PURCHASE AND SALE AGREEMENT
By and Between
▇▇▇▇▇ Petroleum Company and
▇▇▇▇▇▇▇▇▇ Electric Company, Inc.
Dated November 8, 1996
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
1.1 "Affiliate". . . . . . . . . . . . . . . . . . . . 1
1.2 "Agreement". . . . . . . . . . . . . . . . . . . . 1
1.3 "Business Day" . . . . . . . . . . . . . . . . . . 1
1.4 "Closing". . . . . . . . . . . . . . . . . . . . . 2
1.5 "Code" . . . . . . . . . . . . . . . . . . . . . . 2
1.6 "Cogeneration Assets". . . . . . . . . . . . . . . 2
1.7 "Cogeneration Lease" . . . . . . . . . . . . . . . 2
1.8 "Cogeneration Premises Lease". . . . . . . . . . . 2
1.9 "Default". . . . . . . . . . . . . . . . . . . . . 2
1.10 "Effective Date" . . . . . . . . . . . . . . . . . 2
1.11 "Encumbrance". . . . . . . . . . . . . . . . . . . 2
1.12 "Environmental Laws" . . . . . . . . . . . . . . . 2
1.13 "Escrow" . . . . . . . . . . . . . . . . . . . . . 3
1.14 "Financial Statements" . . . . . . . . . . . . . . 3
1.15 "Governmental Entity". . . . . . . . . . . . . . . 3
1.16 "Indemnifying Party" . . . . . . . . . . . . . . . 3
1.17 "Indemnitee" . . . . . . . . . . . . . . . . . . . 3
1.18 "IRS". . . . . . . . . . . . . . . . . . . . . . . 3
1.19 "Material" . . . . . . . . . . . . . . . . . . . . 4
1.20 "Operations and Maintenance Agreement" . . . . . . 4
1.21 "P.G.&E. S. O. #2 Contract". . . . . . . . . . . . 4
1.22 "Partnership Purchase Agreement" . . . . . . . . . 4
1.23 "Permitted Encumbrances" . . . . . . . . . . . . . 4
1.24 "Person" . . . . . . . . . . . . . . . . . . . . . 4
1.25 "Requisite Regulatory Approvals" . . . . . . . . . 4
1.26 "Right to Purchase Contract" . . . . . . . . . . . 4
1.27 "Shareholders" . . . . . . . . . . . . . . . . . . 4
1.28 "SOCAL Contract" . . . . . . . . . . . . . . . . . 5
1.29 "SOCAL Litigation" . . . . . . . . . . . . . . . . 5
1.30 "TOC Purchase Agreement" . . . . . . . . . . . . . 5
ARTICLE II THE PURCHASE AND SALE. . . . . . . . . . . . . . . 5
2.1 Transfer to ▇▇▇▇▇. . . . . . . . . . . . . . . . . 5
2.2 Purchase by ▇▇▇▇▇. . . . . . . . . . . . . . . . . 5
2.3 Payment of the Purchase Price. . . . . . . . . . . 5
2.4 Operating Adjustment.. . . . . . . . . . . . . . . 6
2.5 Allocation of Purchase Price . . . . . . . . . . . 7
2.6 Closing. . . . . . . . . . . . . . . . . . . . . . 7
2.7 Proration of Credits and Payment Obligations.. . . 7
2.8 Real Estate and Other Taxes. . . . . . . . . . . . 7
2.9 Documentation of Sale and Transfer of Ownership. . 7
2.10 Closing Procedure. . . . . . . . . . . . . . . . . 8
2.11 Post Closing Access to Documents . . . . . . . . . 9
2.12 Escrow . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇▇▇. . . . 10
3.1 Corporate Organization . . . . . . . . . . . . . . 10
3.2 Effect of Agreement; Consents. . . . . . . . . . . 10
3.3 Financial Statements . . . . . . . . . . . . . . . 10
3.4 Taxes and Tax Returns. . . . . . . . . . . . . . . 11
3.5 Absence of Adverse Change. . . . . . . . . . . . . 11
3.6 No Misleading Statements . . . . . . . . . . . . . 11
3.7 No Significant Transactions. . . . . . . . . . . . 11
3.8 Properties, Title and Related Matters. . . . . . . 12
3.9 Legal Proceedings. . . . . . . . . . . . . . . . . 13
3.10 Records. . . . . . . . . . . . . . . . . . . . . . 13
3.11 Contracts. . . . . . . . . . . . . . . . . . . . . 13
3.12 Brokerage. . . . . . . . . . . . . . . . . . . . . 14
3.13 Execution and Delivery . . . . . . . . . . . . . . 14
3.14 Environmental Matters. . . . . . . . . . . . . . . 14
3.15 Employees. . . . . . . . . . . . . . . . . . . . . 16
3.16 Investigation. . . . . . . . . . . . . . . . . . . 16
3.17 Consent of Public Utilities Commission
Not Required . . . . . . . . . . . . . . . . . . 16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇. . . . . . 16
4.1 Corporate Organization . . . . . . . . . . . . . . 17
4.2 Due Authorization, Execution and Delivery; Effect of
Agreement. . . . . . . . . . . . . . . . . . . . 17
4.3 Consents . . . . . . . . . . . . . . . . . . . . . 17
4.4 Litigation . . . . . . . . . . . . . . . . . . . . 17
4.5 Brokerage. . . . . . . . . . . . . . . . . . . . . 17
4.6 Approvals. . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V COVENANTS OF ▇▇▇▇▇▇▇▇▇ . . . . . . . . . . . . . . 18
5.1 Access to ▇▇▇▇▇▇▇▇▇. . . . . . . . . . . . . . . . 18
5.2 Governmental Approvals; Consents . . . . . . . . . 18
5.3 Litigation and Claims. . . . . . . . . . . . . . . 19
5.4 Notice of Changes. . . . . . . . . . . . . . . . . 19
5.5 Conduct of Business Operations . . . . . . . . . . 19
5.6 Maintain Cogeneration Assets and Operations. . . . 20
5.7 Exclusive Dealing. . . . . . . . . . . . . . . . . 20
5.8 Termination Fee. . . . . . . . . . . . . . . . . . 21
5.9 Maintenance of Books and Records . . . . . . . . . 22
5.10 Lease of the Cogeneration Assets and
Right to Purchase. . . . . . . . . . . . . . . . 22
5.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VI COVENANTS OF ▇▇▇▇▇ . . . . . . . . . . . . . . . . 23
6.1 Cooperation. . . . . . . . . . . . . . . . . . . . 23
6.2 Governmental Approvals . . . . . . . . . . . . . . 23
6.3 Disclosure Responsibilities. . . . . . . . . . . . 23
ARTICLE VII CONDITIONS TO OBLIGATIONS OF ▇▇▇▇▇ . . . . . . . . 23
7.1 Accuracy of Representations and Warranties . . . . 23
7.2 Performance of Covenants and Agreements. . . . . . 23
7.3 Consents . . . . . . . . . . . . . . . . . . . . . 24
7.4 Governmental Approvals . . . . . . . . . . . . . . 24
7.5 Approval of Counsel. . . . . . . . . . . . . . . . 24
7.6 Officers' Certificate. . . . . . . . . . . . . . . 24
7.7 Resolutions. . . . . . . . . . . . . . . . . . . . 24
7.8 Opinions of Counsel. . . . . . . . . . . . . . . . 24
7.9 Closing of Agreements. . . . . . . . . . . . . . . 24
7.10 Termination of Operations and
Maintenance Agreement. . . . . . . . . . . . . . 24
7.11 PG&E Consent . . . . . . . . . . . . . . . . . . . 24
7.12 Good Standing Certificates . . . . . . . . . . . . 25
7.13 Sunset Investment Indemnity. . . . . . . . . . . . 25
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF ▇▇▇▇▇▇▇▇▇. . . . . 25
8.1 Accuracy of Representations and Warranties . . . . 25
8.2 Performance of Covenants and Agreements. . . . . . 25
8.3 Resolutions. . . . . . . . . . . . . . . . . . . . 25
8.4 Approval of Counsel. . . . . . . . . . . . . . . . 25
8.5 Governmental Approvals . . . . . . . . . . . . . . 26
8.6 Officers' Certificate. . . . . . . . . . . . . . . 26
8.7 Opinion of Counsel . . . . . . . . . . . . . . . . 26
8.8 Closing of Agreements. . . . . . . . . . . . . . . 26
ARTICLE IX TERMINATION PRIOR TO CLOSING . . . . . . . . . . . 26
9.1 Termination. . . . . . . . . . . . . . . . . . . . 26
9.2 Effect on Obligations. . . . . . . . . . . . . . . 27
ARTICLE X INDEMNIFICATION. . . . . . . . . . . . . . . . . . 27
10.1 Indemnification by ▇▇▇▇▇ . . . . . . . . . . . . . 27
10.2 Indemnification by ▇▇▇▇▇▇▇▇▇ and the Shareholders. 27
10.3 Survival . . . . . . . . . . . . . . . . . . . . . 27
10.4 Notice and Opportunity to Defend . . . . . . . . . 27
10.5 General. . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE XI MISCELLANEOUS. . . . . . . . . . . . . . . . . . . 29
11.1 Entire Agreement . . . . . . . . . . . . . . . . . 29
11.2 Successors and Assigns . . . . . . . . . . . . . . 29
11.3 Expenses . . . . . . . . . . . . . . . . . . . . . 29
11.4 Taking of Necessary Action . . . . . . . . . . . . 29
11.5 Invalidity . . . . . . . . . . . . . . . . . . . . 29
11.6 Attorneys' Fees. . . . . . . . . . . . . . . . . . 30
11.7 Counterparts . . . . . . . . . . . . . . . . . . . 30
11.8 Headings . . . . . . . . . . . . . . . . . . . . . 30
11.9 Construction and References. . . . . . . . . . . . 30
11.10 Modification and Waiver. . . . . . . . . . . . . . 30
11.11 Notices. . . . . . . . . . . . . . . . . . . . . . 31
11.12 Public Announcements . . . . . . . . . . . . . . . 32
11.13 Governing Law; Interpretation. . . . . . . . . . . 32
11.14 Jurisdiction . . . . . . . . . . . . . . . . . . . 32
LIST OF EXHIBITS
Exhibit Number
Right to Purchase Contract . . . . . . . . . . . . . . . . . . 1
Assignments of Leases, Rights of Way, Easements
and Contracts . . . . . . . . . . . . . . . . . . . . . . 2A, 2B
Allocation of Purchase Price . . . . . . . . . . . . . . . . . 3
Certificate of Satisfaction. . . . . . . . . . . . . . . . . . 4
Escrow Instructions. . . . . . . . . . . . . . . . . . . . . . 5
Certificate of Compliance of ▇▇▇▇▇▇▇▇▇ . . . . . . . . . . . . 6
Opinions of Counsel to ▇▇▇▇▇▇▇▇▇ . . . . . . . . . . . . . 7A, 7B
Sunset Investment Company LLC Indemnity. . . . . . . . . . . . 8
Certificate of Compliance of ▇▇▇▇▇ . . . . . . . . . . . . . . 9
Opinion of Counsel to ▇▇▇▇▇. . . . . . . . . . . . . . . . . . 10
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is dated, for the
convenience of the parties hereto, November 8, 1996, by and between ▇▇▇▇▇
Petroleum Company, a Delaware corporation ("▇▇▇▇▇"), and ▇▇▇▇▇▇▇▇▇ Electric
Company, Inc., a California corporation ("▇▇▇▇▇▇▇▇▇").
RECITALS:
▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ have determined that it is in their
respective best interests for ▇▇▇▇▇ to purchase from ▇▇▇▇▇▇▇▇▇ the Cogeneration
Assets (as defined in Section 1.7 hereof) for Two Hundred Thousand Dollars
($200,000) cash, upon the terms and subject to the conditions set forth herein;
▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ have entered into an Agreement in Principle
and Exclusive Dealing Agreement dated August 15, 1996 ("AIP"), and wish to set
forth the representations, warranties, agreements and conditions under which
the purchase and sale will occur in this Definitive Agreement, as defined in
Section 6 of the AIP, which upon execution will supersede the AIP.
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ and its shareholders hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings
given to them in this Article I, unless defined elsewhere in this Agreement.
1.1 "Affiliate" shall mean with respect to any Person, an
individual or entity that, directly or indirectly, controls, is controlled by or
is under common control with such Person.
1.2 "Agreement" shall have the meaning such term is given in the
introductory paragraph hereof.
1.3 "Business Day" shall mean any day other than Saturday, Sunday
or other days on which federally chartered commercial banks in California are
authorized by law to close.
2
1.4 "Closing" shall have the meaning such term is given in Section
2.6 hereof.
1.5 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.6 "Cogeneration Assets" shall mean ▇▇▇▇▇▇▇▇▇'▇ rights relative
to the operational cogeneration plant described in the Disclosure Letter from
▇▇▇▇▇▇▇▇▇ delivered to ▇▇▇▇▇ at or prior to execution hereof, which shall refer
to the relevant Sections of this Agreement (the "▇▇▇▇▇▇▇▇▇ Disclosure Letter"),
and all tangible and intangible assets related to such plant, including but not
limited to the P.G.&E. S. O. #2 Contract as defined in Section 1.21 hereof, the
Operations and Maintenance Agreement as defined in Section 1.20 hereof, the
Cogeneration Lease as defined in Section 1.7 hereof, the Cogeneration Premises
Lease as defined in Section 1.8 hereof and the Right to Purchase Contract as
defined in Section 1.26 hereof, excluding only the SOCAL Contract as defined in
Section 1.28 hereof and the SOCAL Litigation as defined in Section 1.29 hereof.
1.7 "Cogeneration Lease" shall mean that Lease Agreement dated as
of August 15, 1994, between Security Pacific Leasing Corporation, a Delaware
corporation ("Security Pacific"), as lessor, and ▇▇▇▇▇▇▇▇▇, as lessee, a copy of
which is attached to the ▇▇▇▇▇▇▇▇▇ Disclosure Letter.
1.8 "Cogeneration Premises Lease" shall mean that Premises Lease
dated as of August 15, 1994, between the persons and entities listed in Exhibit
A of such Lease, collectively the "Premises Lessors," and Security Pacific, the
"Premises Lessee," Security Pacific's interest in which was subleased to
▇▇▇▇▇▇▇▇▇ pursuant to the Cogeneration Lease, a copy of which is attached to
the ▇▇▇▇▇▇▇▇▇ Disclosure Letter.
1.9 "Default" shall mean, as to any party to this Agreement, (a)
a default by such party in the performance of any of its material obligations
hereunder and the continuation of such default for a period of five (5)
Business Days after written notice is delivered by the non-defaulting party to
the defaulting party that a default has occurred or (b) the breach of any
representation or warranty hereunder.
1.10 "Effective Date" shall have the meaning such term is given in
paragraph 2.4a hereof.
1.11 "Encumbrance" shall mean any security interest, mortgage,
pledge, claim, lien, charge, option, defect, encumbrance, or other right or
interest of any nature.
1.12 "Environmental Laws" shall be broadly construed to mean any and
all federal, state or local laws, statutes, ordinances, rules, regulations,
orders, or determinations of any Governmental Entity pertaining to the
environment heretofore or currently in effect in any and all jurisdictions in
which ▇▇▇▇▇▇▇▇▇ is conducting or at any time has conducted business, or where
any of the Cogeneration Assets are located, or where any hazardous substances
generated by or disposed of by ▇▇▇▇▇▇▇▇▇ are located. "Environmental Laws"
shall include, but shall not be limited to, the federal Clean Air Act, as
amended; the federal Comprehensive Environmental,
3
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended; the
federal Water Pollution Control Act, as amended; the federal Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"); the federal Safe
Drinking Water Act, as amended; the federal Toxic Substances Control Act, as
amended; the federal Superfund Amendments and Reauthorization Act of 1986, as
amended; the federal Clean Water Act, as amended; or any state laws or
regulations similar or analogous to or in implementation of these provisions;
the California State Business Plan Law, California Health and Safety Code
Section 25500 et seq.; the Hazardous Substance Account Act, Health and Safety
Code Section 25300 et seq.; the Hazardous Waste Control Law, Health and Safety
Code Section 25100 et seq.; Chapter 6.7 of Division 20 of the Health and Safety
Code, Section 25280 et seq.; the Safe Drinking Water and Toxic Enforcement Act
of 1986 ("Proposition 65"); Health and Safety Code Section 25249.5 et seq.;
Division 26 of the Health and Safety Code, Section 39000 et seq.; the ▇▇▇▇▇▇-
Cologne Act, Water Code Section 13000 et seq.; and any other successor or
amendments thereto, or implementing regulations thereof; and all other laws,
statutes, ordinances, rules, regulations, orders and determinations of any
Governmental Entity relating to (a) the control of any potential pollutant
or protection of the air, water or land; (b) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation; and (c)
exposure to hazardous, toxic or other substances alleged to be harmful. The
terms "hazardous substance," "release" and "threatened release" have the
meanings specified in CERCLA, and the terms "solid waste" and "disposal"
(or "disposed") have the meanings specified in RCRA; provided, however, that,
to the extent the laws of the state in which any Cogeneration Assets are or
were located currently or subsequently provide for a meaning for "hazardous
substance," "release," "solid waste" or "disposal" which is broader than that
specified in either CERCLA or RCRA, such broader meaning shall apply.
1.13 "Escrow" shall mean the escrow account established by ▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇ with First American Title Insurance Company pursuant to Section 2.12
hereof.
1.14 "Financial Statements" shall have the meaning such term is
given in Section 3.3 hereof.
1.15 "Governmental Entity" shall mean the United States of America,
any state, county, city, municipality and any subdivision thereof, any court,
administrative or regulatory agency, commission, department or body or other
governmental authority or instrumentality or any entity or Person exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.16 "Indemnifying Party" shall have the meaning such term is given
in paragraph 10.4a hereof.
1.17 "Indemnitee" shall have the meaning such term is given in
paragraph 10.4a hereof.
1.18 "IRS" shall mean the Internal Revenue Service.
4
1.19 "Material" means any condition, change or effect that,
individually or when taken together with all other such conditions, changes or
effects that existed or occurred prior to the date of determination of the
existence or occurrence of the material condition, change or effect, is or is
reasonably likely to be materially adverse to the business, assets (including
intangible assets), financial condition or results of operations of ▇▇▇▇▇ or
▇▇▇▇▇▇▇▇▇ respectively, in each case taken as a whole.
1.20 "Operations and Maintenance Agreement" shall mean that
agreement entitled Operations and Maintenance Agreement between Solar Turbines
Incorporated ("Solar") and ▇▇▇▇▇▇▇▇▇ dated as of August 15, 1994, as amended, a
copy of which is attached to the ▇▇▇▇▇▇▇▇▇ Disclosure Letter.
1.21 "P.G.&E. S. O. #2 Contract" refers to the California Public
Utilities Commission Standard Offer #2 Power Purchase Agreement for Firm
Capacity and Energy between Solar and Pacific Gas and Electric Company
("PG&E"), executed by Solar on November 14, 1985, and by PG&E on November 20,
1985, and assigned by Solar to Monarch Cogeneration 1986-1, a California
limited partnership ("Monarch"), effective upon PG&E's consent thereto executed
by PG&E on February 13, 1987, and further assigned by Monarch to ▇▇▇▇▇▇▇▇▇ and
Security Pacific by Consent to Assignment and Agreement dated as of August 15,
1994, and the Agreement for Installation or Allocation of Special Facilities
executed by PG&E on September 17, 1986, assigned by Solar to Monarch, effective
on PG&E's consent thereto executed by PG&E on February 13, 1987, and assigned
by Monarch to ▇▇▇▇▇▇▇▇▇ and Security Pacific by Consent to Assignment and
Agreement dated as of August 15, 1994, copies of which documents are attached
to the ▇▇▇▇▇▇▇▇▇ Disclosure Letter.
1.22 "Partnership Purchase Agreement" shall have the meaning such
term is given in paragraph 2.10c hereof.
1.23 "Permitted Encumbrances" shall mean encumbrances which ▇▇▇▇▇
accepts, in writing.
1.24 "Person" shall mean any individual, corporation, association,
partnership, joint venture, trust, estate, unincorporated organization or
Governmental Entity.
1.25 "Requisite Regulatory Approvals" shall have the meaning such
term is given in paragraph 5.2a hereof.
1.26 "Right to Purchase Contract" shall mean an agreement to be
entered into between ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ and Security Pacific, in which ▇▇▇▇▇▇▇▇▇
and ▇▇▇▇▇ have the right to purchase Security Pacific's interest in the
Cogeneration Assets under the terms and in the format of Exhibit 1 attached
hereto and made a part hereof and all exhibits attached to Exhibit 1.
1.27 "Shareholders" shall mean the Shareholders of ▇▇▇▇▇▇▇▇▇.
5
1.28 "SOCAL Contract" shall mean that Gas Transmission Service
Contract between Southern California Gas Company ("SOCAL") and Caterpillar
Capital Company dated February 25, 1988, amended March 1, 1992, and assigned by
Caterpillar Capital Company to ▇▇▇▇▇▇▇▇▇ by Consent to Assignment and Agreement,
dated August 19, 1994, copies of which are attached to the ▇▇▇▇▇▇▇▇▇ Disclosure
Letter.
1.29 "SOCAL Litigation" shall mean that lawsuit originally filed in
the United States District Court for the Southern District of Texas, Houston
Division, entitled ▇▇▇▇▇▇▇▇▇ Electric Company, Inc., v. Southern California Gas
Company, on or about July 17, 1995, Case No. H95-3752, transferred to the
Central District of California and docketed in such district as Case No.
CV96-2502, together with any amendments thereto and any counter-claims or
cross-complaints presently or hereafter filed therein whether by SOCAL or
others; that lawsuit filed October 7, 1996, in the Superior Court of the State
of California for the County of ▇▇▇▇, entitled ▇▇▇▇▇▇▇▇▇ Electric Company, Inc.
v. Southern California Gas Company, Case No. CV96-2502, together with any
amendments thereto and any cross-complaints presently or hereafter filed
therein by SOCAL or others; that lawsuit filed in the Superior Court for the
County of Los Angeles entitled Southern California Gas Company ▇. ▇▇▇▇▇▇▇▇▇
Electric Company, Inc., Case No. BC158128, together with any amendments thereto
and any cross-complaints presently or hereinafter filed by ▇▇▇▇▇▇▇▇▇ or others;
and any lawsuits presently or hereafter filed by SOCAL or its assignee against
▇▇▇▇▇▇▇▇▇ or the Shareholders, or their successors, or ▇▇▇▇▇, based wholly or
in part on the SOCAL Contract.
1.30 "TOC Purchase Agreement" shall have the meaning such terms is
given in paragraph 2.10c hereof.
ARTICLE II
THE PURCHASE AND SALE
2.1 Transfer to ▇▇▇▇▇. In accordance with the provisions of this
Agreement, ▇▇▇▇▇▇▇▇▇ shall transfer and convey the Cogeneration Assets to ▇▇▇▇▇
free and clear of liens and Encumbrances (other than Permitted Encumbrances)
pursuant to Assignments of Leases, Rights of Way, Easements and Contracts in
the forms of Exhibits 2A and 2B attached hereto and made a part hereof (the
"Instruments of Transfer"), to be delivered at the Closing, in accordance with
the provisions relating to the Closing, and ▇▇▇▇▇ will acquire the Cogeneration
Assets from ▇▇▇▇▇▇▇▇▇.
2.2 Purchase by ▇▇▇▇▇. ▇▇▇▇▇, in reliance upon the covenants,
representations, warranties and indemnities of ▇▇▇▇▇▇▇▇▇ contained herein,
hereby agrees to purchase the Cogeneration Assets from ▇▇▇▇▇▇▇▇▇ for the
purchase price (the "Purchase Price") stated in Section 2.3 hereof.
2.3 Payment of the Purchase Price. As payment for the transfer and
conveyance of the Cogeneration Assets by ▇▇▇▇▇▇▇▇▇ to Berry, Berry shall
deliver to Escrow for
6
the benefit of ▇▇▇▇▇▇▇▇▇ or its nominees at the Closing, in accordance with the
provisions related to the Closing, a wire transfer with immediately available
funds in the amount of Two Hundred Thousand Dollars ($200,000) to an account
specified by the Escrow Agent (as herein defined) prior to the Closing. The
transaction shall be subject to post-closing operating adjustment as provided
in Section 2.4 hereof ("Operating Adjustment"). The Operating Adjustment shall
not be handled through Escrow.
2.4 Operating Adjustment.
a. October 1, 1996, at 12:01 a.m. shall be considered the
"Effective Date" of this Agreement, and the operations of ▇▇▇▇▇▇▇▇▇ and the
Cogeneration Assets, including income derived from the P.G.&E. S.O. #2 Contract,
shall be for the account of ▇▇▇▇▇ from and after that date, conducted in the
ordinary course of business as described in Section 5.5 hereof; provided,
however, that the application of such an Effective Date shall not be deemed to
make ▇▇▇▇▇ liable for any costs or charges related to the SOCAL Contract. For
all other purposes, and without limiting the generality of the foregoing, the
representations, warranties, covenants and indemnities herein, and the delivery
of the Purchase Price, shall occur and be effective at the Closing. The
Operating Adjustment will occur at or after the Closing with a cash payment in
an amount equal to the net income or loss of the Cogeneration Assets after the
Effective Date, adjusted to reflect only necessary operating revenues and
expenses which would have been credited to or incurred by ▇▇▇▇▇ had both this
Agreement and the acquisition of the Cogeneration Assets under the Right to
Purchase Contract been concluded and closed on the Effective Date. The
operating revenues shall specifically include, but not be limited to, revenue
from power and steam sales. Operating expenses shall exclude any payments made
pursuant to the Cogeneration Lease or the Cogeneration Premises Lease, any
SOCAL charges, legal fees, interest, amortization, unreasonable travel and
entertainment and management fees in excess of Fifty Dollars ($50) per day. If
the Cogeneration Assets produce a net income after the Effective Date, then
▇▇▇▇▇▇▇▇▇ shall pay ▇▇▇▇▇ an Operating Adjustment equal to such net income.
If the Cogeneration Assets produce a net loss after the Effective Date, then
▇▇▇▇▇ shall pay ▇▇▇▇▇▇▇▇▇ an Operating Adjustment equal to the amount of the
net loss.
b. In the event ▇▇▇▇▇▇▇▇▇ does not provide ▇▇▇▇▇ with its
calculation of the Operating Adjustment (the "Calculation") prior to the
Closing, ▇▇▇▇▇▇▇▇▇ shall provide ▇▇▇▇▇ with the Calculation within sixty (60)
days after the Closing. ▇▇▇▇▇ shall have immediate access at reasonable times
to such books, records and invoices as it deems necessary to verify the
Calculation. If ▇▇▇▇▇ does not object to the Calculation within ten (10) days
after receipt thereof by ▇▇▇▇▇, it shall be deemed to be final and binding upon
the parties hereto. If ▇▇▇▇▇ objects to the Calculation within such ten (10)
days by specifying the items to which it objects, then the parties will attempt
to mutually resolve any differences. If the differences cannot be resolved
within twenty (20) days after ▇▇▇▇▇'▇ objection to the Calculation, then all
amounts agreed to shall be paid as provided below and the difference shall be
resolved by arbitration under the Commercial Arbitration Rules of the American
Arbitration Association. The costs of arbitration shall be shared equally by
the parties. This Section 2.4 is the only Section or part of this Agreement
which is subject to arbitration jurisdiction.
7
c. Within three (3) days after the final determination of
the Operating Adjustment, the party required to make the Operating Adjustment
payment shall pay, via wire if requested, the other party the Operating
Adjustment payment agreed upon.
2.5 Allocation of Purchase Price. The parties agree to allocate
the Purchase Price in accordance with the terms of Code Section 1060 and the
Treasury Regulations promulgated thereunder, and to report this transaction for
federal and state tax purposes in accordance with the agreed-upon allocation in
the form of Exhibit 3 attached hereto and made a part hereof.
2.6 Closing. Subject to the provisions of Articles VII and VIII,
the closing (the "Closing") shall take place at 10 a.m., Pacific Standard Time,
at the offices of ▇▇▇▇▇ Petroleum Company, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ such date prior to December 1, 1996, as to which ▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇ shall mutually agree. By written notice to the other party, either
▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇ shall have the right to extend the Closing an additional
forty-five (45) days in the event that either party is not in a position to
close by December 1, 1996.
