EXHIBIT 10.25
SHAREHOLDERS' AGREEMENT
This Shareholders' Agreement (this "Agreement") is made and entered into
as of this 25th day of February, 1997, by and among Cogen Technologies Saba
Capital Company, L.L.C., a limited liability company duly formed and existing
under the laws of Delaware ("Cogen"), Capco Resources, Inc., a corporation
duly organized and existing under the laws of Delaware ("Capco"), and Coastal
Saba Power Ltd., a company duly organized and existing under the laws of
Mauritius ("Coastal SP") (Cogen, Capco and Coastal SP being hereinafter
referred to as the "Parties", and each, a "Party").
W I T N E S S E T H :
WHEREAS, a Cogen Affiliate and certain other entities entered into a
Project Development and Shareholders' Agreement dated June 2, 1995 (the
"Initial Agreement") as amended by an Amendment to Project Development and
Shareholders' Agreement dated March 30, 1996 (the Initial Agreement, as so
amended, being herein called the "Original Agreement"), relating to the
development, financing, construction and operation of a power generating plant
at or near Farouqabad, Pakistan (the "Project"),
WHEREAS, the Cogen Affiliate has subsequently assigned its interest
under the Original Agreement to Cogen, .
WHEREAS, the Original Agreement has been terminated, and
WHEREAS, Coastal SP, Cogen and Saba Power Company (Private) Limited, a
private limited company duly organized and existing under the laws of the
Islamic Republic of Pakistan (the "Company"), have entered into a Purchase and
Sale Agreement dated as of November 26, 1996 (the "Purchase Agreement"),
providing, inter alia, that Coastal SP will become a Shareholder of the
Company,
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants and conditions contained herein the Parties agree as follows:
ARTICLE I
STRUCTURE AND OWNERSHIP
1.1 Status as a Partnership.
(a) It is the intention of the Shareholders that the Company be
treated as a partnership for tax purposes in the United States. The Company
will file an election with the U.S. Internal Revenue Service to be treated as
a partnership if a majority in interest of the Shareholders believes such an
election is desirable (in which case each Shareholder will take whatever
actions are required to make the election).
(b) This Agreement and the Articles of Association of the Company
should be read together as creating a single partnership and as constituting a
single partnership agreement for tax purposes in the United States and for no
other purposes.
1.2 Ownership and Equity Funding.
(a) The Parties acknowledge that the Project capital cost is
approximately $152 million based on current projections and that approximately
$43 million of such cost is to be funded as base equity capital ("Base
Equity") and approximately $109 million in third-party limited recourse debt.
The Parties agree that Cogen shall contribute 7.25%, Capco shall contribute 2%
and Coastal SP shall contribute 90.75% of the total Base Equity required for
the Project. The Lenders have required, pursuant to the Shareholders' Direct
Agreement, that the obligation to provide unfunded Base Equity be supported by
letters of credit ("Base Equity L/C's"). The Lenders have also required, among
other things, (i) equity support for cost overruns during the construction
period in the form of irrevocable and unconditional letters of credit ("Cost
Overrun L/C"), (ii) equity support during the operational period in the form
of irrevocable and unconditional letters of credit ("Restoration Reserve
L/C"), and (iii) equity support during the operational period in the form of
debt service reserve letters of credit ("Debt Service Reserve L/C") (the Cost
Overrun L/C, Restoration Reserve L/C, and the Debt Service Reserve L/C being
collectively referred to as the "Equity Support L/C's"). After the Closing
Date, Coastal SP shall provide 92.751 of Base Equity, Cogen shall provide
7.25% of Base Equity and each of Coastal SP and Cogen shall provide Base
Equity L/C's in amounts equal to $26,004,898 (in the case of Coastal SP) and
$2,032,728 (in the case of Cogen) pursuant to the Shareholders' Direct
Agreement. In addition to providing its share of Base Equity and the Base
Equity L/C, as described in the foregoing sentence and subject to Section
1.2(b), each of Coastal SP and Cogen shall be required to provide Equity
Support L/C's through irrevocable and unconditional letters of credit
acceptable to the Lenders in amounts equal to 90.75% (in the case of Coastal
SP) and 9.25% (in the case of Cogen) of the aggregate amount of each Equity
Support L/C that is required to be provided by the Shareholders pursuant to
the Shareholders Direct Agreement except that Coastal SP shall provide 100% of
the Cost Overrun L/C in an amount equal to $11,500,000. Capco has contributed
2% of the Base Equity through recognition of certain capitalized development
costs and will not be required to provide any Base Equity L/C or any Equity
Support L/Cs. Subject to Section 1.2(b), each Party shall be required to
provide its equity at the times and in the form required by the Lenders, and
as proposed herein.
(b) Each of Coastal SP and Cogen shall utilize its total unfunded
equity as and when funded to subscribe for shares of the Company, and a
proportionate share of the Base Equity L/C and Equity Support L/C's shall be
drawn and shares shall be issued to Coastal SP and Cogen, respectively, in
proportion to the amount of such letters of credit provided by Coastal SP and
Cogen, in accordance with this Section 1.2, except that, notwithstanding
anything to the contrary in the Shareholders' Direct Agreement, Coastal SP
shall also provide the Equity Support L/C's to the extent of the Special
Shares (defined in Section 2.4(a)).
(c) In recognition of Capco's not posting any Base Equity L/C or
Equity Support L/C's, Capco expressly waives in favor of Cogen and Coastal SP
any preemptive rights to acquire shares pursuant to draws thereunder or, in
lieu of such draws, sums deposited (pursuant to the Amended and Restated
Shareholders' Direct Agreement) in respect of the purposes for which such
letters of credit were posted. In the event that the Lenders draw upon any
letter of credit posted by Coastal SP or Cogen, Coastal SP's, Cogen's and
Capco's equity ownership in the Company shall be affected as follows: the
Party posting the letter of credit shall become the owner of the shares
purchased with the proceeds of each draw thereunder, and all right, title and
interest in such shares shall vest in such Party (free and clear of any
encumbrance other than pursuant to the Security Documents and the Indemnity
Agreement). Notwithstanding the provisions of Section 1.2(b), any shares
issued against the proceeds of each draw under the Base Equity L/C posted by
Coastal SP that would cause the proportion of shares of the Company owned by
Coastal SP to exceed 90.75% shall be transferred and reissued without payment
of further consideration by Cogen other than the transfer to Coastal SP of the
right to receive the Capital Payment (as defined in the Equity-Put Agreement)
pursuant to the Equity-Put Agreement.
(d) (i) In the event that the Lenders draw upon any Equity
Support L/C posted by Coastal SP for the account of Cogen or Capco and Cogen
or Capco, as the case may be, fails to reimburse Coastal SP within ten (10)
days of notice of that draw for its share of the draw attributable to the
Special Shares, Coastal SP's, Cogen's and Capco's equity ownership in the
Company shall be affected as follows: Coastal SP shall have the right to
become the owner of the shares purchased with the proceeds of the draw for
which Cogen or Capco, as the case may be, has failed to make timely
reimbursement, and all right, title and interest in such shares shall,
following the above 10-day period, immediately vest in Coastal SP (free and
clear of any encumbrance other than pursuant to the Security Documents and the
Indemnity Agreement).
