SELLERS OMNIBUS AGREEMENT Regarding Indeck Maine Energy, LLC
Exhibit 10.3
Regarding
Indeck Maine Energy, LLC
This Sellers Omnibus Agreement (this
“Agreement”) is dated as of August 19,
2008 by and among Ridgewood Maine, L.L.C., a limited liability
company formed under the laws of Delaware
(“RM”), Indeck Energy Services, Inc., a
corporation formed under the laws of Illinois
(“IES”) and, solely as to Sections 2(e),
6, 9(b) and 13, Ridgewood Renewable Power LLC, a Delaware
limited liability company (the “Managing
Shareholder”). Terms used herein but not otherwise
defined shall have the respective meaning ascribed to them in
the IME Operating Agreement (as defined below).
RECITALS
WHEREAS, RM and IES are all of the members of Indeck
Maine Energy, L.L.C., a limited liability company formed under
the laws of Illinois (“IME”); and
WHEREAS, the Amended and Restated Operating Agreement of
Indeck Maine Energy, L.L.C. made as of June 11, 1997 (the
“IME Operating Agreement”), sets forth the
rights and responsibilities of the members of IME (in such
context, each an “IME Member” and collectively,
the “IME Members”) with respect to IME and
their respective membership interests therein (collectively, the
“IME Membership Interests”); and
WHEREAS, the Managing Shareholder is the managing
shareholder of certain business trusts formed under the laws of
Delaware (the “Trusts”), some of which are the
members and owners of RM; and
WHEREAS, RM, IES and the Managing Shareholder are all of
the parties to that certain Agreement dated as of
November 20, 2007 (the “Original
Agreement”), which the parties hereto desire to amend
as set forth herein; and
WHEREAS, the Managing Shareholder has negotiated a sale
of the IME Membership Interests owned by RM and IES, to an
unaffiliated third party (the “Proposed
Transaction”);
WHEREAS, RM has loaned funds to IME in the aggregate
principal amount of $8,150,000 plus accrued interest thereon
pursuant to a series of promissory notes issued from time to
time by IME and currently held by RM (the “RM Promissory
Notes”) and IES and its predecessors have loaned funds
to IME in the aggregate principal amount of $8,150,000 plus
accrued interest thereon pursuant to a series of promissory
notes issued from time to time by IME and currently held by IES
(the “IES Promissory Notes” and together with
the RM Promissory Notes, the “Promissory
Notes”), which Promissory Notes are listed on
Schedule 1 hereto; and
WHEREAS, RM and IES wish to set forth certain agreements
between them regarding the Proposed Transaction and other
related corporate matters.
NOW, THEREFORE, in consideration of the foregoing
and the mutual agreements contained herein, and for other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to become
legally bound, agree as follows:
1. Amendment of Original Agreement and IME
Operating Agreement.
(a) This Agreement supercedes the Original Agreement, which
is amended and restated in its entirety by this Agreement and
which Original Agreement is of no further force or effect.
(b) This Agreement constitutes an amendment of the IME
Operating Agreement in accordance with Section 13.2 thereof
to the extent that the terms and provisions hereof modify any
terms and provisions of the IME Operating Agreement as in
existence prior to the execution and delivery hereof.
2. Creation of Senior Preferred Membership
Units; Contribution of Promissory Notes.
(a) The parties agree that IME shall hereby authorize a new
class of membership interests in IME called “Senior
Preferred Membership Interests,” which shall be
denominated in units and issued by the Managing Shareholder in
accordance with the provisions of this Agreement. The units of
Senior Preferred Membership Interests (the “Senior
Preferred Membership Units”) shall initially consist of
1,000 authorized units. The holders of Senior Preferred
Membership Units shall be entitled to preferred allocations of
distributions from IME as further described in Section 7 of
this Agreement.
