AGREEMENT AND PLAN OF MERGER

Exhibit 10.2

PORTIONS OF THIS EXHIBIT MARKED BY

* * * HAVE BEEN OMITTED PURSUANT TO

A REQUEST FOR CONFIDENTIAL TREATMENT

FILED SEPARATELY WITH THE

SECURITIES AND EXCHANGE COMMISSION

FOIA

CONFIDENTIAL

TREATMENT

REQUESTED

 

AGREEMENT AND PLAN OF MERGER

by and among

DEGS WIND I, LLC,

DEGS WIND VERMONT, INC.,

CATAMOUNT ENERGY CORPORATION

and

THE SHAREHOLDERS

NAMED HEREIN

 

Dated as of June 25, 2008

TABLE OF CONTENTS

 

 

i

TABLE OF CONTENTS (CONT’D)

 

 

ii

TABLE OF CONTENTS (CONT’D)

 

 

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TABLE OF CONTENTS (CONT’D)

 

Exhibit A – Table of Shareholders

Exhibit B – Letter of Transmittal

Exhibit C – Escrow Agreement

Exhibit D – Table of Option holders

Exhibit E – Budget

Exhibit F – Insurance

Exhibit G – Purchase Price Calculation and Closing Payments Schedule

Exhibit H – Transaction Bonus Recipient Letter

 

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AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER, dated as of June 25, 2008 (the “ Agreement ”), by and among DEGS Wind I, LLC, a Delaware limited liability company (“ Parent ”), DEGS Wind Vermont, Inc., a corporation organized under the laws of Vermont and a wholly-owned subsidiary of Parent (“ Merger Sub ”), Catamount Energy Corporation, a Vermont corporation (the “ Company ”), and the security holders of the Company listed on the signature pages hereof (each a “ Shareholder ” and, collectively, the “ Shareholders ”).

W I T N E S S E T H

WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the Company have approved, adopted and recommended to their respective shareholders or members, as the case may be, this Agreement, which contemplates the merger of Merger Sub with and into the Company as set forth below (the “ Merger ”), in accordance with the Vermont Business Corporation Act, 11A V.S.A. § 11.01 et seq. (the “ VBCA ”), and upon the terms and subject to the conditions set forth in this Agreement;

WHEREAS, upon the consummation of the Merger, each issued and outstanding share of the Company’s Class A common stock, $0.01 par value per share (the “ Common Stock ”), will be converted into the right to receive (i) an amount per Share in cash at Closing (without interest) equal to the Closing Common Stock Payment, and (ii) a conditional amount of cash equal to the sum of the Applicable Escrow Per Share Payment and the Applicable Shareholders’ Representative Expense Per Share Payment, upon the terms and subject to the limitations and conditions of this Agreement;

WHEREAS, the Shareholders collectively own 762,501 shares of Common Stock, which constitute all of the issued and outstanding shares of capital stock of the Company (the “ Shares ”);

WHEREAS, concurrently with the execution of this Agreement, the sole shareholder of Merger Sub has approved and adopted this Agreement and the Merger;

WHEREAS, concurrently with the execution of this Agreement, the Shareholders have approved and adopted this Agreement and the Merger;

WHEREAS, Parent, Merger Sub, the Company and the Shareholders desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger;

WHEREAS, concurrently with the execution of this Agreement, Duke Energy Corporation (the “ Guarantor ”) has entered into a guaranty, dated as of the date hereof, for the account of Parent, and with the Company and the Securityholders (as defined herein) as third party beneficiaries with respect to the obligations of Parent arising under, or in connection with, this Agreement (the “ Guaranty ”); and

WHEREAS, certain terms used in this Agreement are defined in Section 1.1.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1 Certain Definitions . For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1 :

“ Advisory Services Agreement ” means that certain Advisory Services Agreement, dated December 20, 2005, by and among the Company and Diamond Castle Holdings, LLC.

“ Affiliate ” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

“ Affiliated Group ” means any affiliated group within the meaning of Section 1504 of the Code or any comparable or analogous group under applicable Law.

“ Agreement ” shall have the meaning set forth in the Preamble hereto.

“ Amended and Restated Registration Rights Agreement ” means that certain Amended and Restated Registration Rights Agreement, dated October 31, 2005, among the Company and the stockholders signatory thereto, as may be further amended from time to time.