2.7 Proration of Credits and Payment Obligations. All credits and
payment obligations associated with the Cogeneration Assets, excluding the
leases described in Sections 1.7 and 1.8, including but not limited to lease
rentals and other forms of contractual payments, shall be prorated between
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ as of the Effective Date. ▇▇▇▇▇▇▇▇▇ shall be responsible
and shall pay for all such items due, incurred or attributable to the period
prior to the Effective Date and ▇▇▇▇▇ shall be responsible and shall pay for
all such items due, incurred or attributable to the period after such date.
2.8 Real Estate and Other Taxes. All real estate, occupation, ad
valorem, personal property and severance taxes and charges on the Cogeneration
Assets shall be prorated as of the Effective Date. ▇▇▇▇▇▇▇▇▇ shall pay all
such items for all periods prior to such date, however, ▇▇▇▇▇ shall be entitled
to all refunds and rebates with regard to such periods. In the event ▇▇▇▇▇
pays additional taxes or charges which are assessed upon or levied against the
Cogeneration Assets after Closing with respect to any period prior to the
Effective Date, ▇▇▇▇▇▇▇▇▇ shall promptly reimburse ▇▇▇▇▇ the amount thereof
upon presentation of a receipt therefor. If ▇▇▇▇▇▇▇▇▇ elects to challenge the
validity of such ▇▇▇▇ or any portion thereof, ▇▇▇▇▇ shall extend reasonable
cooperation to ▇▇▇▇▇▇▇▇▇ in such efforts, at no expense to ▇▇▇▇▇.
2.9 Documentation of Sale and Transfer of Ownership. Except as
otherwise provided herein, the Cogeneration Assets shall be conveyed pursuant to
the Instruments of Transfer in such form or forms customary and necessary to
properly transfer the tangible and intangible assets included in the
Cogeneration Assets according to the requirements of any applicable federal,
state or local agency.
▇. ▇▇▇▇▇▇▇▇▇ shall deliver control of the Cogeneration
Assets to ▇▇▇▇▇ at the Closing subject to the reservations, limitations,
conditions and restrictions contained in this Agreement and the Instruments of
Transfer.
8
▇. ▇▇▇▇▇▇▇▇▇ shall make available at ▇▇▇▇▇▇▇▇▇'▇ offices or
such other place as deemed appropriate by ▇▇▇▇▇ until the Closing, during
normal business hours, for examination by ▇▇▇▇▇, such title information and
abstracts as may then be available in ▇▇▇▇▇▇▇▇▇'▇ files.
2.10 Closing Procedure. At the Closing through Escrow, the
transactions listed below shall occur, all subject to and conditioned upon the
execution and delivery of a Certificate of Satisfaction described in paragraph
2.10e hereof.
▇. ▇▇▇▇▇▇▇▇▇ shall deliver to ▇▇▇▇▇ originals (unless
otherwise noted) of each of the following documents:
(1) Certified resolutions of the Board of Directors of
▇▇▇▇▇▇▇▇▇ authorizing the execution and delivery of this Agreement and the
transactions contemplated hereby.
(2) The Cogeneration Lease, Cogeneration Premises
Lease, Operations and Maintenance Agreement, P.G.&E. S.O. #2 Contract, all
insurance policies presently in force with respect to the Cogeneration Assets,
and all leases, contracts, agreements, indentures and other instruments
described in the ▇▇▇▇▇▇▇▇▇ Disclosure Letter.
(3) Assignment of the P.G.&E. S.O. #2 Contract from
▇▇▇▇▇▇▇▇▇ to ▇▇▇▇▇, executed by ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ and Consent to Assignment of
the P.G.&E. S.0. #2 Contract from ▇▇▇▇▇▇▇▇▇ to ▇▇▇▇▇, executed by ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ and P.G.&E.
(4) Assignment of the Cogeneration Lease from ▇▇▇▇▇▇▇▇▇
to ▇▇▇▇▇, executed by ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, consented to by Security Pacific in
the Right to Purchase Contract.
(5) Assignment of the Cogeneration Premises Lease from
the Premises Lessors to ▇▇▇▇▇, executed by ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and the Premises
Lessors under such Premises Lease, consented to by Security Pacific in the
Right to Purchase Contract.
(6) The Right to Purchase Contract, executed by
▇▇▇▇▇▇▇▇▇, Security Pacific and ▇▇▇▇▇.
(7) Amendment and Consent to Assignment of the
Operations and Maintenance Agreement as provided in Section 7.10 from ▇▇▇▇▇▇▇▇▇
to ▇▇▇▇▇, executed by ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and Solar (the "Amended Operations &
Maintenance Agreement"), (which document contains a representation by Solar
that ▇▇▇▇▇▇▇▇▇ has not breached any provision of, and is not in default under,
the terms of the Operations and Maintenance Agreement) and the ▇▇▇▇▇ Indemnity
and the Reserve Security Instruments (as those terms are defined in the Amended
Operations & Maintenance Agreement).
(8) Executed Instruments of Transfer.
9
(9) Executed Certificate of Compliance of ▇▇▇▇▇▇▇▇▇.
(10) Executed Opinion of Counsel to ▇▇▇▇▇▇▇▇▇.
(11) ▇▇▇▇▇▇▇▇▇ Disclosure Letter.
(12) Written notice from Sunset (as defined in Section
7.13) meeting the requirements of Section 7.13 hereof.
▇. ▇▇▇▇▇ shall deliver to ▇▇▇▇▇▇▇▇▇ originals (unless
otherwise noted) of each of the following documents:
(1) Certified resolutions of the Board of Directors of
▇▇▇▇▇ authorizing the execution and delivery of this Agreement and the
transactions contemplated hereby.
(2) Executed Certificate of Compliance of ▇▇▇▇▇.
(3) Executed Opinion of Counsel to ▇▇▇▇▇.
(4) ▇▇▇▇▇ Disclosure Letter.
▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ will execute and mutually deliver two
(2) originals of a statement that the respective transactions contemplated by
the Purchase and Sale Agreement between ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ Oil Company, a
general partnership, et al., dated November 8, 1996 (the "Partnership Purchase
Agreement"), and the Purchase and Sale Agreement between ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇
Oil Company, Inc., a California corporation, dated November 8, 1996 (the "TOC
Purchase Agreement"), are in condition to close.
▇. ▇▇▇▇▇ will deliver to ▇▇▇▇▇▇▇▇▇ the Purchase Price as
provided in Section 2.3 hereof.
▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ will execute and mutually deliver two
(2) originals of the Certificate of Satisfaction in the form of Exhibit 4
attached hereto and made a part hereof.
2.11 Post Closing Access to Documents. ▇▇▇▇▇▇▇▇▇ will cooperate
with ▇▇▇▇▇ and its agents on any post-closing audit or financial review that is
required by ▇▇▇▇▇ due to the transactions contemplated by this Agreement.
2.12 Escrow. First American Title Insurance Company, a California
corporation, whose address is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, is hereby appointed to act as escrow agent
("Escrow Agent") to conduct the purchase and sale of the Cogeneration Assets.
▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ shall execute instructions to the Escrow Agent,
substantially in the form of Exhibit 5 and attached hereto and made a part
10
hereof, to provide for the payment of liabilities secured by the Cogeneration
Assets and the release of Encumbrances, other than Permitted Encumbrances,
against the Cogeneration Assets. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ further agree that
▇▇▇▇▇▇▇▇▇ shall be responsible for and pay for all escrow fees and charges.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇▇▇
Except as set forth in the ▇▇▇▇▇▇▇▇▇ Disclosure Letter, ▇▇▇▇▇▇▇▇▇
hereby represents and warrants to and covenants with ▇▇▇▇▇ as follows:
3.1 Corporate Organization. ▇▇▇▇▇▇▇▇▇ is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has full power and authority to conduct its business as
currently conducted and to own, operate and lease the Cogeneration Assets it
now owns, operates or holds under lease.
3.2 Effect of Agreement; Consents.
a. The execution, delivery and performance of this Agreement
by ▇▇▇▇▇▇▇▇▇ and the consummation by ▇▇▇▇▇▇▇▇▇ of the transactions contemplated
hereby (i) do not require the consent, approval, clearance, waiver, order or
authorization of any Person except PG&E, Security Pacific and Solar; (ii) do
not violate any provision of the Articles of Incorporation or Bylaws of
▇▇▇▇▇▇▇▇▇; (iii) do not conflict with or violate any permit, concession, grant,
franchise, statute, law, rule or regulation of any Governmental Entity or any
order, judgment, award or decree of any court or other Governmental Entity to
which ▇▇▇▇▇▇▇▇▇ is subject or any of the Cogeneration Assets are bound; and
(iv) do not conflict with, or result in any breach of, or default or loss of
any right under (or an event or circumstance that, with notice or the lapse of
time, or both, would result in a default), or the creation of any Encumbrance
pursuant to, or cause or permit the acceleration prior to maturity of any
amounts owing under any indenture, mortgage, deed of trust, lease or other
agreement to which ▇▇▇▇▇▇▇▇▇ is a party or to which any of the Cogeneration
Assets are subject, in each case, which failure, violation, conflict or breach
would, in the aggregate, materially hinder or impair the consummation of the
transactions contemplated by this Agreement.
b. The execution, delivery and performance of this Agreement
by ▇▇▇▇▇▇▇▇▇ will not result in the loss of any governmental license, franchise
or permit possessed by ▇▇▇▇▇▇▇▇▇ related to the Cogeneration Assets or give a
right of acceleration or termination to any party to any agreement or other
instrument to which ▇▇▇▇▇▇▇▇▇ is a party and by which the Cogeneration Assets
are bound, or result in the loss of any right or benefit under such agreement
or instrument.
3.3 Financial Statements. ▇▇▇▇▇▇▇▇▇ has heretofore furnished to
▇▇▇▇▇ true and correct copies of the balance sheets of ▇▇▇▇▇▇▇▇▇ as of December
31, 1995, April 30, 1996,
11
and September 30, 1996, and the related statements of revenues and expenses
for the periods then ended (collectively, the "Financial Statements"). The
Financial Statements have been prepared in accordance with the books and
records of ▇▇▇▇▇▇▇▇▇ and in conformity with generally accepted accounting
principles applied, except as otherwise noted therein, on a basis consistent
with prior periods, and fairly present, in all material respects, the
financial position and results of operations of ▇▇▇▇▇▇▇▇▇ as at and for the
periods specified therein. As of September 30, 1996, ▇▇▇▇▇▇▇▇▇ did not have
any liability of any kind or manner, either direct, accrued, absolute or
otherwise, which was required to be disclosed by generally accepted accounting
principles and which was not reflected or disclosed in the Financial Statements
and there have been no changes in ▇▇▇▇▇▇▇▇▇'▇ method of accounting for tax
purposes or other purposes except as disclosed in the ▇▇▇▇▇▇▇▇▇ Disclosure
Letter.
3.4 Taxes and Tax Returns. ▇▇▇▇▇▇▇▇▇ has filed all federal, state,
local and foreign income and other tax returns required to be filed by it, and
each such return is complete and accurate in all material respects. The taxes
shown due on such returns have been paid and there are no taxes, interest,
penalties, assessments or deficiencies (any of the foregoing being referred to
herein as a "Tax") claimed to be due in respect of such tax returns or claimed
in writing to be due by any taxing authority. The tax returns of ▇▇▇▇▇▇▇▇▇
have not been audited by the IRS, nor has ▇▇▇▇▇▇▇▇▇ received notice of any
examination being conducted by the IRS or any other taxing authority for any
fiscal year. All other taxes, including property taxes, imposed by the United
States and by any state, municipality, subdivision or instrumentality of the
United States, or other taxing authority, which are due and payable by
▇▇▇▇▇▇▇▇▇ have been paid in full or will be paid or provided for up to the
Closing date.
3.5 Absence of Adverse Change. Since April 30, 1996, there has not
been (a) any Material adverse change in the condition of the Cogeneration
Assets; (b) any damage, destruction or loss adversely affecting the
Cogeneration Assets; (c) any incurrence by ▇▇▇▇▇▇▇▇▇ or by the Shareholders of
or entry into any liability, mortgage, lien or transaction affecting the
Cogeneration Assets; (d) any guarantee of or grant of a security interest to
secure a third Person's obligations by ▇▇▇▇▇▇▇▇▇; (e) except as provided in the
▇▇▇▇▇▇▇▇▇ Disclosure Letter, any commitment by ▇▇▇▇▇▇▇▇▇ relating to the
Cogeneration Assets; or (f) any agreement, in writing or otherwise, or any
corporate action with respect to the foregoing. No event or condition has
occurred or exists and ▇▇▇▇▇▇▇▇▇ is not aware of any event or condition that
has occurred or exists and that could result in a Material adverse change in
the Cogeneration Assets since April 30, 1996.
3.6 No Misleading Statements. This Agreement, the exhibits hereto
and the information referred to herein, when taken as a whole, do not include
any untrue statement of a material fact and do not omit any material fact
necessary to make the statements contained herein or therein not misleading.
3.7 No Significant Transactions. Except for the execution of this
Agreement, since December 31, 1995, ▇▇▇▇▇▇▇▇▇ has not engaged in any Material
transactions and will not engage in any Material transactions prior to the
Closing.
12
3.8 Properties, Title and Related Matters.
▇. ▇▇▇▇▇▇▇▇▇'▇ interest, as Lessee of the Cogeneration
Lease, in the personal property and fixtures included in the Cogeneration
Assets and the personal property and fixtures included in the Cogeneration
Lease is free and clear of all Encumbrances except for Permitted Encumbrances.
▇▇▇▇▇▇▇▇▇ has not breached any provision of and is not in default (and no event
or circumstance exists that written notice or the lapse of time, or both, would
constitute a default) under the terms of the Cogeneration Lease.
b. Other than ▇▇▇▇▇▇▇▇▇'▇ interest, as sublessee of the
Cogeneration Premises Lease, in the real property upon which the Cogeneration
Assets are located (the "Cogeneration Premises"), ▇▇▇▇▇▇▇▇▇ has no easements or
rights of way and no real property is leased by ▇▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇ has good
title to all the leasehold estates pursuant to which the real property
described in the previous sentence is leased, free and clear of all
Encumbrances, except for Permitted Encumbrances. Except as described in the
▇▇▇▇▇▇▇▇▇ Disclosure Letter, ▇▇▇▇▇▇▇▇▇ has not breached any provision of and is
not in default (and no event or circumstance exists that with notice or the
lapse of time, or both, would constitute a default) under the terms of any
lease, easement, right of way or other agreement pursuant to which the
Cogeneration Premises are leased or held and all of such leases, easements,
rights of way or other agreements are in full force and effect. There are no
pending or threatened disputes with respect to any lease, easement, right of
way or other agreement pursuant to which the Cogeneration Premises are leased
or held and the lessor or grantor thereunder has not breached any provision of
and is not in default (and no event or circumstance exists that with notice or
the lapse of time, or both, would constitute a default) under the terms of any
such lease, easement, right of way or other agreement. The ▇▇▇▇▇▇▇▇▇
Disclosure Letter contains a description of all structures, improvements, tanks
and pipes or other fixtures located on or under any leases, easements or rights
of way included in or affecting the Cogeneration Premises.
c. Since the physical inspection by ▇▇▇▇▇ on September 5,
1996, the maintenance and operation of the machinery and equipment of the
Cogeneration Assets listed in the ▇▇▇▇▇▇▇▇▇ Disclosure Letter have been
consistent with the past maintenance and operation of such machinery and
equipment, ordinary wear and tear excepted, and, except as described in the
▇▇▇▇▇▇▇▇▇ Disclosure Letter, all machinery, pipelines and equipment are
operative in all material respects.
▇. ▇▇▇▇▇▇▇▇▇ is not in material violation of and, except as
disclosed in the ▇▇▇▇▇▇▇▇▇ Disclosure Letter, ▇▇▇▇▇▇▇▇▇ has not received any
written notice of any violation of any zoning regulation, ordinance, law, rule,
order, regulation or requirement relating to the Cogeneration Assets, or
operation of or on its properties which remains uncured or which has not been
dismissed where failure to comply therewith would have a Material adverse
effect on ▇▇▇▇▇▇▇▇▇ or the Cogeneration Assets.
e. Attached to the ▇▇▇▇▇▇▇▇▇ Disclosure Letter is a correct
and complete list and copies of all policies of fire, liability and other forms
of insurance held by
13
▇▇▇▇▇▇▇▇▇ presently in force with respect to the Cogeneration Assets. Such
policies are in full force and effect and assignable and ▇▇▇▇▇▇▇▇▇ is not in
default under any of them.
f. The Operations and Maintenance Agreement shall be subject
to cancellation by ▇▇▇▇▇ after the Closing without any requirement for the
posting of a letter of credit or any other penalty other than an acceptable
period of time to elapse for notice, except as such requirement may relate to
the required Adjustment of Capacity Payments in the event of termination or
reduction as required by the P.G.&E. S.O. #2 Contract.
3.9 Legal Proceedings. Except as disclosed in the ▇▇▇▇▇▇▇▇▇
Disclosure Letter, there is no legal, judicial, administrative or governmental
arbitration or other action or proceeding or governmental investigation pending
or threatened against ▇▇▇▇▇▇▇▇▇ or any director or officer of ▇▇▇▇▇▇▇▇▇, or
affecting any of the Cogeneration Assets, which if adversely determined would
have a Material adverse effect on the Cogeneration Assets. ▇▇▇▇▇▇▇▇▇ is not in
violation of or default under any laws, ordinances, regulations, judgments,
injunctions, orders or decrees (including, without limitation, any immigration
laws or regulations) of any court or other Governmental Entity applicable to
its business, which violations or defaults would have a Material adverse effect
on the business, results of operations, financial condition,Cogeneration Assets
or prospects of ▇▇▇▇▇▇▇▇▇. There are no Material judgments, orders,
injunctions or decrees of any Governmental Entity regarding any agreement in
which ▇▇▇▇▇▇▇▇▇ is a named party or any of the Cogeneration Assets are
identified or subject. Except for the SOCAL Litigation, there is no pending
litigation in or to which ▇▇▇▇▇▇▇▇▇ is a named party or any of the Cogeneration
Assets of ▇▇▇▇▇▇▇▇▇ are identified and subject.
3.10 Records. ▇▇▇▇▇▇▇▇▇ has records that accurately reflect its
transactions and transactions that affect the Cogeneration Assets in all
material respects.
3.11 Contracts.
a. All contracts, agreements, indentures and other
instruments to which ▇▇▇▇▇▇▇▇▇ is a party are attached to the ▇▇▇▇▇▇▇▇▇
Disclosure Letter. Except for the agreements attached to the ▇▇▇▇▇▇▇▇▇
Disclosure Letter, ▇▇▇▇▇▇▇▇▇ is not a party to or bound by (i) any agreement,
indenture or other instrument which contains restrictions with respect to the
sale of the Cogeneration Assets; (ii) any contract, agreement, indenture, note
or other instrument relating to (A) the granting of any Material Encumbrance or
(B) any guarantee or other contingent liability (identifying the primary
contract or agreement to which such guarantee or contingent liability relates
or the agreement pursuant to which such guarantee was delivered) affecting or
in respect of the Cogeneration Assets; (iii) any management service, consulting
or any other similar type of contract; (iv) any other agreement, contract or
commitment limiting the freedom of ▇▇▇▇▇▇▇▇▇ or any Affiliate of ▇▇▇▇▇▇▇▇▇ to
engage in any line of business, to own, operate, sell, transfer, pledge or
otherwise dispose of or encumber any Asset or to compete with any Person or in
any geographic area; or (v) any other agreement, contract or commitment which
relates to the Cogeneration Assets. The ▇▇▇▇▇▇▇▇▇ Disclosure Letter sets forth
with respect to each mortgage, security agreement, letter of credit or
guaranty, a cross reference to the principal agreement, instrument or document
referred to in the ▇▇▇▇▇▇▇▇▇ Disclosure Letter
14
pursuant to which such mortgage, security agreement, letter of credit or
guaranty was executed or to which such mortgage, security agreement, letter of
credit or guaranty relates.
b. Except as disclosed in the ▇▇▇▇▇▇▇▇▇ Disclosure Letter,
▇▇▇▇▇▇▇▇▇ has not breached any provision of or is not in default (and no event
or circumstance exists that with notice or the lapse of time, or both, would
constitute a default) under the terms of any agreement attached to the
▇▇▇▇▇▇▇▇▇ Disclosure Letter. All contracts, agreements, indentures and other
instruments attached to the ▇▇▇▇▇▇▇▇▇ Disclosure Letter are in full force and
effect. There are no pending or threatened disputes with respect to the
contracts, agreements, indentures or instruments attached to the ▇▇▇▇▇▇▇▇▇
Disclosure Letter. ▇▇▇▇▇▇▇▇▇ is not obligated to pay any liquidated damages
under any of the contracts, agreements, indentures or other instruments
attached to the ▇▇▇▇▇▇▇▇▇ Disclosure Letter and ▇▇▇▇▇▇▇▇▇ is not aware of any
facts or circumstances that could reasonably be expected to result in an
obligation of ▇▇▇▇▇▇▇▇▇ to pay such liquidated damages.
3.12 Brokerage. No investment banker, broker or finder has acted
directly or indirectly for ▇▇▇▇▇▇▇▇▇ in connection with this Agreement or the
transactions contemplated hereby. No investment banker, broker, finder or
other Person is entitled to any brokerage or finder's fee or similar
commission in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of ▇▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇ agrees to
indemnify, defend and hold ▇▇▇▇▇ harmless from and against any and all claims,
liabilities or obligations with respect to all fees, commissions or expenses
asserted by any Person on the basis of any act, statement, agreement or
commitment alleged to have been made by ▇▇▇▇▇▇▇▇▇ with respect to any such fee,
expense or commission.
3.13 Execution and Delivery. ▇▇▇▇▇▇▇▇▇ has full power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement by ▇▇▇▇▇▇▇▇▇ and the performance
of its obligations hereunder have been duly authorized by all necessary
corporate action on its part, including unanimous approval by the Shareholders.
This Agreement has been duly executed and delivered by ▇▇▇▇▇▇▇▇▇ and
constitutes a legal, valid and binding obligation of ▇▇▇▇▇▇▇▇▇, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by or subject to (a) any bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and
(b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3.14 Environmental Matters.
a. To the best of ▇▇▇▇▇▇▇▇▇'▇ knowledge, ▇▇▇▇▇▇▇▇▇ has at
all times operated in compliance with all applicable limitations, restrictions,
conditions, standards, prohibitions, requirements and obligations of
Environmental Laws and related orders of any court or other Governmental
Entity.
b. To the best of ▇▇▇▇▇▇▇▇▇'▇ knowledge, ▇▇▇▇▇▇▇▇▇ is not
in violation of or subject to (i) any existing, pending or threatened action,
suit, investigation, inquiry or
15
proceeding by or before any court or other Governmental Entity or (ii) any
remedial obligations, in each case under any applicable Environmental Law
relating to the Cogeneration Assets or operations conducted thereon by any
Person at any time during which such Cogeneration Assets were owned, leased,
used or operated by or for the benefit of ▇▇▇▇▇▇▇▇▇, or by any Person prior to
such time to the extent ▇▇▇▇▇▇▇▇▇ has knowledge of such matters.
c. To the best of ▇▇▇▇▇▇▇▇▇'▇ knowledge, all notices,
permits, licenses or similar authorizations, if any, required to be obtained or
filed by ▇▇▇▇▇▇▇▇▇ under all applicable Environmental Laws in connection with
its past or present operation or use of any and all Cogeneration Assets or the
conduct of its business, including but not limited to past or present
treatment, storage, disposal or release of a hazardous substance or solid waste
into the environment, have been duly obtained or filed.
d. To the best of ▇▇▇▇▇▇▇▇▇'▇ knowledge, all hazardous
substances and solid wastes generated at any and all of the Cogeneration Assets
or by any Person in connection with the ownership, lease, use or operation of
the Cogeneration Assets have, at any time during which such Cogeneration Assets
were owned, leased, used or operated by or for the benefit of ▇▇▇▇▇▇▇▇▇ or any
Affiliate thereof, been transported, stored, treated and disposed of by carriers
or treatment, storage and disposal facilities authorized or maintaining valid
permits under all applicable Environmental Laws.
e. To the best of ▇▇▇▇▇▇▇▇▇'▇ knowledge, all hazardous
substances and solid wastes generated at any and all of the Cogeneration Assets
or by any prior owner or operator of the Cogeneration Assets were transported,
stored, treated and disposed of by carriers or treatment, storage and disposal
facilities authorized or maintaining valid permits under all applicable
Environmental Laws.
f. To the best of ▇▇▇▇▇▇▇▇▇'▇ knowledge, no Person has, at
any time during which the Cogeneration Assets were owned, leased, used or
operated by or for the benefit of ▇▇▇▇▇▇▇▇▇, disposed of or released any
hazardous substance or solid waste on or under the Cogeneration Assets, except
in compliance with all applicable Environmental Laws.
g. To the best of ▇▇▇▇▇▇▇▇▇'▇ knowledge, no Person has
disposed of or released any hazardous substance or solid waste on, under or
around the Cogeneration Assets, except in compliance with all applicable
Environmental Laws.
h. To the best of ▇▇▇▇▇▇▇▇▇'▇ knowledge, no facts or
circumstances exist which could reasonably be expected to result in any
liability to any Person with respect to the current or past business and
operations of ▇▇▇▇▇▇▇▇▇ or the Cogeneration Assets in connection with any
release, transportation or disposal of any hazardous substance or solid waste
or action taken or omitted that was not in full compliance with or was in
violation of any applicable Environmental Law.
16
3.15 Employees.
▇. ▇▇▇▇▇▇▇▇▇ has no employees.
b. Officers of ▇▇▇▇▇▇▇▇▇ shall not assert claims against
▇▇▇▇▇ based on employment by ▇▇▇▇▇▇▇▇▇ for ▇▇▇▇▇▇▇▇▇, retirement benefits,
health benefits, deferred compensation, violations of any federal, state or
local laws or statutes, wages or other benefits or compensation. Officers of
▇▇▇▇▇▇▇▇▇ shall not assert any claim against ▇▇▇▇▇ for discriminatory hiring
practices based on state or federal laws or statutes, union contracts or for
benefits based upon the Employee Retirement Income Security Act of 1974, as
Amended ("ERISA").
▇. ▇▇▇▇▇▇▇▇▇ is not currently nor has it ever been a party
to any officer or employee pension or welfare plan to which ERISA applies or to
which ▇▇▇▇▇▇▇▇▇ was required to make contributions for the benefit of its
employees, officers or directors.
d. Neither ▇▇▇▇▇▇▇▇▇ nor any of its Affiliates is a party
to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor union organization.
There is no unfair labor practice or labor arbitration proceeding pending or
threatened against ▇▇▇▇▇▇▇▇▇ or any of its Affiliates relating to their
business which, if determined adversely to ▇▇▇▇▇▇▇▇▇ or the Affiliate would
have a Material adverse effect. There are no organizational efforts with
respect to the formation of a collective bargaining unit presently being made
or threatened involving ▇▇▇▇▇▇▇▇▇ or any of its Affiliates.
3.16 Investigation. ▇▇▇▇▇▇▇▇▇ and its agents, counsel and
accountants have had reasonable access to representatives of ▇▇▇▇▇ to make such
investigations as they desired with respect to the business, operations and
affairs of ▇▇▇▇▇ in connection with the transactions contemplated hereby. In
determining whether to consummate the transactions contemplated hereby,
▇▇▇▇▇▇▇▇▇ is relying solely on the terms, covenants, representations,
warranties and indemnities herein and on their own investigations into and
analysis of the business, operations and condition (financial or otherwise) of
▇▇▇▇▇ and have not relied on ▇▇▇▇▇, or its officers or directors, with respect
to the interpretation of data relating to the valuation of ▇▇▇▇▇▇▇▇▇, the
income tax ramifications of this purchase and sale, and/or the ability of ▇▇▇▇▇
to operate the Cogeneration Assets.
3.17 Consent of Public Utilities Commission Not Required. The
consent of the California Public Utilities Commission to the transfer of the
P.G.&E. S.O. #2 Contract from ▇▇▇▇▇▇▇▇▇ to ▇▇▇▇▇ is not required.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇
Except as set forth in the Disclosure Letter from ▇▇▇▇▇ delivered to
▇▇▇▇▇▇▇▇▇ at or prior to the execution hereof, which shall refer to the
relevant Sections of this Agreement (the
17
"▇▇▇▇▇ Disclosure Letter"), ▇▇▇▇▇ hereby represents and warrants to and
covenants with ▇▇▇▇▇▇▇▇▇ as follows:
4.1 Corporate Organization. ▇▇▇▇▇ is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to carry on its business as
it is now being conducted, and to execute, deliver and perform this Agreement
and to consummate the transactions contemplated hereby.
