SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1997
Commission File Number 33-95928
LS Power Funding Corporation
(Exact name of registrant as specified in its charter)
Delaware 81-0502366
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
402 East Main Street, Bozeman, MT 59715, (406) 587-7397
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
LSP-Cottage Grove, L.P.
LSP-Whitewater Limited Partnership
(Exact name of registrant as specified in its charter)
Delaware 81-0493289
Delaware 81-0493287
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Numbers)
402 East Main Street, Bozeman, MT 59715, (406) 587-6325
402 East Main Street, Bozeman, MT 59715, (406) 587-6122
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
1
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LS Power Funding Corporation
LSP-Cottage Grove, L.P.
LSP-Whitewater Limited Partnership
Form 10-Q Index
Page
PART I
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results
of Operations 3
PART II
Item 1. Legal Proceedings 6
Item 2. Changes in Securities 6
Item 3. Defaults Upon Senior Securities 6
Item 4. Submission of Matters to a Vote of Security Holders 6
Item 5. Other Information 6
Item 6. Exhibits and Reports on Form 8-K 6
Signatures 7
Financial Statement Index F-1
Exhibits Index EI-1
2
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PART I/ITEM 1. FINANCIAL STATEMENTS
See financial statements commencing at F-1. These unaudited financial
statements have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission (the "Commission"). Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted. While LS Power Funding Corporation ("Funding"),
LSP-Cottage Grove, L.P. ("Cottage Grove") and LSP-Whitewater Limited
Partnership ("Whitewater" and, together with Cottage Grove, the "Partnerships")
believe that the disclosures made are adequate to make the information
presented not misleading, these financial statements should be read in
conjunction with the audited financial statements included in the Annual
Report on Form 10-K for the year ended December 31, 1996, filed by Funding,
Cottage Grove and Whitewater.
PART I/ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
Cottage Grove is a single purpose Delaware limited partnership established
on December 14, 1993 to develop, finance, construct, own, operate and manage
a gas-fired cogeneration facility located in Cottage Grove, Minnesota (the
"Cottage Grove Power Plant"). Whitewater is a single purpose Delaware limited
partnership established on December 14, 1993 to develop, finance, construct,
own, operate and manage a gas-fired cogeneration facility located in
Whitewater, Wisconsin (the "Whitewater Power Plant", and collectively with the
Cottage Grove Power Plant, the "Power Plants" or "Projects"). Since their
formation in 1993, the Partnerships have been developing and constructing their
respective power plants and have generated no operating revenues or expenses.
Cottage Grove
Power Plant Construction
The Cottage Grove Power Plant is being constructed by Westinghouse Electric
Corporation ("Westinghouse Electric" or the "Contractor") pursuant to a
turnkey construction contract (the "Cottage Grove Construction Contract").
Westinghouse Electric had agreed to complete the construction and start-up of
the Cottage Grove Power Plant to specified performance levels by May 31, 1997.
Westinghouse began construction of the Cottage Grove Power Plant on June 30,
1995.
At June 30, 1997, the construction and start-up of the Cottage Grove Power
Plant had not been completed. The Contractor has experienced a number of
equipment difficulties which have delayed the completion of construction and
start-up. These difficulties include (i) inability to meet performance and
emission requirements when running the Power Plant on fuel oil and (ii)
increased utilization of catalyst to control emissions. These difficulties
have caused a more lengthy start-up period than originally anticipated.
In order to demonstrate that construction of the Power Plant is complete,
the Contractor is required to demonstrate, with the concurrence of Cottage
Grove and R.W. Beck, the independent engineer, that: (i) the Power Plant is
mechanically and electrically sound and free from known defects or
deficiencies that affect the safety and reliability of the Power Plant,
(ii) the Power Plant meets certain performance and emissions guarantees,
(iii) the Power Plant successfully completes testing designed to demonstrate
the Power Plant's reliability, and (iv) the Power Plant successfully completes
testing required by Cottage Grove's power sales contract ("PPA") with Northern
States Power Company ("NSP"). As of June 30, 1997, engineering, procurement
and construction was estimated to be 99% complete. Cottage Grove currently
estimates that construction and start-up of the Cottage Grove Power Plant will
be completed on August 29, 1997.
3
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As a result of the Contractor's failure to complete construction and
start-up of the Cottage Grove Power Plant by May 31, 1997, the Contractor is
required, until completion of construction, to reimburse Cottage Grove for
extension fees paid under its PPA, and to pay certain liquidated damages.
Cottage Grove has extended the milestone for the delivery of energy under its
PPA to August 31, 1997. Cottage Grove has recorded receivables from the
Contractor of $1,732,730 at June 30, 1997, which is comprised of reimbursable
extension fees of $800,001 and delay liquidated damages of $932,729. Also, as
of June 30, 1997, Cottage Grove had retained construction contract payments
(in the form of cash and an irrevocable letter of credit) totaling $10,715,048.
Liquidity and Capital Resources
For the three months ended June 30, 1997, Cottage Grove capitalized
construction costs totaling approximately $8,296,000. At June 30, 1997,
Cottage Grove's investments held by trustee totaled $29,055,681, of which
$6,043,000 was held in a fund reserved for debt service, and $7,657,296 was
held in a contingency fund to pay for project cost overruns. Cottage Grove
transferred $1,277,235 from the contingency fund during the second quarter of
1997 to fund estimated increases to budgeted construction costs.
On April 25, 1997, Cottage Grove received an equity contribution of
$18,167,000 from TPC Cottage Grove, Inc. The funds were deposited with
Cottage Grove's trustee and were available upon deposit for payment of Cottage
Grove project costs.
Whitewater
Power Plant Construction
The Whitewater Power Plant is being constructed by Westinghouse Electric
Corporation ("Westinghouse Electric" or the "Contractor") pursuant to a
turnkey construction contract (the "Whitewater Construction Contract").
Westinghouse Electric had agreed to complete the construction and start-up of
the Whitewater Power Plant to specified performance levels by May 31, 1997.
Westinghouse began construction of the Whitewater Power Plant on June 30, 1995.
At June 30, 1997, the construction and start-up of the Whitewater Power
Plant had not been completed. The Contractor has experienced a number of
equipment difficulties which have delayed the completion of construction and
start-up. These difficulties include (i) inability to meet performance and
emission requirements when running the Power Plant on fuel oil, (ii) increased
utilization of catalyst to control emissions, and (iii) a leak in the high
pressure section of the steam turbine. These difficulties have caused a more
lengthy start-up period than originally anticipated.
In order to demonstrate that construction of the Power Plant is complete,
the Contractor is required to demonstrate, with the concurrence of Whitewater
and R.W. Beck, the independent engineer, that: (i) the Power Plant is
mechanically and electrically sound and free from known defects or
deficiencies that affect the safety and reliability of the Power Plant,
(ii) the Power Plant meets certain performance and emissions guarantees,
(iii) the Power Plant successfully completes testing designed to demonstrate
the Power Plant's reliability, and (iv) the Power Plant successfully completes
testing required by Whitewater's PPA with Wisconsin Electric Power Company
("WEPCO"). As of June 30, 1997, engineering, procurement and construction was
estimated to be 99% complete. Whitewater currently estimates that
construction and start-up of the Whitewater Power Plant will be completed on
August 18, 1997.
As a result of the Contractor's failure to complete construction and
start-up of the Whitewater Power Plant by May 31, 1997, the Contractor is
required, until completion of construction, to reimburse Whitewater for
extension fees paid under its PPA, and to pay certain liquidated damages.
Whitewater has extended the milestone for the delivery of energy under its PPA
to August 18, 1997. Whitewater has recorded receivables from the Contractor of
$983,764 for delay liquidated damages at June 30, 1997. Also, as of June 30,
1997, Whitewater had retained construction contract payments (in the form of
cash and an irrevocable letter of credit) totaling $10,997,751.
4
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Liquidity and Capital Resources
For the three months ended June 30, 1997, Whitewater capitalized
construction costs totaling approximately $7,039,000. At June 30, 1997,
Whitewater's investments held by trustee totaled $30,932,826, of which
$6,900,000 was held in a fund reserved for debt service, and $7,706,049 was
held in a contingency fund to pay for project cost overruns. Whitewater
transferred $2,270,407 from the contingency fund during the second quarter of
1997 to fund estimated increases to budgeted construction costs.
On April 25, 1997, Whitewater received an equity contribution of
$20,556,000 from TPC Whitewater, Inc. The funds were deposited with
Whitewater's trustee and were available upon deposit for payment of Whitewater
project costs.
Replacement Power
In accordance with Whitewater's PPA, Whitewater is responsible for
reimbursing WEPCO for the actual increased costs of capacity and energy
acquired to replace the capacity and energy which were to be provided by the
Whitewater Power Plant. Whitewater's obligation to reimburse WEPCO for these
"Replacement Power" costs began on June 23, 1997 and continues until
construction and start-up of the Whitewater Power Plant is complete.
Whitewater has an obligation for Replacement Power costs if WEPCO's actual
costs of capacity and energy exceed the amounts which would have been paid to
Whitewater under the PPA. For the period from June 23, 1997 through
June 30, 1997, WEPCO has provided an invoice for Replacement Power costs in
the amount of $174,860. This amount has been reflected in Whitewater's
balance sheet as of June 30, 1997, and in its statements of cash flows for
the periods then ended. Whitewater's obligation for Replacement Power costs
is a project cost and will be payable from the project's contingency fund.
Greenhouse
Whitewater has a construction contract with Dominion Growers/Whitewater,
L.C. ("Dominion") to design, engineer, interconnect, construct and start-up a
greenhouse (the "Greenhouse") adjacent to the Whitewater site. Construction
of the Greenhouse was substantially completed on June 2, 1997. On June 6,
1997, an amendment to the construction contract was executed to clarify
Dominion's fee for construction of the Greenhouse and to reflect other
revisions to the construction contract. Final completion of Greenhouse
construction is anticipated by August 31, 1997.
Whitewater had a lease agreement with Dominion (the "Dominion Lease").
Under the Dominion Lease, Whitewater had agreed to lease to Dominion the
Greenhouse and an approximate 38-acre parcel of land upon which the Greenhouse
has been constructed. The Dominion Lease was to commence upon substantial
completion of construction of the Greenhouse and expire on the later of (i)
the 25th anniversary of the Whitewater Commercial Operations Date, and (ii)
May 31, 2022. In connection with the Dominion Lease, Whitewater also had a
hot water supply agreement with Dominion to supply the hot water requirements
of the Greenhouse.
Due to changed circumstances occurring in 1996, Whitewater and Dominion
agreed to terminate the Dominion Lease and the related hot water supply
agreement with Dominion. To replace these Dominion arrangements, Whitewater
has entered into an operational services agreement (the "Greenhouse
Operational Services Agreement") with FloriCulture, Inc. ("FloriCulture"), an
affiliate of Whitewater, to operate the Greenhouse for the benefit of
Whitewater.
Under the terms of the Greenhouse Operational Services Agreement,
FloriCulture is required to provide all the services necessary to produce,
market, and sell horticultural products and to operate and maintain the
Greenhouse facility. As compensation for its services, FloriCulture is
reimbursed on a monthly basis for its approved costs in connection with
conducting the Greenhouse business and operating the Greenhouse facility, and
will receive an annual management fee equal to 12% of Whitewater's net profit
from the operation of the Greenhouse. The term of the Greenhouse Operational
Services Agreement expires on May 31, 2022, unless terminated earlier by
mutual written agreement of Whitewater and FloriCulture.
5
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PART II/ITEM 1. LEGAL PROCEEDINGS
During the second quarter of 1997, Funding, Cottage Grove and Whitewater
have not been parties to any material legal proceedings.
PART II/ITEM 2. CHANGES IN SECURITIES
None.
PART II/ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
PART II/ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II/ITEM 5. OTHER INFORMATION
None.
PART II/ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See the Exhibits Index at EI-1.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.
6
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SIGNATURES: Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
of the undersigned thereunto duly authorized.
LS POWER FUNDING CORPORATION
By: /s/ Michael S. Liebelson
Name: Michael S. Liebelson
Title: Managing Director and Treasurer
Date: August 12, 1997
LSP-COTTAGE GROVE, L.P.
By: LSP-Cottage Grove, Inc.
Its: General Partner
By: /s/ Michael S. Liebelson
Name: Michael S. Liebelson
Title: Managing Director and Treasurer
Date: August 12, 1997
LSP-WHITEWATER LIMITED PARTNERSHIP
By: LSP-Whitewater I, Inc.
Its: General Partner
By: /s/ Michael S. Liebelson
Name: Michael S. Liebelson
Title: Managing Director and Treasurer
Date: August 12, 1997
7
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LS Power Funding Corporation
LSP-Cottage Grove, L.P.
LSP-Whitewater Limited Partnership
Financial Statement Index
Page
LS POWER FUNDING CORPORATION
Balance sheets as of June 30, 1997 and December 31, 1996. . . . . .F-2
Statements of operations for the three months ended
June 30, 1997 and 1996, and for the six months
ended June 30, 1997 and 1996. . . . . . . . . . . . . . . . . . .F-3
Statements of cash flows for the six months ended
June 30, 1997 and 1996. . . . . . . . . . . . . . . . . . . . . .F-4
Notes to financial statements . . . . . . . . . . . . . . . . . . .F-5
LSP-COTTAGE GROVE, L.P.
Balance sheets as of June 30, 1997 and December 31, 1996. . . . . .F-7
Statements of cash flows for the six months ended June 30, 1997
and 1996, and the period from Inception (December 14, 1993)
to June 30, 1997. . . . . . . . . . . . . . . . . . . . . . . . .F-8
Notes to financial statements . . . . . . . . . . . . . . . . . . .F-9
LSP-WHITEWATER LIMITED PARTNERSHIP
Balance sheets as of June 30, 1997 and December 31, 1996. . . . . F-11
Statements of cash flows for the six months ended June 30, 1997
and 1996, and the period from Inception (December 14, 1993)
to June 30, 1997. . . . . . . . . . . . . . . . . . . . . . . . F-12
Notes to financial statements . . . . . . . . . . . . . . . . . . F-13
F-1
<PAGE>
LS POWER FUNDING CORPORATION
BALANCE SHEETS
June 30, December 31,
1997 1996
(Unaudited)
ASSETS
CURRENT ASSET - Cash $ 1,000 $ 1,000
INVESTMENT IN FIRST MORTGAGE BONDS 332,000,000 332,000,000
Total Assets $332,001,000 $332,001,000
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITY - Senior Secured Bonds Payable $332,000,000 $332,000,000
CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 1,000
shares authorized, 100 shares issued
and outstanding 1 1
Additional paid-in capital 999 999
Total Stockholders' Equity 1,000 1,000
Total Liabilities and
Stockholders' Equity $332,001,000 $332,001,000
See accompanying notes to financial statements.
F-2
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LS POWER FUNDING CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
Interest Income $6,471,549 $6,471,549 $12,943,098 $12,943,098
Interest Expense 6,471,549 6,471,549 12,943,098 12,943,098
Net Income (Loss) $ --- $ --- $ --- $ ---
See accompanying notes to financial statements.
F-3
<PAGE>
LS POWER FUNDING CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
1997 1996
Cash Flows From Operating Activities $ --- $ ---
Cash Flows From Investing Activities --- ---
Cash Flows From Financing Activities --- ---
Increase in cash --- ---
Cash, beginning of period 1,000 1,000
Cash, end of period $1,000 $1,000
See accompanying notes to financial statements.
F-4
<PAGE>
LS POWER FUNDING CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. FINANCIAL STATEMENTS
The balance sheet as of June 30, 1997, and the statements of operations and
cash flows for the periods ended June 30, 1997 and 1996 have been prepared by
LS Power Funding Corporation ("Funding"), without audit. In the opinion of
management, these financial statements include all adjustments (consisting of
normal recurring adjustments) necessary to present fairly its financial
position as of June 30, 1997, and the results of its operations and its cash
flows for the periods ended June 30, 1997 and 1996.
The unaudited financial statements included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. While Funding believes that the
disclosures made are adequate to make the information presented not misleading,
these financial statements should be read in conjunction with Funding's audited
financial statements included in Funding's Annual Report on Form 10-K for the
year ended December 31, 1996.
2. ORGANIZATION
Funding was established on June 23, 1995 as a special purpose Delaware
corporation to issue debt securities in connection with financing construction
of two gas fired cogeneration facilities, one located in Cottage Grove,
Minnesota (the "Cottage Grove Project") and the other located in Whitewater,
Wisconsin (the "Whitewater Project"). LSP-Cottage Grove, L.P.("Cottage Grove")
and LSP-Whitewater Limited Partnership ("Whitewater") are Delaware limited
partnerships established to develop, finance, construct, own, operate and
manage the facilities at Cottage Grove and Whitewater, respectively. Cottage
Grove and Whitewater each own 50% of the outstanding stock of Funding.
Funding's sole business activities are limited to maintaining its organization
and activities necessary pursuant to the offering of debt securities and its
acquisition of debt securities issued by Cottage Grove and Whitewater.
