Amendment No. 3 to
SEC File No. 70-8369
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1
APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("Act")
GENERAL PUBLIC UTILITIES CORPORATION ("GPU")
100 Interpace Parkway
Parsippany, New Jersey 07054
GENERAL PORTFOLIOS CORPORATION ("GPC")
Mellon Bank Center
Tenth and Market Streets
Wilmington, Delaware 19801
ENERGY INITIATIVES, INC. ("EI")
One Upper Pond Road
Parsippany, New Jersey 07054
(Names of companies filing this statement and addresses
of principal executive offices)
GENERAL PUBLIC UTILITIES CORPORATION
(Name of top registered holding company parent of applicants)
Don W. Myers, Vice President Douglas E. Davidson, Esq.
and Treasurer Berlack, Israels & Liberman
M.A. Nalewako, Secretary 120 West 45th Street
GPU Service Corporation New York, New York 10036
100 Interpace Parkway
Parsippany, NJ 07054
B.L. Levy, President
K.A. Tomblin, Secretary
Energy Initiatives, Inc.
One Upper Pond Road
Parsippany, New Jersey 07054
_________________________________________________________________
(Names and addresses of agents for service)
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GPU, GPC and EI hereby amend their Application on Form U-1,
as heretofore amended, docketed in SEC File No. 70-8369, as
follows:
1. By filing the following Exhibits in Item 6 thereof:
(a) Exhibits:
B-1 Stock Purchase Agreement
B-2 Escrow Agreement
Project No. 1 Agreements:
B-3(a) Project No. 1 Agreement of Limited
Partnership - filed by Form SE
dated April 11, 1994.*
B-3(b)(i) Project No. 1 Participation
Agreement, as amended - filed by
Form SE dated April 11, 1994.*
B-3(b)(ii) Project No. 1 Lease - filed by Form
SE dated April 11, 1994.*
B-3(b)(iii) - (iv) Letter of Credit and Reimbursement
Agreement, as amended - filed by
Form SE dated April 11, 1994.*
B-3(c) Project No. 1 Power Purchase
Agreement - filed by Form SE dated
April 11, 1994.*
B-3(d) Project No. 1 Steam Sales Agreement
- filed by Form SE dated April 11,
1994.*
B-3(e)(i) - (v) Project No. 1 Gas Supply Agreement
- filed by Form SE dated April 11,
1994.*
B-3(f)(i) - (ii) Project No. 1 Gas Transportation
Agreements - filed by Form SE dated
April 11, 1994.*
Project No. 2 Agreements:
B-4(a)(i) - (iv) Project No. 2 Limited Partnership
Agreement, as amended - filed by
Form SE dated April 11, 1994.*
B-4(b)(i) - (ii) Project No. 2 Financing Agreements
- filed by Form SE dated April 11,
1994.*
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B-4(c) Project No. 2 Power Purchase
Agreement - filed by Form SE dated
April 11, 1994.*
B-4(d)(i) - (ii) Project No. 2 Steam Sales
Agreement, as amended - filed by
Form SE dated April 11, 1994.*
B-4(e)(i) - (ii) Project No. 2 Gas Purchase
Agreements, as amended - filed by
Form SE dated April 11, 1994.*
B-4(f)(i) - (ii) Project No. 2 Gas Transportation
Agreements - filed by Form SE dated
April 11, 1994.*
Project No. 3 Agreements:
Exhibit B-5(a) Project No. 3 Agreement of Limited
Partnership - filed by Form SE
dated April 11, 1994.*
Exhibit B-5(b)(i) - Project No. 3 Financing Agreement,
(iii) as amended - filed by Form SE dated
April 11, 1994.*
Exhibit B-5(c) Project No. 3 Power Purchase
Agreement, as amended - filed by
Form SE dated April 11, 1994.*
Exhibit B-5(d)(i) - Project No. 3 Steam Sales
Agreement,
(iv) as amended - filed by Form SE dated
April 11, 1994.*
Exhibit B-5(e) Project No. 3 Gas Supply Agreement
- filed by Form SE dated April 11,
1994.*
Exhibit B-5(f)(i) - Project No. 3 Gas Transportation
(ii) Agreements - filed by Form SE dated
April 11, 1994.*
Project No. 4 Agreements:
Exhibit B-6(a)(i) - Project No. 4 Agreement of Limited
(iii) Partnership - filed by Form SE
dated April 11, 1994.*
Exhibit B-6(b)(i) Project No. 4 Financing Agreement -
filed by Form SE dated April 11,
1994.*
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Exhibit B-6(b)(ii) Project No. 4 Lease and Assignment
- filed by Form SE dated April 11,
1994.*
Exhibit B-6(b)(iii) Project No. 4 Sublease - filed by
Form SE dated April 11, 1994.*
Exhibit B-6(c) Project No. 4 Power Purchase
Agreement - filed by Form SE dated
April 11, 1994.*
Exhibit B-6(d) Project No. 4 Steam Sales Agreement
- filed by Form SE dated April 11,
1994.*
Exhibit B-6(e) Project No. 4 Gas Sales Agreement -
filed by Form SE dated April 11,
1994.*
Exhibit B-6(f) Project No. 4 Gas Transportation
Agreement - filed by Form SE dated
April 11, 1994.*
Project No. 5 Agreements:
Exhibit B-7(a) Project No. 5 Agreement of Limited
Partnership - filed by Form SE
dated April 11, 1994.*
Exhibit B-7(b) Project No. 5 Financing Agreement -
filed by Form SE dated April 11,
1994.*
Exhibit B-7(c) Project No. 5 Power Purchase
Agreement, as amended - filed by
Form SE dated April 11, 1994.*
Exhibit B-7(d) Project No. 5 Steam Sales Agreement
- filed by Form SE dated April 11,
1994.*
Exhibit B-7(e)(i) - Project No. 5 Gas Supply Agreement,
(ii) as amended - filed by Form SE dated
April 11, 1994.*
Exhibit B-7(f) Project No. 5 Gas Transportation
Agreement - filed by Form SE dated
April 11, 1994.*
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Development Project Agreements:
Exhibit B-8(a)(i) - Development Project No. 1 Power
(ii) Purchase Agreements - filed by Form
SE dated April 11, 1994.*
Exhibit B-9 Development Project No. 1
Development Agreement - filed by
Form SE dated April 11, 1994.*
_______________
* Filed pursuant to continuing hardship exemption under Item
202 of Regulation S-T granted by Division of Investment
Management, Office of Public Utility Regulation, by letter
dated March 24, 1994.
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SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935, THE UNDERSIGNED COMPANIES HAVE DULY
CAUSED THIS STATEMENT TO BE SIGNED ON THEIR BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
GENERAL PUBLIC UTILITIES CORPORATION
GENERAL PORTFOLIOS CORPORATION
By:______________________________
Don W. Myers
Vice President and Treasurer
ENERGY INITIATIVES, INC.
By:______________________________
Bruce L. Levy
President
Date: April 14, 1994
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EXHIBITS TO BE FILED BY EDGAR
Exhibits:
B-1 - Stock Purchase Agreement
B-2 - Escrow Agreement
<PAGE>
Exhibit B-1
STOCK PURCHASE AND SALE AGREEMENT
BY AND AMONG
NORTH CANADIAN OILS LIMITED
NORTH CANADIAN RESOURCES, INC.
NORTH CANADIAN POWER INCORPORATED
AND
ENERGY INITIATIVES, INC.
DATED MARCH 31, 1994
<PAGE>
TABLE OF CONTENTS
ARTICLE I
TRANSACTION
1.1. Purchase and Sale Transactions . . . . . . . . . 2
1.2. NCO Obligations and Releases . . . . . . . . . . 2
1.3. Requisite Consents . . . . . . . . . . . . . . . 3
1.4. Excluded Subsidiaries Exclusion . . . . . . . . . 3
1.6. Lake Interest Option . . . . . . . . . . . . . . 5
1.7. Management Agreement . . . . . . . . . . . . . . 6
1.8. Sublease . . . . . . . . . . . . . . . . . . . . 6
1.9. Name Change . . . . . . . . . . . . . . . . . . . 6
ARTICLE II
CONSIDERATION FOR TRANSFER OF THE STOCK
2.1. Consideration . . . . . . . . . . . . . . . . . . 6
2.2. Payment of Consideration . . . . . . . . . . . . 8
ARTICLE III
THE ESCROW AND CLOSINGS
3.1. Escrow . . . . . . . . . . . . . . . . . . . . . 9
3.2. Buyer's Escrow Deposit . . . . . . . . . . . . . 9
3.3. Sellers' Escrow Deposit . . . . . . . . . . . . . 10
3.4. NCP Closing . . . . . . . . . . . . . . . . . . . 15
3.5. Preclosing (NCP Closing) . . . . . . . . . . . . 16
3.6. Excluded Subsidiaries Closings . . . . . . . . . 16
3.7. Lake Interest Closing . . . . . . . . . . . . . . 17
3.8. Excluded Subsidiaries Option . . . . . . . . . . 18
3.9. Termination of Escrow . . . . . . . . . . . . . . 18
ARTICLE IV
CASH AMOUNT CALCULATIONS AND ADJUSTMENTS
4.1. Calculation of Working Capital Value . . . . . . 19
4.2. Calculation of Working Capital Closing
Adjustment . . . . . . . . . . . . . . . . . . . 20
4.3. Closing Balance Sheet . . . . . . . . . . . . . . 21
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ARTICLE V
REPRESENTATIONS OF NCO
5.1. Organizational Status . . . . . . . . . . . . . . 22
5.2. Corporate Authority . . . . . . . . . . . . . . . 22
5.3. Authorization . . . . . . . . . . . . . . . . . . 23
5.4. Validity . . . . . . . . . . . . . . . . . . . . 23
5.5. Noncontravention . . . . . . . . . . . . . . . . 23
5.6. Brokers . . . . . . . . . . . . . . . . . . . . . 24
5.7. Proceedings . . . . . . . . . . . . . . . . . . . 24
5.8. NCO Obligations . . . . . . . . . . . . . . . . . 24
5.9. Financial Condition . . . . . . . . . . . . . . . 24
ARTICLE VI
REPRESENTATIONS OF NCRI
6.1. Organizational Status . . . . . . . . . . . . . . 25
6.2. Corporate Authority . . . . . . . . . . . . . . . 26
6.3. Authorization . . . . . . . . . . . . . . . . . . 26
6.4. Validity . . . . . . . . . . . . . . . . . . . . 27
6.5. Noncontravention . . . . . . . . . . . . . . . . 27
6.6. Ownership of NCP Stock, Lake Interest and LIHI
Stock . . . . . . . . . . . . . . . . . . . . . . 28
6.7. Proceedings . . . . . . . . . . . . . . . . . . . 29
6.8. Intercompany Account . . . . . . . . . . . . . . 29
6.9. Securities Laws . . . . . . . . . . . . . . . . . 29
ARTICLE VII
REPRESENTATIONS OF NCP
PART A. REPRESENTATIONS CONCERNING NCP AND THE TRANSACTION
7.1. Organizational Status . . . . . . . . . . . . . . 30
7.2. Corporate Authority . . . . . . . . . . . . . . . 30
7.3. Authorization . . . . . . . . . . . . . . . . . . 30
7.4. Validity . . . . . . . . . . . . . . . . . . . . 31
7.5. Noncontravention . . . . . . . . . . . . . . . . 31
7.6. Capitalization . . . . . . . . . . . . . . . . . 31
7.7. Subsidiaries . . . . . . . . . . . . . . . . . . 32
7.8. Limited Partnerships. . . . . . . . . . . . . . . 32
7.9. Title to Assets . . . . . . . . . . . . . . . . . 33
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PART B. REPRESENTATIONS CONCERNING THE BUSINESS AND THE
PROJECTS
7.10. Taxes . . . . . . . . . . . . . . . . . . . . . . 34
7.11. Financial Statements . . . . . . . . . . . . . . 36
7.12. Interim Change . . . . . . . . . . . . . . . . . 37
7.13. Insurance . . . . . . . . . . . . . . . . . . . . 38
7.14. Material Contracts . . . . . . . . . . . . . . . 38
7.15. Employees . . . . . . . . . . . . . . . . . . . . 39
7.16. Employee Benefit Plans . . . . . . . . . . . . . 39
7.17. Projects in Development. . . . . . . . . . . . 41
7.18. Transactions with Affiliates . . . . . . . . . . 41
7.19. Proceedings . . . . . . . . . . . . . . . . . . . 41
7.20. Compliance with Law . . . . . . . . . . . . . . . 41
7.21. Bank Accounts and Safe Deposit Boxes . . . . . . 42
7.22. Qualifying Facility Status . . . . . . . . . . . 42
7.23. Copies of Documents . . . . . . . . . . . . . . . 42
PART C. REPRESENTATIONS CONCERNING THE ASSETS
7.24. Condition of Assets . . . . . . . . . . . . . . . 42
7.25. Real Estate . . . . . . . . . . . . . . . . . . . 43
7.26. Trade Names and Trademarks . . . . . . . . . . . 43
7.27. Patents . . . . . . . . . . . . . . . . . . . . . 43
7.28. Environmental Matters . . . . . . . . . . . . . . 44
7.29. Capital Projects . . . . . . . . . . . . . . . . 44
7.30. Accounts Receivable . . . . . . . . . . . . . . . 44
PART D. CERTAIN LIMITATIONS AND QUALIFICATIONS OF THE
REPRESENTATIONS
ARTICLE VIII
REPRESENTATIONS OF BUYER
8.1. Organizational Status . . . . . . . . . . . . . . 45
8.2. Corporate Authority . . . . . . . . . . . . . . . 45
8.3. Authorization of the Transaction . . . . . . . . 46
8.4. Validity . . . . . . . . . . . . . . . . . . . . 46
8.5. Noncontravention . . . . . . . . . . . . . . . . 46
8.6. Buyer's Investigation . . . . . . . . . . . . . . 47
8.7. Investment Representation . . . . . . . . . . . . 47
8.8. Brokers . . . . . . . . . . . . . . . . . . . . . 47
8.9. Qualifying Facility Status . . . . . . . . . . . 47
8.10. Financial Condition . . . . . . . . . . . . . . . 48
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ARTICLE IX
INTERIM CONDUCT
9.1. Interim Conduct through NCP Closing . . . . . . . 48
9.2. Interim Conduct from NCP Closing through
Excluded Subsidiaries Closings . . . . . . . . . 51
ARTICLE X
COVENANTS OF NCO, NCRI AND NCP
10.1. Access . . . . . . . . . . . . . . . . . . . . . 51
10.2. Press Releases and Announcements . . . . . . . . 51
10.3. Undertakings . . . . . . . . . . . . . . . . . . 51
10.4. Further Assurances . . . . . . . . . . . . . . . 52
10.5. Cooperation . . . . . . . . . . . . . . . . . . . 52
10.6. Lake Interest . . . . . . . . . . . . . . . . . . 52
ARTICLE XI
COVENANTS OF BUYER
11.1. Confidentiality . . . . . . . . . . . . . . . . . 53
11.2. No Solicitation of Employees . . . . . . . . . . 53
11.3. Use of "North Canadian" . . . . . . . . . . . . . 54
11.4. Tax, Securities Law Reporting and Accounting
Information . . . . . . . . . . . . . . . . . . . 54
11.5. Treatment of Personnel . . . . . . . . . . . . . 55
11.6. Books and Records . . . . . . . . . . . . . . . . 55
11.7. Cooperation. . . . . . . . . . . . . . . . . . . 56
11.8. Press Releases and Announcements . . . . . . . . 56
11.9. Qualifying Facility Status . . . . . . . . . . . 57
11.10. Undertakings . . . . . . . . . . . . . . . . . . 57
11.11. Further Assurances . . . . . . . . . . . . . . . 57
ARTICLE XII
CONDITIONS PRECEDENT TO OBLIGATIONS TO CLOSE
12.1. Conditions Precedent to Obligation of Buyer . . . 57
12.2. Conditions Precedent to Obligations of NCO, NCRI
and NCP . . . . . . . . . . . . . . . . . . . . . 58
12.3. Conditions Precedent to Excluded Subsidiaries
Closing . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE XIII
REMEDIES FOR BREACHES OF AGREEMENT
13.1. Stipulated Damages. . . . . . . . . . . . . . . . 59
13.2. Other Relief and Damages . . . . . . . . . . . . 60
13.3. Post Closing Remedies . . . . . . . . . . . . . . 60
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ARTICLE XIV
TERMINATION
14.1. Termination of Agreement . . . . . . . . . . . . 60
14.2. Effect of Termination . . . . . . . . . . . . . . 62
ARTICLE XV
POST-CLOSING INDEMNIFICATION
15.1. Indemnification by NCO . . . . . . . . . . . . . 62
15.2. Indemnification by Buyer . . . . . . . . . . . . 63
15.3. Indemnification Relating to Environmental
Matters . . . . . . . . . . . . . . . . . . . . . 65
15.4. Other Indemnification Provisions . . . . . . . . 66
15.5. Determination of Damages . . . . . . . . . . . . 66
15.6. Indemnification Procedures . . . . . . . . . . . 66
15.7. Reimbursement . . . . . . . . . . . . . . . . . . 67
ARTICLE XVI
CERTAIN TAX MATTERS
16.1. Section 338(h)(10) Election . . . . . . . . . . . 67
16.2. Tax Returns and Tax Indemnity . . . . . . . . . . 70
16.3. Control of Contest . . . . . . . . . . . . . . . 71
16.4. General . . . . . . . . . . . . . . . . . . . . . 71
16.5. Ada Project Indemnity. . . . . . . . . . . . . . 72
16.6. Sales and Transfer Taxes . . . . . . . . . . . . 72
16.7. Tax Effective Time . . . . . . . . . . . . . . . 72
16.8. Survival . . . . . . . . . . . . . . . . . . . . 72
16.9. Florida Nexus . . . . . . . . . . . . . . . . . . 73
ARTICLE XVII
GENERAL PROVISIONS
17.1. No Third-Party Beneficiaries . . . . . . . . . . 73
17.2. Amendment and Waiver . . . . . . . . . . . . . . 73
17.3. Notices . . . . . . . . . . . . . . . . . . . . . 73
17.4. Counterparts . . . . . . . . . . . . . . . . . . 75
17.5. Parties in Interest . . . . . . . . . . . . . . . 75
17.6. Entire Agreement and Transaction . . . . . . . . 75
17.7. Applicable Law . . . . . . . . . . . . . . . . . 75
17.8. Headings . . . . . . . . . . . . . . . . . . . . 75
17.9. Expenses . . . . . . . . . . . . . . . . . . . . 76
17.10. Severability . . . . . . . . . . . . . . . . . . 76
17.11. Construction . . . . . . . . . . . . . . . . . . 76
17.12. Currency . . . . . . . . . . . . . . . . . . . . 76
17.13. Conflicts . . . . . . . . . . . . . . . . . . . . 76
17.14. Time of Essence . . . . . . . . . . . . . . . . . 76
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ANNEXES
A GLOSSARY
B PROJECTS
C DEVELOPMENT PROJECTS
D CONFIDENTIALITY LETTER AGREEMENT
E INTERIM OPERATING PLAN
SCHEDULES Section
Reference
1.2 NCO Obligations . . . . . . . . . . . . 1.2
2.1 Cash Consideration Allocation . . . . . 2.1
4.1 NCP Working Capital Value Calculation . 4.1
4.2 Working Capital Closing Adjustment . . . 4.2
5.2 Requisite Consents . . . . . . . . . . . 5.2, 6.2, 7.2.
5.3 Governmental Approvals . 5.3, 5.5, 6.3, 6.5, 7.3, 7.5
7.7 NCP Subsidiaries . . . . . . . . . . . . Preambles, 7.7
7.8 Limited Partnerships . . . . . . . . . . Preambles, 7.8
7.9 Encumbrances . . . . . . . . . . . . . . 7.9
7.10 Tax Matters . . . . . . . . . . . . . . 7.10
7.11.1 Audited Financial Statements . . . . . . 7.11.1
7.11.2 Partnership Financial Statements . . . . 7.11.1
7.12 Interim Changes . . . . . . . . . . . .
7.13 Insurance . . . . . . . . . . . . . . . 7.13
7.14 Material Contracts . . . . . . . . . . . 7.14
7.15.1 List of Personnel . . . . . . . . . . . 7.15.1
7.15.2 Personnel Agreements . . . . . . . . . . 7.15.2
7.16 Employee Benefit Plans . . . . . . . . . 7.16
7.18 Transactions with Affiliates . . . . . . 7.18
7.19 Proceedings . . . . . . . . . . . . . . 7.19
7.21 Bank Accounts and Safe Deposit Boxes . . 7.21
7.23 Documents Provided to Buyer . . . . . . 7.23
7.24 Condition of Assets . . . . . . . . . . 7.24
7.25 Real Estate . . . . . . . . . . . . . . 7.25
7.26 Trade Names and Trademarks . . . . . . . 7.26
7.28 Environmental Matters . . . . . . . . . 7.28
7.29 Capital Projects . . . . . . . . . . . . 7.29
ATTACHMENTS
IA FORM OF ASSUMPTION AGREEMENT
IB FORM OF RELEASE
IC FORM OF BUYER'S PARENT GUARANTEE
II ESCROW AGREEMENT
IV FORM OF OPINION OF COUNSEL TO BUYER REGARDING QF
STATUS
V FORM OF OPINION OF COUNSEL TO BUYER
VI BUYER'S SOLVENCY CERTIFICATE WITH BALANCE
SHEET
VII FORM OF OPINIONS OF CANADIAN COUNSEL TO SELLERS
VIII FORM OF OPINION OF US COUNSEL TO SELLERS
IX MANAGEMENT AGREEMENT
X SUBLEASE
XI LAKE OPTION AGREEMENT
XII LAKE PARTNERSHIP AMENDMENT
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<PAGE>
STOCK PURCHASE AND SALE AGREEMENT
THIS STOCK PURCHASE AND SALE AGREEMENT, including the Annexes,
Schedules and Attachments hereto (collectively, the "Agreement")
is made this 31st day of March, 1994 by and among:
(a) NORTH CANADIAN OILS LIMITED, a Canadian corporation ("NCO"):
(b) NORTH CANADIAN RESOURCES, INC., a Delaware corporation
("NCRI");
(c) NORTH CANADIAN POWER INCORPORATED, a California corporation
("NCP"); and
(d) ENERGY INITIATIVES, INC., a Delaware corporation (the
"Buyer").
NCO and NCRI are sometimes herein collectively referred to as
"Sellers." Capitalized terms used in this Agreement shall unless
otherwise defined herein have the meanings ascribed to them in
the Glossary attached as Annex A hereto.
WHEREAS, NCO is the stockholder of record of, and owner of all
Beneficial Interest in, all of the issued and outstanding shares
of stock of NCRI;
WHEREAS, NCRI is the stockholder of record of, and owner of all
Beneficial Interest in, all of the issued and outstanding shares
of stock of NCP and Lake Interest Holdings Inc., a Delaware
corporation ("LIHI");
WHEREAS, NCP, itself and through the NCP Subsidiaries (i.e., the
corporations disclosed in Schedule 7.7) and the Limited
Partnerships (i.e., the limited partnerships disclosed in
Schedule 7.8) (NCP, the NCP Subsidiaries and the Limited
Partnerships being collectively referred to herein as the
"Company"), is engaged exclusively in the business of developing,
owning interests in and managing cogeneration and other
independent power plants in the United States and Canada using
natural gas as the primary fuel (the "Business");
WHEREAS, LIHI is a special purpose subsidiary of NCRI formed for
the specific and limited purpose of acquiring, holding and, under
certain circumstances contemplated hereby and by the Lake
Interest Option Agreement, disposing of the Lake Interest;
WHEREAS, NCP, through the NCP Subsidiaries, currently has
interests in the five operating power plants identified in
Annex B hereto (collectively, the "Projects") and NCP is actively
engaged in the development of the projects identified in Annex C
hereto (collectively, the "Development Projects");
WHEREAS, Buyer wishes to acquire, subject to the terms and
conditions hereof, NCP and the Business, substantially as it
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exists as of the date hereof with such changes as occur from and
after the date hereof, by purchasing all, but not less than all,
of the outstanding shares of stock of NCP;
WHEREAS, NCRI is willing to sell such shares, subject to the
terms and conditions hereof, to Buyer, and NCO is willing to
cause NCRI to sell such shares to Buyer; and
WHEREAS, NCP has determined that it is in its best interest that
ownership be transferred from NCRI to Buyer, and accordingly NCP
desires to induce Sellers and Buyer to enter into this Agreement
and consummate the Purchase and Sale Transactions.
NOW, THEREFORE, in consideration of the above premises and the
representations and agreements herein contained, the parties
hereto, intending to be legally bound, mutually agree as follows:
ARTICLE I
TRANSACTION
1.1. Purchase and Sale Transactions.
1.1.1. At the NCP Closing, NCRI shall sell, transfer, assign and
deliver to Buyer, and Buyer shall purchase and accept, all right,
title and interest in and to the NCP Stock (i.e., one thousand
(1,000) shares of common stock, no par value, of NCP).
1.1.2. At each Excluded Subsidiaries Closing, NCRI shall sell,
transfer, assign, and deliver to Buyer, and Buyer shall purchase
and accept all right, title and interest in and to the shares of
stock of the respective NCP Subsidiary or NCP Subsidiaries being
sold to Buyer at such Closing.
1.1.3. At the Lake Interest Closing, NCRI shall (or, in the case of
paragraph (a) of Subsection 1.6.1, shall cause LIHI to) sell,
transfer, assign and deliver to Buyer's assignee, and Buyer's
assignee shall purchase and accept, at Buyer's option, all right,
title and interest in and to either:
(a) the LIHI Stock (i.e., 1,000 shares of common stock, par
value $.01 per share); or
(b) the Lake Interest.
1.2. NCO Obligations and Releases.
1.2.1. At the NCP Closing, Buyer shall assume the NCO Obligations
(i.e., the obligations and guarantees disclosed in Schedule 1.2),
except for any of the NCO Obligations which relate to Projects
owned, directly or indirectly, by Excluded Subsidiaries which
Buyer shall not be obligated to assume at the NCP Closing.
1.2.2. At any Excluded Subsidiaries Closing at which Buyer purchases
any Excluded Subsidiary which owns, directly or indirectly, a
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Project to which an NCO Obligation relates (as disclosed on
Schedule 1.2), Buyer shall assume such NCO Obligation which
relates to the Project owned by such Excluded Subsidiary.
1.2.3. Buyer shall forever defend, indemnify and hold harmless NCO
and its successors and assigns from and against any and all
Claims and Damages related to or arising from Buyer's failure to
perform fully and discharge completely the responsibilities of
NCO with respect to such assumed NCO Obligations.
1.2.4. Prior to the NCP Closing and thereafter until termination of
the Escrow Agreement, Buyer and Sellers shall fully cooperate
with each other to obtain all Consents required from third
parties which are necessary for the assumption by Buyer of all
such NCO Obligations and the release of NCO therefrom at the NCP
Closing or at the Excluded Subsidiaries Closing, as the case may
be. In connection therewith, Buyer agrees to:
(a) use its best efforts (but shall not be obligated to incur
additional liability or consent to any financially adverse
change in the terms of any Project agreements) to obtain
such Consents and Releases; and
(b) make the credit of Buyer's Parent available to support
Buyer's assumption of NCO Obligations.
1.3. Requisite Consents.
Prior to the NCP Closing and thereafter until termination of the
Escrow Agreement, Buyer and Sellers shall fully cooperate with
each other to obtain all Requisite Consents (i.e. all Consents
required from third parties under any Commitments with respect to
the Projects which are required for the transfer, directly or
indirectly, of ownership or management thereof). In connection
therewith, Buyer agrees to use its best efforts (but shall not be
obligated to incur additional liability or consent to any
financially adverse change in the terms of any Project
agreements) to obtain such Requisite Consents.
1.4. Excluded Subsidiaries Exclusion.
1.4.1. In the event that there are any Requisite Consents that have
not been obtained at the NCP Closing, NCP shall at or prior to
the NCP Closing transfer to NCRI the stock of such NCP
Subsidiaries which own the Projects with respect to which the
Requisite Consents were not yet then obtained.
1.4.2. Prior to the NCP Closing, NCP shall deliver to Buyer the
audited December 31, 1993 Financial Statements of Pasco Cogen,
Ltd. In the event that such audited financial statements shall
disclose any material adverse change in the results of operations
or financial condition of Pasco Cogen, Ltd. from that shown on
the unaudited December 31, 1993 Financial Statements of Pasco
Cogen, Ltd. included as part of Schedule 7.11.2, except for any
such adverse change resulting from a circumstance or event
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reflected in such audited December 31, 1993 financial statements
that:
(a) occurs subsequent to March 31, 1994,
(b) is discovered subsequent to March 31, 1994,
(c) is disclosed in any of the Schedules hereto, or
(d) relates to Taxes or Environmental Laws for which Buyer is
indemnified hereunder,
then at Buyer's request NCP shall transfer to NCRI the stock of
the Pasco Subsidiaries and any right and obligation of Buyer to
purchase the Pasco Subsidiaries shall terminate.
1.4.3. Prior to the NCP Closing, NCP shall deliver to Buyer the FPB
audited 1993 Financial Statements of the FPB Partnership. In the
event that such audited financial statements shall disclose any
material adverse change in the results of operations or financial
condition of the FPB Partnership from that shown on the unaudited
1993 Financial Statements of the FPB Partnership included as part
of Schedule 7.11.2, except for any such adverse change resulting
from a circumstance or event reflected in such audited
December 31, 1993 financial statements that:
(a) occurs subsequent to March 31, 1994,
(b) is discovered subsequent to March 31, 1994,
(c) is disclosed in any of the Schedules hereto, or
(d) relates to Taxes or Environmental Laws for which Buyer is
indemnified hereunder;
then at Buyer's request NCP shall transfer to NCRI the stock of
the FPB Subsidiary and any right and obligation of Buyer to
purchase the FPB Subsidiary shall terminate.
1.5. Lake Interest Exclusion.
1.5.1. At or prior to the date on which Buyer, directly or
indirectly, acquires the Lake Subsidiaries as contemplated
hereby, Sellers, NCP and the Lake Subsidiaries, as necessary,
shall take all such corporate and other action as shall be
necessary, appropriate or advisable to amend the Lake Project
Partnership Agreement in substantially the form of Attachment XII
(the "Lake Partnership Amendment").
1.5.2. Upon adoption of the Lake Partnership Amendment, Lake
Investment, L.P. shall transfer to LIHI, the Lake Interest (i.e.,
initially the 1% general partnership interest and the 49% limited
partnership interest in the Lake Project) created as a result of
the Lake Partnership Amendment.
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1.5.3. LIHI shall thereupon hold the Lake Interest until such time,
if any, as the Lake Interest Option is exercised and the Lake
Interest Closing occurs as provided herein and by the Lake
Interest Option Agreement or the Lake Interest Option expires.
1.6. Lake Interest Option.
1.6.1. For the period beginning on the date hereof and ending as
of the close of business on December 31, 1994 ("Lake Interest
Option Expiration Date"):
(a) NCRI hereby irrevocably grants, and agrees to cause LIHI to
grant, to Buyer the exclusive right and option to purchase
from LIHI all right, title and interest of LIHI in and to
the Lake Interest; and
(b) NCRI hereby irrevocably grants to Buyer the exclusive right
and option to purchase all right, title and interest of
NCRI in and to all 1,000 issued and outstanding shares of
common stock of LIHI (the "LIHI Stock").
If the Lake Interest Closing has not occurred on or before the
close of business on the Lake Interest Option Expiration Date,
the Lake Interest Option shall expire.
1.6.2. It is expressly agreed that Buyer shall have the right in
its sole discretion to assign, in whole or in part, the Lake
Interest Option without the consent of NCO, NCRI or LIHI to any
Person unless such assignment would cause the Lake Project to
lose its QF Status; provided, however, that the Lake Interest
Option may only be exercised in whole and not in part. The owner
(including any such assignee) of the Lake Interest Option from
time to time is hereinafter referred to as the "Lake Interest
Optionee".
1.6.3. The Lake Interest Optionee may exercise the Lake Interest
Option by providing notice thereof to NCRI and LIHI, which notice
shall:
(a) state that Lake Interest Optionee is exercising the Lake
Interest Option;
(b) identify the name of Lake Interest Optionee and whether the
Lake Interest Optionee will be acquiring the LIHI Stock or
the Lake Interest; and
(c) state the date of the purchase and sale of the LIHI Stock
or the Lake Interest, as applicable (the "Lake Interest
Closing"), which shall not be earlier than the second
Business Day following notice of exercise.
1.6.4. Sellers, NCP, the Lake Subsidiaries, LIHI and Buyer shall
execute and deliver all such instruments, certificates, opinions
and other documents as shall be necessary, appropriate or
advisable to carry out the foregoing.
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1.7. Management Agreement.
Prior to the NCP Closing, NCP and NCRI shall enter into the
Management Agreement in the form of Attachment IX, pursuant to
which NCP will, following the NCP Closing, manage on behalf of
NCRI any Excluded Subsidiaries until, as the case may be, the
earlier of the date on which;
(a) such Excluded Subsidiaries are acquired by NCP or Buyer, as
the case may be; and
(b) the Escrow Agreement terminates with respect thereto.
1.8. Sublease.
Prior to the NCP Closing, NCP and NCRI shall enter into the
Sublease in substantially the form of Attachment X, pursuant to
which NCP will sublease the Santa Ana Premises.
1.9. Name Change.
1.9.1. At or prior to the NCP Closing, NCP shall amend its
Certificate of Incorporation to change its corporate name to
delete the words "North Canadian" therefrom and to adopt such
name as Buyer shall advise NCP in writing.
1.9.2. Any and all rights to the name "North Canadian" shall remain
with NCO and shall not be transferred to Buyer.
1.9.3. Following the NCP Closing, Buyer agrees not to use, and not
to permit NCP or any of Buyer's or NCP's directly or indirectly
owned Subsidiaries to use, the name "North Canadian" in their
respective corporate names or for any other purposes.
ARTICLE II
CONSIDERATION FOR TRANSFER OF THE STOCK
2.1. Consideration.
2.1.1. The aggregate Purchase Price payable to NCRI in connection
with the Purchase and Sale Transactions is Seventy-One Million
Seven Hundred Ninety-One Thousand Dollars ($71,791,000), which
shall be allocated and paid to NCRI in accordance with Schedule
2.1; provided, however that the Purchase Price shall be
automatically reduced in the amount of $2,000,000 in the event
that on or before the NCP Closing, North Canadian Marketing
Corporation has not delivered to Buyer a fully executed amendment
to the Participation Agreement dated as of July 29, 1992 among
Lake Cogen, ltd., Nationsbank of Florida, National Association
(formerly known as the Citizens and Southern National Bank of
Florida), as owner trustee, TIFD III-C, Inc. and General Electric
Capital Corporation, as amended to the date hereof, the Escrow
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Agreement dated July 29, 1992 among Lake Cogen, Ltd., TIFD III-
C, Inc. and Nationsbank of Florida, National Association
(formerly known as The Citizens and Southern National Bank of
Florida), as owner trustee, as amended to the date hereof and Gas
Purchase Agreement dated as of July 29, 1992, between North
Canadian Marketing Corporation and Lake Cogen, Ltd. as amended to
the date hereof which sets the initial gas price under the Lake
Project Gas Purchase Agreement, as amended, to $2.38 per MMBtu
from $2.44 per MMBtu effective July 1, 1993.
2.1.2. In addition to the payment to NCRI of the Purchase Price:
(a) Buyer and/or Buyer's Parent shall assume, or provide for
the assumption at the NCP Closing (or at an Excluded
Subsidiaries Closing, as appropriate) of the NCO
Obligations pursuant to one or more Assumption Agreements,
in substantially the form of Attachment IA; provided,
however, that Buyer (and/or Buyer's Parent) shall only be
obligated to assume:
(i) at the NCP Closing, those NCO Obligations relating to
Projects in which an ownership interest is acquired,
directly or indirectly, by Buyer at the NCP Closing,
and
(ii) at an Excluded Subsidiaries Closing, those NCO
Obligations relating to Excluded Subsidiaries in which
an ownership interest is acquired by Buyer at such
Excluded Subsidiaries Closing.
(b) Escrow Agent shall disburse from the Escrow (and, if and to
the extent Buyer's Cash Deposit is insufficient, Buyer
shall pay) to NCRI at the NCP Closing the sum of:
(i) the Working Capital Value, plus
(ii) the Deferred Payment Consideration, if any, plus or
minus
(iii) any amount owing to NCRI to reflect a positive
Working Capital Closing Adjustment as set forth in
Section 4.2, less any amount owing to Buyer to
reflect a negative Working Capital Closing
Adjustment.
2.1.3. In the event there are any Excluded Subsidiaries and/or the
Lake Interest is excluded at the NCP Closing, the Purchase Price
payable to NCRI at the NCP Closing shall be adjusted in
accordance with the allocations in Schedule 2.1 and paid to NCRI
as provided for in Subsection 2.2 in accordance with the
allocations in Schedule 2.1 at the Excluded Subsidiaries Closing,
if any, at which such Excluded Subsidiaries are purchased by
Buyer or NCP and, as applicable, at the Lake Interest Closing.
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2.2. Payment of Consideration.
2.2.1. At the NCP Closing, the Escrow Agent shall deliver to NCRI on
behalf of Buyer (and Buyer shall pay to NCRI such amounts to the
extent that Buyer's Cash Deposit is insufficient) and NCRI shall
accept in immediately available funds
(a) the Purchase Price (as adjusted, if applicable, in
accordance with the provisions of Section 2.1 and
Schedule 2.1), plus
(b) the Working Capital Value (provided, however, that if the
Working Capital Value has not been agreed or finally
determined in accordance with the provisions of Section 4.1
at the time of the NCP Closing, then payment at the NCP
Closing will be made in accordance with the provisions of
Subsection 4.1.2), plus
(c) the Deferred Payment Consideration, if any, plus or minus
(d) the amount of the Working Capital Closing Adjustment
pursuant to the provisions relating to the Working Capital
Closing Adjustment set forth in Section 4.2 (provided,
however, that if the Working Capital Closing Adjustment has
not been agreed or finally determined in accordance with the
provisions of Section 4.2 at the time of the NCP Closing,
then payment at the NCP Closing will be made in accordance
with the provisions of Subsections 4.2.5 and 4.2.6).
2.2.2. At each Excluded Subsidiaries Closing, the Escrow Agent shall
deliver to NCRI on behalf of Buyer (and Buyer shall pay to NCRI
such amounts to the extent that Buyer's Cash Deposit is
insufficient) and NCRI shall accept in immediately available
funds the Purchase Price for such Excluded Subsidiary (as
adjusted in accordance with the provisions of Section 2.1 and
Schedule 2.1).
2.2.3. At the NCP Closing and at any Excluded Subsidiaries Closing,
Buyer shall:
(a) assume pursuant to one or more Assumption Agreements, which
Assumption Agreements shall be substantially in the form of
Attachment IA, and dated as of the NCP Closing Date or the
Excluded Subsidiaries Closing Date (as the case may be) at
which they are delivered, the NCO Obligations relating to
the Projects in which an ownership interest is then being
acquired, directly or indirectly, by Buyer, and
(b) deliver to NCO a Release releasing NCO from such NCO
Obligations in substantially the form of Attachment IB or,
if such Release has not been obtained, a guarantee by
Buyer's Parent in substantially the form of Attachment IC.
2.2.4. All payments to NCRI pursuant to this Agreement shall be by
wire transfer payable to North Canadian Resources, Inc. (Account
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No. 405-788-1) at Royal Bank of Canada, Main Branch (Branch No.
00009), 339 8th Avenue S.W., Calgary, Alberta, Canada, (Bank
Routing No. 00003).
ARTICLE III
THE ESCROW AND CLOSINGS
3.1. Escrow.
Simultaneously herewith, Buyer and NCRI are entering into the
Escrow Agreement with the Escrow Agent in the form of
Attachment II.
3.2. Buyer's Escrow Deposit.
3.2.1. Simultaneously herewith, Buyer shall deposit with the Escrow
Agent, as Buyer's Cash Deposit, immediately available funds by
wire transfer in the amount of $74,975,000, representing the
Estimated Cash Payment equal to the sum of the following:
(i) $71,791,000, representing the Purchase Price, plus
(ii) $459,000, representing the Estimated Working Capital
Value, plus
(iii) $1,350,000, representing the Estimated Deferred
Payment Consideration (based on an estimate of 90
days at $15,000 per day), plus
(iv) $1,375,000, representing the Estimated Working Capital
Closing Adjustment (based on 50% of the assumed
negative cash flow at the rate of $500,000 per month
from March 1, 1994 through August 15, 1994).
3.2.2. Simultaneously herewith, Buyer shall deposit with the Escrow
Agent, as Buyer's NCP Deposit, two fully executed (or in the case
of documents certified by governmental officials, one original
copy) of each of the following:
(a) An opinion of Buyer's counsel in the form of Attachment V;
and
(b) A solvency certificate signed by Buyer's chief financial
officer in the form of Attachment VI.