(ii) If the Lenders have drawn on the Debt Service Reserve
L/C posted by Coastal SP for the account of Cogen or Capco, each of the
Shareholders shall decide, within fifteen (15) days of notice of that draw,
whether it will replenish a share of the Debt Service Reserve L/C in the
proportions set forth in Section 1.2(b) hereof. If Cogen or Capco decides not
to replenish its pro rata share of such Debt Service Reserve L/C, Coastal SP
may replenish that unreplenished portion of the Debt Service Reserve L/C. If
Coastal SP so replenishes such Debt Service Reserve L/C, Coastal SP shall be
paid an amount equal to fifteen percent (15%) per annum of the amount not
replenished by the non-replenishing Shareholder. That amount shall be paid out
of the Company's distributions which, but for this clause (ii), would be
payable to the non-replenishing Shareholder, excluding distributions made with
respect to Special Shares, made through the Agent before any other
distributions are made by the Agent to that Shareholder, and the Agent shall
reduce the distributions to that Shareholder accordingly. The foregoing amount
shall be paid to Coastal SP so long as such replenished Debt Service Reserve
L/C remains in effect or is drawn upon and the excess amount is not
replenished.
1.3 Shareholders' and Board of Directors' Actions.
(a) On or before the Closing Date, the Corporate Law Authority of
Pakistan shall have approved the transactions contemplated hereby and by the
Purchase Agreement. On or before the Closing Date, the Shareholders shall
adopt resolutions in the forms attached hereto as Schedules 1.3(a)(i) and
1.3(a)(ii), (i) adopting the amendments to the Memorandum and Articles of
Association of the Company that are necessary to give effect to such
transactions and (ii) approving the appointment of a board of directors of the
Company as specified in the following paragraph, respectively. Each action
contemplated by this Section 1.3(a) shall be taken in a manner consistent with
the requirements set forth in the approval obtained by the Company from the
PPIB and in accordance with all reporting requirements specified in such
approval.
(b) Each Shareholder shall be entitled to vote its share in the
Company based upon one vote for each share it holds. It is agreed that the
Company will have eight (8) directors and Coastal SP will be entitled to
appoint or cause to be appointed seven (7) of such directors (or such larger
number thereof as will approximate the combined direct and indirect percentage
of shares held by Coastal SP of the Company, such number to be rounded to the
closest whole number). As soon as possible after receipt of any necessary PPIB
and Lenders' approval therefor Coastal SP will name its seven (7) directors to
be elected as directors of the Company and Cogen will cause seven (7) of the
existing directors of the Company to resign so that Coastal SP's nominees may
be elected as directors on the Board of Directors of the Company effective as
of the Closing Date. In the event of any subsequent casual vacancy on the
Board of Directors, the Shareholder who had nominated the former director
shall have the right to nominate the replacement director. It is further
agreed that Coastal SP will select the Chairman of the Board of Directors of
the Company.
(c) Notwithstanding anything to the contrary contained herein or
in the Articles of Association of the Company, the matters set forth on Part I
of Annex A shall require approval by Shareholders or Directors, as the case
may be, representing at least 85% of the issued and outstanding shares and the
matters set forth on Part II of Annex A shall require the unanimous consent of
the Shareholders.
(d) In recognition of the Coastal SP Obligations (as defined in
the Indemnity Agreement), Coastal SP agrees in favor of Cogen that during the
existence of a failure of Coastal SP to pay any undisputed amount or any
disputed amount finally determined to be due to Capital in accordance with the
Capitalization Agreement, subject to the rights of the Finance Parties under
the Finance Documents, Coastal SP will not vote its shares of the Company in
favor of any action of the Company unless and until such action shall have
received an affirmative vote by Cogen of its shares of the Company.
(e) The Shareholders agree that to the extent necessary to give
legal effect to the provisions of Section 1.3, the Shareholders will amend the
Articles of Association accordingly.
1.4 Operation and Maintenance. Subject to receipt of any necessary
Governmental Approvals and approvals of the Lenders, the Company shall
exercise any rights it may have to terminate the O&M Agreement with SSOI
without incurring liability for wrongful termination. Upon the lawful
termination of the O&M Agreement with SSOI, Coastal SP shall cause Coastal
Technology Pakistan (Private) Limited, a Coastal SP Affiliate, to enter into
an O&M Agreement with the Company pursuant to which such Coastal SP Affiliate
will operate the Project on a cost basis, plus an agreed upon fee, and
otherwise on terms not less favorable in the aggregate to the Company than
those set forth in the O&M Agreement. Coastal SP or the Coastal SP Affiliate
shall provide Cogen with copies of monthly reports detailing the operation of
the Project, and shall provide access to the books and records of the Company
and to the Site to Cogen and its authorized representatives during normal
business hours and upon receiving advance notice from Cogen.
1.5 Assistance. Cogen will assist Coastal SP in all Project matters and
especially those dealing with site location and local approvals, assisting as
liaison with governmental agencies, both political and regulatory. Cogen shall
have primary responsibility for those matters that are the subject of the
Enhancement Events during the periods set forth in Section 2.4(b), and Coastal
SP shall support all reasonable efforts of Cogen to attain the Enhancement
Events.
1.6 Pledge of Stock. It is recognized that in connection with raising
borrowed funds for construction of the Project, the Parties will have to
pledge their stock in the Company in favor of the Lenders, and the Parties may
have to demonstrate their financial ability to perform their respective equity
commitments set forth in the Shareholders' Direct Agreement. The Parties agree
that they will pledge such stock and use all reasonable efforts to take such
other actions as required by the Lenders.
1.7 Irrevocable Proxy. The Parties agree that each existing and future
Shareholder will, as a condition to being a Shareholder, execute and deliver
an irrevocable proxy in the form set forth in the Company's Articles of
Association appointing the Chairman of the Board of Directors of the Company
and, if the Chairman is not in attendance, each of the other Shareholders in
sequence, to attend and vote for that Shareholder and on that Shareholder's
behalf, at an Extraordinary General Meeting held after the date of the proxy,
for the sole purpose of winding up the Company after the occurrence of an
event described in Article 109.(1) of such Articles of Association, in favor
of a resolution requiring the dissolution of the Company.
1.8 Regulatory Status. The Parties agree to make all filings and take
all action as may be required to preserve the Company's status as a foreign
utility company under the Public Utility Holding Company Act of 1935, as
amended ("PUHCA"), unless and until the Company shall have taken all action
necessary to qualify and become an "Exempt Wholesale Generator" pursuant to
PUHCA; and thereafter will maintain such status or any other future status so
as to avoid regulation as a "public utility" or an "electric utility" as
defined in the Federal Power Act of 1935, as amended, or a "public utility
company," "electric utility company," or "holding company," each as defined in
PUHCA , or as a "subsidiary" or an "affiliate," each as defined in PUHCA, of
any of the foregoing.
ARTICLE II
EXPENSES, SPECIAL SHARES AND REIMBURSABLE EVENTS
2.1 Interim Expenses. Each of the Parties paying costs on behalf of the
Company pursuant to Section 12.08 of the Purchase and Sale Agreement shall
have the right to be reimbursed for such audited expenses, subject to the
Finance Documents, out of the first funds available for such reimbursement of
expenses.