3. CONSTRUCTION
Cottage Grove
Cottage Grove has entered into a $109 million turnkey construction contract
(inclusive of executed change orders) with Westinghouse Electric Corporation
("Westinghouse Electric"). Westinghouse Electric has committed to complete
the construction and start-up of the Cottage Grove Project to specified
performance levels by May 31, 1997 and is required under the contract to
reimburse Cottage Grove for extension fees paid under its power sales contract
with Northern States Power Company ("NSP"), and to pay certain liquidated
damages in the event of a delay. At June 30, 1997, the construction and
start-up of the Cottage Grove Project had not been completed. Cottage Grove
has recorded receivables from Westinghouse Electric of $1,732,730 at June 30,
1997, which is comprised of reimbursable extension fees of $800,001 and delay
liquidated damages of $932,729.
As of June 30, 1997, engineering, procurement and construction was
estimated to be 99% complete and total costs incurred to date under the
construction contract were approximately $106,061,000. Cottage Grove currently
estimates that construction and start-up of the Cottage Grove Project will be
completed on August 29, 1997.
F-5
<PAGE>
LS POWER FUNDING CORPORATION
NOTES TO FINANCIAL STATEMENTS - (Concluded)
Whitewater
Whitewater has entered into a $118 million turnkey construction contract
(inclusive of executed change orders) with Westinghouse Electric.
Westinghouse Electric has committed to complete the construction and start-up
of the Whitewater Project to specified performance levels by May 31, 1997 and
is required under the contract to reimburse Whitewater for extension fees paid
under its power sales contract with Wisconsin Electric Power Company ("WEPCO"),
and to pay certain liquidated damages in the event of a delay. At June 30,
1997, the construction and start-up of the Whitewater Project had not been
completed. Whitewater has recorded receivables from Westinghouse Electric
for delay liquidated damages of $983,764 at June 30, 1997.
As of June 30, 1997, engineering, procurement and construction was estimated
to be 99% complete and total costs incurred to date under the construction
contract were approximately $112,968,000. Whitewater currently estimates that
construction and start-up of the Whitewater Project will be completed on August
18, 1997.
General
As with any major construction effort, construction of the Cottage Grove
and Whitewater Projects involves many risks, including shortages of materials
and labor, work stoppages, labor disputes, weather interferences, engineering,
environmental permitting or geological problems and unanticipated cost
increases for reasons beyond the control of Westinghouse Electric, the
occurrence of which could give rise to delays, cost overruns or performance
deficiencies, or otherwise adversely affect the design or operation of the
Cottage Grove and Whitewater Projects.
4. POWER SALES CONTRACTS
Cottage Grove
Cottage Grove has entered into a 30 year power sales contract with NSP.
The power sales contract is subject to termination if specified construction,
energy delivery and other milestone deadlines are not met. The power sales
contract requires delivery of energy by May, 1997. The milestone for the
delivery of energy may be extended on a month-to-month basis for up to 26
months for a fee of $400,000 per month for each of the first two months, and
$266,667 per month for each month thereafter. Cottage Grove has extended the
milestone for the delivery of energy to August 31, 1997.
Whitewater
Whitewater has entered into a 25 year power sales contract with WEPCO. The
power sales contract is subject to termination if specified construction,
energy delivery and other milestone deadlines are not met. The power sales
contract requires delivery of energy by June, 1997. The milestone for the
delivery of energy may be extended on a daily basis for up to 24 months, less
extensions of other milestones, for a fee of $50,000 per month. Whitewater
has extended the milestone for the delivery of energy to August 18, 1997.
F-6
<PAGE>
LSP-COTTAGE GROVE, L.P.
(a Delaware Limited Partnership in the Development Stage)
BALANCE SHEETS
June 30, December 31,
1997 1996
(Unaudited)
ASSETS
CURRENT ASSETS - Cash $ 103,638 $ 103,224
INVESTMENTS HELD BY TRUSTEE, stated at
cost which approximates market value 29,055,681 28,108,244
PLANT, PROPERTY AND EQUIPMENT 145,071,250 125,596,814
DEBT ISSUANCE AND FINANCING COSTS 6,648,004 6,773,753
OTHER ASSETS 500 500
Total Assets $180,879,073 $160,582,535
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITY - Accounts payable $ 7,711,073 $ 5,581,535
FIRST MORTGAGE BONDS PAYABLE 155,000,000 155,000,000
Total Liabilities 162,711,073 160,581,535
CONTINGENCIES
PARTNERS' CAPITAL 18,168,000 1,000
Total Liabilities and Partners' Capital $180,879,073 $160,582,535
See accompanying notes to financial statements.
F-7
<PAGE>
LSP-COTTAGE GROVE, L.P.
(a Delaware Limited Partnership in the Development Stage)
STATEMENTS OF CASH FLOWS
(Unaudited)
December 14,
1993 (inception)
Six Months Ended June 30, to June 30,
1997 1996 1997
Cash Flows From Investing Activities:
Acquisition of land and
improvements $ --- $ --- $ (97,590)
Payments on construction
in progress (18,024,600) (39,133,197) (145,470,724)
Investments held by trustee (18,167,000) --- (173,167,000)
Investments drawn for
construction 18,025,014 39,322,340 152,793,591
Investment in LS Power
Funding Corporation --- --- (500)
Cash provided by (used in)
investing activities (18,166,586) 189,143 (165,942,223)
Cash Flows From Financing Activities:
Debt issuance and
financing costs --- (153,348) (7,122,139)
Proceeds from First
Mortgage Bonds --- --- 155,000,000
Capital contributions 18,167,000 --- 18,168,000
Cash provided by (used in)
financing activities 18,167,000 (153,348) 166,045,861
Increase in cash 414 35,795 103,638
Cash, beginning of period 103,224 55,030 ---
Cash, end of period $ 103,638 $ 90,825 $ 103,638
RECONCILIATION OF CHANGES IN
CONSTRUCTION IN PROGRESS
Increase in total
construction in progress $(19,474,436) $(37,849,335) $(144,973,660)
Amortization of debt
issuance and financing costs 125,749 118,360 474,135
Interest income on
investments held by trustee (805,451) (2,668,376) (8,682,272)
Decrease in other current assets --- 12,926 ---
Increase in accounts payable 2,129,538 1,253,228 7,711,073
Payments on construction
in progress $(18,024,600) $(39,133,197) $(145,470,724)
See accompanying notes to financial statements.
F-8
<PAGE>
LSP-COTTAGE GROVE, L.P.
(a Delaware Limited Partnership in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
1. FINANCIAL STATEMENTS
The balance sheet as of June 30, 1997, and the statements of cash flows for
the periods ended June 30, 1997 and 1996 have been prepared by LSP-Cottage
Grove, L.P. (the "Partnership"), without audit. In the opinion of management,
these financial statements include all adjustments (consisting of normal
recurring adjustments) necessary to present fairly its financial position as
of June 30, 1997, and its cash flows for the periods ended June 30, 1997 and
1996.
The unaudited financial statements included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. While the Partnership believes
that the disclosures made are adequate to make the information presented not
misleading, these financial statements should be read in conjunction with the
Partnership's audited financial statements included in the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1996.
2. ORGANIZATION
The Partnership is a Delaware limited partnership that was formed on
December 14, 1993 to develop, finance, construct, own and operate a gas-fired
cogeneration facility with a design capacity of approximately 245 megawatts to
be located in Cottage Grove, Minnesota (the "Cottage Grove Project"). The
Partnership holds a 50% equity ownership interest in LS Power Funding
Corporation ("Funding"), which was established on June 23, 1995 as a special
purpose Delaware corporation to issue debt securities in connection with
financing construction of the Cottage Grove Project and a similar gas-fired
cogeneration facility to be located in Whitewater, Wisconsin (the "Whitewater
Project"). On June 30, 1995, a portion of the proceeds from the offering and
sale of the debt securities issued by Funding was used to purchase $155
million of debt securities issued simultaneously by the Partnership.
3. INVESTMENTS HELD BY TRUSTEE
Investments held by trustee consists of:
June 30, December 31,
1997 1996
Overnight repurchase obligations $26,081,229 $28,108,244
Accounts receivable - Westinghouse 1,732,730 ---
Accounts receivable - Northern States
Power Company 1,241,722 ---
$29,055,681 $28,108,244
F-9
<PAGE>
LSP-COTTAGE GROVE, L.P.
(a Delaware Limited Partnership in the Development Stage)
NOTES TO FINANCIAL STATEMENTS - (Concluded)
Overnight repurchase obligations are secured by U.S. Treasury notes.
Accounts receivable - Westinghouse represents amounts due from Westinghouse
Electric Corporation ("Westinghouse Electric"), the Partnership's
construction contractor, for reimbursement of extension fees paid to Northern
States Power Company ("NSP") under the Partnership's power sales contract with
NSP, and for delay liquidated damages due as a result of Westinghouse
Electric's failure to complete the construction and start-up of the Cottage
Grove Project by May 31, 1997. Accounts receivable - Northern States Power
Company represents amounts due for test energy delivered to NSP during
start-up of the Cottage Grove Project.
The use of funds held by the trustee is restricted to payment of project
costs, including payment of interest on the First Mortgage Bonds. Investments
held by trustee are carried at cost, which approximated market at June 30,
1997 and December 31, 1996.
4. CONSTRUCTION
The Partnership has entered into a $109 million turnkey construction
contract (inclusive of executed change orders) with Westinghouse Electric.
Westinghouse Electric has committed to complete the construction and start-up
of the Cottage Grove Project to specified performance levels by May 31, 1997
and is required under the contract to reimburse the Partnership for extension
fees paid under its power sales contract with NSP, and to pay certain
liquidated damages in the event of a delay. At June 30, 1997, the
construction and start-up of the Cottage Grove Project had not been completed.
The Partnership has recorded receivables from Westinghouse Electric of
$1,732,730 at June 30, 1997, which is comprised of reimbursable extension fees
of $800,001 and delay liquidated damages of $932,729.
As of June 30, 1997, engineering, procurement and construction was
estimated to be 99% complete and total costs incurred to date under the
construction contract were approximately $106,061,000. The Partnership
currently estimates that construction and start-up of the Cottage Grove
Project will be completed on August 29, 1997. As with any major construction
effort, construction of the Cottage Grove Project involves many risks,
including shortages of materials and labor, work stoppages, labor disputes,
weather interferences, engineering, environmental permitting or geological
problems and unanticipated cost increases for reasons beyond the control of
Westinghouse Electric, the occurrence of which could give rise to delays, cost
overruns or performance deficiencies, or otherwise adversely affect the design
or operation of the Cottage Grove Project.
5. POWER SALES CONTRACT
The Partnership has entered into a 30 year power sales contract with NSP.
The power sales contract is subject to termination if specified construction,
energy delivery and other milestone deadlines are not met. The power sales
contract requires delivery of energy by May, 1997. The milestone for the
delivery of energy may be extended on a month-to-month basis for up to 26
months for a fee of $400,000 per month for each of the first two months, and
$266,667 per month for each month thereafter. The Partnership has extended the
milestone for the delivery of energy to August 31, 1997.
F-10
<PAGE>
LSP-WHITEWATER LIMITED PARTNERSHIP
(a Delaware Limited Partnership in the Development Stage)
BALANCE SHEETS
June 30, December 31,
1997 1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 447,636 $ 101,114
Other current assets --- 575
Total Current Assets 447,636 101,689
INVESTMENTS HELD BY TRUSTEE, stated at
cost which approximates market value 30,932,826 34,414,528
PLANT, PROPERTY AND EQUIPMENT 167,263,637 149,232,431
DEBT ISSUANCE AND FINANCING COSTS 6,740,539 6,868,561
OTHER ASSETS 500 500
Total Assets $205,385,138 $190,617,709
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITY - Accounts payable $ 7,828,138 $ 13,616,709
FIRST MORTGAGE BONDS PAYABLE 177,000,000 177,000,000
Total Liabilities 184,828,138 190,616,709
CONTINGENCIES
PARTNERS' CAPITAL 20,557,000 1,000
Total Liabilities and Partners' Capital $205,385,138 $190,617,709
See accompanying notes to financial statements.
F-11
<PAGE>
LSP-WHITEWATER LIMITED PARTNERSHIP
(a Delaware Limited Partnership in the Development Stage)
STATEMENTS OF CASH FLOWS
(Unaudited)
December 14,
1993 (inception)
Six Months Ended June 30, to June 30,
1997 1996 1997
Cash Flows From Investing Activities:
Acquisition of land
and improvements $ --- $ (145,765) $ (3,538,281)
Payments on construction
in progress (24,557,080) (43,223,420) (165,287,819)
Investments held by trustee (20,556,000) --- (197,556,000)
Investments drawn
for construction 24,903,602 43,517,756 176,496,676
Investment in LS Power
Funding Corporation --- --- (500)
Cash provided by (used in)
investing activities (20,209,478) 148,571 (189,885,924)
Cash Flows From Financing Activities:
Debt issuance and
financing costs --- (153,348) (7,223,440)
Proceeds from
First Mortgage Bonds --- --- 177,000,000
Capital contributions 20,556,000 --- 20,557,000
Cash provided by (used in)
financing activities 20,556,000 (153,348) 190,333,560
Increase (decrease) in cash 346,522 (4,777) 447,636
Cash, beginning of period 101,114 71,441 ---
Cash, end of period $ 447,636 $ 66,664 $ 447,636
RECONCILIATION OF CHANGES IN
CONSTRUCTION IN PROGRESS
Increase in total
construction in progress $(18,031,206) $(41,754,725) $(163,725,356)
Amortization of debt issuance
and financing costs 128,022 120,548 482,901
Interest income on
investments held by trustee (865,900) (3,023,712) (9,873,502)
Decrease in other
current assets 575 --- ---
Increase (decrease) in
accounts payable (5,788,571) 1,434,469 7,828,138
Payments on
construction in progress $(24,557,080) $(43,223,420) $(165,287,819)
See accompanying notes to financial statements.
F-12
<PAGE>
LSP-WHITEWATER LIMITED PARTNERSHIP
(a Delaware Limited Partnership in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
1. FINANCIAL STATEMENTS
The balance sheet as of June 30, 1997, and the statements of cash flows for
the periods ended June 30, 1997 and 1996 have been prepared by LSP-Whitewater
Limited Partnership (the "Partnership"), without audit. In the opinion of
management, these financial statements include all adjustments (consisting of
normal recurring adjustments) necessary to present fairly its financial
position as of June 30, 1997, and its cash flows for the periods ended June 30,
1997 and 1996.
The unaudited financial statements included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. While the Partnership believes that
the disclosures made are adequate to make the information presented not
misleading, these financial statements should be read in conjunction with the
Partnership's audited financial statements included in the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1996.
2. ORGANIZATION
The Partnership is a Delaware limited partnership that was formed on
December 14, 1993 to develop, finance, construct, own and operate a gas-fired
cogeneration facility with a design capacity of approximately 245 megawatts to
be located in Whitewater, Wisconsin (the "Whitewater Project"). The
Partnership holds a 50% equity ownership interest in LS Power Funding
Corporation ("Funding"), which was established on June 23, 1995 as a special
purpose Delaware corporation to issue debt securities in connection with
financing construction of the Whitewater Project and a similar gas-fired
cogeneration facility to be located in Cottage Grove, Minnesota (the "Cottage
Grove Project"). On June 30, 1995, a portion of the proceeds from the
offering and sale of the debt securities issued by Funding was used to
purchase $177 million of debt securities issued simultaneously by the
Partnership.
3. INVESTMENTS HELD BY TRUSTEE
Investments held by trustee consists of:
June 30, December 31,
1997 1996
Overnight repurchase obligations $29,017,379 $34,414,528
Accounts receivable - Westinghouse 983,764 ---
Accounts receivable - Wisconsin Electric
Power Company 931,683 ---
$30,932,826 $34,414,528
F-13
<PAGE>
LSP-WHITEWATER LIMITED PARTNERSHIP
(a Delaware Limited Partnership in the Development Stage)
NOTES TO FINANCIAL STATEMENTS - (Continued)
Overnight repurchase obligations are secured by U.S. Treasury notes.
Accounts receivable - Westinghouse represents amounts due from Westinghouse
Electric Corporation ("Westinghouse Electric"), the Partnership's construction
contractor, for delay liquidated damages due as a result of Westinghouse
Electric's failure to complete the construction and start-up of the Whitewater
Project by May 31, 1997. Accounts receivable - Wisconsin Electric Power
Company represents amounts due for test energy delivered to Wisconsin Electric
Power Company ("WEPCO") during start-up of the Whitewater Project.
The use of funds held by the trustee is restricted to payment of project
costs, including payment of interest on the First Mortgage Bonds. Investments
held by trustee are carried at cost, which approximated market at June 30, 1997
and December 31, 1996.
4. CONSTRUCTION
The Partnership has entered into a $118 million turnkey construction
contract (inclusive of executed change orders) with Westinghouse Electric.