3.2.3. Simultaneously herewith, Buyer shall also deposit with the
Escrow Agent, as Buyer's Subsidiaries Deposit (Buyer's Cash
Deposit, Buyer's NCP Deposit and Buyer's Subsidiaries Deposit
being referred to herein collectively as "Buyer's Escrow
Deposit"), the following:
(a) Lake Deposit:
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(i) Assumption Agreement with respect to each of the NCO
Obligations relating to the Lake Project executed by
Buyer in form and substance substantially in the form
of Attachment IA;
(b) Pasco Deposit:
(i) Assumption Agreements with respect to the NCO
Obligations relating to the Pasco Project executed by
Buyer in form and substance substantially in the form
of Attachment IA;
(c) Syracuse Deposit:
(i) Assumption Agreement with respect to the NCO
Obligations relating to the Syracuse Project executed
by Buyer in form and substance substantially in the
form of Attachment IA.
3.3. Sellers' Escrow Deposit.
3.3.1. Simultaneously herewith, Sellers shall deposit (or cause NCRI
to deposit) with the Escrow Agent, as Sellers' NCP Deposit, the
following:
(a) Certificates evidencing the Stock endorsed by NCRI in blank
for transfer;
(b) By-laws, minute book and stock record book of NCP, together
with a certificate of the secretary of NCP certifying the
authenticity and completeness thereof;
(c) Current Articles of Amalgamation of NCO certified as of a
recent date by a duly authorized Canadian government
official or notarized by a duly authorized notary;
(d) Certificates of Incorporation of each of NCRI and NCP
certified as of a recent date by the Secretary of State of
Delaware and California, respectively;
(e) Certificate of Status of NCO certified as of a recent date
by a duly authorized Canadian government official.
(f) Certificates of good standing (and, where available,
indicating no past due franchise, capital stock or similar
taxes) as of a recent date with respect to each of NCRI and
NCP from the Secretary of State of Delaware and California,
respectively;
(g) Certificates of the Secretary of State of Michigan and Texas
dated a recent date to the effect that NCP is duly qualified
as a foreign corporation and in good standing in such
states;
(h) Certificates of the Secretary of State of California and
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Texas dated as of a recent date to the effect that NCRI is
duly qualified as a foreign corporation in good standing in
such states.
(i) Certificates of Incorporation of each Non-Project Subsidiary
(i.e., each NCP Subsidiary which does not have an ownership
interest in a Project) certified as of a recent date from
the Secretary of State of their respective states of
incorporation;
(j) Certificates of good standing (and, where available,
indicating no past due franchise, capital stock or similar
taxes) as of a recent date of each Non-Project Subsidiary
from the Secretary of State of their respective states of
incorporation;
(k) Certificates representing all of the issued and outstanding
shares of stock of each Non-Project Subsidiary registered in
the name of NCP or the NCP Subsidiary that is the owner of
such shares of stock;
(l) Resignations of officers and directors of NCP and each Non-
Project Subsidiary;
(m) Certificates of NCO, NCRI and NCP with respect to board of
directors resolutions approving the transactions, their
respective By-laws, and the absence of amendments to their
respective certificates of incorporation since the date of
the certified copies;
(n) Opinion of Sellers' Canadian counsel in the form of
Attachment VII; and
(o) Opinion of Sellers' United States counsel in the form of
Attachment VIII.
3.3.2. Simultaneously herewith, Sellers shall also deposit (or cause
NCRI to deposit) with the Escrow Agent, as Sellers' Subsidiaries
Deposit (Sellers' NCP Deposit and Sellers' Subsidiaries Deposit
being referred to herein collectively as "Sellers' Escrow
Deposit"), the following with respect to the NCP Subsidiaries
which have ownership interests in the Projects:
(a) Lake Deposit:
(i) By-laws, minute books and stock record books of NCP
Lake Power Incorporated, NCP Gem Incorporated and
Umatilla Groves Incorporated (collectively, the "Lake
Subsidiaries"), in each case together with a
certificate of the secretary or assistant secretary of
such corporation certifying the authenticity and
completeness thereof;
(ii) Certificates of Incorporation of each Lake Subsidiary
certified as of a recent date from the Secretary of
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State of Delaware;
(iii) Certificates of good standing (and, where
applicable, indicating no past due franchise,
capital stock or similar taxes), as of a recent
date with respect to each Lake Subsidiary from the
Secretary of State of Delaware;
(iv) Certificates of Limited Partnership and good standing
and (and, where applicable, indicating no past due
franchise, capital stock or similar taxes), as of a
recent date of Lake Investment, L.P. and Lake Cogen
Ltd. (collectively, the "Lake Partnerships") from the
Secretary of State of their respective states of
formation;
(v) Copies of the Partnership Agreements for each of the
Lake Partnerships, together with a certificate of the
secretary or assistant secretary of NCP certifying the
authenticity and completeness thereof;
(vi) Certificates representing all of the issued and
outstanding shares of stock of each Lake Subsidiary
registered in the name of NCP (except the certificate
for outstanding shares of NCP Lake Power Incorporated,
which has been pledged to General Electric Capital
Corporation);
(vii) Resignations of officers and directors of the Lake
Subsidiaries;
(viii) Stock powers for each Lake Subsidiary endorsed in
blank for transfer;
(b) Pasco Deposit:
(i) By-laws, minute books and stock record books of NCP
Dade Power Incorporated and NCP Pasco Incorporated
(collectively, the "Pasco Subsidiaries"), in each case
together with a certificate of the secretary or
assistant secretary of such corporation certifying the
authenticity and completeness thereof;
(ii) Certificates of Incorporation of each Pasco Subsidiary
certified as of a recent date from the Secretary of
State of Delaware;
(iii) Certificates of good standing (and, where
applicable, indicating no past due franchise,
capital stock or similar taxes), as of a recent
date with respect to each Pasco Subsidiary from
the Secretary of State of Delaware;
(iv) Certificate of Limited Partnership (and, where
applicable, indicating no past due franchise,
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capitalization or similar taxes), certified as of a
recent date by the Secretary of State of Delaware for
each of Dade Investment, L.P. and Pasco Cogen, Ltd.
(collectively, the "Pasco Partnerships");
(v) Copies of the Partnership Agreements for each of the
Pasco Partnerships, together with a certificate of the
secretary or assistant secretary of NCP certifying the
authenticity and completeness thereof;
(vi) Certificates representing all of the issued and
outstanding shares of stock of each Pasco Subsidiary
registered in the name of NCP;
(vii) Resignations of officers and directors of the
Pasco Subsidiaries;
(viii) Stock powers for each Pasco Subsidiary endorsed in
blank for transfer;
(c) Syracuse Deposit:
(i) By-laws, minutes books and stock record books of
Syracuse Investment, Inc. and NCP Syracuse, Inc.
(collectively, the "Syracuse Subsidiaries"), in each
case together with a certificate of the secretary or
assistant secretary of such corporation certifying
the authenticity and completeness thereof;
(ii) Certificates of Incorporation of each Syracuse
Subsidiary certified as of a recent date from the
Secretary of State of Delaware;
(iii) Certificates of good standing (and, where applicable,
indicating no past due franchise, capital stock or
similar taxes), as of a recent date with respect to
the Syracuse Subsidiary from the Secretary of State
of Delaware;
(iv) Certificates of Limited Partnership certified (and,
where applicable, indicating no past due franchise,
capitalization or similar taxes), as of a recent date
by the Secretary of State of Delaware for each of
Syracuse Orange Partners, L.P. and Project Orange
Associates, L.P. (collectively, the "Syracuse
Partnerships");
(v) Copies of the Partnership Agreements for each of the
Syracuse Partnerships, together with a certificate of
the secretary or assistant secretary of NCP
certifying the authenticity and completeness thereof;
(vi) Certificates representing all of the issued and
outstanding shares of stock of each Syracuse
Subsidiary registered in the name of NCP;
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(vii) Resignations of officers and directors of the
Syracuse Subsidiaries;
(viii) Stock powers for each Syracuse Subsidiary endorsed in
blank for transfer;
(d) Ada Deposit:
(i) By-laws, minute books and stock record books of NCP
Ada Power Incorporated (the "Ada Subsidiary"),
together with a certificate of the secretary or
assistant secretary of such corporation certifying
the authenticity and completeness thereof;
(ii) Certificate of Incorporation of the Ada Subsidiary
certified as of a recent date from the Secretary of
State of California;
(iii) Certificates of good standing (and, where applicable,
indicating no past due franchise, capital stock or
similar taxes), as of a recent date with respect to
the Ada Subsidiary from the Secretary of State of
California;
(iv) Certificates of Limited Partnership (and, where
applicable, indicating no past due franchise,
capitalization or similar taxes), certified as of a
recent date by the Secretary of State of Delaware for
Ada Cogeneration Limited Partnership (the "Ada
Partnership");
(v) A copy of the Partnership Agreement for the Ada
Partnership, together with a certificate of the
secretary or assistant secretary of NCP certifying
the authenticity and completeness thereof;
(vi) Certificates representing all of the issued and
outstanding shares of stock of the Ada Subsidiary,
registered in the name of NCP;
(vii) Resignations of officers and directors of the Ada
Subsidiary;
(viii) Stock powers for the Ada Subsidiary endorsed by NCP
in blank for transfer;
(e) FPB Deposit:
(i) By-laws, minute books and stock record books of NCP
Commerce Power Incorporated ("FPB Subsidiary"),
together with a certificate of the secretary or
assistant secretary of such corporation certifying
the authenticity and completeness thereof;
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(ii) Certificate of Incorporation of the FPB Subsidiary
certified as of a recent date from the Secretary of
State of California;
(iii) Certificates of good standing (and, where applicable,
indicating no past due franchise, capital stock or
similar taxes), as of a recent date with respect to
the FPB Subsidiary from the Secretary of State of
California;
(iv) Certificates of Limited Partnership (and, where
applicable, indicating no past due franchise,
capitalization or similar taxes), certified as of a
recent date by the Secretary of State of Delaware for
FPB Cogeneration Partners, L.P. (the "FPB
Partnership");
(v) Copies of the Partnership Agreement for the FPB
Partnership, together with a certificate of the
secretary or assistant secretary of NCP certifying
the authenticity and completeness thereof;
(vi) Certificates representing all of the issued and
outstanding shares of stock of the FPB Subsidiary
registered in the name of NCP;
(vii) Resignations of officers and directors of the FPB
Subsidiary;
(viii) Stock powers for the FPB Subsidiary endorsed by NCP
in blank for transfer;
(f) Lake Interest Deposit:
(i) By-laws, minute book and stock record books of LIHI,
together with a certificate of the secretary or
assistant secretary of such corporation certifying the
authenticity and completeness thereof;
(ii) Certificate of Incorporation by LIHI certified as of a
recent date by the Secretary of State of Delaware;
(iii) Certificates representing all of the issued and
outstanding shares of LIHI Stock registered in the name
of NCRI; and
(iv) Lake Interest Assignment Instruments.
3.4. NCP Closing.
3.4.1. The NCP Closing shall occur at the offices of McDermott,
Will & Emery, 227 West Monroe Street, Chicago, Illinois, and
shall begin at 10:00 A.M. (Central Time) or at such other time or
place as the parties may mutually agree in writing.
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3.4.2. The NCP Closing shall, subject to the satisfaction of the
conditions precedent set forth in Article XII, occur four
Business Days following the later of the following dates:
(a) issuance of the required SEC Order;
(b) the termination of the waiting period under the H-S-R Act;
(c) receipt of all Requisite Consents with respect to the
Minimum Number of Projects; and
(d) delivery to Buyer of the NCP February 28 Balance Sheet;
or on such other date as the parties may mutually agree in
writing.
3.4.3. At the NCP Closing, the Escrow Agent shall release and
deliver in each case in accordance with the terms of the Escrow
Agreement:
(a) to NCRI:
(i) the allocable portion of Buyer's Cash Deposit,
(ii) Buyer's NCP Deposit, and
(iii) the allocable portion of Buyer's Subsidiaries Deposit;
(b) to Buyer:
(i) Sellers' NCP Deposit, and
(ii) the allocable portion of Sellers' Subsidiaries Deposit;
3.4.4. At the NCP Closing, each party shall execute and deliver to
the other such other instruments or documents as may be necessary
or appropriate to carry out the Purchase and Sale Transactions
and the Escrow Agreement and to comply with the terms hereof and
thereof.
3.5. Preclosing (NCP Closing).
A preclosing shall occur at the offices of McDermott, Will &
Emery, at 10:00 A.M. (Central Time) on the Business Day
immediately preceding the NCP Closing or at such other time or
place as the parties may mutually agree in writing.
3.6. Excluded Subsidiaries Closings.
3.6.1. The closings with respect to the Excluded Subsidiaries (the
"Excluded Subsidiaries Closings") shall occur at the offices of
McDermott, Will & Emery and shall begin at 10:00 A.M. (Central
Time) or at such other time or place as the parties may mutually
agree in writing.
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3.6.2. Each Excluded Subsidiaries Closing shall, subject to the
satisfaction of the conditions precedent set forth in
Article XII, occur two Business Days following the date when all
Requisite Consents with respect to such Excluded Subsidiaries are
obtained, or such other date as the parties may mutually agree in
writing.
3.6.3. A preclosing shall occur at the offices of McDermott, Will &
Emery, at 10:00 A.M. (Central Time) on the Business Day
immediately preceding an Excluded Subsidiaries Closing or at such
other time or place as the parties may mutually agree in writing.
3.6.4. At each Excluded Subsidiaries Closing, the Escrow Agent shall
release and deliver the allocable portion of the Buyer's Escrow
Deposit relating to such Excluded Subsidiaries and the Sellers'
Subsidiary Escrow Deposit relating to such Excluded Subsidiaries,
in each case in accordance with the terms of the Escrow
Agreement.
3.6.5. At each Excluded Subsidiaries Closing, each party shall
execute and deliver to the other such other instruments and
documents as may be necessary or appropriate to carry out the
Purchase Sale Transactions and the Escrow Agreement and to comply
with the terms and conditions hereof and thereof.
3.7. Lake Interest Closing.
3.7.1. The Lake Interest Closing shall, subject to the satisfaction
of the conditions precedent set forth in Article XII, occur at
the offices of McDermott, Will & Emery and shall begin at 10:00
A.M. (Central Time) or at such other time and place as the
parties may mutually agree in writing.
3.7.2. The Lake Interest Closing shall occur two Business Days
following the later of the following dates:
(a) receipt by NCRI of a written assignment and direction from
Buyer designating the Lake Interest Optionee; and
(b) receipt of all Requisite Consents required for the
contemplated transfer of the Lake Interest,
or on such other date as the parties may mutually agree in
writing.
3.7.3. A preclosing shall occur at the offices of McDermott, Will &
Emery, at 10:00 A.M. (Central Time) on the Business Day
immediately preceding the Lake Interest Closing or at such other
time or place as the parties may mutually agree in writing.
3.7.4. At the Lake Interest Closing:
(a) NCRI and Buyer shall certify to the Escrow Agent that the
Lake Interest Closing is occurring;
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(b) NCRI shall instruct the Escrow Agent to release to Buyer the
relevant Lake Interest Assignment Instrument; and
(c) The Escrow Agent shall wire transfer $7,000,000 from Buyer's
Cash Deposit to NCRI.
The right of the Lake Interest Optionee to deliver notice of
exercise of the Lake Interest Option as aforesaid shall be
conditioned on receipt by Lake Interest Optionee and NCRI of all
Requisite Consents to the transfer of the Lake Interest or LIHI
Stock, as applicable, to the Lake Interest Optionee.
3.7.5. At the Lake Interest Closing, each party shall execute and
deliver to the other such other instruments and documents as may
be necessary or appropriate to carry out the Purchase and Sale
Transactions and the Escrow Agreement and to comply with the
terms and conditions hereof and thereof.
3.8. Excluded Subsidiaries Option.
3.8.1. NCRI hereby grants to Buyer (or, at Buyer's direction, to
NCP) the irrevocable, exclusive option to purchase (following the
NCP Closing) each of the Excluded Subsidiaries at the Purchase
Prices therefor set forth in Schedule 2.1 at any time after the
NCP Closing through December 31, 1994.
3.8.2. NCRI hereby grants to Buyer (or, at Buyer's discretion, to
NCP) the irrevocable, nonexclusive option to purchase each of the
Excluded Subsidiaries at the Purchase Prices therefor set forth
in Schedule 2.1 at any time after December 31, 1994 until the
earlier of:
(a) the date NCRI enters into a binding agreement to sell such
respective Excluded Subsidiary; and
(b) December 31, 1995.
3.9. Termination of Escrow.
3.9.1. In the event that the NCP Closing does not occur on or before
August 15, 1994, then unless the parties shall otherwise agree in
writing, the Escrow shall be terminated and the Escrow Agent
shall:
(a) disburse to NCRI,
(i) the Stipulated Damages, if any, owing to NCRI
pursuant to Section 13.1,
(ii) the Deferred Consideration, if any, owing to NCRI,
and
(iii) interest on the Cash Deposit payable to NCRI pursuant
to Section 3.2 of the Escrow Agreement; and
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(b) disburse to Buyer, the balance of the Cash Deposit;
(c) deliver to NCRI, the balance of Sellers' Escrow Deposit; and
(d) deliver to Buyer, the balance of Buyer's Escrow Deposit.
3.9.2. In the event following an NCP Closing any Excluded
Subsidiaries have not been purchased by Buyer and/or the Lake
Interest has not been purchased by the Lake Interest Optionee on
or prior to December 31, 1994, then unless the parties shall
otherwise agree in writing, on January 1, 1995 the Escrow shall
be terminated and the Escrow Agent shall:
(a) disburse to Buyer the entire balance of the Cash Deposit;
(b) deliver to NCRI the entire balance of the Sellers' Escrow
Deposit; and
(c) deliver to Buyer the entire balance of the Buyer's Escrow
Deposit.
ARTICLE IV
CASH AMOUNT CALCULATIONS AND ADJUSTMENTS
4.1. Calculation of Working Capital Value.
4.1.1. Within forty-five (45) days following the date hereof (and in
any event at least four Business Days prior to the NCP Closing),
NCP shall prepare and deliver to Buyer and NCRI a consolidated
balance sheet of NCP as of February 28, 1994 (the "February 28
Balance Sheet") on a basis consistent with the Audited Balance
Sheet, but excluding the Lake Subsidiaries, and a computation
based on such February 28 Balance Sheet of the Working Capital
Value as of February 28, 1994 using the format set forth on
Schedule 4.1 hereof (the "NCP Working Capital Value
Calculation").
4.1.2. Buyer and NCRI shall have the right on or before the NCP
Closing to raise an objection to the NCP Working Capital Value
Calculation. If either Buyer or NCRI so object, then at the NCP
Closing:
(a) the amount not in dispute shall be paid by the Escrow Agent
to NCRI; and
(b) the balance shall continue to be held by the Escrow Agent.
If Buyer or NCRI do not so object, then the agreed amount of the
Working Capital Value shall be paid by the Escrow Agent to NCRI
at the NCP Closing.
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4.1.3. If the amount of the Working Capital Value is in dispute at
the time of the NCP Closing, NCRI and Buyer shall cooperate with
each other to reach a mutual agreement thereon, or, failing such
agreement within 10 days, then the determination shall be made by
an independent certified public accounting firm ("Accountant")
reasonably acceptable to NCRI and Buyer, the cost of which shall
be paid equally by NCRI and Buyer. NCRI and Buyer shall deliver
to the Accountant copies of any schedules or documentation which
may be reasonably required by the Accountant to make its
determination. NCRI and Buyer shall use their best efforts to
cause the Accountant to promptly complete such determination.
The determination of the Accountant shall be final and binding on
the parties.
4.1.4. In the event that the Working Capital Value as so determined
in accordance with the provisions of Subsection 4.1.3 is:
(a) an amount greater than the amount paid with respect to the
Working Capital Value at the NCP Closing pursuant to
paragraph (b) of Subsection 2.2.1, Buyer shall pay NCRI such
difference;
(b) an amount smaller than the amount paid with respect to the
Working Capital Value at the NCP Closing pursuant to
paragraph (b) of Subsection 2.2.1, NCRI shall pay to Buyer
such difference.
Such payment shall be made by check or wire transfer within five
Business Days of the resolution of any objection.
4.2. Calculation of Working Capital Closing Adjustment.
4.2.1. The Working Capital Closing Adjustment included as part of
the Cash Payment shall be calculated as follows:
(a) the amount of:
(i) the Intercompany Account, if any, owing by NCP to NCRI
as of the close of business on the day immediately
preceding the NCP Closing, plus
(ii) 50% of the increase, if any, in the Working Capital of
NCP during the period commencing March 1, 1994 through
the close of business on the day immediately preceding
the NCP Closing,
shall be added to the Cash Payment; and
(b) the amount of:
(i) the Intercompany Account, if any, owing by NCRI to NCP
as of the close of business on the day immediately
preceding the NCP Closing, plus
(ii) 50% of the decrease, if any, in the Working Capital of
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NCP during the period commencing March 1, 1994 through
the close of business on the day immediately preceding
the NCP Closing,
shall be subtracted from the Cash Payment.
The net amount calculated in accordance with paragraphs (a) and
(b) of this Subsection 4.1.1 shall be the "Working Capital
Closing Adjustment."
4.2.2. The change in Working Capital referred to in items (a)(ii)
and (b)(ii) of Subsection 4.1.2 shall be calculated by
subtracting the positive or negative amount of Working Capital
reflected on the NCP Closing Balance Sheet from the positive or
negative amount of Working Capital reflected on the February 28
Balance Sheet. In each case such computations shall be made in
accordance with the format of Schedule 4.2 adjusted to exclude
the Lake Subsidiaries.
4.2.3. For purposes of this calculation, the Intercompany Account
will be:
(a) adjusted to zero at February 28, 1994; and
(b) treated as a current receivable and payable and part of
Working Capital after February 28.
4.2.4. The Intercompany Account shall be satisfied and extinguished
at the NCP Closing by the adjustment in the Cash Payment provided
for by Subsection 4.2.1.
4.2.5. Prior to the NCP Closing, NCP shall provide to Buyer and to
NCRI an estimate of the status of Working Capital and
Intercompany Account balance at the NCP Closing Date and such
Working Capital and Intercompany Account balance shall be the
basis for the Working Capital Closing Adjustment to be made at
the NCP Closing as provided in paragraph (d) of Subsection 2.2.1.
4.2.6. Buyer and NCRI shall have the right on or before the NCP
Closing to raise an objection to the NCP Working Capital Closing
Adjustment Calculation. If either Buyer or NCRI so object, then
at the NCP Closing:
(a) the amount not in dispute shall be paid by the Escrow Agent
to NCRI; and
(b) the balance shall continue to be held by the Escrow Agent.
If Buyer or NCRI do not so object, then the amount of the NCP
Working Capital Closing Adjustment Calculation shall be paid by
the Escrow Agent to NCRI at the NCP Closing.
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4.3. Closing Balance Sheet.
4.3.1. Within 30 days following NCP Closing, NCRI shall prepare and
deliver to Buyer, and NCP shall assist NCRI to prepare, an
unaudited, consolidated balance sheet of NCP as of the NCP
Closing Date (the "Closing Balance Sheet") prepared in a manner
consistent with the Audited Balance Sheet but excluding the Lake
Subsidiaries and Lake Partnerships, setting forth on an accrual
basis the Working Capital and Intercompany Account balances as of
the NCP Closing.
4.3.2. Buyer shall have the right within 30 days following the
delivery of the Closing Balance Sheet to object to the
calculation of Working Capital and the Intercompany Account
therein and the resulting Working Capital Closing Adjustment. If
Buyer does so object, NCRI and Buyer shall cooperate with each
other to reach a mutual agreement thereon, or, failing such
agreement within 10 days, then the determination shall be made by
an Accountant reasonably acceptable to NCRI and Buyer, the cost
of which shall be shared equally by NCRI and Buyer. NCRI and
Buyer shall deliver to the Accountant copies of any schedules or
documentation which may be reasonably required by the Accountant
to make its determination. NCRI and Buyer shall use their best
efforts to cause the Accountant to promptly complete such
determination. The determination of the Accountant shall be
final and binding on the parties.
4.3.3. In the event that the actual Working Capital Closing
Adjustment as so determined is greater or less than the Estimated
Working Capital Closing Adjustment used in the calculation of the
Cash Payment pursuant to Subsection 2.2.1 then:
(a) if greater, then Buyer shall pay (or cause the Escrow Agent
to pay) NCRI such difference;
(b) if less, then NCRI shall pay to Buyer such difference.
Such payment shall be made by check or wire transfer within
thirty-five days after delivery by NCRI to Buyer of the
computation of the Working Capital Closing Adjustment or five
Business Days after the resolution of any objection pursuant to
Section 4.3.2, whichever is later.
ARTICLE V
REPRESENTATIONS OF NCO
As an inducement to Buyer to enter into this Agreement, NCO
hereby makes the following representations to Buyer, as of the
date hereof, subject in each case to Buyer's acknowledgment in
Section 8.6.3 hereof and the limitations set forth in Part D of
Article VII. Disclosure of an item in any Schedule with respect
to any Section of this Agreement shall constitute disclosure in
every Schedule of this Agreement notwithstanding the fact that no
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express cross reference is made. Where reference is made in this
Agreement to "knowledge of NCO", it means the actual knowledge of
the officers of NCO. Where reference is made in this Agreement
to the "best knowledge of NCO", it means the actual knowledge of
the officers of NCO based on diligent inquiry of such persons as
the officers of NCO reasonably believe to have knowledge of the
facts or circumstances as to which the representation is being
made .
5.1. Organizational Status.
NCO is a validly subsisting corporation under the laws of Canada.
NCO has the corporate power and authority required to own and
lease its properties and to carry on its activities as they are
now conducted. NCO is duly qualified to do business as a foreign
corporation in each jurisdiction in which the ownership of its
properties or conduct of its business requires it to be so
qualified, except where the failure to be so qualified would not
have a material adverse effect on its ability to enter into this
Agreement or perform its obligations hereunder.
5.2. Corporate Authority.
Except as disclosed in Schedule 5.2, NCO has full legal right and
corporate power, without the Consent of any other Person, to
execute, deliver and perform its obligations under this Agreement
and the Closing Documents, as applicable, and the Purchase and
Sale Transactions.
5.3. Authorization.
All corporate and other actions required to be taken by NCO to
authorize the execution, delivery and performance of this
Agreement and, as applicable, the Closing Documents, and the
transactions contemplated thereby, have been duly and properly
taken.
(a) Except as disclosed in Schedule 5.3, no Consent, approval or
authorization of, or filing of any certificate, notice,
application, report or other document with, any Governmental
Authority, and
(b) except as disclosed in Schedule 5.2 hereto, no Consent of
the stockholders of NCO or of any Person under any
Commitment to which it is a party or by which its assets are
bound or subject,
is required on the part of NCO in connection with the valid
execution and delivery of this Agreement, the sale by NCRI of the
Stock to Buyer, or the performance by NCO, NCRI or NCP of any of
their respective obligations hereunder or under the Escrow
Agreement or any of the Closing Documents.
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5.4. Validity.
This Agreement has been duly executed and delivered by NCO and is
a lawful, valid and legally binding obligation of NCO,
enforceable in accordance with its terms and conditions, except
to the extent limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally
or by general equitable principles.
5.5. Noncontravention.
The execution, delivery and performance of this Agreement, the
Escrow Agreement and the Closing Documents and the transactions
contemplated hereby and thereby are not prohibited by, do not
violate or conflict with any provision of, or result in a default
(or constitute an event which with notice or lapse of time or
both, would become a default) under or a breach of:
(a) NCO's Articles of Amalgamation or By-laws;
(b) except as disclosed in Schedule 5.3, any order, decree or
judgment of any court, Government Authority or arbitrative
body to which NCO is a party or by which it or any of its
assets are bound or subject;
(c) any law or regulation applicable to NCO; or
(d) except as disclosed in Schedule 5.2, any Commitment to which
NCO is a party or by which any of its assets are bound or
subject relating to the sale of the Stock or that could
result in a Third Party Injunction or impose a lien on the
Stock or assets of NCP or the Projects.
5.6. Brokers.
With the exception of fees which will be paid by NCO to Merrill
Lynch & Co., none of the Sellers, NCP, the NCP Subsidiaries and
the Limited Partnerships nor anyone on their behalf have any
liability to any broker, finder or agent or have agreed to pay
any brokerage fees, commissions or finders fees with respect to
this Agreement or the Purchase and Sale Transactions.
5.7. Proceedings.
Except as disclosed in Schedule 7.19, there are no Proceedings
pending or, to the best knowledge of NCO (including, without
limitation, discussions with attorneys who currently provide
services to NCO) threatened before any court, arbitrator or
Government Authority which would, if adversely decided:
(a) affect the ability or capacity of NCO to execute and deliver
this Agreement and to perform its obligations set forth in
Articles I, II, III and IV of this Agreement, the Escrow
Agreement or the Closing Documents,
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(b) materially affect the ability or capacity of NCO to perform
any of its other obligations hereunder and the Purchase and
Sale Transactions, or
(c) except as otherwise disclosed in NCO's most recent Annual
Report on Form 40-F with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, a copy
of which has been delivered to Buyer, materially adversely
affect the financial condition, results of operations,
business or properties of NCO so as to impair its ability to
perform its obligations under this Agreement or the Purchase
and Sale Transactions.
5.8. NCO Obligations.
NCO has complied in all material respects with the terms and
conditions of each of the NCO Obligations, no claim has been
asserted or, to the best knowledge of NCO, threatened thereunder,
and no default exists thereunder which would have a material
adverse effect on the related Project.
5.9. Financial Condition.
The 1993 Annual Report or Form on 40-F of NCO provided to Buyer
accurately represents the financial position of NCO as of
December 31, 1993.
ARTICLE VI
REPRESENTATIONS OF NCRI
As an inducement to Buyer to enter into this Agreement, NCRI
hereby makes the following representations to Buyer as of the
date hereof, subject in each case to Buyer's acknowledgment in
Section 8.6.3 hereof and the limitations set forth in Article VII
hereof. Disclosure of an item in any Schedule with respect to
any Section of this Agreement shall constitute disclosure in
every Schedule of this Agreement notwithstanding the fact that no
express cross reference is made. Where reference is made in this
Agreement to "knowledge of NCRI", it means the actual knowledge
of the officers of NCRI. When reference is made in this
Agreement to the "best knowledge of NCRI", it means the actual
knowledge of the officers of NCRI based on diligent inquiry of
such persons as the officers of NCRI reasonably believe to have
knowledge of the facts or circumstances as to which the
representation is being made.
6.1. Organizational Status.
6.1.1. NCRI is a validly existing corporation and in good standing
under the laws of the State of Delaware. NCRI has the corporate
power and authority required to own and lease its properties and
to carry on its activities as they are now conducted. NCRI is
qualified to do business as a foreign corporation in the States
25
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of Texas and California, the only states where the ownership or
lease of its properties or conduct of its business requires it to
be so qualified, except where the failure to be so qualified
would not have a material adverse effect on its ability to enter
into this Agreement or perform its obligations hereunder.
6.1.2. LIHI is a validly existing corporation and in good standing
under the laws of the State of Delaware. LIHI has the corporate
power and authority required to own and dispose of the Lake
Interest. LIHI is not qualified to do business as a foreign
corporation in any jurisdiction, provided that its ownership of
the Lake Interest will require it to be so qualified in Florida
if and when it acquires a general partnership Lake Interest.
LIHI:
(a) has been formed for the sole purpose of acquiring, holding
and disposing of the Lake Interest;
(b) is not engaged in any other business; and
(c) has no assets other than the Lake Interest nor any
liabilities or obligations other than those created by, and
is not a party to any Commitment except for, this Agreement,
and Commitments to enter into the Lake Project Partnership
Agreement and the Lake Interest Option Agreement.
6.2. Corporate Authority.
6.2.1. Except as disclosed in Schedule 5.2 hereto, NCRI has full
legal right and corporate power, without the Consent of any other
Person, to execute, deliver and perform its obligations under
this Agreement, the Escrow Agreement and the Closing Documents,
as applicable, and the Purchase and Sale Transactions.
6.2.2. Except as disclosed in Schedule 5.2, LIHI has full legal
right and corporate power, without the Consent of any other
Person (except as contemplated in Section 1.5 hereof), to perform
its obligations under this Agreement, the Escrow Agreement, the
Lake Interest Option Agreement and the Closing Documents and the
Purchase and Sale Transactions.
6.3. Authorization.
6.3.1. All corporate and other actions required to be taken by NCRI
to authorize the execution, delivery and performance of this
Agreement, the Escrow Agreement and, as applicable, the Closing
Documents and the Purchase and Sale Transactions have been duly
and properly taken.
(a) Except as disclosed in Schedule 5.3, no Consent, approval or
authorization of, or filing of any certificate, notice,
application, report or other document with, any Government
Authority; and
(b) except as disclosed in Schedule 5.2 hereto, no Consent of
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the stockholders of NCRI or of any Person under any
Commitment to which it is a party or by which its assets are
bound or subject, is required on the part of NCRI in
connection with the valid execution and delivery of this
Agreement, the sale by NCRI of the Stock to Buyer, or the
performance by NCRI or NCP of any of their respective
obligations hereunder or under the Escrow Agreement or any
of the Closing Documents.
6.3.2. All corporate and other actions required to be taken by LIHI
to authorize the execution, delivery and performance of this
Agreement, the Escrow Agreement, the Lake Interest Option
Agreement and the Closing Documents and the Purchase and Sale
Transactions have been duly and properly taken.
(a) Except as disclosed in Schedule 5.3, no Consent, approval or
authorization of, or filing of any certificate, notice,
application, report or other document with, any Government
Authority; and
(b) except as disclosed in Schedule 5.2, no Consent of any
Person under any Commitment to which it is a party or by
which its assets are bound or subject,
is required on the part of LIHI in connection with the valid
execution and delivery of this Agreement, the Escrow Agreement,
the Lake Interest Option Agreement and the Closing Documents or
the performance by LIHI of any of its obligations hereunder or
thereunder.
6.4. Validity.
6.4.1. This Agreement, the Escrow Agreement, the Lake Interest
Option Agreement and the Closing Documents have each been duly
executed and delivered by NCRI and are lawful, valid and legally
binding obligations of NCRI, enforceable in accordance with their
respective terms and conditions, except to the extent limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally or by general
equitable principles.
6.4.2. This Agreement, the Escrow Agreement, the Lake Interest
Option Agreement and the Closing Documents have been duly
executed and delivered by or on behalf of LIHI and are the
lawful, valid and legally binding obligation of LIHI, enforceable
in accordance with their respective terms and conditions, except
to the extent limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally
or by general equitable principles.
6.5. Noncontravention.
6.5.1. The execution, delivery and performance of this Agreement,
the Escrow Agreement and the Closing Documents and the
transactions contemplated thereby are not prohibited by, do not
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violate or conflict with any provision of, or result in a default
(or, constitute an event which with notice or lapse of time or
both, would become a default) under or a breach of:
(a) NCRI's Certificate of Incorporation or By-laws;
(b) except as disclosed in Schedule 5.3, any order, decree or
judgment of any court, Government Authority or arbitrative
body to which NCRI is a party or by which it or any of its
assets are bound or subject;
(c) any law or regulation applicable to NCRI; or
(d) except as disclosed in Schedule 5.2, any Commitment to which
NCRI is a party or by which any of its assets are bound or
subject relating to the sale of the Stock or the LIHI Stock
or that could result in a Third Party Injunction or impose a
lien on the Stock or assets of NCP or the Projects.
6.5.2. The execution, delivery and performance of this Agreement
and the transactions contemplated hereby are not prohibited by,
do not violate or conflict with any provision of, or result in a
default (or, constitute an event which with notice or lapse of
time or both, would become a default) under or a breach of:
(a) LIHI's Certificate of Incorporation or By-laws;
(b) any order, decree or judgment of any court, Government
Authority, or arbitrative body to which LIHI is a party or
by which it or any of its assets are bound or subject;
(c) any law or regulation applicable to LIHI; or
(d) any Commitment to which LIHI is a party or by which any of
its assets are bound or subject relating to the sale of the
Lake Interest or the LIHI Stock that could result in a Third
Party Injunction or impose a lien on the Lake Interest or
the LIHI Stock.
6.6. Ownership of NCP Stock, Lake Interest and LIHI Stock.
6.6.1. As of the date hereof, NCRI is the sole stockholder of
record and sole owner of the entire Beneficial Interest in the
NCP Stock free and clear of all Encumbrances and Claims and at
NCP Closing will have the absolute right, power and capacity to
sell, assign, transfer and deliver the NCP Stock to Buyer free
and clear of any Encumbrances, voting trust arrangements or
Claims of any nature whatsoever. Upon delivery and payment for
the NCP Stock pursuant hereto, Buyer will acquire good and valid
title to the NCP Stock, free and clear of all Encumbrances or
Claims except for Encumbrances or Claims that may be imposed by
Buyer or on account of the conduct of Buyer.
6.6.2. Upon acquisition from Lake Investment, L.P. of the Lake
Interest, LIHI will acquire and thereafter hold the same free and
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clear of all Encumbrances and Claims, and at the Lake Interest
Closing will have the absolute right, power and capacity to sell,
assign, transfer and deliver the Lake Interest to the Lake
Optionee free and clear of any Encumbrances, voting trust
arrangements or Claims of any nature whatsoever. Upon delivery
and payment for the Lake Interest pursuant hereto and the Lake
Interest Option Agreement, the Lake Interest Optionee will
acquire good and valid title to the Lake Interest, free and clear
of all Encumbrances or Claims except for Encumbrances or Claims
that may be imposed by the Lake Optionee or on account of the
conduct of the Lake Optionee.
6.6.3. LIHI's capitalization consists solely of one thousand
(1,000) shares of common stock, $1.00 par value per share, all of
which have been issued and outstanding. The LIHI Stock is owned
by NCRI free and clear of all Encumbrances, voting trust
arrangements and Claims. Upon delivery and payment for the LIHI
Stock pursuant hereto and the Lake Interest Option Agreement, the
Lake Interest Optionee will acquire good and valid title to the
LIHI Stock, free and clear of all Encumbrances, voting trust
arrangements or Claims of any nature whatsoever, except for
Encumbrances or Claims that may be imposed by the Lake Optionee
or on account of the conduct of the Lake Optionee.
6.7. Proceedings.
6.7.1. Except as disclosed in Schedule 7.19, there are no
Proceedings pending or, to the best knowledge of NCRI, (including
but not limited to discussions with attorneys who currently
provide services to NCRI), threatened before any court,
arbitrator or Government Authority which would, if adversely
decided:
(a) affect the ability or capacity of NCRI to execute and
deliver this Agreement, the Escrow Agreement or the Closing
Documents and to perform its obligations hereunder or
thereunder, or
(b) except as otherwise specifically disclosed in writing by
NCRI to Buyer at or prior to the date hereof, materially
adversely affect the financial condition, results of
operations, business or properties of NCRI so as to impair
its ability to perform its obligations under this Agreement,
the Escrow Agreement or the Closing Documents or the
Purchase and Sale Transactions.
6.7.2. There are no Proceedings pending or, to the best knowledge
of NCRI threatened, before any court, arbitrator or Government
Authority against, relating to or affecting LIHI.
6.8. Intercompany Account.
The Intercompany Account balance represents cash, goods and
services contributed at the fair value or allocated or actual
cost thereof to NCP in the ordinary course for use or to
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discharge proper obligations of the Business net of lawfully paid
dividends, and will be set at zero ($0) as of March 1, 1994.
6.9. Securities Laws.
The offering and sale of the Stock are exempt from the
registration requirements of the Securities Act of 1933 and any
applicable filing or notice requirements of state "blue sky"
laws.
ARTICLE VII
REPRESENTATIONS OF NCP
As an inducement to Buyer to enter into this Agreement, NCP
hereby makes the following representations to Buyer as of the
date hereof, subject in each case to Buyer's acknowledgment in
Section 8.6.3 hereof and the limitations set forth in Part D of
this Article VII. Disclosure of an item in any Schedule with
respect to any Section of this Agreement shall constitute
disclosure in every Schedule of this Agreement notwithstanding
the fact that no express cross reference is made. Where
reference is made in this Agreement to "knowledge of NCP", it
means the actual knowledge of the officers of NCP. Where
reference is made in this Agreement to "best knowledge of NCP" it
means the actual knowledge of the officers of NCP based on
diligent inquiry of such persons as the officers of NCP
reasonably believe to have knowledge of the facts or,
circumstances as to which the representation is being made.
PART A. REPRESENTATIONS CONCERNING NCP AND THE TRANSACTION
7.1. Organizational Status.
7.1.1. NCP is a validly existing corporation and in good standing
under the laws of the State of California. NCP has the corporate
power and authority required to own and lease its properties and
to carry on its activities as they are now conducted and as
presently proposed to be conducted and to own the stock of the
NCP Subsidiaries.
7.1.2. NCP is qualified to do business and is in good standing in
the States of Michigan and Texas, the only states where the
conduct of its business or the ownership or lease of its
properties requires it to be so qualified as a foreign
corporation.