2.2 [Intentionally Left Blank]
2.3 [Intentionally Left Blank]
2.4 Special Shares and Enhancement Events.
(a) The Parties agree that they will jointly direct the Company to
pay all distributions including dividends from their shares, returns of
capital and any assets or cash distributed following the winding up of the
Company to the Agent as specified in Section 4.1(a). Each of Cogen and Capco
agrees that it will direct the Agent to distribute to Coastal SP the dividends
received from shares owned by Capco representing two percent (2%) of the total
shares issued by the Company and shares owned by Cogen representing seven and
one-quarter percent (7.25%) of the total shares issued by the Company or, in
the event of an Enhancement Event, such lesser number of shares as set forth
in this Section 2.4 (such shares, measured as a percentage of the total shares
issued by the Company, as reduced from time to time, the "Special Shares", and
each Special Share being one percent of the total shares issued by the
Company).
(b) The Parties agree that an Enhancement Event shall occur
(whether or not such occurrence is caused by Cogen or Coastal SP or otherwise)
if, within 12 months after the Closing Date in the case of subsection (i)
below, and within 37 months after the Closing Date in the case of subsections
(ii) and (iii) below, an amendment to the Power Purchase Agreement is duly
executed by the Company and WAPDA that:
(i) extends the Required Commercial Operations Date (as such
term is defined in the Power Purchase Agreement) by up to 3.5 months (an
"Avoided LD Event"); or
(ii) increases the Estimated Dependable Capacity (as such
term is defined in the Power Purchase Agreement), such that 105% of the
Estimated Dependable Capacity (the "Increased Capacity") is an amount greater
than 114 MW but no more than 127.2 MW (an "Increased Capacity Event");
(iii) shifts the amount of the tariff, set forth in Table 1
of Schedule 6 to the Power Purchase Agreement, in the Non-Escalable Local
Component to the Non-Escalable Foreign Component (as such terms are defined in
the Power Purchase Agreement) (a "Revised Tariff Event");
provided, however, that such an amendment shall qualify as an Enhancement
Event only if (A) such amendment contains no other change to the Power
Purchase Agreement unless approved by Coastal SP; (B) the Lenders have
approved such amendment, to the extent required under the Finance Documents;
(C) Coastal SP has received an opinion from the Company's counsel reasonably
satisfactory to Coastal SP with regard thereto; (D) after giving effect to
such amendment, the GOP Guarantee applies undiminished to WAPDA's obligations
under the Power Purchase Agreement as modified by such amendment; and (E) such
amendment causes no default or event of default under any of the Project
Documents or Finance Documents. Each amendment evidencing the achievement of
an increment of increased value will cause an Enhancement Event to occur so
long as such amendment occurs within the applicable period and subject to the
proviso set forth in this Section 2.4(b).
(c) (i) If an Avoided LD Event occurs within the time period set
forth in Section 2.4(b), the Special Shares shall be reduced by an amount (the
"Avoided LD Event Credit") equal to the product of (1) 1/280,108 times (2) the
sum of (x) 314,640 per month of extension plus (y) the pro rated monthly
portion (based on a 30-day month) of 314,640 for any period of extension which
is less than a month. As provided in Section 2.4(c)(iv) of this Agreement,
such reduction shall be made first by decreasing the Special Shares by the
Avoided LD Event Credit (as if such credit was stated as a percentage; e.g.,
if the Avoided LD Event Credit is 2.25 when the percentage of Special Shares
is 9.25%, then after giving effect to such Avoided LD Event Credit, the
percentage of Special Shares will be 7.00%), and then, by allocating first to
Capco the number of shares then released as Special Shares until Capco shall
no longer have any Special Shares, with the balance allocated to Cogen.
(ii) (A) If an Increased Capacity Event occurs on or before
the Commercial Operations Date, the Special Shares shall be reduced by an
amount (the "Capacity Credit") equal to the product of (1) 1/280,108 times (2)
657,424 per MW for each MW (prorated for any part thereof) of increase in
Increased Capacity in excess of 114 MW but not greater than 122.2 MW. As
provided in Section 2.4(c)(iv) of this Agreement, such credit shall be made
first by decreasing the Special Shares by the Capacity Credit (as if such
credit was stated as a percentage), and then, by allocating first to Capco the
number of shares then released as Special Shares until Capco shall no longer
have any Special Shares, with the balance allocated to Cogen.
(B) If an Increased Capacity Event occurs after the
Commercial Operations Date, but within the period set forth in Section 2.4(b),
the Special Shares shall be reduced by an amount (the "Additional Capacity
Credit") calculated in the same manner as is set forth in Section
2.4(c)(ii)(A) except that the value of 657,424 per MW shall be reduced to a
value of 609,091 for the purposes of calculating the Additional Capacity
Credit. As provided in Section 2.4(c)(iv) of this Agreement, such credit shall
be made first by decreasing the Special Shares by the Additional Capacity
Credit (as if such credit was stated as a percentage), and then, by allocating
first to Capco the number of shares then released as Special Shares until
Capco shall no longer have any Special Shares, with the balance allocated to
Cogen.
(C) If Cogen is able to obtain an increase in the
Increased Capacity, within the period set forth for an Increased Capacity
Event in Section 2.4(b), to a level above 127.2 MW, the Parties shall
negotiate to effect an appropriate amendment to the Power Purchase Agreement
and, based on the amendment, an appropriate reduction in Special Shares
reflecting the incremental cost to the Company of the capacity increase and
the incremental value to the Company of the additional sales and subject to
the fulfillment of the proviso set forth in Section 2.4(b) above.
(iii) If a Revised Tariff Event occurs within the period set
forth in Section 2.4(b), the Special Shares shall be reduced by an amount (the
"Revised Tariff Event Credit", and together with the Avoided LD Event Credit,
Capacity Credit and Additional Capacity Credit, collectively the "Credits";
and individually a "Credit") equal to 7.0687. As provided in Section
2.4(c)(iv) of this Agreement, such credit shall be made first by decreasing
the Special Shares by the Revised Tariff Event Credit (as if such credit was
stated as a percentage), and then, by allocating first to Capco the number of
shares then released as Special Shares until Capco shall no longer have any
Special Shares, with the balance allocated to Cogen.
(iv) Each Credit, and the corresponding reduction of Special
Shares, shall, for all purposes of this Agreement, be deemed made, and
received by Cogen or Capco, as the case may be, on the date of occurrence of
the corresponding Enhancement Event. Without limiting the decrease in Special
Shares upon the occurrence of each Credit, it is agreed that on and as of the
date that the aggregate of all Credits equals or exceeds 9.25, then subject to
Section 2.4(c)(v), the respective shares of Cogen and Capco in the Company
then constituting Special Shares (if any), and all shares of the Company
issued or received then or thereafter by Cogen and Capco attributable thereto
or otherwise, shall forever cease to be Special Shares, and the provisions and
references to Special Shares in this Agreement shall be deemed terminated and
deleted mutatis mutandis throughout this Agreement.
(v) Notwithstanding the foregoing, any decrease in ~he `.~-.~er of
Special Shares shall not cause a reduction in the amount of the Cost Overrun
L/C posted by Coastal SP. If there are any draws on such Cost Overrun L/C,
Coastal SP shall have the right to become the owner of any shares purchased
with the proceeds of such draw in accordance with Section 1.2(d)(i). Each of
Cogen and Capco hereby waives any right it may have to reimburse any such draw
and any preemptive rights to acquire shares pursuant to any such draw.