Westinghouse Electric has committed to complete the construction and start-up
of the Whitewater Project to specified performance levels by May 31, 1997 and
is required under the contract to reimburse the Partnership for extension fees
paid under its power sales contract with WEPCO, and to pay certain liquidated
damages in the event of a delay. At June 30, 1997, the construction and
start-up of the Whitewater Project had not been completed. The Partnership
has recorded receivables from Westinghouse Electric for delay liquidated
damages of $983,764 at June 30, 1997.
As of June 30, 1997, engineering, procurement and construction was
estimated to be 99% complete and total costs incurred to date under the
construction contract were approximately $112,968,000. The Partnership
currently estimates that construction and start-up of the Whitewater Project
will be completed on August 18, 1997. As with any major construction effort,
construction of the Whitewater Project involves many risks, including
shortages of materials and labor, work stoppages, labor disputes, weather
interferences, engineering, environmental permitting or geological problems
and unanticipated cost increases for reasons beyond the control of
Westinghouse Electric, the occurrence of which could give rise to delays,
cost overruns or performance deficiencies, or otherwise adversely affect the
design or operation of the Whitewater Project.
5. POWER SALES CONTRACT
The Partnership has entered into a 25 year power sales contract with WEPCO.
The power sales contract is subject to termination if specified construction,
energy delivery and other milestone deadlines are not met. The power sales
contract requires delivery of energy by June, 1997. The milestone for the
delivery of energy may be extended on a daily basis for up to 24 months, less
extensions of other milestones, for a fee of $50,000 per month. The
Partnership has extended the milestone for the delivery of energy to August
18, 1997.
In accordance with the power sales contract with WEPCO, the Partnership is
responsible for reimbursing WEPCO for the actual increased costs of capacity
and energy acquired to replace the capacity and energy which were to be
provided by the Whitewater Project. The Partnership's obligation to reimburse
WEPCO for these "Replacement Power" costs began on June 23, 1997 and continues
until construction and start-up of the Whitewater Project is complete. The
Partnership has an obligation for Replacement Power costs if WEPCO's actual
costs of capacity and energy exceed the amounts which would have been paid to
the Partnership under the PPA. For the period from June 23, 1997 through June
30, 1997, WEPCO has provided an invoice for Replacement Power costs in the
amount of $174,860. This amount has been reflected in the Partnership's balance
sheet as of June 30, 1997, and in its statements of cash flows for the periods
then ended.
F-14
<PAGE>
LS Power Funding Corporation
LSP-Cottage Grove, L.P.
LSP-Whitewater Limited Partnership
Exhibits Index
Exhibit No. Description
3.1. Certificate of Incorporation of LS Power Funding Corporation.*
3.2. Bylaws of LS Power Funding Corporation.*
3.3. Certificated of Limited Partnership of LSP-Cottage Grove, L.P.*
3.4. Amended and Restated Partnership Agreement dated as of June 30,
1995 among LSP-Cottage Grove, Inc., Granite Power Partners, L.P.
and TPC Cottage Grove, Inc.*
3.4.1 Amendment #1 to Cottage Grove Partnership Agreement.****
3.5. Certificate of Limited Partnership of LSP-Whitewater Limited
Partnership.*
3.6. Amended and Restated Partnership Agreement dated as of June 30, 1995
among LSP-Whitewater I, Inc., Granite Power Partners, L.P. and TPC
Whitewater, Inc.*
4.1. Trust Indenture dated as of May 1, 1995 by and among LS Power
Funding Corporation and IBJ Schroder Bank & Trust Company, as
Trustee, with respect to the Senior Secured Bonds (as supplemented by
the First Supplemental Indenture dated as of May 1, 1995 by and among
LS Power Funding Corporation and IBJ Schroder Bank & Trust
Company, as Trustee).*
4.2. Trust Indenture dated as of May 1, 1995 by and among LSP-Cottage
Grove, L.P. and IBJ Schroder Bank & Trust Company, as Trustee, with
respect to the Cottage Grove First Mortgage Bonds (as supplemented by
the First Supplemental Indenture dated as of May 1, 1995 by and among
LSP-Cottage Grove, L.P. and IBJ Schroder Bank & Trust Company, as
Trustee).*
EI-1
<PAGE>
Exhibit No. Description
4.3. Trust Indenture dated as of May 1, 1995 by and among LSP-Whitewater
Limited Partnership and IBJ Schroder Bank & Trust Company, as
Trustee, with respect to the Whitewater First Mortgage Bonds (as
supplemented by the First Supplemental Indenture dated as of May 1,
1995 by and among LSP-Whitewater Limited Partnership and IBJ
Schroder Bank & Trust Company, as Trustee).*
4.4. Registration Rights Agreement dated as of June 30, 1995 by and among
Chase Securities, Inc., Morgan Stanley & Co. Incorporated, LS Power
Funding Corporation, LSP-Cottage Grove, L.P. and LSP-Whitewater
Limited Partnership.*
4.5. Form of Senior Secured Bond (included in Exhibit 4.1).*
4.6. Form of Cottage Grove First Mortgage Bond (included in Exhibit 4.2).*
4.7. Form of Whitewater First Mortgage Bond (included in Exhibit 4.3).*
LS Power Funding Corporation Agreements
10.20. Agency Agreement dated May 1, 1995 between LS Power Funding
Corporation and LSP-Cottage Grove, L.P.*
10.21. Agency Agreement dated May 1, 1995 between LS Power Funding
Corporation and LSP-Whitewater Limited Partnership.*
10.22. Security Agreement (related to Cottage Grove) dated as of May 1,
1995 between LS Power Funding Corporation and IBJ Schroder Bank
& Trust Company, as Trustee.*
10.23. Security Agreement (related to Whitewater) dated as of May 1, 1995
between LS Power Funding Corporation and IBJ Schroder Bank &
Trust Company, as Trustee.*
LSP-Cottage Grove, L.P. Agreements
10.24. Equity Contribution Agreement dated June 30, 1995 among
LSP-Cottage Grove, L.P., TPC Cottage Grove, Inc. and The Chase
Manhattan Bank (National Association), as depositary agent.*
EI-2
<PAGE>
Exhibit No. Description
10.25. Collateral Agency and Intercreditor Agreement dated as of May 1,
1995 among LSP-Cottage Grove, L.P., the L/C Facility Agent (as
defined therein), the Working Capital Agent (as defined therein),
each Permitted Counterparty under any Interest Rate Protection
Agreement (as defined therein), each Additional Permitted Debt Agent
(as defined therein), IBJ Schroder Bank & Trust Company, as trustee,
the Other Representatives (as defined therein) and The Chase
Manhattan Bank (National Association), as depositary agent, and as
collateral agent.*
10.26. Deposit and Disbursement Agreement dated as of May 1, 1995 among
LSP-Cottage Grove, L.P. and The Chase Manhattan Bank (National
Association), as collateral agent, and as depositary agent.*
10.27. Credit Agreement dated as of May 1, 1995 among LSP-Cottage Grove,
L.P., the lenders party thereto and The Chase Manhattan Bank
(National Association), as agent.*
10.27.1 Instrument of Assignment, Resignation, Appointment, Acceptance and
Designation dated as of December 31, 1995 among The Chase
Manhattan Bank (National Association), Dresdner Bank AG, New
York and Grand Cayman Branches, and LSP-Cottage Grove, L.P.***
10.27.2 Amendment No. 1 to Credit Agreement dated as of December 31,
1995 among LSP-Cottage Grove, L.P. and Dresdner Bank AG, New
York Branch, as agent.***
10.28. Assignment and Security Agreement dated as of May 1, 1995 between
LSP-Cottage Grove, L.P. and The Chase Manhattan Bank (National
Association), as collateral agent.*
10.29. Pledge Agreement dated as of May 1, 1995 between LSP-Cottage
Grove, L.P. and IBJ Schroder Bank & Trust Company, as trustee.*
10.30. Mortgage, Assignment of Rents, Security
Agreement and Fixture Filing dated as of May 1, 1995 between
LSP-Cottage Grove, L.P. and The Chase Manhattan Bank (National
Association), as collateral agent, for the benefit of IBJ Schroder
Bank & Trust Company, as trustee.*
EI-3
<PAGE>
Exhibit No. Description
10.31. Mortgage, Assignment of Rents, Security Agreement and Fixture
Filing dated as of May 1, 1995 between LSP-Cottage Grove,
L.P. and The Chase Manhattan Bank (National Association), as
collateral agent, for the benefit of The Chase Manhattan Bank
(National Association), as agent under the Credit Agreement.*
10.32. Subordinated Mortgage, Assignment of Rents, Security
Assignment and Fixture Filing dated as of May 1, 1995 by
LSP-Cottage Grove, L.P., as mortgagor, and Northern States
Power Company, as mortgagee.*
10.33. Subordinated Assignment and Security Agreement dated as of
May 1, 1995 between LSP-Cottage Grove, L.P. and Northern
States Power Company.*
10.34. Power Purchase Agreement dated as of May 9, 1994 between
Northern States Power Company and LSP-Cottage Grove, L.P.*
10.35. Letter Agreement dated December 16, 1994 between Northern
States Power Company and LSP-Cottage Grove, L.P.*
10.36. Letter Agreement dated June 1, 1995 between Northern States
Power Company and LSP-Cottage Grove, L.P.*
10.37. Letter Agreement dated June 8, 1995 between Northern States
Power Company and LSP-Cottage Grove, L.P.*
10.38. Letter Agreement dated June 12, 1995 between Northern States
Power Company and LSP-Cottage Grove, L.P.*
10.39. Assignment dated as of November 23, 1994 between Granite
Power Partners, L.P. and LSP-Cottage Grove, L.P.*
10.40. Second Amended and Restated Turnkey Construction Agreement
dated as of April 11, 1995 between Westinghouse Electric
Corporation and LSP-Cottage Grove, L.P.**
10.41. Amended and Restated Operation and Maintenance Agreement
dated as of April 11, 1995 between Westinghouse Operating
Services Company, Inc. and LSP-Cottage Grove, L.P.**
EI-4
<PAGE>
Exhibit No. Description
10.42. Parts Agreement dated as of April 11, 1995 between Westinghouse
Electric Corporation and LSP-Cottage Grove, L.P.**
10.43. Management Services Agreement dated as of May 1, 1995
between LS Power Corporation and LSP-Cottage Grove, L.P.*
10.44. Second Amended and Restated Steam Supply Agreement dated as
of June 19, 1995 between the Minnesota Mining and
Manufacturing Company and LSP-Cottage Grove, L.P.*
10.45. Purchase and Sale Agreement dated September 30, 1994 between
the Minnesota Mining and Manufacturing Company and
LSP-Cottage Grove, L.P.*
10.46. Letter Agreement (land and easement) dated September 30, 1994
between the Minnesota Mining and Manufacturing Company and
LSP-Cottage Grove, L.P.*
10.47. Letter Agreement (side letter to steam agreement) dated
September 30, 1994 between the Minnesota Mining and
Manufacturing Company and LSP-Cottage Grove, L.P.*
10.48. Gas Sales Contract dated as of December 22, 1994 between
Natural Gas Clearinghouse and LSP-Cottage Grove, L.P.*
10.49. First Amendment to Gas Sales Contract dated as of April 18,
1995 between Natural Gas Clearinghouse and LSP-Cottage
Grove, L.P.*
10.50. Gas Sales Contract dated as of February 16, 1995 among Aquila
Energy Marketing Corporation, UtiliCorp United, Inc. and
LSP-Cottage Grove, L.P.*
10.51. First Amendment to Gas Sales Contract dated as of April 26,
1995 among Aquila Energy Marketing Corporation, UtiliCorp
United, Inc. and LSP-Cottage Grove, L.P.*
10.52. Amended and Restated Gas Supply Transportation Agreement
dated as of May 8, 1995 between Peoples Natural Gas Company
and LSP-Cottage Grove, L.P.*
EI-5
<PAGE>
Exhibit No. Description
10.53. Amended and Restated Cottage Grove Letter Agreement dated as
of April 10, 1995 between Northern Natural Gas Company,
Peoples Natural Gas Company and LSP-Cottage Grove, L.P.*
10.54. Firm Throughput Service Agreement (Northern Contract #24042)
dated April 25, 1995 between Northern Natural Gas Company and
LSP-Cottage Grove, L.P.*
10.55. Interruptible Throughput Service Agreement (Northern Contract #
24198) dated April 25, 1995 between Northern Natural Gas
Company and LSP-Cottage Grove, L.P.*
10.56. Interruptible Throughput Service Agreement (Northern Contract
#24199) dated April 25, 1995 between Northern Natural Gas
Company and LSP-Cottage Grove, L.P.*
10.57. Firm Deferred Delivery Service Agreement (Northern Contract
#23281) dated as of April 25, 1995 between Northern Natural
Gas Company and LSP-Cottage Grove, L.P.*
10.58. Interruptible Deferred Delivery Service Agreement (Northern
Contract #24203) dated as of April 25, 1995 between Northern
Natural Gas Company and LSP-Cottage Grove, L.P.*
10.59. Letter Agreement dated as of April 21, 1995 between Northern
Natural Gas Company and LSP-Cottage Grove, L.P.*
10.60. Limited Warranty Deed granted by Minnesota Mining and
Manufacturing Company to LSP-Cottage Grove, L.P. dated June
1, 1995.*
10.61. Consent and Agreement dated as of May 1, 1995 among Northern
States Power Company, LSP-Cottage Grove, L.P. and The Chase
Manhattan Bank (National Association), as collateral agent.*
10.62. Consent and Agreement dated as of May 1, 1995 among
Westinghouse Electric Corporation, LSP-Cottage Grove, L.P.