(b) Effective as of the date that is three days prior to
the scheduled closing date of the Proposed Transaction (the
“Contribution Date”), RM shall contribute the
RM Promissory Notes to IME in exchange for the issuance to RM of
500 Senior Preferred Membership Units (the “RM Senior
Preferred Units”), which Senior Preferred Membership
Units shall have an aggregate fair market value equal to the
aggregate amount of principal and accrued interest under the RM
Promissory Notes as of the Contribution Date.
(c) Effective as of the Contribution Date, IES shall
contribute the IES Promissory Notes to IME in exchange for the
issuance to IES of 500 Senior Preferred Membership Units (the
“IES Senior Preferred Units”), which Senior
Preferred Membership Units shall have an aggregate fair market
value equal to the aggregate amount of principal and accrued
interest under the IES Promissory Notes as of the Contribution
Date.
(d) The Senior Preferred Membership Units issued to each of
RM and IES hereunder shall not be certificated, but shall be
reflected in the records of IME.
(e) The Managing Shareholder shall provide RM and IES with
notice of the occurrence of the Contribution Date at least two
business days prior thereto. On the Contribution Date, RM shall
deliver all of the RM Promissory Notes in its possession to IME,
duly endorsed for transfer to IME, and shall provide an
affidavit and indemnity, reasonably acceptable to the Managing
Shareholder, with respect to any RM Promissory Notes no longer
in RM’s possession. On the Contribution Date, IES shall
deliver all of the IES Promissory Notes in its possession to
IME, duly endorsed for transfer to IME, and shall provide an
affidavit and indemnity, reasonably acceptable to the Managing
Shareholder, with respect to any IES Promissory Notes no longer
in IES’s possession. IME will cancel the Promissory Notes
upon its receipt of the Promissory Notes or indemnity and
affidavits with respect thereto, and issuance of the Senior
Preferred Membership Units.
3. IME Membership
Interests. Each of RM and IES represents and
warrants to the other that, including the transactions
contemplated in Section 2 hereto:
(a) such party is the record and beneficial owner and has
good and valid title to the IME Membership Interests in its name
as set forth on Schedule 2, free and clear of all
Liens (as defined in the PSA or an Alternate Definitive
Agreement) as of the date hereof and constitute all of such
party’s direct and indirect right, title and interest in or
to the Company; and
(b) to the best knowledge of such party, the information
concerning the IME Membership Interests set forth in
Schedule 2 hereto is true, complete and accurate,
and reflects all of the equity interests and proprietary
interests in the two biomass-fueled electricity generation
projects located in the State of Maine owned by and operated by
IME (the “Projects”) since the inception of the
Projects.
4. Representation with Respect to PSA or
Alternative Definitive Agreement. RM and IES
agree that the Managing Shareholder is authorized to represent
and act on behalf of RM and IES in connection with the
preparation of the Purchase and Sale Agreement dated as of the
date hereof (as amended from time to time in accordance with the
terms hereof, the “PSA”) among RM, IES and
Covanta Energy Corporation (“Covanta”) or of
another definitive agreement reflecting a Superior Proposal (as
defined in the PSA) (such other definitive agreement being
referred to herein as the “Alternate Definitive
Agreement”) to be executed by IES and RM (or entities
directly or indirectly owned by the Trusts) as sellers (the
“Sellers” and individually a
“Seller”) and the buyer or buyers in such
Superior Proposal; provided, that except as referenced herein,
the Alternate Definitive Agreement will not contain terms that
materially distinguish between RM as a Seller on the one hand
and IES as a Seller on the other with respect to the sale of the
IME Membership Interests except in the
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case of such terms that are more adverse to RM as compared to
IES. The Managing Shareholder will provide IES with weekly
updates on the status of the negotiation and preparation of the
PSA or the Alternate Definitive Agreement and, upon the
execution of the PSA or the Alternate Definitive Agreement, the
preparation for the closing of the transaction contemplated
therein.
5. Approval of PSA or Alternate Definitive
Agreement.