7.2. Corporate Authority.
Except as disclosed in Schedule 5.2 hereto, NCP has full legal
right and corporate power, without the Consent of any other
Person, to execute, deliver and to perform its obligations under
this Agreement, the Escrow Agreement and the Closing Documents,
as applicable, and the Purchase and Sale Transactions.
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7.3. Authorization.
All corporate and other actions required to be taken by NCP to
authorize the execution, delivery and performance of this
Agreement and, as applicable, the Escrow Agreement and the
Closing Documents and the transactions contemplated hereby and
thereby have been duly and properly taken.
(a) Except as disclosed in Schedule 5.3, no Consent, approval or
authorization of, or filing of any certificate, notice,
application, report or other document with, any Government
Authority; and
(b) except as disclosed in Schedule 5.2 hereto, no Consent of
any Person under any Commitment to which it is a party or by
which its assets are bound or subject,
is required on the part of NCP, the NCP Subsidiaries and any
Limited Partnership in connection with the valid execution and
delivery of this Agreement, the sale by NCRI of the Stock to
Buyer, or the performance by NCP of any of its obligations
hereunder or under the Escrow Agreement or any of the Closing
Documents.
7.4. Validity.
This Agreement, the Escrow Agreement and the Closing Documents
have each been duly executed and delivered by NCP and are the
lawful, valid and legally binding obligations of NCP, enforceable
in accordance with their respective terms and conditions, except
to the extent limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally
or by general equitable principles.
7.5. Noncontravention.
7.5.1. The execution, delivery and performance of this Agreement,
the Escrow Agreement and the Closing Documents and the
transactions contemplated hereby and thereby are not prohibited
by, do not violate or conflict with any provision of, or result
in a default (or constitute an event which with notice or lapse
of time or both, would become a default) under or a breach of:
(a) NCP's Certificate of Incorporation or By-laws;
(b) the certificate of incorporation or by-laws of any NCP
Subsidiary;
(c) the Agreement of Limited Partnership of any Limited
Partnership;
(d) except as disclosed in Schedule 5.2, any Commitment to which
the Company is a party or by which any of its assets are
bound or subject that could give rise to a Third Party
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Injunction or impose a lien on the Stock or assets of NCP or
the Projects;
(e) except as disclosed in Schedule 5.3, any order, decree
or judgment of any court, Government Authority or
arbitrative body to which NCP is a party or by which it
or any of its assets are bound or subject; or
(f) any law or regulation applicable to the Company.
7.5.2. The consummation of the transactions contemplated by this
Agreement, the Escrow Agreement and the Closing Documents will
not result in a Third Party Injunction or the creation of any
Encumbrance on any assets of the Company or result in the
termination or acceleration of any indebtedness or other material
obligation of the Company.
7.6. Capitalization.
7.6.1. NCP's authorized capital stock consists of ten thousand
(10,000) shares of common stock, no par value, of which one
thousand (1,000) shares, constituting the Stock, are issued and
outstanding and owned of record and beneficially by NCRI and no
shares are held in the treasury. All of the issued and
outstanding shares of the Stock have been duly authorized and
validly issued and are fully paid and nonassessable. There are
no outstanding options, rights, warrants, conversion rights or
other Commitments to which NCP is a party or binding upon NCP
providing for the issuance or transfer by NCP of additional
shares of capital stock.
7.6.2. The stock and minute books of NCP and each NCP Subsidiary
contain complete and accurate records of all issuances and
transfers of capital stock and all meetings and other actions of
their respective boards of directors and shareholders.
7.7. Subsidiaries.
7.7.1. Except as disclosed in Schedule 7.8, NCP does not own,
directly or indirectly, any interest of any kind in any other
corporation, association or business entity other than the NCP
Subsidiaries, a complete list of which is disclosed in Schedule
7.7, and its interests in the Limited Partnerships.
7.7.2. Each of the NCP Subsidiaries is a validly existing
corporation and in good standing under the laws of the respective
state disclosed in Schedule 7.7. Except as disclosed in
Schedule 7.7, each of the NCP Subsidiaries is duly qualified or
licensed to do business in every state where, by the nature of
its respective business or the ownership or lease of property,
failure to be so qualified would have a material adverse effect
upon its respective business or assets or where failure to so
qualify would affect its ability to enforce any of its material
rights. Schedule 7.7 also discloses each jurisdiction where the
NCP Subsidiaries are qualified to do business. Each of the NCP
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Subsidiaries has the corporate power and authority to carry on
its respective activities as now conducted and as presently
proposed to be conducted and to own, lease and use the properties
owned, leased or used by it.
7.7.3. The authorized, issued and outstanding stock of each of the
NCP Subsidiaries is disclosed in Schedule 7.7.
7.7.4. All of the issued and outstanding shares of stock of each NCP
Subsidiary have been duly authorized and validly issued and are
fully paid and nonassessable. Except as disclosed in
Schedule 7.9, NCP owns all of the issued and outstanding stock of
each NCP Subsidiary free and clear of all Encumbrances and
Claims.
7.7.5. There are no outstanding options, rights, warrants,
conversion rights or other Commitments to which the Company is a
party providing for the issuance or transfer by any NCP
Subsidiary of any shares of its stock.
7.8. Limited Partnerships.
7.8.1. A complete list of the Limited Partnerships which, directly
or indirectly, own any interest in any of the Projects is
disclosed in Schedule 7.8. (the "Limited Partnerships") which
list also discloses the names of each partner, the type of
interest (i.e., general or limited) and the amount of its
interest. Each of the Limited Partnerships is validly existing
and in good standing under the laws of its respective state of
organization disclosed in Schedule 7.8. Each of the Limited
Partnerships has the power and authority to own, lease and use
its properties and to carry on its respective activities as now
conducted and to own, lease and use the properties owned or used
by it. Except as disclosed in Schedule 7.8, none of the Limited
Partnerships are required to be qualified to do business as a
foreign limited partnership in any jurisdiction as a result of
the ownership, lease or use of its properties or conduct of its
business.
7.8.2. The ownership interest of NCP Subsidiaries with respect to
the Limited Partnerships is disclosed in Schedule 7.8. Except as
disclosed in Schedule 7.9, each NCP Subsidiary owns its ownership
interest in the Limited Partnerships free and clear of all Claims
and Encumbrances. Except as specified in the respective
partnership agreements of the Limited Partnerships, there are no
outstanding options, rights, warrants, conversion rights or other
Commitments to which any of the Limited Partnerships are a party
providing for the issuance or transfer by such Limited
Partnerships of additional partnership interests. Each NCP
Subsidiary is exclusively engaged in the business of owning its
interest in the related Limited Partnership, as disclosed in
Schedule 7.8. NCP is not engaged, nor does it own any interest
in, any business other than the Business, and the Non-Project
Subsidiaries which are not actively engaged in any business
activities.
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7.8.3. None of NCP, the NCP Subsidiaries and the Limited
Partnerships are in violation of any provision of their
respective Certificates of Incorporation or By-laws or
certificates of limited partnership or partnership agreements, as
the case may be.
7.9. Title to Assets.
7.9.1. The Company has valid title to all of the tangible personal
property reflected on the Audited Balance Sheet, except for:
(a) such tangible assets which:
(i) are not material to the conduct of the Business or
the operations of any Project,
(ii) were disposed of in the ordinary course of business
since December 31, 1993, and
(iii) in any case do not have a book value exceeding
$50,000 in the aggregate;
(b) assets being leased under capitalized leases;
(c) minor imperfections of title which:
(i) do not materially detract from the value or do not
materially restrict the use of such tangible assets;
and
(ii) in any case do not have a book value exceeding
$25,000 in the aggregate; and
(d) those disclosed in Schedule 7.9 or in the title insurance
policies referenced therein.
7.9.2. None of such tangible assets are subject to any Encumbrance
or Claim, except:
(a) minor Encumbrances which do not materially detract from the
value or interfere with the present use of such tangible
assets; and
(b) those disclosed in Schedule 7.9 or in the title insurance
policies referenced therein.
7.9.3. Except as disclosed in Schedule 7.9, the Company holds valid
and subsisting leasehold interests to all properties leased by
it, subject to no Encumbrances or Claims.
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PART B. REPRESENTATIONS CONCERNING THE BUSINESS AND THE
PROJECTS.
7.10. Taxes.
7.10.1. Except as disclosed in Schedule 7.10 and for matters relating
to Taxes which are the responsibility of Sellers pursuant to the
provisions of Article XVI, NCP makes the following
representations to Buyer as of the date hereof, except that such
representations are made only to the best knowledge of NCP as and
to the extent that they relate to the Pasco Partnership and the
FPB Partnership:
(a) all Returns required to be filed on or before the NCP
Closing Date have been timely filed (within the time
permitted by any timely filed extension) by or on behalf of
the Company and all Taxes shown to be due on such Returns
have been timely paid;
(b) neither NCRI nor the Company has received any notice of any
Tax deficiency or assessment;
(c) no Return of NCRI or the Company is currently under audit by
the relevant authorities, and neither NCRI nor the Company
has received any notice that any Return is under
examination;
(d) no material issues have been raised by the relevant taxing
authorities on audit that are of a recurring nature and that
would have an effect upon the Taxes of the Company;
(e) no notice of a Claim has ever been made by a Government
Authority in a jurisdiction where the Company does not file
Returns that it is or may be subject to Taxes in that
jurisdiction;
(f) no extension of the statute of limitations with respect to
any claim for Taxes has been granted by either NCRI or the
Company; and
(g) there are no liens for Taxes upon the assets of the Company
except liens for Taxes not yet due.
7.10.2. NCP and the NCP Subsidiaries have not filed or had filed on
their behalf a consent to the application of Section 341(f) of
the Code.
7.10.3. None of NCP, the NCP Subsidiaries or the Limited Partnerships
will be required, as a result of a change in method of accounting
for any taxable period ending on or prior to the date of the last
Excluded Subsidiaries Closing, to include any adjustment under
Section 481(c) of the Code in taxable income for any period
ending subsequent to the NCP Closing Date.
7.10.4. Except as disclosed in Schedule 7.10, the Company is not a
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party to any contractual obligation requiring the indemnification
or reimbursement of any Person with respect to the payment of any
Taxes. Except as disclosed in Schedule 7.10, no Claim has been
asserted, which has not been resolved or satisfied, for any
payment under any agreement disclosed in Schedule 7.10.
7.10.5. All material elections with respect to Taxes affecting the
Company as of the date hereof are disclosed in Schedule 7.10.
7.10.6. None of the assets of the Company directly or indirectly
secures any debt the interest on which is tax-exempt under
Section 103(a) of the Code.
7.10.7. None of the assets of the Company is "tax-exempt use
property" within the meaning of Section 168(h) of the Code.
7.10.8. None of the current or former partners in the Limited
Partnerships is a tax-exempt entity within the meaning of Section
168(h) of the Code.
7.10.9. The Company is not a party to any agreement, contract,
arrangement, or plan that has resulted or would result,
separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the
Code.
7.10.10. NCRI is a "United States person" within the meaning of the
Code.
7.10.11. The transactions contemplated herein are not subject to the
tax withholding provisions of Section 3406 of the Code, or of
Subchapter A of Chapter 3 of the Code, or of any other provision
of law.
7.10.12. The Company does not have and has not had a branch in any
foreign country.
7.10.13. Except for the Limited Partnerships, the Company is not a
party to any joint venture, partnership, or other arrangement or
contract that could be treated as a partnership for Federal
income tax purposes.
7.10.14. NCRI and the Company have disclosed on its Federal Returns,
or otherwise have "substantial authority" for, all positions
taken therein that could give rise to a substantial
understatement of Federal income Tax within the meaning of
Section 6662 of the Code.
7.10.15. The Company has withheld and paid all Taxes required to have
been withheld and paid in connection with:
(a) amounts paid to any employee or any foreign person or
entity; and
(b) any backup withholding required under Section 3406 of the
Code.
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7.11. Financial Statements.
7.11.1. Attached hereto as Schedule 7.11.1 are the audited
consolidated financial statements, including the notes thereto,
of NCP as of December 31, 1993 and for the twelve months then
ended (the "Audited Financial Statements").
7.11.2. Attached hereto as Schedule 7.11.2 are the Partnership
Financial Statements, comprised of the:
(a) audited balance sheets, income statements and statements of
cash flows and partners' equity of each of the Ada, Syracuse
and Lake Partnerships as of December 31, 1993, respectively,
and (in the case of the Pasco Partnerships, as of
September 30, 1993), and for the twelve months then ended;
(b) the unaudited balance sheet, income statement and statement
of cash flows and partners' equity of the FPB Partnership as
of December 31, 1993 and for the twelve months then ended;
and
(c) the unaudited balance sheet, income statement and statements
of cash flows and partners' equity of the Pasco Partnership
as of December 31, 1993 and for the three months then ended.
7.11.3. Except as noted in the related report, if any, of independent
certified public accountants, the Audited Financial Statement and
Partnership Financial Statements:
(a) have been prepared in accordance with GAAP consistently
applied, and
(b) fairly present the financial position, results of
operations, cash flows and stockholders' equity of the
relevant companies as of and for the period presented.
7.11.4. The Audited Balance Sheet including the notes thereto
reflects or provides for all claims against and debts and
liabilities of NCP and the NCP Subsidiaries, fixed or contingent,
as of December 31, 1993 which are required to be reflected or
provided for in a balance sheet prepared in accordance with GAAP
consistently applied.
7.11.5. Except as set forth in the Schedules, NCP does not have, to
the knowledge of NCP based on their own actual knowledge and
discussions with the other employees of NCP who are not officers,
any material liabilities (whether fixed, contingent or
otherwise), except liabilities:
(a) reflected or reserved against on the Audited Balance Sheet;
or
(b) incurred since the date of the Audited Balance Sheet in the
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ordinary course of business and consistent with past
practice.
7.11.6. The accounting books and records of the company have been
regularly maintained by NCP, and such accounting books and
records accurately reflect in all material respects all of the
financial transactions that should be reflected in its accounting
books and records so maintained.
7.12. Interim Change.
Except as expressly disclosed in Schedule 7.12, since
December 31, 1993, there has not been:
(a) any material adverse change in the Business or any Project
or in the financial condition or results of operations of
NCP, nor has there occurred any event which could reasonably
be expected to result in any such material adverse change;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting NCP, the
Business or any Project;
(c) any increase in the compensation or benefits payable or to
become payable by the Company to any of its employees, other
than as disclosed in Schedule 7.15;
(d) any work stoppage or labor dispute involving the Company,
the Business or any Project;
(e) any employment or severance agreement entered into with any
of the employees of the Company, other than those disclosed
in Schedule 7.15;
(f) any sale, assignment, transfer, lease or other disposition
or agreement to sell, assign, transfer, lease or otherwise
dispose of any assets of the Company or any Project other
than those sales in the ordinary course of business having a
book value not exceeding $100,000 in the aggregate;
(g) any capital expenditure or Commitment to make any such
expenditure with respect to the Company, Business or any
Project by the Company in excess of $100,000 in the
aggregate;
(h) any acquisition or agreement entered into by the Company for
the acquisition (by merger, consolidation, or acquisition of
stock or assets or otherwise) by the Company of any interest
in any corporation, partnership or other business
organization or division thereof;
(i) any incurrence of any indebtedness for borrowed money or
issuance of any debt securities or assumption, granting,
guarantee or endorsement, or other accommodation arrangement
making the Company responsible for, the obligations of any
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Person, or any loans or advances;
(j) any termination, discontinuance, closing or disposition of
any facility of the Company;
(k) any change in any method of accounting or accounting
practice used by NCP or any NCP Subsidiary, other than such
changes required by GAAP as disclosed in Schedule 7.11
hereto; or
(l) the entering into of any Commitment for the purchase of
materials, equipment, supplies or services in an amount of
more than $100,000 in the aggregate or extending for more
than one year.
7.13. Insurance.
Schedule 7.13 discloses a complete and correct list and summary
description (including the name of the carrier, coverage and
expiration date) of all policies of insurance and indemnity and
surety bonds maintained by the Company including those with
respect to the Business and the Projects. Such policies are, as
of the date hereof, in full force and effect. The Company has
not received any notice of cancellation, non-renewal or amendment
of any such insurance policy or bond or is in default under any
such policy or bond, no coverage thereunder is being disputed,
and, to the knowledge of NCP, all claims thereunder have been
filed in a timely fashion.
7.14. Material Contracts.
7.14.1. Schedule 7.14 discloses all of the Commitments (including
those related to the Projects) to which the Company is a party or
is otherwise bound meeting any of the descriptions set forth
below (the "Material Contracts"):
(a) except for any lease which involves annual payments of
$100,000 or less, any lease of machinery, equipment or other
personal or real property;
(b) except for any Commitment entered into in the ordinary
course consistent with past practice and which involves
total consideration of $50,000 or less, any Commitment for
the purchase of any equipment or supplies;
(c) except for any Commitment entered into in the ordinary
course consistent with past practice and which involves
total consideration of $50,000 or less, any written
Commitment with clients, customers, subcontractors and
others requiring performance of any services by the Company;
(d) except for amounts owing through the Intercompany Account
incurred after February 28, 1994, any indebtedness,
liability for borrowed money, liability for the deferred
purchase price of property (excluding normal trade payables
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individually less than $25,000 or in the aggregate $50,000
or less), any instrument guaranteeing any indebtedness,
obligation or liability, or any obligation to incur any
indebtedness, obligation or liability;
(e) any joint venture, partnership or other similar arrangement;
(f) all Commitments that materially limit the ability of the
Company or its employees, agents or affiliates to compete in
the conduct of any business enterprise or undertaking with
any Person in any geographic area or during any period of
time;
(g) all Commitments related to Projects having a value in excess
of $25,000 or extending beyond one year; and
(h) all Commitments relating to the declaration, setting aside
or payment of any dividend or any other distribution with
respect to or repurchase any shares of its capital stock.
7.14.2. Except as disclosed in Schedule 7.14, each Material Contract
is valid and binding and in full force and effect and no default
(or event which with the giving of notice or passage of time or
both would constitute a default) exists thereunder.
7.14.3. The Company has not agreed to waive any statute of
limitations or other material right or affirmative defense with
respect to any of the Material Contracts.
7.15. Employees.
Except for employment agreements disclosed in Schedule 7.15, the
Company has no written or oral employment agreements, with
officers, directors or employees of the Company.
7.16. Employee Benefit Plans.
7.16.1. Schedule 7.16 discloses all collective bargaining agreements,
compensation, profit-sharing, retirement, pension, severance pay,
and other employee benefit plans, arrangements or understandings
of the Company or to which the Company is a party or otherwise
bound relating to the Business (the "Plans"), including all those
that are subject to the provisions of ERISA.
7.16.2. Each Plan which is not a Multiemployer Plan has been operated
in all material respects in compliance with the applicable
provisions of such plans and, with all applicable provisions of
ERISA, the Code and all other laws applicable to such Plan.
7.16.3. The Company has not incurred (and does not expect to incur)
nor is the Company assessable for, any liability to the PBGC.
7.16.4. The Company has not engaged in any transaction which would
result in a civil penalty pursuant to Section 502(i) of ERISA or
which would constitute a prohibited transaction under ERISA or be
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subject to a tax imposed under Section 4975 of the Code with
respect to the Plans.
7.16.5. Except as disclosed in Schedule 7.16, neither the Company nor
any ERISA Affiliate is a party, or is (or has been) required to
make contributions, to any multiemployer pension plan, as defined
in Section 3(37) of ERISA ("Multiemployer Plan"), and neither the
Company nor any ERISA Affiliate has made or expects to make a
complete or partial withdrawal from any such Multiemployer Plan
so as to incur any withdrawal liability as defined in Section
4201 of ERISA. Neither the Company nor any ERISA Affiliate has
incurred, or expects to incur, any liability, penalty or tax to
any person under Title IV of ERISA or Section 4971, 4972, 4976,
4977 or 4979 of the Code. For purposes of this Agreement, "ERISA
Affiliate" means any entity (whether or not incorporated) which
would be treated as a single employer with the Company under
Section 414(b), (c), (m) or (o) of the Code and the regulations
thereunder.
7.16.6. Complete copies of the documents comprising each of the
Pension Plans, and complete copies of the most recent Form 5500
which have been filed with the IRS for each such Plan have been
furnished to Buyer.
7.16.7. All contributions required to be made under the terms of the
Plans and under applicable law have been made or have been
accrued as liabilities in the Audited Balance Sheet.
7.16.8. None of the Plans are subject to Section 412 of the Code.
7.16.9. In the case of each Plan which is an "employee welfare
benefit plan" as defined in Section 3(1) of ERISA, but without
regard to whether any such Plan is in fact subject to ERISA, the
benefits under such Plan are provided exclusively through
insurance contracts or policies issued by insurance companies or
similar organizations. Each Plan that is a "group health plan"
(as defined in the Code and ERISA) is in compliance with the
requirements of Part 6 of Subtitle B of Title I of ERISA and
Section 4980B of the Code.
7.16.10. There is no pending or, to the best knowledge of the
Company, threatened Claims, legal action, proceeding or
investigation against or involving any Plan which could result in
liabilities to the Company that are not be reflected in the
Audited Balance Sheet.
7.16.11. As of the NCP Closing, the Company will not have any
liabilities for any benefits payable under the Plans, or any
other liabilities arising out of or in connection with the
operation or administration of the Plans, except for any such
liabilities that are reflected in the Audited Balance Sheet.
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7.17. Projects in Development.
Annex C discloses those potential projects currently under
development by the Company, together with all letters of intent
and similar understandings to which the Company is a party
although the same may purport to be non-binding and all proposed
Material Contracts which the Company is presently negotiating.
7.18. Transactions with Affiliates.
Except for amounts owing by NCP through the Intercompany Account
accruing after February 28, 1994 or as disclosed in Schedules
7.14 and 7.18 with respect to the NCP Subsidiaries and the
Limited Partnerships and with respect to Commitments by NCO and
NCM relating to the Projects, no Affiliate of NCP:
(a) has any cause of action or other Claim whatsoever against or
owes any amount to, or is owed any amount by, the Company
exceeding $50,000 in the aggregate;
(b) has any interest in or owns any property or right (except
for the lease to the Santa Ana Premises) used in the conduct
of the Business; or
(c) has any other Commitment with the Company.
7.19. Proceedings.
Except for Proceedings disclosed in Schedule 7.19, there are no
Proceedings pending, or to NCP's best knowledge including, but
not limited to, discussions with NCP's General Counsel and
attorneys currently retained by NCP, threatened, before any court
or Government Authority or arbitrator against or relating to or
affecting the Company or the Business or any Project, or the
transactions contemplated by this Agreement. There is no
continuing order, injunction or decree of any court, arbitrator
or Government Authority to which the Company is a party, or to
which the Business is subject.
7.20. Compliance with Law.
Except with respect to Taxes and employee benefit and
environmental matters (which matters have been separately
negotiated and representations with respect to which are
separately made elsewhere herein):
(a) the Company and its respective officers, directors, agents
and employees have complied in all material respects with
all applicable laws and regulations of federal, state, local
and foreign Government Authorities applicable to the
Company, the Business and each Project, and applicable to
the properties owned or leased and used by the Business or
the Projects; and
(b) there are no Claims relating to any Violation of any such
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laws and regulations by the Company.
The Company holds all permits, licenses, certificates and other
authorizations necessary to the conduct of the commercial
operation of each Project, each of which is in full force and
effect and sufficient for its intended purpose, and, is not the
subject of any protest, challenge or other Claim notice of which
has been received by the Company.
7.21. Bank Accounts and Safe Deposit Boxes.
7.21.1. Schedule 7.21 discloses the title and number of each bank or
other deposit or financial account used by NCP and the NCP
Subsidiaries, the bank at which that account is maintained, and
the names of the persons authorized to draw against the account
or otherwise have access to it.
7.21.2. Schedule 7.21 also discloses the same information for each
lock box and safe deposit box leased by NCP and the NCP
Subsidiaries.
7.22. Qualifying Facility Status.
Each Project is a Qualifying Facility, and no electric utility or
electric utility holding company owns any equity interest, within
the meaning of 18 CFR Section 292.206, in any Project.
7.23. Copies of Documents.
NCP has heretofore made available in its Document Room or
delivered to Buyer true and complete copies of each document
disclosed in Schedule 7.23 and in any of the other Schedules
hereto.
PART C. REPRESENTATIONS CONCERNING THE ASSETS
7.24. Condition of Assets.
Except as disclosed in Schedule 7.24, the material assets and
properties utilized in the conduct of the Business or operation
of the Projects, whether owned or leased, are in normal operating
condition and repair (reasonable wear and tear excepted). The
Projects have been operated and maintained in such a manner that
all material warranties, guarantees and service contracts
applicable thereto remain in full force and effect in accordance
with their terms. To NCP's best knowledge (including without
limitation discussions with the Asset Managers), the machinery
and equipment comprising each Project (the "Equipment") has, as
an integrated facility, been operated and maintained in all
material respects:
(a) in accordance with the operations and maintenance agreements
between the respective Projects and the operators thereof
and in accordance with the operating instructions provided
by the Equipment manufacturers;
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(b) in compliance with all applicable federal, state and local
laws, permits, licenses and regulations (including, without
limitation, the National Electric Code); and
(c) in accordance with generally accepted practices and
procedures in the electric utility industry.
7.25. Real Estate.
Schedule 7.25 discloses the real estate owned, leased or
subleased by the Company and a list of Commitments with respect
to the ownership thereof. Except as disclosed in Schedule 7.25:
(a) the Company has good and marketable title to all such owned
real property and valid leasehold or other interests to all
such other property; and
(b) no real property of the Company encroaches on any real
property of others. There are no pending or threatened
condemnations or eminent domain proceedings affecting any
such property, and the Company has not received any notice
from any municipal body or other public authority requiring
work to be done or improvements to be made upon any of its
property.
7.26. Trade Names and Trademarks.
7.26.1. Schedule 7.26 discloses all registered trade names,
trademarks, service marks and copyrights and their registrations
(or applications for registration), owned by NCP or the NCP
Subsidiaries and which are currently used in and are material to
the Business.
7.26.2 To the knowledge of NCP, NCP and the NCP Subsidiaries have
not infringed, and are not infringing, in any material manner on
any trade name, trademark, service mark, license, franchise or
copyright belonging to any other Person. The Company has not
received any notice or Claim asserting any such infringement.
7.26.3. Except as disclosed in Schedule 7.26, the Company is not a
party to any written Commitments, whether as licensor or
licensee, with respect to any trade names, trademarks, service
marks, licenses, franchises or applications for them, or any
copyrights.
7.27. Patents.
7.27.1. Neither NCP nor any of the NCP Subsidiaries or Limited
Partnerships own any patents, patent applications or rights with
respect thereto.
7.27.2. To the knowledge of NCP, the Company has not infringed and is
not now infringing in any material manner on any patent belonging
to any Person. The Company has not received any notice or Claim
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asserting any such infringement.
7.27.3. The Company is not party to any license, agreement, or
arrangement, whether as licensee or licensor, with respect to any
patent, application for patent, invention, design, model or
process.
7.27.4. The Company has the right and authority to use such
inventions, trade secrets, processes, models, designs, and
formulas as are necessary to enable it to conduct the Business in
the manner presently conducted by it.
7.28. Environmental Matters.
7.28.1. As to each parcel of owned or leased real property disclosed
in Schedule 7.25, the Company has obtained a Phase I study and
has delivered to Buyer complete and correct copies of results of
all of such Phase I studies (the "Phase I Studies").
7.28.2. Except as disclosed in Schedule 7.28, to the best knowledge
of NCP (including without limitation discussions with the Asset
Managers), there has been no storage, generation, manufacture,
refinement, transportation, production, treatment or disposal of
toxic or hazardous wastes or substances by the Company or any
Project or, to the knowledge of NCP, any of the Company's
predecessors in interest, at any location at which the Company or
any Project has at any time conducted business, or to which has
been sent such waste of any kind, directly or indirectly, in
violation of any applicable Environmental Laws. Except as
disclosed in Schedule 7.28, to the best knowledge of NCP
(including without limitation discussions with the Asset
Managers), there has been no spill, discharge, leak, emission,
ejection, escape, dumping or any other release of any kind by the
Company or any Project during the period of ownership of such
Project by the Company onto any location at which the Company or
any Project has at any time conducted activities or into the
environment surrounding such locations of any toxic wastes or
hazardous wastes or substances (as such terms are defined under
any applicable federal, state or local law, statute, ordinance,
rule or regulation).
7.28.3. Schedule 7.28 discloses all underground storage tanks on any
property owned by the Company or any Project or on which the
Company or any Project conducts the Business. To the best
knowledge of NCP (including without limitation discussions with
the Asset Managers), each tank disclosed in Schedule 7.28 is
currently in compliance with all Environmental Laws.
7.29. Capital Projects.
Except for potential capital expenditures not in excess of
$100,000 in the aggregate, Schedule 7.29 discloses all capital
projects and capital expenditures committed for or undertaken and
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remaining uncompleted by the Company.
7.30. Accounts Receivable.
All of the accounts receivable of the Company existing as of the
NCP Closing Date will be actual and bona fide receivables which
will have resulted from the ordinary course of business of the
Company.
PART D. CERTAIN LIMITATIONS AND QUALIFICATIONS OF THE
REPRESENTATIONS
The representations and warranties set forth in Articles V, VI,
VII, XV and XVI are the only representations and warranties made
by NCO, NCRI and NCP with respect to the Purchase and Sale
Transactions. NCO, NCRI and NCP disclaim any liability or
responsibility for any representation or warranty that may have
otherwise been made or alleged to have otherwise been made and
contained in any document or statement made or communicated to
Buyer, including but not limited to, any opinion, information or
advice provided to Buyer by any director, officer, employee,
agent, consultant or representative of NCO, NCRI, NCP or any NCP
Subsidiary in respect of:
(a) any future cash flows or projections with respect to the
Business or any Project; and
(b) any projects under development listed on Annex C.
EXCEPT AS EXPRESSLY SET FORTH IN ARTICLES V, VI, VII, XV and XVI
HEREIN, ALL WARRANTIES EXPRESSED OR IMPLIED WITH RESPECT TO THE
ASSETS OF THE BUSINESS AND OF THE PROJECTS ARE HEREBY DISCLAIMED
AND EXCLUDED, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.
ARTICLE VIII
REPRESENTATIONS OF BUYER
As an inducement to NCO, NCRI and NCP to enter into this
Agreement, Buyer hereby makes the following representations to
NCO, NCRI and NCP as of the date hereof.
8.1. Organizational Status.
Buyer is a validly existing corporation and in good standing
under the laws of the State of Delaware. Buyer has the corporate
power and authority required to carry on its activities as they
are now conducted.
8.2. Corporate Authority.
Buyer has full legal right and corporate power, without the
Consent of any other Person, to execute, deliver and to perform
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its obligations under this Agreement, the Escrow Agreement and
the Closing Documents, as applicable and the transactions
contemplated hereby and thereby, subject to the receipt by Buyer
and Buyer's Parent of an appropriate order ("SEC Order") of the
Securities and Exchange Commission ("SEC") under the 1935 Act and
the expiration of the H-S-R Act waiting period.
8.3. Authorization of the Transaction.
All corporate and other actions required to be taken by Buyer to
authorize the execution, delivery and performance of this
Agreement, the Escrow Agreement and, as applicable, the Closing
Documents and all transactions contemplated hereby and thereby
have been duly and properly taken. No Consent, approval or
authorization of, or filing of any certificate, notice,
application, report or other document with, any Government
Authority, is required on the part of Buyer in connection with
the valid execution and delivery of this Agreement, the
acquisition of the Stock, or the performance by Buyer of any of
its obligations hereunder and thereunder except for the filings
by Buyer:
(a) as contemplated by the H-S-R Act; and
(b) of an application or applications with the SEC pursuant to
the 1935 Act, and the receipt by Buyer and Buyer's Parent of
the SEC Order.
8.4. Validity.
This Agreement, the Escrow Agreement and the Closing Documents
have been duly executed and delivered by Buyer and subject to the
receipt by Buyer and Buyer's Parent of the SEC Order and the
expiration of the H-S-R Act waiting period is a lawful, valid and
legally binding obligation of Buyer, enforceable in accordance
with its terms and conditions, except to the extent limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally or by general
equitable principles.
8.5. Noncontravention.
Provided that Buyer shall have received the SEC Order and the H-
S-R Act waiting period has expired, the execution, delivery and
performance of this Agreement, the Escrow Agreement or any
Closing Document are not prohibited by, do not violate or
conflict with any provision of, or result in a default (or, to
the knowledge of Buyer, an event which with notice or lapse of
time or both, would become a default) under or a breach of:
(a) Buyer's Certificate of Incorporation or By-laws;
(b) any order, decree or judgment of any court or Government
Authority to which Buyer is a party or by which Buyer or its
properties are bound or subject; or
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(c) any law or regulation applicable to Buyer.
8.6. Buyer's Investigation.
8.6.1. Buyer acknowledges that:
(a) it had the opportunity to visit with the Company and meet
with its respective representatives to discuss the Business
and the Projects and the assets, liabilities, financial
condition, cash flow and operations of the Company and the
Projects, and
(b) all materials and information requested by Buyer have been
provided to Buyer to Buyer's reasonable satisfaction.
8.6.2. Buyer acknowledges that it has made its own independent
examination, investigation, analysis and evaluation of the
Business and the Projects, including Buyer's own estimate of the
value of the Business, the Projects and the Stock.
8.6.3. Buyer acknowledges that it has undertaken such due diligence
(including a review of the assets, liabilities, books, records
and services of the Business, the Projects and the Company) as
Buyer deems adequate, including that described in Subsections
8.6.1 and 8.6.2. To the best of Buyer's knowledge including,
without limitation, diligent inquiry of such persons as the
officers of Buyer reasonably believe to have knowledge of the
results of Buyer's due diligence review as of the date hereof:
(a) none of the representations of NCO, NCRI or NCP herein are
inaccurate in any material respect; and
(b) none of NCO, NCRI or NCP are in breach in any material
respect of any of their respective covenants to Buyer
hereunder.
8.7. Investment Representation.
Buyer is purchasing the Stock for investment, for its own account
and not with a view to distribute the Stock within the meaning of
applicable securities laws.
8.8. Brokers.
Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which NCO, NCRI
or NCP could become liable or obligated.
8.9. Qualifying Facility Status.
Assuming that the representations of NCP in Section 7.23 are true
and correct in all respects, the consummation of the transactions
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contemplated hereby will not result in the loss of the Qualifying
Facility status of any of the Projects.
8.10. Financial Condition.
The balance sheet of Buyer included herewith as Attachment II has
been prepared in accordance with GAAP and, together with the
notes thereto, fairly represents the financial position of Buyer
as of December 31, 1993. The financial statements of Buyer's
Parent included or incorporated by reference in Buyer's Parent's
1993 Annual Report on Form 10-K provided to the Sellers
accurately represents the financial position of Buyer's Parent as
of December 31, 1993.
ARTICLE IX
INTERIM CONDUCT
9.1. Interim Conduct through NCP Closing.
9.1.1. From the date hereof until the NCP Closing, NCP hereby agrees
to operate, and to cause each of the NCP Subsidiaries to operate,
the Business as a going concern consistent with prior practice
and the Interim Operating Plan included as Annex E, under the
supervision and direction of an Operating Committee, consisting
of Thomas Beale, Donald McKechnie, Gregory Lawyer (or such
replacements designated by NCRI as are reasonably acceptable to
Buyer) and Buyer Designee, which Operating Committee shall meet
in person or by conference telephone call at least bi-weekly for
the purpose of directing the operations of NCP. Detailed notes
of all such meetings shall be maintained and copies provided
promptly to each of Buyer and NCRI. Buyer shall have the right
to locate Buyer Designee on NCP's premises and NCP shall provide
reasonable office space and reasonable access to all NCP records
and operations for such purpose, it being the intent of the
parties to provide for an efficient and orderly transition during
the period prior to the NCP Closing.
9.1.2. From the date hereof until the NCP Closing, except for
transactions contemplated by this Agreement or the Interim
Operating Plan or approved in writing by Buyer and NCO, NCP
shall:
(a) maintain the properties and assets of the Company in
accordance with past practice, reasonable wear and tear
excepted;
(b) maintain and keep in full force and effect all insurance on
the Projects, the assets and property or for the benefit of
employees of the Company, all liability and other casualty
insurance, and all bonds on personnel, presently carried and
not modify any of the same without the consent of the Buyer;
(c) use its best efforts to preserve intact the organization of
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the Company and the Business and to keep available the
services of the present executives, employees and agents of
the Company and to preserve the good will of suppliers,
customers and others having business relationships with the
Company and the Business;
(d) maintain its books, accounts and records in the usual,
regular and ordinary manner in accordance with sound
business practices and on a basis consistent with prior
years;
(e) not grant or agree to grant to employees of the Company any
increase in the wages, salary, bonus or other compensation,
remuneration or benefits, or become a party to any
employment agreement, Plan, or any consulting arrangement,
or become a party to any contract or arrangement, providing
for payment of bonuses, profit sharing, stock benefits,
severance payments or retirement or other employment
benefits, except as required by contracts disclosed in
Schedule 7.14 and 7.16 or as expressly provided by this
Agreement;
(f) not enter into or agree to enter into any Commitment other
than Commitments made in the ordinary course of business
consistent with prior practices which do not individually
exceed $25,000 or extend beyond 12 months;
(g) not declare, set aside or pay any dividend or make any other
distribution with respect to or repurchase any shares of its
capital stock;
(h) not merge or consolidate with or agree to merge or
consolidate with, nor purchase or agree to purchase all or
substantially all of the assets of, nor otherwise acquire an
interest in any corporation, partnership, or other business
organization or acquire or lease any assets other than in
the ordinary course of business;
(i) not sell, lease or otherwise dispose of or agree to sell,
lease or otherwise dispose of any material assets,
properties, rights or Claims of NCP or the NCP Subsidiaries,
except in the ordinary course of business and which have a
value not exceeding $50,000 in the aggregate;
(j) not authorize for issuance, issue, sell or deliver any
additional shares of the Company's capital stock or any
securities or obligations convertible into shares of its
capital stock, or issue or grant any option, warrant,
conversion rights or other right to purchase any shares of
its capital stock;
(k) not split, combine or reclassify any shares of the Company's
capital stock or redeem or otherwise acquire, directly or
indirectly, any shares of its capital stock;
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(l) not incur nor agree to incur nor agree to become subject to
any debt or liability, except for:
(a) debt incurred through the Intercompany Account,
(b) liabilities for normal payables arising in the ordinary
course of business, and
(c) other liabilities which do not exceed $50,000 in the
aggregate, nor agree to guarantee the debts or
liabilities of any other Person;
(m) comply with the provisions of all laws, regulations,
permits, licenses, certificates, authorizations, judicial
decrees and orders applicable to the Company and the conduct
of the Business and the Projects where the failure to comply
would have a material effect on NCP, the Business or any
Project;
(n) refrain from terminating, modifying or amending any Material
Contract, or grant any consent or waiver thereunder;
(o) not make any additional capital expenditure (including
capitalized development expenditures) with respect to NCP,
the NCP Subsidiaries or any Development Projects;
(p) except with respect to changing the name of NCP as set forth
in Section 1.9 and any Partnership Agreement Amendment in
connection with the Lake Interest, not take any action to
amend the Certificate of Incorporation or By-laws of NCP or
any NCP Subsidiary or the certificate of limited partnership
of any Limited Partnership;
(q) not make any loan or advance to any person who is an
officer, director, employee or shareholder of the Company,
other than routine advances for travel, meal and similar
expenses;
(r) not prepay any liability other than current liabilities of
the Company coming due in the ordinary course of business
and other than the Intercompany Account;
(s) not mortgage, pledge or subject to any lien, charge or
Encumbrance any assets, tangible or intangible, or capital
stock, of the Company;
(t) duly perform in all material respects all of the Company's
obligations arising under the Commitments to which it is a
party or to which its assets are subject, all in accordance
with the respective terms and conditions thereof; and
(u) maintain, renew and keep in full force and effect all
permits, licenses, certifications and other authorizations
necessary to the conduct of the commercial operations of
each Project and the Business; and
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(v) not make any election, except for an election under Section
754 of the Code, with respect to any Taxes or Returns
affecting the Company.
Notwithstanding the foregoing, nothing herein shall be deemed to
limit or restrict the Company in discharging its duties to or
with respect to any of the Limited Partnerships or the discharge
by NCP or the NCP Subsidiaries in the discharge of their
respective fiduciary duties to the Limited Partnerships or to any
of their respective partners.
9.2. Interim Conduct from NCP Closing through Excluded
Subsidiaries Closings.
9.2.1. The parties agree that, following the NCP Closing, NCP shall
manage the Projects owned by the Excluded Subsidiaries in
accordance with the terms of the Management Agreement.
9.2.2. During the period following the NCP Closing, NCRI agrees to
be bound by and shall adhere to each of the covenants set forth
in Section 9.1.1 with respect to its ownership of any Excluded
Subsidiaries until the date of the related Excluded Subsidiaries
Closing.