2.5 Limitation of Indemnity of Cogen Under the Purchase Agreement.
Notwithstanding anything in this Agreement or in the Purchase Agreement to the
contrary, Shareholder (in this Section 2.5 as defined in the Purchase
Agreement) shall have liability to Buyer (in this Section 2.5 as defined in
the Purchase Agreement) under Section 10.01(a) of the Purchase Agreement only
to the extent described in Section 10.01(b) of the Purchase Agreement and
further limited as follows: from and after the Closing Date the obligations of
Shareholder to make any payment to Buyer in satisfaction of any such liability
shall be limited to (a) making payments from Distributions (as defined in
Section 4.4(c) of the Security Trust Deed) when and if payable to or received
by Shareholder pursuant to Sections 4.4(c) and (d) of the Security Trust Deed
(and if any such Distributions have yet to be paid, the appropriate parties
shall be instructed by Shareholder that such Distributions be paid only to the
extent due hereunder, directly to the appropriate indemnitees) and (b) from
any Enhancement Amount that pursuant to Section 3.02 of the Capitalization
Agreement is to be paid to Cogen Technologies Capital Company, L.P. after
Buyer has made a claim for which Shareholder is so liable by Buyer's reducing
any such amount yet to become due; provided, however, that any payments
received by Buyer with respect to Special Shares during such time as they
constitute Special Shares shall not be deemed as payments made by Shareholder
in satisfaction of any liability of Shareholder under Section 10.01(a) of the
Purchase Agreement. If Shareholder transfers any shares, the indemnity
obligations in Section 10.01(a) of the Purchase Agreement (as limited by
Section 10.01(b) thereof and this Section 2.5) shall be borne by the
transferees of such shares in proportion to the number of transferred shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties. Each of the Parties represents and
warrants to the others that as of the date of this Agreement:
(i) it is duly formed or incorporated, as applicable, existing, in
good standing and has complied fully with all requirements of applicable laws
and regulations of the country in which it is incorporated;
(ii) it has the power to enter into and to perform this Agreement;
(iii) except for the approvals from PPIB and the Finance Parties
of the transactions contemplated hereunder and under the Purchase Agreement,
all necessary corporate and/or other consents and procedures necessary to
authorize and give effect to the execution and performance of this Agreement
have been duly obtained and followed and remain in force as of the date
hereof;
(iv) this Agreement is its legal, valid and binding obligation and
is enforceable in accordance with its terms subject to bankruptcy, insolvency
or similar laws affecting creditors rights and general principles of equity;
(v) the effectiveness of this Agreement will not violate any
obligation, whether by reason of any law or regulation or under any contract,
by which it is bound;
(vi) there are no proceedings pending, or to the best of its
knowledge threatened, for its liquidation;
(vii) it will, following the receipt of shares in the Company
pursuant to this Agreement and subject to the Security Documents, be the full
legal and beneficial owner of such shares; and
(viii) it is aware that it is illegal under the United States
Foreign Corrupt Practices Act (the "FCPA") to give, offer, promise or
authorize the giving of anything of value to any government official or
political party in an effort to win or retain business; for purposes of this
Agreement, "government official" means not only a public official, but also a
government employee (including employees of government-owned utilities and
other state enterprises), director of a state enterprise, candidate for public
office or party official; nothing was done in connection with the Project by
any Shareholder, its Affiliates or any of their respective directors,
officers, shareholders or, to Shareholder's knowledge, employees, or by the
Company or any of its shareholders, directors, officers or employees that, if
done by an American citizen, would have constituted a violation of the FCPA.
ARTICLE IV
DISTRIBUTIONS
4.1 Redistribution Through Agent.
(a) On the Closing Date, each Shareholder shall join in appointing
the Agent as agent for all the Shareholders, collectively, authorized to
receive all distributions of dividends and any other amounts payable by the
Company to the Shareholders, on behalf of such Shareholder, and each
Shareholder shall join in instructing the Company to make any such payments
directly to the Agent, by issuing the Agent Appointment Letter, in the form
attached hereto as Schedule 4.1(a). All distributions by the Company
(including dividends, returns of capital and any assets or cash distributed
following the winding up of the Company) shall be paid to the Agent directly.
Agent shall, at the direction of the Shareholders, redistribute all amounts
received by it on behalf of the Shareholders to the Shareholders in accordance
with the terms of this Agreement. Notwithstanding any provisions relating to
the sharing of distributions set forth in the Articles of Association of the
Company, no Shareholder shall be entitled to any amount, funds or property
distributed by the Company except as provided in this Agreement and the
Indemnity Agreement.
(b) Except as provided in Sections 2.1, 4.2 or 4.3 and subject to
Section 4.5, and any interest that Cogen may acquire pursuant to Sections
1.2(c) or (d), Section 2.4(c)(v) or Section 6.4, all distributions of cash or
property to the Agent by the Company shall be redistributed by the Agent in
the following percentages:
Coastal SP 100%
Cogen 0%
Capco 0%
4.2 Exception Where Enhancement Event Has Occurred. When any Enhancement
Event has occurred, the Agent shall redistribute a percentage of the cash and
property to Coastal SP equal to the sum of 90.75% and the percentage of the
Company's issued shares that remain as Special Shares plus any other shares
owned by Coastal SP pursuant to Section 1.2(d), and the balance shall be
redistributed by the Agent to Cogen and Capco in proportion to their
respective percentage holding of shares other than Special Shares.
4.3 Exception for Distributions Following Winding-up of the Company.
Liquidating distributions of cash or property to the Agent in connection with
the winding up of the Company will be redistributed to Shareholders with
positive Capital Account balances pro rata in the same ratio as the balances
in their Capital Accounts.
4.4 No Restoration of Negative Capital Accounts. Except for any negative
balance resulting from a distribution in contravention of this Agreement, at
no time will a Shareholder with a negative balance in its Capital Account as
defined in Section 5.1 have any obligation to restore the negative balance.
4.5 Adjustment of Distributions. Any and all distributions to be made by
Agent shall be made to each Shareholder in accordance with the percentage of
the Company's issued shares held by such Shareholder, taking into account any
Special Shares or other shares held by such Shareholder in accordance with
Section 1.2(d).
ARTICLE V
CAPITAL CONTRIBUTIONS
5.1 Capital Accounts. A separate capital account ("Capital Account")
will be maintained for each Shareholder. Capital Accounts will be maintained
in the manner required by Treas. Regs. Section 1.704-l(b). There will be added
to the Capital Account of each Shareholder:
(a) the amount of any cash and the fair market value of any
property that the Shareholder contributed to the Company (net of liabilities
securing the property that the Company is considered to assume or take subject
to under Section 752 of the U.S. Internal Revenue Code), and
(b) the Profits allocated to the Shareholder under Article VII.
There will be subtracted from the Capital Account of each Shareholder:
(c) the amount of any cash and the fair market value of any
property distributed to the Shareholder (net of liabilities securing the
property that the Shareholder is considered to assume or take under Section
752 of the U.S. Internal Revenue Code) but not counting any redirection of
cash distributions to pay indemnities pursuant to Section 2.5(a) hereof or
pursuant to Section 2.02(b) of the Indemnity Agreement, and
(d) the Losses allocated to the Shareholder under Article VII.
5.2 Basis for Initial Balance.
(a) For the reasons specified in the Capitalization Agreement,
each Shareholder will have an initial Capital Account balance on the Closing
Date of zero.