and The Chase Manhattan Bank (National Association), as
collateral agent.*
EI-6
<PAGE>
Exhibit No. Description
10.63. Consent and Agreement dated as of May 1, 1995 among
Westinghouse Operating Services Company, Inc., LSP-Cottage
Grove, L.P. and The Chase Manhattan Bank (National
Association), as collateral agent.*
10.64. Consent and Agreement dated as of May 1, 1995 among
Minnesota Mining and Manufacturing Company, LSP-Cottage
Grove, L.P. and The Chase Manhattan Bank (National
Association), as collateral agent.*
10.65. Consent and Agreement dated as of May 1, 1995 among Natural
Gas Clearinghouse, LSP-Cottage Grove,
L.P. and The Chase Manhattan Bank (National Association), as
collateral agent.*
10.66. Consent and Agreement dated as of May 1, 1995 among Aquila
Energy Marketing Corporation, UtiliCorp United, Inc.,
LSP-Cottage Grove, L.P. and The Chase Manhattan Bank
(National Association), as collateral agent.*
10.67. Consent and Agreement dated as of May 1, 1995 among Northern
Natural Gas Company, Peoples Natural Gas Company,
LSP-Cottage Grove, L.P. and The Chase Manhattan Bank
(National Association), as collateral agent.*
10.68. Consent and Agreement dated as of May 1, 1995 among Northern
Natural Gas Company, LSP-Cottage Grove, L.P. and The Chase
Manhattan Bank (National Association), as collateral agent.*
10.69. Consent and Agreement dated as of May 1, 1995 among Peoples
Natural Gas Company, LSP-Cottage Grove, L.P. and The Chase
Manhattan Bank (National Association), as collateral agent.*
10.70. Subordinated Creditor Consent and Agreement dated as of May
1, 1995 among LSP-Cottage Grove, L.P., Northern States Power
Company and Westinghouse Electric Corporation.*
10.71. Subordinated Creditor Consent and Agreement dated as of May
1, 1995 among LSP-Cottage Grove, L.P., Northern States Power
Company and Westinghouse Operating Services Company, Inc.*
EI-7
<PAGE>
Exhibit No. Description
10.72. Subordinated Creditor Consent and Agreement dated as of May 1,
1995 among LSP-Cottage Grove, L.P., Northern States Power
Company and Aquila Energy Marketing Corporation.*
10.73. Subordinated Creditor Consent and Agreement dated as of May 1,
1995 among LSP-Cottage Grove, L.P., Northern States Power
Company and Natural Gas Clearinghouse.*
10.74. Subordinated Creditor Consent and Agreement dated as of May 1,
1995 among LSP-Cottage Grove, L.P., Northern States Power
Company and Northern Natural Gas Company.*
10.75. Subordinated Creditor Consent and Agreement dated as of May 1,
1995 among LSP-Cottage Grove, L.P., Northern States Power
Company, Northern Natural Gas Company and Peoples Natural
Gas Company.*
10.76. Subordinated Creditor Consent and Agreement dated as of May 1,
1995 among LSP-Cottage Grove, L.P., Northern States Power
Company and Peoples Natural Gas Company.*
10.77. Subordinated Creditor Consent and Agreement dated as of May 1,
1995 among LSP-Cottage Grove, L.P., Northern States Power
Company and Minnesota Mining and Manufacturing Company.*
10.78. Grants of Easement by Minnesota Mining and Manufacturing
Company to LSP-Cottage Grove, L.P., each dated May 30, 1994,
for the following: (i) Easterly Utilities, (ii) Westerly Utilities,
(iii) New Well, and (iv) Well Lines.*
10.79. Temporary Construction Easement granted by Minnesota Mining
and Manufacturing Company to LSP-Cottage Grove, L.P.*
10.80. Easements from Soo Line Railroad Company to LSP-Cottage
Grove, L.P., for Easterly and Westerly Railroad Crossroads, each
dated June 27, 1995.*
10.81. Assignments of Rights and Privileges dated June 12, 1995 by and
between Minnesota Mining and Manufacturing Company and
LSP-Cottage Grove, L.P.*
EI-8
<PAGE>
Exhibit No. Description
LSP-Whitewater Limited Partnership Agreements
10.82. Equity Contribution Agreement dated as of May 1, 1995 among
LSP-Whitewater Limited Partnership, TPC Whitewater, Inc. and
The Chase Manhattan Bank (National Association), as depositary
agent.*
10.83. Collateral Agency and Intercreditor Agreement dated as of May 1,
1995 among LSP-Whitewater Limited Partnership, the L/C
Facility Agent (as defined therein), the Working Capital Agent (as
defined therein), each Permitted Counterparty under any Interest
Rate Protection Agreement (as defined therein), each Additional
Permitted Debt Agent (as defined therein), IBJ Schroder Bank &
Trust Company, as trustee, the Other Representatives (as defined
therein) and The Chase Manhattan Bank (National Association), as
depositary agent, and as collateral agent.*
10.84. Deposit and Disbursement Agreement dated as of May 1, 1995
among LSP-Whitewater Limited Partnership and The Chase
Manhattan Bank (National Association), as collateral agent, and as
depositary agent.*
10.85. Credit Agreement dated as of May 1, 1995 among LSP-Whitewater
Limited Partnership, the lenders party thereto and The Chase
Manhattan Bank (National Association), as agent.*
10.85.1 Instrument of Assignment, Resignation, Appointment,
Acceptance and Designation dated as of December 31, 1995
among The Chase Manhattan Bank (National Association),
Dresdner Bank AG, New York and Grand Cayman Branches,
and LSP-Whitewater Limited Partnership.***
10.85.2 Amendment No. 1 to Credit Agreement dated as of December
31, 1995 among LSP-Whitewater Limited Partnership and
Dresdner Bank AG, New York Branch, as agent.***
10.86. Assignment and Security Agreement dated as of May 1, 1995
between LSP-Whitewater Limited Partnership and The Chase
Manhattan Bank (National Association), as collateral agent.*
EI-9
<PAGE>
Exhibit No. Description
10.87. Pledge Agreement dated as of May 1, 1995 between
LSP-Whitewater Limited Partnership and IBJ Schroder Bank &
Trust Company, as trustee.*
10.88 Mortgage, Assignment of Rents,Security Agreement and Fixture
Filing dated as of May 1, 1995 between LSP-Whitewater Limited
Partnership and The Chase Manhattan Bank (National
Association), as collateral agent, for the benefit of IBJ Schroder
Bank & Trust Company, as trustee.*
10.89. Mortgage, Assignment of Rents, Security Agreement and Fixture
Filing dated as of May 1, 1995 between LSP-Whitewater Limited
Partnership and The Chase Manhattan Bank (National
Association), as collateral agent, for the benefit of the Chase
Manhattan Bank (National Association), as agent under the Credit
Agreement.*
10.90. Subordinated Mortgage, Assignment of Rents, Security
Assignment and Fixture Filing dated as of May 1, 1995 by
LSP-Whitewater Limited Partnership, as mortgagor, and
Wisconsin Electric Power Company, as mortgagee.*
10.91. Subordinated Assignment and Security Agreement dated as of May
1, 1995 between LSP-Whitewater Limited Partnership and
Wisconsin Electric Power Company.*
10.92. Development Agreement dated as of November 23, 1994 between
City of Whitewater and LSP-Whitewater Limited Partnership.*
10.93. Power Purchase Agreement dated as of December 21, 1993
between Wisconsin Electric Power Company and LSP-Whitewater
Limited Partnership.*
10.94. Amendment to Power Purchase Agreement dated as of February
10, 1994 between Wisconsin Electric Power Company and
LSP-Whitewater Limited Partnership.*
10.95. Second Amendment to Power Purchase Agreement dated as of
October 5, 1994 between Wisconsin Electric Power Company
and LSP-Whitewater Limited Partnership.*
EI-10
<PAGE>
Exhibit No. Description
10.96. Third Amendment to Power Purchase Agreement dated as of May
5, 1995 between Wisconsin Electric Power Company and
LSP-Whitewater Limited Partnership.*
10.96.1 Fourth Amendment to Power Purchase Agreement dated as of
March 18, 1997 between Wisconsin Electric Power Company
and LSP-Whitewater Limited Partnership.*****
10.97. Interconnection Agreement dated as of May 12, 1995 between
Wisconsin Electric Power Company and LSP-Whitewater
Limited Partnership.*
10.98. Intentionally Omitted.
10.99. Assignment dated as of November 23, 1994 between Granite
Power Partners, L.P. and LSP-Whitewater Limited
Partnership.*
10.100 Second Amended and Restated Turnkey Construction Agreement
dated as of April 11, 1995 between Westinghouse Electric
Corporation and LSP-Whitewater Limited Partnership.**
10.101. Amended and Restated Operation and Maintenance Agreement
dated as of April 11, 1995 between Westinghouse Operating
Services Company, Inc. and LSP-Whitewater Limited
Partnership.**
10.102. Parts Agreement dated as of April 10, 1995 between
Westinghouse Electric Corporation and LSP-Whitewater Limited
Partnership.**
10.103. Management Services Agreement dated as of May 1, 1995
between LS Power Corporation and LSP-Whitewater Limited
Partnership.*
10.104. Steam Supply Agreement dated as of July 25, 1994 between the
Department of Administration of the State of Wisconsin and
LSP-Whitewater Limited Partnership.*
EI-11
<PAGE>
Exhibit No. Description
10.105. Greenhouse Hot Water Supply Agreement dated as of May 1,
1995 between Dominion Growers/Whitewater, L.C. and
LSP-Whitewater Limited Partnership.*
10.106. Construction Contract dated as of May 1, 1995 between
Dominion Growers/Whitewater, L.C. and LSP-Whitewater
Limited Partnership.*
10.106.1 Addendum to Construction Contract dated as of June 6,
1997 between Dominion Growers/Whitewater, L.C. and
LSP-Whitewater Limited Partnership.
10.107. Deed of Lease dated as of May 1, 1995 between Dominion
Growers/Whitewater, L.C. and LSP-Whitewater Limited
Partnership.*
10.107.1 Settlement Agreement dated as of May 27, 1997 between
Dominion Growers/Whitewater, L.C. and LSP-Whitewater
Limited Partnership.
10.107.2 Greenhouse Operational Services Agreement dated as of
May 27, 1997 between FloriCulture, Inc. And LSP-
Whitewater Limited Partnership.
10.108. Letter Agreement dated May 12, 1995 between Dominion
Growers, Inc. and LSP-Whitewater Limited Partnership.*
10.109. Gas Sales Contract dated as of December 22, 1994 between
Natural Gas Clearinghouse and LSP-Whitewater Limited
Partnership.*
10.110. First Amendment to Gas Sales Contract dated as of April 18,
1995 between Natural Gas Clearinghouse and LSP-Whitewater
Limited Partnership.*
10.111. Gas Sales Contract dated as of February 16, 1995 among Aquila
Energy Marketing Corporation, UtiliCorp United, Inc. and
LSP-Whitewater Limited Partnership.*
EI-12
<PAGE>
Exhibit No. Description
10.112. First Amendment to Gas Sales Contract dated as of April 26,
1995 among Aquila Energy Marketing Corporation, UtiliCorp
United, Inc. and LSP-Whitewater Limited Partnership.*
10.113. Letter Agreement dated April 21, 1995 between Northern
Natural Gas Company and LSP-Whitewater Limited
Partnership.*
10.114. Amended and Restated Letter Agreement dated as of April 10,
1995 between Northern Natural Gas Company and
LSP-Whitewater Limited Partnership.*
10.115. Gas Transportation Agreement dated March 9, 1995 between
Wisconsin Natural Gas Company and LSP-Whitewater Limited
Partnership.*
10.116. Capacity Release and Gas Sales Agreement dated as of April 27,
1995 between Wisconsin Power and Light Company and
LSP-Whitewater Limited Partnership.*
10.117. First Amendment to Capacity Release and Gas Sales Agreement
dated as of June 2, 1995 between Wisconsin Power and Light
Company and LSP-Whitewater Limited Partnership.*
10.118. Firm Throughput Service Agreement (Northern Contract
#23479) dated April 25, 1995 between Northern Natural Gas
Company and LSP-Whitewater Limited Partnership.*
10.119. Interruptible Throughput Service Agreement (Northern Contract
#24200) dated April 25, 1995 between Northern Natural Gas
Company and LSP-Whitewater Limited Partnership.*
10.120. Interruptible Throughput Service Agreement (Northern Contract
#24201) dated April 25, 1995 between Northern Natural Gas
Company and LSP-Whitewater Limited Partnership.*
10.121. Firm Deferred Delivery Service Agreement (Northern Contract
#23282) dated as of April 25, 1995 between Northern Natural
Gas Company and LSP-Whitewater Limited Partnership.*
EI-13
<PAGE>
Exhibit No. Description
10.122. Interruptible Deferred Delivery Service Agreement (Northern
Contract #24202) dated as of April 25, 1995 between Northern
Natural Gas Company and LSP-Whitewater Limited
Partnership.*
10.123. Consent and Agreement dated as of May 1, 1995 between City
of Whitewater, LSP-Whitewater Limited Partnership and The
Chase Manhattan Bank (National Association), as collateral
agent.*
10.124. Consent and Agreement dated as of May 1, 1995 among
Wisconsin Electric Power Company, LSP-Whitewater Limited
Partnership and The Chase Manhattan Bank (National
Association), as collateral agent.*
10.125. Consent and Agreement dated as of May 1, 1995 among
Westinghouse Electric Corporation, LSP-Whitewater Limited
Partnership and The Chase Manhattan Bank (National
Association), as collateral agent.*
10.126. Consent and Agreement dated as of May 1, 1995 among
Westinghouse Operating Services Company, Inc.,
LSP-Whitewater Limited Partnership and The Chase Manhattan
Bank (National Association), as collateral agent.*
10.127. Consent and Agreement dated as of May 1, 1995 among State of
Wisconsin, acting through the Department of Administration,
LSP-Whitewater Limited Partnership and The Chase Manhattan
Bank (National Association), as collateral agent.*
10.128. Consent and Agreement dated as of May 1, 1995 between
Dominion Growers/Whitewater, L.C., LSP-Whitewater Limited
Partnership and The Chase Manhattan Bank (National
Association), as collateral agent.*
10.129. Consent and Agreement dated as of May 1, 1995 among Natural
Gas Clearinghouse, LSP-Whitewater Limited Partnership and
The Chase Manhattan Bank (National Association), as collateral
agent.*
EI-14
<PAGE>
Exhibit No. Description
10.130. Consent and Agreement dated as of May 1, 1995 among Aquila
Energy Marketing Corporation, UtiliCorp United, Inc.,
LSP-Whitewater Limited Partnership and The Chase Manhattan
Bank (National Association), as collateral agent.*
10.131. Consent and Agreement dated as of May 1, 1995 among
Wisconsin Natural Gas Company, LSP-Whitewater Limited
Partnership and The Chase Manhattan Bank (National
Association), as collateral agent.*
10.132. Consent and Agreement dated as of May 1, 1995 among
Northern Natural Gas Company, LSP-Whitewater Limited
Partnership and The Chase Manhattan Bank (National
Association), as collateral agent.*
10.133. Subordinated Creditor Consent and Agreement dated as of May
1, 1995 among LSP-Whitewater Limited Partnership, Wisconsin
Electric Power Company and Westinghouse Electric
Corporation.*
10.134. Subordinated Creditor Consent and Agreement dated as of May
1, 1995 among LSP-Whitewater Limited Partnership, Wisconsin
Electric Power Company and Westinghouse Operating Services
Company, Inc.*
10.135. Subordinated Creditor Consent and Agreement dated as of May
1, 1995 among LSP-Whitewater Limited Partnership, Wisconsin
Electric Power Company and Aquila Energy Marketing
Corporation.*
10.136. Subordinated Creditor Consent and Agreement dated as of May
1, 1995 among LSP-Whitewater Limited Partnership, Wisconsin
Electric Power Company and Natural Gas Clearinghouse.*
10.137. Subordinated Creditor Consent and Agreement dated as of May
1, 1995 among LSP-Whitewater Limited Partnership, Wisconsin
Electric Power Company and Northern Natural Gas Company.*
EI-15
<PAGE>
Exhibit No. Description
10.138. Easement dated May 11, 1995 granted by the University of
Wisconsin-Whitewater to LSP-Whitewater Limited Partnership.*
10.139. Easement dated March 22, 1995grantedby the City of
Whitewater to LSP-Whitewater Limited Partnership.*
10.140. Easement dated March 22, 1995 granted by the City of
Whitewater to LSP-Whitewater Limited Partnership.*
10.141. Easement dated March 22, 1995 granted by the City of
Whitewater to LSP-Whitewater Limited Partnership.*
10.142. Easement dated March 22, 1995 granted by the City of
Whitewater to LSP-Whitewater Limited Partnership.*
10.143. Easement dated June 2, 1995 granted by Joe C. Pattermann and
June M. Pattermann to LSP-Whitewater Limited Partnership.*
10.144. Easement dated September 10, 1994 granted by Joe C.
Pattermann and June M. Pattermann to LSP-Whitewater
Limited Partnership.*
10.145. Easement dated May 25, 1995 granted by John P. Hill and
Rosalee K. Hill to LSP-Whitewater Limited Partnership.*
10.146. Easement dated June 1, 1994 granted by Mark D. Hoffmann to
LSP-Whitewater Limited Partnership.*
10.147. Easement dated May 31, 1995 granted by Daniel L.
Schwertfeger and Jeanne M. Schwertfeger to LSP-Whitewater
Limited Partnership.*
10.148. Easement dated June 2, 1995 granted by Jerry C. Kollwelter and
Donna L. Kollwelter to LSP-Whitewater Limited Partnership.*
10.149 Easement dated June 1, 1995 granted by Lowell C. Hagen and
Thu T. Hagen to LSP-Whitewater Limited Partnership.*
10.150. Easement dated June 1, 1995 granted by Dean A. Cox and
Maybell Cox to LSP-Whitewater Limited Partnership.*
EI-16
<PAGE>
Exhibit No. Description
10.151. Easement dated June 5, 1995 granted by John's Disposal
Service, Inc. to LSP-Whitewater Limited Partnership.*
10.152. Easement dated June 12, 1995 granted by Greg Lurvey and Mark
Lurvey to LSP-Whitewater Limited Partnership.*
10.153. Easement dated October 24, 1994 granted by Perry Moyer and
Dorothy Moyer to LSP-Whitewater Limited Partnership.*
10.154. Easement dated October 24, 1994 granted by Perry Moyer and
Dorothy Moyer to LSP-Whitewater Limited Partnership.*
10.155. Easement dated May 30, 1995 granted by Perry Moyer and
Dorothy Moyer to LSP-Whitewater Limited Partnership.*
10.156. Easement dated May 30, 1995 granted by Perry Moyer and
Dorothy Moyer to LSP-Whitewater Limited Partnership.*
10.157. Easement dated June 5, 1995 granted by Robert J. Wagner to
LSP-Whitewater Limited Partnership.*
10.158. Easement dated June 5, 1995 granted by Robert J. Wagner to
LSP-Whitewater Limited Partnership.*
Granite Power Partners, L.P. Agreements
10.159. Pledge Agreement dated as of May 1, 1995 between Granite
Power Partners, L.P. and The Chase Manhattan Bank (National
Association), as collateral agent.*
10.160. Pledge Agreement dated as of May 1, 1995 between Granite
Power Partners, L.P. and The Chase Manhattan Bank (National
Association), as collateral agent.*
10.161. Assignment dated as of November 23, 1994 between Granite
Power Partners, L.P. and LSP-Cottage Grove, L.P.*
10.162. Assignment dated as of November 23, 1994 between Granite
Power Partners L.P. and LSP-Whitewater Limited Partnership.*
EI-17
<PAGE>
Exhibit No. Description
10.163. Acknowledgment and Consent dated June 30, 1995 among
Wisconsin Electric Power Company, LSP-Whitewater I, Inc.,
Granite Power Partners, L.P. and TPC Whitewater, Inc.*
10.164. Amendment to Participation Agreement dated as of June 29,
1995 between Tomen Power Corporation and Granite Power
Partners, L.P.*
LSP-Cottage Grove, Inc. Agreements
10.165. Security Agreement dated as of May 1, 1995 between
LSP-Cottage Grove, Inc. and The Chase Manhattan Bank
(National Association), as collateral agent.*
10.166. Management Services Agreement dated as of May 1, 1995
between LS Power Corporation and LSP-Cottage Grove, Inc.*
LSP-Whitewater I, Inc. Agreements
10.167. Security Agreement dated as of May 1, 1995 between
LSP-Whitewater I, Inc. and The Chase Manhattan Bank
(National Association), as collateral agent.*
10.168. Management Services Agreement dated as of May 1, 1995
between LS Power Corporation and LSP-Whitewater I, Inc.*
10.169. Acknowledgment and Consent dated June 30, 1995 among
Wisconsin Electric Power Company, LSP-Whitewater I, Inc.,
Granite Power Partners, L.P. and TPC Whitewater, Inc.*
LS Power Corporation Agreements
10.170. Amended and Restated Limited Partnership Agreement of
Granite Power Partners, L.P. dated January 16, 1992 among
LS Power Corporation, Chase Manhattan Capital Corporation
and Joseph Cogen.*
10.171. First Amendment to Amended and Restated Limited Partnership
Agreement of Granite Power Partners, L.P. dated December 30,
1993 among LS Power Corporation, Chase Manhattan Capital
Corporation and Joseph Cogen.*
EI-18<PAGE>
_____________________
* Incorporated herein by reference from the Registration
Statement on Form S-4, File No. 33-95928 filed with the
Securities and Exchange Commission by LS Power Funding
Corporation, LSP-Cottage Grove, L.P. and LSP-Whitewater
Limited Partnership (collectively, the "Registrants") on August
16, 1995, as amended.