4.2 Due Authorization, Execution and Delivery; Effect of Agreement.
The execution, delivery and performance by ▇▇▇▇▇ of this Agreement and the
consummation by ▇▇▇▇▇ of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of ▇▇▇▇▇. This
Agreement has been duly and validly executed and delivered by ▇▇▇▇▇ and
constitutes the legal, valid and binding obligation of ▇▇▇▇▇, enforceable
against it in accordance with its terms, except to the extent that such
enforceability (a) may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally; and
(b) is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). The
execution, delivery and performance by ▇▇▇▇▇ of this Agreement and the
consummation by ▇▇▇▇▇ of the transactions contemplated hereby (i) do not
require the consent, approval, clearance, waiver, order or authorization of any
Person, except as otherwise disclosed in the ▇▇▇▇▇ Disclosure Letter; (ii) do
not violate any provision of the Certificate of Incorporation or Bylaws of
▇▇▇▇▇; (iii) do not conflict with or violate any permit, concession, grant,
franchise, statute, law, rule or regulation of any Governmental Entity or any
order, judgment, award or decree of any court or other Governmental Entity to
which ▇▇▇▇▇ is subject; and (iv) do not conflict with, or result in any breach
of, or default or loss of any right under (or an event or circumstance that,
with notice or the lapse of time, or both, would result in a default), or the
creation of an Encumbrance pursuant to, or cause or permit the acceleration
prior to maturity of any amounts owing under, any indenture, mortgage, deed of
trust, lease, or other agreement to which ▇▇▇▇▇ is a party, in each case, which
failure, violation, conflict or breach would, in the aggregate, materially
hinder or impair the consummation of the transactions contemplated by this
Agreement.
4.3 Consents. Except as otherwise disclosed in the ▇▇▇▇▇
Disclosure Letter, no consent, approval or authorization of, or exemption by,
or filing with, any Governmental Entity or any Person is required in
connection with the execution, delivery or performance by ▇▇▇▇▇ of this
Agreement or the taking of any other action contemplated hereby.
4.4 Litigation. There is no legal, judicial, administrative or
governmental arbitration or other action or proceeding or governmental
investigation pending against ▇▇▇▇▇, or threatened against ▇▇▇▇▇, which seeks to
enjoin or obtain damages in respect of the consummation of the transactions
contemplated hereby.
4.5 Brokerage. No investment banker, broker, finder or other
Person is entitled to any brokerage or finder's fee or similar commission in
respect of this Agreement or the transactions contemplated hereby based in any
way on agreements, arrangements or
18
understandings made by or on behalf of ▇▇▇▇▇. ▇▇▇▇▇ agrees to indemnify and
hold ▇▇▇▇▇▇▇▇▇ and the Partners harmless from and against any and all claims,
liabilities or obligations with respect to all fees, commissions or expenses
asserted by any Person on the basis of any act, statement, agreement or
commitment alleged to have been made by ▇▇▇▇▇ with respect to any such fee,
commission or expense.
4.6 Approvals. No approval of the stockholders of ▇▇▇▇▇ is
necessary or required under the Delaware General Corporation Law, as currently
in effect, or ▇▇▇▇▇'▇ Certificate of Incorporation or Bylaws for the
consummation of the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF ▇▇▇▇▇▇▇▇▇
From and after the date of this Agreement until the Closing, except
as expressly authorized by this Agreement or expressly consented to in writing
by ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ covenants and agrees with ▇▇▇▇▇ as follows:
5.1 Access to ▇▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇ shall afford to ▇▇▇▇▇ and to
the employees, agents, lenders, investors and authorized representatives of
▇▇▇▇▇ and to their respective counsel and accountants such reasonable access to
the Cogeneration Assets, officers, offices, equipment, files, agreements,
documents, and books and records of ▇▇▇▇▇▇▇▇▇ (including, without limitation,
engineering data and information, computer programs, tapes and other records),
and the opportunity to make notes, abstracts and copies therefrom, as may be
requested by ▇▇▇▇▇ in order that ▇▇▇▇▇ may have full opportunity to make such
reasonable investigations as it shall desire with respect to the business,
operations, Cogeneration Assets and affairs of ▇▇▇▇▇▇▇▇▇ in connection with the
transactions contemplated hereby and ▇▇▇▇▇▇▇▇▇ shall furnish ▇▇▇▇▇ with such
additional financial and operating data and other information as to the
business, operations and Cogeneration Assets of ▇▇▇▇▇▇▇▇▇ as ▇▇▇▇▇ shall, from
time to time, reasonably request for such purpose. ▇▇▇▇▇ hereby releases
▇▇▇▇▇▇▇▇▇ from all liability arising out of the entry by ▇▇▇▇▇ or its
employees, agents, lenders, investors or authorized representatives onto the
business premises of ▇▇▇▇▇▇▇▇▇ for purposes of conducting the investigation
contemplated by this Section 5.1. ▇▇▇▇▇ hereby agrees to indemnify, defend and
hold harmless ▇▇▇▇▇▇▇▇▇ against all liability, demands, claims, costs, losses,
damages, recoveries, settlements and expenses incurred by ▇▇▇▇▇▇▇▇▇ arising
from or related to the conduct by ▇▇▇▇▇ or its employees, agents, lenders,
investors or authorized representatives of the investigation.
5.2 Governmental Approvals; Consents.
▇. ▇▇▇▇▇▇▇▇▇ shall use its best efforts, and shall cooperate
with ▇▇▇▇▇, to obtain all permits, approvals and consents, and to make all
filings, necessary or required to be obtained or made, and to begin and cause
all waiting periods required to lapse, for ▇▇▇▇▇ to have full use and
enjoyment of the Cogeneration Assets subsequent to the purchase and sale and
19
for the consummation by ▇▇▇▇▇▇▇▇▇ of the transactions contemplated by this
Agreement under any applicable federal law or the applicable laws of any state
having jurisdiction over the transactions contemplated hereby (all such
permits, approvals, filings and consents and the lapse of all such waiting
periods being referred to as the "Requisite Regulatory Approvals").
▇. ▇▇▇▇▇▇▇▇▇ shall use its best efforts to obtain all
consents, approvals, clearances, waivers, orders or authorizations of any
Person necessary to be obtained by ▇▇▇▇▇▇▇▇▇ for ▇▇▇▇▇ to have full use and
enjoyment of the Cogeneration Assets subsequent to the purchase and sale and
for the consummation of the transactions by ▇▇▇▇▇▇▇▇▇ contemplated by this
Agreement.
5.3 Litigation and Claims. ▇▇▇▇▇▇▇▇▇ shall promptly inform ▇▇▇▇▇
in writing of any litigation, or of any claim or controversy or contingent
liability of which ▇▇▇▇▇▇▇▇▇ becomes aware that might reasonably be expected to
become the subject of litigation, against ▇▇▇▇▇▇▇▇▇ or affecting any of the
Cogeneration Assets.
5.4 Notice of Changes. ▇▇▇▇▇▇▇▇▇ shall promptly inform ▇▇▇▇▇ in
writing if ▇▇▇▇▇▇▇▇▇ becomes aware of any change that shall have occurred or
that shall have been threatened (or any development that shall have occurred or
that shall have been threatened involving a prospective change) in the
financial condition, results of operations, business of the Cogeneration Assets
or of ▇▇▇▇▇▇▇▇▇ that is or with the exercise of reasonable business judgment
would be expected to have an adverse effect on the Cogeneration Assets.
▇▇▇▇▇▇▇▇▇ shall promptly inform ▇▇▇▇▇ in writing if any representation or
warranty made by ▇▇▇▇▇▇▇▇▇ in this Agreement shall cease to be accurate or upon
the occurrence of any breach of any covenant or other agreement required by
this Agreement to be performed or complied with by ▇▇▇▇▇▇▇▇▇.
5.5 Conduct of Business Operations. ▇▇▇▇▇▇▇▇▇ shall not, without
the prior written consent of ▇▇▇▇▇:
a. Except as a result of damages to the Cogeneration Assets
as a result of a force majeure, fail to use its best efforts to operate the
Cogeneration Assets in the same manner as they have been historically operated
and ▇▇▇▇▇▇▇▇▇ shall avoid experiencing a loss in electrical generation output
below 14.2 megawatts per day, except for reductions due to scheduled
maintenance.
b. Other than in the ordinary course of business, sell,
lease or otherwise dispose of any Cogeneration Assets or any interests therein,
or enter into, or consent to the entering into of, any agreement granting to
any third Person a right to purchase, lease or otherwise acquire any
Cogeneration Assets or interests therein, except as otherwise provided for in
this Agreement;
c. Enter into any agreement or incur any obligation, the
terms of which would be violated by the consummation of the transactions
contemplated by this Agreement;
20
d. (i) Enter into any new line of business with respect to
the Cogeneration Assets; (ii) change its investment, liability management and
other material policies in any respect; (iii) incur or commit to any capital
expenditures or financing relative to the Cogeneration Assets; (iv) otherwise
acquire or agree to acquire any assets for a total consideration in the
aggregate in excess of Five Thousand Dollars ($5,000); or (v) waive any right
under or cancel any contract, debt or claim listed in any exhibits hereto or
the ▇▇▇▇▇▇▇▇▇ Disclosure Letter, which waiver or cancellation would have an
adverse effect on the Cogeneration Assets;
e. Maintain books of account relative to the Cogeneration
Assets other than in the usual, regular and ordinary manner in accordance with
good business practices or make any change in any of its accounting methods or
practices; or
f. Take any action that would or might reasonably be
expected to result in any of the conditions to Closing set forth in Article VII
hereof not being satisfied.
5.6 Maintain Cogeneration Assets and Operations. Except for
entering into the Right to Purchase Contract for acquisition of the
Cogeneration Assets as provided in Sections 1.26 and 5.10 hereof, during the
period from the date hereof through the Closing, ▇▇▇▇▇▇▇▇▇ shall (a) carry on
its business in the usual, regular and ordinary course in a good and diligent
manner consistent with sound business practices and in compliance with all
applicable laws, rules and regulations; (b) not introduce any new method of
management or operation; (c) use its best efforts to preserve its business
organization, maintain its rights and franchises, keep available the services
of its officers and employees and preserve the goodwill and its relationships
with customers, suppliers and others having business dealings with it;
(d) preserve in full force and effect all leases, operating agreements,
easements, rights of way, permits, licenses, contracts and other agreements
which relate to the Cogeneration Assets (other than those expiring by their
terms); (e) use its best efforts to perform or cause to be performed all of its
obligations in or under any of such leases, agreements and contracts to be
transferred as part of the Cogeneration Assets; (f) use its best efforts to
safeguard and maintain secure all reports and other confidential data in the
possession of ▇▇▇▇▇▇▇▇▇ relating to the Cogeneration Assets; and (g) use its
best efforts to operate its business and activities in the same manner as they
have been carried out and to maintain the same level of expenditure as have
previously been incurred in connection with such business and activities.
5.7 Exclusive Dealing. ▇▇▇▇▇▇▇▇▇ shall not directly or indirectly,
through any representative or otherwise, solicit or entertain offers from,
negotiate with or in any manner encourage, discuss, accept or consider any
proposal of any Person relating to the acquisition of the assets or business,
in whole or in part of ▇▇▇▇▇▇▇▇▇, whether through direct purchase,
consolidation or other business combination (other than sales of inventory or
in the ordinary course of business) so long as this Agreement has not been
terminated. ▇▇▇▇▇▇▇▇▇ recognizes that ▇▇▇▇▇ has and continues to incur
substantial time and expense in evaluating this transaction. ▇▇▇▇▇▇▇▇▇
acknowledges that ▇▇▇▇▇, in reliance on this Section 5.7, will continue to
incur additional time, effort and expense. ▇▇▇▇▇▇▇▇▇ has agreed to this
provision due to the unique terms specified in the AIP and contemplated in
this transaction.
21
5.8 Termination Fee. In the event that ▇▇▇▇▇▇▇▇▇ breaches Section
5.7 hereof and within twelve (12) months after such breach or termination,
▇▇▇▇▇▇▇▇▇ closes a transaction with an unrelated third party relating to the
acquisition of a Material portion of the Cogeneration Assets or the business of
▇▇▇▇▇▇▇▇▇, in whole or part, whether through direct purchase, merger,
consolidation or other business combination (other than sales of inventory or
immaterial portions of ▇▇▇▇▇▇▇▇▇'▇ Cogeneration Assets in the ordinary course),
then, immediately upon such closing, ▇▇▇▇▇▇▇▇▇ shall pay to ▇▇▇▇▇ the sum of
Twenty Thousand Dollars ($20,000). Such payment shall constitute liquidated
damages and, in the absence of fraud or bad faith, shall be in lieu of any
other penalty or remedy ▇▇▇▇▇ might otherwise seek, the parties having
determined that the
22
actual damages resulting from the events for which such liquidated damages are
to be awarded would be extremely difficult and uncertain to calculate and that
liquidated damages above represent a good faith estimate of such actual
damages.
___________ __________
▇▇▇▇▇▇▇▇▇ initials ▇▇▇▇▇ initials
___________ ___________ ___________ __________
___________ ___________ ___________ __________
___________ ___________ ___________ __________
___________ ___________ ___________ __________
Shareholders' initials
5.9 Maintenance of Books and Records. ▇▇▇▇▇▇▇▇▇ will possess and
maintain the complete books and records of the Cogeneration Assets.
5.10 Lease of the Cogeneration Assets and Right to Purchase. At the
Closing, ▇▇▇▇▇▇▇▇▇ will hold the lessee's interest in the Cogeneration Lease
and the right to purchase the Cogeneration Assets from Security Pacific, free
of debt or encumbrances, including without limitation the following executed
agreements, assignments and consents: (a) Cogeneration Lease Assignment;
(b) Assignment and Consent to Assignment by PG&E of the P.G.&E. S.O. #2
Contract from ▇▇▇▇▇▇▇▇▇ to ▇▇▇▇▇, without modification; (c) Assignment and
Consent to Assignment by Solar of the Operations and Maintenance Agreement from
▇▇▇▇▇▇▇▇▇ to ▇▇▇▇▇, modified as provided in Section 7.10 hereof;
(d) Certificates of Non-default effective at the Closing as to Solar; (e) to
the extent available through the best efforts of ▇▇▇▇▇▇▇▇▇, all books, data
sheets, logs, maintenance manuals and other records relating to the
Cogeneration Assets from the date of its construction to the Closing; (f) to
the extent available through the best efforts of ▇▇▇▇▇▇▇▇▇, originals or copies
of all insurance policies issued to Monarch, Solar or ▇▇▇▇▇▇▇▇▇ covering or
relating to the Cogeneration Assets from the date of its construction to the
Closing; and (g) executed Right to Purchase Contract.
5.11 Taxes. ▇▇▇▇▇▇▇▇▇ shall pay any documentary transfer, sales or
use taxes that may become due on the purchase and sale of the Cogeneration
Assets under the terms of this Agreement and/or the purchase of Security
Pacific's interest in the Cogeneration Assets under the Right to Purchase
Contract, plus any penalty or interest thereon.
23
ARTICLE VI
COVENANTS OF ▇▇▇▇▇
▇▇▇▇▇ hereby covenants and agrees with ▇▇▇▇▇▇▇▇▇ as follows:
6.1 Cooperation. Subject to the terms and conditions of this
Agreement, ▇▇▇▇▇ shall cooperate with ▇▇▇▇▇▇▇▇▇ to use its best efforts to
secure all necessary consents, approvals, authorizations, exemptions and
waivers from all Persons and Governmental Entities as shall be required to be
obtained by ▇▇▇▇▇ in order to enable ▇▇▇▇▇ to consummate the transactions
contemplated hereby; provided, however, that under no circumstances shall ▇▇▇▇▇
be required to pay any money or obligate itself to such a person beyond the
terms of this Agreement.
6.2 Governmental Approvals. ▇▇▇▇▇ shall use its best efforts, and
shall cooperate with ▇▇▇▇▇▇▇▇▇, to obtain all Requisite Regulatory Approvals.
6.3 Disclosure Responsibilities. ▇▇▇▇▇, as a reporting company
under Section 12 of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), and listed company under the New York Stock Exchange (the "NYSE"), is
required to comply with certain disclosure requirements regarding its business
activities, including, but not limited to, the issuance of press releases and
the preparation and filing of periodic reports with the Securities and Exchange
Commission. In order to comply with the disclosure requirements of the
Exchange Act and NYSE, as well as the timing of such disclosures, all
statements to the public, including press releases, shall be at the sole
discretion of ▇▇▇▇▇.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF ▇▇▇▇▇
The obligations of ▇▇▇▇▇ to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction (or waiver by ▇▇▇▇▇) on
or prior to the Closing of all of the following conditions:
7.1 Accuracy of Representations and Warranties. The
representations and warranties of ▇▇▇▇▇▇▇▇▇ set forth in this Agreement shall be
true and correct in all respects as of the date when made and at and as of the
Closing.
7.2 Performance of Covenants and Agreements. ▇▇▇▇▇▇▇▇▇ shall have
duly performed and complied in all respects with the covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing. None of the events or conditions entitling ▇▇▇▇▇ to
terminate this Agreement under Article IX hereof shall have occurred and be
continuing.
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7.3 Consents. Any consent required for the consummation of this
purchase and sale under any agreement, contract, license or other instrument
described in any exhibit hereto or referred to herein, or for the continued
enjoyment by ▇▇▇▇▇ of any benefits of such agreement, contract, license or
other instrument after the Closing, which consent ▇▇▇▇▇▇▇▇▇ is specifically
obligated to obtain pursuant to this Agreement, shall have been obtained and
be effective.
7.4 Governmental Approvals. All Requisite Regulatory Approvals
shall have been obtained, made or lapsed and shall be in full force and effect.
7.5 Approval of Counsel. The form and substance of all legal
matters contemplated hereby and all papers delivered hereunder shall be
reasonably acceptable to Nordman, Cormany, Hair & ▇▇▇▇▇▇▇, counsel to ▇▇▇▇▇.
7.6 Officers' Certificate. ▇▇▇▇▇ shall have received a certificate
of ▇▇▇▇▇▇▇▇▇, substantially in the form of Exhibit 6 attached hereto and made a
part hereof, satisfactory in form and substance to ▇▇▇▇▇, executed on behalf of
▇▇▇▇▇▇▇▇▇ by its President and Secretary, as to compliance with the matters set
forth in Sections 7.1, 7.2, 7.3 and 7.4 of this Agreement.
7.7 Resolutions. ▇▇▇▇▇ shall have received certified copies of
resolutions of the Board of Directors of ▇▇▇▇▇▇▇▇▇ and the written consents of
the Shareholders owning one hundred percent (100%) of the outstanding shares of
common stock of ▇▇▇▇▇▇▇▇▇ approving this Agreement, and the transactions
contemplated hereby.
7.8 Opinions of Counsel. ▇▇▇▇▇ shall have received the opinions
of ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, counsel to ▇▇▇▇▇▇▇▇▇ and the
Shareholders, in form and content satisfactory to ▇▇▇▇▇, substantially in the
form of Exhibit 7 attached hereto and made a part hereof.
7.9 Closing of Agreements. The Closing shall not occur unless the
Closings contemplated by the Partnership Purchase Agreement and the TOC
Purchase Agreement have occurred or will occur concurrently with the Closing.
7.10 Termination of Operations and Maintenance Agreement. The
Operations and Maintenance Agreement shall be modified to provide that it is
subject to cancellation by ▇▇▇▇▇ after the Closing without any requirement for
the posting of a letter of credit or any other penalty other than an acceptable
period of time to elapse for notice, except as such requirement may relate to
the Required Adjustment of Capacity Payments in the event of termination as
required by the P.G.&E. S.O. #2 Contract. ▇▇▇▇▇ shall have received the duly
executed Amended Operations & Maintenance Agreement, the ▇▇▇▇▇ Indemnity and
the Reserve Security Instruments (as those terms are defined in the Amended
Operations & Maintenance Agreement).
7.11 PG&E Consent. PG&E will have consented to the transfer of the
P.G.&E. S.O. #2 Contract from ▇▇▇▇▇▇▇▇▇ to ▇▇▇▇▇ without amendment to such
contract.
25
7.12 Good Standing Certificates. ▇▇▇▇▇▇▇▇▇ shall have delivered
valid Good Standing Certificates from the Secretary of the State of California
and the California Franchise Tax Board showing ▇▇▇▇▇▇▇▇▇ in good standing.
7.13 Sunset Investment Indemnity. ▇▇▇▇▇ shall have received an
indemnity from Sunset Investment Company, LLC, a California limited liability
company ("Sunset"), in form and content satisfactory to ▇▇▇▇▇ substantially in
the form of Exhibit 8 attached hereto and made a part hereof. ▇▇▇▇▇ shall also
have received written confirmation from Sunset in a form acceptable to ▇▇▇▇▇
that Sunset has established a reserve fund, in an amount of not less than Five
Million Dollars ($5,000,000) to be held for the benefit of ▇▇▇▇▇ (and others)
to indemnify ▇▇▇▇▇ (and others) from and against any and all costs, claims,
judgments, settlements and liabilities arising out of the SOCAL Contract and
the SOCAL Litigation and that all terms and conditions of the Amended
Operations & Maintenance Agreement by and among ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and other
parties, have been satisfied.
7.14 ▇▇▇▇▇▇▇▇▇ shall have delivered the duly executed Right to
Purchase Contract.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF ▇▇▇▇▇▇▇▇▇
The obligations of ▇▇▇▇▇▇▇▇▇ to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver
by ▇▇▇▇▇▇▇▇▇) on or prior to the Closing of all of the following conditions:
8.1 Accuracy of Representations and Warranties. The
representations and warranties of ▇▇▇▇▇ set forth in this Agreement shall be
true and correct in all material respects as of the date when made and at and
as of the Closing.
8.2 Performance of Covenants and Agreements. ▇▇▇▇▇ shall have duly
performed and complied in all respects with the covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing. None of the events or conditions entitling
▇▇▇▇▇▇▇▇▇ to terminate this Agreement under Article IX hereof shall have
occurred and be continuing.
8.3 Resolutions. ▇▇▇▇▇▇▇▇▇ shall have received certified copies
of resolutions of the Board of Directors of ▇▇▇▇▇ approving this Agreement and
the transactions contemplated hereby.
8.4 Approval of Counsel. The form and substance of all legal
matters contemplated hereby and all papers delivered hereunder shall be
reasonably acceptable to ▇▇▇▇▇ ▇▇▇▇▇, counsel to ▇▇▇▇▇▇▇▇▇ and the
Shareholders.
26
8.5 Governmental Approvals. All Requisite Regulatory Approvals
shall have been obtained, made or lapsed and shall be in full force and effect.
8.6 Officers' Certificate. ▇▇▇▇▇▇▇▇▇ shall have received a
certificate of ▇▇▇▇▇, substantially in the form of Exhibit 9 attached hereto
and made a part hereof, satisfactory in form and substance to ▇▇▇▇▇▇▇▇▇,
executed on behalf of ▇▇▇▇▇ by the President and Secretary of ▇▇▇▇▇, as to
compliance with the matters set forth in Sections 8.1, 8.2, 8.3 and 8.5 of this
Agreement.
8.7 Opinion of Counsel. ▇▇▇▇▇▇▇▇▇ shall have received the opinion
of Nordman, Cormany, Hair & ▇▇▇▇▇▇▇, counsel to ▇▇▇▇▇, in form and content
reasonably satisfactory to ▇▇▇▇▇▇▇▇▇, substantially in the form of Exhibit 10
attached hereto and made a part hereof.
8.8 Closing of Agreements. The Closing shall not occur unless the
Closings contemplated by the Partnership Purchase Agreement and the TOC
Purchase Agreement have occurred or will occur concurrently with the Closing.
ARTICLE IX
TERMINATION PRIOR TO CLOSING
9.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
a. By the mutual written consent of ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇;
b. Subject to the right of either party to extend the
Closing as provided in Section 2.6 hereof, upon written notice by either party
to the other party if the Closing has not occurred forty-five (45) days after
the execution of this Agreement;
c. By ▇▇▇▇▇ in writing if ▇▇▇▇▇▇▇▇▇ or the Shareholders
shall be in Default;
d. By ▇▇▇▇▇▇▇▇▇ in writing if ▇▇▇▇▇ shall be in Default;
e. By ▇▇▇▇▇ if, after the date of this Agreement, there
shall have occurred a Material adverse change (or any development or condition
involving a prospective Material adverse change) in the business, financial
condition or results of operations of ▇▇▇▇▇▇▇▇▇; or
f. By ▇▇▇▇▇, if the transaction is not approved by all of
the Shareholders.
27
9.2 Effect on Obligations. Termination of this Agreement pursuant
to this Article shall terminate all obligations of the parties hereunder,
except for the obligation under Sections 3.12 and 4.5; provided, however, that
termination pursuant to paragraphs 9.1c or d hereof shall not relieve any
defaulting party from any liability to the other parties hereto.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification by ▇▇▇▇▇. ▇▇▇▇▇ agrees to indemnify, defend
and hold ▇▇▇▇▇▇▇▇▇, and agents of ▇▇▇▇▇▇▇▇▇, harmless from and against any and
all loss, liability, damage, costs and expenses (including interest, penalties,
settlements, fines, costs and expenses incurred in connection with
investigating and defending any claims or causes of action, and reasonable
attorneys' fees) that ▇▇▇▇▇▇▇▇▇ and its agents may incur or become subject to
arising out of or due to any inaccuracy of any representation or the breach of
any warranty, covenant, undertaking or other agreement of ▇▇▇▇▇ contained in
this Agreement.
10.2 Indemnification by ▇▇▇▇▇▇▇▇▇ and the Shareholders. ▇▇▇▇▇▇▇▇▇
and the Shareholders, jointly and severally, agree to indemnify, defend and
hold ▇▇▇▇▇, and the officers, directors, employees and agents of ▇▇▇▇▇
(collectively, the officers, directors, employees and agents being referred to
in each case as its "Related Parties") harmless from and against any and all
lawsuits, liability, damages, costs and expenses (including interest,
penalties, settlements, fines, costs and expenses incurred in connection with
investigating and defending any claims or causes of action, and reasonable
attorneys' fees) that ▇▇▇▇▇ and its Related Parties may incur or become subject
to or arising out of or due to (a) any inaccuracy of any representation or the
breach of any warranty, covenant, undertaking or other agreement of ▇▇▇▇▇▇▇▇▇
or the Shareholders contained in this Agreement, or (b) any claim by SOCAL,
PG&E, Solar, or any other creditor of ▇▇▇▇▇▇▇▇▇ or the Shareholders against
▇▇▇▇▇ based upon or related to, in whole or in part, the SOCAL Contract, the
SOCAL Litigation or the transfer of the Cogeneration Assets to ▇▇▇▇▇.
10.3 Survival. The several warranties, indemnities,
representations, covenants and agreements of the parties contained in this
Agreement and in any other instrument delivered pursuant hereto shall survive
the Closing and shall remain in full force and effect thereafter.
10.4 Notice and Opportunity to Defend.
a. If a party seeking indemnification (the "Indemnitee")
becomes aware of any matters that it believes may give rise to an indemnifiable
claim, or asserts any claim that it believes may be indemnifiable pursuant to
this Agreement, the Indemnitee shall give the party obligated to provide
indemnification (the "Indemnifying Party") prompt written notice of such matter
or claim, stating with particularity the nature of such matter or the
aforementioned claim and the amount thereof. Failure to provide such notice
shall not affect the right of the Indemnitee to indemnification except to the
extent such failure shall have resulted in
28
liability to the Indemnifying Party that could have been actually avoided had
such notice been provided within such required time period.
b. If the matter that the Indemnitee believes gives rise to
an indemnifiable claim does not involve a third party claim against an
Indemnitee, the Indemnifying Party shall have thirty (30) days from the date on
which it received notice of such claim pursuant to this Section to respond to
such notice. If such Indemnifying Party accepts responsibility or does not
respond within such thirty (30)-day period, the Indemnifying Party shall
promptly pay to the Indemnitee the full amount of such claim. If the
Indemnifying Party rejects any liability with respect to such claim, it shall
give written notice of such objection to the Indemnitee within such thirty
(30)-day period and the parties shall seek to resolve such claim by agreement.