(a) IES approves the PSA in the form presented to it on the
date hereof and is executing and delivering the PSA
simultaneously with its execution of this Agreement. Once IES
signs the PSA, any changes adverse to IES in the price and other
material terms regarding the proposed sale of the IME Membership
Interests by IES, as set forth in the PSA, shall be subject to
the prior written consent of IES, and shall not be subsequently
modified or amended in such manner without the specific prior
written consent of IES. Without limiting the foregoing, the
Managing Shareholder acknowledges that any such adverse changes
to the price, the timing or type of payment, the conditions
precedent to receiving payment, and the obligations of IES
regarding the sale of its IME Membership Interests pursuant to
the PSA are material and shall require IES’ specific prior
written consent.
(b) In the event that the Proposed Transaction is not
consummated pursuant to the PSA and the Managing Shareholder
prepares an Alternate Definitive Agreement, at such time as the
Alternate Definitive Agreement is in its final form, it shall be
promptly delivered to IES for the purpose of review and
execution by IES of the Alternate Definitive Agreement. Should
IES fail to execute the Alternate Definitive Agreement within 5
business days after such receipt of the proposed Alternate
Definitive Agreement, IES shall not participate in the Proposed
Transaction. Once IES signs the Alternate Definitive Agreement,
any changes adverse to IES in the price and other material terms
regarding the proposed sale of the IME Membership Interests by
IES, as set forth in the Alternate Definitive Agreement, shall
be subject to the prior written consent of IES, and shall not be
subsequently modified or amended in such manner without the
specific prior written consent of IES. Without limiting the
foregoing, the Managing Shareholder acknowledges that any such
adverse changes to the price, the timing or type of payment, the
conditions precedent to receiving payment, and the obligations
of IES regarding the sale of its IME Membership Interests
pursuant to the Alternate Definitive Agreement are material and
shall require IES’ specific prior written consent.
6. Participation by RM. IES hereby
acknowledges the right and authority of the Managing Shareholder
to cause RM to be included in the Proposed Transaction without
regard to the participation (or lack thereof) of IES in the
Proposed Transaction. For the avoidance of doubt, should IES
fail to execute the Alternate Definitive Agreement pursuant to
Section 5 or fail for any other reason to participate in
the Proposed Transaction, IES acknowledges that the Managing
Shareholder may include the IME Membership Interests owned by RM
in the Proposed Transaction thereby transferring the IME
Membership Interests owned by RM to Covanta, a subsidiary of
Covanta or any other buyer or buyers without further obligation
or liability to IES or need for approval from IME, and IES
consents to the admission of Covanta, a subsidiary of Covanta or
such other buyer or buyers as members of IME in such event. The
Managing Shareholder and RM shall have no liability to IES
respecting IES’ determination whether to participate in the
Proposed Transaction and IES acknowledges that it is conducting
and has conducted its own due diligence with respect to the sale
of its IME Membership Interests and is not relying on RM or the
Managing Shareholder.