ARTICLE X
COVENANTS OF NCO, NCRI AND NCP
10.1. Access.
NCP shall, and shall cause the NCP Subsidiaries to, give
representatives of Buyer access to NCP's and the NCP
Subsidiaries' properties, books, Commitments and records relating
to the Business and Projects (including work papers) during
reasonable business hours and shall furnish Buyer with all
financial and operating data and other information as to NCP, the
Business and the Projects and the properties and assets of the
Company as Buyer may from time to time reasonably request.
10.2. Press Releases and Announcements.
Neither NCO, NCRI nor NCP shall issue any press release or
announcement relating to the subject matter of this Agreement
without the prior written approval of Buyer; provided, however,
that NCO may make any public disclosure it believes in good faith
is required by law or regulation (in which case NCO will inform
and confer with the Buyer prior to making the disclosure).
10.3. Undertakings.
NCO, NCRI and NCP, shall, and NCRI shall cause LIHI to, use their
respective best efforts to facilitate the consummation of the
Purchase and Sale Transactions so as to permit NCP Closing to
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occur as provided herein by May 31, 1994 or as soon thereafter as
practicable, including prompt submission of all information and
documents required by the H-S-R Act and requesting early
termination of the waiting period required by the H-S-R Act.
NCO, NCRI and NCP shall cooperate with Buyer and employ their
best efforts (to the extent not unreasonably burdensome to NCO,
NCRI and NCP) to satisfy the conditions to NCP Closing set forth
in Section 12.2.
10.4. Further Assurances.
At the request of Buyer, NCO, NCRI and NCP shall (and NCRI shall
cause LIHI to) promptly execute and deliver or cause to be
executed and delivered, to Buyer all such documents and
instruments, in addition to those otherwise required by this
Agreement, as Buyer may reasonably request in order to carry out
or evidence the terms and provisions of this Agreement.
10.5. Cooperation.
NCO and NCRI agree to cooperate with Buyer in connection with any
tax inquiry, tax determination or tax-related Proceeding
affecting a tax liability related to the Company and to make
available to Buyer, the employees and representatives of NCO,
NCRI and their Affiliates, together with documents,
correspondence, reports, electronically readable data and other
materials bearing on such tax inquiry, examination, Proceeding or
determination of tax liability or treatment; provided that Buyer
shall reimburse NCRI for all reasonable out-of-pocket expenses
incurred by it in connection therewith and shall pay reasonable
compensation to NCRI for all time spent by NCO, NCRI, and its
Affiliates and their employees, on such matters.
10.6. Lake Interest.
Except with the written consent of Buyer, between the date hereof
and the Lake Interest Closing, or termination of the Lake
Interest Option, whichever shall first occur:
(a) NCRI shall cause LIHI to maintain its existence as a
corporation in good standing under Delaware law and not
permit LIHI to:
(i) merge or consolidate with any Person, or sell or
otherwise transfer the Lake Interest Option to any
Person, or issue any additional shares of capital stock
or any instruments convertible into or exercisable for
capital stock;
(ii) enter into any Commitment or incur any liability or
obligation whatsoever, except for the Lake Partnership
Amendment and the Lake Interest Option Agreement, or
engage in any business other than holding the Lake
Interest;
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(iii) fail to comply with the terms and provisions of the
Lake Partnership Amendment, or engage in any activity
prohibited thereunder; or
(iv) create or suffer to exist any Encumbrance on the Lake
Interest or the Lake Interest Option.
(b) NCRI shall not sell, assign or otherwise transfer the LIHI
Stock, or create or suffer to exist any Encumbrance on the
LIHI Stock.
ARTICLE XI
COVENANTS OF BUYER
11.1. Confidentiality.
11.1.1. In addition to complying with all of the provisions of the
Confidentiality Letter Agreement attached as Annex D, Buyer will
use its best efforts to cause all information regarding NCO,
NCRI, the Company, the Business and the Projects, obtained in
connection with the negotiation and performance of this
Agreement, including any information obtained by any
representative of Buyer to be treated as confidential until the
NCP Closing and, with respect to any Excluded Subsidiary until
any closing relating to such Excluded Subsidiary and will not
use, and will not permit others to use, any such information in a
manner detrimental to NCO, NCRI or the Company; provided,
however, that Section 11.1 shall not apply to information that:
(a) was known by Buyer when received;
(b) is or hereafter becomes lawfully obtainable from other
sources;
(c) is necessary or appropriate to disclose to any regulatory
authority having jurisdiction over NCO, NCRI, the Company or
Buyer or any Affiliate thereof or as otherwise required by
law;
(d) is reasonably necessary to disclose to those persons with a
need to know such information in order to confirm the
representations and warranties contained herein; or
(e) is reasonably necessary to disclose to any prospective
purchaser of the Lake Interest, provided that such
prospective purchaser agrees in writing, on terms
substantially similar to those set forth in the
Confidentiality Letter Agreement, to treat such information
as confidential.
11.1.2. If the transactions contemplated by this Agreement are not
consummated, Buyer will continue to hold all such information in
confidence and will return to NCO all documents, computer disks
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and other materials (and all copies thereof) containing such
information pursuant to this Subsection 11.1.2 and as provided in
the Confidentiality Letter Agreement.
11.2. No Solicitation of Employees.
11.2.1. Buyer shall not, and shall not permit any of its Subsidiaries
or Affiliates to solicit, employ, interfere with or attempt to
entice from either of NCO or the Company or any of their
respective Subsidiaries or Affiliates known to Buyer any person
who is now employed by them in an executive, managerial, project
development, information processing or marketing capacity at any
time prior to the NCP Closing except with respect to the Retained
Personnel.
11.2.2. If the transactions contemplated by this Agreement are not
consummated, for a period of two years from the date this
Agreement terminates, Buyer shall not, and shall not permit any
of its Subsidiaries or Affiliates to take any of the actions set
forth in Subsection 11.2.1.
11.3. Use of "North Canadian".
11.3.1. Buyer, its Subsidiaries and their Affiliates shall not use
and are strictly prohibited from doing business under or using
the name "North Canadian" as part of any corporate, trade or
assumed name.
11.3.2. Buyer agrees that within 20 days following the NCP Closing,
it shall remove any signs and cease using and destroy any
letterhead, business forms, business cards, promotional and sales
brochures and all other literature which contains the name "North
Canadian".
11.4. Tax, Securities Law Reporting and Accounting
Information.
Following NCP Closing, Buyer shall cause NCP to provide all
documents and information which, consistent with NCP's past
practice, have been furnished to NCO and NCRI to:
(a) provide all information required:
(i) to prepare all currently unfiled Returns, including
Returns for the years ended December 31, 1992 and 1993
and the 1994 period prior to Closing, and other forms
or elections relating to Taxes; and
(ii) to contest or claim any subsequent adjustments, or
proposed adjustments, to any Return for any Tax for
which NCO or NCRI, or either of them, are or were
responsible;
(b) provide all information required to prepare all financial
statements that NCO or NCRI may desire or be required to
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prepare including the Closing Balance Sheet and the audit
thereof and financial statements for the year ended
December 31, 1993, and the audit thereof and for any 1994
stub periods;
(c) provide all information required to prepare all of NCO's
securities law filings; and
(d) provide all information required to claim all refunds of
Taxes for periods ending on or prior to the NCP Closing Date
and deposits or prepaid expenses which NCO or NCRI, or
either of them, may elect to claim.
NCO and NCRI shall reimburse Buyer and NCP for all reasonable
costs and expenses incurred in connection with this Section 11.4.
11.5. Treatment of Personnel.
11.5.1. Buyer agrees that it shall:
(a) retain following the NCP Closing such of the personnel
disclosed in Schedule 11.5 as Buyer shall have designated in
a written notice furnished to Seller at or prior to the NCP
Closing (the personnel so designated are referred to
hereinafter as the "Retained Personnel" and the other of
such personnel being referred to herein as the "Other
Personnel"), and to continue to retain all of the Retained
Personnel on substantially the same terms of employment as
such personnel now have (except for benefits which are
provided for in paragraph (c) of this Subsection 11.5.1) for
a period of at least 90 days following the NCP Closing;
(b) pay when due all severance pay which may become due with
respect to such Other Personnel;
(c) cause the Retained Personnel to be provided with
substantially the same benefits as Buyer generally makes
available to personnel employed by it in comparable
positions; and
(d) give to each of the Retained Personnel who continues to
provide services to the Company after the NCP Closing credit
for past service with the Company and any company
controlling, controlled by or under common control with the
Company for purposes of vesting of employee benefits;
provided, however, that this Section 11.5 shall not be construed
as an employment contract for such personnel or give any persons
any rights or Claims hereunder.
11.5.2. Sellers agree that they shall take all steps that may be
necessary to cause:
(a) the Company's participation in each of the Plans;
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(b) the coverage of all employees of the Company under each of
the Plans; and
(c) all obligations and liabilities of the Company under each of
the Plans,
to terminate effective as of the NCP Closing.
11.6. Books and Records.
11.6.1. Buyer shall use its best efforts not to destroy, without the
prior written consent of NCO, any of the business, tax and
accounting records (whether in tangible or machine readable form)
of the Company or relating to the operation of the Business for
any period prior to and including the NCP Closing Date.
11.6.2. Buyer agrees to use its best efforts to retain all business,
tax and accounting records acquired by Buyer hereunder, including
any documents and materials as may be in the possession of a
third party and that are related to the Business, or operations
of the Business or the Projects shall be open for inspection by
representatives of NCO at any time during regular business hours
during such period of seven years (or such longer period as is
required by applicable law or any agreements with any taxing or
other governmental authorities) from the date of preparation or
compilation of such books, records, documents or materials and
NCO may during such period at its expense make such copies or
excerpts therefrom, in either case to comply with legal, audit,
applicable securities laws, tax or other obligations or
otherwise, as NCO may reasonably request. Buyer shall not
destroy or give up possession of any original or final copy of
any of the books and records relating to the business, properties
or operations of the Business or the Projects reasonably required
in the preparation of tax, regulatory and other governmental
compliance matters, whether or not delivered to Buyer hereunder,
without first offering NCO the opportunity to obtain such
original or final copy or a copy thereof for a period of seven
years (or such longer period as is required by applicable law or
any agreements with any taxing or other Government Authorities)
following the NCP Closing, the Excluded Subsidiaries Closing or
the Lake Interest Closing, as the case may be. In the event the
stock of NCP or any NCP Subsidiary is sold or any of the assets
of NCP or any NCP Subsidiary are sold by Buyer, the Buyer shall
use its reasonable efforts to provide NCO with the same access
and rights as set forth in this Section 11.6 with respect to any
subsequent buyer or buyers.
11.6.3. After such period, all of such books and records may be
destroyed, except those books and records which NCO specifically
requests to be retained, provided that the cost of storing or
delivering such retained books and records is borne by NCO.
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11.7. Cooperation.
Buyer agrees to cooperate with NCO and NCRI in connection with
any tax inquiry, tax determination or tax-related Proceeding
affecting a tax liability related to the Business and to make
available to NCO and NCRI, the Company's employees and
representatives, together with documents, correspondence,
reports, electronically readable data and other materials bearing
on such tax inquiry, examination, Proceeding or determination of
tax liability or treatment; provided that NCO shall reimburse
Buyer for all reasonable out-of-pocket expenses incurred by it in
connection therewith and shall pay reasonable compensation to
Buyer for all time spent by Buyer and its employees and the
Company's employees on such matters.
11.8. Press Releases and Announcements.
Buyer shall not issue any press release or announcement relating
to the subject matter of this Agreement without the prior written
approval of NCO; provided, however, that Buyer may make any
public disclosure it believes in good faith is required by law or
regulation (in which case Buyer will inform and confer with NCO
prior to making the disclosure).
11.9. Qualifying Facility Status.
Buyer agrees that on the NCP Closing Date, the Lake Interest
Closing Date and each Excluded Subsidiaries Closing Date, as the
case may be, assuming the representations made by NCP in Section
7.22 are true and correct as of such date, the consummation of
the transactions contemplated hereby relating to such closing
date will not result in the loss of the QF Status of the Projects
which are then being sold to Buyer or Lake Interest Optionee, as
the case may be.
11.10. Undertakings.
Buyer shall use its best efforts to facilitate the consummation
of the Purchase and Sale Transactions contemplated by this
Agreement so as to permit the NCP Closing to occur as provided
herein, by May 31, 1994 or as soon thereafter as practicable,
including prompt submission of all information and documents
required by the H-S-R Act and requesting early termination of the
waiting period required by the H-S-R Act. Buyer shall cooperate
with NCO, NCRI and NCP in connection with their efforts to
satisfy the conditions to NCP Closing set forth in Section 12.2.
11.11. Further Assurances.
At the request of Sellers, or either of them, Buyer shall
promptly execute and deliver, or cause to be executed and
delivered to Sellers, and either of them, all such documents and
instruments, in addition to those otherwise required by this
Agreement, as Sellers may reasonably request in order to carry
out or evidence the terms and provisions of this Agreement.
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ARTICLE XII
CONDITIONS PRECEDENT TO OBLIGATIONS TO CLOSE
12.1. Conditions Precedent to Obligation of Buyer.
The obligation of Buyer to consummate the transactions to be
performed by it in connection with the NCP Closing is subject to
satisfaction of each of the following conditions:
(a) there shall not be any Third Party Injunction in effect
preventing consummation by NCO, NCP, NCRI, LIHI or Buyer of
any of the Purchase and Sale Transactions;
(b) all applicable waiting periods (and any extensions thereof)
under the H-S-R Act shall have expired or otherwise been
terminated and Buyer shall have received all other
authorizations, Consents and approvals of Government
Authorities including the SEC Order and third parties as may
be required for the lawful consummation by NCO, NCRI, LIHI
and NCP and Buyer of the transactions contemplated by this
Agreement, each of which shall be in full force and effect;
(c) Buyer shall have received the deliveries specified for
delivery at the NCP Closing in Section 3.3 hereof;
(d) NCO shall have delivered to Buyer written assurances in form
and substance satisfactory to Buyer that each of the Limited
Partnerships will either:
(i) have an election in effect under Section 754 of the
Code for the taxable period of each such Limited
Partnership that includes the NCP Closing Date (or, in
the case of an interest in a Limited Partnership, which
is owned directly or indirectly by an Excluded
Subsidiary, the date of the respective Excluded
Subsidiary Closing, or
(ii) will have obtained the necessary consent of all
appropriate parties that an election under Section 754
of the Code will be made for the taxable period of each
such Limited Partnership that includes the NCP Closing
Date (or, in the case of an interest in a Limited
Partnership, which is owned directly or indirectly by
an Excluded Subsidiary, the date of the respective
Excluded Subsidiary Closing;
(e) NCRI shall have delivered to Buyer a certification of non-
foreign status as required under Section 1445 of the Code
and the regulations thereunder; and
(f) all of the Requisite Consents with respect to the Minimum
Number of Projects shall have been received and such
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Requisite Consents shall be in full force and effect.
12.2. Conditions Precedent to Obligations of NCO, NCRI and
NCP.
The obligations of NCO, NCRI and NCP to consummate the
transactions to be performed by them in connection with the NCP
Closing are subject to satisfaction of each of the following
conditions:
(a) there shall not be any Third Party Injunction in effect
preventing consummation by NCO, NCRI, LIHI or NCP of the
Purchase and Sale Transactions;
(b) NCRI shall have received the deliveries specified for
delivery at the NCP Closing by Article II and Section 3.2
hereof;
(c) all applicable waiting periods (and any extensions thereof)
under the H-S-R Act shall have expired or otherwise been
terminated and NCO, NCRI and NCP shall have received all
other authorizations, Consents and approvals of Government
Authorities as may be required for the lawful consummation
by NCO, NCRI and NCP of the transactions contemplated by
this Agreement, each of which shall be in full force and
effect;
(d) Buyer shall have delivered to NCO Releases from third
parties with respect to the NCO Obligations other than
Releases of NCO Obligations with respect to any Excluded
Subsidiary in form and substance substantially as set forth
in Attachment IB, or in lieu of any such Releases a Buyer
Parent Guarantee in form and substance substantially as set
forth in Attachment IC; and
(e) all of the Requisite Consents with respect to the Minimum
Number of Projects shall have been received, and such
Requisite Consents shall be in full force and effect.
12.3. Conditions Precedent to Excluded Subsidiaries Closing.
The obligations of the parties hereto to consummate the
transactions to be performed by them in connection with a
Excluded Subsidiaries Closing following the NCP Closing are
subject to satisfaction of each of the following conditions:
(a) each of the conditions precedent to the obligations of the
respective parties in Section 12.1 and 12.2 hereof shall
have been satisfied;
(b) Buyer shall have delivered to NCO Releases from third
parties with respect to any NCO Obligations applicable to
such Excluded Subsidiary in form and substance substantially
as set forth in Attachment IB or, in lieu thereof, a Buyer
Parent Guarantee in form and substance substantially as set
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forth in Attachment IC; and
(c) all of the Requisite Consents with respect to the Excluded
Subsidiary shall have been received, and such Requisite
Consents shall be in full force and effect.
ARTICLE XIII
REMEDIES FOR BREACHES OF AGREEMENT
13.1. Stipulated Damages.
13.1.1. In the event this Agreement terminates prior to NCP Closing
solely as a result of the failure by Buyer to obtain the required
SEC Order on or prior to August 15, 1994, then in lieu of any and
all statutory or common law remedies or damages which the Sellers
or NCP may have, Buyer has directed the Escrow Agent to, and
hereby agrees to, pay to NCRI, and the Sellers and NCP agree to
accept as Stipulated Damages, the amount of $7,000,000.
13.1.2. Except as provided in Subsection 13.1.1 or Section 13.2, in
the event this Agreement terminates prior to NCP Closing for any
other reason other than due to the failure or inability to
satisfy on or before August 15, 1994 one or more of the
conditions precedent to obligation of Buyer set forth in
Subsection 12.1 (other than the failure of Buyer to obtain the
SEC Order on or prior to such date), then in lieu of any and all
statutory or common law remedies or damages which the Sellers or
NCP may have, Buyer has directed the Escrow Agent to, and hereby
agrees to, pay to NCRI, and the Sellers and NCP agree to accept
as Stipulated Damages the amount of $5,000,000.
13.2. Other Relief and Damages.
In the event that NCO, NCRI or NCP, on the one hand, or Buyer, on
the other hand, knowingly or willfully breaches, violates or
fails or refuses to perform any material covenant or agreement
made by such party herein, the result of which conduct delays,
impedes or prevents the NCP Closing or deprives the other party
of the benefit of its bargain under this Agreement, including
taking any action seeking to restrain or prevent the Escrow Agent
from carrying out the terms of the Escrow Agreement, the non-
breaching party or parties may, in addition to the Stipulated
Damages provided for in Subsections 13.1.1 or 13.1.2, as the case
may be, and any remedies at law for other Damages or other
relief:
(a) institute and prosecute an action in any court of competent
jurisdiction to enforce specific performance of such
covenants or agreements or seek any other equitable relief;
and/or
(b) institute and prosecute an action in any court of competent
jurisdiction for any and all Transaction Costs up to an
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amount equal to the lesser of $250,000 or the Transaction
Costs actually incurred.
13.3. Post Closing Remedies.
Except for equitable relief provided for in Section 13.2(a) and
as provided for in Articles I through IV, XV and XVI, none of the
parties shall have any rights or claims after the NCP Closing
against any other party hereto, or any of their respective
Affiliates, under this Agreement with respect to the subject
matter hereof.
ARTICLE XIV
TERMINATION
14.1. Termination of Agreement.
14.1.1. Buyer and Sellers may terminate this Agreement by mutual
written consent at any time prior to the NCP Closing.
14.1.2. Buyer may terminate this Agreement without liability to NCO,
NCRI, NCP or their Affiliates except as may otherwise be provided
in Section 14.2 by giving notice to NCO in the event that the NCP
Closing shall not have occurred:
(a) on or after May 31, 1994 by reason of the failure to obtain
Requisite Consents with respect to the Minimum Number of
Projects; or
(b) on or after August 15, 1994 by reason of the failure to
occur of any other condition precedent under Section 12.1
hereof (unless the failure results solely from Buyer itself
breaching any representation or covenant contained in this
Agreement).
14.1.3. Sellers may terminate this Agreement without any liability to
Buyer or its Affiliates except as may otherwise be provided in
Section 14.2 by NCRI giving notice to Buyer in the event that the
NCP Closing shall not have occurred:
(a) on or after May 31, 1994 by reason of the failure to obtain
Requisite Consents with respect to the Minimum Number of
Projects; or
(b) on or after August 15, 1994 by reason of the failure to
occur of any other condition precedent under Section 12.2
hereof (unless the failure results solely from NCO, NCRI or
NCP themselves breaching any representation or covenant
contained in this Agreement).
14.1.4. If this Agreement terminates pursuant to this Article XIV,
the Escrow Agent shall disburse to NCRI from Buyer's Cash Deposit
(or, if Buyer's Cash Deposit is not sufficient Buyer shall pay)
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promptly, but in any event within 30 days of termination, to NCRI
$15,000 for each day, if any, following May 31, 1994 to the date
of termination ("Deferred Payment Consideration") in immediately
available funds in addition to any amounts to which NCRI may be
entitled pursuant to Article XIII.
14.1.5. In the event this Agreement is terminated pursuant to this
Article XIV, for a period of three years from the date hereof
Buyer shall not, without the prior written approval of the Board
of Directors of NCO:
(a) in any manner acquire, agree to acquire or make any proposal
to acquire, directly or indirectly, any securities or
property of NCO, NCRI or NCP or any of their Subsidiaries;
(b) propose to enter into, directly or indirectly, any merger or
business combination involving NCO, NCRI or NCP or any of
their Subsidiaries or to purchase, directly or indirectly, a
material portion of the assets of NCO, NCRI or NCP or any of
their Subsidiaries; or
(c) advise, assist or encourage any other Person in connection
with the foregoing.
14.2. Effect of Termination.
If any party terminates this Agreement pursuant to this Article
XIV, all obligations of the parties hereunder shall terminate
without any liability of any party to any other party (except for
any liability of any party then in breach); provided, however,
that the provisions contained in Sections 11.1, 11.2, 13.1, 13.2,
14.1.4, 14.1.5, and this Section 14.2 shall survive termination
of this Agreement.
ARTICLE XV
POST-CLOSING INDEMNIFICATION
15.1. Indemnification by NCO.
15.1.1. NCO warrants to Buyer that:
(a) the representations of:
(i) NCO set forth in Article V,
(ii) NCRI set forth in Article VI, and
(iii) NCP set forth in Article VII
are true and correct on the date hereof, except that no
warranty is being made as to the title to any real estate or
any Encumbrances thereon; and
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(b) each of NCO and NCRI is solvent immediately prior to
consummation of the transactions contemplated hereby and is
and will continue to be solvent upon consummation of such
transactions.
15.1.2. NCO hereby indemnifies Buyer and its Affiliates against, and
agrees forever to defend Buyer and its Affiliates against and
hold Buyer and each of Buyer's Affiliates harmless from any and
all Damages incurred or suffered by them following the NCP
Closing as a result of:
(a) any breach of warranty set forth in Subsection 15.1.1;
(b) any breach of any covenant or agreement made or to be
performed by NCO, NCRI, LIHI or NCP pursuant to this
Agreement, the Escrow Agreement, the Lake Option Agreement
or the Closing Documents; or
(c) any pending or threatened Proceedings at the NCP Closing, an
Excluded Subsidiaries Closing or the Lake Interest Closing,
as the case may be, challenging or seeking to enjoin, delay
or set aside the consummation of the transactions
contemplated hereby as a result of the conduct or
circumstances of NCO, NCRI or NCP or its Affiliates.
15.1.3. Notwithstanding anything (other than the provisions of
Articles I, II, III, IV and XVI) to the contrary, the Sellers
shall only be liable for Damages and shall only be obligated to
indemnify or defend Buyer or any other Person pursuant to this
Agreement or with respect to the representations set forth in
Article V, VI and VII and the warranties set forth in
Section 15.1.1. hereof:
(a) to the extent Damages resulting from breaches thereof exceed
in the aggregate $500,000; and
(b) with respect to such Damages in excess of $500,000, then
only up to the maximum aggregate Damages equal to one-third
of the Purchase Price.
15.1.4. Buyer and its Affiliates shall not be entitled to any
indemnification with respect to any Claim with respect to a
breach of the representations set forth in Articles V, VI and VII
and the warranties set forth in Section 15.1 or any breach of any
covenant or agreement contained herein unless a Notice of Claim
is properly delivered to NCO in accordance herewith on or prior
to December 31, 1995; provided, however, that if the Notice of
Claim is so properly delivered within such time period, the
indemnification obligations of NCO shall apply to all Damages
incident to the Claim, whether incurred before or after the
Notice of Claim and the expiration of such time period; provided
further, however, that the foregoing limitations shall not apply
to any indemnification arising under Article XVI.
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15.2. Indemnification by Buyer.
15.2.1. Buyer warrants to Sellers that:
(a) the representations of Buyer set forth in Article VIII are
true and correct as of the date hereof; and
(b) Buyer is solvent immediately prior to consummation of the
transactions contemplated hereby and is and will continue to
be solvent upon consummation of such transactions.
15.2.2. Buyer hereby indemnifies Sellers and their Affiliates
against, and agrees forever to defend Sellers and their
Affiliates against and hold Sellers and their Affiliates harmless
from, any and all Damages incurred or suffered by Sellers, or
either of them and their Affiliates, after the NCP Closing as a
result of:
(a) any breach of warranty set forth in Section 15.2.1;
(b) any breach of any covenant or agreement made or to be
performed by Buyer pursuant to this Agreement, the Escrow
Agreement or the Closing Documents;
(c) any pending or threatened Proceedings at the NCP Closing, on
Excluded Subsidiaries Closing or the Lake Interest Closing,
as the case may be, challenging or seeking to enjoin, delay
or set aside the consummation of the transactions
contemplated hereby as a result of the conduct or
circumstances of Buyer or its Affiliates;
(d) any Claim with respect to the NCO Obligations assumed by
Buyer under Assumption Agreements for the Projects Buyer
acquires at the NCP Closing or, any other liabilities or
obligations of the Company attributable to the operation of
the Business after the NCP Closing except with respect to
any Excluded Subsidiaries and other than for such
liabilities and obligations for which NCO has indemnified
Buyer in this Agreement; or
(e) the failure of Buyer to give any notices that Buyer is
required to give or to file any reports that Buyer is
required to file, relating to:
(i) the employment or severance of employment of
personnel after the NCP Closing, or
(ii) the effect on Retained Personnel of the transactions
contemplated by Article I of the Agreement.
15.2.3. Notwithstanding anything (other than the provisions of
Articles I, II, III, IV and XVI) contained herein to the
contrary, Buyer shall only be liable for Damages and shall only
be obligated to indemnify or defend Sellers or any other Person
pursuant to this Agreement or with respect to the representations
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set forth in Article VII or the warranties set forth in Section
15.2.1 hereof:
(a) to the extent Damages resulting from breaches thereof exceed
in the aggregate $500,000; and
(b) with respect to such Damages in excess of $500,000, then
only up to maximum aggregate Damages equal to one-third of
the Purchase Price;
provided, however, that the foregoing limitations shall not apply
to Buyer's obligations under the Assumption Agreements.
15.2.4. Neither of the Sellers nor their Affiliates shall be entitled
to any indemnification with respect to any Claim with respect to
breach of the representations set forth in Article VII or the
warranties set forth in Section 15.2.1 or any breach of any
covenant or agreement contained herein unless a Notice of Claim
is properly delivered to Buyer in accordance herewith on or prior
to December 31, 1995; provided, however, that if the Notice of
Claim is properly delivered within such time period, the
indemnification obligations of Buyer shall apply to all Damages
incident to the Claim, whether incurred before or after the
Notice of Claim or the expiration of such time period; provided
further, however, that the foregoing limitations shall not apply
to any indemnification arising under Article XVI.
15.3. Indemnification Relating to Environmental Matters.
Notwithstanding anything in this Agreement to the contrary, the
respective indemnification obligations of the parties arising out
of any violation of Environmental Laws and the other
environmental matters which are the subject of NCP's
representations in Section 7.29 (collectively, "Environmental
Matters") and NCO's warranties pursuant to subsection 15.1.1 with
respect thereto shall be as follows:
(a) If the NCP Closing occurs, NCO hereby indemnifies and saves
Buyer and its Affiliates harmless from and against any and
all Environmental Matters with respect to the Company and
each Project which occur or accrue:
(i) prior to Sellers' or NCP's acquisition of an
ownership interest therein (the "Environmental
Ownership Date"), except to the extent that Sellers
or NCP do not have knowledge thereof as of the date
of this Agreement or have otherwise expressly
disclosed such Environmental Matters to Buyer in
Schedule 15.3; and
(ii) during the period from the Environmental Ownership
Date through the date hereof, except to the extent
that Sellers or NCP do not, to the best of their
knowledge, know of any such Environmental Matter or
have otherwise expressly disclosed such Environmental
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Matter to Buyer in Schedule 15.3; provided, however,
that NCO's indemnification obligation under this
subparagraph (a)(ii) shall be limited to 50% of the
amount of each such Environmental Matter and shall be
further subject to the overall limitation on NCO's
indemnification payment liability in this Agreement
of one-third of the Purchase Price.
(b) If the NCP Closing occurs, Buyer hereby indemnifies and
saves Sellers and their Affiliates harmless from and against
any and all Environmental Matters with respect to the
Company and each Project (other than with respect to any
Excluded Subsidiaries and related Projects not acquired by
Buyer) which occur or accrue:
(i) prior to the Environmental Ownership Date for which
NCO has not indemnified Buyer pursuant to
subparagraph (a)(i) above; and
(ii) during the period from the Environmental Ownership
Date through the date hereof, for which NCO has not
indemnified Buyer pursuant to subparagraph (a)(ii)
above, subject, however, to the overall limitation on
Buyer's indemnification payment liability in this
Agreement of one-third of the Purchase Price; and
(iii) following the date hereof.
With respect to any Excluded Subsidiary, however, Buyer's
indemnification obligations under this Section 15.3 shall become
effective only in the event that the related Excluded
Subsidiaries Closing occurs.
15.4. Other Indemnification Provisions.
The foregoing indemnification provisions are in substitution for
and in derogation of, any statutory or common law remedy NCO,
NCRI or Buyer may have for Damages for breach of the
representations set forth in Articles V, VI, VII or VIII or
warranty set forth in Sections 15.1, 15.2 and 15.3, respectively,
or any breach of any covenant or agreement contained herein;
provided, however, that the provision of this Section 15.4 are in
addition to the provision of Section 13.2 and shall not prevent
NCO, NCRI or Buyer or their respective Affiliates from seeking
the remedies of specific performance or injunctive relief in
connection with a breach of a covenant or agreement by the other
party, nor shall it limit any remedies in the event of fraud or
willful or knowing breach.
15.5. Determination of Damages
Appropriate adjustments shall be made for Tax Benefits and for
the time cost of money (using the medium-term Federal Rate as of
February 1, 1994 as the discount rate) in determining the amount
of Damages for purposes of this Article XV.
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15.6. Indemnification Procedures.
15.6.1. In the event Sellers, or either of them, or Buyer seek
indemnification (the "Indemnified Party") from the other (the
"Indemnifying Party") with respect to any Claim pursuant to this
Article XV, the Indemnified Party shall promptly deliver to the
Indemnifying Party a Notice of Claim (i.e., a notice of the
existence of the Claim, setting forth in reasonable detail the
facts and circumstances to the extent then known pertaining
thereto and the basis for the Indemnified Party's right to
indemnification).
15.6.2. If any third party shall assert any Claim against NCO or
Buyer with respect to any matter which gives rise to a Claim for
indemnification under this Agreement, then the party claiming
indemnification shall promptly notify the other party thereof
(which notification shall in any case be made within the period
necessary to preserve the rights of the Indemnified Party with
respect to said Claim or Proceeding). In the event the
Indemnifying Party notifies the Indemnified Party within 30 days
after the Indemnified Party has given notice of the matter to the
Indemnifying Party that the Indemnifying Party is required to
indemnify the Indemnified Party in full against any such Claim
that the Indemnifying Party is assuming the defense thereof:
(a) the Indemnifying Party will defend the Indemnified Party
against the matter with counsel of its choice reasonably
satisfactory to the Indemnified Party;
(b) the Indemnified Party may retain separate co-counsel at its
sole cost and expense; and
(c) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the
matter without the written consent of Indemnifying Party
(which consent the Indemnifying Party shall not unreasonably
withhold).
15.6.3. In the event the Indemnifying Party does not notify the
Indemnified Party within 30 days or such shorter period after the
Indemnified Party has given notice of the matter to the
Indemnifying Party that the Indemnifying Party is assuming the
defense thereof, the Indemnified Party, without being deemed to
have waived any indemnification rights to which it may be
entitled, may defend against, or enter into any settlement with
respect to, the matter in any manner it reasonably may deem
appropriate.
15.7. Reimbursement.
The Indemnified Party shall be entitled to reimbursement from the
Indemnifying Party of reasonable expenses included in Damages
with respect to any Claim or Proceeding (including, without
limitation, the cost of defense, preparation and investigation
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relating to such Claim or Proceeding) as such expenses are
incurred by the Indemnified Party subject to the provisions of
this Article XV.
ARTICLE XVI
CERTAIN TAX MATTERS
16.1. Section 338(h)(10) Election.
16.1.1. If Buyer shall in its discretion so elect, NCRI and Buyer
shall jointly file the election provided for by Section
338(h)(10) of the Code and the corresponding election under
applicable state or local tax law for NCP and each of the other
"Target Corporations" (i.e., the NCP Subsidiaries which are the
subject of a stock purchase by Buyer); provided, however, that no
such election shall be effected under the tax laws of the State
of California or any of its localities (collectively, the
"Elections") in which event:
(a) the Elections, if made, shall be made for NCP and every
Target Corporation;
(b) Buyer and NCRI shall each provide to the other all necessary
information, including information as to tax basis, to
permit the Elections to be made and its consequences to be
accurately reflected for all relevant accounting and tax
reporting purposes;
(c) Buyer shall retain at Buyer's cost Boston Pacific Company,
or other nationally recognized firm or firms, subject to
NCRI's approval of such firm or firms, which approval shall
not be unreasonably withheld, to prepare a report (a
"Report") appraising the value of the assets of the Target
Corporations:
(i) to determine the amount of the "adjusted grossed-up
basis" (within the meaning of Treasury Regulation
Section 1.338(b)-1, or any successor regulation
thereto), and the amount of the "deemed sales price"
(within the meaning of Treasury Regulation Section
1.338(h)(10)-1(f), or any successor regulation
thereto), and
(ii) to determine the proper allocations (the
"Allocations") of the "adjusted grossed-up basis"
among the assets of the Target Corporations in
accordance with section 338(b)(5) of the Code,
(d) A draft of such Report shall be furnished to NCRI no later
than 120 days after the NCP Closing or the Excluded
Subsidiaries Closing, as applicable. Buyer and NCRI shall
discuss and resolve any changes NCRI proposes to the draft
and such Report shall be finalized no later than 150 days
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after the applicable Closing.
(e) With respect to each Election, Buyer shall prepare a Form
8023, together with all required attachments, a Form 8594,
and the corresponding forms required or appropriate under
state tax laws (collectively, an "Election Form") in a
manner consistent with the Allocation and shall furnish a
copy to NCRI no later than 30 days after the finalization of
the Report. Buyer and NCRI shall resolve any objections
Buyer may have to the Election Form no later than 15 days
thereafter. In the event there is any unresolved dispute
between Buyer and NCRI, Buyer and NCRI shall designate a
nationally recognized accounting firm within three days
thereafter and such accounting firm shall resolve the
dispute as to the Election Form within 15 days thereafter.
The cost of such accounting firm shall be equally borne by
Buyer and NCRI.
(f) Buyer and NCRI shall take all action and file all documents
necessary to effect and preserve timely Elections.
(g) NCRI shall calculate the gain or loss, if any, resulting
from the Elections in a manner consistent with the
Allocations and shall not take any position inconsistent
with the Elections or the Allocations in connection with any
Return;
(h) Buyer shall allocate the "adjusted grossed-up basis" among
the assets of the Target Corporations in a manner consistent
with the Allocations and neither Buyer nor NCRI shall take
any position inconsistent with the Elections or the
Allocations in any Return.
(i) Seller shall calculate the Section 338 Cost, as defined in
the next sentence, and shall furnish the details of such
calculation to Buyer no later than 45 days after the
finalization of the Report for the final qualified stock
purchase pursuant to this agreement.
The Section 338 Cost shall be equal to the excess, if any,
on an after-tax basis of:
(i) the state and local (but not federal) Taxes payable
with respect to the sales of the Target Corporations
taking into account the Elections, but without taking
into account any other income, losses, credits or
other tax incidents of NCRI or any of its other
Subsidiaries (except for purposes of determining
allocation percentages), over
(ii) the state and local (but not federal) Taxes that
would be payable by NCRI with respect to the sale by
it of the Stock and the sale by it of the Excluded
Subsidiaries in the absence of the Elections taking
into account gain from any deferred intercompany
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transactions (to the extent such gain is included in
the basis of the stock sold) that would be triggered
by such sale, but without taking into account any
other income, losses, credits or other tax incidents
of NCRI or any of its other Subsidiaries (except for
purposes of determining allocation percentages).
For purposes of clause (i),
(A) any distribution of an Excluded Subsidiary or
the Lake Interest shall be treated as
pursuant to a complete liquidation of the
distributing corporation qualifying under
Section 332 of the Code, and
(B) gain from any deferred intercompany
transactions triggered by the sale or the
Elections shall not be taken into account.
Buyer and NCRI shall resolve any objections Buyer may have
to the calculation of the Section 338 Cost no later than 60
days after the finalization of the Report. In the event
there is any unresolved dispute between Buyer and NCRI,
Buyer and NCRI shall designate a nationally recognized
accounting firm within three days thereafter and such
accounting firm shall resolve the dispute as to the Section
338 Cost within 30 days thereafter. The cost of such
accounting firm shall be equally borne by Buyer and NCRI.
(j) (i) All federal Taxes attributable to the sale of the
Target Corporations and the Elections shall be borne
by NCRI.
(ii) All state and local Taxes attributable to the sale of
the Target Corporations and the Elections, to the
extent not in excess of the amount determined under
item (ii) of paragraph (i) above, shall be borne by
NCRI.
(iii) To the extent that any Taxes described in clause (i)
or (ii) of this paragraph are imposed on any of the
Target Corporations, NCRI shall indemnify the Buyer
therefor.
(k) The Section 338 Cost related to any state tax payment shall
be borne as follows:
(i) the first $1,000,000 shall be borne by NCRI;
(ii) the next $1,566,000 shall be borne by Buyer; and
(iii) any excess over $2,566,000 shall be borne by NCRI.
Within 60 days after finalization of the final Report, Buyer
shall indemnify NCRI, or NCRI shall indemnify Buyer, to the
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extent required to reflect the foregoing allocation of the
Section 338 Cost. To the extent that the Section 338 Cost
is redetermined on audit, Buyer shall indemnify NCRI, or
NCRI shall indemnify the Buyer, for Taxes, interest and
penalties, if any, in order to reflect properly the
foregoing allocation.
16.2. Tax Returns and Tax Indemnity.
16.2.1. NCO and NCRI shall prepare or cause to be prepared and shall
timely file all Returns (including any amendments thereto)
relating to any Taxes of NCP or the NCP Subsidiaries for which
NCP is consolidated or combined with NCRI with respect to any NCP
Short-Year Period, any NCP Pre-Closing Tax Period, and any
Excluded Subsidiary Pre-Closing Tax Period. NCO and NCRI shall
file or cause to be filed all Returns (including any amendments
thereto) and pay or cause to be paid all Taxes with respect to
NCP and the NCP Subsidiaries for any NCP Short-Year Period, any
NCP Pre-Closing Tax Period, and any Excluded Subsidiary Pre-
Closing Tax Period.
16.2.2. Notwithstanding the provisions of Article XV or any other
provision herein to the contrary, NCO and NCRI shall indemnify
and hold harmless Buyer, NCP and the NCP Subsidiaries against:
(a) all Taxes imposed on NCP or the NCP Subsidiaries with
respect to any NCP Short-Year Period, NCP Pre-Closing Period
or Excluded Subsidiary Short-Year Period.
(b) all Taxes imposed on any member of an affiliated,
consolidated, combined or unitary group which includes or
has included NCP or the NCP Subsidiaries with respect to any
taxable period that ends on or prior to the date of the last
Excluded Subsidiary Closing or that includes the date of the
last Excluded Subsidiary Closing; and
(c) all liability resulting from or attributable to a breach of
the representations and warranties contained in Section
7.10; provided, however, that NCO and NCRI shall have no
liability to Buyer, NCP or the NCP Subsidiaries to the
extent of any accruals or reserves for Taxes as set forth in
the Audited Balance Sheet or disclosed in Schedule 7.10.
16.2.3. Except as otherwise specifically provided in this Article
Buyer shall cause NCP and the NCP Subsidiaries to file all
Returns relating to NCP and the NCP Subsidiaries and shall pay or
cause NCP and the NCP Subsidiaries to pay all Taxes with respect
thereto for all taxable periods ending after the NCP Closing and
all Taxes with respect to any taxable period for which the Return
does not become due until after the NCP Closing. Buyer shall
indemnify NCO and NCRI against all other Taxes imposed on NCP and
the NCP Subsidiaries except as otherwise specifically provided in
this Article.