If the parties are unable to resolve such claim by agreement within sixty (60)
days following the expiration of such thirty (30)-day period mentioned above,
the parties shall be entitled to pursue, without prejudice to any of their
rights hereunder, such remedies as may be available to the parties under
applicable law.
c. In the event any action, suit, proceeding or
investigation is brought against the Indemnitee by a third party which the
Indemnitee believes may give rise to an indemnifiable claim, the Indemnitee
shall give the Indemnifying Party prompt written notice of the commencement of
such action, suit, proceeding or investigation as provided in paragraph a. of
this Section. Such Indemnifying Party shall have a period of thirty (30) days
after receipt of such notice within which to respond to such notice. If such
Indemnifying Party does not respond within such thirty (30)-day period or
rejects responsibility for such matter in whole or in part, the Indemnitee
shall be free to pursue, without prejudice to any of its rights hereunder, such
remedies as may be available to such party under applicable law. If such
Indemnifying Party accepts responsibility, such Indemnifying Party shall, as
between the Indemnitee and the Indemnifying Party, be obligated to compromise
or defend such matter, at its own expense. The Indemnitee shall employ counsel
of its choice and the Indemnifying Party shall reimburse the Indemnitee for
attorneys' fees and costs. The Indemnifying Party shall cooperate fully with
the Indemnitee and its counsel in the defense against any such asserted
liability. Any compromise of such asserted liability by the Indemnitee shall
require the prior written consent of the Indemnifying Party, which shall not be
unreasonably withheld. If, however, the Indemnitee refuses its consent to a
bona fide offer of settlement that involves solely the payment of cash that the
Indemnifying Party wishes to accept, the Indemnitee may continue to pursue such
matter, free of any participation by the Indemnifying Party, at the sole
expense of the Indemnitee. In such event, the obligation of the Indemnifying
Party to the Indemnitee shall be equal to the lesser of (i) the amount of the
offer of settlement that the Indemnitee refused to accept plus the costs and
expenses of the Indemnitee prior to the date the Indemnifying Party notified
the Indemnitee of the offer of settlement; and (ii) the actual out-of-pocket
amount the Indemnitee is obligated to pay as a result of such party's
continuing to pursue such matter. An Indemnifying Party shall be entitled to
recover from the Indemnitee any additional expenses incurred by such
Indemnifying Party as a result of the decision of the Indemnitee to pursue
such matter.
29
10.5 General. The indemnification provided in this Agreement shall
apply regardless of whether the matter subject to indemnification involved an
action taken or omitted that was negligent, grossly negligent or reckless by
the Person to be so indemnified. It is understood that such indemnification is
intended to be a means of compensating the parties for any damage or liability
directly or indirectly realized by them for matters subject to such
indemnification. To the extent the indemnification provided for herein may not
be provided to any Person under law, such indemnification shall be required to
be provided to any other Person for whom such indemnification may be
permissible as herein provided.
ARTICLE XI
MISCELLANEOUS
11.1 Entire Agreement. This Agreement and related documents
executed concurrently herewith constitute the sole understanding of the parties
hereto with respect to the matters provided for herein and supersedes the AIP
and any previous agreements and understandings between the parties with respect
to the subject matter hereof. No amendment, modification or alteration of the
terms or provisions of this Agreement shall be binding unless the same shall be
in writing and duly executed by ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇.
11.2 Successors and Assigns. This Agreement will inure to the
benefit of and be binding upon ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and the Shareholders and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties hereto.
11.3 Expenses. Except as provided in Sections 10.1 and 10.2 hereof,
each party hereto shall be responsible for the payment of the fees and expenses
of their respective counsel, accountants and other experts.
11.4 Taking of Necessary Action. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees, subject to
applicable laws, to use all reasonable best efforts promptly to take or cause
to be taken all action and to promptly do or cause to be done all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
Without limiting the foregoing and subject to the terms and conditions of this
Agreement, the parties shall use their reasonable best efforts to obtain and
make all consents, approvals, assurances and filings of or with third parties
and Governmental Entities necessary or advisable for the consummation of the
transactions contemplated by this Agreement. Each party shall cooperate with
the other in good faith to help the other satisfy its obligations hereunder.
11.5 Invalidity. Except for satisfaction of the conditions of
Article VII or VIII, and the provisions of Article X, if any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any rule of law, or public policy, all other conditions
30
and provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic and legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
11.6 Attorneys' Fees. In the event of any claim, dispute or
controversy arising out of or relating to this Agreement, including an action
for declaratory relief, the prevailing party in such action or proceeding shall
be entitled to recover its taxable costs or arbitration fees, and reasonable
out-of-pocket expenses, including, but not limited to, telephone calls,
photocopies, expert witnesses, travel, computer expenses related to litigation,
and attorneys' fees to be fixed by the court or the arbitrator. Such recovery
shall include court costs, out-of-pocket expenses and attorneys' fees on
appeal, if any. The court shall determine who is the "prevailing party,"
whether or not the dispute or controversy proceeds to final judgment.
11.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
11.8 Headings. The headings of the articles, sections and
paragraphs of this Agreement and of the exhibits hereto are included for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction hereof or thereof.
11.9 Construction and References. Words used in this Agreement,
regardless of the number or gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context shall require. Unless
otherwise specified, all references in this Agreement to articles, sections,
paragraphs or clauses are deemed references to the corresponding articles,
sections, paragraphs or clauses in this Agreement, and all references in this
Agreement to exhibits are references to the corresponding exhibits attached to
this Agreement.
11.10 Modification and Waiver. Any of the terms or conditions of
this Agreement may be waived in writing at any time by the party which is
entitled to the benefits thereof. No waiver of any of the provisions of this
Agreement shall be deemed to or shall constitute a waiver of any other
provisions hereof (whether or not similar).
31
11.11 Notices. Any notice, request, instruction or other
document to be given hereunder by any party hereto to any other party shall be
in writing and delivered personally, via telecopy (with receipt confirmed) or
by registered or certified mail, postage prepaid:
(a) if to ▇▇▇▇▇▇▇▇▇, to:
▇▇▇▇▇▇▇▇▇ Electric Company, Inc.
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., President
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇. ▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No. (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to ▇▇▇▇▇, to:
▇▇▇▇▇ Petroleum Company
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and Chief Executive
Officer
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Nordman, Cormany, Hair & Compton
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
1000 Town Center Drive, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No. (▇▇▇) ▇▇▇-▇▇▇▇
32
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon
actual receipt by such party (or its agents for notices hereunder). Any notice
that is addressed and mailed in the manner herein provided shall be
conclusively presumed to have been duly given to the party to which it is
addressed at the close of business, local time of the recipient, on the third
day after the day it is so placed in the mail. Any notice that is sent by
telecopy shall be deemed to have been duly given to the party to which it is
addressed upon telephonic confirmation of the same as provided herein. A copy
of any notices delivered by telecopy shall promptly be mailed in the manner
herein provided to the party to which such notice was given.
11.12 Public Announcements. Without the prior express consent of
▇▇▇▇▇, neither ▇▇▇▇▇▇▇▇▇ nor any Shareholder shall make any public statements,
including, without limitation, any press releases, with respect to this
Agreement and the transactions contemplated hereby.
11.13 Governing Law; Interpretation. This Agreement shall be
construed in accordance with and governed by the laws of the State of
California (regardless of the laws that might otherwise govern under applicable
California principles of conflict of laws) as to all matters, including, but
not limited to, matters of validity, construction, effect, performance and
remedies.
11.14 Jurisdiction. Any legal action or proceeding with respect
to this Agreement may be brought in the federal or state courts for the County
of ▇▇▇▇, in the State of California, and by execution and delivery of this
Agreement, ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ hereby accept the jurisdiction of the aforesaid
courts.
33
IN WITNESS WHEREOF, ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ have caused this Agreement
to be executed as of the date first above written.
▇▇▇▇▇ PETROLEUM COMPANY, ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC., a Delaware
corporation a California corporation
By: ___________________________ By: ________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., President
and Chief Executive Officer
By: ___________________________ By: ________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Secretary
The undersigned constitute all of the Shareholders of ▇▇▇▇▇▇▇▇▇ and hereby
agree jointly and severally to be bound to the terms of this Agreement,
including but not limited to, the agreement to indemnify ▇▇▇▇▇ Petroleum
Company under the terms of Article X of this Agreement. By signing this
Agreement, the Shareholders of ▇▇▇▇▇▇▇▇▇ hereby unanimously consent to the
transfer of the Cogeneration Assets from ▇▇▇▇▇▇▇▇▇ to ▇▇▇▇▇.
▇▇▇▇▇ RESOURCE DEVELOPMENT
COMPANY, a California corporation
By: ____________________________ ____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., President ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., as Trustee
and Secretary of Trust "B" Under Will of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Deceased
_________________________________ ___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ V
_________________________________ ____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇
_________________________________ ____________________________________
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
34
VERNIER RESOURCES CORPORATION, GENERAL WESTERN, INC.,
a Texas corporation a New Mexico corporation
By: _____________________________ By: _______________________________
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
and Secretary
By: _____________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Secretary
__________________________________ ________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
__________________________________ ________________________________
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, as Trustee ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
of the ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
Family Trust dated April 9, 1996
__________________________________ ________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, as Trustee ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, as Trustee of
of the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Family
Family Trust dated June 22, 1982 Trust dated June 22, 1982
Spousal Consents
The undersigned, spouses of the Shareholders named in this Agreement,
hereby consent to the terms and conditions of this Agreement and agree that
their community property, if any, included in the Cogeneration Assets, as
defined herein, is subject to this Agreement.
_________________________________ _________________________________
_________________________________ _________________________________
_________________________________ _________________________________
1
RIGHT TO PURCHASE CONTRACT
This Right to Purchase Contract ("Agreement") dated as of November 8,
1996, among ▇▇▇▇▇▇▇▇▇ Electric Company, Inc., a California corporation
("▇▇▇▇▇▇▇▇▇"), ▇▇▇▇▇ Petroleum Company, a Delaware corporation ("▇▇▇▇▇"), and
Security Pacific Leasing Corporation, a Delaware corporation ("SPLC"), with
reference to the following facts:
RECITALS
▇. ▇▇▇▇▇▇▇▇▇ and SPLC, and certain other entities and individuals, are
parties to a Participation Agreement dated as of August 15, 1994 (the
"Participation Agreement") relating to SPLC's purchase of the Plant, the lease
of the Premises from the Premises Lessors to SPLC, the sublease of the
Premises to ▇▇▇▇▇▇▇▇▇, and the lease of the Facility to ▇▇▇▇▇▇▇▇▇.
B. Concurrent with the execution and delivery of the Participation
Agreement, and in accordance therewith, the parties thereto entered into the
following agreements, among others:
1. The Premises Lease, which provides, inter alia, for the lease
of the Premises by the Premises Lessors to SPLC;
2. The Lease dated as of August 15, 1994, among SPLC and
▇▇▇▇▇▇▇▇▇, which provides, inter alia, for the lease of the Plant by SPLC to
▇▇▇▇▇▇▇▇▇ and the sublease of the Premises by SPLC to ▇▇▇▇▇▇▇▇▇ (capitalized
terms herein not otherwise defined herein being used as defined therein);
C. The Lease provides, inter alia, that ▇▇▇▇▇▇▇▇▇ has the option to
purchase the Facility which option cannot be exercised before December 31,
2000;
D. SPLC is willing to grant to ▇▇▇▇▇▇▇▇▇ the immediate right to purchase
the Facility, and to consent to ▇▇▇▇▇▇▇▇▇'▇ assigning such right to ▇▇▇▇▇, and
to the simultaneous termination of the Lease, all on the terms and conditions
set forth herein; and
▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ have entered into a Purchase and Sale Agreement
dated as of November 8, 1996 ("Purchase and Sale Agreement"), which provides,
inter alia, for ▇▇▇▇▇ to acquire the Facility from SPLC.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements as
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. GRANT OF RIGHT TO PURCHASE
1.1 Grant of Right to Purchase Facility. Subject to and upon the
terms and conditions set forth in this Agreement, and in reliance on the
representations, warranties, indemnities and other assurances contained herein,
SPLC hereby grants to ▇▇▇▇▇▇▇▇▇, its successors and assigns,
2
the right to purchase ("Right to Purchase"), effective for all purposes as of
October 1, 1996, all of SPLC's right, title and interests in the Facility, and
the other property described in Paragraph 1 of the ▇▇▇▇ of Sale and Assignment
referred to in Section 3.2, and to the extent assignable by SPLC all rights,
privileges, benefits and powers conferred upon or owned by SPLC under the
documents described in Exhibit "A" to the Quitclaim referred to in Section 3.2
for $6,282,586.47 ("the "Purchase Price"). The parties hereto acknowledge and
agree that the Purchase Price represents full and fair consideration for the
Facility, and that no party hereto will seek any adjustment of the Purchase
Price for any reason whatsoever. Such Right to Purchase shall terminate on
November 30, 1996, if not exercised before such date. The Right to Purchase
may be exercised upon 24 hours prior written notice (the "Closing Notice") by
the holder of such right to SPLC on a Business Day or upon such shorter written
notice as the parties may agree to specifying the date (which shall be a
Business Day) on which the documents are to be recorded and the funds are to
be delivered from escrow (the "Closing Date").
1.2 Purchase Price. The Purchase Price shall be due on the Closing
Date. ▇▇▇▇▇▇▇▇▇ shall pay any sales, use or transfer tax in connection with
the Right to Purchase and the exercise of the Right to Purchase whether such
taxes are assessed on the Closing Date or thereafter.
1.3 Acceptance by ▇▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇ hereby accepts SPLC's grant
of the Right to Purchase, and assumes, and agrees to fully comply with, any
and all rights and obligations of SPLC relating to the Facility, and all other
agreements relating thereto.
2. ASSIGNMENT OF RIGHT TO PURCHASE
2.1 Assignment by ▇▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇ hereby assigns to ▇▇▇▇▇,
its successors and assigns, effective for all purposes as of October 1, 1996,
all of its right, title and interest in the Right to Purchase.
2.2 Acceptance by ▇▇▇▇▇. ▇▇▇▇▇ hereby accepts the assignment from
▇▇▇▇▇▇▇▇▇ of the Right to Purchase the Facility, effective October 1, 1996, and
agrees to pay the Purchase Price directly to SPLC; provided, however, that (a)
▇▇▇▇▇▇▇▇▇'▇ obligations to pay any sales, use or transfer taxes on the sale of
the Facility from SPLC to ▇▇▇▇▇ shall not be assumed by ▇▇▇▇▇, and ▇▇▇▇▇▇▇▇▇
shall remain obligated to pay such taxes on the Closing Date and/or thereafter,
and (b) ▇▇▇▇▇ does not assume any of ▇▇▇▇▇▇▇▇▇'▇ obligations under the
Participation Agreement, or otherwise, unless expressly assumed herein or by
separate written agreement.
2.3 Purchase Price to be Paid by ▇▇▇▇▇. ▇▇▇▇▇ agrees that, in
accordance with its acceptance herein of the assignment of Right to Purchase
from ▇▇▇▇▇▇▇▇▇, it will, subject to satisfaction of the conditions in Section
4, purchase the Facility and will pay the Purchase Price directly to SPLC on
the Closing Date.
2.4 Execution of Further Documents. The parties agree to execute
all other documents necessary to consummate the transfer by which SPLC will
release any security interests it may have arising out of or relating to its
ownership of the Facility.
2.5 Consent by SPLC. SPLC hereby consents to ▇▇▇▇▇▇▇▇▇'▇
assignment to
3
▇▇▇▇▇ of the Right to Purchase (effective for all purposes as of October 1,
1996), and ▇▇▇▇▇▇▇▇▇'▇ rights under the Lease, and all related documents, and
SPLC hereby consents to the assignment by Premises Lessors of the Premises
Lease to ▇▇▇▇▇.
3. CLOSING OF PURCHASE OF FACILITY
The sale of the Facility pursuant to the exercise of the Right to
Purchase shall be accomplished through an escrow (the "Escrow") with First
American Title Insurance Company (the "Escrow Agent") under an Escrow Agreement
in the form of Exhibit A (the "Escrow Agreement") as follows:
3.1 Concurrently herewith, the parties hereto shall execute and
deliver the Escrow Agreement to the Escrow Agent.
3.2 Upon execution and delivery of the Escrow Agreement by the
Escrow Agent, SPLC shall execute and deliver to the Escrow Agent a ▇▇▇▇ of Sale
and Assignment in the form of Exhibit B, a Quitclaim in the form of Exhibit C,
a Termination and Release of Security Interests in the form of Exhibit D, and
UCC 2's in the form of Exhibits E-1, E-2 and E-3.
3.3 Not later than 2:00 p.m. Pacific Time on the scheduled Closing
Date specified in the Closing Notice, ▇▇▇▇▇ shall deliver to the Escrow Agent
the Funds described in Section 1(e) of the Escrow Agreement.
3.4 On the Closing Date, upon satisfaction or waiver in writing of
the conditions precedent set forth in Section 4, the parties hereto shall cause
their counsel to deliver to the Escrow Agent Closing Instructions in the form
of Annex I to the Escrow Agreement (the "Closing Instructions").
4. CONDITIONS PRECEDENT
The respective obligations of the parties hereto to consummate the
sale of the Facility as contemplated herein (the "Closing") are subject to the
satisfaction or waiver in writing of the following conditions precedent:
4.1 All conditions to the closing of the transactions contemplated
under the Purchase and Sale Agreement shall have been satisfied.
4.2 Escrows, Nos. 1125444N, 1128320N and 1128321N among Escrow
Agent, ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ (the "Other Escrows") shall close simultaneously
with the closing of the Escrow.
4.3 The representations and warranties of each party hereto shall
be true and correct at the time of the Closing, and by delivery of the Closing
Instructions each party shall be deemed to have confirmed that such is the
case.
4.4. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ shall have received a Termination and
Release of Security Interests in the form of Exhibit D, duly executed and
delivered by ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ Oil
4
Company, a California general partnership ("TOC"), and SPLC, and ▇▇▇▇▇▇▇▇▇
shall have given notice thereof to PG&E and Solar (as defined in Exhibit D) and
requested their execution and delivery of the acknowledgment of such notice
provided therein.
4.5 SPLC shall have received from TOC and each Premises Lessor
acknowledgments of their awareness of the transactions contemplated hereby and
their confirmation that (i) the indemnity obligations of ▇▇▇▇▇▇▇▇▇ under
Sections 11, 16 and 17 of the Lease, and their respective Guarantees, continue
in full force and effect notwithstanding the Closing of the transactions
contemplated hereby and (ii) the obligations of ▇▇▇▇▇▇▇▇▇ to SPLC hereunder and
under all documents executed and delivered in connection herewith are
guaranteed under the Guarantees.
4.6 SPLC shall have received an opinion of counsel for ▇▇▇▇▇▇▇▇▇
in form and substance satisfactory to SPLC.
4.7 SPLC shall have received evidence of the insurance required
by Section 5.3.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 SPLC represents and warrants to ▇▇▇▇▇▇▇▇▇ and any assignee
of the Right to Purchase that:
5.1.1 LIMITATION OF REPRESENTATIONS. THE FACILITY AND ANY
OTHER RIGHTS SUBJECT TO THE RIGHT TO PURCHASE WILL BE CONVEYED, QUITCLAIMED OR
RELEASED "AS IS" AND "WHERE IS", AND SPLC MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT THERETO OR WITH RESPECT TO ITS
RIGHT, TITLE AND INTEREST THEREIN OR WITH RESPECT TO THE VALUE,
MERCHANTABILITY, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, OPERATION,
FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT, ABSENCE OF LATENT DEFECTS,
SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR FITNESS FOR USE OF THE PLANT
OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO SUCH PROPERTY OR ANY PART THEREOF, except
that SPLC has received and presently has whatever right, title and interest in
and to the Facility and each and every item of the Facility and other rights
described above as was conveyed to it, and SPLC has not made any prior sale,
assignment, or transfer of such right, title and interest in and to any item
of the Facility to any person, firm or corporation; and SPLC's right, title and
interest therein are free and clear of all claims, liens, encumbrances of any
kind whatsoever arising by, through or under SPLC.
5.1.2. ▇▇▇▇▇▇▇▇▇'▇ Good Standing. SPLC has not given
or received any notice of any default to or by the Lessee under the Lease.
5.1.3. No Notice of Violations. SPLC has not received
any written notice of any violation of any zoning regulation, ordinance, law,
rule, order, regulation or requirement relating to the Facility, or assets or
operation of or on its properties which remains uncured or which has not been
dismissed.
5.2 Consent. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ represent and warrant that no
consent, approval or authorization of, or exemption by, or filing with, any
governmental entity or any other person is required in connection with the
execution and delivery of this Agreement or the taking of any other action
contemplated hereby by either of them or SPLC; and SPLC represents and
warrants
5
that no consent, approval or authorization of, or exemption by, or filing with,
any bank regulatory authority is required in connection with its execution and
delivery of this Agreement or the taking of any other action contemplated
hereby.
5.3 Insurance. The purchaser of the Facility will, at its sole
costs and expense, include SPLC and ▇▇▇▇▇▇▇▇▇ as additional insured under a
general liability policy on the Facility for a period of one year after the
date of recordation of the ▇▇▇▇ of Sale and Assignment.
5.4 Title. ▇▇▇▇▇▇▇▇▇ represents that the Prior ▇▇▇▇ of Sale as
defined in paragraph 1.b of the ▇▇▇▇ of Sale and Assignment conveyed good and
marketable title to the Facility to SPLC free and clear of all liens, except
Permitted Liens, and the Premises Lease conveyed a valid leasehold interest in
the Premises.
6. INDEMNIFICATIONS BY ▇▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇
6.1 Indemnification by ▇▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇ agrees to indemnify,
defend and hold SPLC and its officers, directors, employees and agents
(collectively, "Indemnitees") harmless from and against any and all lawsuits,
liability, damages, costs and expenses (including, without limitation,
reasonable attorneys' fees and costs, including allocated time charges of
internal counsel) that any Indemnitee may incur or become subject to arising
out of or due to any inaccuracy of any representation, or the breach of any
warranty or covenant by ▇▇▇▇▇▇▇▇▇ contained in this Agreement.
6.2 Indemnification by ▇▇▇▇▇. ▇▇▇▇▇ agrees to indemnify, defend
and hold each Indemnitee harmless from and against any and all lawsuits,
liability, damages, costs and expenses (including, without limitation,
reasonable attorneys' fees and costs) that any Indemnitee may incur or become
subject to or arising out of or due to any inaccuracy of any representation, or
the breach of any warranty or covenant by ▇▇▇▇▇ contained in this Agreement.
7. MISCELLANEOUS
7.1 Successor and Assigns. This Agreement will inure to the
benefit of and be binding upon the parties hereto, and their respective
successors and assigns.
7.2 Expenses. Except as otherwise provided herein, ▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇ shall be responsible for the payment of the fees and expenses of their
respective counsel, accountants and other experts, and ▇▇▇▇▇▇▇▇▇ shall be
responsible for the payment of fees and expenses of counsel (including
allocated time charges of internal counsel) of SPLC and accountants and other
experts incurred by SPLC.
7.3 Modification and Waiver. Any of the terms or conditions of
this Agreement may be waived in writing at any time by the party which is
entitled to the benefits thereof. No waiver of any of the provisions of this
Agreement shall be deemed to or shall constitute a waiver of any other
provisions hereof (whether or not similar).
7.4 Further Assurances. The parties agree to take all such further
actions and execute, acknowledge and deliver all such further documents that
are necessary or useful in carrying out the purpose and intent of this
Agreement, to the extent permitted by applicable law.
6
7.5 Invalidity. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other provisions of this Agreement shall remain in full
force and effect.
7.6 Attorneys' Fees. In the event of any claim, dispute or
controversy arising out of or relating to this Agreement, the prevailing party
in such action or proceeding shall be entitled to recover its reasonable
attorneys' fees and costs (including allocated time charges of internal
counsel). The court shall determine who is the "prevailing party," whether or
not the dispute or controversy proceeds to final judgment.
7.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
7.8 Notices. Any notice, request, instruction or other document
to be delivered hereunder by any party hereto to any other party shall be in
writing and delivered personally, via telecopy (with receipt confirmed) or by
registered or certified mail, postage prepaid:
if to ▇▇▇▇▇▇▇▇▇, to:
▇▇▇▇▇▇▇▇▇ Electric Company, Inc.
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., President
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to ▇▇▇▇▇, to:
▇▇▇▇▇ Petroleum Company
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
& Chief Executive Officer
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
7
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Nordman, Cormany, Hair & Compton
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Post Of fice ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Security Pacific:
Security Pacific Leasing Corporation
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Contract Administration
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agents for notices hereunder). Any notice that
is addressed and mailed in the manner herein provided shall be conclusively
presumed to have been duly given to the party to which it is addressed at the
close of business, local time of the recipient, on the third day after the day
it is so placed in the mail. Any notice that is sent by telecopy shall be
deemed to have been duly given to the party to which it is addressed upon
telephonic confirmation of the same as provided herein. A copy of any notice
delivered by telecopy shall promptly be mailed in the manner herein provided to
the party to which such notice was given.
7.9 Headings. Headings used in this Agreement are included for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect its construction.
7.10 Governing Law; Interpretation. This Agreement shall be
construed in accordance with and governed by the laws of California as to all
matters relating hereto.
7.11 Survival. The warranties, representations and indemnities
contained in this Agreement, and in any other instrument delivered pursuant
hereto, shall survive the Closing Date and shall remain in full force and
effect thereafter. In addition, notwithstanding the sale of the Facility and
termination of the Lease or the Lease Term, whether by operation of law, or
otherwise, ▇▇▇▇▇▇▇▇▇ shall remain obligated under Sections 11, 16 and 17 of the
Lease after termination thereof.
8
7.12 Entire Agreement. This Agreement and related documents
executed concurrently herewith constitute the sole understanding of the parties
hereto with respect to the matters provided for herein and supersede any
previous agreements and understandings between the parties with respect to the
subject matter hereof. No amendment, modification or alteration of this
Agreement shall be binding unless in writing and duly executed by all parties
hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, ▇▇▇▇▇ PETROLEUM COMPANY,
INC., a California corporation a Delaware corporation
By: By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., President ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
By: By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
SECURITY PACIFIC LEASING CORPORATION,
a Delaware corporation
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
9
EXHIBIT A TO RIGHT TO PURCHASE CONTRACT
ESCROW AGREEMENT
This Escrow Agreement ("Agreement") is entered into as of November 8,
1996, among ▇▇▇▇▇▇▇▇▇ Electric Company, Inc., a California corporation
("▇▇▇▇▇▇▇▇▇"), Security Pacific Leasing Corporation, a Delaware corporation
("SPLC"), ▇▇▇▇▇ Petroleum Company, a Delaware corporation ("▇▇▇▇▇"), and First
American Title Insurance Company, a California corporation (in its capacity as
escrow agent hereunder, "Escrow Agent").
RECITALS
▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ have entered into that certain Purchase and Sale
Agreement dated as of November 8, 1996 ("Purchase and Sale Agreement"), whereby
▇▇▇▇▇ agreed to acquire from ▇▇▇▇▇▇▇▇▇ or SPLC and ▇▇▇▇▇▇▇▇▇ agreed to convey
or cause SPLC to convey to ▇▇▇▇▇, inter alia, all of ▇▇▇▇▇▇▇▇▇'▇ right, title
and interest in and to certain cogeneration assets, including, without
limitation, its lease rights to a natural-gas fired cogeneration facility, and
all equipment and facilities relating thereto (collectively, the "Cogeneration
Assets") as more particularly described in the Purchase and Sale Agreement
(the "Property").
B. SPLC, ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ have entered into that certain Right to
Purchase Contract dated November 8, 1996, pursuant to which SPLC granted to
▇▇▇▇▇▇▇▇▇ an assignable option to purchase the Property, and SPLC has consented
to the assignment of such option to ▇▇▇▇▇.
C. The parties hereto desire to enter into a written agreement outlining
the actions to be taken in connection with the delivery of certain documents
and instruments into and out of escrow.
NOW, THEREFORE, in consideration of the agreements and the mutual
covenants set forth herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. On or before the Closing Date, ▇▇▇▇▇▇▇▇▇, SPLC and ▇▇▇▇▇, as the case
may be, shall deliver to Escrow Agent the following original documents
(attached as Exhibits to the Right to Purchase Contract) described in clauses
(a) through (d) below (the "Escrow Documents"), ▇▇▇▇▇ shall wire transfer to
Escrow Agent the funds described in clause (e) below (the "Funds") and
▇▇▇▇▇▇▇▇▇ shall wire transfer the funds described in clause (f) below
(the "Additional Funds"):
(a) ▇▇▇▇ of Sale and Assignment, dated as of November _____, 1996,
executed by SPLC, in recordable form, conveying the Property to ▇▇▇▇▇.