(b) The stock of the Company had zero value prior to the infusion
of approximately $28 million in new capital after the Closing Date. The
early-stage development work on the Project in the amount of $15.372 million
was funded by an Affiliate of Cogen and Capco and has been capitalized. The
Company has zero net worth. An additional approximately $28 million in new
equity is required by the Finance Parties, and Coastal SP has agreed to
contribute 92. 75% of such equity in exchange for which the Company agreed to
issue Coastal SP sufficient shares so that Coastal SP will own 90. 75% of the
shares after giving effect to Section 1.2(C)
(c) The Finance Documents require the Shareholders to contribute
24% or more of the total cost of the Project, or approximately $43 million in
equity of which $15. 372 million is represented by capitalized early stage
development work already funded. The Shareholders closed the shortfall of
$15.732 million between the capital infusion required by the construction
lender and the "equity" required by the Finance Documents by having the
Company capitalize the $15.372 million of the Affiliated Payable (as such term
is defined in the Capitalization Agreement). Such $15.372 million that was
capitalized in exchange for shares of the Company was treated as equity for
purposes of the Implementation Agreement and the Finance Documents and was not
viewed by the Shareholders as creating positive value and its omission from
the Capital Accounts reflects agreement that the approximately $28 million in
new capital infusion after the Closing Date is the only true capital in the
Company going forward.
ARTICLE VI
TRANSFER OF SHARES
6.1 Invalid Share Transfer. If any Party hereto shall transfer any
shares of stock of the Company in violation of the terms of the loan
documentation evidencing the construction and/or permanent financing for the
Project or the Memorandum and Articles of Association or other organizational
documents of the Company or under any other agreement relating to the Project,
including, without limitation, the Project Documents, such transfer will be
null and void and of no force and effect. Nothing in this Article shall be
construed as authorizing any Party to transfer any stock in violation of such
loan documentation or the Memorandum and Articles of Association or other
organizational documents of the Company or any other agreement relating to the
Project.
6.2 Transfer of Special Shares. If Cogen or Capco transfers any shares
that are treated as Special Shares, such transfer shall be made subject to
Coastal SP's rights and undertakings under this Agreement including the right
to receive payments equal to the dividends from such shares and the
undertaking to grant Credits with respect thereto and decrease Special Shares
upon the occurrence of Enhancement Events, as though Cogen or Capco, or both,
as applicable, remained the owners thereof.
6.3 New Parties and Transfers with Irrevocable Proxy. Each Shareholder
agrees that it will not transfer shares in the Company unless any transferee
of such shares agrees to become a party to this Agreement and executes and
delivers the irrevocable proxy described in Section 1.7. The Shareholders
shall cause the Company to place a legend on all share certificates stating
that the issuance and transfer of shares and dividends associated with the
shares are subject to the provisions of this Agreement.
6.4 Transfer of Cogen Shares.
(a) If no Enhancement Event has occurred during the time period
set forth in Section 2.4(b) of this Agreement for such events (the
"Enhancement Period") or if Enhancement Events have occurred but Cogen
continues to own Special Shares at the end of the Enhancement Period, Cogen
shall, within 30 days after the last day on which such Enhancement Event could
have occurred, transfer to Coastal SP all of the Special Shares owned by
Cogen. Such transfer shall be evidenced in a manner reasonably acceptable to
Coastal SP.
(b) Upon the earlier of the end of the Enhancement Period and the
date on which all Enhancement Events are achieved, Coastal SP shall have the
right to purchase all shares of the Company owned by Cogen that are not
Special Shares for a price to be determined pursuant to Annex C. Coastal SP's
right to purchase such shares shall expire on the 90th day following the day
on which Cogen gives notice to Coastal SP that either (a) the Enhancement
Events have been achieved or (b) the Enhancement Period has ended.
(c) Except as set forth in this Section 6.4 or otherwise with
Coastal SP's consent, Cogen may not transfer any Special Shares and may not,
before the end of the 90 day period described in Section 6.4(b), transfer any
shares that are not Special Shares; provided, however, that Cogen may transfer
2% of the shares of the Company that are Special Shares to Western Resources
Energy Limited ("Western") pursuant to a letter agreement by and among Cogen,
Western and Capco dated February 28, 1997, subject to the consent of the
Lenders.
6.5 Negative Covenant. Except as set forth in the Security Documents and
the Indemnity Agreement, Cogen and Capco shall not suffer the encumbrance of
any dividends available for satisfaction of the liabilities described in
Section 2.5 hereof.
ARTICLE VII
U.S. TAXABLE INCOME
7.1 Filing Returns. The Company will file a return each year with the
U.S. Internal Revenue Service, and furnish a copy to each Shareholder, as
required by Section 6031 of the U.S. Internal Revenue Code for foreign
partnerships in which there are U.S. persons as partners.
7.2 Losses. After giving effect to the special allocations in Section
7.7, Losses each year will be allocated as follows:
(a) First, in any year when the Company is in a cumulative net
loss position after taking into account Profits and Losses for all prior
years, 90.75% to Coastal SP, 7.25% to Cogen and 2% to Capco, but only to the
extent of the cumulative net loss of the Company, and
(b) the balance, if any, 100% to Coastal SP, 0% to Cogen and 0% to
Capco.
7.3 Profits. After giving effect to the special allocations in Section
7.7 and with the exception in Section 7.6 of certain gains from Disposition
Events, Profits each year will be allocated as follows:
(a) First, 90.75% to Coastal SP, 7.25% to Cogen and 2% to Capco in
an amount equal to the excess, if any, of (i) the cumulative Losses allocated
to such Shareholders in prior years under Section 7.2, over (ii) the
cumulative Profits allocated to such Shareholders in prior years, and
(b) the balance, if any, 100% to Coastal SP, 0% to Cogen and 0% to
Capco.
7.4 Meanings of Profit and Loss. "Profits" and "Losses" mean the taxable
income or loss of the Company computed under U.S. tax rules, but with any
adjustments required by the capital account maintenance rules in Treas. Regs.
Section 1.7041(b)(2)(iv), including the following:
(a) any income that is exempted from U.S. income tax and would not
be taken into account by a U.S. company for purposes of figuring taxable
income will still be included in Profits or Losses for purposes of
allocations, and
(b) any expenditures by the Company that are described in Section
705(a)(2)(B) of the U.S. Internal Revenue Code or treated as Section
705(a)(2)(B) expenditures by the U.S. income tax regulations will be
subtracted from taxable income or loss.
7.5 Effect of Enhancement Events. If there is an Enhancement Event that
causes the percentages for making distributions under Section 4.1(b) to
change, then those same percentages will be used for allocating residual
Profits and Losses in Sections 7.2(b) and 7.3(b) hereof.
7.6 Gain from Disposition Events. Any gain from a Disposition Event will
be allocated first to Shareholders in the amounts needed to bring their
Capital Account balances into the ratio then in effect for making
distributions under Section 4.1(b). Any remaining gain will be allocated in
the same manner as other Profits.
7.7 Special Allocations. The following special allocations will be made
before any general allocations of Profits and Losses in Sections 7.2 and 7.3
hereof:
(a) No Shareholder will be allocated Losses in any calendar year
to the extent the allocation would cause the Specially-Adjusted Capital
Account of the Shareholder to go into deficit. The Specially-Adjusted Capital
Account of a Shareholder is not considered in deficit to the extent the
Shareholder is obligated to restore the capital account (including any deemed
obligation to restore under U.S. income tax regulations) at liquidation.
"Specially-Adjusted Capital Account" means the Capital Account of a
Shareholder adjusted for certain expected events described in Treas. Regs.
Section 1.704-l(b)(2)(ii)(d).