“ Amended and Restated Stockholders’ Agreement ” means that certain Amended and Restated Stockholders’ Agreement, dated October 31, 2005, among the Company and the stockholders signatory thereto, as may be further amended from time to time.

“ Antitrust Laws ” means, collectively, the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any other Laws that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or that require notification.

“ Applicable Escrow Per Share Payment ” means, with respect to any Share, Class TV Stock Option or Unallocated Class TV Stock Option, the quotient obtained by dividing (x) the product of the Escrow Amount multiplied by the applicable Escrow Percentage by (y) the sum of (i) the number of Shares owned by such Securityholder, plus (ii) the number of shares of Common Stock issuable upon the exercise of the Class TV Stock Options owned by such Securityholder, plus (iii) the number of shares of Common Stock that would have been issuable upon the exercise of the Unallocated Class TV Stock Options (if and as though such Unallocated Class TV Stock Options were issued and outstanding as of the Closing) allocated to such Securityholder.

 

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“ Applicable Shareholders’ Representative Expense Per Share Payment ” means, with respect to any Share, Class TV Stock Option or Unallocated Class TV Stock Option, the quotient obtained by dividing (x) the Shareholders’ Representative Expense Amount multiplied by the applicable Escrow Percentage by (y) the sum of (i) the number of Shares owned by such Securityholder, plus (ii) the number of shares of Common Stock issuable upon the exercise of the Class TV Stock Options owned by such Securityholder, plus (iii) the number of shares of Common Stock that would have been issuable upon the exercise of the Unallocated Class TV Stock Options (if and as though such Unallocated Class TV Stock Options were issued and outstanding as of the Closing) allocated to such Securityholder.

“ Articles of Merger ” shall have the meaning set forth in Section 2.1(a) of this Agreement.

“ Balance Sheet ” shall have the meaning set forth in Section 3.6(a) of this Agreement.

“ Balance Sheet Date ” shall have the meaning set forth in Section 3.6(a) of this Agreement.

“ Base Purchase Price ” means $240,000,000, plus the aggregate amount of the exercise prices for all Class TV Stock Options outstanding immediately prior to the Closing, plus the aggregate amount of the Unallocated Class TV Stock Option Exercise Prices for all Unallocated Class TV Stock Options set forth in the Unallocated Class TV Stock Options Spreadsheet, less the Company Transaction Expenses.

“ Basket ” shall have the meaning set forth in Section 9.6(a) of this Agreement.

“ BLB Loan Agreement ” shall have the meaning set forth in Section 6.5(b) of this Agreement.

“ Board ” shall mean the Board of Directors of the Company.

“ Budget ” shall have the meaning set forth in Section 3.8(xii) of this Agreement.

“ Business Day ” means any day of the year on which national banking institutions in New York are open to the public for conducting business and are not required or authorized to close.

“ Claim Notice ” shall have the meaning set forth in Section 9.5(a) of this Agreement.

“ Class DT Stock Option ” means any outstanding option granted pursuant to a Class DT Stock Option Award Agreement between the Company and the applicable employee of the Company.

“ Class TV Stock Option ” means any outstanding option granted pursuant to a Class TV Stock Option Award Agreement between the Company and the applicable employee of the Company, and such term shall not include any Unallocated Class TV Stock Options.

 

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“ Closing ” shall have the meaning set forth in Section 2.11 of this Agreement.

“ Closing Common Stock Payment ” shall mean the Common Stock Payment less (i) the Applicable Escrow Per Share Payment and (ii) the Applicable Shareholders’ Representative Expense Per Share Payment.

“ Closing Date ” shall have the meaning set forth in Section 2.11 of this Agreement.

“ Closing Option Consideration ” shall mean, with respect to each Class TV Stock Option, the Option Consideration less the product of (a) the sum of (i) the Applicable Escrow Per Share Payment and (ii) the Applicable Shareholders’ Representative Expense Per Share Payment, and (b) the number of Shares subject to the underlying Class TV Stock Option.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Common Stock ” shall have the meaning set forth in the Recitals hereto.

“ Common Stock Payment ” means the quotient obtained by dividing (x) the Base Purchase Price by (y) the Fully Diluted Number.

“ Company ” shall have the meaning set forth in the Preamble hereto.

“ Company Consolidated Group ” shall have the meaning set forth in Section 3.9(k) of this Agreement.

“ Company Documents ” shall have the meaning set forth in Section 3.2 of this Agreement.

“ Company Intellectual Property ” shall have the meaning set forth in Section 3.12(a) of this Agreement.