(b) Termination and Release of Security Interests, dated as of
November _____, 1996, executed by ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ Oil Company, a
California general partnership, and SPLC.
(c) Quitclaim, dated as of November ______, 1996, executed by SPLC,
in recordable form.
10
(d) UCC 2's dated November _____, 1996, executed by SPLC.
(e) Federal funds bank wire transfer to account no. _______ of
Escrow Agent at Union, Bank located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇
(ABA #▇▇▇▇▇▇▇▇▇) referring to "First American Title Insurance Company Escrow
No. _______," from ▇▇▇▇▇ in the amount of $6,282,586.47 (the "Funds") to be
used to pay the purchase price of the Property, plus an amount from ▇▇▇▇▇
sufficient to cover all recording fees (but not any sales, use or transfer tax)
relating to the Escrow Documents and the transfer and conveyance to be effected
thereby.
(f) Federal funds bank wire transfer in account no. _______ of
Escrow Agent at Union Bank, located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇
(ABA #▇▇▇▇▇▇▇▇▇) referring to "First American Title Insurance Company Escrow
No. ______," from ▇▇▇▇▇▇▇▇▇ in the amount of $4,500.00 (the "Additional Funds")
to be used to pay all of the fees incurred by SPLC's legal counsel in
connection with the preparation of the Escrow Documents and the closing.
2. Escrow Agent hereby agrees to hold and distribute the Escrow
Documents and the Funds pursuant to the terms hereof, for the fee hereinafter
described. If the Funds are not disbursed pursuant to these instructions on
the date received, the Funds shall be invested overnight in interest bearing
accounts or money market accounts for ▇▇▇▇▇'▇ account, at the risk of and at
the instruction of ▇▇▇▇▇.
3. When, but only when, on or before November 30, 1996, or such later
date as ▇▇▇▇▇▇▇▇▇, SPLC and ▇▇▇▇▇ may designate in writing (the "Closing Date")
as (a) Escrow Agent receives facsimile authorization, in the form of Annex I,
from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq. on behalf of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, Esq. on
behalf of SPLC, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., on behalf of ▇▇▇▇▇ (the "Closing
Instructions"), (b) Escrow Agent is authorized to close the escrows described
in Section 14, and (c) Escrow Agent holds the Funds and the Additional Funds
and is prepared to disburse or apply the Funds and the Additional Funds in
accordance with Paragraph 6, Escrow Agent shall cause all necessary or
appropriate actions to be taken with respect to the Escrow Documents and the
Funds and the Additional Funds such that the Escrow Documents, other than
documents 1(b) and 1(d) listed above, can be recorded and the Funds and the
Additional Funds disbursed on the Closing Date. Such actions shall include,
without limitation, the following:
(a) Escrow Agent shall record or cause to be recorded the executed
original of the ▇▇▇▇ of Sale and Assignment and, if required by applicable law,
any transfer tax declaration corresponding thereto, in the appropriate records
of ▇▇▇▇ County, California, and in connection therewith shall insert the
recording date of the recorded document in the appropriate place in each of the
Escrow Documents;
(b) Escrow Agent shall record or cause to be recorded the executed
original of the Quitclaim and, if required by applicable law, any transfer tax
declaration corresponding thereto, in the appropriate records of ▇▇▇▇ County,
California, and in connection therewith shall insert the recording date of the
recorded document in the appropriate place in each of the Escrow Documents; and
11
(c) Escrow Agent shall send the UCC-2 Financing Statements for
filing with the California Secretary of State's Office together with
appropriate filing fees, and concurrently record, or cause to be recorded,
executed original counterparts of such UCC 2's which need to be filed in the
appropriate records of ▇▇▇▇ County, California to effect the release any UCC-1
Financing Statements previously filed of record.
(d) All documents filed for recording shall be distributed to
▇▇▇▇▇ upon Escrow Agent's receipt of such documents back from recording.
Escrow Agent shall also distribute executed counterparts of all other Escrow
Documents to each of ▇▇▇▇▇▇▇▇▇ and SPLC, and the original of the document
described in 1(b) above shall be delivered to ▇▇▇▇▇.
4. Upon completion of the actions described in Paragraphs 3(a) and (b),
Escrow Agent shall give notice of such fact (the "Closing Confirmation
Notice"), via facsimile, to ▇▇▇▇▇▇▇▇▇, SPLC and ▇▇▇▇▇, and their respective
counsel, at the Confirmation Nos. provided in paragraph 8 below.
5. If Escrow Agent, through no fault of its own, is unable to complete
the transaction contemplated by this Agreement prior to 4:00 p.m., Pacific
Time, on the Closing Date, Escrow Agent shall give notice of such fact, via
facsimile, to ▇▇▇▇▇▇▇▇▇, SPLC and ▇▇▇▇▇, and their respective counsel at the
Confirmation numbers provided in paragraph 8 below, and at SPLC's request,
shall return the Escrow Documents to SPLC and, at ▇▇▇▇▇'▇ request shall return
the Funds to ▇▇▇▇▇ by federal funds bank wire, and shall forward the Additional
Funds to SPLC. The return of Funds to ▇▇▇▇▇ shall be by federal funds bank
wire to:
▇▇▇▇▇ Fargo Bank
Located at: ▇▇▇▇, ▇▇ ▇▇▇▇▇
Account No.: 4893-027706
ABA No.: ▇▇▇▇▇▇▇▇▇
Account Name: ▇▇▇▇▇ Petroleum Company
provided, however, that such requests shall not terminate this escrow, and such
documents and the Funds shall be redelivered by the parties, as the case may
be, upon 24-hour notice from Escrow Agent that escrow will be able to close on
or before November 30, 1996.
6. On the Closing Date delivery of the Closing Confirmation Notice and
telephonic confirmation of receipt by the recipients thereof, Escrow Agent
shall disburse the Funds as follows:
First, to SPLC $6,282,586.47 plus $4,500.00 by federal funds bank
wire to the account of SPLC, Acct. #14995-50439, ABA #▇▇▇-▇▇▇-▇▇▇, at Bank of
America NT&SA, SF-RCBO #1499, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: Controller, Re:
▇▇▇▇▇▇▇▇▇ Electric.
Second, to and for Escrow Agent's own account a portion thereof
corresponding to recording fees (but not any sales, use or transfer taxes,
which shall be the sole obligation of ▇▇▇▇▇▇▇▇▇ as hereinafter provided)
relating to the Escrow Documents and the transfer and conveyance to be effected
thereby.
12
Third, to ▇▇▇▇▇, by federal funds bank wire to the account of ▇▇▇▇▇
described in Paragraph 5, any interest earned on any overnight investment of
the Funds.
In addition to the above disbursements, Escrow Agent shall provide
▇▇▇▇▇▇▇▇▇ with a written calculation of the amount of any transfer taxes
relating to the Escrow Documents, and ▇▇▇▇▇▇▇▇▇ shall pay such amount on or
before the Closing Date.
Escrow Agent shall thereupon issue a statement of receipts and
disbursements to ▇▇▇▇▇▇▇▇▇, SPLC and ▇▇▇▇▇.
7. SPLC shall not incur any expense in connection with the issuance of
these instructions or the fulfillment of the requirements contained herein.
All escrow and recording fees in connection herewith shall be the sole
obligation of ▇▇▇▇▇. Any sales, use or transfer taxes shall be the sole
obligation of ▇▇▇▇▇▇▇▇▇.
8. Any notice, request, instruction or other document to be given
hereunder by any party hereto to any other party shall be in writing and
delivered personally, via telecopy (with receipt confirmed) or by registered or
certified mail, postage prepaid:
if to ▇▇▇▇▇▇▇▇▇, to:
▇▇▇▇▇▇▇▇▇ Electric Company, Inc.
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., President
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No. (▇▇▇) ▇▇▇-▇▇▇▇
13
if to ▇▇▇▇▇, to:
▇▇▇▇▇ Petroleum Company
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and Chief Executive
Officer
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Nordman, Cormany, Hair & Compton
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Post Of fice ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No. (▇▇▇) ▇▇▇-▇▇▇▇
if to Security Pacific, to:
Security Pacific Leasing Corporation
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq., Senior Counsel
Bank of America Legal Department
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No. (▇▇▇) ▇▇▇-▇▇▇▇
if to Escrow Agent, to:
First American Title Insurance Company
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Escrow Officer
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No. (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agents for notices hereunder). Any
14
notice that is addressed and mailed in the manner herein provided shall be
conclusively presumed to have been duly given to the party to which it is
addressed at the close of business, local time of the recipient, on the third
day after the day it is so placed in the mail. Any notice that is sent by
telecopy shall be deemed to have been duly given to the party to which it is
addressed upon telephonic confirmation of the same as provided herein. A copy
of any notice delivered by telecopy shall promptly be mailed in the manner
herein provided to the party to which such notice was given.
9. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective heirs, executors, administrators,
personal representatives, successors and assigns. Any and all rights granted to
any of the parties hereto may be exercised by their agents or personal
representatives.
10. Time is of the essence of this Agreement.
11. This Agreement is governed by and is to be construed under the laws
of the State of California.
12. This Agreement may be executed in several counterparts, each of which
shall be deemed an original and all such counterparts together shall constitute
one and the same instrument.
13. This Agreement may be amended only by a written instrument similarly
executed by all of the parties hereto.
14. The parties hereto understand and acknowledge that the transaction
contemplated by this Agreement is being handled by the Escrow Agent in
conjunction with three other escrows (i.e., Escrow Nos. 1125444N, 1128320N and
1128321N) involving the overall purchase and sale transaction between ▇▇▇▇▇▇▇▇▇
and ▇▇▇▇▇.
IN WITNESS WHEREOF, each of the parties hereto has signed this Agreement
as of the date and year first above written.
▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, ▇▇▇▇▇ PETROLEUM COMPANY,
INC., a California corporation a Delaware corporation
By: By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., President ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
By: By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
15
SECURITY PACIFIC LEASING FIRST AMERICAN TITLE
CORPORATION, a Delaware corporation INSURANCE COMPANY,
a California corporation
By: By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
16
EXHIBIT B TO RIGHT TO PURCHASE CONTRACT
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NORDMAN, CORMANY, HAIR &
COMPTON
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
1000 Town Center Drive, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇ OF SALE AND ASSIGNMENT
1. KNOW ALL MEN BY THESE PRESENTS that SECURITY PACIFIC LEASING
CORPORATION, a Delaware corporation ("Seller"), for good and valuable
consideration to it paid by ▇▇▇▇▇ PETROLEUM COMPANY, a Delaware corporation
("Buyer"), hereby grants, conveys, bargains, sells, transfers and delivers unto
Buyer, its successors and assigns, all of Seller's right, title and interest in
and to:
a. each and every item of the machinery, equipment, and other
goods described in Exhibit A (the "Plant") and located on the real property
near the city of ▇▇▇▇, ▇▇▇▇ County, California (the "Site") described in
Exhibit B;
b. the ▇▇▇▇ of Sale dated as of August 23, 1994, by Signal Capital
Projects, Inc., as Seller, to Security Pacific Leasing Corporation, as Buyer
(the "Prior ▇▇▇▇ of Sale");
c. all licenses and other rights of Seller required, necessary or
convenient for the use of all patented and unpatented inventions, devises,
equipment, apparatuses and processes included in or constituting part of the
Plant or useful in the operation thereof;
d. all plans and specifications for the construction and
installation of the Plant and the Site improvements (collectively, the
"Facility"), together with all operating manuals, process descriptions, process
flow sheets, piping, wiring and instrumentation drawings, equipment
descriptions and lists, operating instructions, maintenance records, and all
other technical information relating to the construction, installation,
operation and maintenance of the Facility; and
e. to the extent the following have not expired or been terminated
on or before the date hereof, all representations, indemnities, warranties,
guaranties and agreements, if any, made to or for the benefit of Seller and
Seller's predecessors in interest under all contracts for the design,
acquisition, construction and installation of the Facility, including, without
limitation, warranties as to operation and performance of the components of the
Facility and indemnities as to patent infringement. But Buyer shall not be
liable for any of the obligations or duties of Seller or Seller's predecessor in
interest thereunder.
17
TO HAVE AND TO HOLD the same unto Buyer, its successors and assigns, forever.
2. THE PLANT IS SOLD "AS IS" AND "WHERE IS" AND SELLER MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT THERETO OR WITH
RESPECT TO ITS RIGHT, TITLE AND INTEREST THEREIN OR IN THE PRIOR ▇▇▇▇ OF SALE
OR WITH RESPECT TO THE VALUE, MERCHANTABILITY, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, OPERATION, FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT,
ABSENCE OF LATENT DEFECTS, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
FITNESS FOR USE OF THE PLANT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION
OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PLANT OR ANY
PART THEREOF, except Seller covenants and warrants that:
a. Each and every item of the Plant and other rights described
above and Seller's rights, title and interest therein are free and clear of all
claims, liens, encumbrances of any kind whatsoever arising by, through or under
Seller;
b. Seller has received and presently has whatever title in and to
the Plant as was conveyed to it by the Prior ▇▇▇▇ of Sale, and Seller has not
made any prior sale, assignment, or transfer of such right, title and interest
in and to any item of the Plant or in and to the Prior ▇▇▇▇ of Sale to any
person, firm or corporation; and
c. Seller has the present power and authority and good and lawful
right to sell, assign, and transfer its right, title and interest in and to the
Plant and in and to the ▇▇▇▇ of Sale to Buyer and Seller will defend such
right, title and interest forever against all claims and demands whatsoever.
3. This ▇▇▇▇ of Sale and Assignment is binding on the successors and
assigns of Seller and inures to the benefit of the successors and assigns of
Buyer.
Seller acknowledges that the payment of the purchase price for the Plant
has been made to it and, accordingly, this is a fully executed ▇▇▇▇ of Sale and
Assignment and Buyer's title to the Plant is in no way subject to defeasance or
forfeiture by reason of any alleged failure of consideration to be received by
Seller hereunder.
This ▇▇▇▇ of Sale and Assignment is executed and delivered on November
____, 1996, at San Francisco, California, and is governed by the laws of
California.
18
IN WITNESS WHEREOF, Seller has caused this ▇▇▇▇ of Sale and Assignment to
be executed by its duly authorized officer.
SECURITY PACIFIC LEASING CORPORATION
a Delaware corporation
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Vice President
19
STATE OF CALIFORNIA }
}
COUNTY OF ________________ }
On __________________, before me, ________________________, Notary Public,
personally appeared _______________________, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name{s}
{is/are} subscribed to the within instrument and acknowledged to me that
{he/she/they} executed the same in {his/her/their} authorized capacity{y/ies},
and that by {his/her/their} signature{s} on the instrument the person{s}, or
the entity upon behalf of which the person{s} acted, executed the instrument.
WITNESS my hand and official seal.
_________________________________
20
EXHIBIT A TO ▇▇▇▇ OF SALE AND ASSIGNMENT
PLANT DESCRIPTION
All equipment constituting a natural gas-fueled gas turbine cogeneration
plant providing steam for enhanced oil recovery, with a 13.3 megawatt licensed
capacity and a 15.63 net megawatt design capacity, comprised of, among other
things, (a) two Solar "Mars" model gas turbine generators, (b) two ▇▇▇▇▇▇▇▇▇
Thermo-Flood heat recovery steam generators (each complete with diverter
valves, stacks and a ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ selective catalytic reduction system),
(c) a ▇▇▇▇▇▇ water softener system, (d) a water storage tank, (e) an ammonia
storage tank, (f) two common 100% capacity Howden natural gas compressors,
(g) two ▇▇▇▇▇▇▇▇▇-▇▇▇▇ feedwater pumping systems, (h) an emission control
system, (i) a fuel supply system, (j) water and steam systems, (k) an
electrical system, (l) a turbine-generator fire suppression system and
(m) various other support systems, control equipment, wiring and piping,
together with any and all components attached thereto, installed thereon or
incorporated therein, or otherwise belonging thereto, excluding all land,
building, foundations, footings, concrete pads or similar supports,
above-grade concrete structures which are an integral part of the foundations,
concrete floors, paving, roads, trenches, sumps, earthen dams, below-grade
concrete pits, underground piping, sewers and drains and grounding.
21
EXHIBIT B TO ▇▇▇▇ OF SALE AND ASSIGNMENT
SITE DESCRIPTION
That certain portion of the east half of the northeast quarter of Section
33, Township 12 North, Range 24 West, San Bernardino Meridian, in the
unincorporated area of ▇▇▇▇ County, California, described as Parcel 1 of Parcel
Map No. 8297, as per map recorded in the Office of the County Recorder of ▇▇▇▇
County on January 20, 1989, in Book 37 of Parcel Maps, at pages 134 and 135.
22
▇▇▇▇▇ PETROLEUM COMPANY
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
STATEMENT OF TAX DUE UNDER PROVISIONS OF THE
DOCUMENTARY STAMP ACT
and
REQUEST THAT STAMPS NOT BE MADE A PART OF THE
PERMANENT RECORD
TO: County Recorder
THE TAX DUE PURSUANT TO THE PROVISIONS OF THE DOCUMENTARY STAMP ACT ON THE
DEED TRANSFER, OR CONVEYANCE FROM:
[Name of Grantee(s) or Lessee(s)]
TO:
[Name of Grantee(s) or Lessee(s)]
OF THE FOLLOWING BRIEFLY DESCRIBED REAL PROPERTY:
Amounts to: $ Amounts to: $
( ) Unincorporated Area ( ) City of
( ) Computed on full value ( ) Computed on full value
( ) Computed on full value LESS liens ( ) Computed on full value
and encumbrances remaining LESS liens and encumbrances
remaining
Documentary Transfer Tax $
Computed on full value of property
conveyed
23
▇▇▇▇▇ Petroleum Company
By:
Affix transfer Tax Stamp Here Stamp Reserved for Recorder's Coding
Stamp
Date: By:
Title :
AFTER THE PERMANENT RECORD IS MADE, THIS DOCUMENT WILL BE ATTACHED TO THE
CONVEYING DOCUMENT AND RETURNED TO THE PARTY ENTITLED THERETO. A COPY WILL BE
MADE AND PLACED ON FILE FOR AUDITING PURPOSES.
24
EXHIBIT C TO THE RIGHT TO PURCHASE CONTRACT
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NORDMAN, CORMANY, HAIR &
COMPTON
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
1000 Town Center Drive, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
A.P.N. 220-181-17-00-4
220-181-18-00-7
220-191-03-00-6
QUITCLAIM DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
Security Pacific Leasing Corporation, a Delaware corporation ("SPLC"), hereby
REMISES, RELEASES, AND FOREVER QUITCLAIMS to ▇▇▇▇▇ Petroleum Company, a
Delaware corporation, any right, title and interest SPLC may have in the
property described in Exhibit A attached hereto and by this reference made a
part hereof. Any property conveyed hereby is conveyed "as is" and "where is"
and SPLC makes no representations or warranties, express or implied, with
respect thereto or with respect to its right, title and interest therein or
with respect to the value, merchantability, compliance with specifications,
condition, design, operation, freedom from patent or trademark infringement,
absence of latent defects, suitability or fitness for a particular purpose or
fitness for use of the plant or any part thereof, or any other representation
or warranty whatsoever, express or implied, with respect to such property or
any part thereof.
Dated: SECURITY PACIFIC LEASING CORPORATION
a Delaware corporation
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Vice President
25
STATE OF CALIFORNIA }
}
COUNTY OF ___________ }
On ________________, before me, ______________________, Notary Public,
personally appeared ___________________, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name{s}
{is/are} subscribed to the within instrument and acknowledged to
me that {he/she/they} executed the same in {his/her/their} authorized
capacity{y/ies}, and that by {his/her/their} signature{s} on the instrument the
person{s}, or the entity upon behalf of which the person{s} acted, executed the
instrument.
WITNESS my hand and official seal.
________________________________
26
EXHIBIT A TO QUITCLAIM DEED
1. Premises Lease dated as of August 15, 1994, between the persons
listed in Exhibit "A" as Premises Lessor, and Security Pacific Leasing
Corporation as Premises Lessee, recorded in Book 7079, page 2007, ▇▇▇▇ County
Recorded on August 26, 1994, document number 127331.
2. Right of Way dated August 23, 1994, between ▇▇▇▇▇▇▇▇▇ Oil Company,
Inc., a California corporation, Grantor, and Security Pacific Leasing
Corporation, Grantee, recorded in Book 7079, page 2110, ▇▇▇▇ County Recorder
on August 26, 1994, document number 127333.
3. Right of Way, Right of Use, Right to Discharge and Right of
Encroachment, dated August 23, 1994, between the persons and entities listed
in Exhibit "A" thereof, collectively Grantor, and Security Pacific Leasing
Corporation, Grantee, recorded in Book 7079, page 2077, ▇▇▇▇ County Recorder,
on August 26, 1994, document number 127332.
4. The following described real property in the County of ▇▇▇▇, State
of California:
PARCEL 1:
That certain portion of the East half of the Northeast quarter of
Section 33, Township 12 North, Range 24 West, S.B.B.M., described
as Parcel 1 of Parcel Map 8297 in the unincorporated area of the
County of ▇▇▇▇, State of California, as per Map recorded January
20, 1989 in Book 37, pages 134 and 135 of Parcel Maps, in the
Office of the County Recorder of said County.
EXCEPTING therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land above described which may have
been discovered or known to exist on or prior to November 11,
1902.
PARCEL 2:
The East half of the Northeast quarter of Section 33, Township 12
North, Range 24 West, S.B.B.M., in the unincorporated area of the
County of ▇▇▇▇, State of California, as per the official plat
thereof on file in the Office of the Surveyor General.
27
EXCEPTING therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land above described which may have
been discovered or known to exist on or prior to November 11,
1902.
EXCEPTING therefrom a portion of said land now known as Parcel 1
of Parcel Map no. 8297 recorded January 20, 1989 in Book 37, page
134 and 135 of Parcel Maps.
PARCEL 3:
The Northwest quarter of the Northwest quarter of Section 34,
Township 12 North, Range 24 West, S.B.B.M., in the unincorporated
area of the County of ▇▇▇▇, State of California, as per the
official plat thereof on file in the Office of the Surveyor General.
EXCEPTING therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land above-described which may have
been discovered or known to exist on or prior to May 13, 1901.
5. The following described real property in the County of ▇▇▇▇, State
of California:
PARCEL 1:
The North half of the Southwest quarter and the Southeast quarter of
the Southwest quarter of Section 32, Township 32 South, Range 24
East, M.D.B.M., in the unincorporated area of the County of ▇▇▇▇,
State of California, as per the official plat thereof on file in the
Office of the Surveyor General.
Excepting therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land described above which may have
been discovered or known prior to November 1, 1901.
PARCEL 2:
The Southeast quarter of Section 32, Township 32 South, Range 24
East, M.D.B.M., in the City of ▇▇▇▇, State of California, as per the
official plat thereof on file in the Office of the Surveyor General.
Excepting therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land described above which may have
been discovered or known before June 10, 1910.
28
PARCEL 3:
The Northeast quarter of Section 32, Township 32 South, Range 24
East, M.D.B.M., in the City of ▇▇▇▇, State of California, as per the
official plat thereof on file in the Office of the Surveyor General.
Excepting therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land described above which may have
been discovered or known prior to October 26, 1910.
6. Any right, title or interest, as security or outright, of Security
Pacific Leasing Corporation, a Delaware corporation, in any property
conveyed to Security Pacific Leasing Corporation by, under or
pursuant to that certain Participation Agreement dated as of August
15, 1994, among ▇▇▇▇▇▇▇▇▇ Electric Company, Inc., as Lessee,
▇▇▇▇▇▇▇▇▇ Oil Company, as Guarantor, the persons listed in Annex II
thereto, as Guarantors and Premises Lessors, and Security Pacific
Leasing Corporation, as Lessor.
7. Any right, title or interest of Security Pacific Leasing
Corporation, a Delaware corporation, under that certain Cogeneration
Facility Lease between Security Pacific Leasing Corporation and
▇▇▇▇▇▇▇▇▇ Electric Company, Inc., dated August 15, 1994, and Lease
Supplement #1, dated August 26, 1994, relating to the above-described
real property described as Parcel 1 in paragraph 4 above;
EXCEPT, however, that the indemnity obligations of ▇▇▇▇▇▇▇▇▇
Electric Company, Inc. under Sections 11, 16 and 17 of said
Cogeneration Facility Lease, shall continue in full force and
effect, notwithstanding the Quitclaim Deed to which this Exhibit A
is attached, or the termination of said Cogeneration Facility Lease.
29
▇▇▇▇▇ PETROLEUM COMPANY
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
STATEMENT OF TAX DUE UNDER PROVISIONS OF THE
DOCUMENTARY STAMP ACT
and
REQUEST THAT STAMPS NOT BE MADE A PART OF THE
PERMANENT RECORD
TO: County Recorder
THE TAX DUE PURSUANT TO THE PROVISIONS OF THE DOCUMENTARY STAMP ACT ON THE
DEED, TRANSFER, OR CONVEYANCE FROM:
[Name of Grantee(s) or Lessee(s)]
TO:
[Name of Grantee(s) or Lessee(s)]
OF THE FOLLOWING BRIEFLY DESCRIBED REAL PROPERTY:
Amounts to: $ Amounts to: $
( ) Unincorporated Area ( ) City of
( ) Computed on full value ( ) Computed on full value
( ) Computed on full value LESS liens ( ) Computed on full value LESS
and encumbrances remaining liens and encumbrances
remaining
Documentary Transfer Tax $
Computed on full value of property
conveyed
30
▇▇▇▇▇ Petroleum Company
By:
Affix transfer Tax Stamp Here Stamp Reserved for Recorder's Coding
Stamp
Date: By:
Title :
AFTER THE PERMANENT RECORD IS MADE, THIS DOCUMENT WILL BE ATTACHED TO THE
CONVEYING DOCUMENT AND RETURNED TO THE PARTY ENTITLED THERETO. A COPY WILL BE
MADE AND PLACED ON FILE FOR AUDITING PURPOSES.
31
EXHIBIT D TO RIGHT TO PURCHASE CONTRACT
TERMINATION AND RELEASE OF SECURITY INTERESTS
This Termination and Release of Security Interests (this "Agreement"), is
dated as of November _____, 1996, between ▇▇▇▇▇▇▇▇▇ Electric Company, Inc., a
California corporation ("TEC"), ▇▇▇▇▇▇▇▇▇ Oil Company, a California general
partnership ("TOC"), and Security Pacific Leasing Corporation, a Delaware
corporation ("SPLC").
RECITALS
A. TEC and SPLC entered into a Security Agreement ("TEC Security
Agreement") as of August 15, 1994, by which TEC granted SPLC a security
interest, among other things, in agreements with Pacific Gas & Electric Company
("PG&E") and Solar Turbines Incorporated ("Solar"), respectively, described in
Exhibit A and Exhibit B attached hereto ("Exhibit A Agreements" and "Exhibit B
Agreement," respectively).
B. TEC, SPLC and PG&E entered into a Consent to Assignment and Agreement
dated as of August 15, 1994, in which PG&E, among other things, consented to
the assignment of a security interest to SPLC in the Exhibit A Agreements.
C. TEC, SPLC and Solar entered into a Consent to Assignment of Contract
Rights dated as of August 25, 1994, in which Solar, among other things,
consented to the assignment of a security interest to SPLC in the Exhibit B
Agreement.
D. TOC and SPLC entered into a Security Agreement ("TOC Security
Agreement") as of August 15, 1994, by which TOC granted SPLC a security
interest in certain Collateral therein described; TOC and SPLC entered into a
Pledge Account Security Agreement ("Pledge Agreement") as of August 15, 1994,
by which TOC granted SPLC a security interest in all money on deposit in a
certain Pledged Account; and certain individuals and entities ("Pledgors") and
SPLC entered into a Stock Pledge Agreement ("Stock Agreement") as of August 15,
1994, by which each of the Pledgors pledged and delivered to SPLC all of their
stock of TEC (the "Pledged Stock").