16.2.4. In any case where the period for filing a Return does not end
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as of the date of the NCP Closing or an Excluded Subsidiaries
Closing then, for purposes of this Agreement, Taxes for the
entire taxable period that includes the NCP Closing or the
Excluded Subsidiaries Closing, as the case may be, shall, except
as otherwise specifically provided in this Article, be paid by
Buyer.
16.2.5. All Returns of Excluded Subsidiaries with respect to Taxes
that are the liability of NCRI required to be filed on or before
the date of the Excluded Subsidiary Closing in question will be
timely filed (within the time permitted by any timely filed
extension) by or on behalf of the Excluded Subsidiary in question
and all Taxes shown to be due on such Returns shall be timely
paid.
16.3. Control of Contest.
Buyer and NCRI shall each have the right, at its own expense, to
control any audit or determination by any taxing authority,
initiate any claim for refund or amended Return and contest,
resolve and defend against any assessment, notice of deficiency
or other adjustment or proposed adjustment of Taxes for any
taxable period for which such party (or any of its affiliates) is
charged with responsibility for filing a Return under this
Agreement; provided, however, that neither Buyer nor NCRI shall
have the right to agree to pay assessment, deficiency, settlement
or other adjustment or proposed adjustment of Taxes that would
adversely affect the interests of the other, without the other's
written consent. In the event a party not charged under this
Agreement with payment responsibility for a taxable period or
portion thereof shall be paid a refund with respect to that
period or portion thereof, such party shall pay the refund to the
party so charged within seven (7) days of receipt of such refund.
Buyer shall not, and shall not permit NCP or the NCP Subsidiaries
to, carry back any tax attribute to a pre-Closing period Return
of NCO, NCRI, NCP or the NCP Subsidiaries.
16.4. General.
Each of Buyer, NCO and NCRI shall provide the other and Buyer
shall following the NCP Closing Date cause NCP and the NCP
Subsidiaries to provide to NCO and NCRI, with the right, at
reasonable times and upon reasonable notice, to have access to
personnel, and to copy and use, any records or information that
may be relevant in connection with the preparation of any
Returns, any audit or other examination by any taxing authority
or any litigation relating to liability for Taxes. Except as
otherwise provided in this Agreement, the party requesting
assistance shall reimburse the other party for reasonable
expenses incurred in providing such assistance. Information
required in the filing of any Return shall be provided to the
other party not less than thirty (30) days before such Return is
due. NCRI will allow the Buyer an opportunity to review and
comment upon any Returns under Subsection 16.2.1 (including any
amended returns) to the extent that they relate to the Company.
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NCRI will take no position on such Returns that relate to the
Company that would adversely affect the Company after the NCP
Closing Date.
16.5. Ada Project Indemnity.
In the event that, for any pre-closing period, NCRI, NCP or any
of the NCI Subsidiaries is determined to be entitled
(disregarding any statute of limitations) for federal income tax
purposes to claim more than 1% of the federal investment tax
credit available to the Ada Cogeneration Limited Partnership,
NCRI shall pay to buyer the amount of such excess credit if, as
and when NCRI utilizes such credit, plus interest (from the due
date of the federal income tax return, including extensions for
the period, in which such credit is applied) at the rate
applicable to federal income tax overpayments.
16.6. Sales and Transfer Taxes.
All sales and transfer Taxes (including all stock transfer taxes,
if any) incurred in connection with the transactions contemplated
hereby, other than those sales and transfer Taxes which are part
of the Section 338 Cost, will be borne by NCO and NCRI. If
required by applicable law, Buyer or NCRI, as the case may be,
will join in the preparation and execution of any Returns or
other documentation related to the payment of any sales or
transfer Taxes.
16.7. Tax Effective Time.
For purposes of Taxes, the NCP Closing, the Excluded Subsidiaries
Closing and the Lake Interest Closing shall be deemed to have
occurred, and shall be effective, as of the close of business on
the NCP Closing Date, the respective Excluded Subsidiaries
Closing Date and the Lake Interest Closing Date, respectively.
16.8. Survival.
All of the representations, warranties, covenants and indemnities
contained in this Agreement which relate to Taxes shall survive
the NCP Closing or the Excluded Subsidiaries Closing in question
(even if the Indemnified Party knew or had reason to know of any
misrepresentation or breach of warranty or covenant at the time
of the NCP Closing or such Excluded Subsidiaries Closing as the
case may be) and continue in full force and effect until the
expiration of the applicable statute of limitations (including
any extensions thereof).
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16.9. Florida Nexus.
NCRI shall use its best efforts to take all actions, including
establishing, prior to the NCP Closing, nexus and filing
documents, requisite to make the election and file an acceptable
consolidated return for Florida state income tax for the taxable
period that includes the NCP Closing and subsequent taxable
periods through 1996.
ARTICLE XVII
GENERAL PROVISIONS
17.1. No Third-Party Beneficiaries.
This Agreement constitutes an agreement solely among the parties
hereto and is not intended to and will not confer any rights,
remedies, obligations or liabilities, legal or equitable,
including any right of employment, on any person (including but
not limited to any employee or former employee of the Company)
other than the parties hereto and their respective successors or
assigns, or otherwise constitute any person a third party
beneficiary under or by reason of this Agreement. Nothing in
this Agreement, expressed or implied, is intended to or shall
constitute the parties hereto as partners or participants in a
joint venture.
17.2. Amendment and Waiver.
No amendment or waiver of any provision of this Agreement shall
in any event be effective, unless the same shall be in writing
and signed by the parties hereto, and then such amendment, waiver
or consent shall be effective only in the specific instance and
for the specific purpose for which given.
17.3. Notices.
17.3.1. All notices, requests, demands and other communications
hereunder shall be in writing and shall be, personally delivered
or sent by facsimile transmission with confirming copy sent by
overnight courier (such as Express Mail, Federal Express, etc.)
and a delivery receipt obtained and addressed to the intended
recipient as follows:
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(a) If to NCO, NCRI or NCP:
Prior to the NCP Closing:
North Canadian Oils Limited
715 - 5th Avenue, S.W.
Calgary, Alberta, T2P 2X7
Canada
Attention: Gordon B. Singer, Vice President and CFO
Telephone: 403-231-0111
Facsimile: 403-231-0187
After the NCP Closing:
To NCO and NCRI: at the address listed above
To NCP: at the address listed in paragraph (b) below
In each case with a copy to:
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606-5096
Attention: William J. McGrath, P.C.
Telephone: 312-372-2000
Facsimile: 312-984-3669
and
Norcen Energy Resources Limited
715 - 5th Avenue, S.W.
Calgary, Alberta, T2P 2X7
Canada
Attention: E.A. Leew, Vice President, Law
Telephone: 403-231-0111
Facsimile: 403-231-0187
(b) If to Buyer:
Energy Initiatives, Inc.
One Upper Pond Road
Parsippany, NJ 07054
Attention: Bruce L. Levy, President
Telephone: 201-263-6950
Facsimile: 201-263-6953
With a copy to:
Berlack, Israels & Liberman
120 West 45th St.
New York, NY 10036
Attention: Douglas E. Davidson, Esq.
Telephone: 212-704-0100
Facsimile: 212-704-0196
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17.3.2. Any party may change its address for receiving notice by
giving written notice to the others named above. All such
notices shall be given as provided in Section 17.3.1 and shall be
effective immediately upon confirmation of facsimile or
completion of personal delivery.
17.4. Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same Agreement.
17.5. Parties in Interest.
This Agreement shall bind and inure to the benefit of the parties
named herein, in each case with respect to the obligations and
rights applicable to them, and their respective, successors.
17.6. Entire Agreement and Transaction.
This Agreement, including the Annexes, Schedules and Attachments
listed in the Table of Contents in the forepart hereof and the
documents delivered pursuant hereto, together with the Confiden-
tiality Letter Agreement, constitute the entire agreement among
the parties with respect to the transactions contemplated hereby
and supersede all other agreements and understandings among the
parties.
17.7. Applicable Law.
This Agreement shall be governed by and construed in accordance
with the internal substantive laws of the State of New York.
Should any provision of this Agreement be determined to be
invalid, void or unenforceable by a court of competent
jurisdiction for any reason, the remaining provisions shall
remain in full force and effect. The parties consent to the non-
exclusive jurisdiction of the New York federal and state courts.
17.8. Headings.
The section and other headings contained in this Agreement are
for convenience of reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
17.9. Expenses.
Except as otherwise expressly provided herein, each party to this
Agreement shall pay its own costs and expenses (including those
of its respective attorneys and accountants and consultants) in
connection with the transactions contemplated hereby; provided
that any such costs and expenses incurred by NCP prior to the NCP
Closing shall be borne by NCO or NCRI.
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17.10. Severability.
Any term or provision of this Agreement which is held invalid or
unenforceable by a court of competent jurisdiction, shall be
ineffective to the extent of such invalidity or unenforceability
without rendering invalid or unenforceable the remaining rights
of the Person intended to be benefitted by such provision and
provisions of this Agreement.
17.11. Construction.
This Agreement has been negotiated by Buyer and by NCO (for
itself and on behalf of NCRI and NCP), and their respective legal
counsel, and legal or equitable principles that might require the
construction of this Agreement or any provision hereof against
the party drafting this Agreement shall not apply in any
construction or interpretation of this Agreement.
17.12. Currency.
All references herein to dollars are to United States dollars.
17.13. Conflicts.
If there is any conflict or inconsistency between a provision in
this Agreement and that of an Annex, Schedule or Attachment
hereto, the provision of this Agreement shall prevail.
17.14. Time of Essence.
Time is of the essence in this Agreement.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT
DATED MARCH 31, 1994]
IN WITNESS WHEREOF, each of the parties has caused this Agreement
to be duly executed on this date first written above.
NORTH CANADIAN OILS LIMITED ENERGY INITIATIVES, INC.
By: By:
Name: Name:
Title: Title:
By:
Name:
Title:
NORTH CANADIAN RESOURCES, INC.
on behalf of itself and Lake Interest
Holdings Inc.
By:
Name:
Title:
NORTH CANADIAN POWER
INCORPORATED
By:
Name:
Title:
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ANNEX A
GLOSSARY OF TERMS
Affiliate: Affiliate of any Person shall mean any
Person which, directly or indirectly,
controls, is controlled by or is under
common control with such Person
(excluding any trustee under, or any
commitment with responsibility for
administering, any Pension Plan). A
Person shall be deemed to be "controlled
by" any other Person if such other
Person possesses, directly or
indirectly, power:
(i) to vote 10% or more of the
securities (on a fully diluted
basis) having ordinary voting
power for the election of
directors or managing general
partners; or
(ii) to direct or cause the
direction of the management and
policies of such Person whether
by contract or otherwise.
Ada Partnership: Ada Cogeneration Limited Partnership.
Ada Subsidiary: NCP Ada Power Incorporated.
Agreement: The Stock Purchase and Sale Agreement by
and among NCO, NCRI, NCP and Buyer dated
March 31, 1994, including the Annexes,
Schedules and Attachments thereto.
Allocations: The allocations of the "adjusted
grossed-up basis" of the Stock among the
assets of NCP as set forth in Schedule
2.1 of the Agreement.
Asset Managers: The employees of NCP responsible for
management of the Projects.
Assumption Agreement: The Agreements in the form of Attachment
IA pursuant to which the NCO Obligations
are assumed by Buyer.
Audited Balance Sheet: The audited consolidated balance sheet
of NCP as of December 31, 1993.
Audited Financial
Statements: The audited consolidated balance sheet,
income statement and statements of cash
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flow and stockholder's equity of NCP at
December 31, 1993 and for the 12 months
then ended together with the notes
related thereto.
Beneficial Interest: The right to vote, receive the dividends
and distributions on or sell or cause
the sale, transfer or any other
disposition whatsoever of, and all other
rights incident to legal and beneficial
ownership of, the securities subject to
such interest.
Budget: NCP's operating budget for 1994.
Business: Developing, owning interests in and
managing cogeneration and other
independent power plants in the United
States and Canada using natural gas as
the primary fuel.
Business Day: Any day excluding Saturday, Sunday and
any other day which banks in New York
are permitted or authorized to close.
Buyer: Energy Initiatives, Inc., a Delaware
corporation and a wholly-owned indirect
subsidiary of Buyer's Parent.
Buyer's Cash Deposit: Buyer's Cash Deposit as set forth in
Section 3.2.1 of the Agreement, together
with all accrued interest and income
thereon.
Buyer's Escrow Deposit: The deposits by Buyer with the Escrow
Agent under the Escrow Agreement
consisting of the Buyer's Cash Deposit,
NCP Deposit and Subsidiaries Deposit set
forth in Section 3.2 of the Agreement.
Buyer's NCP Deposit: The deposits by Buyer of the Closing
Documents with the Escrow Agent under
the Escrow Agreement as set forth in
Section 3.2.2 of the Agreement.
Buyer's Parent: General Public Utilities Corporation, a
Pennsylvania corporation.
Buyer's Parent The guarantee of Buyer's Parent, in
Guarantee: substantially the form of Attachment IC,
of any NCO Obligation assumed by Buyer
for which a Release is not obtained.
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Cash Deposit: Buyer's deposit of the Estimated Cash
Payment with the Escrow Agent.
Cash Payment: The aggregate cash payable to NCRI in
connection with the Purchase and Sale
Transactions, consisting of an amount
equal to the sum of the Purchase Price,
the Working Capital Value, the Deferred
Payment Consideration, if any, and the
Working Capital Closing Adjustment.
Claim: An asserted claim, demand, action, suit,
charge or Proceeding for Damages or
equitable relief.
Closing Balance Sheet: The consolidated balance sheet of NCP
and its subsidiaries (excluding the Lake
Subsidiaries) as of the NCP Closing Date
prepared in a manner consistent with the
Audited Balance Sheet.
Closing Documents: The documents to be delivered by Sellers
and/or Buyer at the NCP Closing, an
Excluded Subsidiaries Closing and the
Lake Interest Closing, as the case may
be, as set forth in Articles III and XII
of the Agreement.
Code: The Internal Revenue Code of 1986, as
amended.
Commitments: Contracts, agreements, instruments,
plans, licenses, options, guarantees,
leases and purchase or sale orders,
indentures and mortgages, in each case
whether written or oral.
Company: NCP, the NCP Subsidiaries and the
Limited Partnerships.
Confidentiality Letter Letter agreement dated October 20, 1993
Agreement: by and between NCO and Buyer.
Consents: Any approvals, consents and
acknowledgements required by any third
party or Government Authority or
instrumentality, whether written or
oral.
Damages: All losses and damages (including
incidental and consequential damages)
together with related costs and expenses
(including court costs, reasonable
attorneys' fees and expenses, including
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those related to investigation and
expert assistance, and amounts paid in
settlement).
Deferred Payment
Consideration: The amount payable by Buyer to NCRI
equal to $15,000 per day for each day,
if any, that the NCP Closing does not
take place following May 31, 1994 until
the NCP Closing or the date of
termination of the Agreement, whichever
shall first occur.
Development Projects: Projects in development identified in
Annex C to the Agreement.
Document Room: Room 937 at the NCP Premises containing
documents and material relating to the
Business and the Projects.
Election: Election under Section 338(h)(10) of the
Code.
Encumbrance: Any security interest, mortgage, pledge,
lien, equity, charge, restriction or
other encumbrance.
Environmental Laws: Any law, statute, ordinance, rule,
regulation, order, judgment, decree,
permit or license, in any way regulating
the storage, generation, manufacture,
refinement, transportation, production,
treatment or disposal of toxic or
hazardous wastes or substances of any
kind or which would require any remedial
action with respect thereto applicable
to the Company, the Projects or the
Business.
ERISA: Employee Retirement Income Security Act
of 1974, as amended.
ERISA Affiliate: Any entity (whether or not incorporated)
which would be treated as a single
employer with the Company under
Section 414(b), (c), (m) or (o) of the
Code and the regulations thereunder.
Escrow Agent: Harris Trust and Savings Bank, and any
successor Escrow Agent under the Escrow
Agreement.
Escrow Agreement: Escrow Agreement dated March 31, 1994 by
and among NCRI, Buyer and Escrow Agent.
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Estimated Cash Payment: $74,975,000.
Estimated Deferred
Payment Consideration: $1,350,000 (based on an estimate of 90
days at $15,000 per day).
Estimated Working Capital
Closing Adjustment: $1,375,000, representing the Estimated
Working Capital Closing Adjustment
(based on 50% of assumed negative cash
flow of NCP at the rate of $500,000 per
month from March 1, 1994 to August 15,
1994).
Excluded Projects: Projects for which all Requisite
Consents have not been obtained as of
the NCP Closing.
Excluded Subsidiaries: NCP Subsidiaries which have direct or
indirect ownership interests in the
Excluded Projects.
Excluded Subsidiaries The deliveries and performances required
Closings: by Section 3.6 of the Agreement in
connection with the sale of stock of an
Excluded Subsidiary.
Excluded Subsidiaries
Pre-Closing Tax Period: Any taxable period of an Excluded
Subsidiary that ends on or prior
to the Excluded Subsidiaries
Closing for such Excluded
Subsidiary.
February 28 Balance Sheet: The unaudited consolidated
balance sheet of NCP as of
February 28, 1994 prepared as
provided in Section 4.1.1 of the
Agreement.
FPB Audited 1993 The audited balance sheet, statements of
Financial Statements: operations, partners equity and cash
flows and the related notes, as of
December 31, 1993 and for the year then
ended.
FPB Partnership: FPB Cogeneration Partners, L.P.
FPB Subsidiary: NCP Commerce Power Incorporated.
GAAP: Generally accepted accounting principles
as in effect for the United States from
time to time.
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Glossary: This Glossary of Terms incorporated by
reference as Annex A to the Agreement.
Government Authority: Any foreign, federal, state or local
governmental commission, board, bureau,
agency or similar regulatory or
administrative body.
H-S-R Act: Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the
applicable rules and regulations
thereunder.
Indemnified Party: Either Sellers or Buyer, as the case may
be, and their respective Affiliates as
set forth in Section 15.6 of the
Agreement.
Indemnifying Party: Either NCO or Buyer, as the case may be,
as set forth in Section 15.6 of the
Agreement.
Intercompany Account: The balance owing between NCP and NCRI
resulting from accrual of expenses and
cash transfers.
Interim Operating Plan: The plan mutually agreed upon by Buyer,
NCRI and NCP (including budget and
strategy) and included as Annex E to the
Agreement to govern operations of the
Business between the date of the
Agreement and the NCP Closing.
IRS: Internal Revenue Service.
Lake Interest: Initially, the 1% general partnership
interest and the 49% limited partnership
interest in Lake Investment, L.P. which
shall be transferred by NCP to LIHI and
shall be the subject of the Lake
Interest Option Agreement.
Lake Interest Assignment
Instruments: Assignments of partnership interests to
be held by LIHI with respect to
interests in the Lake Partnerships and
an assignment of the LIHI Stock.
Lake Interest Closing: The deliveries and performances required
by Section 3.7 of the Agreement in
connection with the purchase and sale of
the Lake Interest or the LIHI Stock, as
the case may be.
6
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Lake Interest Option: The exclusive right and option granted
to Buyer to purchase either the Lake
Interest or the LIHI stock set forth in
Section 1.6 of the Agreement.
Lake Interest Option
Agreement: Agreement granting the Lake Interest
Option in the form of Attachment XI.
Lake Interest Option The close of business on December 31,
Expiration Date: 1994, on which date the Lake Interest
Option shall expire.
Lake Interest Optionee: The owner of the Lake Interest Option
from time to time.
Lake Partnership The amendment of the Lake Project Partnership
Amendment: Agreement pursuant to which the Lake Interest
will be transferred to LIHI.
Lake Partnerships: Lake Investment, L.P. and Lake Cogen
Ltd.
Lake Subsidiaries: NCP Lake Power Incorporated, NCP Gem
Incorporated and Umatilla Groves
Incorporated.
LIHI: Lake Interest Holdings Inc., a Delaware
corporation and a wholly owned
subsidiary of NCRI.
LIHI Stock: The outstanding 1,000 shares of common
stock, par value $.01 per share, of LIHI
owned of record and beneficially by
NCRI.
Limited Partnerships: The limited partnerships listed on
Schedule 7.8 to the Agreement.
Management Agreement: Management Agreement to be entered into
by and between NCP and NCRI in the form
of Attachment IX to the Agreement,
pursuant to which NCP will manage the
Excluded Subsidiaries and related
Projects for NCRI following the NCP
Closing.
Material Contracts: The Commitments listed on Schedule 7.14
to the Agreement.
Minimum Number of At least three of the five Projects,
Projects: including at least one of either the
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Lake Project or the Pasco Project.
Multiemployer Plan: Any multiemployer pension plan, as
defined in Section 3(37) of ERISA.
NCM: North Canadian Marketing Corporation, a
California corporation and a wholly
owned subsidiary of NCRI.
NCO: North Canadian Oils Limited, a Canadian
corporation.
NCP: North Canadian Power Incorporated, a
California corporation and a wholly
owned subsidiary of NCRI.
NCP Closing: The deliveries and performances required
by Section 3.4 of the Agreement in
connection with the purchase and sale of
the Stock.
NCP Closing Date: The date that the NCP Closing occurs
relating to the purchase and sale of the
Stock.
NCP Estimate: Pro forma calculation estimating, based
on the best information then available
to NCRI, the amount of the Working
Capital Closing Adjustment which will
exist at the NCP Closing.
NCO Obligations: The obligations and guarantees of NCO
listed on Schedule 1.2 to the
Agreement.
NCP Pre-Closing Tax
Period: Any taxable period other than an NCP
Short-Year Period that ends on or prior
to the NCP Closing.
NCP Short-Year Period: Any taxable period of NCP which ends as
a result of the sale of the Stock.
NCP Stock (or Stock): The outstanding 1,000 shares of common
stock, no par value, of NCP being
purchased from NCRI by Buyer pursuant to
the Purchase and Sale Agreement.
NCP Subsidiaries: The Subsidiaries of NCP listed on
Schedule 7.7 to the Agreement.
NCP Working The Working Capital calculation comtemplated
Capital Calculation: by Section 4.1 of the Agreement.
8
<PAGE>
NCRI: North Canadian Resources, Inc. a
Delaware corporation and a wholly owned
subsidiary of NCO.
1935 Act: Public Utility Holding Company Act of
1935, as amended, and the rules and
regulations thereunder.
Non-Project Subsidiaries: The NCP Subsidiaries which do not
have ownership interests in any
Project.
Notice of Claim: A notice of existence of the Claim,
setting forth to the extent then known
in reasonable detail the facts and
circumstances pertaining thereto and the
basis for the Indemnified Party's right
to indemnification.
OSHA: Occupational Safety and Health Act, as
amended, and the applicable regulations
thereunder.
Partnership Financial
Statements: Audited balance sheets, income
statements and statements of cash flows
and partners' equity of each of the Ada,
Syracuse and Lake Partnerships as of
December 31, 1993, respectively, and (in
the case of the Pasco Partnerships, as
of September 30, 1993), and for the
twelve months then ended, and the
unaudited balance sheet, income
statement and statements of cash flows
and partners' equity of the FPB
Partnership as of December 31, 1993 and
for the twelve months then ended, and
the unaudited balance sheet, income
statement and statements of cash flows
and partners' equity as of December 31,
1993 and for the three months then
ended.
Pasco Audited The audited balance sheet, statements of
December 31, 1993 operations, partners' equity and cash
Pasco Cogen, Ltd. flows, and the notes thereto of the
Financial Statements: Pasco Cogen Ltd. as at December 31, 1993
and for the three months then ended.
Pasco Partnerships: Dade Investment, L.P. and Pasco Cogen
Ltd.
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Pasco Subsidiaries: NCP Dade Power Incorporated and NCP
Pasco Incorporated.
PBGC: Pension Benefit Guaranty Corporation.
Pension Plan: Each "employee pension benefit plan" as
defined in section 3(2) of ERISA which
is not a Multiemployer Plan.
Person: Any individual, partnership,
corporation, association, firm, trust or
any other entity or organization.
Phase I Studies: The Phase I Studies delivered by Sellers
to Buyer referred to in Section 7.28.1
of the Agreement.
Plans: The employee benefit plans, collective
bargaining agreements and other
compensation arrangements set forth in
Schedule 7.16.1 of the Agreement.
Proceeding: Any pending suit or other action,
proceeding, investigation or legal,
administrative, arbitration or other
method of settling disputes or
disagreements or governmental
investigation by or before any foreign,
federal, state or local governmental or
non-governmental court, department,
commission, board, bureau, arbitrator,
agency or instrumentality.
Projects: The operating cogeneration facilities
identified in Annex B to the Agreement.
Purchase Price: Seventy-one million seven hundred
ninety-one thousand ($71,791,000)
dollars as adjusted pursuant to the
provisions of Article II of the
Agreement.
Purchase and Sale
Transactions: The purchase and sale transactions
contemplated by Section 1.1 of the
Agreement.
Qualifying Facility (QF): A "qualifying cogeneration
facility" as that term is defined
in the Public Utility Regulatory
Policies Act of 1978 and the
regulations of the Federal Energy
Regulatory Commission thereunder.
QF Status: Status as a Qualifying Facility.
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<PAGE>
Releases: With respect to any closing under the
Agreement, any and all releases of third
parties releasing NCO from the NCO
Obligations relating to the Projects
which are the subject of such closings.
Reporting Period: The taxable period for which a Return is
due.
Requisite Consents: All Consents required from third parties
under any Commitments with respect to
each Project which are required for the
transfer, directly or indirectly, of
ownership or management thereof and as a
condition precedent to the closings
including those consents included in
Schedule 5.2 to the Agreement.
Returns: All federal, state, local, foreign or
other governmental returns or reports
with respect to Taxes, including any
consolidated, combined, joint or other
return that properly includes the
income, deductions or other tax
information concerning the Company.
Santa Ana Premises: Office space currently occupied by NCP
located at 1551 North Tustin Avenue,
Santa Ana, California 92701, as defined
in the terms of the Sublease.
SEC Order: An appropriate order of the Securities
and Exchange Commission under the 1935
Act authorizing, to the extent
necessary, the transactions contemplated
by the Agreement.
Sellers: NCO and NCRI.
Sellers' Escrow Deposit: Sellers' NCP Escrow Deposit and Sellers'
Subsidiaries Deposits.
Sellers' NCP Deposit: The deposit by Sellers with the Escrow
Agent pursuant to the Escrow Agreement
of the Closing Documents set forth in
Section 3.3 of the Agreement.
Sellers' Subsidiaries The deposit by Sellers with the Escrow Agent
Deposit: pursuant to the Escrow Agreement of the
Closing Documents with respect to the
NCP Subsidiaries set forth in Section
3.3.2 of the Agreement.
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<PAGE>
Stipulated Damages: Set forth in Subsections 13.1.1 and
13.1.2 of the Agreement.
Stock: The outstanding 1,000 shares of common
stock, no par value, of NCP being
purchased from NCRI by Buyer pursuant to
the Agreement.
Sublease: Sublease by and between NCRI and NCP in
the form of Attachment X to the
Agreement pursuant to which NCP will
sublet the Santa Ana Premises from NCRI.
Subsidiary: A corporation of which a Person and/or
their respective Subsidiaries, as the
case may be, own directly or indirectly,
such number of shares as have more than
50% of the ordinary voting power for the
election of directors.
Syracuse Partnerships: Syracuse Orange Partners, L.P. and
Project Orange Associate, L.P.
Syracuse Subsidiaries: Syracuse Investment, Inc and NCP
Syracuse, Inc.
Tax Benefit: An amount equal to the actual tax
savings produced by any deduction,
credit, decrease in income or decrease
in recapture of credit and shall be
deemed to be realized in the taxable
period for which such deduction, credit,
decrease in income or decrease in
recapture of credit results in a
reduction (and shall equal the amount of
such reduction) in the Taxes paid or
results in an increase in any refund of
Taxes received (including interest
thereon) (and shall equal the amount of
such increase), for such period as
compared to the Taxes that would have
been paid or the refund of Taxes that
would have been received for such period
in the absence of such deduction,
credit, decrease in income or recapture
of credit.
Taxes: Taxes of any nature, including income,
profit, franchise, alternative, or add-
on or minimum sales, use, payroll,
withholding, occupation, property and
excise taxes imposed by any government
or instrumentality, whether federal,
state, local, foreign or other levies
and assessments imposed by any federal,
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state, local or foreign taxing
authority, including but not limited to
all income, sales, use, ad valorem,
value added, franchise, severance, net
or gross proceeds, withholding payroll,
employment, excise or property taxes,
together with any interest thereon, any
penalties, additions to tax or
additional amounts applicable thereto,
and any contractual or other obligation
to indemnify or reimburse any person
with respect to any such Taxes.
Target Corporations: NCP Subsidiaries which are qualified
purchasers by Buyer.
Third Party Injunction: Any preliminary or permanent injunction,
temporary restraining order or similar
restraint of any kind issued by a court
of competent jurisdiction or
governmental or administrative body
obtained by or on behalf of a third
party which is not Sellers, NCP, LIHI or
Buyer or an Affiliate of the foregoing,
the effect of which is to prohibit or
restrict in any manner, the consummation
of any of the transactions contemplated
by the Agreement.
Transaction Costs: Investment banking, legal, accounting,
consultant and other fees or costs
incurred by Buyer, on the one hand, and
NCO, NCRI and NCP, on the other hand, as
a result of the transactions
contemplated by the Agreement.
Violation: Any violation of any applicable laws,
rules, regulations, orders, judgments or
decrees of any federal, state, local and
foreign governments and governmental
agencies and instrumentalities or any
court or arbitrative body.
Working Capital: The sum of all current assets less the
sum of all current liabilities of NCP
and the NCP Subsidiaries determined on a
consolidated basis but excluding the
Lake Project prepared in a manner
consistent with the Audited Balance
Sheet.
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<PAGE>
Working Capital The NCP Closing adjustment to Working Capital
Closing Adjustment: required by Section 4.2 of the
Agreement.
Working Capital Value: Value of the Working Capital as of
February 28, 1994.
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<PAGE>
Annex B
PROJECTS
1. Lake Cogen Ltd cogeneration project located
at Golden Gem Growers Inc. in Lake County,
Florida.
2. Pasco Cogen Ltd cogeneration project located
at Lykes Pasco Inc. in Pasco County, Florida.
3. Project Orange Associates cogeneration
project located at Syracuse University in
Syracuse, New York.
4. Ada Cogeneration Limited Partnership
cogeneration project located at Amway
Corporation in Ada, Michigan.
5. FPB Cogeneration Partners, L.P. cogeneration
project located at Newark Group Industries in
City of Commerce, California.
<PAGE>
Annex C
DEVELOPMENT PROJECTS
1. Cogeneration project in New York City to sell
28.5 MW to Consolidated Edison Company (with
SEF Cogen Corp.).
2. Cogeneration project in Warner Robbins,
Georgia to sell 225 MW to Georgia Power
Company (with International Power Systems
Corporation).
3. Cogeneration project in Washington State to
sell 50 MW (with PMC Hydro).
<PAGE>
ANNEX D
INTENTIONALLY OMITTED
<PAGE>
ANNEX E
INTERIM OPERATING PLAN
The attached Interim Operating Plan represents the Company's best
estimate of the costs to manage the business based on the
following major assumptions.
GENERAL AND ADMINISTRATION (EXCLUDING DEVELOPMENT)
1. Staffing levels assumed to remain unchanged with no planned
increase in salary except as noted on Schedule 7.15.
2. All staff to receive a pay to stay bonus equal to 50% of
salary based on their current salary payable to those
employees who remain with the Company through to the NCP
Closing. Closing is assumed to be May 31, 1994 for purposes
of the pay to stay bonus.
3. Rent is based on sharing the Santa Ana office and Toronto
office with North Canadian Marketing together with an
allocation from NCO/Norcen of rent for the 7th floor of the
Calgary office formerly used by NCO. As of June 1, 1994 it
is assumed that only NCP's share of the Santa Ana office
will be applicable.
4. Travel relates to management of the operating projects as
well as costs associated with maintaining the business with
offices and employees in three different locations.
Excluded from the budget is the operations management fees from
the projects estimated to be approximately $110,000 per month of
which $25,000 per month is paid to Adam Victor as part of the
December 1992 settlement.
OPERATIONS
The following is a list of the more significant items for each
project that the Partnerships hope to address during the
remainder of 1994 which form part of the operating plans for both
NCP and the projects. Reference is also made to Schedule 7.12
Interim Changes, Schedule 7.19 Proceedings, Schedule 7.24
Condition of Assets and Schedule 7.29 Capital Projects for
additional information.
A. FPB Project
1. Continue working with the bank to resolve the financial
issues (ongoing).
2. Resolve the dispute with the steam host regarding the
steam price (2nd quarter).
3. Completion of required capital projects (Schedule 7.29)
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(throughout year).
4. Manage environmental and permitting issues (as
required).
(Note: These projects will be conducted under the
management of the Managing General Partner -
Energy America)
B. Ada Project
1. Filing of rebuttal testimony relative to Consumer Power
rates (April).
2. Manage environmental and permitting issues as necessary
and (as required).
3. Completion of required capital projects (Schedule 7.29)
(throughout year).
4. Develop gas management strategy (2nd quarter).
5. Complete assignment to NCMC of Great Lakes
Transportation (2nd quarter).
C. Syracuse Project
1. Complete Amendment #3 (2nd quarter).
2. Negotiate Contract Amendment with NIMO/resolve cap
issue (4th quarter).
3. Complete punch list and warrantee items (2nd quarter).
4. Amend SSOI Contract/Resolve S&S bonus/penalty issue
(3rd quarter).
5. Investigate expansion of project (through 4th quarter).
6. Completion of required escrow items (4th quarter).
7. Demand charge mitigation strategy (3rd quarter).
8. Tennessee rate case (ongoing).
9. Resolve Canadian Hunter disagreement (2nd quarter).
10. Manage environmental and permitting issues as necessary
(as required).
11. Finalize interruptible gas supply arrangements (3rd
quarter).
12. Completion of required capital projects (Schedule 7.29)
(throughout year).
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<PAGE>
13. Finalize Century West Buydown.
D. Pasco Project
1. Nominate committed capacity (July 1).
2. Complete negotiations on Zurn Bonus and Lien (2nd
quarter).
3. Resolve condensate return issues with Lykes Pasco (2nd
quarter).
4. Demand charge mitigation strategy (3rd quarter).
5. Complete FGT Capacity Assignment (2nd quarter).
6. MDQ adjustment in conjunction with nomination of
committed capacity (July 1).
7. Complete punch list and warrantee items (2nd quarter).
8. Manage environmental and permitting issues as necessary
(as required).
9. Obtain FERC Recertification Order (2nd quarter).
10. Completion of required capital projects (Schedule 7.29)
(throughout year).
11. Amend NCM Contract to provide flexibility in managing
imbalances.
E. Lake Project
1. Nominate committed capacity (July 1).
2. Complete negotiations on Zurn Bonus and Lien (2nd
quarter).
3. Demand charge mitigation strategy (3rd quarter).
4. Complete FGT Capacity Assignment (2nd quarter).
5. MDQ adjustment in conjunction with nomination of
committed capacity (July 1).
6. Complete punch list and warrantee items (2nd quarter).
7. Manage environmental and permitting issues as necessary
(as required).
8. Resolve chiller steam issue with Golden Gem (2nd
quarter).
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<PAGE>
9. Complete agreement on gas price reset (before NCP
Closing).
10. Completion of required capital projects (Schedule 7.29)
(throughout year).
11. Amend NCM contract to provide flexibility in managing
imbalances.
DEVELOPMENT
It is recognized that development projects are subject to
continuing change and as such the development plan is also
subject to change.
Mid-Georgia Cogeneration Project
The budget reflects a litigation, political and public relation
strategy to have the GPSC compel GPC to enter into a Power
Purchase Agreement with the Partnership and fulfil its federal
power purchase obligation to purchase power at or below its full
avoided costs. We, as the QF, have chosen to fix avoided costs
at levels projected as of the time that a legally enforceable
obligation occurred. We believe the obligation occurred on or
before December 6, 1993.
To support this effort, Slater Consulting, as our expert witness,
is providing the avoided cost analysis. Hicks, Maloof and
Campbell is the local counsel with McDermott Will & Emery as
legal advisor. Hill and Knowlton, a local public relations firm,
is providing public relations. John Ellis of International Power
Systems is the local developer and leader of the political
coalition. The GPSC is expected to render a decision in June and
its is anticipated that GPC will appeal the decision if we
prevail.
The overall strategy is to win the litigation based upon the
merits being that our cost for electric power is below GPC's full
avoided cost and that we will provide rate payer benefit. In
addition we will attempt to obtain compelling local support to
help protect us against GPC killing the project politically even
if we win on the merits of the case.
NYC Energy Group Cogeneration Project:
We continue to pay SEF Cogen $50,000 per month pursuant to our
agreement. SEF continues to work the NYCHA to negotiate the
steam agreement. Howard Rubinstein, a local PR and lobbying
firm, has been engaged with the assistance of the legal firm of
Fischbin, Badillo to help get the NYCHA to sign the steam
agreement. Once the NYCHA has agreed to the contract,
Commissioner Sullivan on behalf of the project will go to ConEd
and pursue the consolidation of the five agreements. Blasland &
Bouck has been engaged to perform the environmental permitting
4
<PAGE>
and are expected to be released to begin work in earnest in
April. These efforts are targeting NYCHA's sign off of the steam
agreement by May, 1994.
Response to Oglethorpe RFP:
We are pursuing this opportunity with our joint venture partner
CMS. John Ellis of IPS is providing the development support on
behalf of NCP. We have the pricing for the shortlisted group
from the GPC 1996 peaking solicitation and used it as a basis for
determining our bid. The bid was submitted on March 29, 1994.
Hydro-Therm Cogeneration Project:
The Joint Venture submitted a qualifications proposal to the
University of Washington to be followed up in the second quarter
with a detailed proposal to supply them steam and sell electric
energy to Seattle City Light. It is expected that if the
proposal is approved by the University of Washington and Seattle
City Light (expected by August) that this deal would be
negotiated.
In addition, we are looking for sites that would allow us to bid
to Snohomish PUD in response to their RFP for 250 Mw. The
proposal is due May 18, 1994.
5
<PAGE>
ATTACHMENT IA
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT is made and entered into this ____ day
of _____, 1994, by ENERGY INITIATIVES, INC., a Delaware
corporation ("Buyer") in favor of, and is delivered to, NORTH
CANADIAN OILS LIMITED, a Canadian corporation ("NCO").
Capitalized terms used herein shall have the meanings ascribed to
them in the Glossary which is incorporated herein by reference as
Annex A hereto.
WHEREAS, NCO and Buyer are parties to a Stock Purchase and Sale
Agreement, dated as of ____________, 1994 (the "Purchase
Agreement"), governing the sale of all of the stock of North
Canadian Power Incorporated, an indirect, wholly owned subsidiary
of NCO, and the assumption by Buyer of certain obligations of
NCO;
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged:
Buyer hereby assumes and agrees to pay, satisfy, perform and
fully discharge promptly when due the following NCO Obligations
(i.e., the following obligations of NCO):
[Description to be inserted from Schedule 1.2
of the Purchase Agreement]
Buyer shall forever defend, indemnify and hold harmless NCO and
its respective successors and assigns from and against any and
all Claims and Damages related to or arising from Buyer's failure
to fully perform and discharge the responsibilities of NCO with
respect to the NCO Obligations. Buyer further agrees to
discharge all such obligations promptly as they come due.
Buyer shall at any time and from time to time, execute and
deliver to NCO all other and further agreements, undertakings,
indemnities and other instruments necessary or appropriate to
relieve and discharge NCO fully from all liabilities and
obligations assumed hereby or to carry out Buyer's obligations as
set forth in Article I of the Purchase Agreement.
This Assumption Agreement shall be governed by and construed in
accordance with the internal substantive laws of the State of New
York.
1
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Instrument to
be signed on its behalf by a duly authorized officer as of the
date first written above.
ENERGY INITIATIVES, INC.
By:
Its:
2
<PAGE>
ATTACHMENT IB
CONSENT TO ASSUMPTION AND RELEASE
The undersigned hereby acknowledges and consents to the
assumption of [List specific NCO Obligation] (the "Obligation")
by Buyer and hereby irrevocably and unconditionally, fully and
forever aquits, releases and discharges North Canadian Oils
Limited, a Canadian corporation, its respective affiliates and
subsidiaries and its respective officers, directors, employees,
agents, representatives, successors and assigns from all actions,
claims, causes of actions, suits, charges, complaints,
controversies, debts, sums of money, agreements, judgments,
damages, liabilities, guarantees, or obligations of any kind
whatsoever in law or in equity related to or arising from the
Obligation.
Dated: ____________, 1994 By:
Its:
1
<PAGE>
ATTACHMENT I-C
GUARANTY
GUARANTY, dated as of ________ __, 1994, is entered into by
GENERAL PUBLIC UTILITIES CORPORATION, a corporation organized
under the laws of the Commonwealth of Pennsylvania (the
"Guarantor"), in favor of NORTH CANADIAN OILS LIMITED, a Canadian
corporation ("NCO").