“ Company Option Plan ” means the Catamount Energy Corporation 2005 Equity Incentive Plan.

“ Company Option ” means each Class TV Stock Option or Class DT Stock Option or other right to purchase shares of Common Stock.

“ Company Permits ” shall have the meaning set forth in Section 3.17(b) of this Agreement.

“ Company Plans ” shall have the meaning set forth in Section 3.14(a) of this Agreement.

“ Company Transaction Expenses ” means the aggregate amount of all out-of-pocket fees and expenses of Weil, Gotshal & Manges LLP, Goldman Sachs and Andrews Kurth LLP, incurred by or on behalf of, or paid or to be paid by, the Company, any of its Subsidiaries or the Shareholders in connection with transactions contemplated herein.

 

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“ Confidentiality Agreement ” shall have the meaning set forth in Section 6.6 of this Agreement.

“ Continuing Employees ” shall have the meaning set forth in Section 6.12(a) of this Agreement.

“ Contract ” means any legally binding written contract, agreement, indenture, note, bond, mortgage, loan, instrument, lease, license or other commitment or obligation.

“ DC Shareholders ” means Diamond Castle Partners IV, L.P., Diamond Castle Partners IV-A, L.P., and Deal Leaders Fund, L.P.

“ Development Project ” means each of the Underlying Projects other than the Operating Projects.

“ Dispute Notice ” shall have the meaning set forth in Section 9.5(a) of this Agreement.

“ Easement Agreements ” means all instruments creating easements, licenses, rights of way or other access rights benefiting Real Property.

“ Easement Interest ” means an easement, license, right of way or other access right in real property granted with respect to or otherwise benefiting any Real Property.

“ Effective Time ” shall have the meaning set forth in Section 2.1(a) of this Agreement.

“ Employee Payments ” shall have the meaning set forth in Section 6.12(b)(iv) of this Agreement.

“ Employees ” shall have the meaning set forth in Section 3.15(a) of this Agreement.

“ Environmental Law ” means any Law relating to pollution, damage to or protection of the environment and natural resources, or human health and safety as it relates to, the protection of the environment and natural resources, or to the exposure to Hazardous Materials in the environment, and occupational health and safety as it relates to the exposure to Hazardous Materials, including, but not limited to, (i) the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), 42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., the Clean Air Act of 1970, 42 U.S.C. § 7401 et seq., the Federal Water Pollution Control Act of 1977, 33 U.S.C. § 1251 et seq., the Endangered Species Act of 1973, 16 U.S.C. § 1531 et seq., the National Environmental Policy Act of 1969, 42 U.S.C. § 4321 et seq., the Migratory Bird Treaty Act of 1918, 16 U.S.C. § 703 et seq., the Bald and Golden Eagle Protection Act, 16 U.S.C. § 668 et seq., 16 U.S.C. § 470 et seq., the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq., the Toxic Substances and Control Act of 1976, 15 U.S.C. § 2601 et seq., the Emergency Planning and Community Right-To-Know Act of 1986, 42 U.S.C. § 11011 et seq., the Safe Drinking Water Act of 1974, 42 U.S.C. § 300f et seq., the Pollution Prevention Act of 1990, 42 U.S.C. § 13101

 

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et seq., the Hazardous Materials Transportation Act of 1975, 49 U.S.C. § 5101 et seq., the Occupational Health and Safety Act of 1970, 29 U.S.C. § 651 et seq. (to the extent it regulates exposure to Hazardous Materials), each as amended as of the date hereof; (ii) any Law relating to the Release or threatened Release of Hazardous Materials into the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface); or (iii) any Law relating to environmental protection and the use, treatment, storage, generation, disposal or transport of any Hazardous Material.

“ Environmental Permits ” shall have the meaning set forth in Section 3.18 .

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ ERCOT ” means the Electric Reliability Council of Texas, Inc. and any successor organization.

“ Escrow Account ” shall have the meaning set forth in Section 2.8 .

“ Escrow Agent ” shall have the meaning set forth in Section 2.8 .

“ Escrow Agreement ” shall have the meaning set forth in Section 2.8 .

“ Escrow Amount ” shall have the meaning set forth in Section 2.8 .

“ Escrow Funds ” shall have the meaning set forth in Section 2.8 .

“ Escrow Percentage ” means, with respect to each Securityholder, the percentage set forth across from such Securityholder’s name on Schedule 1.1(d) or, if there is more than one such percentage, the sum of such percentages.