E. SPLC, TEC and ▇▇▇▇▇ Petroleum Company, a Delaware corporation
("▇▇▇▇▇"), have entered into a Right to Purchase Contract, dated November 8,
1996, by which SPLC has granted TEC the right to purchase the Facility (the
"Cogeneration Facility") which is the subject of the Exhibit "A" Agreements,
and TEC has assigned such right to ▇▇▇▇▇. The parties intend by this Agreement
to provide for release by SPLC of its security interests in the collateral
under the TEC Security Agreement, the TOC Security Agreement, the Pledge
Agreement and the Stock Agreement, including, without limitation, the security
interests in the Exhibit A Agreements, the Exhibit B Agreement, the Pledged
Account and the Pledged Stock (collectively, the "Security Interests"),
effective upon SPLC's delivery of title to the Facility to ▇▇▇▇▇ ("Title
Delivery").
32
NOW THEREFORE, the parties hereto agree as follows:
1. Effective upon Title Delivery:
a. The Security Interests are hereby terminated and all security
interests of SPLC thereunder, and the other collateral therein, are hereby
released.
b. SPLC quitclaims any remaining interest it has in the Exhibit
A Agreements and Exhibit B Agreement to ▇▇▇▇▇.
c. SPLC and TEC shall give PG&E and Solar written notice of
termination of the Security Interests in the Exhibit A Agreements and Exhibit B
Agreement, with proof of service (i.e., affidavit) to ▇▇▇▇▇ and shall provide
▇▇▇▇▇ with the original signed acknowledgments from PG&E and Solar, with copies
to SPLC, when available .
2. This Agreement shall be governed by and construed in accordance with
the law of California.
3. This Agreement may be executed in any number of counterparts, all of
which together shall constitute a single instrument, and it shall not be
necessary that any counterpart be signed by all of the parties hereto.
WHEREOF, the undersigned caused this Agreement to be duly executed as of
the day and year first above written.
▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.
a California corporation
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
President
▇▇▇▇▇▇▇▇▇ OIL COMPANY,
a California general partnership
By: ▇▇▇▇▇ Resource Development
Company, its Managing General
Partner
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
President
33
By: Paso Energy, Inc., its Managing
General Partner
By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
By: HHB, Inc., its Managing General
Partner
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
Address:
▇▇▇▇▇▇▇▇▇ Electric Company, Inc. and
▇▇▇▇▇▇▇▇▇ Oil Company
c/▇ ▇▇▇▇▇ Resource Development Co.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SECURITY PACIFIC LEASING CORPORATION
a Delaware corporation
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
Address:
Security Pacific Leasing Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Contract Administrator
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
34
EXHIBIT A TO TERMINATION AND RELEASE OF SECURITY INTERESTS
(1) The California Public Utilities Commission Standard Offer #2
Power Purchase Agreement for Firm Capacity and Energy between Solar Turbines
Incorporated ("Solar") and Pacific Gas and Electric Company ("PG&E"), executed
by Solar on November 14, 1985, and by PG&E on November 20, 1985, and assigned
by Solar to Monarch Cogeneration 1986-1, a California Limited Partnership
("Monarch"), effective upon PG&E's consent thereto executed by PG&E on February
13, 1987; which agreement was further assigned by Monarch to ▇▇▇▇▇▇▇▇▇ Electric
Company, Inc., a California corporation ("TEC"), effective upon PG&E's consent
thereto executed by PG&E on August 25, 1994.
(2) The Agreement for Installation or Allocation of Special
Facilities executed by PG&E on September 17, 1986, and assigned by Solar to
Monarch, effective on PG&E's consent thereto executed by PG&E on February 13,
1987; which agreement was further assigned by Monarch to TEC, effective upon
PG&E's consent thereto executed by PG&E on August 25, 1994.
35
EXHIBIT B TO TERMINATION AND RELEASE OF SECURITY INTERESTS
Operation and Maintenance Agreement dated as of August 15, 1994,
between Solar and TEC.
36
STATE OF CALIFORNIA
UNIFORM COMMERCIAL CODE - FINANCING STATEMENT CHANGE - FORM UCC-2
IMPORTANT - Read instructions on back before completing form
EXHIBIT E-1
This STATEMENT is presented for filing pursuant to the California Uniform
Commercial Code
1. File No.of Orig. Fin. Stmt. 1A. Date of Filing of Orig. Fin. Stmt.
94175339 8/29/94
1B. Date of Orig. Fin. Stmt. 1C. Place of Filing Orig. Fin. Stmt.
8/25/94 Secretary of State Office
2. Debtor (Last Name First) 2A. Social Security or Federal Tax No.
▇▇▇▇▇▇▇▇▇ Electric Company, Inc.
2B. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇. ▇▇▇ Code
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇/▇.▇. ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
3. Additional Debtor (if any)(Last Name First)
3A. Social Security or Federal Tax No.
3B. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇. ▇▇▇ Code
4. Secured Party
Name Security Pacific Leasing Corporation
Mailing Address ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ California Zip Code 94104
4A. Social Security No., Federal Tax No.
or Bank Transit and A.B.A. No.
5. Assignee of Secured Party (if any)
Name
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇. Social Security No., Federal Tax No.
or Bank Transit and A.B.A. No.
6. A ( ) Continuation - The original Financing Statement between the
foregoing Debtor and Secured Party bearing the file number and date
shown above is continued. If collateral is crops or timber, check
here and insert description of real property on which growing or to
be grown in Item 7 below.
B (X) Release - From the collateral described in the Financing Statement
bearing the file number shown above, the Secured Party releases the
collateral described in Item 7 below.
C ( ) Assignment - The Secured Party certifies that the Secured Party has
assigned to the Assignee above named, all the Secured Party's rights
under the Financing Statement bearing the file number shown above in
the collateral described in item 7 below.
D ( ) Termination - The Secured Party certifies that the Secured Party no
longer claims a security interest under the Financing Statement
bearing the file number shown above.
E ( ) Amendment - The Financing Statement bearing the file number shown
above is amended as set forth in Item 7 below. (Signature of debtor
required on all amendments.)
F ( ) Other -
7. Any and all collateral described in the Financing Statement bearing the
file number shown above.
8. C 9. This space for
O use of Filing
(Date)November 1996 D Officer (Date,
E Time, Filing
Office)
1
By:
Signature of Debtor(s) (Title) 2
3
4
By: Signature(s) of Secured Party(ies) (Title)
5
6
10. Return Copy To 7
8
Name
Address 9
City, State
and Zip
37
STATE OF CALIFORNIA
UNIFORM COMMERCIAL CODE - FINANCING STATEMENT CHANGE - FORM UCC-2
IMPORTANT - Read instructions on back before completing form
EXHIBIT E-2
This STATEMENT is presented for filing pursuant to the California Uniform
Commercial Code
1. File No.of Orig. Fin. Stmt. 1A. Date of Filing of Orig. Fin. Stmt.
94175364 8/29/94
1B. Date of Orig. Fin. Stmt. 1C. Place of Filing Orig. Fin. Stmt.
8/25/94 Secretary of State Office
2. Debtor (Last Name First) 2A. Social Security or Federal Tax No.
▇▇▇▇▇▇▇▇▇ Electric Company, Inc.
2B. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇. ▇▇▇ Code
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇/▇.▇. ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
3. Additional Debtor (if any)(Last Name First)
3A. Social Security or Federal Tax No.
3B. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇. ▇▇▇ Code
4. Secured Party
Name Security Pacific Leasing Corporation
Mailing Address ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ California Zip Code 94104
4A. Social Security No., Federal Tax No.
or Bank Transit and A.B.A. No.
5. Assignee of Secured Party (if any)
Name
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇. Social Security No., Federal Tax No.
or Bank Transit and A.B.A. No.
6. A ( ) Continuation - The original Financing Statement between the
foregoing Debtor and Secured Party bearing the file number and date
shown above is continued. If collateral is crops or timber, check
here and insert description of real property on which growing or to
be grown in Item 7 below.
B (X) Release - From the collateral described in the Financing Statement
bearing the file number shown above, the Secured Party releases the
collateral described in Item 7 below.
C ( ) Assignment - The Secured Party certifies that the Secured Party has
assigned to the Assignee above named, all the Secured Party's rights
under the Financing Statement bearing the file number shown above in
the collateral described in item 7 below.
D ( ) Termination - The Secured Party certifies that the Secured Party no
longer claims a security interest under the Financing Statement
bearing the file number shown above.
E ( ) Amendment - The Financing Statement bearing the file number shown
above is amended as set forth in Item 7 below. (Signature of debtor
required on all amendments.)
F ( ) Other -
7. Any and all collateral described in the Financing Statement bearing the
file number shown above.
8. C 9. This space for
O use of Filing
(Date)November 1996 D Officer (Date,
E Time, Filing
Office)
1
By:
Signature of Debtor(s) (Title) 2
3
4
By: Signature(s) of Secured Party(ies) (Title)
5
6
10. Return Copy To 7
8
Name
Address 9
City, State
and Zip
38
STATE OF CALIFORNIA
UNIFORM COMMERCIAL CODE - FINANCING STATEMENT CHANGE - FORM UCC-2
IMPORTANT - Read instructions on back before completing form
EXHIBIT E-3
This STATEMENT is presented for filing pursuant to the California Uniform
Commercial Code
1. File No.of Orig. Fin. Stmt. 1A. Date of Filing of Orig. Fin. Stmt.
94175348 8/29/94
1B. Date of Orig. Fin. Stmt. 1C. Place of Filing Orig. Fin. Stmt.
8/25/94 Secretary of State Office
2. Debtor (Last Name First) 2A. Social Security or Federal Tax No.
▇▇▇▇▇▇▇▇▇ Oil Company
2B. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇. ▇▇▇ Code
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇/▇.▇. ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
3. Additional Debtor (if any)(Last Name First)
3A. Social Security or Federal Tax No.
3B. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇. ▇▇▇ Code
4. Secured Party
Name Security Pacific Leasing Corporation
Mailing Address ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ California Zip Code 94104
4A. Social Security No., Federal Tax No.
or Bank Transit and A.B.A. No.
5. Assignee of Secured Party (if any)
Name
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇. Social Security No., Federal Tax No.
or Bank Transit and A.B.A. No.
6. A ( ) Continuation - The original Financing Statement between the
foregoing Debtor and Secured Party bearing the file number and date
shown above is continued. If collateral is crops or timber, check
here and insert description of real property on which growing or to
be grown in Item 7 below.
B (X) Release - From the collateral described in the Financing Statement
bearing the file number shown above, the Secured Party releases the
collateral described in Item 7 below.
C ( ) Assignment - The Secured Party certifies that the Secured Party has
assigned to the Assignee above named, all the Secured Party's rights
under the Financing Statement bearing the file number shown above in
the collateral described in item 7 below.
D ( ) Termination - The Secured Party certifies that the Secured Party no
longer claims a security interest under the Financing Statement
bearing the file number shown above.
E ( ) Amendment - The Financing Statement bearing the file number shown
above is amended as set forth in Item 7 below. (Signature of debtor
required on all amendments.)
F ( ) Other -
7. Any and all collateral described in the Financing Statement bearing the
file number shown above.
8. C 9. This space for
O use of Filing
(Date)November 1996 D Officer (Date,
E Time, Filing
Office)
1
By:
Signature of Debtor(s) (Title) 2
3
4
By: Signature(s) of Secured Party(ies) (Title)
5
6
10. Return Copy To 7
8
Name
Address 9
City, State
and Zip
1
EXHIBIT 2A TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN ▇▇▇▇▇ PETROLEUM COMPANY
AND ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NORDMAN, CORMANY, HAIR & COMPTON
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
1000 Town Center Drive, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
MAIL TAX STATEMENTS TO:
▇▇▇▇▇ Petroleum Company
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
A.P.N. 220-181-17-00-4
220-181-24-00-4
220-181-18-00-7
ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND CONTRACTS
THIS ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND CONTRACTS
("Assignment") dated and effective as of 12:01 a.m. Pacific Standard Time, on
October 1, 1996 (the "Effective Date"), is from ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY,
INC., a California corporation ("Assignor"), whose address is ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, Post Office ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, to ▇▇▇▇▇ PETROLEUM
COMPANY, a Delaware corporation ("Assignee"), whose address is 28700 ▇▇▇▇▇
Hills Road, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
a. Assignment. For the sum of Ten Dollars ($10) and other good and
valuable consideration, the receipt and sufficiency of which Assignor hereby
acknowledges, Assignor hereby transfers, grants, bargains, conveys and assigns
to Assignee, effective for all purposes as of the Effective Date, subject to
the terms and conditions set forth in that certain Purchase and Sale Agreement
dated November 8, 1996, by and between ▇▇▇▇▇ Petroleum Company and ▇▇▇▇▇▇▇▇▇
Electric Company, Inc. ("Purchase and Sale Agreement"), and subject to all
contracts, agreements, encumbrances and other matters to which the following
assets are subject as of the Effective Date, all of Assignor's right, title and
interest in and to the interests and rights described in Schedule A to this
Assignment (hereinafter collectively called and referred to as the
"Cogeneration Assets") and all other rights, privileges, obligations, benefits
and powers conferred upon the owner or holder of the Cogeneration Assets.
2
b. Assumptions. Assignee hereby assumes and agrees to pay, perform and
discharge its obligations under the Cogeneration Assets, and the agreements,
associated contracts and other burdens pertaining thereto, which accrue and
relate to, or are based upon or arise out of, events occurring after the
Effective Date, all in accordance with the terms of the Purchase and Sale
Agreement.
c. Further Assurances. The parties agree to take all such further
actions and execute, acknowledge and deliver all such further documents that
are necessary or useful in carrying out the purposes of this Assignment. So
long as authorized by applicable law so to do, Assignor hereby agrees to
execute, acknowledge and deliver to Assignee all such other additional
instruments, notices, division orders, transfer orders and other documents and
to do all such other and further acts and things as may be necessary to more
fully and effectively grant, convey, transfer and assign to Assignee the
Cogeneration Assets conveyed hereby or intended so to be.
d. Schedule. Reference is made to Schedule A attached hereto and made
a part hereof for all purposes. Reference in such Schedule A to instruments on
file or recorded in the public records are made for all purposes.
e. Headings. Headings are included in this Assignment for convenience
of reference and shall in no way define, limit, extend, or describe the scope or
intent of any provision of this Assignment.
f. Successors and Assigns. This Assignment shall bind and inure to the
benefit of Assignor and Assignee and their respective successors and assigns.
g. Multiple Counterparts. This Assignment may be executed in any number
of counterparts and each counterpart hereof shall be deemed to be an original
instrument but all of such counterparts shall constitute but one assignment.
h. Recordation. To facilitate recording or filing of this Assignment,
each counterpart filed with a federal or state agency or office may contain only
those portions of Schedule A that describe property under the jurisdiction of
that agency or office. Assignor and Assignee have each retained a counterpart
of this Assignment with a complete Schedule A. Another counterpart of this
Assignment with a complete Schedule A shall be recorded in the official real
property records of ▇▇▇▇ County, California.
3
i. Governing Law. The provisions of this Assignment shall be governed
by and construed in accordance with the laws of the State of California,
excluding any conflicts of law, rule or principle that might refer same to the
laws of another jurisdiction.
▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC., ▇▇▇▇▇ PETROLEUM COMPANY,
a California corporation a Delaware corporation
By: __________________________ By: ______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., President ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
and Chief Executive Officer
By: __________________________ By: ______________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
"Assignor" "Assignee"
4
STATE OF CALIFORNIA )
)
COUNTY OF ____________ )
On _______________, 1996, before me, _____________________, Notary Public,
personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
________________________________
STATE OF CALIFORNIA )
)
COUNTY OF _____________ )
On ________________, 1996, before me, ______________________, Notary Public,
personally appeared ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed
the same in his authorized capacity, and that by his signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
__________________________________
STATE OF CALIFORNIA )
)
COUNTY OF _____________ )
On ________________, 1996, before me, ______________________, Notary Public,
personally appeared ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the persons
whose names are subscribed to the within instrument and acknowledged to me that
they executed the same in their authorized capacity, and that by their
signatures on the instrument the persons, or the entities upon behalf of which
the persons acted, executed the instrument.
WITNESS my hand and official seal.
__________________________________
5
SCHEDULE A TO
EXHIBIT 2A
ASSIGNMENT OF RIGHTS OF WAY, EASEMENTS AND CONTRACTS
ATTACHED TO AND MADE A PART OF THAT CERTAIN PURCHASE AND SALE AGREEMENT
DATED NOVEMBER 8, 1996,
BY AND BETWEEN ▇▇▇▇▇ PETROLEUM COMPANY AND
▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.
(Unrecorded Documents)
1. PG&E S.O. #2 Contract between Solar, signed November 15, 1985, and Pacific
Gas & Electric Company, signed November 20, 1985; and assigned by Solar to
Monarch Cogeneration 1986-1, and further assigned by Monarch to ▇▇▇▇▇▇▇▇▇
Electric Company, Inc., and Security Pacific, effective by PG&E's consent
on August 25, 1994.
2. Operation & Maintenance Agreement between Solar Turbines Incorporated and
▇▇▇▇▇▇▇▇▇ Electric Company, Inc., dated August 15, 1994.
3. Right to Purchase Contract, dated November 8, 1996, by and among ▇▇▇▇▇▇▇▇▇
Electric Company, ▇▇▇▇▇ Petroleum Company and Security Pacific Leasing
Corporation and all Exhibits thereto.
1
EXHIBIT 2B TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN ▇▇▇▇▇ PETROLEUM COMPANY
AND ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NORDMAN, CORMANY, HAIR & COMPTON
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
1000 Town Center Drive, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
MAIL TAX STATEMENTS TO:
▇▇▇▇▇ Petroleum Company
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
A.P.N. 220-181-17-00-4
220-181-24-00-4
220-181-18-00-7
ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND CONTRACTS
THIS ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND CONTRACTS
("Assignment") dated and effective as of 12:01 a.m. Pacific Standard Time, on
October 1, 1996 (the "Effective Date"), is from ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY,
INC., a California corporation ("Assignor"), whose address is ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, Post Office ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, to ▇▇▇▇▇ PETROLEUM
COMPANY, a Delaware corporation ("Assignee"), whose address is 28700 ▇▇▇▇▇
Hills Road, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
j. Assignment. For the sum of Ten Dollars ($10) and other good and
valuable consideration, the receipt and sufficiency of which Assignor hereby
acknowledges, Assignor hereby transfers, grants, bargains, conveys and assigns
to Assignee, effective for all purposes as of the Effective Date, subject to
the terms and conditions set forth in that certain Purchase and Sale Agreement
dated November 8, 1996, by and between ▇▇▇▇▇ Petroleum Company and ▇▇▇▇▇▇▇▇▇
Electric Company, Inc. ("Purchase and Sale Agreement"), and subject to all
contracts, agreements, encumbrances and other matters to which the following
assets are subject as of the Effective Date, all of Assignor's right, title and
interest in and to the interests and rights described in Schedule A to this
Assignment (hereinafter collectively called and referred to as the
"Cogeneration Assets") and all other rights, privileges, obligations, benefits
and powers conferred upon the owner or holder of the Cogeneration Assets.
2
k. Assumptions. Assignee hereby assumes and agrees to pay, perform and
discharge its obligations under the Cogeneration Assets, and the agreements,
associated contracts and other burdens pertaining thereto, which accrue and
relate to, or are based upon or arise out of, events occurring after the
Effective Date, all in accordance with the terms of the Purchase and Sale
Agreement.
l. Further Assurances. The parties agree to take all such further
actions and execute, acknowledge and deliver all such further documents that
are necessary or useful in carrying out the purposes of this Assignment. So
long as authorized by applicable law so to do, Assignor hereby agrees to
execute, acknowledge and deliver to Assignee all such other additional
instruments, notices, division orders, transfer orders and other documents and
to do all such other and further acts and things as may be necessary to more
fully and effectively grant, convey, transfer and assign to Assignee the
Cogeneration Assets conveyed hereby or intended so to be.
m. Schedule. Reference is made to Schedule A attached hereto and made
a part hereof for all purposes. Reference in such Schedule A to instruments on
file or recorded in the public records are made for all purposes.
n. Headings. Headings are included in this Assignment for convenience
of reference and shall in no way define, limit, extend, or describe the scope or
intent of any provision of this Assignment.
o. Successors and Assigns. This Assignment shall bind and inure to the
benefit of Assignor and Assignee and their respective successors and assigns.
p. Multiple Counterparts. This Assignment may be executed in any number
of counterparts and each counterpart hereof shall be deemed to be an original
instrument but all of such counterparts shall constitute but one assignment.
q. Recordation. To facilitate recording or filing of this Assignment,
each counterpart filed with a federal or state agency or office may contain
only those portions of Schedule A that describe property under the jurisdiction
of that agency or office. Assignor and Assignee have each retained a
counterpart of this Assignment with a complete Schedule A. Another counterpart
of this Assignment with a complete Schedule A shall be recorded in the official
real property records of ▇▇▇▇ County, California.
3
r. Governing Law. The provisions of this Assignment shall be governed
by and construed in accordance with the laws of the State of California,
excluding any conflicts of law, rule or principle that might refer same to the
laws of another jurisdiction.
▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC., ▇▇▇▇▇ PETROLEUM COMPANY,
a California corporation a Delaware corporation
By: ____________________________ By: ______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., President ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
and Chief Executive Officer
By: ____________________________ By: ______________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
"Assignor" "Assignee"
4
STATE OF CALIFORNIA )
)
COUNTY OF _____________ )
On ________________, 1996, before me, ______________________, Notary Public,
personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
_______________________________
STATE OF CALIFORNIA )
)
COUNTY OF _____________ )
On ________________, 1996, before me, _______________________, Notary Public,
personally appeared ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
_______________________________
STATE OF CALIFORNIA )
)
COUNTY OF _____________ )
On ________________, 1996, before me, ______________________, Notary Public,
personally appeared ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the persons
whose names are subscribed to the within instrument and acknowledged to me that
they executed the same in their authorized capacity, and that by their
signatures on the instrument the persons, or the entities upon behalf of which
the persons acted, executed the instrument.
WITNESS my hand and official seal.
_______________________________
5
SCHEDULE A TO
EXHIBIT 2B
ASSIGNMENT OF RIGHTS OF WAY, EASEMENTS AND CONTRACTS
ATTACHED TO AND MADE A PART OF THAT CERTAIN PURCHASE AND SALE AGREEMENT
DATED NOVEMBER 8, 1996,
BY AND BETWEEN ▇▇▇▇▇ PETROLEUM COMPANY AND
▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.
(Recorded Documents)
1. Cogeneration Facility Lease between Security Pacific Leasing Corporation
and ▇▇▇▇▇▇▇▇▇ Electric Company, dated August 15, 1994, and Lease
Supplement #1, dated August 26, 1994, relating to the following described
real property:
That certain portion of the East half of the Northeast quarter
of Section 33, Township 12, North, Range 24 West, S.B.B.M.,
described as Parcel 1 of Parcel Map 8297 in the unincorporated
area of the County of ▇▇▇▇, State of California, as per Map
recorded January 20, 1989 in Book 37, pages 134 and 135 of
Parcel Maps, in the Office of the County Recorder of said
County.
EXCEPTING therefrom any vein or lode of quartz or other rock
in place bearing gold, cinnabar, lead, tin, copper or other
valuable deposits within the land above described which may
have been discovered or known to exist prior to November 11,
1902.
6
STATEMENT OF TAX DUE UNDER PROVISIONS OF THE
DOCUMENTARY STAMP ACT
and
REQUEST THAT STAMPS NOT BE MADE A PART OF THE PERMANENT RECORD
TO: ▇▇▇▇ County Recorder
THE TAX DUE PURSUANT TO THE PROVISIONS OF THE DOCUMENTARY STAMP ACT ON THE
DEED, TRANSFER, OR CONVEYANCE FROM: ▇▇▇▇▇▇▇▇▇ Electric Company, Inc.
[Name of Grantor(s) or
Lessor(s)]
TO: ▇▇▇▇▇ Petroleum Company
[Name of Grantee(s) or Lessee(s)]
OF THE FOLLOWING BRIEFLY DESCRIBED REAL PROPERTY: T12N, R24W, Section 33;
APNs 220-181-17-00-4; 220-181-24-00-4; 220-181-18-00-7
Amounts to: $________________ Amounts to: $________________
(X) Unincorporated Area ( ) City of ___________________
( ) Computed on full value ( ) Computed on full value
( ) Computed on full value LESS liens ( ) Computed on full value LESS
and encumbrances remaining liens and encumbrances
remaining
Documentary Transfer Tax $____________
Computed on full value of property
conveyed
▇▇▇▇▇▇▇▇▇ Electric Company, Inc.
By: _________________________________
Affix transfer Tax Stamp Here Stamp Reserved for Recorder's Coding Stamp
Date: _____________________________ By:__________________________
Title: ______________________
AFTER THE PERMANENT RECORD IS MADE, THIS DOCUMENT WILL BE ATTACHED TO THE
CONVEYING DOCUMENT AND RETURNED TO THE PARTY ENTITLED THERETO. A COPY WILL
BE MADE AND PLACED ON FILE FOR AUDITING PURPOSES.
EXHIBIT 3 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN ▇▇▇▇▇ PETROLEUM COMPANY
AND ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.
ALLOCATION OF PURCHASE PRICE
The parties agree to the allocation of purchase price as represented on
IRS Form 8594 attached hereto.
1
FORM 8594 ASSET ACQUISITION STATEMENT OMB No. 1545-1021
(Rev Jan 1996) UNDER SECTION 1060
Department of the Treasury Attachment
Internal Revenue Service Sequence No. 61
Attach to your Federal income tax return
Name as Shown on return Identification number as shown on return
▇▇▇▇▇▇▇▇▇ Electric Company, Inc. ▇▇-▇▇▇▇▇▇▇
Check the box that identifies you Buyer (X) Seller
Part 1 General Information - to be completed by all filers.
1. Name of other party to the transaction
▇▇▇▇▇ Petroleum Company
Other party's identification number
▇▇-▇▇▇▇▇▇▇
Address (number, street, and room or suite no.)
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
2. Date of Sale 3. Total sales price
October 1, 1996 $200,000
Part II Assets Transferred - to be completed by all filers of an original
statement
4. Assets Aggregate Fair Market Value Allocation of Sales price
(Actual Amount for Class I)
Class I $ $
Class II $ $
Class III $ $ 200,000
Class IV $ $
Total $ $ 200,000
5. Did the buyer and seller provide for an allocation of the sales price in
the sales contract or in another written document signed by both parties?
(X) Yes No
If Yes, are the aggregate fair market values listed for each of asset
Classes I, II, III and IV the amounts agreed upon in your sales contract
or in a separate written document?
(X) Yes No
6. In connection with the purchase of the group of assets, did the buyer also
purchase a license or a covenant not to complete, or enter into a lease
agreement, employment contract, management contract, or similar
arrangement with the seller (or managers, directors, owners, or employees
of the seller)?
Yes (X) No
If Yes, specify (a) the type of agreement, and (b) the maximum amount of
consideration (not including interest) paid or to be paid under the
agreement. See the instructions for line 6.
For Paperwork Reduction Act Notice, see instructions.
Cat. ▇▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ (▇▇▇. 1-96)
2
[THIS PAGE INTENTIALLY BLANK]
2/19/96 Published by Tax Management Inc., a subsidiary of The Bureau of
National Affairs, Inc. 8594.I
1
Form 8594 Asset Acquisition Statement OMB No 1545-1021
(Rev January 1993) Under Section 1060 Expires 2-29-96
Department of the Treasury
Internal Revenue Service Attachment
Attach to your Federal income tax return Sequence No 61
Name as shown on return Identification number as shown on return
▇▇▇▇▇ Petroleum Company ▇▇-▇▇▇▇▇▇▇
Check the box that identifies you X Buyer Seller
Part I General Information - to be completed by filers
1 Name of other party to the transaction
▇▇▇▇▇▇▇▇▇ Electric Company, Inc.
Other party's identification number
▇▇-▇▇▇▇▇▇▇
Address (number, street, and room or suite no.)
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇, and Zip Code
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
2 Date of Sale 3 Total Sales Price
10/1/96 $200,000
Part II Assets Transferred - to be completed by all filers of an original
statement
4 Assets Aggregate Fair Market Value Allocation of Sales Price
(Actual Amount for Class 1)
Class I $ $
Class II $ $
Class III $ $ 200,000
Class IV $
Total $ 200,000
5 Did the buyer and seller provide for an allocation of the sales price in
the sales contrct or in another written document signed by both parties?
X Yes No
If "yes," are the aggregate fair market values listed for each of asset
Classes I, II, and III the amounts agreed upon in your sales contract or
in a separate written document?