** In addition to the note for "*" above, confidential treatment has
been granted for certain portions of the noted document.
*** Incorporated herein by reference from the Annual Report on
Form 10-K for the fiscal year ended December 31, 1995, File
No. 33-95928 filed with the Securities and Exchange Commission
by the Registrants.
**** Incorporated herein by reference from the Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1996, File
No. 33-95928 filed with the Securities and Exchange Commission
by the Registrants.
***** Incorporated herein by reference from the Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1997, File
No. 33-95928 filed with the Securities and Exchange Commission
by the Registrants.
EI-19
<PAGE>
Exhibit 10.106.1
ADDENDUM TO CONSTRUCTION CONTRACT
THIS ADDENDUM TO CONSTRUCTION CONTRACT, made and
entered into this 6th day of June, 1997, by and between LSP-WHITEWATER
LIMITED PARTNERSHIP, a Delaware Limited Partnership, (hereinafter referred
to as "Owner"), and DOMINION GROWERS/WHITEWATER, L.C., a Virginia
Limited Liability Company, (hereinafter referred to as "Contractor"),
WHEREAS, Owner and Contractor entered into a certain Construction
Contract dated May 1, 1995 (hereinafter referred to as the "Agreement"); and
WHEREAS, the parties wish to amend the provisions of the Agreement as
set forth herein;
NOW, THEREFORE, WITNESSETH:
That for and in consideration of the sum of Ten Dollars ($10.00), cash in
hand paid and other good and valuable consideration, hereby acknowledged by
the parties to be sufficient at law, the parties hereto agree as follows
(capitalized terms used herein but not defined shall have the meanings set
forth in the Agreement):
1. That notwithstanding the provisions of the Agreement (including, but not
limited to, (a) the definition of the "Contractor's Fee" set forth in Section
1.1 of Article I; and (b) the Contract Price and the Payment Schedule set forth
in Paragraphs 4.1 and 4.2 of Article IV, and Changes set out in Article 5), the
parties agree as follows:
1. That the sole fees due and payable to Contractor under
the terms of the Agreement, as a Contractor's Fee or
otherwise, shall be as follows:
1. Working Capital Payment
(paid on or about May 1, 1995) $100,000.00;
Final Payment
(due following Substantial
Completion in accordance with
Section 4.2.3 of the Agreement) $254,000.00;
Consulting Fee for installation
Of Owner supplied equipment
(due in accordance with Section 4
hereof on or about September 1, 1997) $25,000.00
Total Payments: $379.000.00.
<PAGE>
Owner shall also reimburse Contractor pursuant to Section 4.2 of
the Agreement, for the actual costs incurred by Contractor to complete the
Greenhouse Facility in accordance with the Agreement (as modified hereby),
including without limitation, the costs of labor, materials, services and
consultant fees up to, including reimbursements made to date, $3,760,000.00
(the "Allowable Cost"). Contractor shall be solely responsible for all
completion costs, which, when added to the costs reimbursed to date (such sum,
the "Aggregate Completion Cost"), exceed the Allowable Cost; provided however,
that, if the Aggregate Completion Cost is less than the Allowable Cost, then
Contractor shall receive an additional Contractor's Fee equal to the difference
between such amounts. The payment terms of any such Contractor's Fee shall be
governed by Section 4.2.3 of the Agreement.
2. CLARIFICATIONS TO SCOPE: The parties hereto agree that the
Contractor shall include within the scope of construction an acceptable
back-flow prevention device for the protection of the potable water system and
dust isolation construction in the soil mixing area of the barn. The parties
further agree that the scope of the Contract shall not include top soil
replacement and seeding of the site, the costs involved in the paving of the
driveway, or any further grading, ditching, piping and/or landscaping on the
site. The parties agree that the equipment to be obtained by Contractor within
the scope of the agreement shall be limited to the equipment actually purchased
as of the date of this Agreement and that the square foot dimensions of the
Greenhouse and the Office/Production and Shipping Barns shall be the as-built
dimensions.
3. HEATING SYSTEM RETENTION: The parties acknowledge and agree
that the sum of Seventeen Thousand and 00/100 Dollars ($17,000.00) has been
included on the Punch List in respect of the current heating system and that
such amount shall be applied in accordance with this Section 3. In the event
that the current heating system is not capable of maintaining 70 degrees
Fahrenheit (70 F.) ambient temperature in the growing areas in all actual
weather conditions, from October 1, 1997 through March 31, 1998 (Heating
System Requirements), due to lack of capacity within the heating system, then
said $17,000.00 shall be applied to the costs incurred by the Contractor to
correct the heating system to meet the Heating System Requirements.
Application of funds from the $17,000.00 escrow shall be Owner's sole remedy
against Contractor for any deficiency in the engineering and/or construction
of the heating system.
If the current heating system meets the Heating System Requirements
through March 31, 1998, then the $17,000.00 shall be paid to Contractor on or
before April 10, 1998. If corrections are required, payment of any funds
remaining in the escrow after payment of costs to repair and/or upgrade the
heating system shall be paid to the Contractor within ten (10) days of
completion and acceptance by Owner of necessary repairs and/or upgrades.
<PAGE>
If any deficiency in the Heating System Requirements is noted, Contractor
shall be notified, in writing, within forty-eight (48) hours, and Contractor
shall be given the opportunity to evaluate the heating system at that time to
determine compliance with Heating System Requirements and to determine what
repairs and/or upgrades may be required. Contractor shall have forty (40)
days from the date of Owner's notification to complete any necessary repairs
and/or upgrades. After such time, if, in Owner's opinion, Contractor has
failed to properly complete such repairs and/or upgrades, Owner shall be free
to retain another firm to complete such work and shall be entitled to apply all
costs associated therewith against the $17,000.00 in escrow.
4. RETAINER AGREEMENT: The Twenty-Five Thousand and 00/100 Dollar
($25,000.00) Consulting Fee referred to in Section 1 hereof of the Contractor's
Fee shall be retained by Owner in a retainer account (Retainer Account) and
shall be applied to cover Contractor's costs in assisting Owner in the layout
and installation of soil mixing and production line equipment. Contractor may
bill Owner for Contractor's actual out-of-pocket costs for transportation,
meals, lodging and a per-diem fee of Four Hundred and 00/100 Dollars ($400.00)
per day for each day Contractor is present on the site assisting in the
installation to be paid from the Retainer Account; provided, however, in no
case shall the Contractor's fees incurred exceed the amount of the Retainer
Account. The balance of the Retainer Account shall be paid to Contractor at
the earlier of: (a) when all soil mixing and production line equipment is
installed and operating to the satisfaction of the operating company, or
(b) September 30, 1997.
5. Except as specifically modified herein, the Agreement shall remain
in full force and effect and unaltered by the terms of this Addendum.
WITNESS the following signatures and seals, this 6th day of June, 1997.
EXECUTED IN DUPLICATE, EACH DEEMED TO BE AN ORIGINAL.
LSP-WHITEWATER LIMITED PARTNERSHIP
a Delaware Limited Partnership
By: LSP-WHITEWATER I, INC.,
its General Partner
By: /s/ Michael Liebelson
MICHAEL LIEBELSON
TITLE: MANAGING DIRECTOR
<PAGE>
DOMINION GROWERS/WHITEWATER, L.C.,
a Virginia Limited Liability Company
By: DOMINION GROWERS, INC.,
a Virginia Stock Corporation,
Managing Principal
By: /s/ Johannes C. Van Wingerden
JOHANNES C. VAN WINGERDEN, PRESIDENT
<PAGE>
Exhibit 10.107.1
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT, made and entered into this 27th
day of May, 1997, by and between LSP-WHITEWATER LIMITED PARTNERSHIP, a
Delaware Limited Partnership, (hereinafter referred to as "LSP"), and
DOMINION GROWERS/WHITEWATER, L.C., a Virginia Limited Liability Company,
(hereinafter referred to as "Dominion");
WHEREAS, LSP and Dominion entered into a certain Deed of Lease
dated May 1, 1995, (hereinafter referred to as the "Lease") and a certain
Greenhouse Hot Water Supply Agreement dated May 1, 1995, (hereinafter
referred to as the "Hot Water Agreement"); and
WHEREAS, the parties wish to terminate the Lease and the Hot Water
Agreement;
NOW, THEREFORE, WITNESSETH:
That for and in consideration of the sum of Ten Dollars ($10.00), cash in
hand paid and other good and valuable consideration, hereby acknowledged by
the parties to be sufficient at law, the parties hereto agree as follows:
1. TERMINATION OF LEASE AGREEMENT: The parties hereto
agree that effective the date of this Settlement Agreement, the Lease Agreement
shall be null and void and of no further force and effect. Each party agrees
that there are no outstanding obligations from LSP to Dominion or from Dominion
to LSP arising out of the Lease Agreement on the date of this termination.
2. TERMINATION OF HOT WATER AGREEMENT: The parties hereto agree that
the Hot Water Agreement shall terminate upon the date of this Settlement
Agreement and shall be null and void and of no further force and effect. The
parties hereto further agree that there are no outstanding obligations from
LSP to Dominion or from Dominion to LSP arising out of the Hot Water Agreement
as of the date of this termination.
3. ENTIRE AGREEMENT: AMENDMENTS
This Settlement Agreement together with any and all documents
executed and delivered by LSP and/or Dominion in connection with the execution
and delivery of this Settlement Agreement, set forth the entire understanding
and agreement of LSP and Dominion solely with respect to the Lease and the Hot
Water Agreement and all courses of dealing, usage of trade and all prior
representations, promises, understandings and agreements solely with respect to
the Lease and the Hot Water Agreement, whether oral or written, or superseded
by and merged into this Settlement Agreement. No modification or amendment of
<PAGE>
this Settlement Agreement shall be binding upon LSP or Dominion, or either,
unless in writing and fully executed.
IN WITNESS WHEREOF, LSP and Dominion have executed this Settlement
Agreement, have affixed their seals hereunto and have delivered the same, as
of the day, month and year first above written.
EXECUTED IN DUPLICATE, EACH DEEMED TO BE AN ORIGINAL,
LSP-WHITEWATER LIMITED PARTNERSHIP,
a Delaware Limited Partnership
By: LSP-WHITEWATER I, INC.,
its General Partner
By: /s/ Michael Liebelson
MICHAEL LIEBELSON
TITLE: Managing Director
DOMINION GROWERS/WHITEWATER, L.C.,
a Virginia Limited Liability Company
By: DOMINION GROWERS, INC.,
a Virginia Stock Corporation,
Managing Principal
By: /s/ Johannes C. Van Wingerden
JOHANNES C. VAN WINGERDEN, PRESIDENT
<PAGE>
Exhibit 10.107.2
GREENHOUSE
OPERATIONAL SERVICES AGREEMENT
by and between
LSP-WHITEWATER LIMITED PARTNERSHIP,
as Owner
and
FLORICULTURE, INC.,
as Operator
Dated as of May 27, 1997
<PAGE>
GREENHOUSE OPERATION AND MAINTENANCE AGREEMENT
GREENHOUSE OPERATIONAL SERVICES AGREEMENT
dated as of May 27, 1997 (the "Effective Date"), by and
between LSP-Whitewater Limited Partnership, a Delaware
limited partnership ("Owner"), and FloriCulture, Inc.,
a Delaware corporation ("Operator").
RECITALS:
WHEREAS, Owner owns a greenhouse facility in
Jefferson County, Wisconsin (as further described in
Article I, the "Facility");
WHEREAS, Owner also owns and operates a
natural gas-fired 250 megawatt cogeneration plant near
the Facility in Whitewater, Wisconsin (the "Plant"),
which Plant produces hot water useful to the operation
of the Facility; and
WHEREAS, Owner desires to engage Operator to
operate, maintain and manage the Facility and to
produce, market and sell horticultural products (the
"Business") on behalf of Owner, in accordance with the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the
mutual covenants and promises set forth herein,
IT IS AGREED:
ARTICLE I
Definitions
"Affiliate" means, in relation to any Person, any
Person which directly or indirectly controls, or is
under common control with, or is controlled by such
other Person.
<PAGE>
"Agreement" means this Greenhouse Operation and
Maintenance Agreement (including all exhibits and
schedules attached hereto), as it may be amended,
supplemented, or otherwise modified from time to time.
"Business" shall have the meaning set forth in the
recitals hereto.
"Cold Water" means water returned to Owner at the
Cold Water Delivery Point having a temperature which
may be less than 130 F and of the same quality as the
Hot Water taken.
"Cold Water Delivery Point" means the point at
which the Plant's Cold Water return pipe connects to
the Hot Water Storage Tank.
"Construction Contract" means the Construction
Contract for the Facility dated as of May 1, 1995 by
and between Owner and Contractor.
"Contractor" means Dominion Growers/Whitewater,
L.C., a Virginia limited liability company.
"day" shall mean a calendar day unless otherwise
specified.
"Early Termination" shall have the meaning set
forth in Section 8.1.
"Effective Date" shall have the meaning set forth
in the introduction hereto.
"Emergency" means any event or condition relating
to or affecting the Facility which may result in injury
to persons or damage to property.
"Event of Default" shall have the meaning set
forth in Section 9.1.
<PAGE>
"Facility" means the greenhouse facility in
Jefferson County, Wisconsin owned by Owner, including
the Hot Water System.
"Facility Manager" means the individual designated
by Operator and approved by Owner pursuant to Section
2.11 to direct and manage the Work and to act on behalf
of Operator as the primary point of contact with Owner.
"Facility Permits" means any permit, license,
exception, action, order, authorization, assent,
consent or approval for the Facility and any
amendments, modifications, supplements or additions
thereto.
"Financing Documents" means the indentures,
promissory notes, loan agreements, guarantees,
assignments, security agreements, mortgages and other
agreements between Owner and any Project Lender for the
development, construction and/or permanent financing or
refinancing of the Plant, and any documents relating
thereto, as the same may be amended, supplemented, or
otherwise modified from time to time.
"Force Majeure" shall have the meaning as set
forth in Section 12.1.
"Governmental Authority" means the United States
of America, the State of Wisconsin, or any local or
special district agency, department, authority,
political subdivision, court, judicial or
administrative authority or instrumentality of either.
"Hot Water" means water heated from steam generat-
ed by the Plant and delivered to the Facility at the
Hot Water Delivery Point at a temperature of 180 F to
210 F.
"Hot Water Delivery Point" means the point of mea-
surement of the Hot Water supply to the Hot Water Stor-
age Tank.
<PAGE>
"Hot Water Storage Tank" means the Hot Water
storage tank located adjacent to the Facility.
"Hot Water System" means the Hot Water Storage
Tank and the Hot Water and Cold Water piping running
between the Facility and the Hot Water Storage Tank.
"Initial Operating Budget" means the proposed
Operating Budget for the Facility submitted by Operator
to Owner within thirty (30) days of the Effective Date,
as thereafter approved by Owner.
"Initial Operating Plan" means the proposed Oper-
ating Plan for the Facility submitted by Operator to
Owner within thirty (30) days of the Effective Date, as
thereafter approved by Owner.
"Initial Services" shall have the meaning set
forth in Section 2.2.
"Law(s)" means any constitution, charter, act,
statute, law, ordinance, code, rule, regulation, order,
permit, condition, specified standards or criteria con-
tained in any applicable permit, approval, order, deci-
sion, determination or ruling of any Governmental
Authority having jurisdiction, all as in effect from
time to time.
"Management Fee" means the amount payable by Owner
to Operator as provided in Section 5.3.
"Management Services" shall have the meaning set
forth in Section 2.4.