“ EWG ” shall have the meaning set forth in Section 3.20(c) of this Agreement.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Existing D&O Coverage ” shall have the meaning set forth in Section 6.7(d) of this Agreement.

“ FERC ” means the Federal Energy Regulatory Commission.

“ Financial Statements ” shall have the meaning set forth in Section 3.6(a) of this Agreement.

“ FPA ” means the Federal Power Act.

“ Fully Diluted Number ” means the sum of (i) the number of Shares outstanding immediately prior to the Closing, (ii) all shares of Common Stock that are subject to Class TV Stock Options outstanding immediately prior to Closing, and (iii) all shares of Common Stock that would be subject to the Unallocated Class TV Stock Options set forth on the Unallocated

 

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Class TV Stock Options Spreadsheet (if and as though such Unallocated Class TV Stock Options were issued and outstanding as of immediately prior to Closing).

“ GAAP ” means generally accepted accounting principles in the United States as of the date hereof.

“ Goldman Sachs ” means Goldman, Sachs & Co.

“ Goldman Sachs Fee ” means the amount payable by the Company to Goldman Sachs in connection with the transactions contemplated hereby.

“ Governmental Body ” means any government or governmental or regulatory body thereof, or political subdivision thereof, whether federal, state, local or foreign, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private).

“ Hazardous Material ” means any product, material, substance or waste that is regulated, classified or otherwise characterized under or pursuant to any applicable Environmental Laws as “hazardous,” “toxic,” “pollutant,” or a contaminant, including, but not limited to (i) any “hazardous substance” as now defined pursuant to CERCLA, as amended; (ii) any “pollutant or contaminant” as now defined in 42 U.S.C. § 9601(33); (iii) any material now defined as “hazardous waste” pursuant to 40 C.F.R. Part 261; (iv) any petroleum, including crude oil and any fraction thereof; (v) natural or synthetic gas usable for fuel; (vi) any “hazardous chemical” as now defined pursuant to 29 C.F.R. Part 1910; (vii) any asbestos, polychlorinated biphenyl (“PCB”), radium, or isomer of dioxin, or any material or thing composed of such substance or substances; or (viii) any material now defined as a “hazardous material” pursuant to 49 C.F.R. § 171.8.

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“ Incentive Plans ” shall have the meaning set forth in Section 6.12(b) of this Agreement.

“ Indebtedness ” of any Person means, without duplication, (i) the principal, accreted value, accrued and unpaid interest, prepayment and redemption premiums or penalties (if any), unpaid fees or expenses and other monetary obligations in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (ii) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable and other accrued current liabilities arising in the Ordinary Course of Business (other than the current liability portion of any indebtedness for borrowed money)); (iii) all obligations of such Person under leases required to be capitalized in accordance with GAAP; (iv) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction; (v) all obligations of such Person under interest rate or currency swap transactions (valued at the termination value thereof); (vi) all obligations of the type referred to in clauses (i) through (v) of any Persons for the payment of which such Person is responsible or liable, directly

 

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or indirectly, as obligor, guarantor, surety or otherwise, including guarantees of such obligations; and (vii) all obligations of the type referred to in clauses (i) through (vi) of other Persons secured by (or for which the holder of such obligations has an existing right, contingent or otherwise, to be secured by) any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person).

“ Indemnified Party ” shall have the meaning set forth in Section 9.5(a) of this Agreement.

“ Indemnitees ” shall have the meaning set forth in Section 6.7(a) of this Agreement.

“ Individual Shareholder ” shall mean each of Joseph Cofelice and James Moore.

“ Investment ” means, in any Person, any loan or advance to such Person, any purchase or other acquisition of capital stock, warrants, rights, options, obligations or other securities or any substantial assets of such Person, any capital contributions to such Person or any other investment in such Person.

“ IRS ” means the Internal Revenue Service and, to the extent relevant, the United States Department of Treasury.

“ Knowledge ” of the Company means, with respect to information relating to the Company (but not otherwise relating to any of the Project Companies or Underlying Projects), the actual knowledge, after reasonable inquiry, of the individuals specified in Schedule 1.1(a) , and with respect to information relating to the Project Companies and Underlying Projects, the Knowledge of the Company shall be based on information either within the possession of such Persons listed in Schedule 1.1(a) or reasonably available or accessible to, or within the actual knowledge of, such Persons.