(b) Minimum Gain Chargeback. If the Company has a net decrease in
"partnership minimum gain" (within the meaning of Treas. Regs. Section
1.704-2(b) (2)) in a year, then each Shareholder will be allocated it~ms of
gross income and gain that year, before any other allocation, equal to that
Shareholder's share of the net decrease in partnership minimum gain. This
provision is intended to comply with the requirements of Treas. Regs. Section
1.704-2(f).
(c) Partner Minimum Gain Chargeback. If a Shareholder suffers a
net decrease in "partner nonrecourse debt minimum gain" (within the meaning of
Treas. Regs. Section 1.704-2(i)(4)) in a year, then that Shareholder will be
allocated items of gross income and gain to comply with the requirements of
Treas. Regs. Section 1.7042(i)(4).
(d) Qualified Income Offset. If a Shareholder unexpectedly
receives an adjustment, allocation or distribution described in Treas. Regs.
Section 1.704-l(b)(ii)(d)(4), (5) or (6) and this causes the
Specially-Adjusted Capital Account of the Shareholder to go into deficit, then
the Shareholder will be allocated gross income in an amount and manner
sufficient to eliminate the deficit as quickly as possible. However, the
Capital Account of a Shareholder is not considered in deficit to the extent
the Shareholder is obligated to restore the Capital Account (including any
deemed obligation to restore under U.S. income tax regulations) at liquida-
tion. This provision is intended to serve as a "qualified income offset"
within the meaning of Treas. Regs. Section 1.704-2(b)(ii)(d).
(e) Partner Nonrecourse Deductions. If there are any "partner
nonrecourse deductions" (within the meaning of Treas. Regs. Section
1.704-2(i)(1), then these will be specially allocated to the Shareholder who
bears the economic risk of loss for the "partner nonrecourse liability"
(within the meaning of Treas. Regs. Section 1.704-2(b)(4)) to which the
deductions are attributable.
(f) Section 704(c) Adjustments. If any Shareholder contributes
appreciated or depreciated property to the Company, allocations to
Shareholders will be adjusted as required by Section 704(c) of the U.S.
Internal Revenue Code to take into account the built-in gain or loss at the
time of contribution.
ARTICLE VIII
CONFIDENTIALITY
Each Party agrees not to disclose to any third party the contents of
this Agreement, any other documentation or agreement in connection with this
Agreement or the Project that is marked as confidential, and any and all
written information marked as confidential relating to this Agreement or the
Project without the prior written consent of the other Parties. The obligation
of each Party under this Article VIII shall extend to such Party's officers,
directors, affiliates, consultants, agents and employees and shall survive the
expiration or termination of this Agreement for a period of five (5) years
thereafter. For the purpose of this Agreement, confidential information shall
not include:
(i) any information that was rightfully in the possession of a
Party prior to the date of disclosure of such information to the Party;
(ii) any information that was in the public domain prior to the
date of disclosure of such information to a Party;
(iii) any information that becomes part of the public domain by
publication or otherwise except by an unauthorized act or omission on the part
of a Party;
(iv) any information that is supplied to a Party by a third party
which is under no obligation to the other Party to maintain such information
in confidence;
(v) any information required or reasonably requested by any of the
Finance Parties in connection with financing the Project or by the GOP or any
other governmental entity in connection with the implementation of the
Project; and
(vi) any information which a Party is required by law or
regulatory process to disclose.
If any Party or its representatives are requested or required (by oral
question, interrogatories, requests for information or documents, subpoenas,
governmental inquiry, or similar process) to disclose any documentation or
information of a confidential nature relating to this Agreement, the Party
receiving such request or demand will use reasonable efforts to provide the
other Parties with prompt notice of such request or demand so that such other
Parties have an opportunity to seek an appropriate protective order. In
addition, each Party agrees to take all reasonable steps necessary to prevent
disclosure of such confidential material, including seeking an appropriate
protective order, or, if the information is required to be disclosed,
confidential treatment. It is further agreed that, if, in the absence of a
protective order, any Party or any of its representatives are legally required
to disclose such confidential information concerning this Agreement or a Party
to this Agreement, such Party or its representatives may disclose such
information without liability hereunder, but no Party shall be relieved or any
liability hereunder for any previous disclosure by such Party or any of its
representatives which was not permitted by this Agreement.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification. Each of the Parties (each an "Indemnifying Party")
shall indemnify and save the other Party harmless from, against, for and in
respect of any and all direct damages, losses, settlement payments,
obligations, liabilities, claims or actions suffered, sustained, incurred or
required to be paid by the other Parties arising from or relating to (a) the
negligence or willful misconduct of such Indemnifying Party with respect to
the actions contemplated under this Agreement or (b) a breach by such
Indemnifying Party of any of its obligations hereunder; provided, however,
that no Party shall be liable for indirect or consequential damages including
lost profits.
9.2 Indemnification for Payments under the Shareholders' Direct
Agreement. In recognition of the joint and several liability of Cogen and
Capco under the Shareholders' Direct Agreement, each of Cogen and Capco
further agree, without limiting the indemnity set forth in the foregoing
Section 9.1, that if either of Cogen or Capco fails to make any payment under
the Shareholders' Direct Agreement and the other party is called upon to make
a payment thereunder that is in excess of the payment it would otherwise have
made taking into account such party's ownership percentage of the issued and
outstanding shares of the Company, such party shall be entitled to
reimbursement from the other party.
ARTICLE X
MISCELLANEOUS
10.1 Entire Agreement; Amendments. This Agreement, the Purchase
Agreement, the Indemnity Agreement, the Capitalization Agreement, the Equity
Put Agreement and the Finance Documents contain the entire agreement and
understanding among the Parties hereto with respect to the subject matter
contained herein and supersede all prior and contemporaneous agreements,
negotiations, understandings, representations and statements, oral and
written. No amendment, modification, limitation or release of any of the terms
and conditions contained herein shall be made except by a written agreement
executed by the duly authorized representatives of the Parties hereto and in
full compliance with any applicable governmental requirement.
10.2 Assignment. No Party shall assign its rights or delegate its
obligations hereunder without the prior written consent of the other Parties;
provided that each Party consents to the other Party's assignment of this
Agreement to the Security Trustee pursuant to the Pledge Agreements. Each such
assignee shall agree to become a party to this Agreement.
10.3 Arbitration. If any dispute or claim between or among any of the
Parties arising out of this Agreement or their rights and duties arising out
of this Agreement (in this Section 10.3, a "claim") has not been resolved by
mutual agreement on or before the thirtieth (30th) day following the first
notice of the subject matter of the claim to or from one Party to the other,
then any Party may refer the claim to binding arbitration under the following
provisions:
(a) To refer a claim to arbitration, a party must provide notice
to the other party stating (i) a general description of the claim and (ii)
that the claim is being referred to arbitration under this Section 10.3(a).
(b) The Parties shall endeavor to agree promptly on a panel of
three arbitrators. If on or before the fifteenth (15th) day following the
notice described in Section 10.3(a) they have not so agreed, then each Party
may designate one arbitrator. If no arbitrator or only one arbitrator is
selected as just provided by the fifteenth (15th) day following the expiration
of the fifteenth (15th)-day period referred to at the beginning of the
immediately preceding sentence, any party may petition the United States
District Court for the Southern District of New York to designate a number of
arbitrators so that two in total have been designated. The two arbitrators
designated as provided above in this Section 10.3(b) shall endeavor to
designate promptly a third arbitrator. If the two arbitrators have not
designated a third arbitrator by the fifteenth (15th) day following the
designation of the second arbitrator, any party may petition the United States
District Court for the Southern District of New York to appoint the third
arbitrator. If the court named above has failed to designate an arbitrator,
then on or after the fifteenth (15th) day following the request, any Party may
request the International Court of Arbitration of the International Chamber of
Commerce to designate the arbitrator. If any arbitrator resigns, becomes
incapacitated, or otherwise refuses or fails to serve or to continue to serve
as an arbitrator, the Party or other Person that designated that arbitrator
shall designate a successor.