X Yes No
6 In connection with the purchase of the group of assets, did the buyer also
purchase a license or a covenant not to compete, or enter into a lease
agreement, employment contract, management contract, or similar arrangement
with the seller (or managers, directors, owners, or employees of the
seller)?
Yes X No
If "yes," specify (a) the type of agreement, and (b) the maximum amount of
consideration (not including interest) paid or to be paid under the
agreement. See the instructions for line 6.
Form 8594 (Rev. 1-96) Page 2
2
Part III Class III, Intangible Amortizable Assets Only - Complete if
applicable. The amounts shown below also must be included under
Class III assets in Part II. Attach additional sheets if more
space is needed.
Assets Fair Market Value Useful Life Allocation of Sales Price
Contracts $ 200,000 5 $ 200,000
$ $
$ $
$ $
$ $
$ $
Part IV Supplemental Statement - To be completed only if amending an
original statement or previously filed supplemental statement
because of anincrease or decrease in consideration N/A
7. Assets Allocation of Sales Price Increase or Redetermined Allocation
as Previously Reported (Decrease) of Sales Price
Class I $ $ $
Class II $ $ $
Class III $ $ $
Class IV $ $ $
Totals $ $
8. Reason(s) for increase or decrease. Attach additional sheets if more
space is needed.
9. Tax year and tax return form number with which the original form 8594 and
any supplemental statements were filed.
1
EXHIBIT 4 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN ▇▇▇▇▇ PETROLEUM COMPANY
AND ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.
CERTIFICATE OF SATISFACTION
TO THE PURCHASE AND SALE AGREEMENT
ENTERED INTO BY AND BETWEEN ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC. AND ▇▇▇▇▇
PETROLEUM COMPANY
ON NOVEMBER 8, 1996
(PARAGRAPH 2.10(e) THEREOF)
The undersigned parties to that certain Purchase and Sale Agreement by and
between ▇▇▇▇▇ Petroleum Company and ▇▇▇▇▇▇▇▇▇ Electric Company, Inc., to be
entered into on this 8th day of November, 1996, declare that all conditions to
the Closing have been satisfied and the transaction is Closed.
▇▇▇▇▇ PETROLEUM COMPANY, ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.,
a Delaware corporation a California corporation
By: _______________________ By: _______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., President
and Chief Executive Officer
By: __________________________ By: _______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Secretary
1
EXHIBIT 5 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN ▇▇▇▇▇ PETROLEUM COMPANY
AND ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.
ESCROW INSTRUCTIONS
FIRST AMERICAN TITLE INSURANCE COMPANY
MAIN OFFICE: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ (93309)
MAILING ADDRESS: ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TELEPHONE (▇▇▇) ▇▇▇-▇▇▇▇
FACSIMILE (▇▇▇) ▇▇▇-▇▇▇▇
E S C R O W I N S T R U C T I O N S
FIRST AMERICAN TITLE INSURANCE COMPANY CONDUCTS ESCROW BUSINESS UNDER
CERTIFICATE OF AUTHORITY NO. 2787 ISSUED BY THE STATE OF CALIFORNIA DEPARTMENT
OF INSURANCE.
FINAL DRAFT
Escrow Officer: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Property: COGENERATION
ASSETS,
TAFT, CA
Escrow Number: 1128320N
Date: November 4, 1996
To:FIRST AMERICAN TITLE INSURANCE COMPANY
THESE INSTRUCTIONS ARE ENTERED INTO PURSUANT TO THAT CERTAIN PURCHASE AND SALE
AGREEMENT DATED WHEN EXECUTED BY ▇▇▇▇▇ PETROLEUM COMPANY AND ▇▇▇▇▇▇▇▇▇ ELECTRIC
COMPANY, INC. A COPY OF WHICH IS ATTACHED HERETO. AS ESCROW HOLDER YOU SHALL\
BE CONCERNED ONLY WITH THOSE SPECIFIC PROVISIONS OF SAID CONTRACT SET FORTH AND
ENUMERATED THEREIN AS FOLLOWS:
#1.6, #1.13, #2.1, #2.2, #2.3, #2.5, #2.6 CLARIFICATION: DISTRIBUTION OF SALE
PROCEEDS AND RECORDATION OF DOCUMENTS WITH ▇▇▇▇ COUNTY RECORDER WILL BE HANDLED
AT THE OFFICE OF ESCROW HOLDER, FIRST AMERICAN TITLE INSURANCE COMPANY, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ #▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇. THIS ESCROW TO CLOSE CONCURRENTLY
WITH ESCROWS #1128321N AND #1125444N,
#2.7 AND #2.8 CLARIFICATION: PARTIES TO SUPPLY ESCROW HOLDER WITH INFORMATION
SO PRORATIONS CAN BE HANDLED THROUGH ESCROW OR NOTIFY ESCROW HOLDER BY MUTUAL
WRITTEN INSTRUCTIONS THAT PRORATIONS WILL BE HANDLED OUTSIDE OF THIS ESCROW;
#2.10 CLARIFICATION: DOCUMENTS TO BE DEPOSITED INTO ESCROW OR PARTIES TO NOTIFY
ESCROW HOLDER BY MUTUAL WRITTEN INSTRUCTIONS THAT SAID DOCUMENTS HAVE BEEN
DELIVERED OUTSIDE OF ESCROW, #2.12, ARTICLES VII AND VIII, DOCUMENTS WILL BE
DEPOSITED AND APPROVED BY COUNSEL PRIOR TO CLOSE OF ESCROW.
ALL PARTIES AGREE THAT TRANSFER OF SAID PROPERTY IS NOT BEING HANDLED THROUGH
THE BULK SALE PROCESS. ESCROW HOLDER WILL NOT CONDUCT ANY UCC SEARCHES. NO
TITLE INSURANCE OR GUARANTEES OF TITLE WILL BE ISSUED BY ESCROW HOLDER WITH
REGARD TO PROPERTY BEING TRANSFERRED IN THIS ESCROW.
1A
ANY AND ALL OTHER PROVISIONS OF SAID CONTRACT NOT ENUMERATED ABOVE IMPOSE NO
DUTIES ON YOU AS ESCROW HOLDER AND ARE MATTERS OF AGREEMENT AND UNDERSTANDING
BETWEEN THE PARTIES WITH WHICH YOU SHALL NOT BE CONCERNED.
THE ATTACHED GENERAL PROVISIONS AND PAGE #1B ARE HEREBY MADE A PART OF THESE
INSTRUCTIONS.
▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC
BY:
ITS:
▇▇▇▇▇ PETROLEUM COMPANY
BY:
ITS:
1B
ESCROW INSTRUCTIONS - PAGE 1B
Escrow Number: 1128320N
NOTICE OF TAX REPORTING AND WITHHOLDING OBLIGATIONS OF THE PARTIES:
State Law
In accordance with Sections 18805 and 26131 of the Revenue and Taxation
Code, a buyer may be required to withhold an amount equal to three and
one-third percent of the sales price in the case of the disposition of
California real property interest by either:
1. A seller who is an individual with a last known street address outside of
California or when the disbursement instructions authorize the proceeds be sent
to a financial intermediary of the seller, OR
2. A corporate seller which has no permanent place of business in California.
The buyer may become subject to penalty for failure to withhold an amount equal
to the greater of 10 percent of the amount required to be withheld or five
hundred dollars ($500).
However, notwithstanding any other provision included in the California
statutes referenced above, no buyer will be required to withhold any amount or
be subject to penalty for failure to withhold if:
1. The sales price of the California real property conveyed does not exceed
one hundred thousand dollars ($100,000), OR
2. The seller executes a written certificate, under the penalty of
perjury,certifying that the seller is a resident of California, or if a
corporation, has a permanent place of business in California, OR
3. The seller, who is an individual, executes a written certificate, under
the penalty of perjury, that the California real property being conveyed is the
seller's principal residence (as defined in Section 1034 of the Internal
Revenue Code.The seller is subject to penalty for knowingly filing a fraudulent
certificate for the purpose of avoiding the withholding requirement.
The California statues referenced above include provisions which authorize the
Franchise Tax Board to grant reduced withholding and waivers from withholding
on a case-by-case basis.
The parties to this transaction should seek an attorney's, accountant's, or
other tax specialists's opinion concerning the effect of this law on this
transaction and should not act on any statements made or omitted by the escrow
or closing officer.
2B
Federal Law:See Item #16 of General Provisions
Federal 1099 Reporting for Resident Seller
The parties acknowledge that First American Title has an obligation to
provide information from this transaction to the Internal Revenue Service at
the close of the escrow. This information includes, but is not limited to, the
taxpayer identification and/or social security number(s) of the seller(s) and
the gross sales price. First American Title can not authorize the recording
and closing of this transaction without receipt of information deemed adequate
by First American Title for complying with the IRS reporting requirements.
Failure to provide the requested information to escrow holder will result in
a delay in closing.
THE UNDERSIGNED HEREBY EXPRESSLY ACKNOWLEDGE RECEIPT OF THE ABOVE NOTICE.
▇▇▇▇▇▇▇▇▇ ELECTIC COMPANY, INC
BY:
ITS:
▇▇▇▇▇ PETROLEUM COMPANY
BY:
ITS:
3B
GENERAL PROVISIONS
1. Deposit of Funds & Disbursements
You shall deposit all funds received in this escrow in any bank
insured by an agency of the United States Government, including your
affiliated bank, First American Trust Company, in one or more of your
general escrow demand accounts. These funds may be transferred to any
other general escrow demand account or accounts, in the above named bank
or banks, including those maintained in your affiliated bank. All
disbursements shall be made by your check. You are authorized not to
close escrow or disburse until good funds have been confirmed in escrow.
2. Prorations and Adjustments
The expression "close of escrow" used in this escrow means the date
of which instruments referred to herein are recorded and relates only to
prorations and/or adjustments unless otherwise specified.
3. Recordation of Instruments
You are authorized to record any documents delivered through this
escrow, the recording of which is necessary or proper in the issuance of
the requested policy of title insurance.
4. Authorization to Execute Assignment of Insurance Policies
You are to execute on behalf of the parties hereto form assignments
of interest in any insurance policies (other than title insurance) called
for in this escrow; forward assignments and policies upon close of escrow
to the agent with the request, first, that insurer consent to such
transfer and/or attach a loss payable clause and/or make such other
additions or corrections as may have been specifically required herein,
and second, that the agent there after forward such policies to the
parties entitled to them.
In all acts in this escrow relating to insurance, including
adjustments, if any, you shall be fully protected in assuming that each
policy is in force and that the necessary premium therefor has been paid.
5. Authorization to Furnish Copies
You are to furnish a copy of these instructions, amendments
thereto, closing statements and/or any other documents deposited in this
escrow to the lender or lenders, the real estate broker or brokers and/or
the attorney or attorneys involved in this transaction upon request of the
lenders, brokers or attorneys.
6. Personal Property Taxes
No examination or insurance as to the amount or payment of personal
property taxes is required unless specifically requested.
7. Right of Cancellation
Any party instructing you to cancel this escrow shall file notice of
cancellation in your office, in writing. You shall within a reasonable
time thereafter mail, by certified mail, one copy of the notice to each of
the other parties at the addresses stated in this escrow. Unless written
objection to cancellation is filed in your office by a party within ten
(10)days after date of mailing, you are authorized at your option to
comply with the notice and demand payment of your cancellation charges as
provided in this agreement. If written objection is filed, you are
authorized at your option to hold all money and instruments in this escrow
and take no further action until otherwise directed, either by the
parties' mutual written instructions, or final order of
4B
a court of competent jurisdiction.
8. Action in Interpleader
The parties hereto expressly agree that you, as escrow holder, have
the absolute right at your election to file an action in interpleader
requiring the parties to answer and litigate their several claims and
rights among themselves and you are authorized to deposit with the clerk
of the court all documents and funds held in this escrow. In the event
such action is filed,the parties jointly and severally agree to pay your
cancellation charges and costs, expenses and reasonable attorney's fees
which you are required to expend or incur in the interpleader action, the
amount thereof to be fixed and judgment therefor to be rendered by the
court. Upon the filing of the action, you shall thereupon be fully
released and discharged from all obligations to further perform any duties
or obligations otherwise imposed by the terms of this escrow.
9. Termination of Agency Obligations
If there is no action taken on this escrow within six (6) months
after the "time limit date" as set forth in the escrow instructions or
written extension thereof, your agency obligation shall terminate at your
option and all documents, monies or other items held by you shall be
returned to the parties depositing same.
If the event of cancellation of this escrow, whether it be at the
request of any of the parties or otherwise, the fees and charges due First
American Title Insurance Company, including expenditures incurred and/or
authorized shall be borne equally by the parties hereto (unless otherwise
agreed to specifically.)
10. Conflicting Instructions
Should you before or after close of escrow receive or become aware
of any conflicting demands or claims with respect to this escrow or the
rights of any of the parties hereto, or any money or property deposited
herein or affected hereby, you shall have the right to discontinue any or
all further acts on your part until the conflict is resolved to your
satisfaction, and you shall have the further right to commence or defend
any action or proceedings for the determination of the conflict as
provided in paragraphs 7 and 8 or these General Provisions.
11. Funds Retained in Escrow
If for any reason funds are retained in escrow, you may deduct
therefrom $10.00 as a monthly charge as custodian thereof.
12. Usury
You are not to be concerned with any question of usury in any loan
or encumbrances involved in the processing of the escrow and you are
hereby released of any responsibility of liability therefor.
13. Indemnify for Attorneys Fees and Costs
In the event suit is brought by any party to this escrow, including
the title company or any other party, as against each other, or
others,including the title company, claiming any right they may have as
against each other or against the title company, then in that event, the
parties hereto agree to indemnify and hold harmless the title company
against any attorney's fees and costs incurred by it.
14. Amendments to Escrow Instructions
Any Amendment or supplement to these escrow instructions must be in
writing. These escrow instructions constitute the entire escrow between
the escrow holder and the parties hereto.
5B
15. Supplemental taxes:
Seller and Buyer acknowledge that the subject property may be
subject to supplemental taxes due as a result of change of ownership
taking place through this escrow. Any necessary adjustment due either
party on receipt of a supplemental tax ▇▇▇▇ will be made by the parties
outside of this escrow and escrow holder is released of any liability in
connection with same.
16. Foreign Investment in Real Property Tax Act
The Foreign Investment in Real Property Tax Act of 1980 as amended
by the Tax Reform Act of 1984 places special requirements for tax
reporting and withholding on the parties to a real estate transaction
where the transferor(seller) is a non resident alien or non domestic
corporation or partnership or is a domestic corporation or partnership
controlled by non residents or non resident corporations or partnerships.
The parties to this transaction are seeking an attorney's, accountant's,
or other tax specialist's opinion concerning the effect of this Act on
this transaction and are not acting on any statements made or omitted by
the escrow or closing officer. (INITIAL HERE: )
17. Preliminary change of Ownership form:
Prior to close of escrow buyer will be sent a Preliminary Change of
Ownership Report, which is required by the County Recorder's office to
accompany documents called for herein at the time of recording, in
accordance with Section 480.3 of the Revenue and Taxation Code. Buyer is
aware he must return the form completed and signed prior to the close of
escrow. If escrow holder does not receive this report prior to close of
escrow, buyer authorizes escrow holder to charge his account the sum
of$20.00 which is the fee the County Recorder charges for recording the
Deed without the completed form. Buyer is hereby put on notice that the
Assessor is required to mail out the form for completion later on if it
has not been filed at close of escrow.
18. Good Funds Law:
The parties understand that all funds to close escrow must be
deposited sufficient number of days prior to the close of escrow in order
to comply with Section 12413.1 of the California Insurance Code.
Generally speaking,wire transferred funds may be deposited into our escrow
account any time prior to the close of escrow. Cashier's checks and
certified checks must be deposited into our escrow account the business
day before the close of escrow.
19. Escrow Trust Funds:
Buyer and seller acknowledge that escrow holder will be depositing
all funds in escrow in a NON INTEREST bearing fiduciary account at one of
the following banks: Union Bank.
20. Disclosure of Taxpayer Identification Numbers
Internal Revenue Code Section 6109(h) imposes requirements for
furnishing, disclosing, and including taxpayer identification numbers in
tax returns on the parties to a residential real estate transaction
involving seller provided financing. The parties understand that the
disclosure reporting requirements are exclusive obligations between the
parties to this transaction and that First American Title Insurance
Company is not obligated to transmit the taxpayer identification numbers
to the Internal Revenue Service or to the parties. First American Title
Insurance Company is not rendering an opinion concerning the effect of
this law on this transaction,and the parties are not acting on any
statements made or omitted by the escrow or closing officer.
To facilitate compliance with this law, the parties to this escrow hereby
authorize First American Title Insurance Company to release any party's
taxpayer identification number to any requesting party who is a party to
this transaction. The requesting party shall deliver a written request to
escrow. The parties hereto waive all rights of confidentiality regarding
their respective taxpayer identification numbers and agree to hold First
American Title Insurance Company harmless
6B
against any fees, costs, or judgments incurred and/or awarded in
connection with the release of taxpayer identification numbers.
1
EXHIBIT 6 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN ▇▇▇▇▇ PETROLEUM COMPANY
AND ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.
CERTIFICATE OF COMPLIANCE
TO THE PURCHASE AND SALE AGREEMENT
ENTERED INTO BY AND BETWEEN ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.
AND ▇▇▇▇▇ PETROLEUM COMPANY
ON NOVEMBER 8, 1996
(PARAGRAPH 7.6 THEREOF)
The undersigned certify that ▇▇▇▇▇▇▇▇▇ Electric Company, Inc., has
complied with the matters set forth in Sections 7.1, 7.2, 7.3, and 7.4 of that
certain Purchase and Sale Agreement by and between ▇▇▇▇▇ Petroleum Company and
▇▇▇▇▇▇▇▇▇ Electric Company, Inc., entered into on November 8, 1996.
Date: _____________, 1996 ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.,
a California corporation
By: ______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. President
By: ______________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Secretary
1
EXHIBIT 7A TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN ▇▇▇▇▇ PETROLEUM COMPANY
AND ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.
FORM OF OPINION OF COUNSEL
TO ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.
November ___, 1996
▇▇▇▇▇ Petroleum Company
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: ▇▇▇▇▇ Petroleum Company / ▇▇▇▇▇▇▇▇▇ Electric Company, Inc.
Asset Purchase and Sale Transaction
Gentlemen:
We have acted as counsel to ▇▇▇▇▇▇▇▇▇ Electric Company, Inc., a California
corporation ("▇▇▇▇▇▇▇▇▇"), in connection with the purchase of substantially all
the assets of ▇▇▇▇▇▇▇▇▇ by ▇▇▇▇▇ Petroleum Company, a Delaware corporation
("▇▇▇▇▇"), pursuant to that certain Purchase and Sale Agreement, dated November
8, 1996, by and between ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ (the "Agreement"). Capitalized
terms used in this letter without definition have the meanings given such terms
in the Agreement.
In rendering the opinions set forth below, we have assumed the due
authorization, execution and delivery of the Agreement by ▇▇▇▇▇.
Based on the foregoing, and in reliance thereon, but subject to the
qualifications herein set forth, we are of the opinion that:
1. ▇▇▇▇▇▇▇▇▇ is a corporation duly organized and validly existing under,
and by virtue of, the laws of the State of California and is in good standing
under such laws. ▇▇▇▇▇▇▇▇▇ has requisite corporate power to own and operate
its properties and assets, and to carry on its business as presently conducted.
2. ▇▇▇▇▇▇▇▇▇ has full corporate power and authority to execute and
deliver the Agreement and to perform its obligations under the terms of the
Agreement.
3. All corporate action on the part of ▇▇▇▇▇▇▇▇▇ and its directors and
shareholders necessary for the authorization, execution, delivery and
performance of the Agreement and the consummation of the transactions
contemplated thereby, has been taken. The Agreement has
2
been duly executed and delivered by ▇▇▇▇▇▇▇▇▇ and constitutes a legal, valid
and binding obligation of ▇▇▇▇▇▇▇▇▇, enforceable against it in accordance with
its respective terms, except as such enforceability may be limited by or
subject to (a) any bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to creditor's rights generally and (b) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
4. The individuals and entities executing the Agreement as shareholders
of ▇▇▇▇▇▇▇▇▇ are the beneficial owners of all the issued and outstanding shares
of ▇▇▇▇▇▇▇▇▇ common stock (the "Shares"). There are no outstanding options,
warrants, rights of first refusal, or other rights calling for the issuance of,
or any security convertible into or exchangeable for, the Shares and no other
person or entity has any right in or to the Shares.
5. No consent, approval or authorization of or designation of ▇▇▇▇▇▇▇▇▇
is required in connection with the valid execution and delivery of the
Agreement, or the consummation of the transactions contemplated thereby on the
Closing thereof, except as such have been obtained or made prior to or upon the
date hereof.
6. To our best knowledge, no default exists and no event has occurred
which would constitute a default under, or violation in the due performance and
observance of any term, covenant or condition, or breach of, ▇▇▇▇▇▇▇▇▇'▇
Articles of Incorporation or Bylaws or any indenture, license, lease,
franchise, mortgage, instrument, or other agreement to which ▇▇▇▇▇▇▇▇▇ is a
party, or by which it or its properties may be bound; or (a) an event that
would permit any party to any agreement or instrument to terminate it or to
accelerate the maturity of any indebtedness or other obligation of ▇▇▇▇▇▇▇▇▇;
(b) an event that would result in the creation or imposition of any lien,
charge, or encumbrance on any asset of ▇▇▇▇▇▇▇▇▇; or (c) an event that would
conflict with any order, rule, or regulation directed to ▇▇▇▇▇▇▇▇▇ by any court
or governmental agency or body having jurisdiction over it.
7. Except as disclosed in the ▇▇▇▇▇▇▇▇▇ Disclosure Letter (as defined
in the Agreement), to our best knowledge, there is no suit, action,
arbitration, or legal, administrative, or other proceeding or governmental
investigation pending or threatened against or affecting ▇▇▇▇▇▇▇▇▇ or any of
its businesses or properties or financial or other condition.
8. Except as disclosed in the ▇▇▇▇▇▇▇▇▇ Disclosure Letter, there are no
agreements, written or oral, between ▇▇▇▇▇▇▇▇▇ and any other party that affect,
directly or indirectly, the Cogeneration Assets.
We are members of the bar of the State of California, and accordingly we
do not purport to be experts on, or to be qualified to express any opinion
herein concerning, nor do we express any opinions herein concerning, any law
other than Federal law and the laws of the State of California.
This opinion letter is limited to the matters expressly stated herein and
no opinion or other statement may be inferred or implied beyond the matters
expressly stated herein. This
3
opinion letter is addressed to ▇▇▇▇▇ for the benefit of ▇▇▇▇▇ and is only for
▇▇▇▇▇'▇ use in connection with the Agreement. This opinion letter may not be
relied upon by any other person or entity without prior written consent. This
opinion is as of this date, and we expressly decline any undertaking to advise
you of any matters arising subsequent to the date hereof which would cause us
to amend any portion of the foregoing in whole or in part.
Very truly yours,
▇▇▇▇▇ ▇▇▇▇▇, Esq.
cc: Nordman, Cormany, Hair & ▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
1
EXHIBIT 7B TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN ▇▇▇▇▇ PETROLEUM COMPANY
AND ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.
FORM OF OPINION OF COUNSEL
TO ▇▇▇▇▇▇▇▇▇ ELECTRIC COMPANY, INC.
November ___, 1996
▇▇▇▇▇ Petroleum Company
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
28700 ▇▇▇▇▇ Hills Road
Post Office Bin X
Taft, CA 93268
Re: Berry Petroleum Company / Tannehill Electric Company, Inc.
Asset Purchase and Sale Transaction
Gentlemen:
We have acted as counsel to Tannehill Electric Company, Inc., a California
corporation ("Tannehill") and Sunset Investment Company, LLC, a California
limited liability company ("Sunset LLC"), in connection with the purchase of
substantially all the assets of Tannehill by Berry Petroleum Company, a Delaware
corporation ("Berry"), pursuant to that certain Purchase and Sale Agreement,
dated November 8, 1996, by and between Tannehill and Berry (the "Agreement").
In connection with the Agreement, Sunset LLC, has entered into an agreement to
indemnify Berry (and other parties) against certain claims and losses (the
"Indemnity").
In rendering the opinions set forth below, we have assumed the due
authorization, execution and delivery of the Agreement by Berry.
Based on the foregoing, and in reliance thereon, but subject to the
qualifications herein set forth, we are of the opinion that:
1. Tannehill is a corporation duly organized and validly existing under,
and by virtue of, the laws of the State of California and is in good standing
under such laws. Tannehill has requisite corporate power to own and operate
its properties and assets, and to carry on its business as presently conducted.
2
2. Sunset LLC is a limited liability company duly organized and validly
existing under, and by virtue of, the laws of the State of California and is in
good standing under such laws. Sunset LLC has requisite power to own and
operate its properties and assets, and to carry on its business as presently
conducted.
3. Tannehill has full corporate power and authority to execute and
deliver the Agreement and to perform its obligations under the terms of the
Agreement.
4. Sunset LLC has full corporate power and authority to execute and
deliver the Indemnity and to perform its obligations under the terms of the
Indemnity.
5. All corporate action on the part of Tannehill and its directors and
shareholders necessary for the authorization, execution, delivery and
performance of the Agreement and the consummation of the transactions
contemplated thereby, has been taken. The Agreement has been duly executed and
delivered by Tannehill and constitutes a legal, valid and binding obligation of
Tannehill, enforceable against it in accordance with its respective terms,
except as such enforceability may be limited by or subject to (a) any
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
creditor's rights generally and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
6. All action on the part of Sunset LLC and its members necessary for
the authorization, execution, delivery and performance of the Indemnity and the
consummation of the transactions contemplated thereby, has been taken. The
Indemnity has been duly executed and delivered by Sunset LLC and constitutes a
legal, valid and binding obligation of Sunset LLC enforceable against it in
accordance with its respective terms, except as such enforceability may be
limited by or subject to (a) any bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to creditor's rights generally and (b)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
7. The individuals and entities executing the Agreement as shareholders
of Tannehill are the beneficial owners of all the issued and outstanding shares
of Tannehill common stock (the "Shares"). There are no outstanding options,
warrants, rights of first refusal, or other rights calling for the issuance of,
or any security convertible into or exchangeable for, the Shares and no other
person or entity has any right in or to the Shares.
8. The individuals and entities executing the Indemnity as members of
Sunset LLC are the beneficial owners of all the ownership interests in
Sunset LLC (the "Interests"). There are no outstanding options, warrants,
rights of first refusal, or other rights calling for the issuance of, or any
security convertible into or exchangeable for, the Interests and no other
person or entity has any right in or to the Interests.
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9. No consent, approval or authorization of or designation of Tannehill
is required in connection with the valid execution and delivery of the
Agreement, or the consummation of the transactions contemplated thereby on the
Closing thereof, except as such have been obtained or made prior to or upon the
date hereof.
10. No consent, approval or authorization of or designation of Sunset LLC
is required in connection with the valid execution and delivery of the
Agreement, or the consummation of the transactions contemplated thereby on the
Closing thereof, except as such have been obtained or made prior to or upon the
date hereof.
11. To our best knowledge, no default exists and no event has occurred
which would constitute a default under, or violation in the due performance and
observance of any term, covenant or condition, or breach of, Tannehill's
Articles of Incorporation or Bylaws, Sunset LLC's Article of Organization or
Operating Agreement, or any indenture, license, lease, franchise, mortgage,
instrument, or other agreement to which Tannehill is a party, or by which it or
its properties may be bound; or (a) an event that would permit any party to any
agreement or instrument to terminate it or to accelerate the maturity of any
indebtedness or other obligation of Tannehill; (b) an event that would result
in the creation or imposition of any lien, charge, or encumbrance on any asset
of Tannehill; or (c) an event that would conflict with any order, rule, or
regulation directed to Tannehill by any court or governmental agency or body
having jurisdiction over it.
12. Except as disclosed in the Tannehill Disclosure Letter (as defined
in the Agreement), to our best knowledge, there is no suit, action,
arbitration, or legal, administrative, or other proceeding or governmental
investigation pending or threatened against or affecting Tannehill, Sunset LLC
or any of their businesses or properties or financial or other condition.
13. Except as disclosed in the Tannehill Disclosure Letter, there are no
agreements, written or oral, between Tannehill, Sunset LLC and any other party
that affect, directly or indirectly, the Cogeneration Assets.