7. Allocation of Proceeds. In the
event the transaction set forth in the PSA or an Alternate
Definitive Agreement closes and IES participates therein by
selling its IME Membership Interests, and notwithstanding
anything in the IME Operating Agreement to the contrary, the
proceeds of the transaction attributable to the sale of the IME
Membership Interests shall be allocated between RM and IES and
paid or utilized as set forth in this Section 7. The
parties intend such proceeds shall be disbursed promptly at the
closing of such sale (the date of such disbursement being the
“Disbursement Date”), except to the extent an
Alternate Definitive Agreement provides for holdbacks, escrows
or the like of a portion of the sale proceeds (the
“Holdback”). Unless an Alternate Definitive
Agreement expressly provides otherwise, the portion of the
Holdback attributable to the sale of the IME Membership
Interests shall be not more than the product of (i) a
fraction, in which the numerator is the gross proceeds
receivable from the sale of IME Membership Interests pursuant to
such Alternate Definitive Agreement, and the denominator is the
aggregate gross proceeds receivable from the sale
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of all the assets sold pursuant to such Alternate Definitive
Agreement (excluding the effect of any Holdbacks in each case),
multiplied by (ii) the aggregate Holdback required under
such Alternate Definitive Agreement. Sale proceeds subject to
any Holdback which are allocated to the sale of the IME
Membership Interests shall be distributed when and as provided
in such Alternate Definitive Agreement. The proceeds of the
transaction and any Holdback attributable to the sale of the IME
Membership Interests shall be allocated among RM and IES and
paid as follows:
FIRST, to the payment of Transaction Costs (as defined below)
attributable to the sale of the IME Membership Interests,
allocated fifty-five percent (55%) from the proceeds otherwise
to be received by RM and forty-five percent (45%) from the
proceeds otherwise to be received by IES;
SECOND, to RM and IES as the holders of the Senior Preferred
Membership Units pro rata up to the fair market value of such
units as of the Contribution Date as determined in accordance
with Section 2 hereof;
THIRD, all remaining proceeds will be paid fifty-five percent
(55%) to RM and forty-five percent (45%) to IES.
8. Transaction Costs. For purposes
of this Agreement, the term “Transaction Costs”
shall mean the sum of (a) the portion of the total
investment banking fees and expenses payable to Xxxxx
Xxxxxx & Co. arising from a sale pursuant to the PSA
or an Alternate Definitive Agreement attributable to the sale of
the IME Membership Interests which shall be deemed equal to the
product of (i) a fraction in which the numerator is the
gross proceeds receivable from the sale of IME Membership
Interests in the Proposed Transaction and the denominator is the
aggregate gross proceeds receivable from the sale of all the
assets sold in the Proposed Transaction (including any Holdbacks
in each case), multiplied by (ii) the aggregate Xxxxx
Xxxxxx & Co. costs, fees and expenses paid plus
(b) an amount equal to 1.5% of the gross proceeds
receivable from the sale of the IME Membership Interests in the
Proposed Transaction. The Managing Shareholder will cause to be
disbursed from the gross proceeds paid by Covanta, a subsidiary
of Covanta or another buyer or buyers of the IME Membership
Interests, the amounts due to Xxxxx Xxxxxx & Co. as
described in this Section 8 part (a), as allocated in
Section 7 above. The Managing Shareholder will also
disburse from the gross proceeds paid by Covanta, a subsidiary
of Covanta or another buyer or buyers of the IME Membership
Interests, the amounts described in this Section 8 part
(b), as allocated in Section 7 above, to third parties in
satisfaction of transaction cost incurred in furtherance of the
Proposed Transaction.
9. Cross-Indemnification.
(a) IES hereby agrees to indemnify, defend and save
harmless RM, its members, managers, employees, officers,
directors, representatives, successors and assigns (collectively
“RM Indemnitees”) from and against any and all
Losses (as defined in the PSA) incurred by RM following the
Closing (as defined in the PSA) accruing, resulting or arising
in connection with any breach by IES of Section 4.2 of the
PSA except to the extent that such Losses result directly from
the gross negligence or willful misconduct of the RM Indemnitees.
(b) RM and the Managing Shareholder hereby jointly and
severally agree to indemnify, defend and save harmless IES, its
members, managers, employees, officers, directors,
representatives, successors and assigns (collectively
“IES Indemnitees”) from and against any and all
Losses (as defined in the PSA) incurred by IES following the
Closing (as defined in the PSA) accruing, resulting or arising
in connection with any breach by RM of Section 4.2 of the
PSA except to the extent that such Losses result directly from
the gross negligence or willful misconduct of the IES
Indemnitees.
(c) If this Agreement or any portion hereof is invalidated
on any ground by any court of competent jurisdiction, the
parties shall nevertheless indemnify each other to the extent
permitted by any applicable portion of this Agreement that has
not been invalidated by any other applicable law.