(c) The arbitration shall be conducted in New York City or such
other place as the Parties may agree. The arbitrators shall set the date, the
time, and the place of the hearing, which must commence on or before the
thirtieth (30th) day following the designation of the third arbitrator. The
hearing may be adjourned to later times and dates as the arbitrators
determine. The arbitration shall be conducted under the rules of the
International Chamber of Commerce not inconsistent with the provisions of this
Agreement or such other rules as the Parties may agree. The arbitrators shall
endeavor to notify a Party not present of any adjournment to other dates or
places; however, the proceedings may continue in the absence of either Party
that has received appropriate notice of the date, the time, and the place of
the initial session of the hearing.
(d) The arbitrators shall endeavor to render their decision on or
before the thirtieth (30th) day following the last session of the hearing. If
the position of one Party prevails, then the other Party shall pay all fees
and expenses of the arbitrators and the prevailing Party in the arbitration.
If the positions of both Parties prevail, the arbitrators' decision must
include an allocation of the fees and expenses of the arbitrators to the
Parties based on the extent to which the Parties do not prevail on their
positions. Each Party against which the decision assesses a monetary
obligation shall pay that obligation on or before the thirtieth (30th) day
following the decision or such other date as the decision may provide.
(e) The decisions of the majority of the arbitrators are final and
binding on both Parties and are not subject to appeal. Without limiting the
provisions of Sections 10.3(g) and (h), the decisions of the arbitrators
(including the granting of the remedies of specific performance and injunctive
relief) may be enforced in any court of competent jurisdiction, and the
Parties authorize any such court to enter judgment on the arbitrators'
decisions.
(f) The Parties agree that arbitration under this Section 10.3 is
the exclusive method for resolving any claim and that it will not commence an
action or proceeding based on a claim, except to enforce arbitrators'
decisions as provided in this Section 10.3 or to compel the other party to
participate in arbitration under this Section 10.3.
(g) This paragraph 10.3(g) and the following paragraph 10.3(h) do
not affect the limitations set forth in paragraphs 10.3(a) through (f) above
on commencing judicial proceedings, but may be used to enforce arbitrators'
decisions, to compel Persons to participate in arbitration, or to compel
Persons that have brought judicial proceedings other than in compliance with
this Section 10.3 to dismiss those proceedings.
(h) The Parties agree that any arbitration award made may be
enforced by each such Party against assets of each of the other Parties,
wherever those assets are located or may be found, and judgment upon any
arbitration award may be entered by any court of competent jurisdiction
thereof. The Parties expressly submit to the jurisdiction of any such court.
10.4 Notices. All notices, communications, or other documents to be
given or made by one Party to the other Parties pursuant to this Agreement
shall be in writing, shall be addressed for the attention of the person
indicated below, and shall either be delivered personally or sent by telegram,
registered or certified mail, or facsimile. The addresses for service of the
Parties and their respective facsimile numbers shall be:
(a) For Cogen:
Address: 0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx Xxxxx and
Xx. Xxxxxxx X. Xxxxxxxx
Facsimile: 000-000-0000
(b) For Coastal SP:
Address: Les Cascades Building
Xxxxx Xxxxxx Street
Port Louis, Mauritius
Facsimile: 000-000-0000
with a copy to:
Address: Coastal Power Company
Nine Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: President
Facsimile: 000-000-0000
(c) For Capco:
Address: 000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Ed Names
Facsimile: (000) 000-0000
or such other addresses and facsimile numbers as either Party may have
notified to the other Party in accordance with this Section 10.4.
10.5 Notices Continued. All Notices shall be deemed delivered (a) when
presented personally, (b) if received on a business day for the receiving
Party, when transmitted by facsimile to the receiving Party's facsimile number
specified above and, if received on a day that is not business day for the
receiving Party, on the first business day following the date transmitted by
facsimile to the receiving Party's facsimile number specified above, (c) one
(1) day after being delivered to a courier for overnight delivery, addressed
to the receiving Party, at the address indicated above (or such other address
as such Party may have specified by Notice delivered to the delivering Party
at its address or facsimile number specified above) or (d) upon receipt if
deposited in a regularly maintained receptacle for the postal service in
Pakistan or the United States, as applicable, postage prepaid, registered or
certified, return receipt requested, addressed to the receiving Party, at the
address indicated above (or such other address as the receiving Party may have
specified by written Notice delivered to the delivering Party at its address
or facsimile number specified above). Any Notice given by facsimile shall be
confirmed in writing delivered personally or sent by registered or certified
mail, but the failure to so confirm shall not void or invalidate the original
Notice if it is in fact received by the Party to which it is addressed.
10.6 Definitions. The terms set forth in Annex B shall have the meanings
set forth therein whenever used in this Agreement, whether in the singular or
the plural, or in the present or in the past tense. Capitalized terms used
herein but not otherwise defined in Annex B, shall have the meanings ascribed
to such terms and be subject to the rules of interpretation in the Purchase
Agreement (and such definitions and rules of interpretation are incorporated
herein by reference).
10.7 U.S. Tax Matters Partner. Cogen will be the "tax matters partner"
of the company within the meaning of Section 6231 of the U.S. Internal Revenue
Code for purposes of any dealings with the U.S. tax authorities. However,
Cogen will keep Coastal SP and Capco fully informed on a timely basis of any
communications with the U.S. tax authorities about the Company and give the
other Parties the opportunity to attend any meetings or participate in any
telephone discussions with the U.S. tax authorities pertaining to the Company.
Cogen will not take any positions or file any material in writing with the
U.S. tax authorities in the capacity as tax matters partner without first
obtaining agreement from Coastal SP. Cogen will be reimbursed for the
reasonable expenses it incurs in performing its duties as tax matters partner.
10.8 Pakistan Taxes. The Company will deal directly with the tax
authorities in Pakistan, but will keep the Shareholders informed on a timely
basis of any issues that arise.
10.9 Elections. The Company will make an election under Section 754 of
the U.S. Internal Revenue Code if any Shareholder so requests. It will make
any other elections for tax purposes in the United States or Pakistan that a
majority in interest of the Shareholders believes is desirable.
10.10 Governing Law. This Agreement and any arbitration arising from or
relating to it shall be governed by and construed, interpreted and enforced in
accordance with the laws of the State of New York.