WHEREAS, NCO, North Canadian Resources Inc., North Canadian Power
Incorporated ("NCP") and Energy Initiatives, Inc. ("EI"), an
indirect wholly-owned subsidiary of the Guarantor, are parties to
a Stock Purchase and Sale Agreement dated as of __________, 1994
("Purchase Agreement"), governing the sale of all the stock of
NCP to EI; and
WHEREAS, pursuant to that certain Assumption Agreement, of even
date herewith ("Assumption Agreement"), made by EI in favor of
NCO, EI has assumed those NCO Obligations (as defined in the
Purchase Agreement) specified in Annex A hereto.
NOW THEREFORE, the Guarantor agrees as follows, intending to be
legally bound:
1. Guaranty.
For value received, the Guarantor hereby unconditionally
guaranties the due and punctual performance by EI of all of its
obligations under the Assumption Agreement (the "Guaranteed
Obligations").
2. Waiver.
The Guarantor hereby waives:
(a) promptness, diligence, notice of acceptance and any
other notice with respect to the Guaranteed Obligations
and this Guaranty;
(b) presentment for payment, notice of nonpayment, demand,
protest, notice of protest and notice of dishonor or
default to any party including the Guarantor;
(c) all other notices to which the Guarantor may be
entitled but which may legally be waived; and
(d) demand for payment as a condition of liability under
this Guaranty.
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<PAGE>
3. No Waivers; Remedies.
No failure or delay on the part of NCO in exercising any right,
power or privilege hereunder shall operate as a waiver thereof;
and no single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise
thereof, or the exercise of any other right, power or privilege.
Failure by NCO to insist upon strict performance hereof shall not
constitute a relinquishment of its right to demand strict
performance at another time. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
4. Addresses for Notices.
All notices and other communications provided for hereunder shall
be in writing (including telecopy communications) and,
if to the Guarantor, addressed to it at
GPU Service Corporation
100 Interpace Parkway
Parsippany, New Jersey 07054
Attention: Don W. Myers
Vice President and Treasurer
Facsimile: 201/263-6822
with a copy to:
Berlack, Israels & Liberman
120 West 45th Street
New York, New York 10036
Attention: Douglas E. Davidson, Esq.
Facsimile: 212/704-0196
and if to NCO, addressed to it at the address set forth in the
Purchase Agreement, or, as to each party, at such other address
or telecopier number as shall be designated by such party in a
written notice to the other party. All such notices and other
communications shall be effective when received, addressed as
aforesaid.
5. Governing Law.
This Guaranty shall be governed by and construed in accordance
with the laws of the State of New York, without references to
principles of conflict of laws.
2
<PAGE>
* * *
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed by its duly authorized officer, all as of the day and
the year first above written.
GENERAL PUBLIC UTILITIES CORPORATION
By:
Name:
Title:
3
<PAGE>
ESCROW AGREEMENT -
SEE EXHIBIT B-2
<PAGE>
BERLACK, ISRAELS & LIBERMAN
120 W. 45th Street
New York, New York 10036
March 31, 1994
North Canadian Oils Limited
North Canadian Resources, Inc.
715-5th Avenue, S.W.
Calgary, Alberta, T2P 2X7
Re: Energy Initiatives, Inc.
Dear Sirs:
This opinion is furnished to you pursuant to Section
3.2.2(c) of the Stock Purchase and Sale Agreement dated March 31,
1994 (the "Agreement") by and among North Canadian Oils Limited,
North Canadian Resources, Inc. and North Canadian Power
Incorporated, on the one hand, and Energy Initiatives, Inc.
("EI") on the other hand. Terms defined in the Agreement are
used herein as therein defined unless otherwise defined herein.
We have acted as counsel to EI and its parent, General
Public Utilities Corporation, a registered holding company under
the Public Utility Holding Company Act of 1935 ("GPU"), in
connection with the execution and delivery by EI of the Agreement
and the consummation by EI and GPU of the various transactions
contemplated thereby to be consummated on the date hereof. In
connection with this opinion, we have examined such certificates,
orders, instruments, agreements and other documents and have made
such other investigation as we have deemed necessary or
appropriate as a basis for this opinion. We have also relied on
such certificates and factual representations of officers of EI
with regard to the distributions to be received, either directly
or indirectly, by EI from the NCP Subsidiaries and the Projects
being acquired by EI as we have deemed necessary, appropriate or
advisable.
We are members of the Bar of the State of New York and
do not purport to be expert in the laws of any jurisdiction other
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<PAGE>
than the State of New York and the Federal laws of the United
States. This opinion is limited to matters governed by the
Federal laws of the United States.
In rendering the opinion set forth below, we have
assumed that on the date hereof, at the NCP Closing and at any
Excluded Subsidiaries Closing, (a) each Project is a "qualifying
cogeneration facility" as defined in Section 201 of the Public
Utility Regulatory Policies Act of 1978, as amended and the
applicable regulations thereunder, (b) other than the interests
in the Projects acquired by EI, no equity interest in the
Projects is held by an electric utility or electric utility
holding company, within the meaning of 18 C.F.R. 292.206(b), and
(c) the Lake Interest constitutes not less than 50% of the total
of such equity interest in the Lake Project or will be adjusted
to such 50% amount in accordance with the Lake Partnership
Amendment.
Based on the foregoing and subject to the
qualifications and assumptions set forth above, we are of the
opinion that the acquisition by EI of the NCP Stock and the stock
of any Excluded Subsidiaries will by virtue of such acquisition
not result in the loss by any Project of its status as a
"qualifying Cogeneration facility" as so defined.
This opinion is rendered solely for your benefit in
connection with the transactions referred to in the first
paragraph hereof and may not be relied upon by any other person
without our prior written consent.
Very truly yours,
BERLACK, ISRAELS & LIBERMAN
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BERLACK, ISRAELS & LIBERMAN
120 W. 45th Street
New York, New York 10036
March 31, 1994
North Canadian Oils Limited
North Canadian Resources, Inc.
715 5th Avenue, S.W.
Calgary, Alberta, T2P 2X7
Canada
Dear Sirs:
This opinion is furnished to you pursuant to Section
3.2.2.(a) of the Stock Purchase and Sale Agreement, dated as of
March 31, 1994 (the "Agreement"), by and among North Canadian
Oils Limited, North Canadian Resources, Inc., and North Canadian
Power Incorporated, on the one hand, and Energy Initiatives, Inc.
on the other hand. Terms defined in the Agreement are used herein
as therein defined unless otherwise defined herein.
We have acted as counsel to the Buyer in connection with the
execution and delivery by Buyer of the Agreement and the other
Closing Documents (as defined below) to which it is a party, and
the consummation by the Buyer of the transactions contemplated
thereby to be consummated on the date hereof.
In so acting, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the (i)
Agreement, (ii) Escrow Agreement, (iii) Assumption Agreement,
(iv) Management Agreement, (v) Lake Interest Option Agreement
(the Escrow Agreement, Assumption Agreement, Management Agreement
and Lake Interest Option Agreement being referred to collectively
as the "Closing Documents") and (vi) Certificate of Incorporation
and By-laws of Buyer, as amended to date, and such corporate
records, agreements, documents and other instruments of Buyer,
and such certificates or comparable documents of public
officials, and have made such further investigation, as we have
deemed relevant and necessary as a basis for the opinions
hereinafter set forth.
In our examination, we have assumed the genuineness of all
signatures (other than of Buyer), the authenticity of all
documents submitted to us as originals, the conformity to
original documents of documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such
later documents.
This opinion is limited to matters governed by the Federal
laws of the United States, the laws of the State of New York, and
the General Corporation Law of the State of Delaware ("DGCL").
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Based upon the foregoing, we are of the opinion that:
1. Buyer is a validity existing corporation in good
standing under the DGCL. Buyer has the corporate power and
authority required to own and lease its properties and to carry
on its activities as they are now conducted.
2. Buyer has full legal right and corporate power,
without the Consent of any other Person to execute, deliver and
perform its obligations under the Agreement and the Closing
Documents to which it is a party, subject to the receipt by Buyer
and Buyer's Parent of an appropriate order ("SEC Order") of the
Securities and Exchange Commission ("SEC") under the 1935 Act and
the filing of a notification and the expiration of the waiting
period under the H-S-R Act.
3. All corporate and other actions required to be
taken by Buyer to authorize the execution, delivery and
performance of the Agreement and the Closing Documents to which
it is a party and all transactions contemplated thereby have been
duly and properly taken. No Consent, approval or authorization
of, or filing of any certificate, notice, application, report or
other document with, any Governmental Authority, is required on
the part of Buyer in connection with the valid execution and
delivery of the Agreement and each Closing Document to which it
is a party, the acquisition of the Stock, or the performance by
Buyer of any of its obligations thereunder, except for the
filings by Buyer (a) as contemplated by the H-S-R Act, and (b) of
an application or applications with the SEC pursuant to the 1935
Act and the receipt by Buyer and Buyer's Parent of the SEC Order.
4. The Agreement and each Closing Document to which
Buyer is a party have been duly executed and delivered by Buyer
and, subject to the receipt by Buyer and Buyer's Parent of the
SEC Order and the filing of a notification and the expiration of
the waiting period under the H-S-R Act, is a valid and legally
binding obligation of Buyer, enforceable in accordance with its
terms and conditions, except to the extent limited by bank-
ruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting creditors' rights generally
or by general principles of equity.
5. The execution, delivery and performance of the
Agreement and the Closing Documents by Buyer are not prohibited
by, do not violate or conflict with any provision of, or result
in a default under a breach of:
(a) Buyer's Certificate of Incorporation or By-
laws;
(b) to our knowledge, any order, decree or
judgment of any court or Governmental
Authority; or
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(c) any law or regulation applicable to Buyer.
Our opinion in paragraph 4 above with respect to the
Escrow Agreement is based on the assumption that the laws of the
State of Illinois are identical to the laws of the State of New
York.
This opinion is solely for your benefit and may not be
relied upon by any other person without our express written
consent.
Very truly yours,
BERLACK, ISRAELS & LIBERMAN
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ATTACHMENT V
ENERGY INITIATIVES, INC.
FINANCIAL OFFICER'S CERTIFICATE
David Brauer, Vice President and Treasurer of Energy Initiatives,
Inc. ("EI"), hereby certifies that EI is solvent on the date
hereof.
Dated: March __, 1994
ENERGY INITIATIVES, INC.
By:
Name:
Title:
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ATTACHMENT VI-A
Macleod Dixon
Barristers & Solicitors
Established in 1912
Canterra Tower
3700, 400 Third Avenue, S.W.
Calgary, Alberta
Canada T2P 4H2
March 31, 1994
Energy Initiatives, Inc.
One Upper Pond Road
Parsippany, New Jersey 07054
Dear Sirs:
Re: North Canadian Oils Limited -
Sale of North Canadian Power Incorporated
This opinion is furnished to you at the request of our
client, North Canadian Oils Limited ("NCO"), pursuant to Section
3.3.1.(m) of the Stock Purchase and Sale Agreement (the
"Agreement") dated as of March 31, 1994 among NCO, North Canadian
Resources, Inc., North Canadian Power Incorporated and Energy
Initiatives, Inc. Capitalized terms used herein and not
otherwise specifically defined herein shall, unless the context
otherwise requires, have the meanings ascribed thereto in the
Agreement.
We have acted as special counsel to NCO in connection
with the transactions contemplated by the Agreement. In this
regard, we have reviewed copies of the following documents:
1) The Certificate and Articles of Amalgamation of
NCO, as amended to date;
2) The By-Laws of NCO, as amended to date;
3) The Agreement;
4) The Closing Documents; and
5) The Escrow Agreement.
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OTHER INVESTIGATIONS AND SCOPE OF REVIEW
In addition, we have reviewed the originals, or copies
certified or otherwise identified to our satisfaction, of
corporate records, including the minute book of NCO as furnished
to us by NCO. certificates of public officials, statutes, and
such other instruments and documents as we have considered
necessary as a basis for the opinions hereinafter expressed. We
have also made such investigations and considered such questions
of law as we have considered necessary or appropriate for the
purposes of our opinion.
ASSUMPTIONS AND RELIANCE
For the purposes of this opinion and in our
examinations we have assumed (i)the genuineness of all signatures
on all documents purporting to be originals and on the originals
of all documents submitted to use as copies, (ii) the
authenticity, accuracy, and completeness of all documents
submitted to us as originals and all documents submitted to us as
copies, and (iii) the conformity to authentic original documents
of all documents submitted to us as copies.
As to various questions of fact material to our
opinion, we have relied, without independent verification, upon
certificates of public officials, certificates of officers of NCO
(copies of such certificates having been delivered to you) and
information, both oral and written, furnished to us by NCO. To
our actual knowledge, there is no assertion therein which is
inaccurate, incorrect, or incomplete.
We have assumed, and to our actual knowledge, no event
has occurred between the date of any of the certificates of
public officials, certificates of officers of NCO or any
information, both oral and written, furnished to us by NCO which
we have relied upon, and the date hereof that would in any manner
affect the accuracy or completeness thereof or its basis for any
of the opinions set out below.
The phrase "to our actual knowledge" as used in this
opinion is subject to the following express limitations: (i) such
phrase refers only to facts or information which has come to our
attention while representing NCO in the course of the transaction
contemplated by the Agreement and refers only to such knowledge
of the members of our firm who have directly participated in the
representation of NCO in the course of such transaction and no
others, and (ii) no inquiry, investigation, or other due
diligence has been performed to determine the existence or the
absence of the facts qualified by such phrase.
PRACTICE LIMITATIONS
We are qualified to practice law only in the Province
of Alberta. Accordingly, the opinions expressed herein are
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<PAGE>
limited to the laws in force in the Province of Alberta and to
the federal laws of Canada applicable therein.
OPINIONS
Based upon and subject to the foregoing and the other
qualifications and assumptions set forth below, we are of the
opinion that:
1. NCO is a validly subsisting corporation under the laws of
Canada. NCO has the corporate power and authority required
to own property and to carry on business.
2. NCO has full corporate power to execute, deliver and perform
its obligations under the Agreement and to consummate the
transactions contemplated thereby.
3. All corporate actions required to be taken by NCO to
authorize the execution, delivery and performance of the
Agreement and the transactions contemplated thereby have
been duly and properly taken.
4. Insofar as the laws in force in the Province of Alberta and
the federal laws of Canada applicable therein are
applicable, the Agreement has been duly executed and
delivered by NCO.
5. The choice of New York law as the governing law of the
Agreement in Section 17.7 thereof will be upheld as a valid
choice of law by the courts of the Province of Alberta. For
the purposes of this opinion, we have assumed that such
choice of law is bona fide, legal under the laws of the
State of New York and that such choice of law is not
contrary to public policy, as that term is interpreted under
the laws of the Province of Alberta.
6. The consent by the parties to the non-exclusive jurisdiction
of the New York federal and state courts in Section 17.7 of
the Agreement will be enforced by the courts of the Province
of Alberta.
7. In the event that the Agreement is sought to be enforced in
the Province of Alberta in accordance with the laws of the
State of New York, the courts of competent jurisdiction in
the Province of Alberta would, subject to item 5 of this
opinion, recognize the choice of law and apply, to the
extent specifically pleaded and proven as a fact by expert
evidence, the laws of the State of New York to all issues
which under the conflict of laws rules of the Province of
Alberta are to be determined in accordance with the proper
or governing law of a contract, provided that none of the
provisions of the Agreement are contrary to public policy,
as that term is understood under the laws of the Province of
Alberta, and except that in any such proceedings such court
will:
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<PAGE>
(a) apply those laws of the Province of Alberta which such
court would characterize as procedural and will not
apply those laws of the State of New York which such
court would characterize as procedural;
(b) not apply those laws of the State of New York which
such court would characterize as revenue,
expropriatory, penal or similar laws;
(c) not apply those laws of the State of New York the
application of which would be inconsistent with public
policy, as such term is interpreted under the laws of
the Province of Alberta.
A court in the Province of Alberta may, however, reserve to
itself an inherent power to decline to hear such an action if it
is contrary to public policy, as such a term is understood under
the laws of the Province of Alberta, for it to do so, or if it is
not the proper forum to hear such an action, or if concurrent
proceedings are being brought elsewhere.
8. The courts of the Province of Alberta would give a judgment
in Canadian dollars based upon a final and conclusive in
personam judgment for a sum certain obtained in a United
States federal or state court against NCO with respect to a
claim pursuant to the Agreement without reconsideration of
the merits if:
(a) the court rendering such judgment had jurisdiction over
the judgment debtor, as recognized by the Courts of the
Province of Alberta;
(b) such judgment was:
(i) not obtained by fraud, or in any manner contrary
to the principles of natural justice;
(ii) not for a claim in respect of any laws of
United States or of any other jurisdiction
other than the Province of Alberta which a
court of the Province of Alberta would
characterize as revenue, expropriatory, penal
or similar laws;
(iii) not contrary to public policy, as such term is
interpreted under the laws of the Province of
Alberta, or contrary to any order made by the
Attorney General of Canada under the Foreign
Extraterritorial Measures Act (Canada) or by the
Competition Tribunal under the Competition Act
(Canada) in respect of certain judgments referred
to therein; and
4
<PAGE>
(iv) not impeachable as void or voidable under the
internal laws of the jurisdiction of the court
rendering such judgment;
(c) there has been compliance with the Limitation of
Actions Act (Alberta) which has the effect that any
action to enforce a foreign judgment must be commenced
within six years of the date of the foreign judgment;
and
(d) no new admissible evidence relevant to the action is
discovered prior to the rendering of judgment by an
Alberta court.
9. The execution and delivery (in so far as the laws in force
in the Province of Alberta and the federal laws of Canada
applicable therein are applicable) and performance by NCO of
the Agreement and the transactions contemplated thereby are
not prohibited by, do not violate or conflict with any
provision of, or result in a default (or constitute an event
which with notice or lapse of time or both would become a
default) under or a breach of:
(a) NCO's Certificate and Articles of Amalgamation or
By-Laws;
(b) to our actual knowledge, (i) any order, decree or
judgment of any court, government authority or
arbitrative body having jurisdiction in the Province of
Alberta and to which NCO is a party or by which it or
any of its assets are bound or subject, or (ii) except
as disclosed in Schedule 5.2 of the Agreement, any
Commitment to which NCO is a party or by which its
assets are bound or subject; or
(c) any law or regulation applicable to NCO.
10. (a) No consent, approval or authorization of, or filing of
any certificate, notice, application, report or other
document with, any governmental authority having
jurisdiction in the Province of Alberta; and
(b) No consent of the stockholders of NCO and, except as
disclosed in Schedule 5.2 of the Agreement, no consent
of any Person under any Commitment to which NCO is a
party or by which its assets are bound or subject;
is required on the part of NCO in connection with the valid
execution and delivery of the Agreement (in so far as the laws in
force in the Province of Alberta and the federal laws of Canada
applicable therein are applicable) or the performance by NCO of
any of its obligations under the Agreement. For the purposes of
our opinion expressed in item 10(b), we have (i) relied entirely
upon the Commitments provided to us by NCO and, accordingly, we
have assumed the absence of, and express no opinion as to, any
5
<PAGE>
other Commitments or any other matter outside of such
Commitments, and (ii) assumed that the Buyer meets the financial
tests established by the Letter Agreement dated December, 1992
between NCO and Met Life Capital Corporation which, if met,
eliminates the need for the consent of Met Life Capital
Corporation to the sale by NCO of its indirect interest in the
Syracuse Project.
This opinion is given as of the date hereof and relates
exclusively to the transactions contemplated by the Agreement
herein described and is for the sole use and benefit of the
addressee hereof. Accordingly, it cannot be relied upon or
distributed to any other person or used in any other transaction
without our express written consent.
Yours truly,
MACLEOD DIXON
6
<PAGE>
RELATED DOCUMENTATION OMITTED
7
<PAGE>
ATTACHMENT VI-B
NORTH CANADIAN OILS LIMITED
March 31, 1994
Energy Initiatives, Inc.
One Upper Pond Road
Parsippany, New Jersey 07054
Re: North Canadian Oils Limited - Sale of North
Canadian Power Incorporated
Dear Sirs:
This opinion is furnished to you pursuant to
Section 3.3.1(m) of the Stock Purchase and Sale Agreement (the
"Agreement") dated as of March 31, 1994 among North Canadian Oils
Limited ("NCO"), North Canadian Resources, Inc., North Canadian
Power Incorporated and Energy Initiatives, Inc. Capitalized
terms used herein and not otherwise specifically defined herein
shall, unless the context otherwise requires, have the meanings
ascribed thereto in the Agreement.
I am Corporate Counsel for Norcen Energy Resources
Limited, agent of North Canadian Oils Limited. For purposes of
rendering the opinions expressed herein, I have reviewed copies
of the following documents:
(a) The Agreement;
(b) The Closing Documents; and
(c) The Escrow Agreement.
In addition, I have reviewed the originals, or copies
certified or otherwise identified to my satisfaction, of
corporate records, certificates of public officials, statutes,
and such other instruments and documents as I have considered
necessary as a basis for the opinions hereinafter expressed. I
have also made such investigations and considered such questions
1
<PAGE>
of law as we have considered necessary or appropriate for the
purposes of our opinion.
For purposes of this opinion and in my examinations I
have assumed (i) the genuineness of all signatures on all
documents purporting to be originals and on the originals of all
documents submitted to me as copies, (ii) the authenticity,
accuracy, and completeness of all documents submitted to me as
originals and all documents submitted to me as copies, and (iii)
the conformity to authentic original documents of all documents
submitted to me as copies.
I am qualified to practice law only in the Province of
Alberta. Accordingly, the opinions expressed herein are limited
to the laws in force in the Province of Alberta and to the
federal laws of Canada applicable therein.
Based upon and subject to the foregoing and the other
qualifications and assumptions set forth below, I am of the
opinion that:
1. NCO has the corporate power and authority required
to own its properties and to carry on its business as now
conducted.
2. The execution, delivery and performance by NCO of
the Agreement and the transactions contemplated thereby are not
prohibited by, do not violate or conflict with any provision of,
or result in a default (or constitute an event which with notice
or lapse of time or both would become a default) under or a
breach of:
(a) (i) any order, decree or judgment of any court,
government authority or arbitrative body having
jurisdiction in the Province of Alberta and to
which NCO is a party or by which it or any of its
assets are bound or subject, or (ii) except as
disclosed in Schedule 5.2 of the Agreement, any
material Commitment to which NCO is a party or by
which its assets are bound or subject; or
(b) any law or regulation applicable to NCO.
3. (a) No consent, approval or authorization of, or
filing of any certificate, notice, application, report or other
document with, any governmental authority having jurisdiction in
the Province of Alberta; and
(b) Except as disclosed in Schedule 5.2 of the
Agreement, no consent of any Person under any material Commitment
to which NCO is a party or by which its assets are bound or
subject;
is required on the part of NCO in connection with the valid
execution and delivery of the Agreement (in so far as the laws in
2
<PAGE>
force in the Province of Alberta and the federal laws of Canada
applicable therein are applicable) or the performance by NCO of
any of its obligations under the Agreement.
4. There are no Proceedings pending or to my knowledge
threatened before any court or governmental authority or
arbitrative body having jurisdiction in the Province of Alberta
which would, if adversely decided, (a) affect the ability or
capacity of NCO to execute and deliver the Agreement and to
perform its obligations set forth in Articles I, II, III and IV
of the Agreement, (b) materially affect the ability or capacity
of NCO to perform all of its other obligations thereunder and the
transactions contemplated thereby, or (c) except as otherwise
disclosed in NCO's most recent Annual Report on Form 20-F with
the SEC under the Securities Exchange Act of 1934, materially
adversely affect the financial condition, results of operations,
business or properties of NCO so as to impair its ability to
perform its obligations under the Agreement or the transactions
contemplated thereby.
This opinion is given as of the date hereof and relates
exclusively to the transactions contemplated by the Agreement
herein described and is for the sole use and benefit of the
addressee hereof. Accordingly, it cannot be relied upon or
distributed to any other person or used in any other transaction
without my express written consent.
Yours truly,
Ken S. Heywood
NORCEN ENERGY RESOURCES LIMITED,
as agent of
NORTH CANADIAN OILS LIMITED
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ATTACHMENT VII
March 31, 1994
Energy Initiatives, Inc.
One Upper Pond Road
Parsippany, New Jersey 07054
Ladies and Gentlemen:
We have acted as special counsel to North Canadian Resources,
Inc., a Delaware corporation ("NCRI") and North Canadian Power
Incorporated, a California corporation ("NCP"), in connection
with the execution and delivery of the Stock Purchase and Sale
Agreement dated as of March 31, 1994 (the "Agreement") by and
among North Canadian Oils Limited, a Canadian corporation
("NCO"), NCRI, NCP and Energy Initiatives, Inc., a Delaware
corporation, and the purchase of all of the issued and
outstanding capital stock of NCP, as contemplated thereby. This
opinion is being rendered pursuant to Section 3.3.1 of the
Agreement. Capitalized terms used but not defined herein shall
have the meanings specified in the Agreement.
The documents we have examined in rendering this opinion, and
upon which we have relied, are solely the following:
(a) the Agreement, including the Annexes and Schedules thereto;
(b) the Escrow Agreement of even date herewith;
(c) the Lake Interest Option Agreement of even date herewith
(the Escrow Agreement and the Lake Interest Option Agreement
are collectively referred to as the "Ancillary Documents");
(d) certificates of the secretary of each of NCRI, NCP and the
Project Subsidiaries (i.e., the NCP Subsidiaries listed on
Exhibit A hereto) certifying as to:
(i) their respective Certificates of Incorporation and By-
Laws; and
(ii) resolutions of the Boards of Directors of NCRI, NCP and
LIHI relating to the Agreement and the Ancillary
Documents;
(e) certificates of incumbency for each of NCRI, NCP and LIHI of
even date herewith;
<PAGE>
Energy Initiatives, Inc.
March 31, 1994
Page 2
(f) certificates of good standing as of a recent date with
respect to each of NCRI, NCP and the Project Subsidiaries
from the Secretary of State of their respective
jurisdictions of incorporation;
(g) minute books and stock records of each of NCP, LIHI and the
Project Subsidiaries, certified in each case by the secretary
of each respective corporation;
(h) lost stock certificate and indemnity agreements with respect
to the issued and outstanding shares of common stock
(collectively, the "Lost Stock Certificate Affidavits") of the
following Project Subsidiaries:
(i) NCP Commerce Power Incorporated;
(ii) NCP Syracuse, Inc.; and
(iii) Syracuse Investment, Inc.
(i) stock certificates and assignments for the NCP Stock, the
LIHI Stock and all of the issued and outstanding shares of
stock of each Project Subsidiary.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as
originals, the legal capacity of natural persons, the conformity
to original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of the
originals of such latter documents. We have also assumed in our
examination of agreements executed by NCRI, NCP and LIHI that all
of the other parties thereto have the power, corporate or other,
to enter into such agreements and perform their respective
obligations thereunder, that all such other parties have duly
authorized by all requisite action, corporate or other, the
execution, delivery and performance of such agreements, that each
such agreement has been duly executed and delivered by each such
other party, and that (except in the case of NCO) each such
agreement constitutes the legal, valid and binding agreement of
each such party enforceable against it in accordance with its
terms. As to any facts material to the opinions set forth below,
we have relied upon representations and warranties contained in
the Agreement, the Ancillary Documents, certificates of officers
of NCRI, NCP, LIHI and the Project Subsidiaries and certificates
of public officials.
<PAGE>
Energy Initiatives, Inc.
March 31, 1994
Page 3
Whenever our opinion with respect to the existence or absence of
facts is indicated to be based on our knowledge or awareness, we
are referring solely to the actual knowledge of the particular
McDermott, Will & Emery attorneys who have represented NCRI and
NCP in connection with the Agreement and the Closing Documents.
We have not undertaken any independent investigation to determine
the existence or absence of such facts and no inference as to our
knowledge concerning such facts should be drawn from the fact
that such representation has been undertaken by us.
Our opinions expressed herein are limited to the federal laws of
the United States of America, the laws of the States of New York
and Illinois and the corporation and limited partnership laws of
states of Delaware and California, and we do not express any
opinion herein concerning any other laws or the effect thereof on
any of the opinions expressed herein.
Based upon the foregoing, we are of the opinion that:
1. NCRI, NCP and LIHI are validly existing corporations and in
good standing under the laws of Delaware in the case of NCRI
and LIHI and of California in the case of NCP. Each of the
Project Subsidiaries is incorporated, validly existing and
in good standing under the laws of its respective states of
incorporation indicated on Schedule A. NCRI, NCP, LIHI and
the Project Subsidiaries have all requisite corporate power
and authority to own and lease their respective properties
and to carry on their respective activities as they are now
conducted.
2. The Agreement and Ancillary Documents to which NCRI, NCP and
LIHI may be a party have been duly executed and delivered by
such Person and, subject to the filing under the H-S-R Act
and expiration of the H-S-R Act waiting period, is a valid
and legally binding obligation of such Person, enforceable
in accordance with its terms, except to the extent limited
by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting
creditors' rights generally or by general principles of
equity.
3. The execution, delivery and performance of the Agreement and
each Ancillary Document to which NCRI, NCP and LIHI may be a
party are not prohibited by, do not violate or conflict with
any provision of, or result in a default under or a breach
of:
(a) any of their respective Certificates of
Incorporation or By-laws;
<PAGE>
Energy Initiatives, Inc.
March 31, 1994
Page 4
(b) to our knowledge:
(i) any order, decree or judgment of any court or
Government Authority or administrative body, or
(ii) except for Commitments to which Requisite Consents
relate, any Commitment to which such Person is a
party or by which its assets are bound; or
(c) any law, to our knowledge, applicable to NCRI, NCP or
LIHI.
4. Except as listed in Schedules 5.2 and 5.3 of the Agreement,
NCRI, LIHI and NCP each have full legal right and corporate
power, without the consent of any other Person, to execute,
deliver and perform their respective obligations under the
Agreement and the Ancillary Documents, as applicable.
5. All corporate actions required to be taken by NCRI, NCP and
LIHI to authorize the execution, delivery and performance of
this Agreement and, as applicable, the Ancillary Documents
have been duly and properly taken. With the exception of
the filing contemplated by the H-S-R Act, no consent,
approval or authorization of, or filing of any certificate,
notice, application, report or other document with, any
Government Authority is required on the part of NCRI, NCP
and LIHI in connection with the valid execution and delivery
of the Agreement and Ancillary Documents to which they may
be a party or the consummation of any of the Purchase and
Sale Transactions contemplated thereby.
6. NCP's authorized capital stock consists of ten thousand
(10,000) shares of common stock, no par value, of which,
based on the NCP stock record and minute books, one thousand
(1,000) shares are issued and outstanding and owned of
record by NCRI and no shares are held in treasury. All of
such issues and outstanding shares have been duly anthorized
and, assuming the consideration reflected in the applicable
corporate minutes was paid, are validly issued, fully paid
and nonassessable. To our knowledge, there are no
outstanding options, rights, warrants, conversion rights or
other commitments to which NCP is a party or binding upon
NCP providing for the issuance or transfer by NCP of
additional shares of stock or restricting the ownership,
voting or transfer of the NCP Stock.
<PAGE>
Energy Initiatives, Inc.
March 31, 1994
Page 5
7. NCRI is the stockholder of record of the NCP Stock and the
LIHI Stock and has the absolute right, power and capacity to
sell, assign, transfer and deliver the NCP Stock and the
LIHI Stock. Assuming Buyer is a bona fide purchaser without
knowledge of any Claims and that the consideration to be
paid by Buyer to NCRI for the NCP Stock is adequate, upon
delivery and payment for the NCP Stock and the LIHI Stock
pursuant to the Agreement (or, in the case of the Lake
Interest, the Lake Interest Option Agreement), Buyer (or in
the case of the Lake Option, the Lake Optionee) will acquire
good and valid title to the stock, free and clear of
pledges, security interests or voting trust arrangements,
except for Encumbrances that may be imposed by Buyer or on
account of the conduct of Buyer.
8. Exhibit A correctly sets forth a description of the
authorized, issued and outstanding capital stock of each
Project Subsidiary, all of such outstanding shares of which,
except as set forth on Schedule 7.9 to the Agreement, are
owned of record by NCP free and clear of pledges, security
interests and voting trust arrangements. All of the issued
and outstanding shares of each Project Subsidiary have been
duly authorized and, assuming the consideration relfected in
applicable corporate minutes was paid, are validly issued,
fully paid and nonassessable. To our knowledge, there are
no outstanding options, rights, warrants, conversion rights
or other agreements or Commitments to which NCP or any of
the Project Subsidiaries is a party or binding upon NCP or
any Project Subsidiary providing for the issuance or
transfer of additional shares of stock of any Project
Subsidiary. Assuming Buyer is a bona fide purchaser without
knowledge of any Claims and that the consideration to be
paid by Buyer to NCRI for the stock of the Project
Subsidiary is adequate, upon delivery and payment for the
stock of the respective Project Subsidiary at the Excluded
Subsidiaries Closing relating to such Project Subsidiary,
Buyer (or NCP) will acquire good and valid title thereto,
free and clear of all pledges, security interests and voting
trust arrangements except for Encumbrances that may be
imposed by Buyer (or, after the NCP Closing, by NCP) or an
account of the conduct of Buyer (or, after the NCP Closing,
by NCP).
9. Each of the Limited Partnerships in which any of the Project
Subsidiaries have an ownership interest is validly existing
and in good standing under the laws of their respective
state of organization.
<PAGE>
Energy Initiatives, Inc.
March 31, 1994
Page 6
10. The offer and sale of the NCP Stock is exempt from the
registration requirements of the Securities Act of 1933.
11. To our knowledge there are no Proceedings pending or
threatened before any court or Government Authority, against
NCRI, NCP or LIHI relating to the Purchase and Sale
Transactions which would, if adversely decided:
(a) affect the ability or capacity of NCRI, NCP or LIHI to
execute and deliver the Agreement or any Ancillary
Document to which it may be a party and to perform
their respective obligations thereunder, or
(b) materially adversely affect the financial condition,
results or operations, business or properties of NCRI,
NCP or LIHI so as to impair its respective ability to
perform its obligations under the Agreement or any
Ancillary Document to which it may be a party or any of
the Purchase and Sale Transactions.
Assuming due authorization, execution and delivery by NCO insofar
as the laws of Canada or the Province of Alberta are concerned
and the legal capacity of NCO to enter into this Agreement and
perform its obligations hereunder, matters as to which we express
no opinion, and in reliance as to all matters governed by the
laws of Canada and the Province of Alberta on the opinion of
Macleod and Dixon being delivered to you on this date, we are of
the further opinion that:
the Agreement is the lawful, valid and legally binding
obligation of NCO, enforceable in accordance with its terms,
except to the extent limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar
laws affecting creditors rights generally or by general
equitable principles.
The opinions rendered herein are as of the date hereof, we assume
no obligation to update or supplement these opinions to reflect
any fact which may hereafter come to our attention or any changes
in law which may hereafter occur.
The opinions set forth above are being delivered to you, in
connection with the Agreement and may not be used, circulated,
quoted, referred to or relied upon in any manner by any other
person or for any other purpose without our prior written
approval in each instance. We are not obligated to update,
revise or supplement our opinions set forth above for any reason.
Very truly yours,
<PAGE>
ATTACHMENT VIII
MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT (the "Agreement") is made this ____ day
of _______, 1994, by and among North Canadian Resources, Inc., a
Delaware corporation ("NCRI") and North Canadian Power
Incorporated, a California corporation ("NCP"). Capitalized
terms used in this Agreement shall unless otherwise defined
herein have the meanings ascribed to them in the Glossary
attached as Annex A hereto.
WHEREAS, Buyer has agreed to purchase from NCRI all, but not less
than all, of the capital stock of NCP (the "Stock") pursuant to a
Stock Purchase and Sale Agreement dated as of March 31, 1994
(the "Purchase and Sale Agreement") by and among North Canadian
Oils Limited, a Canadian corporation ("NCO"), NCRI, NCP and
Energy Initiatives, Inc., a Delaware corporation;
WHEREAS, the Purchase and Sale Agreement contemplates that
certain NCP Subsidiaries (referred to as "Excluded Subsidiaries")
may be transferred to NCRI at or prior to the NCP Closing if
Requisite Consents with respect thereto and the Projects which
they indirectly own and manage (referred to as "Excluded
Projects") are not obtained at or prior to NCP Closing;
WHEREAS, certain Requisite Consents have not been obtained and as
a result NCP intends to transfer to NCRI the stock of such
Excluded Subsidiaries;
WHEREAS, the Purchase and Sale Agreement provides that NCRI and
NCP shall enter into this Management Agreement in connection with
such transfer so that the Excluded Subsidiaries and, indirectly,
the Excluded Projects will continue to be managed, directly or
indirectly, by NCP following (to the same extent as immediately
prior to) the NCP Closing for the period specified herein and in
the Purchase and Sale Agreement.
NOW, THEREFORE, in consideration of the premises, the agreements
herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto mutually agree as follows:
1. Engagement of NCP to Manage Projects for Excluded
Subsidiaries.
(a) From the date hereof until the Termination of this
Agreement, subject to the terms and conditions set
forth herein, NCRI hereby engages NCP to supervise,
direct and administer the operations of the Excluded
Subsidiaries, including their respective operations as
they relate to the operations of the Excluded Projects
and the Limited Partnerships owning or managing them.
NCP hereby agrees that it shall exercise sound business
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judgment in carrying out such activities and act with
due care with respect thereto.
(b) Subject to the provisions of the respective partnership
agreements of the Limited Partnerships owning the
respective Excluded Projects and to the authorization
of the respective Boards of Directors of the Excluded
Subsidiaries, NCP shall endeavor:
(i) to maintain the properties and assets of the
Excluded Subsidiaries in accordance with past
practice, reasonable wear and tear excepted, and
to take reasonable action consistent with NCP's
past practices to cause the properties and assets
of the Limited Partnerships which own interests in
the Excluded Projects to be so maintained;
(ii) to preserve intact the organization of the
Excluded Subsidiaries and the good will of
suppliers, customers and others having business
relationships with the Excluded Subsidiaries and
to take reasonable action consistent with NCP's
past practice to cause the organization and
relationships of the Limited Partnerships which
own interests in the Excluded Projects to be so
maintained; and
(iii) to cause the Excluded Subsidiaries to comply
with the provisions of all laws, judicial
decrees and orders applicable thereto where
the failure to comply would have a material
effect on NCRI, any Excluded Subsidiary or
any Excluded Project and to take reasonable
action consistent with NCP's past practices
to cause the Limited Partnerships which own
interests in the Excluded Projects to comply
with such provisions; and
(iv) to cause the Excluded Subsidiaries to perform in
all material respects all of their respective
obligations under the Commitments to which the
Excluded Subsidiaries are a party or to which
their assets are subject, all in accordance with
the respective terms and conditions thereof, and
to take reasonable action, consistent with NCP's
past practices to cause the Limited Partnerships
which own interests in the Excluded Projects to
perform their respective obligations thereunder.
2. Obligations of NCP.
(a) NCP shall provide personnel to the Excluded
Subsidiaries who are qualified in the management of
projects similar to the Excluded Projects and such
personnel shall devote as much of their time and effort
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as NCP deems necessary or reasonably appropriate for
the operation of the business of the Excluded
Subsidiaries and as may be necessary for the Excluded
Subsidiaries to perform their duties under the
respective partnership agreements to which they are a
party.
(b) Subject to the provisions of the respective partnership
agreements of the Limited Partnership owning the
respective Excluded Projects and to the authority of
the respective Boards of Directors of the Excluded
Subsidiaries, NCP shall endeavor to:
(i) maintain and keep in full force and effect all
insurance on the assets and property of, or for
the benefit of employees of, the Excluded
Subsidiaries and the Excluded Projects all
liability and other casualty insurance, and all
bonds on personnel, presently carried and not
modify any of the same; and
(ii) maintain the books, accounts and records of the
Excluded Subsidiaries and the Excluded Projects in
the usual, regular and ordinary manner in
accordance with NCP's regular business practices
and on a basis consistent with prior years.
(c) NCP agrees to designate one of its employees as its
representative to receive instructions and other
communication from NCRI and to communicate with NCRI on
behalf of NCP.
3. Appointment of NCP as Attorney-in-Fact.
Each of the Excluded Subsidiaries hereby constitutes and appoints
NCP and its duly authorized officers its true and lawful agent
and attorney-in-fact to execute and deliver all such instruments,
agreements, certificates and other documents and to take any and
all such other actions as NCP may deem necessary, appropriate or
advisable to perform it obligations hereunder. Each of the
Excluded Subsidiaries agrees to execute such additional
agreements and take such further actions as NCP shall be
necessary or appropriate to enable NCP to carry out its
obligations hereunder.