(d) The provisions of this Agreement shall survive for same
period of time during which the buyer or a buyer related party
may make an indemnification claim against IME pursuant to the
PSA or Alternate Definitive Agreement.
10. Consent and Waiver. To the
extent required by the IME Operating Agreement, each of RM and
IES consents to the sale of the IME Membership Interests of the
other pursuant to the PSA or an Alternate
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Definitive Agreement and waives any rights it may have to
acquire such IME Membership Interest in connection with such
sale or otherwise restrict the transfer thereof.
11. Termination. Either party
hereto may terminate this Agreement by one (1) day’s
prior written notice to the other party hereto (with a copy to
the Managing Shareholder) if the Proposed Transaction has not
occurred by March 31, 2009; provided, however, that once
the PSA or an Alternate Definitive Agreement is executed by the
parties hereto and so long as the PSA or an Alternate Definitive
Agreement continues to be in effect, this Agreement may not be
terminated.
12. Entire Agreement. Subject to
the applicable provisions of the IME Operating Agreement, this
Agreement constitutes the entire agreement among the parties
with respect to its subject.
13. Agreements for Costs. The
Managing Shareholder represents that it has not entered into
(i) any agreement that obligates IME to pay any cost, debt
or liability in contravention of the IME Operating Agreement or
(ii) any agreement other than the PSA or an Alternate
Definitive Agreement and any “Ancillary Agreements”
described therein with Covanta or any buyer in a Superior
Proposal that reduces the purchase price to be paid for the IME
Membership Interests in order to pay the costs, debts or
liabilities of any entity other than IME and undertakes that it
will not enter into any such agreements.
14. Miscellaneous. This Agreement
shall be governed and construed in accordance with the laws of
the State of New York. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
Each party shall execute such documents and give such assurances
as shall be reasonably necessary to perform its obligations
hereunder. Notices hereunder shall be given as provided in the
IME Operating Agreement. This Agreement may be amended only by
an instrument in writing duly executed by the parties hereto.
Neither this Agreement, nor any portion, right nor obligation
hereunder, may be assigned by either party, but this Agreement
shall be binding on any successor in ownership to any of the IME
Membership Interests prior to the closing of the PSA or an
Alternate Definitive Agreement so long as this Agreement is in
effect. IES agrees to cooperate with RM and the Managing
Shareholder in connection with the negotiation, execution and
closing of the Proposed Transaction, shall not unreasonably
withhold or delay its execution and delivery of the PSA or an
Alternate Definitive Agreement, agrees to execute and deliver
the PSA or an Alternate Definitive Agreement if it complies with
the terms of this Agreement and to execute and deliver any other
document reasonably necessary or appropriate to consummate the
Proposed Transaction. During the term of this Agreement, each of
RM and IES agrees not to sell, transfer, pledge or otherwise
dispose of any IME Membership Interests or Promissory Notes
owned by it, except pursuant to this Agreement and the PSA or an
Alternate Definitive Agreement. In the event of a conflict
between this Agreement and the PSA or an Alternate Definitive
Agreement, this Agreement shall govern.
[Signature
page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement the
date first written above.
RIDGEWOOD MAINE, L.L.C.
| By: |
Ridgewood Penobscot Management Corporation, Manager |
| By: |
/s/ Xxxxxxx
X. Xxxxxx
|
Name: Xxxxxxx X. Xxxxxx
| Title: | President |
INDECK ENERGY SERVICES, INC.
| By: |
/s/ Xxxxxx
X. Xxxxxxx
|
Name: Xxxxxx X. Xxxxxxx
| Title: | Vice President & Controller |
RIDGEWOOD RENEWABLE POWER, LLC,
solely as to Sections 2(e), 6, 9(b) and 13
solely as to Sections 2(e), 6, 9(b) and 13
| By: |
/s/ Xxxxxxx
X. Xxxxxx
|
Name: Xxxxxxx X. Xxxxxx
| Title: | Senior Vice President |
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