"Materials" means all raw and other materials,
supplies, spare parts, tools, consumables, chemicals
and equipment necessary for the operation of the
Business and maintenance of the Facility.
<PAGE>
"Operating Account" means the account established
by Operator and funded by Owner pursuant to Section
5.2(b) for the payment of Reimbursable Costs.
"Operating Budget" shall have the meaning set
forth in Section 2.7.
"Operating Plan" shall have the meaning as set
forth in Section 2.8.
"Operation and Maintenance Manuals" means the
operating manuals and instructions for the Facility
provided by Contractor pursuant to the Construction
Contract and any other operating instructions,
specifications or materials with respect to the Facili-
ty provided to Operator by Owner or any other vendors,
suppliers, contractors or manufacturers.
"Operational Services" shall have the meaning set
forth in Section 2.3.
"Operator" shall have the meaning set forth in the
introduction hereto.
"Owner" shall have the meaning set forth in the
introduction hereto.
"Party" means Owner or Operator and in the plural,
both Owner and Operator together.
"Person" shall mean an individual, partnership,
corporation, business trust, joint stock company,
trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever
nature.
"Personnel" means the personnel employed by the
Operator and assigned to the Site to operate and
maintain the Facility and generally to perform the
Work.
<PAGE>
"Plant" shall have the meaning set forth in the
recitals hereto.
"Profit" shall have the meaning set forth in
Section 5.3.
"Project Lender" means any bank, financial
institution or other Person providing development,
construction or permanent financing or refinancing for
the Plant.
"Prudent Operating Practice" means those
practices, methods, specifications and standards of
safety and performance, as the same may change from
time to time, as are commonly used by experienced,
knowledgeable and professional firms performing
operation and maintenance services on facilities of the
type and size similar to the Facility, which in the
exercise of reasonable judgement and in the light of
the facts known at the time decisions are made, are
considered good, safe and prudent practice in
connection with the operation and maintenance of green-
house facilities and other related equipment, facil-
ities and improvements, with commensurate standards of
safety, performance, dependability, efficiency and
economy.
"Reimbursable Costs" shall have the meaning set
forth in Section 5.2.
"Revenue Account" means the account designated by
Owner in writing following the Effective Date for the
deposit of operating revenues of the Facility.
"Site" means the site where the Facility is
located in Jefferson County, Wisconsin.
"Site Procedures" shall have the meaning set forth
in Section 2.6.
<PAGE>
"Standards of Performance" means the standards for
Operator's performance of the Work as set forth in Sec-
tion 2.5.
"Utility" means Wisconsin Electric Power Company,
a Wisconsin corporation.
"Work" shall mean collectively, the Initial
Services, the Operational Services, the Management
Services and all other obligations of Operator
hereunder.
"Year" shall mean a calendar year.
ARTICLE II
Operator Responsibilities
Section 2.1- Independent Contractor. In per-
forming the Work, Operator is and shall remain an inde-
pendent contractor. Nothing contained in this Agree-
ment shall be construed as creating a joint venture or
partnership relationship between Operator and Owner.
Section 2.2- Initial Services.
Operator shall prepare and deliver to Owner
the following items within thirty (30) days after the
Effective Date (the "Initial Services"), each of which
shall be subject to the timely review, comment and ap-
proval of Owner:
(a) the Site Procedures, in accordance with
Section 2.6;
(b) the Initial Operating Budget, in
accordance with Section 2.7; and
<PAGE>
(c) the Initial Operating Plan, in accordance
with Section 2.8.
Section 2.3- Operational Services.
On and after the Effective Date, Operator
shall perform the following (the "Operational
Services"):
(a) subject to the limitation set forth in
Section 4.1(c), conduct necessary and appropriate com-
mercial operations in accordance with the Operating
Budget and Operating Plan to produce, market and sell
horticultural products;
(b) operate and maintain the Facility such
that it takes Hot Water from the Plant in amounts
consistent with the design capability of the Hot Water
System;
(c) identify, purchase, receive, inspect and
inventory all Materials;
(d) maintain an inventory of Materials ade-
quate to support the continuous and successful opera-
tion of the Business and the Facility;
(e) provide the Operating Budget and the
Operating Plan in accordance with Sections 2.7 and 2.8;
(f) coordinate and communicate with the
Owner's representative assigned to the Facility as
necessary for the administration of this Agreement and
the performance of Operator's obligations hereunder;
(g) provide periodic technical and admin-
istrative reports, in accordance with Section 2.10;
(h) maintain, update as necessary, and comply
with the Site Procedures, in accordance with Section
2.6; and
<PAGE>
(i) respond in a timely manner (but in no
event shall the time to make such a response exceed
five (5) days) to written requests by Owner for
information about the Work.
Section 2.4- Management Services.
On and after the Effective Date, Operator
shall perform the following management tasks for Owner
in connection with the business of the Facility (the
"Management Services"):
(a) maintain accurate books and records in
accordance with Section 2.14;
(b) pay all taxes and prepare and file all
necessary tax returns in accordance with Section 2.13;
(c) prepare and submit all filings of any
nature which are required to be made under any laws,
regulations, ordinances or otherwise applicable to the
Facility and the Business.
(d) assist Owner in the maintenance of the
Facility Permits and procurement of any revisions,
waivers, or additional permits necessary or desirable
for the operation of the Facility as contemplated
hereunder; and
(e) do any and all other activities as di-
rected in writing by Owner.
Section 2.5- Standards of Performance.
Operator shall perform all Work in a careful,
professional, prudent and efficient manner in accor-
dance with the following requirements (collectively,
"Standards of Performance"):
(a) Prudent Operating Practice;
<PAGE>
(b) the Operation and Mainte-
nance Manuals;
(c) the Site Procedures;
(d) all applicable Laws and Facility Permits;
(e) the requirements of all
documents pertaining to insurance
maintained by Owner for the protec-
tion of the Facility pursuant to
Article VI;
(f) any and all warranties and
guaranties received from Contractor
or any other manufacturer or vendor
of Materials; and
(g) consistent with Owner's objective to
maximize its net profits from the operation of the
Facility.
Section 2.6- Site Procedures. Operator shall
prepare on-Site rules, regulations and procedures
("Site Procedures") to which it shall adhere in the
performance of its obligations pursuant to this
Agreement. Operator shall submit such documents to
Owner for review, comment and approval, within thirty
(30) days after the Effective Date. Owner shall notify
Operator in writing of its comments or approval of each
Site Procedure within thirty (30) days following
Operator's submittal of such proposed Site Procedure to
Owner. In addition, Owner may require Operator to pre-
pare additional Site Procedures as Owner deems neces-
sary. Subsequent modifications to Site Procedures,
including any revisions required by Owner's rejection
of such Site Procedures, shall likewise be submitted to
Owner and Contractor for approval and comment, as
applicable, prior to implementation.
Section 2.7 - Operating Budget.
<PAGE>
Within thirty (30) days after the Effective
Date, and thereafter, within ninety (90) days prior to
the beginning of each Year commencing with 1998, Opera-
tor shall submit a proposed operating budget for the
Facility (the "Operating Budget"), for Owner's review
and approval. Each Operating Budget shall contain an
itemized estimate by month of all revenues, Reim-
bursable Costs and Management Fees expected for the
upcoming Year and shall included all supporting data
and assumptions, if any. Each Operating Budget shall
be based on Operator's assessment of the required
Operational Services and shall reflect the most eco-
nomical and reasonable means of performing such Oper-
ational Services in accordance with the Standards of
Performance. Within thirty (30) days after receipt of
the proposed the Operating Budget, Owner shall notify
Operator in writing of its approval or any proposed
additions, deletions or modifications as Owner may deem
necessary or appropriate. The final form of the
Operating Budget and any subsequent modifications
thereto shall be approved in writing by both Parties,
such approval not to be unreasonably withheld. In the
event of any disagreement, the Parties shall promptly
meet and resolve in good faith any areas of
disagreement. Until such time as the Operating Budget
is approved, Operator shall continue to perform the
Operational Services according to the terms of this
Agreement as permitted under the Operating Budget then
in effect. If, at any time, Operator determines that
the any category within an Operating Budget will vary
for such Year by more than five percent (5%) or ten
thousand dollars ($10,000), whichever is greater,
Operator shall immediately notify Owner and shall
follow Owner's instructions regarding further expendi-
tures for the operation and maintenance of the Facility
pursuant to this Agreement. Until such time as
Operator receives such instructions, Operator shall
continue to perform the Operational Services according
to the terms of this Agreement as permitted under the
Operating Budget then in effect.
<PAGE>
Section 2.8- Operating Plan. With each Oper-
ating Budget submitted in accordance with Section 2.7,
Operator shall submit to Owner for Owner's approval
Operator's proposed operating plan for the period
covered by such Operating Budget (the "Operating Plan")
in a form reasonably acceptable to Owner. Such plan
shall describe in detail acceptable to Owner the
Operator's plan for the ensuing year for the operation
of the Business and the maintenance of the Facility in-
cluding, without limitation, a summary of the items in
the Operating Budget (including a list of Materials and
third party services needed to be procured, identifying
the approximate date when an item is needed), hours of
operation, holidays to be observed, schedule of third -
party services, data regarding expected operating per-
formance, projected Hot Water consumption, and any
other matters as Owner may require. All such items
shall be set forth on a monthly basis. The Operating
Plan shall also include a marketing plan for the Busi-
ness and a Personnel staffing plan and hiring schedule
consistent with the requirements of Section 2.11. The
proposed Operating Plan shall be accompanied by all
underlying assumptions necessary for its evaluation.
All actions proposed under the Operating Plan shall
comply with the Standards of Performance. Owner shall
indicate in writing any proposed revisions, correc-
tions, deletions or additions to Operator's proposed
Operating Plan within thirty (30) days after each such
submission. The final form of the Operating Plan shall
be approved in writing by both Parties, such approval
not to be unreasonably withheld. In the event of any
disagreement, the Parties shall promptly meet and
resolve in good faith any areas of disagreement.
Section 2.9- Deposit of Revenues. Within ten
(10) days following the end of each month, Operator
shall deposit into the Revenue Account all payments
received during such month in connection with the oper-
ation of the Facility. Other than for purposes of
deposit, the Revenue Account shall be under the sole
dominion and control of Owner and, without the prior
<PAGE>
written consent of Owner, Operator shall have no right
of withdrawal from the Revenue Account. All monies
deposited into such account, including any interest
accruing thereon, shall be for the sole benefit of
Owner.
Section 2.10- Reports. Operator shall, from
and after the Effective Date furnish or cause to be
furnished to Owner the following reports concerning the
Facility's operations:
(a) Monthly Reports. Commencing within ten
(10) days after the end of each calendar month after
the Effective Date, Operator shall submit: (i) a
progress report, in detail acceptable to Owner,
covering all operations conducted during such calendar
month with respect to operations and maintenance,
procurement, capital improvements, labor relations,
significant interactions with the operator of the
Plant, and other significant matters, which report
shall include (with respect to quantitative items) a
comparison of such items to corresponding values for
the preceding month and the same month in the preceding
year and list any significant operating problems along
with remedial actions planned and a brief summary of
major activities planned for the next two reporting
periods; and (ii) a statement setting forth all
revenues deposited in the Revenue Account and all Reim-
bursable Costs paid or incurred, which statement shall
itemize in detail acceptable to Owner the computation
of such revenues and Reimbursable Costs and shall state
whether or not the Facility operations have conformed
to the applicable Operating Plan and Operating Budget
during such reporting period and if not, the extent and
reasons for such deviation and any remedial action, if
remediable.
(b) Annual Reports. As soon as available,
and in any event within thirty (30) days after the end
of each Year, Operator shall submit to Owner an annual
report certified by the Facility Manager describing in
<PAGE>
detail substantially similar to that contained in the
monthly reports referred to in Section 2.10(a) above,
all of the Facility operations for such Year and
presenting a comparison of such Facility operations
with the Operating Budget and Operating Plan for such
Year and the preceding Year (the "Annual Report").
Within thirty (30) days after the submission of each
Annual Report, the Facility Manager shall meet with a
representative of Owner to review and discuss the
report and to report upon any other aspects of the
Facility operations that Owner may request.
(c) Additional Reports. Operator shall
periodically provide reports to Owner advising Owner of
any information Operator becomes aware of concerning
changes in Laws and/or Prudent Operating Practices that
may be material to the operation and maintenance of the
Facility.
Section 2.11- Personnel.
(a) Operator shall employ at the Facility
the appropriate number of properly qualified and
trained Personnel to perform the Operator's obligations
under this Agreement as approved under the Operating
Budget.
(b) All Personnel shall be qualified and
fully trained for their respective positions. All
individuals utilized by Operator to perform Work shall
be employees of the Operator or subcontractors under
Operator's direction. Working hours, rates of compen-
sation, and all other matters relating to such Person-
nel shall be determined by Operator (subject to Owner's
approval with respect to budget items).
(c) Operator shall retain sole responsibil-
ity and control of labor matters pertaining to the Per-
sonnel. Operator shall provide Owner with such infor-
mation regarding the selection of the Personnel as
Owner may reasonably request. With respect to the
hiring of Personnel and its employment policy, Operator
<PAGE>
shall comply with all applicable federal and state
labor and employment Laws and shall exercise control
over labor relations in a reasonable manner consistent
with the intent and purpose of this Agreement.
Section 2.12- Emergency Procedures. In the
case of an Emergency, Operator shall, in accordance
with the requirements of the Site Procedures, notify
Owner of the nature of such Emergency, the proposed
remedial measures and its probable duration. Operator
shall take corrective action pursuant to Owner's direc-
tion only, provided that Operator shall act immediately
as required to prevent or overcome the threat of injury
to persons or damage to property or to minimize the
adverse consequences thereof pending receipt of
instructions by Owner.
Section 2.13- Taxes. Operator shall pay all
federal, state and local sales and use taxes which may
be assessed for purchases of Materials, income and
unemployment taxes, Federal Insurance Contribution Act
(FICA) taxes and other taxes which it is obligated to
pay with respect to wages and salaries paid by it to
its employees performing the Work, and shall maintain
all appropriate records with respect thereto.
Section 2.14- Books and Records. (a) Opera-
tor shall maintain operating logs, records and reports
(in form and substance as required by the Site
Procedures) documenting the operation of the Facility;
keep accurate records of all business transactions
entered into by Operator; maintain accurate cost
ledgers and accounting records regarding the Work in
accordance with generally accepted accounting
principles for review by Owner. Operator shall also
prepare all reports required for Governmental
Authorities, or by the Facility Permits in connection
with the operation of the Facility, and provide same to
Owner for its review and submittal.
(b) At all reasonable times Owner shall have
access to the records maintained pursuant to this
<PAGE>
Section 2.14 and may audit such records and shall have
the right to determine whether such practices and
systems are in accordance with generally accepted ac-
counting principles and cause Operator to make such
changes as necessary to conform with such principles.
Section 2.15- Access. Operator shall allow
Owner and such other parties as Owner designates from
time to time, to have full, unrestricted access to the
Facility and Site and all reports, data, information
and documents related to the Facility in Operator's
possession.
Section 2.16- Utilities. Operator shall pro-
cure, and pay when due all charges for, all public or
private utility services necessary for the operation
and maintenance of the Facility including, but not
limited to, sewer, gas, light, water, heat and air
conditioning, telephone, electricity, trash removal,
power and other utility and communications services
(all or any one of which hereinafter referred to as
"Utility Charges").
Section 2.17- No Liens or Encumbrances.
Operator shall keep and maintain the Facility free and
clear of all liens and encumbrances resulting from acts
or omissions of Operator or subcontractors or work done
at the request of Operator or subcontractors to the
extent Owner has paid Operator for the Work.
Section 2.18- Litigation; Permit Lapses.
Upon obtaining notice or knowledge thereof, Operator
shall submit prompt written notice to Owner of: (i) any
litigation, or material claim, dispute or action,
threatened in writing or filed, concerning the Facili-
ty, the Site or the Work; (ii) any written refusal or
threatened refusal to grant, renew or extend or any
pending or written threatened action that might affect
the granting, renewal or extension of, any license,
permit, approval, authorization or consent concerning
the Facility or the Work; and (iii) any dispute with
<PAGE>
any Governmental Authority concerning the Facility, the
Work or any Facility Permit.
ARTICLE III
Owner Responsibilities
Section 3.1- Hot Water Supply. Owner shall
supply the Hot Water heating requirements of the
Facility in accordance with the terms and conditions of
this Agreement. Owner shall notify Operator ten (10)
days in advance of the estimated date on which Hot
Water will first be supplied to the Facility.
Section 3.2- Insurance. Owner shall provide
insurance coverage for the Facility and the Site in
accordance with Article VI.
Section 3.3- Reasonable Access. Owner shall
provide and grant to Operator a right of access to the
Facility and the Site throughout the term of this
Agreement. As reasonably requested by Operator, Owner
shall provide Operator with reasonable access to any
information in its possession relating to the physical
characteristics of the Facility.