4. Limitations on NCP Actions.
In performing its obligations under this Agreement, NCP may not,
without the written consent of NCRI, cause any Excluded
Subsidiaries to:
(a) incur or agree to incur or take any affirmative
action to become subject to, any debt or
liability, except liabilities for normal payables
(including intercompany debt) arising in the
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ordinary course of business, or agree to guarantee
the debts or liabilities of any other Person;
(b) take any affirmative action to terminate, modify
or amend any material Commitment of its own or of
any Excluded Projects or except in the ordinary
course of business grant any consent or waiver
thereunder;
(c) except as provided for in the respective budgets
of the Excluded Projects, make any additional
capital expenditure (including capitalized
development expenditures) with respect to the
Excluded Subsidiaries or the Excluded Projects;
(d) pay any liability other than liabilities coming
due in the ordinary course of business.
5. Maintenance of Excluded Subsidiaries.
(a) NCRI reserves the right to elect the Board of Directors
of each Excluded Subsidiary.
(b) NCRI agrees to designate one of its employees or
representatives as its representative to receive
communication from NCP and to communicate to NCP on
behalf of NCRI. The initial representative shall be
Thomas Beale.
(c) NCRI further agrees that it shall not, and shall not
permit the Excluded Subsidiaries to without the consent
of Buyer:
(i) dissolve or take any action to dissolve any of the
Excluded Subsidiaries and it shall maintain each
of the Excluded Subsidiaries as a corporation in
good standing under the laws of the each Excluded
Subsidiaries respective state of incorporation and
in good standing under the laws of each state in
which such Excluded Subsidiary is qualified to do
business in as of the date hereof.
(ii) declare, set aside or pay any dividend or make any
other distribution with respect to or repurchase
any shares of any of the capital stock of any of
the Excluded Subsidiaries;
(iii) merge or consolidate with or agree to merge
or consolidate with, nor purchase or agree to
purchase all or substantially all of the
assets of, nor otherwise acquire an interest
in any corporation, partnership, or other
business organization to acquire or lease any
assets other than in the ordinary course of
business;
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<PAGE>
(iv) authorize for issuance, issue, sell or deliver any
additional shares of capital stock of any of the
Excluded Subsidiaries or any securities or
obligations convertible into shares of capital
stock of any of the Excluded Subsidiaries, or
issue or grant any option, warrant, conversion
rights or other right to purchase any shares of
the capital stock of the Excluded Subsidiaries;
(v) split, combine or reclassify any shares of capital
stock of the Excluded Subsidiaries or redeem or
otherwise acquire, directly or indirectly, any
shares of capital stock of the Excluded
Subsidiaries;
(vi) take any action to amend the Certificate of
Incorporation or the Bylaws of the Excluded
Subsidiaries or the limited partnership agreement
of any Limited Partnership in which Excluded
Subsidiary is a partner other than the Lake
Partnership Amendment.
(vii) mortgage, pledge or subject to any lien,
charge or Encumbrance any material assets,
tangible or intangible, or capital stock, of
any of the Excluded Subsidiaries.
6. Funding.
Any management fees payable to any of the Excluded Subsidiaries
in respect of the Excluded Projects shall be payable to NCP in
consideration for its services hereunder and NCRI shall, and
shall cause the Excluded Subsidiaries to, take such action as may
be necessary or appropriate to insure such payment to NCP. No
other amounts will be payable by NCRI to NCP under this
Agreement. Expenses incurred or borne by NCP in connection with
the performance of its obligations hereunder shall not be
reimbursed by or otherwise be the responsibility of NCRI.
7. Term of Agreement.
Except with respect to the provisions of Section 8, which shall
survive, this Agreement shall terminate (the "Termination") upon
the earlier to occur of the following:
(a) December 31, 1994;
(b) completion of all of the Excluded Subsidiaries'
Closings; or
(c) mutual agreement of the parties.
In the event this Agreement terminates and not all of the
Excluded Subsidiaries Closings have occurred, NCRI shall have
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<PAGE>
full operating and management control with respect to such
remaining Excluded Subsidiaries and NCP shall have no further
liability, responsibility or obligation with respect thereto.
8. Indemnification; Limitation of Liability
8.1 In performing its obligations and duties hereunder, NCP
shall exercise such ordinary degree of care as shall be necessary
or appropriate to manage the business affairs of the Excluded
Subsidiaries and as are generally accepted in the industry for
managing cogeneration projects such as those owned by the
Excluded Subsidiaries. NCRI hereby forever releases and
discharges NCP, its officers, directors, parents, subsidiaries,
agents, employees and affiliates from any and all liability,
claims, actions, suits, proceedings, costs (collectively,
"Liabilities") of any nature whatsoever which NCP or its
officers, directors, parents, subsidiaries, agents, employees and
affiliates (collectively, the "NCP Entities") have or may have or
which any of them may incur in connection with any matter arising
out of the performance of NCP's duties and obligations hereunder
including, without limitation for any diminution in the value of
the Excluded Subsidiaries and the Excluded Projects; provided,
however, that the foregoing shall not relieve NCP from any such
Liabilities resulting from NCP's gross negligence or willful or
wanton misconduct.
8.2 NCRI Indemnification
NCRI hereby indemnifies each of the NCP Entities against and
agrees forever to defend the NCP Entities against and hold the
NCP Entities harmless from any and all liabilities which may at
any time be imposed on, incurred by or asserted against any NCP
Entity relating to or arising out of this Agreement or the
actions contemplated hereby or the performance of the terms
hereof; provided, however, that NCRI shall not so indemnify,
defend or hold harmless any NCP Entity against any liabilities to
the extent that they arise from the gross negligence or willful
misconduct of such NCP entity.
8.3 NCP Indemnification
NCP hereby indemnifies NCRI and its officers, directors, parents,
subsidiaries, agents, employees and affiliates (collectively, the
"NCRI Entities") against and agrees forever to defend the NCRI
Entities against and hold the NCRI Entities harmless from any and
all liabilities which may at any time be imposed on, incurred by
or asserted against any NCRI entity relating to or arising out of
the gross negligence or willful or wanton misconduct of any NCP
Entity in the performance of the terms of this Agreement.
9. Miscellaneous
(a) No amendment or waiver of any provision of this
Agreement shall in any event be effective, unless the
same shall be in writing and signed by the parties
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hereto, and then such amendment, waiver or consent
shall be effective only in the specific instance and
for the specific purpose for which given.
(b) All notices, requests, demands and other communications
hereunder shall be in writing and shall be, personally
delivered or sent by facsimile transmission with
confirming copy sent by overnight courier (such as
Express Mail, Federal Express, etc.) and a delivery
receipt obtained and addressed to the intended
recipient as follows
If to NCRI:
North Canadian Oils Limited
715 - 5th Avenue, S.W.
Calgary, Alberta, T2P 2X7
Canada
Attention: Gordon B. Singer, Vice President and
CFO
Telephone: 403-231-0111
Facsimile: 403-231-0187
With a copy to each of:
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606-5096
Attention: William J. McGrath, P.C.
Telephone: 312-372-2000
Facsimile: 312-984-3669
and
Norcen Energy Resources Limited
715 - 5th Avenue, S.W.
Calgary, Alberta, T2P 2X7
Canada
Attention: E.A. Leew, Vice President, Law
Telephone: 403-231-0111
Facsimile: 403-231-0187
If to NCP:
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<PAGE>
With a copy to each of:
Energy Initiatives, Inc
One Upper Pond Road
Parsippany, New Jersey 07754
Attention: Bruce L. Levy, President
Telephone: 201-263-6957
Facsimile: 201-263-6977
and
Berlack, Israels & Liberman
120 West 45th Street
New York, New York 10036
Attention: Douglas E. Davidson, Esq.
Telephone: 212-704-0100
Facsimile: 212-704-0196
Any party may change its address for receiving notice by giving
written notice to the others named above. All such notices shall
be given as provided in this Section 9 and shall be effective
immediately upon confirmation of facsimile or completion of
personal delivery.
(c) This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an
original, but all of which together shall constitute
one and the same agreement.
(d) This Agreement shall bind and inure to the benefit of
the parties named herein, in each case with respect to
the obligations and rights applicable to them, and
their respective successors.
(e) This Agreement shall be governed by and construed in
accordance with the internal substantive laws of the
State of New York. Should any provision of this
Agreement be determined to be invalid, void or
unenforceable by a court of competent jurisdiction for
any reason, the remaining provisions shall remain in
full force and effect. The parties consent to the non-
exclusive jurisdiction of the New York federal and
state courts.
(f) The section and other headings contained in this
Agreement are for convenience of reference purposes
only and shall not affect in any way the meaning or
interpretation of this Agreement.
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<PAGE>
* * *
IN WITNESS WHEREOF, each of the parties has caused this Agreement
to be duly executed on this date first written above.
NORTH CANADIAN RESOURCES, INC.
By:
Its:
NORTH CANADIAN POWER
INCORPORATED
By:
Its:
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ATTACHMENT IX
SUBLEASE
THIS SUBLEASE made this 31st day of March, 1994
BETWEEN:
NORTH CANADIAN RESOURCES, INC.
a Delaware Corporation
(hereinafter referred to as the "Sublandlord")
OF THE FIRST PART
AND:
NORTH CANADIAN POWER INCORPORATED
a Delaware Corporation
(hereinafter referred to as the "Subtenant")
OF THE SECOND PART
WHEREAS:
1. The Sublandlord represents and warrants to the Subtenant
that by a Lease Agreement dated the 17th day of September,
1992 and by Lease Amending Agreements dated as of the 15th
day of December, 1992, and the 2nd day of April, 1993 (which
Lease Agreement as amended is hereinafter referred to as the
"Head Lease") Bentall/Westminster Partners (hereinafter
referred to as the "Landlord"), leased to the Sublandlord
for a term of seven (7) years, premises consisting of 17,330
Rentable Square Feet of office space on the Ninth (9th)
floor of the building municipally located at 1551 North
Tustin Avenue, Santa Ana, California, 92701 (hereinafter
referred to as the "Leased Premises"), described in the plan
and description attached as Schedule "A-1" to the Head
Lease.
2. The Subtenant has requested the Sublandlord to sublease to
it a portion of the Leased Premises and the Sublandlord has
agreed to grant a Sublease on the terms hereinafter set
forth; and
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3. In this Sublease, terms shall have the same meaning
attributed to them in the Head Lease unless specifically
defined otherwise herein;
NOW THEREFORE, in consideration of the rents, covenants, and
conditions herein contained, the Sublandlord and the Subtenant
agree as follows:
1. The Subtenant hereby subleases from the Sublandlord, and the
Sublandlord hereby subleases to the Subtenant, that portion
of the Leased Premises having an area of 8,930 Rentable
Square Feet as outlined in red but excluding the network
room marked in green on Schedule "X" to this Sublease and
situated on the Ninth (9th) floor of the building
municipally located at 1551 North Tustin Avenue, Santa Ana,
California, 92701 (the "Sublease Premises").
2. This Sublease is and shall be at all times subject to the
Head Lease. The terms, conditions and respective
obligations of the Sublandlord and the Subtenant to each
other under this Sublease shall be the terms and conditions
of the Head lease expect for those provisions of the Head
Lease which are directly contradicted by this Sublease in
which event the terms of this Sublease document shall
control over the Head Lease. Therefore, for the purposes of
this Sublease, wherever in the Head Lease the word
"Landlord" is used it shall be deemed to mean the
Sublandlord herein and wherever in the Head Lease the word
"Tenant" is used it shall be deemed to mean the Subtenant
herein. During the term of this Sublease and for all
periods subsequent for obligations which have arisen prior
to the termination of this Sublease, (a) the Subtenant does
hereby expressly assume and agree to perform and comply
with, for the benefit of Sublandlord and the Landlord, each
and every obligation of Sublandlord under the Head Lease,
and (b) the Sublandlord does hereby expressly assume and
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<PAGE>
agree to perform and comply with, for the benefit of the
Subtenant, each and every obligation of the Landlord under
the Head Lease, except for the following paragraphs and
exhibits which are excluded, from the Head Lease for the
purpose of this Sublease: Paragraphs 26 (Assignment and
Subletting), 13 (Time), 48 (Modification for Lender), 49
(Financial Statements), Exhibit "A-III" (Expansion Space
Plan), Exhibit "B" (Work Letter Agreement) and Paragraphs 53
and 56 of the Rider to the Head Lease.
3. Subject to the Special Provisions attached hereto as
Schedule "Y" and forming part hereof, this Sublease, unless
otherwise mutually agreed upon in writing, shall have a term
of Seven Months commencing on June 1st, 1994 and expiring on
December 31, 1994 (the "Sublease Term") at an Annual Rental
on a square footage basis of Eighteen Dollars and Sixty
Cents ($18.60) per Rental Square Foot of the Sublease
Premises per annum, (for an Annual Basic Rental of
$166,098.00 and a Monthly Basis Rental of $13,841.50 for
the Sublease Premises), in addition to which the Subtenant
will pay its proportionate share of Eight point eight two
Percent (8.82%), being a net Four point five six Percent
(4.56%), of the Annual Operating Expense Allowance in
accordance with the provisions of the Lease Agreement (the
"Rent").
4. No deposit has been or is required to be made with respect
to this Sublease.
5. In any period prior to the commencement of the Sublease Term
in which the Subtenant is permitted to and agrees to have
occupancy of the Sublease Premises exclusively or otherwise,
the Subtenant agrees to perform and observe all of the
provisions of this Sublease, other than the obligation to
pay the rent, which obligation shall commence in accordance
with Clause 3 hereof.
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6. No agreements, representations, warranties or conditions
relating to the Sublease Premises or the contents of this
Sublease have been made except as expressly set out herein.
7. Default of Subtenant (if and whenever):
(a) The Subtenant shall default in the payment of Rent, or
any other sum required to be paid by the Subtenant to
the Sublandlord under the provisions of this Sublease,
and such default shall continue for a period of five
(5) days after the Subtenant receives written notice
from the Subtenant specifying such default; or
(b) The Subtenant shall default in performing or observing
any of its other covenants or obligations of this
Sublease, or observing any of the covenants and
obligations set forth in the Head Lease and assumed by
the Subtenant, and the Sublandlord shall have given
the Subtenant notice of such default and, at the
expiration of Thirty (30) Days after giving of such
notice, the default shall continue to exist (or, in the
case of a default which cannot with due diligence be
cured within a period of Thirty (30) days, the
Subtenant shall fail to proceed promptly after
receiving such notice to begin to cure the same and
shall have failed to proceed diligently to cure the
default within Ninety (90) days); or
(c) The Sublease Term shall be seized or taken into
execution by a creditor of the Subtenant; or
(d) The Sublease Premises shall be abandoned by the
Subtenant or shall remain vacant for Thirty (30) days
or more;
then, and in every such case, the then current month's
Rent, together with the Rent for the Three (3) Months next
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ensuing, shall immediately become due and payable, and the
Sublandlord may, without notice or any form of legal process
whatsoever, forthwith re-enter upon the Sublease Premises,
or any part thereof in the name of the whole, whereupon this
Sublease shall terminate forthwith, anything contained
herein or in any statute or law to the contrary
notwithstanding such termination, the Sublandlord may
subsequently recover from the Subtenant all losses, damages,
costs and expenses whatsoever suffered by reason of the
Sublease having been prematurely terminated.
In case the Subtenant shall default in payments required to
be paid by and under this Sublease, or fails to observe any
covenants required to be observed by it pursuant to this
Sublease, the Sublandlord may pay the same or cause such
covenants to be observed, and the amounts so paid and all
costs related thereto and all expenses or costs paid by the
Sublandlord, as between attorney and client on account of
any default by the Subtenant under this Sublease, shall be
payable by the Subtenant to the Sublandlord forthwith,
either before or after payment by the Sublandlord. The
Sublandlord may, by notice to the Subtenant, demand payment
thereof, and if not paid by the Subtenant within Thirty (30)
days of such notice, the amount thereof shall be deemed to
be Rent in arrears and the Sublandlord shall have any remedy
for the recovery of the same as provided to the Landlord
under the Head Lease.
If the Subtenant shall fail to pay, when same is due and
payable, any Rent amount or charge of the character
described in this paragraph, such unpaid amount shall bear
interest from the due date thereof to the date of the
payment at the rate provided in the Head Lease.
8. The Subtenant agrees to accept the Sublease Premises on an
"as-is" condition. The Subtenant acknowledges that there
are no representations with respect to the condition of the
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Sublease Premises other than the following representations,
warranties and agreements by the Sublandord:
(a) the documents comprising the Head Lease described in
paragraphs 1 of the preambles to this Sublease
constitute all of and the only documents that affect
the Subleased Premises;
(b) at the date hereof, the Sublandlord has duly and
punctually paid, fulfilled and performed, and is in
good standing under the Head Lease with respect to, all
of the covenants, agreements, provisos, stipulations
and conditions contained in the Head Lease to be
observed, performed and kept by the Sublandlord;
(c) no broker, agent or other person brought about this
Sublease or is entitled to any fee, commission or
compensation for or in connection with this Sublease;
and
(d) the Sublandlord shall defend and keep the Subtenant
indemnified against all actions, expense, claims,
costs, damages and demands in respect of any breach of
the Sublandlord of any of the representations and
warranties in this Clause 8.
9. The Subtenant shall not assign, sublet in whole or in part
or otherwise part with possession of all or any part of the
Sublease Premises without prior written consent of the
Sublandlord, such consent not to be unreasonably withheld,
conditioned or delayed by the Sublandlord or by anyone
acting for or on its behalf. Notwithstanding any further
sublease or assignment by the Subtenant, the Subtenant shall
remain fully responsible for the performance of all
covenants and conditions contained with the Sublease.
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<PAGE>
10. This Sublease shall terminate immediately upon the
expiration of the Sublease Term.
11. All notices and other communication under this Sublease to
be given by the one party to the other shall be in writing
and shall be deemed to be duly given only when delivered by
hand or sent by facsimile or mailed by prepaid registered
letter, to the party in question to such address or
facsimile number as the party in question shall from time to
time designate by written notice to the other. Until such
notice shall be given the addresses for service on each of
the parties shall be as follows:
To the Sublandlord at:
North Canadian Resources, Inc.
c/o Norcen Energy Resources Limited
715 - 5 Avenue S.W.
Calgary, Alberta T2P 2X7
Facsimile: (403) 231-0187
Attention: Mr. John A. Paul,
Vice President, Administration
With a copy to:
North Canadian Resources, Inc.
9th floor, 1551 North Tustin Avenue
Santa Ana, California 92701
Facsimile: (714) 667-3909
Attention: Mr. Rick Urbanowicz
To the Subtenant at:
North Canadian Power Incorporated
c/o Energy Initiatives, Inc.
One, Upper Pond Road
Parsippany, N.J. 07054
Facsimile:
Attention: Mr. David C. Brauer,
Vice President, Finance
and Administration
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<PAGE>
Any notices personally delivered or faxed in the manner set
forth above shall be deemed given when personally delivered
or faxed and any notices served by prepaid registered mail
in the manner set out above shall be deemed given Five (5)
business days after the mailing thereof.
12. The Subtenant covenants and agrees with the Sublandlord that
the Sublease Premises shall be used and occupied only for
the purpose of general office use.
13. Any and all Special Provisions set out in Schedule "Y" to
this Sublease are incorporated herein and shall apply to
this Sublease.
14. This Sublease is conditional upon the Landlord's granting
its consent to this Sublease, which the Sublandlord agrees
to use its best and diligent efforts to obtain; provided,
however, that if such consent is not obtained on or before
________________, 1994, the Subtenant may at its election
terminate this Sublease and its obligations hereunder. The
Subtenant, shall not be responsible for paying any part of
the Landlord's expenses, costs and attorneys fees, or other
sums that may be payable by the Sublandlord to the Landlord
for or in connection with obtaining its consent.
IN WITNESS WHEREOF the parties hereto have hereunto executed
these presents by their respective duly authorized signing
authorities as of the day and year first above written.
DATED this 31st day of March, 1994
8
<PAGE>
NORTH CANADIAN RESOURCES, INC.
PER:
NORTH CANADIAN POWER INCORPORATED
PER:
9
<PAGE>
SCHEDULE "X" to a Sublease dated
the 31st day of March, 1994
between North Canadian Resources,
Inc. and Energy Initiatives, Inc.
Attached - Floor Plan For 9th Floor
of Bentall Executive Centre
<PAGE>
SCHEDULE "Y" to a Sublease dated
the 31st day of March, 1994
between North Canadian Resources,
Inc. and Energy Initiatives, Inc.
SPECIAL PROVISIONS
1. The Subtenant shall, at its sole cost and expense install
such doors and partitions as required to separate and secure the
Sublease Premises from the Sublandlord's Leased Premises, all
such installations to be satisfactory to the Landlord. Such
installations shall include, without limitation, the following:
[list specific alterations required]
2. The Sublandlord agrees to provide to the Subtenant
throughout the Sublease Term, and the Subtenant shall sublease
from the Sublandlord, Thirty-two (32) unreserved parking stalls
at the same rates charged by the Landlord for such stalls.
3. Notwithstanding sublease of the Sublease Area to the
Subtenant, The Subtenant hereby grants to the Sublandlord
throughout the Sublease Term an easement and right of way through
that part of the Sublease Premises shown in blue on Schedule X
attached hereto to provide the Sublandlord with access to the
network room shown in green on Schedule "X" attached hereto. The
area shown in blue on Schedule "X" shall be deemed a common area
to the extent required to effect this easement or right-of-way.
The Sublandlord shall be liable for, and shall defend, indemnify
and save harmless the Subtenant against, all actions, expenses,
claims, costs, damages, liabilities and demands, for or in
respect of any personal injuries or property damage resulting
from the use by the Sublandlord, its agents, employees,
contractors or invitees of the easement and right-of-way thus
granted.
4. The Subtenant covenants and agrees that it shall throughout
the Sublease Term:
<PAGE>
(a) pay unto the Sublandlord the Rent hereby reserved, in
the manner hereinbefore provided, without any deduction
whatsoever;
(b) pay, as and when due, to the authority to which same
are owing all taxes, licenses, rates, duties and
assessments imposed, assessed or levied by any lawful
authority during the Sublease Term and relating to the
business carried on in and the use and occupancy of the
Sublease Premises by the Subtenant and relating to
personal property, all business and trade fixtures and
other improvements owned or installed by or on behalf
of the Subtenant in, on or affixed to the Sublease
Premises;
(c) pay interest on any unpaid rents owed by the Subtenant
to the Sublandlord in accordance with applicable
provisions of the Head Lease;
(d) use the Sublease Premises only for the purposes of
offices of the Subtenant; and
(e) maintain such insurance as required by the Head Lease.
The Subtenant shall pay any increased costs resulting
from activities of the Subtenant which increase the
cost of the Sublandlord's insurance.
5. The Subtenant should (i) be liable for and (ii) shall
indemnify and save harmless the Sublandlord against all actions,
expenses, claims, costs, damages, liabilities and demands in
respect of any breach by the Subtenant, its agents, servants,
employees or independent contractors of any of the covenants
contained in this Sublease or the provisions of the Head Lease
that are applicable to the Subtenant in accordance with Clause 2
of the Sublease, but not otherwise.
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<PAGE>
6. The Sublandlord covenants with the Subtenant to pay the Rent
and, with respect to Sublease Premises, to perform and observe
the covenants on Tenant's part contained in the Head Lease, to
enforce the provisions of the Head Lease, as required by the
Subtenant, to assure it of the right of quiet enjoyment and other
benefits of occupancy and at all times to defend and keep the
Subtenant indemnified against all actions, expenses, claims,
costs, damages and demands, in respect of any breach by the
Sublandlord of any of its covenants herein contained, on account
of the non-performance of the covenants and conditions under the
Head Lease.
3
<PAGE>
ATTACHMENT X
LAKE INTEREST OPTION AGREEMENT
THIS LAKE INTEREST OPTION AGREEMENT, dated as of March 31, 1994,
is entered into by and among North Canadian Resources, Inc., a
Delaware corporation ("NCRI"), Lake Interest Holdings Inc., a
Delaware corporation ("LIHI"), and Energy Initiatives, Inc., a
Delaware corporation ("Buyer").
WHEREAS, NCRI, North Canadian Oils Limited, North Canadian Power
Incorporated ("NCP") and Buyer are parties to a Stock Purchase
and Sale Agreement, dated as of March 31, 1994 (the "Purchase
Agreement"), whereby Buyer has agreed subject to the terms and
conditions stated therein to acquire all of the capital stock of
NCP (terms used and not otherwise defined herein shall have the
meanings set forth in the Glossary referenced as Annex A hereto);
WHEREAS, NCP owns, among other things, all of the common stock
of:
(a) NCP Lake Power Incorporated which in turn owns:
(i) a 1% general partnership interest in Lake Cogen,
Ltd., a Florida limited partnership ("Lake
Partnership"), and
(ii) a 1% general partnership interest in Lake
Investment, L.P., a Delaware limited partnership
("LIL") which in turn holds a 99% limited
partnership interest in Lake Partnership; and
(b) NCP Gem Incorporated, a Delaware corporation which in
turn holds a 99% limited partnership interest in LIL;
WHEREAS, the Purchase Agreement contemplates that:
(a) the First Amended and Restated Limited Partnership
Agreement of Lake Partnership dated as of July 24, 1992
("Partnership Agreement") will be amended to, among
other things, admit LIHI as a general partner and a
limited partner; and
(b) LIL will transfer and assign to LIHI an initial 49%
partnership interest to be held by LIHI as a limited
partner and an initial 1% partnership interest to be
held by LIHI as a general partner (collectively, the
"Lake Interest");
WHEREAS, NCRI owns all 1,000 issued and outstanding shares of
common stock, $.01 par value per share, of LIHI (the "LIHI
Stock");
1
<PAGE>
WHEREAS, pursuant to the Purchase Agreement LIHI has granted to
Buyer, for the period commencing on the date hereof and ending on
December 31, 1994 ("Lake Option Expiration Date"), the exclusive
right and option to purchase the Lake Interest;
WHEREAS, pursuant to the Purchase Agreement NCRI has granted to
Buyer, for the period commencing on the date hereof and ending on
the Lake Interest Expiration Date, the exclusive right and option
to purchase the LIHI Stock; and
WHEREAS, as contemplated by the Purchase Agreement the parties
desire to enter into this Option Agreement to more fully set
forth the foregoing arrangements.
NOW, THEREFORE, in consideration of the above premises and the
agreements contained herein and in the Purchase Agreement, the
parties hereto, intending to be legally bound mutually agree as
follows:
1. Grant of Option.
1.1 For the period beginning on the date hereof and ending as of
the close of business on the Lake Option Expiration Date:
(a) LIHI hereby irrevocably grants to Buyer the exclusive
right and option to purchase all right, title and
interest of LIHI in and to the Lake Interest; and
(b) NCRI irrevocably grants to Buyer the exclusive right
and option to purchase all right, title and interest of
NCRI in and to the LIHI Stock, on the terms and
conditions hereinafter set forth (the "Option").
If the Lake Interest Closing (as defined in Section 1.2 below)
has not occurred on or before the close of business on the Lake
Interest Option Expiration Date, (as the same may be extended by
written agreement of the parties) the Option granted hereby shall
expire.
1.2 The parties acknowledge that:
(a) Buyer has, pursuant to the terms of the Purchase
Agreement, deposited $7,000,000 with the Escrow Agent
in respect of the Lake Interest and LIHI Stock; and
(b) NCRI has deposited with the Escrow Agent Sellers' Lake
Interest Deposit which includes executed Lake Interest
Assignment Instruments.
1.3 It is expressly agreed that Buyer shall have the right in
its sole discretion to assign in whole or in part the Option and
all its rights hereunder without the consent of NCO, NCRI or LIHI
or any other Person unless such assignment would cause the Lake
Project to lose its QF Status. The owner of the Option from time
2
<PAGE>
to time is hereinafter referred to as the "Lake Interest
Optionee".
2. Exercise of Option; Closing.
2.1 The Lake Optionee may exercise the Option in whole but not
in part by providing notice thereof to NCRI and LIHI, which
notice shall:
(a) state that Lake Optionee is exercising the Option;
(b) identify the name of Lake Interest Optionee and whether
the Lake Interest Optionee will be acquiring the LIHI
Stock or Lake Interest; and
(c) state the date of the purchase and sale of the LIHI
Stock or Lake Interest, as applicable (the "Lake
Interest Closing"), which shall be not earlier than the
second Business Day following notice of exercise.
2.2 At the Lake Interest Closing:
(a) the Escrow Agent shall:
(i) release and deliver to Buyer Sellers' Lake
Interest Deposit, and
(ii) wire transfer to NCRI the $7,000,000 referred to
in Section 1.1(b)(i) above, and
(b) the Escrow Agent or Buyer shall date the relevant Lake
Interest Assignment Instrument the date of the Lake
Interest Closing, insert the name of the Lake Interest
Optionee into the Lake Interest Assignment Instrument,
and deliver a copy of the same to LIHI; whereupon the
Lake Interest Closing shall be completed.
3. Exercise Condition.
The right of the Lake Interest Optionee to deliver notice of
exercise of the Option as aforesaid shall be conditional on
receipt by Optionee and LIHI of all Requisite Consents to the
transfer of the Lake Interest or LIHI Stock, as applicable, to
the Lake Interest Optionee.
4. Further Assurances.
At the request of Buyer or the Lake Interest Optionee, NCRI and
LIHI shall promptly execute and delivery all such documents and
instruments as Buyer or Lake Interest Optionee may reasonably
request in order to effect the transfer of the Lake Interest or
LIHI Stock to the Lake Interest Optionee and otherwise to carry
out the terms and provisions of this Agreement. In addition, at
the Lake Interest Closing, each party shall execute and deliver
to the other such other instruments and documents as may be
3
<PAGE>
necessary or appropriate to carry out the transactions
contemplated by this Agreement and the Escrow Agreement and to
comply with the terms and conditions hereof and thereof.
5. Covenants of NCRI and LIHI.
5.1 Between the date hereof and the Lake Interest Closing, LIHI
shall maintain its existence as a corporation in good standing
under Delaware law, and shall not:
(a) merge or consolidate with any Person, or sell or
otherwise transfer the Lake Interest to any Person, or
issue any additional shares of capital stock, or any
instruments convertible into or exercisable for capital
stock; or
(b) enter into any Commitment or incur any liability or
obligation whatsoever except for this Agreement, the
Partnership Agreement and the Lake Partnership
Amendment, or engage in any business other than holding
the Lake Interest;
(c) fail to comply with the terms and provisions of the
Partnership Agreement, or engage in any activity
prohibited thereunder; or
(d) create or suffer to exist any Encumbrance on the Lake
Interest.
5.2 Between the date hereof and the Lake Interest Closing, NCRI
shall not sell, assign or otherwise transfer the LIHI Stock, or
create or suffer to exist any Encumbrance on the LIHI Stock.
6. Amendment and Waiver.
No amendment or waiver of any provision of this Agreement shall
be effective unless the same shall be in writing and signed by
the parties hereto, and then such amendment, waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given.
7. Notices.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be personally delivered or sent by
facsimile transmission with confirming copy sent by overnight
courier (such as Express mail, Federal Express, etc.) and a
delivery receipt obtained and addressed to the intended recipient
as follows:
(a) If to NCRI or LIHI, to the address of NCRI set forth in
the Purchase Agreement.
(b) If to Buyer, to the address of Buyer set forth in the
Purchase Agreement.
4
<PAGE>
Any party may change its address for receiving notice by giving
written notice to the others named above. All such notices shall
be given as provided above, and shall be effective immediately
upon confirmation of facsimile or completion of personal
delivery.
8. Miscellaneous.
8.1 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same Agreement.
8.2 Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal substantive laws of the
State of New York. Should any provision of this Agreement be
determined to be invalid, void or unenforceable by a court of
competent jurisdiction for any reason, the remaining provisions
shall remain in full force and effect. The parties consent to
the non-exclusive jurisdiction of the New York federal and state
courts.
8.3 Headings. The section and other headings contained in this
Agreement are for convenience of reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement.
8.4. Construction. This Agreement has been negotiated by Buyer
and by NCRI (for itself and on behalf of LIHI), and their
respective legal counsel, and legal or equitable principles that
might require the construction of this Agreement or any provision
hereof against the party drafting this Agreement shall not apply
in any construction or interpretation of this Agreement.
8.5 Currency. All references herein to dollars are to United
States dollars.
8.6 Time of Essence. Time is of the essence in this Agreement.
8.7 Assignment. This Agreement may not be assigned by NCRI or
LIHI.
* * *
5
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement
to be duly executed on this date first written above.
NORTH CANADIAN RESOURCES, INC. ENERGY INITIATIVES, INC.
By: By:
Name: Name:
Title: Title:
LAKE INTEREST HOLDINGS INC.
By:
Name:
Title:
6
<PAGE>
ATTACHMENT XI
FIRST AMENDMENT
TO
FIRST AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT OF
LAKE COGEN, LTD.
This Agreement (the "Amendment Agreement"), dated as of
__________, 1994 (the "Amendment Date"), by and among NCP Lake
Power Incorporated, a Delaware corporation, Lake Investment,
L.P., a Delaware limited partnership, and Lake Interest Holdings,
Inc., a Delaware corporation ("LIHI").
W I T N E S S E T H:
WHEREAS, Lake Cogen, Ltd. is a Florida limited partnership
existing as of the Amendment Date under and pursuant to that
certain First Amended and Restated Limited Partnership Agreement
of Lake Cogen, Ltd., a Florida Limited Partnership, dated as of
July 24, 1992 (the "Partnership Agreement");
WHEREAS, NCP Lake Power Incorporated is the sole general
partner, and Lake Investment, L.P. is the sole limited partner,
of Lake Cogen, LTD.;
WHEREAS, NCP Lake Power Incorporated and Lake Investment,
L.P. desire to admit LIHI, and LIHI desires to be admitted, as a
general partner and a limited partner to Lake Cogen, LTD. on the
terms set forth herein;
WHEREAS, the parties hereto desire to amend the Partnership
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and other good and valuable consideration, and
intending to be legally bound, the parties hereto agree as
follows:
9. References herein to Recitals, Articles, Sections and
Exhibits are to the Recitals, Articles, Sections, Subsections and
Exhibits of the Partnership Agreement.
10. The Partnership Agreement is hereby amended, effective as of
the Amendment Date, as follows:
A. The following shall be added immediately following
Section 2.3 as a new Section 2.4.
"Section 2.4 Additional General Partner.
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<PAGE>
(a) Effective as of the Amendment Date, Lake
Interest Holdings, Inc., a Delaware corporation
("LIHI"), is admitted to the Partnership as a
general partner and LIL transfers and assigns to
LIHI, and LIHI assumes, a 1% Partnership Interest
which shall be held by LIHI as a General Partner.
(b) Upon the earlier to occur of (i) the
consummation of the transfer of LIHI's aggregate
Partnership Interest pursuant to the exercise of
the Lake Option, or (ii) receipt by the
Partnership of an order issued by the Commission
in which it is determined that the Cogeneration
Facility would continue to meet the ownership
requirements set forth in Section 292.206(a) of
the Regulations for a Qualifying Cogeneration
Facility as defined in Section 201 of PURPA
notwithstanding the removal of LIHI as a General
Partner, LIHI shall be removed as a General
Partner without any further action by LIHI, the
Partnership or any Partner and LIHI's 1%
Partnership Interest then held by LIHI as a
General Partner shall thereafter be held by LIHI
as a Limited Partner and shall constitute a
Limited Partnership Interest.
(c) The foregoing provisions of Section 2.4(b) of
this Agreement shall apply to any assignee or
other transferee of the Partnership Interests held
by LIHI."
B. The word "and" immediately preceding clause (iii) in
Section 7.1 is deleted and the following is added after
said clause (iii):
"; and (iv) no Distributions shall be made prior
to the earlier of (A) the consummation of the
transfer of LIHI's aggregate Partnership Interest
pursuant to the exercise of the Lake Option, or
(B) the expiration or termination of the Lake
Option."
C. The first sentence of Section 8.2 is amended to read in
its entirety as follows:
"NCP Lake is designated as the tax matters partner
("Tax Matters Partner") as provided in Section
0231(a)(7)(A) of the Code and any comparable
provision of state or local law."
D. The phrase "the General Partner" is deleted from clause
(iv) in Section 10.1 and "NCP Lake" is substituted
therefor.
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<PAGE>
E. The Title of Article XI is amended to read in its
entirety as follows:
"MANAGEMENT OF THE PARTNERSHIP"
F. Section 11.1 is deleted and the following shall be
added preceding Section 11.2 which shall be renumbered
Section 11.4:
"Section 11.1 Rights and Obligations of the
General Partners.
(a) Except as otherwise specifically provided
herein, the General Partners shall have full and
exclusive control of the management and operation
of the Partnership and its business. The General
Partners shall have, subject to the limitations
imposed elsewhere herein, the power and authority
on behalf of the Partnership to do or cause to be
done any and all acts deemed by the General
Partners to be necessary or appropriate in
connection with the management and operation of
the business of the Partnership.
(b) Except as otherwise specifically provided
herein, or as the General Partners may otherwise
agree in writing, the authority and discretion
granted to the General Partners in Section 11.1(a)
is hereby delegated to, and shall be exercised
solely by, the Management Committee.
(c) Except for those actions taken by the
Management Committee pursuant to the authority
delegated to it herein, all actions to be taken by
the General Partners or by the Partnership or the
other Partners shall be taken only with the prior
approval in writing of all of the General
Partners. No General Partner shall have the
authority to act on behalf of the Partnership or
any Partner without the prior written approval of
all of the General Partners.
(d) At such time, and from time to time, as and
when the Partnership shall have only one General
Partner, action which may be taken by the General
Partners may be taken by such General Partner
alone.
Section 11.2 The Management Committee.
(a) Except as otherwise specifically provided
herein, or as the General Partners may otherwise
agree in writing, the management and control of
the Partnership and its business is hereby
delegated by the General Partners to a committee
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<PAGE>
(the "Management Committee") consisting of two
representatives of each General Partner selected
as provided in Section 11.2(b). The Management
Committee shall have full discretion and authority
to act on behalf of the General Partners in the
management and operation of the Partnership and
its business.
(b) Each General Partner shall designate two (2)
individuals to serve as members of the Management
Committee (individually, a "Member" and
collectively, the "Members"). Such designation
shall be in writing from the President of the
respective General Partner. Each General Partner
may substitute another individual or individuals
to act in place of the Member or Members
designated by such General Partner, or a Member
may substitute another individual to act in his
place (if so authorized by the General Partner
which designated the Member and if such General
Partner gives notice to the other General Partners
of such authorization). Any such substitution
shall be evidenced in writing by the General
Partner, or the Member, as the case may be, making
the substitution. Immediately upon the removal of
a General Partner, the individuals designated by
such General Partner as Members shall cease to be
Members.
(c) Action by the Management Committee shall
require the affirmative vote of not less than
three Members (or duly designated substitutes
therefor).
(d) Action at a meeting of the Management
Committee may be taken only if not less than
three-quarters of the Members (or duly designated
substitutes) are present in person or by means of
a telephone conference call and vote on the action
to be taken. Meetings of the Management Committee
may be called by any General Partner or by any
Member by providing at least twenty-four (24)
hours notice of such meeting to each of the other
General Partners and to the other Members stating
the time, date, and place of the meeting, which
shall be reasonably convenient to all Members, and
the purpose or purposes for which it is to be
held. Once a meeting has commenced, however, any
business appropriate for the Management
Committee's consideration may be conducted at such
meeting whether or not set forth in the notice.
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<PAGE>
(e) Notice of a meeting need not be given to any
General Partner or Member who signs a waiver of
notice either before or after the meeting.
Attendance of a Member at a meeting shall not
alone constitute a waiver of notice by such
Member.
(f) Notwithstanding the terms of Section 11.2(d),
action may be taken without a meeting of the
Management Committee if such action is taken by
written consent of all of the Members.
Section 11.3. Managing General Partner.
