, organization, unit, body or Entity and any court or other tribunal).
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Proxy Statement" shall mean the proxy statement to be sent to the
Company's stockholders in connection with the
Company Stockholders' Meetings.
"Knowledge of the Company" shall mean the actual knowledge and current
awareness, or knowledge which a reasonable person would have acquired following
a reasonable investigation, of the executive officers and directors of the
Company, together with that of the chief executive officer of each Acquired
Company.
"Legal Proceeding" shall mean any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving, any
court or other Governmental Body or any arbitrator or arbitration panel.
"Legal Requirement" shall mean any federal, state, local, municipal,
foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Body.
"Material Adverse Effect". A violation or other matter will be deemed to
have a "Material Adverse Effect" on the Company if such violation or other
matter would have a material adverse effect on the business, condition, assets,
liabilities, operations or financial performance of the Acquired Companies,
considered as a whole. A violation or other matter will be deemed to have a
"Material Adverse Effect" on Parent if such violation or other matter,
considered individually or in the aggregate with all other such violations and
other matters, would have a material adverse effect on the business, condition,
assets, liabilities, operations or financial performance of Parent and the
Parent Subsidiaries, considered as a whole.
"Merger Consideration" shall mean an amount equal to (i) the Aggregate
Merger Consideration (excluding any deductions thereto pursuant to Section
1.5(c)(v)) plus (ii) the aggregate exercise price of all unexercised Options at
the Effective Time divided by (iii) the number of Converted Shares.
NCA #1 shall mean Nevada Cogeneration Associates #1, a Nevada general
partnership.
"Parent Disclosure Schedule" shall mean the schedule (dated as of the date
of the Agreement) delivered to the Company on behalf of Parent.
"Person" shall mean any individual, Entity or Governmental Body.
"Requisite Company Stockholder Approval" means the affirmative vote of the
holders of a majority of the Company Shares in favor of this Agreement and the
Merger.
"Representatives" shall mean officers, directors, employees, agents,
attorneys, accountants, advisors and
representatives.
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Software" means any source code, object code, machine code, or other
instructions of any kind or description which is loaded or be loaded on any
automated System or device of the Company or the Acquired Companies, including
by way of illustration but not limitation, operating system, BIOS (basic
input/output system), compilers, generators, interpreters, application programs
(whether compiled or not, and whether interpreted or not), instructions stored
on Programmable, Read Only Memory (PROM) chips, instructions stored on Read Only
Memory (ROM) chips, or instructions stored on Erasable, Programmable, and Read
Only Memory (EPROM) chips.
"System(s)" means any automated or partially automated application,
function or process which utilizes Software and which has an input from or
output to some other System, person or report.
"Tax" shall mean any tax (including any income tax, franchise tax, capital
gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad valorem
tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax,
withholding tax or payroll tax), levy, assessment, tariff, duty (including any
customs duty), deficiency or fee, and any related charge or amount (including
any fine, penalty or interest), imposed, assessed or collected by or under the
authority of any Governmental Body.
"Tax Return" shall mean any return (including any information return),
report, statement, declaration, estimate, schedule, notice, notification, form,
election, certificate or other document or information filed with or submitted
to, or required to be filed with or submitted to, any Governmental Body in
connection with the determination, assessment, collection or payment of any Tax
or in connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement relating to any Tax.
"Year 2000 Complaint" or "Y2K Compliant" means that financial accounting,
management reporting, telecommunications, environmental, access control or
security Systems will accurately process, provide and/or receive date/time data
(including without limitation calculating, comparing, and sequencing), within,
from, into, and between centuries (including without limitation the twentieth
and twenty-first centuries), including leap year calculations, and neither the
performance nor the functionality of the System will be affected by dates/times
prior to, on, after, or spanning January 1, 2000.
<PAGE>
Exhibit 1.5(b)(i)
1. Proceeds from sale of BFC stock ___________________
2. Deduct expenses, fees, taxes and other charges ___________________
3. Net Proceeds (equals line1 minus line 2) ___________________
4. Liabilities of BFC ___________________
5. Amount realized (equals line 3 plus line 4) ___________________
6. BFC tax basis in assets ___________________
7. Pre-tax gain on sale of BFC
(equals line 5 minus line 6) ___________________
8. Current year taxable income (loss) from BFC ___________________
9. Available NOL Carryforward of BPC group ___________________
10. Net taxable income
(equals line 7 plus line 8 minus line 9) ___________________
11. Current year federal, state and applicable
alternative minimum taxes (includes any tax due with
respect to positive net taxable income shown in line 10 as
well as (i) incremental alternative minimum taxes and other
taxes due as a result of BFC sale, and (ii)any other taxes of
BFC for the current year for which BPC is liable) ___________________
12. Net after tax cash available for distribution
(equals line 3 minus line 11) ___________________
Schedule 2.23
The following items with regard to the Year 2000 Program for the NCA #1
project should be addressed prior to closing:
o The Company shall provide documentation of tests performed to demonstrate
Y2K compliance of the Westinghouse DCS.
o The Company shall provide documentation demonstrating that the firmware
upgrade for the fire protection panel has been implemented. This was scheduled
for September 1999. If the upgrade has not been performed, the Company shall
provide a contingency plan to address a possible Y2K related failure for the
fire protection panel at the NCA #1 project.
AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 17, 1999
BY AND BETWEEN
BONNEVILLE PACIFIC CORPORATION, AS SELLER
AND
EL PASO ENERGY CORPORATION, AS BUYER