Section 3.4- Accommodations. Owner shall
provide for and make available to Operator such office
space, storage facilities, unloading areas and rest
rooms as Operator may reasonably require and are
reasonably practicable at the Facility, as constructed
pursuant to the Construction Contract.
Section 3.5- Manuals and Drawings. Owner
shall provide Operator with all Operation and
Maintenance manuals and all drawings, specifications,
diagrams, and other information which Owner has or may
obtain with respect to the Facility.
Section 3.6- Real Estate Taxes. Owner shall
pay (or reimburse Operator) for any real estate or
<PAGE>
property taxes which may be assessed against it and/or
Operator associated with the Facility.
Section 3.7- Maintenance of Permits. Owner
shall pay for and maintain, with the cooperation of the
Operator, any and all Facility Permits, including any
required renewals of thereof.
Section 3.8- Payment. Owner shall make pay-
ments to Operator pursuant to Article V.
ARTICLE IV
Limitations on Authority
Section 4.1- General Limitations. Notwith-
standing any provision in this Agreement to the
contrary, unless previously expressly approved in the
Operating Budget or Operating Plan or otherwise ap-
proved in writing by Owner, neither Operator nor any
agent, representative or subcontractor of Operator
shall:
(a) Disposition of Assets. Sell, lease,
pledge, mortgage, convey, or make any license, exchange
or other transfer or disposition of any property or any
interest therein comprising any part of the Facility;
(b) Significant Expenditures. Make or
commit to any expenditure, incur any obligation or
liability or acquire on a Reimbursable Cost basis any
Materials, third party services, assets or other items
costing in excess of $10,000, or consent or agree to do
any of the foregoing;
(c) Vegetable Products. For a period of
seven (7) years from the date hereof (or such shorter
period as Owner shall permit), use the Facility for the
cultivation for commercial sale of detached, severed,
or harvested vegetable products for human ingestion;
<PAGE>
(d) Other Actions. Take or agree to take
any other action that materially varies with the
applicable Operating Plan or Operating Budget or fail
to take any action required by the Operating Plan or
Operating Budget; or
(e) Lawsuits and Settlements. Settle, com-
promise, assign, pledge, transfer, release or consent
to the compromise, assignment, pledge, transfer or re-
lease of, any claim, suit, debt, demand or judgment
against or due by, Owner or Operator, the cost of
which, in the case of Operator, would be a Reimbursable
Cost hereunder, or submit any such claim, dispute or
controversy to arbitration or judicial process, or
stipulate in respect thereof to a judgment, or consent
to do the same or commence any litigation, action,
arbitration, or other proceeding on behalf of Owner.
Section 4.2- Execution of Documents. Any
agreement, contract, notice or other document per-
taining to the Work that is expressly permitted here-
under (or under written approval of Owner) to be
executed by Operator shall be executed by the Facility
Manager or, subject to prior written notice to Owner,
such other individual representative of Operator who is
authorized and empowered by Operator to execute such
documents.
ARTICLE V
Payment Amount and Terms
Section 5.1 - Payment. As the sole and
exclusive compensation and reimbursement to Operator
for the performance of the Work hereunder, Owner shall
pay Operator, in accordance with this Article V, all
Reimbursable Costs and the Management Fee.
<PAGE>
Section 5.2- Reimbursable Costs.
(a) Covered Expenditures. Subject to the
limitations on expenditures set forth elsewhere in this
Agreement, Owner shall reimburse Operator for the fol-
lowing costs incurred by Operator in performing the
Work, each as properly incurred by Operator pursuant to
this Agreement and documented by written invoice or
receipt provided to Owner (the "Reimbursable Costs"):
(i) the actual costs of all Materials and third party
services procured hereunder; (ii) the actual payroll
cost for the Personnel involved in the performance of
the Work, including overtime and relocation costs,
unemployment and disability insurance, worker's
compensation, vacation, holidays, fringe benefits and
other statutory compensation; (iii) the actual cost of
the taxes specified in Section 2.13; (iv) utility
services procured under Section 2.16; and (v) any other
cost designated as a Reimbursable Cost hereunder.
(b) Payments. Immediately following the
Effective Date, Operator shall establish a custodial
bank account on behalf of Owner for the purpose of
paying Reimbursable Costs in accordance with this
Section 5.2(b)(the "Operating Account"). On or before
the first day of each month, Owner shall deposit into
the Operating Account the portion of the Reimbursable
Costs budgeted for such month in the applicable Operat-
ing Budget. All funds on deposit in the Operating
Account, including any interest accruing on funds
therein, shall be for the benefit of Owner except that
Operator shall act as custodian over the Operating
Account and may withdraw funds from such Account as and
when necessary to pay such Reimbursable Costs incurred
by Operator. Operator shall submit a statement to
Owner at the end of each month itemizing the total
Reimbursable Costs incurred during such month. No
Reimbursable Costs shall be incurred by Operator other
than in accordance with the applicable Operating
Budget, as amended, supplemented, or otherwise modified
from time to time in accordance herewith. If at any
<PAGE>
time during the performance of the Work, Operator
becomes aware that for any monthly period Reimbursable
Costs exceed or could be reasonably anticipated to
exceed the amount provided therefor in the Operating
Budget, Operator shall promptly notify Owner of such
budget overrun and shall not, without the written
approval of Owner amending such Operating Budget or
authorizing such expenditure, perform any further Work
that will result in or increase such budget overrun,
except in the case of an Emergency as provided in
Section 2.12. If Owner approves such budget overrun,
Operator may incur such additional Reimbursable Costs
and Owner shall pay to Operator within thirty (30) days
of the date of its approval the amount by which the
additional Reimbursable Costs exceeded available
amounts in the Operating Account.
Section 5.3- Management Fee. (a) Owner shall
pay to Operator an annual Management Fee for each Year
equal to twelve percent (12%) of the annual Profit
realized by Owner in connection with the operation of
the Facility. The Management Fee includes payment for
all costs incurred by Operator that are not
Reimbursable Costs including overhead and personnel
costs for any Work performed off-site and general
administrative costs incurred by Operator for routine
services. As used in this Section 5.3, "Profit" shall
mean, with respect to each Year, the revenue from sales
of the Facility's horticultural products less Reimburs-
able Costs and all other costs incurred by Owner
directly attributable to the operation of the Facility,
including without limitation (i) property taxes, (ii)
insurance costs, (iii) Hot Water delivered to the Hot
Water Delivery Point at a price of $.25 per million Btu
and (iv) the costs of new capital expenditures on the
Facility calculated on an amortized basis, provided
however, that payments for property taxes in the years
1997, 1998 and 1999 shall not be included in the
calculation of Profit.
(b) If, for any Year, Profit is determined to
be a negative amount (a "Loss"), Operator shall not be
<PAGE>
entitled to a Management Fee for such Year and such
Loss shall be carried forward and deducted from the
amount of Profit calculated for the immediately suc-
ceeding Year except that, for the year 1997, the first
$100,000 of any Loss shall not be carried forward.
Section 5.4- Audit Rights. Notwithstanding
the payment of any amount pursuant to the foregoing
provisions, Owner shall remain entitled to conduct an
audit and review of all payments made to Operator
hereunder. Such audit and review may be conducted by
Owner or by an independent certified public accountant
and the party conducting such audit and review shall be
entitled to inspect, copy and audit any of Operator's
financial books, records, accounts, and ledgers
relating to the Facility or the Work. Operator shall
cooperate with the auditors and promptly respond to any
questions relating to such audits. If, pursuant to
such audit and review, it is determined that any amount
previously paid by Operator did not constitute a due
and payable item hereunder, including without
limitation, a properly payable Reimbursable Cost,
Owner, at its option, may recover such amount
immediately upon demand from Operator or deduct or
cause to be deducted such amount from any payment that
thereafter may become due to Operator hereunder.
Section 5.5- Title. Title to all Materials
(including equipment) and other items purchased or ob-
tained by Operator on a Reimbursable Cost basis hereun-
der shall pass immediately to and vest in Owner upon
the passage of title from the vendor or supplier
thereof; provided, however, that such transfer of title
shall in no way affect Operator's obligations as set
forth in the other provisions of this Agreement.
ARTICLE VI
Section 6.1- Classes of Insurance. Owner
shall keep the Facility and the Site insured against
<PAGE>
the risks and hazards and with coverage in amounts not
less than those specified as follows:
(a) Property damage insurance on an all risk
basis including coverage against damage or loss caused
by earth movement (including but not limited to earth-
quake, landslide, subsidence and volcanic eruption) and
flood and providing coverage for (1) the Facility in a
minimum aggregate amount equal to the "full insurable
value" of the Facility and (2) foundations and other
property below the surface of the ground. For purposes
of this Section 6.1(a), "full insurable value" shall
mean the full replacement value of the Facility,
without deduction for physical depreciation; all such
policies may have deductibles of not greater than
$100,000. Such insurance shall also provide for debris
removal with sub-limits of not less than 5% of the
"full insurable value" of the Facility. The earth
movement and flood insurance is required only if it is
available on commercially reasonable terms and it may
be insured with a sub-limit no less than 25% of the
"full insurable value".
(b) Commercial general liability and
property damage insurance (including, but not limited
to, coverage for any construction on or about the Site)
covering the legal liability of Operator against all
claims for any bodily injury or death of persons and
for damage to or destruction of property occurring on,
in or about the Site and arising out of the use or
occupation of the Facility or Site by Operator.
Coverages provided by the foregoing insurance policy
shall include (but not be limited to) all of the
coverages commonly referred to by the insurance
industry as: Premises/Operations Liability; Prod-
ucts/Completed Operations Liability; Blanket Contrac-
tual Liability; Broad Form Property Damage Liability;
Personal Injury, Explosion, Collapse and Underground
Liability, Automobile Liability, including coverage for
Owned, Non-Owned, Hired, or Borrowed Vehicles and
"Mobile Equipment". The foregoing insurance shall
apply as primary insurance, irrespective of any
<PAGE>
insurance which Owner may carry and shall include a
"Cross Liability" clause (Severability of Interests).
The foregoing insurance shall be in combined single
limits for both property damage and personal injury and
in the minimum amount of $5,000,000 (which may include
excess liability coverage of up to $4,000,000) in
connection with any single occurrence.
(c) Business interruption insurance covering
100% of income generated by the Facility for a period
of 12 months arising from losses insured by (a) or (b)
above with a deductible not in excess of 45 days.
Section 6.2- Requirements. All insurance
required under Section 6.1 hereof shall be written by
companies rated at least Rating "A-", Financial Size
VII by A.M. Best Company (or an equivalent rating by
another rating agency if the Best's ratings are
discontinued), which are authorized to do insurance
business in the State of Wisconsin, shall name Operator
as an insured party thereunder with Owner and Project
Lender (or its designated representative) as additional
insured parties and shall expressly provide (a) an
effective waiver by the insurer of all rights of
subrogation against any additional insured, (b) that no
cancellation, reduction in amount or material change in
coverage thereof shall be effective until at least
thirty (30) days after receipt by Owner, Lender (or its
designated representative) and Operator of written
notice thereof, and (c) that during construction of any
improvements on the Site such policies shall be in
"builder's risk" form providing the limits and coverage
required by Article 10 of the Construction Contract.
ARTICLE VII
Dispute Resolution
Section 7.1- Procedure. (a) In the event a
dispute arises between Owner and Operator regarding the
application or interpretation of any provision of this
<PAGE>
Agreement and such dispute involves matters of account-
ing treatment, the aggrieved Party shall promptly noti-
fy the other Party to this Agreement of the dispute
within two (2) days after such dispute arises. Ope-
rator shall immediately appoint its own third party ac-
countant who, together with the Owner's accountant,
shall choose a third accountant. Said three accoun-
tants shall jointly review such evidence as they deem
necessary and shall render a decision (concurrence of
two of the three accountants) on such dispute within
ten (10) days. Such decision shall be binding on the
Owner and the Operator.
(b) In the event a dispute arises between
Owner and Operator regarding the application or
interpretation of any provision of this Agreement other
than accounting disputes referred to in Section 7.1(a)
above, the aggrieved Party shall promptly notify the
other Party to this Agreement of the dispute within ten
(10) days after such dispute arises. If the Parties
shall have failed to resolve the dispute within ten
(10) days after delivery of such notice, each Party
shall, within five (5) days thereafter, nominate a
senior officer of its management to meet at the Facili-
ty, or any other mutually agreed location, to resolve
the dispute. Should the parties be unable to resolve
the dispute to their mutual satisfaction within twenty
(20) days after such nomination, each party shall have
the right to pursue any legal remedies which may exist
or may, with the concurrence of the other party, refer
such matter for arbitration.
Section 7.2- Continuation of Work. Pending
final resolution of any dispute, the Parties shall con-
tinue to fulfill their respective obligations hereun-
der, including but not limited to payment obligations.
The interpretation or decision of the non-aggrieved
Party shall take precedence until such time as the
dispute is resolved pursuant to Section 7.1; provided
that, nothing in this Section shall relieve the non-aggrieved
Party from any liability hereunder resulting from such action to the
extent such interpretation or
<PAGE>
decision is ultimately determined to be wrong pursuant
to the procedures set forth in Section 7.1.
ARTICLE VIII
Termination
Section 8.1- Term. The term of this Agree-
ment shall commence as of the Effective Date and shall
expire on May 31, 2022 (the "Term") unless terminated
earlier by mutual written agreement of the Parties or
following an Event of Default (an "Early Termination").
Section 8.2- Termination Procedure. Upon
the effective date of an Early Termination, Operator
shall (a) discontinue the Work, (b) place no further
orders or subcontracts for Materials, third party
services, or labor, except as authorized in advance by
Owner, (c) make every reasonable effort to obtain
cancellation of affected subcontracts or, at Owner's
request, cause the assignment of any such contracts to
Owner or its replacement operator upon terms satisfac-
tory to Owner, and (d) take such other action as may be
reasonably requested by Owner for the orderly closeout
and transition of Operator's operation and maintenance
activities. After deduction of any amounts owed by
Operator to Owner, within sixty (60) days of an Early
Termination, Owner shall pay to Operator (A) the amount
of any Reimbursable Costs due and payable to Operator
pursuant to this Agreement up to and including the date
of termination, and (B) in the case of a termination by
mutual agreement, (i) all reasonable documented costs
incurred by Operator for its own efforts to implement
termination and the resulting reasonable costs actually
incurred for turnover and demobilization, excluding any
loss of anticipated profit and (ii) a partial
Management Fee based solely on the Profit earned, if
any, from January 1st of the year of termination
through the date of termination. Other than as set
forth in this Section 8.2, Owner shall have no lia-
<PAGE>
bility to Operator for costs, expenses or losses of any
kind or nature incurred by Operator as a result of such
termination. In no event shall the aggregate payments
of Owner hereunder exceed the amount due for the then-current
Year, pro-rated for any partial Year. Upon
Operator's receipt of final payment in full from Owner,
this Agreement shall terminate and neither Party shall
have any further obligation to the other Party except
with respect to those certain provisions of this Agree-
ment which by their nature survive.
ARTICLE IX
Default
Section 9.1- Events of Default. The fol-
lowing occurrences or events, or any of them, by or
against either Operator or Owner, shall constitute a
default under this Agreement:
(a) A material breach of any term,
covenant or agreement contained in this Agreement and,
in the case of obligations which are not curable
through the payment of money, such failure shall remain
unremedied for thirty (30) days during which time the
breaching Party shall be engaged in reasonably diligent
efforts to cure; or
(b) There shall be a Bankruptcy of either
Party; "Bankruptcy" shall mean and refer to (i) the
filing of any petition by such person to commence a
case under the Bankruptcy Code (title 11, U.S.C.) or
any other federal, state or foreign law for the relief
of debtors or the protection of creditors (any such
law, a "Bankruptcy Law"), (ii) the filing of a petition
by any third party with respect to such person under
any Bankruptcy Law, which petition is not opposed
within 120 days after filing, (iii) the failure or in-
ability of such person to pay its debts as they become
due (or any admission in writing by such person of any
<PAGE>
such failure or inability), (iv) the appointment of a
receiver or trustee for such person or any substantial
portion of the property of such person or (v) the
making by such person of any general assignment for the
benefit of creditors; or
Section 9.2- Rights Upon Default.
(a) If an Event of Default shall occur,
then the non-defaulting Party may take any one or more
of the following actions: (i) terminate this Agreement
immediately without obligation to or recourse by the
defaulting Party and in accordance with the procedures
described in Section 8.2, (ii) exercise any other right
it may have under this Agreement, and/or (iii) pursue
any other right or remedy available to it under Law or
equity in accordance with the procedures of Article VII
subject to the limits set forth in this Agreement.
(b) In the event that Owner so elects to
terminate this Agreement as a result of Operator's de-
fault hereunder, and without limiting any other right
or remedy of Owner arising therefrom, Owner may employ
any other person, firm or corporation to perform the
Work by whatever method Owner may deem expedient.