(a) The Management Committee, or the General
Partners in the event there shall be no Management
Committee, from time to time shall select a
General Partner as the Managing General Partner to
control and manage the operation of the
Cogeneration Facility and to provide
administrative services to the Partnership and
shall delegate to the Managing General Partner
such authority as the Management Committee or the
General Partners shall deem appropriate. NCP Lake
is hereby selected as the initial Managing General
Partner, effective as of the Amendment Date, and
is hereby initially authorized, acting in its
discretion on behalf of the Management Committee,
to:
(i) borrow money under the Operative Documents
and, as security for the performance by the
Partnership of its obligations under the Operative
Documents, to mortgage, pledge or otherwise
encumber any and all assets of the Partnership,
including the rights of the Partnership under any
agreements;
(ii) borrow money other than under the Operative
Documents up to $500,000 outstanding at any time;
(iii) cause to be paid all amounts due and
payable by the Partnership and collect all amounts
due to the Partnership;
(iv) employ such agents, employees, managers,
attorneys, consultants and other Persons as the
Project Manager may deem necessary or appropriate
to carry out the business and affairs of the
Partnership;
(v) pay any and all fees and to make any and all
expenditures which it reasonably deems necessary
or appropriate in connection with the management
of the business and affairs of the Partnership;
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<PAGE>
(vi) enforce all rights of the Partnership;
(vii) with the consent and approval of the Owner-
Participant, enter into, execute, acknowledge and
deliver any and all contracts, agreements or other
instruments necessary or appropriate to carry out
the business of the Partnership in which the
Partnership is engaged on March 30, 1994;
(viii) with the consent and approval of the
Owner-Participant, amend the Operation and
Maintenance Agreement;
(viii) to acquire and enter into any contract of
insurance which the Managing General Partner deems
to be necessary and proper for the protection of
the Partnership, the conservation of the
Partnership's assets or for any other purpose
beneficial to the Partnership;
(ix) invest, subject to any restrictions contained
in the Operative Documents, any Partnership funds
not immediately needed in the conduct of the
Partnerships business in such readily marketable
securities as the Project Manager deems
appropriate;
(x) prepare and file any and all tax returns that
may be required by applicable law and cause to be
paid any and all taxes, charges and assessments
that may be levied, assessed or imposed upon the
Partnership or its assets;
(xi) establish, increase, decrease and maintain
reasonable reserves for the operating expenses of
the Partnership and for repairs, maintenance and
capital improvements and replacements consistent
with good business and operating practice in the
steam production and electric power generating
business;
(xii) establish and maintain one or more accounts
on behalf of the Partnership in such financial
institutions and the Project Manager may select;
(xiii) establish and maintain the books and
records of the Partnership as contemplated by
Article X hereof and prepare and provide to the
Partners the reports described therein;
(xiv) make periodic Distributions to the Partners
in accordance with this Agreement;
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<PAGE>
(xv) cause the Partnership to pay to NCP Lake the
administrative management fees due and payable
pursuant to Section 10.1(iv) hereof;
(xvi) apply for, execute, file, prosecute, obtain,
appeal and challenge such permits, approvals,
authorizations, consents, notices, certifications
and other documents with such Federal, state or
local governmental agencies as may be necessary or
appropriate in connection with the Partnership's
business or affairs;
(xvii) prepare and file on behalf of the
Partnership such applications with the Commission
with respect to the status of the Cogeneration
Facility as a qualifying cogeneration facility
under PURPA and the Regulations as the Managing
General Partner shall deem appropriate; and
(xviii) file or cause to be filed the certificates
and other documents contemplated by Article III
hereof.
(b) Notwithstanding anything to the contrary set
forth herein, the Managing General Partner shall
not have the authority to take any action not
specifically authorized in paragraph (a), above,
including, but not limited to:
(i) amending the Operative Documents, other than
the Operations and Maintenance Agreement;
(ii) borrowing money, other than under the
Operative Documents, in excess of $500,000
outstanding at any time;
(iii) changing the nature of the Partnership's
business;
(iv) selling, assigning or otherwise transferring
the Cogeneration Facility or any interest therein;
(v) selling, assigning or otherwise transferring
all or substantially all of the Partnership's
assets or any substantial part thereof so as to
cause the Partnership to be unable to carry on its
business; or
(vi) admitting Persons as additional Limited
Partners or General Partners."
G. Sections 11.3, 11.4, 11.5 and 11.6 shall be renumbered
Sections 11.5, 11.6, 11.7 and 11.8, respectively.
7
<PAGE>
H. Section 11.7 shall be renumbered Section 11.9 and the
following shall be added following subsection (d)
thereof:
"(e) enter into any agreement or transaction with,
or make any payment to, NCP Lake or any Affiliate
thereof, other than administrative management fees
due and payable pursuant to Section 10.1(iv),
Distributions made in respect of NCP Lake's or
LIL's Partnership Interests, or transactions with
NCP Lake or LIL in their capacities as a General
Partner and a Limited Partner, respectively."
I. The following definition shall be added in Exhibit C
immediately following the definition of Cogeneration
Facility:
"Commission" shall mean the United States Federal
Energy Regulatory Commission.
J. The following definition shall be added in Exhibit C
immediately following the definition of Gross Asset
Value:
"Lake Option" shall mean the option to purchase
the aggregate Partnership Interest of LIHI or the
outstanding stock of LIHI granted to Energy
Initiatives, Inc. or its assignee by North
Canadian Resources, Inc., a Delaware corporation
and LIHI under that certain Option Agreement,
dated as of March 31, 1994.
K. The definition of "Partnership Interest" contained in
Exhibit C is amended to read in its entirety as
follows:
"Partnership Interest" for each Partner shall be
as follows:
(i) on and after July 24, 1992, but prior to the
Amendment Date, the Partnership Interest for each
Partner shall be as set forth on Exhibit B hereof;
(ii) on and after the Amendment Date, subject to
adjustment as set forth in subparagraphs (A), (B),
(C) and (D) below, the Partnership Interest for
each Partner shall be as follows:
General Partners: Partnership Interest
NCP Lake Power Incorporated 1%
Lake Interest Holdings, Inc. 1%
8
<PAGE>
Limited Partners:
NCP Lake Power Incorporated 49%
Lake Interest Holdings, Inc. 49%
(A) Capitalized terms used in this definition of
Partnership Interest and not otherwise
defined herein shall have the meanings
assigned to them below:
"Present Value" of a payment, distribution or
allocation, or series thereof, shall be the
present value thereof as of the Amendment
Date, calculated using a discount rate of 12%
per annum.
"Projected" shall mean as projected in the
pro forma spreadsheet attached hereto as
Exhibit E.
"Stream of Benefits" shall mean the
distributions, payments, allocations and
other payments and benefits included by the
Commission in determining the Equity Interest
of a party in a Qualifying Cogeneration
Facility under PURPA.
"Equity Interest" shall mean equity interest
as defined in Section 292.206(b) of the
Commission's regulations under PURPA and
relevant Commission precedent.
"Commission" shall mean the Federal Energy
Regulatory Commission.
"Administrative Management Fees" means the
administrative management fees payable to the
Managing General Partner under Section
10.1(iv) of the Partnership Agreement.
(B) Upon receipt by the Partnership of an order
issued by the Commission in which it is
determined that some or all of the
Administrative Management Fees paid and
projected to be paid to NCP Lake on and after
the Amendment Date should or should not be
included in the Stream of Benefits received
and projected to be received by NCP Lake for
purposes of determining NCP Lake's Equity
Interest in the Cogeneration Facility (such
fees so determined to be included in such
Stream of Benefits, the "Included
Administrative Management Fees"), LIL's
9
<PAGE>
Partnership Interest shall be increased or
decreased, as appropriate, by an amount which
would cause the Present Value of all
distributions and allocations of profits,
losses and deductions made and Projected to
be made on and after the Amendment Date to
NCP Lake and LIL in respect of their
Partnership Interests, together with all
payments of Included Administrative
Management Fees made and Projected to be made
to NCP Lake on and after the Amendment Date,
if any, to be 50% of the Present Value of all
such distributions, allocations and payments
made and Projected to be made to the Partners
and the Partnership Interest of LIHI shall be
decreased or increased, as appropriate, by an
equal amount.
(C) In the event the Commission shall not have
determined on or before March 30, 1995
(whether as a result of any failure of the
Partnership to apply for or request such
determination, or otherwise) that some of all
of the Administrative Management Fees paid
and Projected to be paid to NCP Lake on and
after the Amendment Date need not be included
in the Stream of Benefits received and
projected to be received by NCP Lake for
purposes of determining NCP Lake's Equity
Interest in the Cogeneration Facility, LIL's
Partnership Interest shall be decreased by an
amount which would cause the Present Value of
all distributions and allocations of profits,
losses and deductions made and Projected to
be made on and after the Amendment Date to
NCP Lake and LIL in respect of their
Partnership Interests, together with 25% of
all payments of Administrative Management
Fees made and Projected to be made to NCP
Lake on and after the Amendment Date
("Excluded Percentage Administrative
Management Fees" and the balance of the
Administrative Management Fees, "Included
Percentage Management Fees") to be 50% of the
Present Value of all such distributions,
allocations and payments of Excluded
Percentage Administrative Management Fees
made and Projected to be made to the
Partners, and the Partnership Interest of
LIHI shall be increased by an equal amount.
(D) Upon any determination by the Commission that
all or any part of the consideration, if any,
received by NCP Lake or any Affiliate thereof
for the assignment of the Lake Option must be
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<PAGE>
included in the Stream of Benefits from the
Cogeneration Facility for purposes of
determining the Equity Interest of NCP Lake
and its Affiliates in the Cogeneration
Facility (the "Included Option
Consideration"), then the Partnership
Interest of LIL shall be reduced by an amount
which would cause the Present Value of all
distributions and allocations of profits,
losses and deductions made and Projected to
be made to NCP Lake and LIL in respect of
their Partnership Interests, all payments of
Included Administrative Management Fees, if
any, and Included Percentage Administrative
Management Fees, if any, and the payment of
the Included Option Consideration, to be 50%
of the Present Value of all such
distributions, allocations and payments made
and Projected to be made to the Partners, and
the Partnership Interest of LIHI shall be
increased by an equal amount."
(E) In the event that any decrease in the
Partnership Interest of LIL required by
paragraphs (B), (C) or (D) above shall reduce
LIL's Partnership Interest to zero and the
Present Value of the respective
distributions, allocations, and payments made
and Projected to be made to NCP Lake and LIL
shall not be thereby reduced to 50% of the
Present Value of all such distributions,
allocations and payments made and Projected
to be made to the Partners, then NCP Lake and
LIL shall refund to the Partnership such
portion of any distributions or payments, or
the value of any allocations, made to NCP
Lake or LIL after the Amendment Date as may
be required to cause such Present Value of
the distributions, payments and allocations
made and Projected to be made to NCP Lake and
LIL to be 50% of the Present Value of all
such distributions, payments and allocations
made and Projected to be made to the
Partners."
3. NCP Lake hereby consents to the substitution of LIHI as a
limited partner of the Partnership as required under
Section 13.4.
4. NCP Lake and LIHI hereby consent to the substitution of any
purchaser of LIHI's aggregate Partnership Interest pursuant to
the exercise of the Lake Option, as a general partner of the
Partnership, in the event LIHI is a general partner of the
Partnership at the time such purchase is consummated, and as a
limited partner of the Partnership.
11
<PAGE>
5. NCP Lake and LIL hereby consent to the amendment of the
Partnership Agreement as set forth herein, as contemplated by
Section 16.1 of the Partnership Agreement.
6. This Amendment Agreement, and the application or
interpretation hereof, shall be governed, construed and enforced
in accordance with the laws of the State of Florida.
7. Headings in this Amendment Agreement are solely for
convenience and are not a part of this Amendment Agreement.
8. This Amendment Agreement shall be binding on and inure to
the benefit of the respective successors, assigns and personal
representatives of the parties hereto, except to the extent of
any contrary provision of this Amendment Agreement.
9. This Amendment Agreement is expressly amendatory to the
Partnership Agreement and, except as specifically amended hereby,
the Partnership Agreement shall remain in full force and effect
in accordance with the terms thereof.
10. Each party to this Amendment Agreement, upon request of the
Project Manager, agrees to perform all further acts and execute,
acknowledge and deliver any documents which may be reasonably
necessary, appropriate or desirable to carry out the provisions
of this Amendment Agreement.
11. This Amendment Agreement may be executed in counterparts by
each of the parties hereto, all of which taken together shall be
deemed one original.
12. LIHI represents to the Partnership and the General Partners
that: (a) it is acquiring its Partnership Interests for its own
account for investment and not with a view to or for sale in
connection with any distribution of such Partnership Interests
(but subject, nevertheless, to any requirement of law that the
disposition of its property remain within its control at all
times); (b) it understands that the interests in the Partnership
have not been registered under the Securities Act or the
applicable securities laws of Florida or any other state, and
must be held indefinitely unless the interests are so registered
or an exemption from such registration is available; (c) it has
such knowledge and experience in business matters that it is
capable of evaluating the risks and merits of its investment in
the Partnership; and (d) it has received and reviewed the
material agreements and other documents relating to the
Partnership and/or its business and such other information, oral
or written, as it has requested, having been afforded the
opportunity to ask questions of the General Partners and to
obtain any additional information that it has deemed appropriate.
13. No waiver of any provision of this Amendment Agreement shall
be deemed effective unless contained in a writing signed by the
party against whom the waiver is sought to be enforced. No
12
<PAGE>
failure or delay by any party in exercising any right, power or
remedy under this Amendment Agreement shall operate as a waiver
of any such right, power or remedy, and no waiver of any breach
or failure to perform shall be deemed a waiver of any subsequent
breach or failure to perform or of any other right arising under
this Amendment Agreement.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
NCP LAKE POWER INCORPORATED,
a Delaware corporation
By:
LAKE INVESTMENT, L.P.,
a Delaware limited partnership
By NCP Lake Power Incorporated,
its general partner
By:
LAKE INTEREST HOLDINGS, INC.
a Delaware corporation
By:
13
<PAGE>
Schedule 1.2
NCO OBLIGATIONS TO BE ASSUMED BY BUYER
Lake Project
a. Lease Reserve Guarantee set forth in Section 3(a) of
the Guarantee and Agreement dated as of July 29, 1992, among NCO,
The Citizens & Southern National Bank of Florida (now NationsBank
of Florida, N.A.), as owner trustee, and TIFD III-C, Inc.,
pursuant to which NCO guarantees the payment of rent under the
Lease Agreement dated as of August 16, 1993, between Lake Cogen,
Ltd. and NationsBank of Florida, National Association, as owner
trustee, subject to the limit of the Available Guarantee Amount
as set forth in such section.
b. Foundation Repair Guarantee set forth in Section 3(b)
of the Guarantee and Agreement dated as of July 29, 1992, among
NCO, the Citizens & Southern National Bank of Florida (now
NationsBank of Florida, N.A.), as owner trustee, and TIFD III-C,
Inc., pursuant to which NCO guarantees payment of costs to repair
or replace spread footing foundations for the Project and to
repair or replace equipment subject to an aggregate limit of
$2,000,000.
c. Guaranty of payment of additional mortgage taxes and
transfer taxes set forth in Section 2(e) of the letter dated July
29, 1992, from NCO to TIFD III-C, Inc. and The Citizens &
Southern National Bank of Florida (now NationsBank of Florida,
N.A.), as owner trustee.
Pasco Project
a. Guarantee of payment of amounts necessary to install an
oxidation catalyst set forth in Section 2.1(c) of the Equity
Infusion Agreement dated as of January 15, 1992 among Dade
Investment L.P., Pasco Cogen, Ltd. and Bankers Trust Company, as
collateral agent, as amended by the First Amendment to Equity
Infusion Agreement dated as of July 15, 1993 among Pasco Cogen,
Ltd., Dade Investment L.P., and Bankers Trust Company, as
collateral agent, and in Section 2.1(c) of the Equity Infusion
and Undertaking Agreement dated as of January 15, 1992 among NCP
Dade Power Incorporated, Pasco Cogen, Ltd. and Bankers Trust
Company, as collateral agent, pursuant to which Dade Investment,
L.P. and NCP Dade Power Incorporated are required to fund 49% and
1% respectively of the costs of installing an oxidation catalyst
if one is required for the project by the Florida Department of
Environmental Regulation subject to a limit described in such
sections.
Syracuse Project
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<PAGE>
a. Obligation under paragraph 2(ii) of the Letter dated
December 1992 from North Canadian Oils Limited to Metlife Capital
Corporation requiring North Canadian Oils Limited (or its
transferee who holds shares of North Canadian Power Incorporated)
to purchase the interest of Metlife Capital Corporation in
Syracuse Orange Partners, L.P. in the event the shares of North
Canadian Power Incorporated are transferred prior to the
attainment of certain flip points and Metlife Capital Corporation
does not consent to the transfer or the transferee does not meet
certain net worth requirements.
2
<PAGE>
EXHIBIT B-2
ESCROW AGREEMENT
by and among
NORTH CANADIAN RESOURCES, INC.,
ENERGY INITIATIVES, INC.,
and
HARRIS TRUST AND SAVINGS BANK
dated
March 31, 1994
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
ESCROW
1.1. Creation of Escrow . . . . . . . . . . . . . . . . 3
1.2. Buyer's Deposits . . . . . . . . . . . . . . . . . 3
1.3. NCRI's Deposits . . . . . . . . . . . . . . . . . . 3
1.4. Buyer's Cash Deposit . . . . . . . . . . . . . . . 3
ARTICLE II
DISBURSEMENTS
2.1. Disbursement Certificate . . . . . . . . . . . . . 3
2.2. Time of Disbursements . . . . . . . . . . . . . . . 4
2.3. Procedure for Disbursements and Deliveries . . . . 4
2.4. Delay in Receiving Disbursement Certificate . . . . 5
ARTICLE III
INTEREST ON BUYER'S CASH DEPOSIT
3.1. Interest Disbursements . . . . . . . . . . . . . . 5
3.2. Interest on Buyer's Cash Deposit. . . . . . . . . . 5
ARTICLE IV
TERMINATION OF ESCROW
4.1. Termination of Escrow . . . . . . . . . . . . . . . 6
4.2. Disbursement of Buyer's Cash Deposit and Escrow
Deposits upon Termination . . . . . . . . . . . . . 6
ARTICLE V
SETTLEMENT
ARTICLE VI
ESCROW AGENT'S DUTIES
6.1. Standard of Care . . . . . . . . . . . . . . . . . 7
6.2. Limitation of Liability . . . . . . . . . . . . . . 8
6.3. Counsel to Escrow Agent . . . . . . . . . . . . . . 8
6.4. Reliance . . . . . . . . . . . . . . . . . . . . . 8
6.5. Receipt of Notices . . . . . . . . . . . . . . . . 8
-i-
<PAGE>
ARTICLE VII
SUCCESSOR ESCROW AGENT
ARTICLE VIII
EXPENSES
ARTICLE IX
INVESTMENT OF DEPOSITS
ARTICLE X
NOTICES
10.1. Method of Notice . . . . . . . . . . . . . . . 9
10.2.Place for Delivery of Notices . . . . . . . . . . . 10
ARTICLE XI
MISCELLANEOUS
11.1. Entire Agreement . . . . . . . . . . . . . . . 11
11.2. Parties in Interest . . . . . . . . . . . . . 11
11.3. Counterparts . . . . . . . . . . . . . . . . . 11
11.4. Applicable Law . . . . . . . . . . . . . . . . 11
11.5. Amendment and Waiver . . . . . . . . . . . . . 12
11.6. Severability . . . . . . . . . . . . . . . . . 12
11.7. Headings . . . . . . . . . . . . . . . . . . . 12
11.8. Currency . . . . . . . . . . . . . . . . . . . 12
-ii-
<PAGE>
ANNEXES
Annex A Glossary
Annex B Articles I through IV of the Purchase and Sale
Agreement
EXHIBITS
Exhibit 1 Form of Purchase and Sale Disbursement Certificate
Exhibit 2 Form of Working Capital Closing Adjustment Disbursement
Certificate
Exhibit 3 Form of Interest Computation Certificate
Exhibit 4 Form of Disbursement Notice
Exhibit 5 Form of Termination Notice
-iii-
<PAGE>
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made this 31st day of March, 1994, by
and among NORTH CANADIAN RESOURCES, INC., a Delaware corporation
("NCRI"), ENERGY INITIATIVES, INC., a Delaware corporation
("Buyer") and HARRIS TRUST AND SAVINGS BANK (the "Escrow Agent").
Capitalized terms used in this Escrow Agreement shall unless
otherwise defined herein have the meanings ascribed to them in
the Glossary referenced as Annex A hereto.
WHEREAS, pursuant to a Stock Purchase and Sale Agreement of even
date herewith (the "Purchase and Sale Agreement") among NCRI,
North Canadian Power Incorporated, a California corporation
("NCP"), North Canadian Oils Limited, a Canadian corporation
("NCO") and Buyer, Buyer has agreed to purchase the NCP Stock,
and the stock of the Excluded Subsidiaries, and NCRI has agreed
to sell such securities to Buyer and the Lake Interest and the
LIHI Stock to the Lake Interest Optionee, all as more
specifically set forth in Article I, and subject to the terms and
conditions of, the Purchase and Sale Agreement;
WHEREAS, the Purchase and Sale Agreement contemplates that prior
to consummation of the NCP Closing, NCP may adopt a plan of
liquidation pursuant to which, under certain specified
circumstances, certain of the NCP Subsidiaries (i.e.,
subsidiaries directly and wholly owned by NCP) could be
distributed to NCRI and that the Lake Interest Option (i.e., a 1%
general partnership interest and 49% limited partnership interest
in Lake Investment L.P.) would be distributed to LIHI prior to
the NCP Closing and subsequently sold to NCP, Buyer or the Lake
Interest Optionee, as the case may be, all as contemplated in
Article I of the Purchase and Sale Agreement;
WHEREAS, the parties hereto desire to facilitate the deliveries
required at the several closings contemplated by the Purchase and
Sale Agreement and to assure themselves that each party will be
ready and able to make its respective deliveries as and when
required pursuant to Articles II, III, IV and XII of the Purchase
and Sale Agreement as set forth herein;
WHEREAS, to facilitate the deliveries required at such closings,
the parties hereto desire to establish the Escrow, contemplated
by Article III of the Purchase and Sale Agreement, as follows:
Buyer's Cash Deposit, consisting of $74,975,000 which is
being funded simultaneously with the execution hereof;
NCP Deposit, consisting of two packages of documents to be
delivered as indicated at the NCP Closing:
. one marked "Buyer's NCP Deposit" to be delivered
to NCRI, and
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. one marked "Sellers' NCP Deposit" to be delivered
to Buyer;
Lake Deposit, consisting of two packages of documents to be
delivered as indicated at whatever closing is certified in
accordance with the provision hereof to include the Lake
Subsidiaries:
. one marked "Buyer's Lake Deposit" to be delivered
to NCRI, and
. one marked "Sellers' Lake Deposit" to be delivered
to Buyer;
Pasco Deposit, consisting of two packages of documents to be
delivered at whatever closing is certified in accordance
with the provisions hereof to include the Pasco
Subsidiaries:
. one marked "Buyer's Pasco Deposit" to be delivered
to NCRI, and
. one marked "Sellers' Pasco Deposit" to be
delivered to Buyer;
Syracuse Deposit, consisting of two packages of documents to
be delivered at whatever closing is certified in accordance
with the provisions hereof to include the Syracuse
Subsidiaries:
. one marked "Buyer's Syracuse Deposit" to be
delivered to NCRI, and
. one marked "Sellers' Syracuse Deposit" to be
delivered to Buyer;
Ada Deposit, consisting of one package of documents marked
"Sellers' Ada Deposit" to be delivered to Buyer at whatever
closing is certified in accordance with the provisions
hereof to include the Ada Subsidiaries;
FPB Deposit, consisting of one package of documents marked
"Sellers' FPB Deposit" to be delivered to Buyer at whatever
closing is certified in accordance with the provisions
hereof to include the FPB Subsidiaries;
Lake Interest Deposit, consisting of one package of
documents marked "Sellers' Lake Interest Deposit" to be
delivered to Buyer at whatever closing is certified in
accordance with the provisions hereof to include the Lake
Interest;
NOW, THEREFORE, in consideration of the premises and promises
contained herein, the parties intending to be legally bound
mutually agree as follows:
2
<PAGE>
ARTICLE I
ESCROW
1.1. Creation of Escrow.
Buyer and NCRI hereby establish the Escrow and mutually
acknowledge that this is the Escrow Agreement contemplated by
Section 3.1 of the Purchase and Sale Agreement. The Escrow Agent
agrees to act as escrow agent for the benefit of Buyer and NCRI
in accordance with the terms of this Escrow Agreement.
1.2. Buyer's Deposits.
Buyer hereby delivers to the Escrow Agent into escrow hereunder,
and the Escrow Agent acknowledges and accepts receipt of, funds
in the amount of Buyer's Cash Deposit together with four packages
of documents, each marked as provided in the recitals hereto and
containing the documents as listed in Section 3.2. of Annex B
hereto ("Buyer's Escrow Deposits") .
1.3. NCRI's Deposits.
NCRI hereby delivers into escrow, and the Escrow Agent
acknowledges receipt of, seven packages of documents, each marked
and containing in each package the respective documents as listed
in Section 3.3 of Annex B ("Sellers' Escrow Deposits"):
1.4. Buyer's Cash Deposit.
The Escrow Agent agrees to hold and disburse Buyer's Cash
Deposit, including all accrued and accumulated interest and
earnings thereon which shall be part of Buyer's Cash Deposit for
all purposes hereof, and the other Escrow Deposits received
pursuant to the terms hereof.
ARTICLE II
DISBURSEMENTS
2.1. Disbursement Certificate.
From time to time, as specified herein, the Escrow Agent shall
disburse from or otherwise deliver out of the Escrow to NCRI and
Buyer, as the case may be, such funds from Buyer's Cash Deposit
and the other Escrow Deposits as shall be specified in a
Disbursement Certificate, each of which shall be in substantially
the forms of Exhibit 1 or, in the case of the Working Capital
Closing Adjustment, Exhibit 2 or, in the case of the Lake
Interest, Exhibit 3 or, in the case of a Termination Notice,
Exhibit 4. Each executed Disbursement Certificate shall be
completed by the party or parties executing such certificate with
the following information:
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<PAGE>
(a) the amount of Buyer's Cash Deposit to be disbursed; and
(b) the other Escrow Deposits to be delivered to the
parties at such time.
2.2. Time of Disbursements.
2.2.1. If the Disbursement Certificate is executed by both NCRI and
Buyer (referred to as a "Joint Disbursement Certificate"), then
the Escrow Agent shall make the disbursements required by such
Joint Disbursement Certificate on the second Business Day (or
such other date as may be specified in the Joint Disbursement
Certificate) following receipt by the Escrow Agent of such Joint
Disbursement Certificate.
2.2.2. If the Disbursement Certificate is executed by only NCRI or
Buyer, (a "Unilateral Disbursement Certificate"), then the Escrow
Agent shall:
(a) immediately deliver a Disbursement Notice in the form
of Exhibit 4, together with a copy of the Unilateral
Disbursement Certificate, in accordance with the notice
provisions provided for herein to the party not
executing the Disbursement Certificate, notify such
other party of receipt of the Unilateral Disbursement
Certificate; and
(b) make the disbursements specified by the Unilateral
Disbursement Certificate on but not before the fifth
Business Day following the issuance by the Escrow Agent
of the Disbursement Notice.
2.3. Procedure for Disbursements and Deliveries.
2.3.1. All disbursements of funds from Buyer's Cash Deposit by the
Escrow Agent shall be made by wire transfer as follows:
(a) if to NCRI, then to North Canadian Resources, Inc.
(Account No. 405-788-1) at Royal Bank of Canada, Main
Branch (Branch No. 00009), 339 8th Avenue S.W.,
Calgary, Alberta, Canada, (Bank Routing No. 00003).
(b) if to Buyer, then to General Public Utilities
Corporation (Account No. 3878-3434) at Citibank
Delaware, (Bank Routing No. 0311-0029).
In each case, a copy of the wire transfer confirmation shall be
delivered to NCRI and to Buyer with the deliveries contemplated
by Subsection 2.3.2.
2.3.2. All other disbursements, consisting of delivery of the
various packages of documents comprising the other Escrow
Deposits, shall be delivered to the parties as follows: All
Escrow Deposits to be delivered to NCRI shall be delivered to the
4
<PAGE>
attention of: William J. McGrath, Esq., McDermott, Will & Emery,
227 West Monroe Street, Chicago, Illinois 60606-5096. All Escrow
Deposits to be delivered to Buyer shall be delivered to the
attention of: Douglas E. Davidson, Esq., Berlack, Israels &
Liberman, 120 West 45th Street, New York, NY 10036.
2.4. Delay in Receiving Disbursement Certificate.
In the event the Escrow Agent has not received a Disbursement
Certificate or Termination Notice pursuant to Sections 2.1 or
4.1, respectively, on or before May 31, 1994, the Escrow Agent
shall, unless otherwise instructed in writing jointly by Buyer
and NCRI, disburse to NCRI from Buyer's Cash Deposit, the
Deferred Payment Consideration equal to $15,000 per day from and
after June 1, 1994 until the earlier to occur of the following:
(a) the Escrow Agent receives a Disbursement Certificate
pursuant to Sections 2.1; or
(b) this Escrow Agreement terminates.
The Escrow Agent shall disburse to NCRI the Deferred Payment
Consideration on a bi-monthly basis on every other Friday
commencing on the second Friday following May 31, 1994.
ARTICLE III
INTEREST ON BUYER'S CASH DEPOSIT
3.1. Interest Disbursements.
Except to the extent set forth in a Joint Disbursement
Certificate or until the Escrow Agent is otherwise required to
make a disbursement from Buyer's Cash Deposit in accordance
herewith, all interest accrued and earnings on the Buyer's Cash
Deposit shall be retained by the Escrow Agent hereunder until
this Escrow Agreement is terminated.
3.2. Interest on Buyer's Cash Deposit.
Upon termination of this Escrow Agreement, Buyer shall be
entitled to receive all accrued interest and earnings on Buyer's
Cash Deposit; provided, however, that NCRI shall be entitled to
receive interest on Buyer's Cash Deposit accrued for the period,
if any, from May 31, 1994 until the Escrow Agent receives:
(a) either a Disbursement Certificate authorizing
distribution of the NCP Deposits pursuant to
Section 2.1, or a Termination Notice, in each case
stating that delivery of such Disbursement Certificate
or Termination Notice, as the case may be, has been
delayed solely as a result of the failure or inability
of Buyer to obtain the SEC Order, or
5
<PAGE>
(b) a Termination Notice pursuant to Section 4.1 stating
that the Purchase and Sale Agreement has been
terminated solely as a result of the failure or
inability of Buyer to obtain the SEC Order.
Escrow Agent shall disburse accrued interest in accordance with a
Disbursement Certificate or Termination Notice provided for at
paragraph (a) or (b) above.
ARTICLE IV
TERMINATION OF ESCROW
4.1. Termination of Escrow.
The Escrow and this Escrow Agreement shall terminate in whole or
in part, as the case may be, upon the earlier to occur of the
following:
(a) disbursement of all Escrow Deposits hereunder;
(b) the date the Purchase and Sale Agreement is terminated
by its terms, as evidenced by a Termination Notice
delivered to the Escrow Agent by Buyer and NCRI;
(c) with respect to any Excluded Subsidiaries and the Lake
Interest Deposit, on January 1, 1995; or
(d) joint written direction from NCRI and Buyer;
provided, however, that notwithstanding the foregoing, the Escrow
and this Escrow Agreement shall remain in effect until the
Working Capital Closing Adjustment Disbursement Certificate has
been received by the Escrow Agent and the Escrow Agent has
disbursed such amounts and Escrow Documents as provided therein.
4.2. Disbursement of Buyer's Cash Deposit and Escrow
Deposits upon Termination.
4.2.1. In the event the Escrow Agent receives a Termination Notice
prior to May 31, 1994, from Buyer and NCRI that the Purchase and
Sale Agreement has been terminated, the Escrow Agent shall
disburse Buyer's Cash Deposit and deliver the other Escrow
Deposits as follows:
(a) Buyer's Cash Deposit, including any accrued interest
and income thereon, and the other Buyer's Escrow
Deposits to Buyer; and
(b) the Sellers' Escrow Deposits to NCRI.
4.2.2. In the event the Escrow Agent receives a Termination Notice
after May 31, 1994 from Buyer and NCRI stating that the Purchase
and Sale Agreement has terminated prior to receipt by Escrow
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Agent of a Disbursement Certificate pursuant to Section 2.1,
solely because Buyer has failed to deliver the SEC Order to
Sellers on or prior to August 15, 1994, the Escrow Agent shall
disburse to NCRI $7,000,000 from Buyer's Cash Deposit no later
than August 17, 1994. The balance of Buyer's Cash Deposit
remaining after disbursement of the $7,000,000 to NCRI, together
with the other Escrow Deposits, shall be distributed by the
Escrow Agent in accordance with Subsection 4.2.1.
4.2.3. In the event the Escrow Agent receives from Buyer and NCRI a
Termination Notice in substantially the form attached hereto as
Exhibit 4, stating that the Purchase and Sale Agreement has
terminated prior to the NCP Closing for reasons other than due to
the failure or inability to satisfy on or before August 15, 1994
any of the conditions precedent in Section 12.1 of the Purchase
and Sale Agreement (other than failure of Buyer to obtain the SEC
Order on or prior to such date), then the Escrow Agent shall
disburse to NCRI $5,000,000 from Buyer's Cash Deposit within two
Business Days of the receipt by Escrow Agent of the Termination
Notice. The balance of Buyer's Cash Deposit remaining after
payment of the $5,000,000 to NCRI and the other Escrow Deposits
shall be distributed by the Escrow Agent in accordance with
Subsection 4.2.1.
4.2.4. In the event the Escrow Agent receives written notice from
both Buyer and NCRI following receipt of a Disbursement
Certificate certifying that the NCP Closing has occurred but
after December 31, 1994, that an Excluded Subsidiaries Closing
has not occurred as contemplated by Section 4.1(c), then the
Escrow Agent shall disburse from the Escrow the entire balance of
Buyer's Cash Deposit and Buyer's Escrow Deposits to Buyer the
entire balance of Sellers' Escrow Deposits to NCRI.
ARTICLE V
SETTLEMENT
Anything to the contrary herein notwithstanding, the Escrow Agent
may at any time disburse any portion of Buyer's Cash Deposit or
deliver any of the other Escrow Deposits held by it hereunder as
directed by a joint writing from Buyer and NCRI.
ARTICLE VI
ESCROW AGENT'S DUTIES
6.1. Standard of Care.
The Escrow Agent undertakes to perform such duties and only such
duties as are specifically set forth herein and to use the same
degree of care and skill in its exercise as an ordinary prudent
man would exercise or use under the circumstances in the conduct
of his own affairs.
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6.2. Limitation of Liability.
The Escrow Agent shall not be liable except for the performance
of such duties as are specifically set forth herein and no
implied covenants or obligations shall be read into this Escrow
Agreement against the Escrow Agent. The Escrow Agent shall not
be liable for any error of judgment made in good faith by any of
its officers, unless it shall be proved that the Escrow Agent was
negligent in ascertaining the pertinent facts.
6.3. Counsel to Escrow Agent.
The Escrow Agent may consult with counsel selected by the Escrow
Agent and the advice or opinion of such counsel shall be full and
complete authorization and protection in respect of any action
taken or suffered under this Escrow Agreement in good faith and
in accordance with such advice or opinion of counsel.
6.4. Reliance.
In the absence of bad faith or negligence on its part, the Escrow
Agent may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any
instrument or signature reasonably believed by it to be genuine
and correct and to have been signed or sent by the proper person
or persons.
6.5. Receipt of Notices.
The Escrow Agent is hereby expressly authorized and directed to
disregard in its sole discretion any and all notices or warnings
given by any of the parties hereto, or by any person or
corporation, excepting the notices provided for in this Escrow
Agreement.
ARTICLE VII
SUCCESSOR ESCROW AGENT
In the event that the Escrow Agent shall resign or in the event
that the Escrow Agent shall be removed by the mutual consent of
Buyer and NCRI, a successor Escrow Agent shall be appointed by
mutual agreement of Buyer and NCRI; provided, however, that
failure to agree upon any successor Escrow Agent in the event of
any vacancy shall not terminate this Escrow Agreement, and in
such event Buyer shall have the right to appoint as successor
Escrow Agent a national bank or trust company in good standing
doing business within the City of Chicago which shall, upon
acceptance thereof, be entitled to all the rights, powers and
indemnities hereunder as if originally named herein.
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ARTICLE VIII
EXPENSES
The Escrow Agent shall be paid reasonable compensation for its
services, which amount shall be borne equally by Buyer and NCRI,
including attorneys fees, reasonably incurred by it in connection
with the performance of its duties and obligations under this
Escrow Agreement. NCRI and Buyer agree to indemnify the Escrow
Agent and hold it harmless against all proper charges and
expenses of the Escrow Agent, including reasonable charges and
expenses of its counsel, in defending any action brought against
it by reason of its acting as the Escrow Agent hereunder, unless
it is determined in such action that the Escrow Agent acted in
violation of its duties and obligations hereunder. The Escrow
Agent costs and expenses of enforcing this right of
indemnification also shall be paid by NCRI and Buyer.
ARTICLE IX
INVESTMENT OF DEPOSITS
The Escrow Agent will invest the amounts deposited hereunder in
United States Government Treasury Bills having a maturity of 30
days or less; provided, however, that such investments shall be
limited to those which can be acquired through the Escrow Agent.
The interest and income from the investments with respect to
Buyer's Cash Deposit shall be allocated and disbursed in
accordance with Article IV. The Escrow Agent may use its own
bond department in executing purchases and sales of such
permitted investments. The parties acknowledge that the Escrow
Agent shall not be responsible for any diminution in escrow funds
due to the losses resulting from investments made pursuant to
this Article IX.
For Federal income tax purposes, to the extent permitted by law,
income earned on or from the Buyer's Cash Deposit shall be
treated by the parties to this Escrow Agreement as income of the
Buyer under Section 468B(g) of the Internal Revenue Code of 1986,
as amended, through May 31, 1994, and thereafter of either Buyer
or NCRI as stated in a Joint Disbursement Certificate to Escrow
Agent. Buyer and, if applicable, NCRI, will provide to the
Escrow Agent such forms as are required to establish an exemption
from backup withholding tax on the income of Buyer's Cash
Deposit.
ARTICLE X
NOTICES
10.1. Method of Notice.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be personally delivered or sent by
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facsimile transmission with confirming copy sent by overnight
courier (such as Express Mail, Federal Express, etc.) and a
delivery receipt obtained and addressed to the intended recipient
as follows:
10.2. Place for Delivery of Notices.
(a) If to NCRI:
North Canadian Oils Limited Norcen Energy Resources
Limited
715 - 5th Avenue, S.W. 715 - 5th Avenue, S.W.
Calgary, Alberta, T2P 2X7 Calgary, Alberta,
T2P 2X7
Canada Canada
Attn: Gordon B. Singer, Attn: E.A. Leew, Vice
President, Law
Vice President and CFO Telephone: 403-231-0111
Telephone: 403-231-0111 Facsimile: 403-231-0187
Facsimile: 403-231-0187
In each case with a copy to:
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606-5096
Attn: William J. McGrath, P.C.
Telephone: 312-372-2000
Facsimile: 312-984-3669
(b) If to Buyer:
Energy Initiatives, Inc.
One Upper Pond Road
Parsippany, New Jersey 07054
Attention: Bruce L. Levy, President
Telephone: 201-263-6950
Facsimile: 201-263-6953
With a copy to:
Berlack, Israels & Liberman
120 West 45th Street
New York, New York 10036
Attn: Douglas E. Davidson, Esq.
Telephone: 212-704-0100
Facsimile: 212-704-0196
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(c) If to the Escrow Agent, to:
Harris Trust and Savings Bank
115 West Monroe Street
Chicago, Illinois 60690
Attn: Escrow Division, Marianne Cody
Telephone: 312-461-2420
Facsimile: 312-461-3525
10.3. Change of Address. Any party may change its address for
receiving notice by giving written notice to the others named
above. All such notices shall be given as provided in Section
10.1 and shall be effective immediately upon confirmation of
facsimile or completion of personal delivery.
ARTICLE XI
MISCELLANEOUS
11.1. Entire Agreement.
This Escrow Agreement, including Annexes A and B, the Exhibits
and the certificates and other documents delivered pursuant
hereto, the Purchase and Sale Agreement and the Lake Interest
Option Agreement constitute the entire agreement among the
parties with respect to the transactions contemplated hereby and
supersede all other agreements and understandings among the
parties.
11.2. Parties in Interest.
This Escrow Agreement shall bind and inure to the benefit of the
parties named herein, in each case with respect to the
obligations and rights applicable to them, and their respective,
successors.
11.3. Counterparts.
This Escrow Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
agreement.
11.4. Applicable Law.
This Escrow Agreement shall be governed by and construed in
accordance with the internal substantive laws of the State of
Illinois. Should any provision of this Escrow Agreement be
determined to be invalid, void or unenforceable by a court of
competent jurisdiction for any reason, the remaining provisions
shall remain in full force and effect.
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11.5. Amendment and Waiver.
No amendment or waiver of any provision of this Escrow Agreement
shall in any event be effective, unless the same shall be in
writing and signed by the parties hereto, and then such
amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
11.6. Severability.
Any term or provision of this Escrow Agreement which is held
invalid or unenforceable by a court of competent jurisdiction,
shall be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining rights of the party intended to be benefitted by such
provision and provisions of this Escrow Agreement.
11.7. Headings.
The section and other headings contained in this Escrow Agreement
are for convenience of reference purposes only and shall not
affect in any way the meaning or interpretation of this Escrow
Agreement.
11.8. Currency.
All references herein to dollars are to United States dollars.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE TO ESCROW AGREEMENT
DATED MARCH 31, 1994]
IN WITNESS WHEREOF, the undersigned, have caused this Escrow
Agreement to be executed as of the day and year first above
written.
NORTH CANADIAN RESOURCES, INC. ENERGY INITIATIVES, INC.
By: By:
Name: Name:
Title: Title:
HARRIS TRUST AND SAVINGS BANK
Escrow Agent
By:
Name:
Title:
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Annex A
GLOSSARY
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Annex B
ARTICLE II OF THE PURCHASE AND SALE AGREEMENT
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