10.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
10.12 Limitation on Liability. Notwithstanding any provision contained
or referred to in this Agreement to the contrary, each Shareholder agrees with
the other Shareholders that no representation, warranty, indemnity, assurance
or other agreement made in, or in connection with, this Agreement has been
made, or shall be deemed to have been made, by any Person other than such
Shareholder who is a signatory hereto, and that neither any Shareholder, nor
any Affiliate or subsidiary of any Shareholder, nor any shareholder, member,
officer, director, employee, agent or general or limited partner of any
Shareholder, nor any Person heretofore having served or maintained, or now or
hereafter serving or maintaining ,the status of shareholder, member, officer,
director, employee, agent or general or limited partner of any Shareholder or
any subsidiary or Affiliate of any Shareholder, has relied on any statement
made by (a) any shareholder, member, director, officer, employee, agent or
general or limited partner, subsidiary or Affiliate of any other Shareholder,
or (b) any shareholder, member, officer, director, employee, agent or general
or limited partner of any such subsidiary or Affiliate or (c) any Person that,
whether individually or in a representative capacity, at the time any such
statement was made served or maintained the status of shareholder, member,
officer, director, employee, agent or general or limited partner of any such
other Shareholder or any subsidiary or Affiliate of any such other
Shareholder, in conducting its due diligence review related to the
transactions contemplated by this Agreement, or in deciding to initiate its
participation in, or in proceeding on or prior to the Closing Date with, and
consummating on or prior to the Closing Date, the transactions provided for
in, this Agreement and the transaction contemplated hereby. Each Shareholder
agrees with the other Shareholders that, subject to the additional
limitations, as applicable, in Section 2.5 of this Agreement and Sections
10.01(b) and 10.02(b) of the Purchase Agreement, their respective liabilities
hereunder are limited to claims against the assets of such Shareholder, and
that no such claims shall be made against or upon, and no recourse shall be
had to the assets of, any other Person including, without limitation, (i) any
director, officer, employee, agent, general or limited partner, shareholder,
member, subsidiary or Affiliate of any Shareholder, or (ii) any shareholder,
member, officer, director, employee, agent or general or limited partner of
any such subsidiary or Affiliate, or (iii) any other natural person, or (iv)
any Person heretofore having served or maintained, or now or hereafter serving
or maintaining ,the status of shareholder, member, officer, director,
employee, agent or general or limited partner of any Shareholder or any
subsidiary or Affiliate of any Shareholder, or (v) any successor, assign,
heir, executor or legal representative of any of the foregoing Persons;
provided, however, that nothing herein shall limit the liability of any Person
for damages for fraud, knowing misrepresentation or willful misconduct.
IN WITNESS WHEREOF, the Parties have caused their duly authorized
representatives to execute this Agreement as of the date first above written.
COGEN TECHNOLOGIES SABA
Attestation of Witnesses:
/s/ By: Cogen Technologies Saba
Name: Power GP, Inc., Member
Occupation:
Address: By:/s/
Name:
Title:
Attestation of Witnesses:
/s/
Name:
Occupation:
Address:
Attestation of Witnesses:
/s/ By: Cogen Technologies Saba
Name: Power GP, Inc., Member
Occupation:
Address: By:/s/
Name:
Title:
Attestation of Witnesses: By: Cogen Technologies Saba
Power GP, Inc., its General
/s/ Partner
Name:
Occupation:
Address:
COASTAL SABA POWER LTD.
Attestation of Witnesses:
/s/ By:/s/
Name: Name:
Occupation: Title:
Address:
Attestation of Witnesses:
/s/
Name:
Occupation:
Address:
CAPCO RESOURCES, INC.
Attestation of Witnesses:
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Names
Name: Xxxxxx X. Xxxxx Name: Xxxxxx X. Names
Occupation: Treasurer Title: President
Address: Littleton, CO
Attestation of Witnesses:
/s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Occupation: Accountant
Address: Denver, Colorado
ANNEX A
Part I
1. The execution of any contract or contract amendment, whether or not
on commercially reasonable terms, with respect to the provision of any goods
or services to the Company pursuant to which Coastal SP or Cogen or an
Affiliate of either is a party or in which it has an economic interest and the
making of any payment (other than dividends or payments under any contract or
contract amendment entered into in compliance with this Annex A) to any such
party.
2. Any election to increase the capital of the Company rather than
incurring indebtedness, if such indebtedness is available on commercially
reasonable terms (without any credit support from the Shareholders), except as
expressly set forth in Section 1.2 of the Shareholder's Agreement.
3. Any substantial expansion of the power generating capacity of the
Project to more than 150 MW.
Part II
1. Sale of all or substantially all of the Company's assets.
2. Any dissolution or winding up of the Company (other than dissolution
or winding up caused by the bankruptcy or dissolution of any Shareholder).
3. Any substantial change in the nature of the business of the Company.
4. Any change in the Company's policy to declare dividends with respect
to substantially all of the Company's net earnings subject to applicable laws
and reasonable reserve requirements.
ANNEX B
"Agent" shall mean a bank or other financial institution designated by
all of Coastal SP, Cogen and Capco acting jointly, to serve as agent for the
receipt and distribution of dividends and other distributions to be made by
the Company to the Shareholders as specified in Section 4.1(a).
"Base Equity" shall have the meaning set forth in Section 1.2(a) hereof.
"Base Equity L/C" shall have the meaning as set forth in Section 1.2(a).
"cost Overrun L/C" shall have the meaning set forth in Section 1.2(a) hereof.
"Debt Service Reserve L/C" shall have the meaning set forth in Section
1.2(a) hereof.
"Disposition Event" means a sale, exchange or other disposition of
Company assets, including the disposition of assets that occurs when the
Company is wound up and its assets liquidated.
"Enhancement Event" shall mean any of those events set forth in Section
2.4(b).
"Equity Support L/C's" shall have the meaning set forth in Section
1.2(a).
"Indemnifying Parties" shall have the meaning set forth in Section 9.1
hereof.
"Notices" shall mean all notice, communications, or other documents
given or to be given or made by on Party to the other Parties pursuant to this
Agreement.
"Restoration Reserve L/C" shall have the meaning as set forth in Section
1.2(a) hereof.
"Shareholder or Shareholders" shall mean each of or all holders of
shares of the Company.
"Shareholders' Direct Agreement" shall mean the Amended and Restated
Shareholders' Direct Agreement dated as of February 25, 1997.
"Special Shares" shall have the meaning set forth in Section 2.4(a)
hereof.
"SSOI" shall mean Xxxxxxx & Xxxxxxxxx Operations, Inc.
Schedule 4.1(a)
Form of Agent Appointment Letter
[Closing Date]
[Agent Bank]
[Cayman Islands]
Dear _____:
Reference is made to the Shareholders' Agreement, dated as of February
25, 1997 (the "Shareholders' Agreement"), among Cogen Technologies Saba
Capital Company, L.L.C. ("Cogen"), Capco Resources, Inc. ("Capco") and Coastal
Saba Power Ltd. ("Coastal") (Cogen, Capco and Coastal hereinafter
collectively, the "Shareholders").
The undersigned Shareholders, acting jointly, hereby appoint [Agent
Bank] as their agent, to act as agent on their behalf to (i) receive all
distributions by Saba Power Company (Private) Limited (the "Company")
(including dividends, returns of capital and any assets or cash distributed
following the winding up of the Company) in accordance with the provisions of
the Shareholders' Agreement, and (ii) redistribute all such amounts in
accordance with the provisions of-the Shareholders' Agreement, including,
without limitation, Section 4.1 thereof.
COGEN TECHNOLOGIES SABA
CAPITAL COMPANY, L.L.C.
By: Cogen Technologies Saba
Power GP, Inc., Member
By:
Name
Title
and
By: Cogen Technologies Saba
Power, L.P., Member
By: Cogen Technologies Saba
Power GP, Inc., its
General Partner
By:
Name
Title
COASTAL SABA POWER LTD.
By:
Name
Title
CAPCO RESOURCES, INC.
By:
Name
Title