Furthermore, Operator shall, at Owner's expense, per-
form the following services relative to the Work so
affected by its default, regardless of whether or not
Owner elects to terminate this Agreement as a result of
such default: (i) assist Owner in preparing an inven-
tory of all Materials in use or in storage at the
Facility; and (ii) assign to Owner such subcontracts
and other contractual agreements relating to Operator's
performance of the Work as may be designated by Owner.
ARTICLE X
Indemnity
Section 10.1- Operator Indemnity.
(a) Operator shall indemnify, hold harmless and defend
<PAGE>
Owner, its affiliates and employees and Project Lender
(for the purposes of this Section 10.1, the "Indemni-
tees") from and against any claims, demands, suits,
proceedings, liabilities, judgments, awards, losses,
damages, costs or expenses (including reasonable legal
fees) ("Indemnity Claim") whatsoever in connection with
or arising out of acts or omissions by Operator, wheth-
er or not brought or sought by or in favor of a govern-
mental agency, a third party or the Indemnitee, and
whether or not based on contract, tort (including neg-
ligence), theory of strict contract, theory of strict
liability, or infringement of proprietary rights, for
bodily injury, sickness, death, injury to or destruc-
tion of third-party tangible property arising out of or
in any manner caused or occasioned, in whole or in
part, by any act, omission, error, fault or wilful act
or gross negligence of Operator, or anyone acting on
Operator's behalf, including, without limitation,
subcontractors and vendors. Notwithstanding any
provision in this Agreement to the contrary, Operator's
liability under this Agreement shall in no event exceed
$100,000.
(b) Operator agrees to fully indemnify,
save harmless and defend each Indemnitee from claims,
liabilities, expenses (including legal fees),
penalties, interest, demands and causes of action for
nonpayment of amounts due subcontractors, vendors or
others as a result of providing services which amounts
are payable by Operator, provided Operator has been or
will be paid by Owner, to the extent Operator is enti-
tled to receive such payment, in accordance with the
provisions of this Agreement for such services.
Section 10.2- Owner Indemnity. (a) Owner
shall indemnify, hold harmless and defend Operator, its
affiliates and employees (for the purposes of this Sec-
tion 10.2, the "Indemnitees") from and against any
claims, demands, suits, proceedings, liabilities, judg-
ments, awards, losses, damages, costs or expenses (in-
cluding reasonable legal fees) ("Indemnity Claim")
whatsoever in connection with or arising out of acts by
<PAGE>
Owner, whether or not brought or sought by or in favor
of a governmental agency, a third party or the Indemni-
tee, and whether or not based on contract, tort
(including negligence), theory of strict contract,
theory of strict liability, or infringement of propri-
etary rights, for bodily injury, sickness, death,
injury to or destruction of third-party tangible
property arising out of or in any manner caused or
occasioned, in whole or in part, by any act, omission,
error, fault or negligence of Owner.
Section 10.3- Indemnitee Contribution. In
the event that any Indemnitee seeking indemnification
from Operator or Owner, as the case may be, pursuant to
Section 10.1 or 10.2 is found to have actively
contributed to the cause of the loss for which it is
seeking to be indemnified, such Indemnitee shall bear
its losses and costs arising out of such claim in
proportion to the degree to which it shall be found to
have been negligent in causing such loss.
Section 10.4- Insurance. The obligations
of Operator and Owner referred to in this Article X
shall be limited or reduced to the extent of the
proceeds of any insurance actually received (or any
self-insurance retentions) by Owner or Operator, re-
spectively, as the case may be.
ARTICLE XI
Liability of the Parties
Section 11.1- Limitation of Liability. (a)
Notwithstanding anything else to the contrary set forth
herein, the aggregate liability of Operator with
respect to claims of Owner arising out of the
performance or non-performance by Operator of the Work
or any other obligations under this Agreement, whether
based on contract, warranty, indemnity, tort (including
negligence), strict liability or otherwise, shall be
limited to the proceeds of insurance required <PAGE>
hereunder,
compensation payable to Operator hereunder
and the Management Fee earned by Operator during the
preceding Year. In no event shall either Party be
liable hereunder for any consequential or indirect loss
or damages.
(b) The Parties further agree that the
waivers and disclaimers of liability, indemnities, re-
leases from liability, and limitations on liability
expressed in this Agreement shall survive termination
or expiration of this Agreement.
ARTICLE XII
Force Majeure
Section 12.1- Force Majeure; Events Limita-
tion. Neither Operator nor Owner shall be liable to
the other for any failure to perform pursuant to the
terms and conditions of this Agreement to the extent
such performance was prevented by an event of Force Ma-
jeure. Force Majeure as used in this Agreement means
any event beyond the reasonable control of the Party
affected and which, with the exercise of due care, such
Party could not reasonably have been expected to avoid
or foresee, including but not limited to acts of God,
explosions or fires, floods, hurricanes, tornadoes,
lightning, earthquakes, drought, epidemics, blight,
famine, quarantine, blockade, acts or inactions of
Governmental Authorities, war, insurrection or civil
strife, rebellion, sabotage, strike or labor difficulty
(except any such strikes or labor difficulties
involving Operator's Personnel or other employees);
provided that commercial impracticability shall not
constitute an event of Force Majeure; provided further
that a Party shall not be excused from its performance
pursuant to this Section 12.1 (i) unless such Party
gives notice and full particulars of the same to the
other Party as soon as practicable after the occurrence
relied on, (ii) to the extent such failure was caused
by its negligence or other tortious conduct, (iii) to
the extent the event relied upon could have been
<PAGE>
prevented by reasonable diligence or was within the
reasonable control of such Party, (iv) to the extent of
its failure to use due diligence to remedy the
situation and remove the cause of the event of Force
Majeure in an adequate manner and with all reasonable
dispatch, (v) for its obligations to make payments due
under this Agreement. The burden of proof shall be on
the Party seeking to show excuse from performance due
to a Force Majeure event.
ARTICLE XIII
Miscellaneous Provisions
Section 13.1- Entire Agreement. This
Agreement contains the entire understanding of the
Parties with respect to the subject matter hereof and
supersedes any and all prior negotiations, agreements,
commitments, and writings with respect thereto. There
are no oral understandings, terms or conditions and
neither Party has relied upon any representation,
express or implied, not contained in this Agreement.
Section 13.2- Amendments. No change,
amendment or modification of this Agreement shall be
valid or binding upon the Parties hereto unless such
change, amendment or modification shall be in writing
and duly executed by both Parties.
Section 13.3- Joint Effort. Preparation of
this Agreement has been a joint effort of the Parties
and the resulting document shall not be construed more
severely against one of the Parties than against the
other.
Section 13.4- Captions. The captions con-
tained in this Agreement are for convenience and refer-
ence only and in no way define, describe, extend, or
limit the scope or intent of this Agreement or the in-
tents of any provision contained herein.
<PAGE>
Section 13.5- Notice. Any notice, demand,
offer, or other written instrument required or permit-
ted to be given pursuant to this Agreement shall be in
writing signed by the Party giving such notice and
shall be deemed given when delivered to the Party to
whom notice is to be given by personal delivery, first
class registered or certified mail, nationally
recognized courier, or telex at the most recent address
specified by such Party pursuant to this Section 13.5:
(a)To Owner: LSP-Whitewater Limited Partnership
c/o LS Power Corporation
111 CTH U (W3875)
Whitewater, WI 53190
Attn: Paul Tegan
Telephone: 414-472-7040
Fax: 414-472-7045
With a copy to: LS Power Corporation
402 East Main Street
Bozeman, MT 59715
Attention:Greg Stricker
Telephone: 406-587-1619
Fax: 406-587-8678
(b)To Operator: FloriCulture, Inc.
9525 105th Street Court South
Cottage Grove, MN 55016
Attention: Bruce Hutchinson
Telephone: 612-459-4931
Fax: 612-458-9437
Either Party shall have the right to
change the place to which such notice shall be sent
or delivered by similar notice sent in like manner
to the other Party.
Section 13.6- Partial Invalidity. The
invalidity of one or more of the phrases, sentences,
clauses, Sections or Articles contained in this
<PAGE>
Agreement shall not affect the validity of the
remaining portion of this Agreement so long as the
material purposes of this Agreement can be
determined and effectuated.
Section 13.7- Assignment.
(a) Neither this Agreement nor any right
granted hereunder may be assigned or otherwise dis-
posed of by Operator and neither shall inure to the
benefit of any trustee in bankruptcy, liquidator,
receiver, successor, or Affiliate of Operator,
whether by operation of law or otherwise, without
the express written consent of Owner and, fur-
thermore, any assignment or transfer without such
express written consent shall be null and void and
shall constitute a material breach of this
Agreement; provided, however, that Operator may
assign this Agreement without the consent of Owner
(i) to the successor entity in connection with a
merger, consolidation or other corporate reor-
ganization of Operator, (ii) to the purchaser, in
connection with the sale of all or substantially all
of the business or assets of the Operator, or (iii)
to an Affiliate of Operator, provided such transfer
shall not in any manner release the Operator from
its obligations hereunder.
(b) This Agreement shall not be assigned
by Owner without the prior written consent of Opera-
tor, which consent shall not be unreasonably with-
held, except that this Agreement may be assigned by
Owner without such consent (i) to the Project Lender
as security for Lender's financing of the Plant and
to Utility as collateral security provided that such
transfer shall not in any manner release Owner from
its obligations hereunder; (ii) to the successor of
Owner, or to a Person acquiring all or a controlling
interest in the business assets of Owner or to an
Affiliate of Owner; and (iii) in connection with a
sale or transfer of the Facility. Operator hereby
<PAGE>
agrees to execute and deliver a reasonably accept-
able form of consent.
Section 13.8- No Waiver. Any failure of
either Party to enforce any of the provisions of
this Agreement or to require at any time performance
by the other Party of any of the provisions hereof
during the pendency of this Agreement shall in no
way affect the validity of this Agreement, or any
part hereof, and shall not be deemed a waiver of the
right of either Party thereafter to enforce any and
each such provision.
Section 13.9- Counterparts. This Agree-
ment may be executed by the Parties hereto in sepa-
rate counterparts, each of which when so executed
and delivered shall be an original, but all such
counterparts shall together constitute but one and
the same instrument.
Section 13.10- Publicity. Each Party
shall obtain the other Party's prior written
approval regarding the text of any announcement,
publication, photograph or other type of
communication concerning the Work prior to the
dissemination or release of same by either Party,
which approval shall not be unreasonably withheld.
Section 13.11- Applicable Law. This
Agreement shall be governed by, construed and en-
forced in accordance with the laws of the State of
New York, without regard for its principle governing
conflicts of law.
Section 13.12- Successors and Assigns.
This Agreement shall be binding upon the Parties
hereto, their successors and assigns from the
Effective Date until such time as all obligations
described herein have been completed in full.
Section 13.13- Effect of Approval Rights.
Operator acknowledges and agrees that any right of
<PAGE>
Owner to review or approve any matter under this
Agreement, including, without limitation, any such
right provided in Article II is for the exclusive
benefit of the Party entitled to exercise such right
and no exercise of or failure to exercise any such
right shall in any way relieve or limit any of
Operator's obligations or liabilities under this
Agreement.
IN WITNESS WHEREOF, the Parties hereto
have set their hands on the day and year first above
written.
LSP-Whitewater Limited Partnership
By: LSP-Whitewater I, Inc.,
its general partner
By: /s/ Michael S. Liebelson
Name: Michael S. Liebelson
Title: Managing Director
FloriCulture, Inc.
By: /s/ Bruce Hutchinson
Name: Bruce Hutchinson
Title: President
<PAGE>
TABLE OF CONTENTS
RECITALS:. . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
Definitions. . . . . . . . . . . . . . . . . . . 1
ARTICLE II
Operator Responsibilities. . . . . . . . . . . . 7
Section 2.1 - Independent Contractor 7
Section 2.2 - Initial Services. . 7
Section 2.3 - Operational Services 7
Section 2.4 - Management Services 8
Section 2.5 - Standards of Performance 9
Section 2.6 - Site Procedures . . 10
Section 2.7 - Operating Budget. . 10
Section 2.8 - Operating Plan. . . 11
Section 2.9 - Deposit of Revenues . 12
Section 2.10 - Reports . . . . . . 12
Section 2.11 - Personnel . . . . . 13
Section 2.12 - Emergency Procedures 14
Section 2.13 - Taxes . . . . . . . 14
Section 2.14 - Books and Records . 14
Section 2.15 - Access. . . . . . . 15
Section 2.16 - Utilities . . . . . 15
Section 2.17 - No Liens or Encumbrances 15
Section 2.18 - Litigation; Permit Lapses16
ARTICLE III
Owner Responsibilities . . . . . . . . . . . . . 16
Section 3.1 - Hot Water Supply. . 16
Section 3.2 - Insurance . . . . . . 16
Section 3.3 - Reasonable Access . 16
Section 3.4 - Accommodations. . . 16
Section 3.5 - Manuals and Drawings 16
Section 3.6 - Real Estate Taxes . 17
Section 3.7 - Maintenance of Permits 17
Section 3.8 - Payment . . . . . . 17
<PAGE>
ARTICLE IV
Limitations on Authority . . . . . . . . . . . . 17
Section 4.1 - General Limitations 17
Section 4.2 - Execution of Documents 18
ARTICLE V
Payment Amount and Terms . . . . . . . . . . . . 18
Section 5.1 - Payment . . . . . . 18
Section 5.2 - Reimbursable Costs. 18
Section 5.3 - Management Fee. . . 19
Section 5.4 - Audit Rights. . . . 20
Section 5.5 - Title . . . . . . . 20
ARTICLE VI
Section 6.1 - Classes of Insurance 21
Section 6.2 - Requirements . . . 22
ARTICLE VII
Dispute Resolution . . . . . . . . . . . . . . . 22
Section 7.1 - Procedure . . . . . 22
Section 7.2 - Continuation of Work 23
ARTICLE VIII
Termination. . . . . . . . . . . . . . . . . . . 24
Section 8.1 - Term. . . . . . . . 24
Section 8.2 - Termination Procedure 24
ARTICLE IX
Default. . . . . . . . . . . . . . . . . . . . . 25
Section 9.1 - Events of Default . 25
Section 9.2 - Rights Upon Default 25
ARTICLE X
Indemnity. . . . . . . . . . . . . . . . . . . . 26
Section 10.1 - Operator Indemnity. 26
Section 10.2 - Owner Indemnity . . 27
Section 10.3 - Indemnitee Contribution 27
Section 10.4 - Insurance . . . . . 27
<PAGE>
ARTICLE XI
Liability of the Parties . . . . . . . . . . . . 28
Section 11.1 - Limitation of Liability 28
ARTICLE XII
Force Majeure. . . . . . . . . . . . . . . . . . 28
Section 12.1 - Force Majeure; Events
Limitation. . . . . . 28
ARTICLE XIII
Miscellaneous Provisions . . . . . . . . . . . . 29
Section 13.1 - Entire Agreement. . 29
Section 13.2 - Amendments. . . . . 29
Section 13.3 - Joint Effort. . . . 29
Section 13.4 - Captions. . . . . . 29
Section 13.5 - Notice. . . . . . . 30
Section 13.6 - Partial Invalidity. 30
Section 13.7 - Assignment. . . . . 31
Section 13.8 - No Waiver . . . . . 31
Section 13.9 - Counterparts. . . . 31
Section 13.10 - Publicity . . . . . 32
Section 13.11 - Applicable Law. . . 32
Section 13.12 - Successors and Assigns 32
Section 13.13 - Effect of Approval Rights32
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LS POWER FUNDING
CORPORATION AS OF AND FOR THE PERIOD
ENDED JUNE 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,000
<SECURITIES> 0
<RECEIVABLES> 332,000,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 332,001,000
<CURRENT-LIABILITIES> 0
<BONDS> 332,000,000
0
0
<COMMON> 1
<OTHER-SE> 999
<TOTAL-LIABILITY-AND-EQUITY> 332,001,000
<SALES> 0
<TOTAL-REVENUES> 6,471,549
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,471,549
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LSP-COTTAGE GROVE, L.P. AS OF
AND FOR THE PERIOD ENDED
JUNE 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 103,638
<SECURITIES> 29,055,681
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 103,638
<PP&E> 145,071,250
<DEPRECIATION> 0
<TOTAL-ASSETS> 180,879,073
<CURRENT-LIABILITIES> 7,711,073
<BONDS> 155,000,000
0
0
<COMMON> 0
<OTHER-SE> 18,168,000
<TOTAL-LIABILITY-AND-EQUITY> 180,879,073
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LSP-WHITEWATER LIMITED
PARTNERSHIP AS OF AND FOR THE
PERIOD ENDED JUNE 30, 1997, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 447,636
<SECURITIES> 30,932,826
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 447,636
<PP&E> 167,263,637
<DEPRECIATION> 0
<TOTAL-ASSETS> 205,385,138
<CURRENT-LIABILITIES> 7,828,138
<BONDS> 177,000,000
0
0
<COMMON> 0
<OTHER-SE> 20,557,000
<TOTAL-LIABILITY-AND-EQUITY> 205,385,138
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