14. The transfer of the Cogeneration Assets to Berry will not violate the
terms of any agreement, document, or court order entered into or issued in
connection with the SOCAL Litigation.
We are members of the bar of the State of California, and accordingly we
do not purport to be experts on, or to be qualified to express any opinion
herein concerning, nor do we express any opinions herein concerning, any law
other than Federal law and the laws of the State of California.
This opinion letter is limited to the matters expressly stated herein and
no opinion or other statement may be inferred or implied beyond the matters
expressly stated herein. This opinion letter is addressed to Berry for the
benefit of Berry and is only for Berry's use in connection with the Agreement.
This opinion letter may not be relied upon by any other person
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or entity without prior written consent. This opinion is as of this date, and
we expressly decline any undertaking to advise you of any matters arising
subsequent to the date hereof which would cause us to amend any portion of the
foregoing in whole or in part.
Very truly yours,
Noriega, Alexander & Bradshaw
cc: Nordman, Cormany, Hair & Compton
Attn: Laura K. McAvoy, Esq.
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EXHIBIT 8 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL ELECTRIC COMPANY, INC.
INDEMNIFICATION
THIS INDEMNIFICATION ("Agreement") is entered into on
_________________, 1996, by and between Berry Petroleum Company, a Delaware
corporation ("Berry"), and Sunset Investment Company, LLC, a California limited
liability company ("Sunset LLC"), Boyce Resource Development Company, a
California corporation; Albert G. Boyce, Jr., as Trustee of Trust "B" Under the
Will of Albert G. Boyce, Sr., Deceased; William J. Boyce; Albert G. Boyce V;
Mary K. Boyce; John T. Hinkle; Bettianne H. Bowen; Vernier Resources
Corporation, a Texas corporation; James L. Hinkle; General Western, Inc., a
New Mexico corporation; Delmar R. Archibald and Joy A. Archibald, Trustees of
the Delmar R. Archibald Family Trust, dated June 22, 1982; Lisle Q. Tannehill;
John W. Tannehill; Gail Kay Tannehill, as Trustee of the Gail Kay Tannehill
Family Trust, dated April 9, 1996; and Thomas H. Tannehill, all acting
individually, jointly and severally ("Members"), with Sunset LLC and the
Members collectively referred to herein as "Sunset."
RECITALS
A. On November 8, 1996, Berry entered into separate Purchase and Sale
Agreements with Tannehill Electric Company, Inc., a California corporation
("TEC"), certain provisions of which were agreed to by the TEC Shareholders
("TEC Agreement"), Tannehill Oil Company, Inc., a California corporation
("TOCI"), certain provisions of which were agreed to by the TOCI Shareholders
("TOCI Agreement"), and Tannehill Oil Company, a California general
partnership ("TOC"), and its Partners individually and as Partners of TOC,
("TOC Partners") ("TOC Agreement"), pursuant to which Berry has agreed to
purchase certain assets of TEC, TOCI, TOC and the TOC Partners.
B. TEC, TOCI and TOC are involved in litigation with Southern California
Gas Company ("SOCAL"), the "SOCAL Litigation", as defined below. Under the
terms of the TEC Agreement, TEC and the Shareholders of TEC have indemnified
Berry against certain liabilities, including liabilities related to the SOCAL
Litigation, the SOCAL Contract and litigation by certain parties related to
the transfer of assets to Berry under the terms of the TEC Agreement.
C. As further consideration for Berry entering into the agreements
described in Recital A hereof, TEC, TOCI, TOC and the TOC Partners have agreed
that $5 million of the cash proceeds from the TOC Agreement described in
Recital A hereof will be invested in Sunset LLC as capital to be retained and
invested as provided in the Articles of Organization and the Operating
Agreement of Sunset LLC and held as a reserve fund (the "Reserve") under the
terms of the Amendment and Consent to Assignment of O & M Agreement dated as of
November ___, 1996, among Sunset LLC, Monarch Cogeneration 1986-1, a California
Limited Partnership
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("Monarch"), Caterpillar Capital Company, Inc., a Delaware corporation, Solar
Turbines Incorporated, a Delaware Corporation, TEC, TOC and Berry
(the "Consent") to be used in support of the Indemnification by Sunset LLC of
Berry from costs, judgments, liabilities and claims with respect to the SOCAL
Contract, defined below, SOCAL Litigation and the SOCAL Liabilities from and
after the effective date of the Consent.
D. The Consent provides that Sunset LLC shall grant Berry a security
interest in the Reserve which shall serve as security for Sunset LLC's
obligations under this Agreement (the "Security Agreement"). There shall be a
continuing lien on the Reserve for the term of this Agreement.
E. It is intended hereby to provide for such indemnity by Sunset to
Berry.
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained and contained in the TEC Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Berry and Sunset hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings given to
them in this Article I, unless defined elsewhere in this Agreement.
1.1 "SOCAL Contract" shall mean that Gas Transmission Service Contract
between Southern California Gas Company ("SOCAL") and Caterpillar Capital
Company dated February 25, 1988, amended March 1, 1992, and assigned by
Caterpillar Capital Company to TEC by Consent to Assignment and Agreement,
dated August 19, 1994.
1.2 "SOCAL Litigation" shall mean that lawsuit originally filed in the
United States District Court for the Southern District of Texas, Houston
Division, entitled Tannehill Electric Company, Inc., versus Southern California
Gas Company, on or about July 17, 1995, Case No. H95-3752, transferred to the
Central District of California and docketed in such district as Case No.
CV96-2502, together with any amendments thereto and any counter-claims or
cross-complaints presently or hereafter filed therein whether by SOCAL or
others; that lawsuit filed October 7, 1996, in the Superior Court of the State
of California for the County of Kern, entitled Tannehill Electric Company, Inc.
v. Southern California Gas Company, Case No. CV96-2502, together with any
amendments thereto and any cross-complaints presently or hereafter filed
therein by SOCAL or others; that lawsuit filed in the Superior Court for the
County of Los Angeles entitled Southern California Gas Company v. Tannehill
Electric Company, Inc., Case No. BC158128, together with any amendments thereto
and any cross-complaints presently or hereinafter filed by TEC or others; and
any lawsuits presently or hereafter filed by SOCAL or its assignee against TEC,
TOCI, TOC or the TOC Partners or Sunset LLC or the Members or Shareholders, or
their successors, or Berry, based wholly or in part on the SOCAL Contract.
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1.3 Unless otherwise expressly indicated herein, all defined terms used
in this Agreement shall have the meanings ascribed to them in the Consent.
ARTICLE II
INDEMNITY
2.1 Indemnification by Sunset. Sunset LLC and the Members, jointly and
severally, hereby agree to indemnify, defend (with counsel reasonably acceptable
to Berry) and hold Berry, and the officers, directors, employees and agents of
Berry (collectively, the officers, directors, employees and agents being
referred to in each case as its "Related Parties") harmless from and against
any and all lawsuits, liability, damages, costs and expenses (including
interest, penalties, settlements, fines, costs and expenses incurred in
connection with investigating and defending any claims or causes of action, and
reasonable attorneys' fees) that Berry and/or its Related Parties may incur or
become subject to or arising out of or due to (a) any inaccuracy of any
representation or the breach of any warranty, covenant, undertaking or other
agreement contained in this Agreement, or (b) any claim by SOCAL against Berry
based upon or related to, in whole or in part, the SOCAL Contract, the SOCAL
Litigation, the Facility or the transfer of the Cogeneration Assets (as that
term is defined in the TEC Agreement) to Berry. In no event, shall the
indemnity contained in this Agreement modify the terms of any other indemnify
in favor of Berry from TEC, TOCI, TOC or the TOC Partners in whatever capacity.
All such indemnities shall continue to be in full force and effect and are not
modified or supplemented as a result of this Agreement. Berry shall have full
discretion to proceed against any and all indemnitors with respect to any
claims, liabilities, costs, judgments or settlements for which indemnity is
expressly provided under the terms of any such other agreement or undertaking.
2.2 Obligations Absolute. The obligations of Sunset hereunder shall
remain in full force and effect without regard to, and shall not be affected or
impaired by the following, nor shall any of the following give Sunset any
recourse or right of action against Berry:
(a) Any breach or termination by any party of its obligations under
the O&M Agreement;
(b) Any express or implied amendment, modification, renewal,
addition, supplement, extension of the Consent or the O&M Agreement;
(c) Any exercise or non-exercise or waiver by Berry of any right
or privilege under the O&M Agreement or the Consent and any instruments
delivered in connection therewith;
(d) Any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to
Sunset or Berry, or any entity or individual comprising same, or any action
taken with respect to this Agreement by any trustee or receiver, or by any
court, in any such proceeding, whether or not Sunset shall have had notice or
knowledge of any of the foregoing;
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(e) Any release or discharge of any other party at any time
directly or contingently liable for obligations evidenced by, or referenced in,
the O&M Agreement or the Consent or in connection therewith;
(f) Any assignment or other transfer of this Agreement in whole or
in part;
(g) Any acceptance of partial performance by SOCAL (or its
successors or assigns) of the SOCAL Contract or with respect to the SOCAL
Litigation or the existence of any claims, disputes or allegations by or
between SOCAL on the one hand, and TEC or Sunset LLC, or any of them, on the
other hand, arising out of, relating to, or in connection with, the SOCAL
Contract, the SOCAL Litigation, the O&M Agreement or the Facility from and
after the date on which the O&M Agreement is assigned by TEC to Berry as
contemplated under the Consent; and/or
(h) Any concurrent and/or contributory negligence (whether active
or passive or of any kind or description) or fault of Berry.
2.3 Evidence of Satisfactory Condition. Sunset LLC acknowledges that,
in agreeing to consummate the transactions contemplated under the Consent,
Berry is relying upon Sunset LLC's financial ability to support this Agreement.
In order to provide assurances to Berry of Sunset LLC's continuing ability to
meet its obligations under this Agreement, Sunset LLC shall provide Berry with
financial statements for Sunset LLC upon written request from Berry, given in
the manner required with respect to any notice provided under this Agreement,
in addition to all other financial information required under the Consent or
Security Agreement.
2.4 Sunset LLC's Affirmative Duty. Sunset shall have an affirmative duty
to monitor, on a best-efforts basis, the existence of any facts, course of
conduct or actions taken which could lead to or result in any Claims by SOCAL
against Berry which give rise to Sunset LLC's obligations hereunder, and shall
forthwith give Berry notice of such Claims. Sunset shall have a further duty to
perform each and every obligation set forth in this Agreement with regard to
any Claim of SOCAL of which it knew or should have known, even in the absence
of written notice by Berry. It is the express intention of the parties that
Berry shall have no duty and bear no burden with respect to any Claim by or on
behalf of SOCAL.
2.5 Payments and Performance. Sunset agrees that whenever it shall make
any payment to Berry or otherwise perform any of the obligations under this
Agreement on account of the liability hereunder, it will deliver such payment or
tender such performance to Berry at the address therefor specified hereinbelow,
or at such other address as may be required by Berry, or any entity comprising
Berry, and notify Berry, in writing that such payment is made or performance
tendered under this Agreement for such purpose. No payment made hereunder by
Sunset LLC to Berry shall constitute Sunset LLC as a creditor of Berry.
2.6 Presumptions and Effect of Certain Proceedings. Upon making a
request for indemnification, for a Claim covered hereunder, it shall be
presumed that such indemnification is not prohibited by law and Sunset shall
have the burden of proof to show that such
5
indemnification is expressly prohibited by applicable law in order to overcome
that presumption in reaching any contrary determination. If the person or
persons so empowered to make the determination shall have failed to make the
requested indemnification within sixty (60) days after any judgment, order,
settlement, dismissal, arbitration award, conviction, acceptance of a plea of
nolo contendere or its equivalent, or other disposition or partial disposition
of any proceeding or any other event which could enable Sunset to determine
Berry's entitlement to indemnification, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Berry
shall be absolutely entitled to indemnification under this Agreement, absent
(a) misrepresentation or omission by Berry of a material fact in the request
for indemnification or (b) a specific finding (which has become final) that
all or any part of such indemnification is expressly prohibited by law. The
termination of any proceeding by judgment, order, settlement, arbitration award
or conviction, or upon a plea of nolo contendere or its equivalent, shall not
of itself (i) adversely affect the rights of Berry to indemnification except as
may be provided herein, (ii) create a presumption that Berry did not act in
good faith and in a manner which it reasonably believed to be in or not opposed
to the best interests of Sunset, or (c) with respect to any criminal action or
proceeding, create a presumption that Berry had reasonable cause to believe
that its conduct was unlawful.
2.7 Remedies of Berry in Cases of Determination Not to Indemnify or to
Advance Expenses.
(a) Determination. In the event that (i) an initial determination
is made that Berry is not entitled to indemnification, (ii) advances are not
made pursuant to this Agreement, (iii) payment has not been timely made
following a determination of entitlement to indemnification pursuant to this
Agreement or (iv) Berry otherwise seeks enforcement of this Agreement, Berry
shall be entitled to a final adjudication in an appropriate court of the State
of California of its entitlement to such indemnification or advance. Sunset
shall not oppose Berry's right to seek any such adjudication. In any such
proceeding Berry shall be presumed to be entitled to indemnification under this
Agreement and Sunset shall have the burden of proof to overcome that
presumption.
(b) No Prejudice. In the event an initial determination has been
made, in whole or in part, that Berry is not entitled to indemnification, the
decision in the judicial proceeding provided in paragraph (a) of this Section
2.7 shall be made de novo and Berry shall not be prejudiced by reason of a
determination that it is not entitled to indemnification.
(c) Effect of Determination. If an initial determination is made
or deemed to have been made pursuant to the terms of this Agreement that
indemnification of Berry provided hereunder is not expressly prohibited by law,
Berry shall be entitled to such indemnification and Sunset shall be bound by
such determination in the absence of (i) a misrepresentation or omission of a
material fact by Berry or (ii) a specific finding (which has become final) that
all or any part of such indemnification is expressly prohibited by law.
(d) Stipulation. Sunset shall be precluded from asserting that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable. Sunset LLC shall
6
stipulate in any such court that Sunset is bound by all the provisions of this
Agreement and is precluded from making any assertion to the contrary.
(e) Expenses. Expenses incurred by Berry in good faith in
connection with its request for indemnification under, seeking enforcement of,
or to recover damages for breach of, this Agreement shall be borne by Sunset.
2.8 Grant of Security Interest. Sunset LLC shall grant a security
interest in the assets of Sunset LLC pursuant to the Reserve Security
Instruments and the Security Agreement which shall serve as security for Sunset
LLC's due and punctual performance of all obligations under the Consent and
this Agreement and shall be a continuing lien on the assets of Sunset LLC for
the term of this Agreement. Sunset LLC shall promptly execute and deliver all
Reserve Security Instruments as contemplated under the Consent and this
Agreement.
2.9 Retention of Reserve by Members. In the event the Reserve, or any
part of it, is distributed to the Members due to dissolution of Sunset LLC, or
otherwise, the Members shall hold, invest, retain and pay out such Reserve
under the terms of the Consent, this Agreement, the Sunset LLC Operating
Agreement and any Reserve Security Instruments.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties. Sunset makes the following
representations and warranties which shall be continuing representations and
warranties:
(a) Organization, Standing and Power. Sunset LLC is validly
existing and in good standing under the laws of the States of the United States
in which it does business and has full power and authority to execute, deliver
and perform its obligations under this Agreement.
(b) Binding Effect. This Agreement has been duly authorized,
executed and delivered by Sunset, and is the valid, legal and binding
obligation of Sunset, enforceable against it in accordance with its terms.
(c) No Consents. To Sunset's knowledge, after due and diligent
investigation, no registration with, consent or approval of, or any other
action by, any federal, state or other governmental agency, authority or
regulatory body, foreign or domestic, is required as a condition to, or
otherwise in connection with, the execution, delivery and performance of this
Agreement by Sunset LLC. Neither the execution, delivery or performance of
this Agreement has resulted or will result in any breach of any provision of,
or constitute a default (or an event which with or without notice and/or lapse
of time would constitute a default), or result in the creation of any lien,
charge or other encumbrance upon any of the assets of Sunset LLC, under Sunset
LLC's organizational documents, or any agreement or instrument to which Sunset
LLC is a party or by which it is bound or any statute, rule, judgment, order or
regulation of any court or governmental authority applicable to it.
7
(d) Purpose of Organization. Sunset LLC hereby acknowledges and
warrants that it has been established and is organized, for the primary purpose
of providing to Berry the indemnities and agreements set forth in this
Agreement, and to provide similar indemnities and agreements for the benefit of
other parties in connection with the SoCal Gas Litigation and the SoCal
Liabilities, all as more particularly described in the Consent. The Members
have determined that it is in the best interests of Sunset LLC to execute,
deliver and perform this Agreement for the benefit of Berry and to enter into
the arrangements and undertakings set forth herein.
(e) Insolvency. The execution and delivery of this Agreement will
not (i) render Sunset LLC insolvent under generally accepted accounting
principles nor render it Insolvent (as defined below), (ii) leave Sunset LLC
with remaining assets which constitute unreasonably small capital given the
nature of its business, or (iii) result in the incurrence of Debts (as defined
below) beyond the ability of Sunset LLC to pay them when and as they mature.
For the purposes of this Section (e), "Debts" includes any legal liability for
indebtedness, whether matured or unmatured, liquidated or unliquidated,
absolute, fixed or contingent.
(f) Consent. Sunset LLC has read and examined, or is otherwise
familiar with, the Consent and is aware and has full knowledge of Sunset LLC's
obligations and duties thereunder.
ARTICLE IV
GENERAL PROVISIONS
4.1 Complete Agreement; Interpretation. This Agreement, together with
the Consent, and all instruments or other documents to be executed and
delivered thereunder, supersede any prior negotiations, discussions or
communications between Sunset LLC and Berry and constitute the entire
agreement of such parties with respect to the subject matter of this Agreement.
Each party to this Agreement has substantial experience with the subject matter
of this Agreement and each has fully participated in the negotiation and
drafting of this Agreement and has been advised by counsel of its choice with
respect to the subject matter hereof. Accordingly, this Agreement shall be
construed without regard to the rule that ambiguities in a document are to be
construed against the drafter.
4.2 Exercise of Remedies; Successors; Etc. No delay or failure by Berry
to exercise any remedy against Sunset will be construed as a waiver of that
right or remedy. All remedies of Berry are cumulative. Any claim for
performance under this Agreement, or exercise of any right or remedy accruing
under this Agreement to the benefit of Berry may be made or exercised by each
entity comprising Berry as if Berry collectively has made such claim or
exercised such right or remedy. When the context in which the words are used
in this Agreement indicates that such is the intent, words in the singular
number shall include the plural and vice-versa. If any one or more of the
provisions of this Agreement should be determined to be illegal or
unenforceable, all other provisions shall remain effective. Sunset shall not
have the right to assign any of its rights or obligations under this Agreement
without the prior written consent of
8
Berry, or its successors or assigns, which consent may be withheld in such
party's sole discretion.
4.3 Demands. Except as set forth in Section 2.4 above, each demand by
Berry for performance or payment hereunder shall be in writing and shall be
made in the manner set forth in Section 4.10 below.
4.4 Invalidity. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
4.5 Attorneys' Fees. In the event of any claim, dispute or controversy
arising out of or relating to this Agreement, including an action for
declaratory relief, the prevailing party in such action or proceeding shall be
entitled to recover its taxable costs or arbitration fees, and reasonable
out-of-pocket expenses, including, but not limited to, telephone calls,
photocopies, expert witnesses, travel, computer expenses related to litigation,
and attorneys' fees to be fixed by the court or the arbitrator. Such recovery
shall include court costs, out-of-pocket expenses and attorneys' fees on
appeal, if any. The court shall determine who is the "prevailing party,"
whether or not the dispute or controversy proceeds to final judgment.
4.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
4.7 Headings. The headings of the articles, sections and paragraphs of
this Agreement and of the exhibits hereto are included for convenience only and
shall not be deemed to constitute part of this Agreement or to affect the
construction hereof or thereof.
4.8 Construction and References. Words used in this Agreement,
regardless of the number or gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context shall require. Unless
otherwise specified, all references in this Agreement to articles, sections,
paragraphs or clauses are deemed references to the corresponding articles,
sections, paragraphs or clauses in this Agreement.
4.9 Modification and Waiver. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled
to the benefits thereof. No waiver of any of the provisions of this Agreement
shall be deemed to or shall constitute a waiver of any other provisions hereof
(whether or not similar).
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4.10 Notices. Any notice, request, instruction or other document to be
given hereunder by any party hereto to any other party shall be in writing and
delivered personally, via telecopy (with receipt confirmed) or by registered or
certified mail, postage prepaid:
(a) if to Sunset LLC and/or the Members, to:
Sunset Investment Company, LLC
120 Manteca Avenue
P.O. Box 871
Manteca, California 95336
Attn: Managing Member
Facsimile No. (209) 239-7886
Confirmation No. (209) 239-4014
with copies to:
Noriega, Alexander and Bradshaw
1801 - 18th Street
Bakersfield, California 93301
Attn: William Alexander, Esq.
Facsimile No. (805) 327-5492
Confirmation No. (805) 327-5363
(b) if to Berry, to:
Berry Petroleum Company
Attn: Jerry V. Hoffman
President and Chief Executive Officer
28700 Hovey Hills Road
Post Office Bin X
Taft, California 93268
Facsimile No. (805) 769-8960
Confirmation No. (805) 769-8811
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with copies to:
Nordman, Cormany, Hair & Compton
Attn: Laura K. McAvoy, Esq.
1000 Town Center Drive, Sixth Floor
Post Office Box 9100
Oxnard, California 93031-9100
Facsimile No. (805) 988-8387
Confirmation No. (805) 485-1000
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agents for notices hereunder). Any notice that
is addressed and mailed in the manner herein provided shall be conclusively
presumed to have been duly given to the party to which it is addressed at the
close of business, local time of the recipient, on the third day after the day
it is so placed in the mail. Any notice that is sent by telecopy shall be
deemed to have been duly given to the party to which it is addressed upon
telephonic confirmation of the same as provided herein. A copy of any notices
delivered by telecopy shall promptly be mailed in the manner herein provided to
the party to which such notice was given.
4.11 Governing Law; Interpretation. This Agreement shall be construed in
accordance with and governed by the laws of the State of California (regardless
of the laws that might otherwise govern under applicable California principles
of conflict of laws) as to all matters, including, but not limited to, matters
of validity, construction, effect, performance and remedies.
4.12 Jury Trial Waiver. To the fullest extent permitted by law, and as
separately bargained-for consideration, Sunset hereby waives any right to trial
by jury in any action, suit, proceeding or counterclaims of any kind arising
out of or relating to this Agreement. Sunset hereby expressly acknowledges the
inclusion of this jury trial waiver through its execution of this Agreement.
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IN WITNESS WHEREOF, Berry and Sunset have caused this Agreement to
be executed as of the date first above written.
BERRY PETROLEUM COMPANY SUNSET INVESTMENT COMPANY, LLC
a Delaware corporation a California limited liability
company
By: By:
Jerry V. Hoffman, Albert G. Boyce, Jr.
President Its Managing Member
By: By:
Kenneth A. Olson, John W. Tannehill
Secretary Its Managing Member
By:
James L. Hinkle
Its Managing Member
Members
BOYCE RESOURCE DEVELOPMENT
COMPANY, a California corporation
By:
Albert G. Boyce, Jr., Albert G. Boyce, Jr., as Trustee
President of Trust "B" Under Will of
Albert G. Boyce, Sr., Deceased
William J. Boyce Albert G. Boyce V
Mary K. Boyce John T. Hinkle
Bettianne H. Bowen James L. Hinkle
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VERNIER RESOURCES CORPORATION, GENERAL WESTERN, INC.,
a Texas corporation a New Mexico corporation
By: By:
Bettianne H. Bowen, President James L. Hinkle, President
and Secretary
By:
Cheryl Bailey Harrison,
Secretary
Lisle Q. Tannehill Thomas H. Tannehill
Gail Kay Tannehill, as Trustee Delmar R. Archibald, as
of the Gail Kay Tannehill Trustee of the Delmar R.
Family Trust, dated April 9, Archibald Family Trust, dated
1996 June 22, 1982
John W. Tannehill Joy A. Archibald, as Trustee
of the Delmar R. Archibald
Family Trust, dated June 22,
1982
Spousal Consents
The undersigned, spouses of the Members named in this Agreement, hereby
consent to the terms and conditions of this Agreement and agree that their
community property, if any, included in the Assets, as defined herein, is
subject to this Agreement.
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EXHIBIT 9 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL ELECTRIC COMPANY, INC.
CERTIFICATE OF COMPLIANCE
TO THE PURCHASE AND SALE AGREEMENT
ENTERED INTO BY AND BETWEEN TANNEHILL ELECTRIC COMPANY, INC.
AND BERRY PETROLEUM COMPANY
ON NOVEMBER 8, 1996
(PARAGRAPH 8.6 THEREOF)
The undersigned certify that Berry Petroleum Company has complied with the
matters set forth in Sections 8.1, 8.2, 8.3 and 8.5 of that certain Purchase
and Sale Agreement by and between Berry Petroleum Company and Tannehill
Electric Company, Inc., entered into on November 8, 1996.
Date: _____________, 1996 BERRY PETROLEUM COMPANY,
a Delaware corporation
By: _____________________________
Jerry V. Hoffman, President
and Chief Executive Officer
By: _____________________________
Kenneth A. Olson, Secretary
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EXHIBIT 10 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL ELECTRIC COMPANY, INC.
FORM OF OPINION OF COUNSEL
TO BERRY PETROLEUM COMPANY
November ___, 1996
Tannehill Electric Company, Inc.
Attn: Mr. Albert G. Boyce, Jr.
President
120 Manteca Avenue
P.O. Box 871
Manteca, CA 95336
Re: Berry Petroleum Company / Tannehill Electric Company, Inc.
Asset Purchase and Sale Transaction
Gentlemen:
We have acted as counsel to Berry Petroleum Company, a Delaware
corporation ("Berry"), in connection with the purchase of substantially all the
assets of Tannehill Electric Company, Inc., a California corporation
("Tannehill"), by Berry, pursuant to that certain Purchase and Sale Agreement,
dated November 8, 1996, by and between Tannehill and Berry (the "Agreement").
In rendering the opinions set forth below, we have assumed the due
authorization, execution and delivery of the Agreement by Tannehill.
1. Berry is a corporation duly organized and validly existing under, and
by virtue of, the laws of the State of Delaware and is in good standing under
such laws. Berry has requisite corporate power to own and operate its
properties and assets, and to carry on its business as presently conducted.
2. Berry has full corporate power and authority to execute and deliver
the Agreement and to perform its obligations under the terms of the Agreement.
3. All corporate action on the part of Berry necessary for the
authorization, execution, delivery and performance of the Agreement and the
consummation of the transactions contemplated thereby, has been taken. The
Agreement has been duly executed and delivered by Berry and constitutes a
legal, valid and binding obligation of Berry, enforceable against it in
accordance with its respective terms, except as such enforceability may be
limited by or subject to (a) any bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to
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creditor's rights generally and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4. No consent, approval or authorization of or designation of Berry is
required in connection with the valid execution and delivery of the Agreement
by Berry, or the consummation by Berry of the transactions contemplated thereby
on the Closing thereof, except as such have been obtained or made prior to or
upon the date hereof.
5. To our best knowledge, there is no suit, action, arbitration, or
legal, administrative, or other proceeding or governmental investigation that
is material to the transactions contemplated by the Agreement pending or
threatened against or affecting Berry or any of its businesses or properties or
financial or other condition.
We are members of the bar of the State of California, and except for our
opinion set forth in Paragraph 1 above, we do not purport to be experts on, or
to be qualified to express any opinion herein concerning, nor do we express any
opinions herein concerning, any law other than Federal law and the laws of the
State of California.
This opinion letter is limited to the matters expressly stated herein and
no opinion or other statement may be inferred or implied beyond the matters
expressly stated herein. This opinion letter is addressed to Tannehill for the
benefit of Tannehill and is only for Tannehill's use in connection with the
Agreement. This opinion letter may not be relied upon by any other person or
entity without prior written consent. This opinion is as of this date, and we
expressly decline any undertaking to advise you of any matters arising
subsequent to the date hereof which would cause us to amend any portion of the
foregoing in whole or in part.
Very truly yours,
NORDMAN, CORMANY, HAIR & COMPTON
cc: Roger Coley, Esq.