“ Late Stage Development Projects ” or “ LSDP ” means each of the Underlying Projects referred to as Blaengwen, Mark Hill, Laurel Hill and Sweetwater Wind 6 LLC on Schedule 1.1(c) .

“ Law ” means any applicable foreign, federal, state or local law, statute, code, ordinance, rule, regulation, Order or other legal requirement.

“ Legal Proceeding ” means any judicial, administrative or arbitral actions, suits, litigation or similar proceedings (public or private) by or before any court or other Governmental Body.

“ Letter of Transmittal ” means a letter of transmittal in the form set forth on Exhibit B hereto.

“ Liability ” means any debt, liability or obligation (whether direct or indirect, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due) and including all costs and expenses relating thereto.

 

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“ Lien ” means any lien, encumbrance, pledge, mortgage, deed of trust, security interest, claim, lease, charge, option, right of first refusal, easement, servitude, transfer restriction or any other restriction or limitation.

“ Loss ” shall have the meaning set forth in Section 9.2 of this Agreement.

“ Managed Projects ” shall mean each of the Underlying Projects other than the Specified Projects.

“ Material Adverse Effect ” means any material adverse effect on (A) the business, assets, properties, results of operations, or financial condition of the Company, its Subsidiaries and the Underlying Projects (taken as a whole), other than any such effect to the extent it results from (i) changes in general economic, financial or securities market or political conditions other than changes that disproportionately affect the Company, its Subsidiaries or the Underlying Projects (taken as a whole) as compared to other similarly situated participants (including as to size, scope and area of operation, as applicable) in the industry in which the Company, its Subsidiaries or the Underlying Projects operate, (ii) changes or developments in the international, national, regional, state or local independent power industry or in the products or services for such industry other than changes or developments that disproportionately affect the Company, its Subsidiaries or the Underlying Projects (taken as a whole) as compared to other similarly situated participants (including as to size, scope and area of operation, as applicable) in the industry in which the Company, its Subsidiaries or the Underlying Projects operate, (iii) matters resulting from the execution, delivery, performance or announcement of this Agreement or any of the related transaction documents and the transactions contemplated hereby and thereby, (iv) any change of Law other than a change of Law that disproportionately affects the Company, its Subsidiaries or the Underlying Projects (taken as a whole) as compared to other similarly situated participants (including as to size, scope and area of operation, as applicable) in the industry in which the Company, its Subsidiaries or the Underlying Projects operate; (v) any change in GAAP (but not changes in the application thereof), (vi) any change arising in connection with earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions existing or underway as of the date hereof that does not disproportionately affect the Company, its Subsidiaries or the Underlying Projects (taken as a whole) as compared to other similarly situated participants (including as to size, scope and area of operation, as applicable) in the industry in which the Company, its Subsidiaries or the Underlying Projects operate, (vii) any failure, in and of itself, of the Company to meet any revenue or earnings predictions prepared by the Company (it being the understanding of the parties hereto that the underlying cause of such failure may constitute a Material Adverse Effect if such event is not otherwise excluded from the definition of Material Adverse Effect), (viii) the actions of Parent or Merger Sub or (ix) the failure of any LSDP or any Development Project to receive any Permit that is required for the construction, ownership or operation of its business, provided that such failure does not result from a material breach by the Shareholders or the Company of any of their respective covenants or agreements hereunder; or (B) the ability of the Shareholders or the Company to perform any of their respective material obligations under this Agreement.

“ Material Contracts ” shall have the meaning set forth in Section 3.13(a) of this Agreement.

 

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“ Merger ” shall have the meaning set forth in the Recitals hereto.

“ Merger Sub ” shall have the meaning set forth in the Preamble hereto.

“ Multiemployer Plan ” shall have the meaning set forth in Section 3.14(a) of this Agreement.

“ Operating Projects ” or “ OP ” means each the Underlying Projects referred to as Rumford, Ryegate and the Sweetwater OPs on Schedule 1.1(c) .

“ Option Cancellation Agreement ” means each option cancellation agreement, executed on the date hereof, by an Optionholder and acknowledged by the Company and the Shareholders’ Representative.

“ Option Consideration ” means, with respect to each Class TV Stock Option, an amount equal to the product of (a) the excess, if any, of the Common Stock Payment over the exercise price of each such Class TV Stock Option with respect to one underlying share of Common Stock and (b) the number of Shares subject to such Class TV Stock Option.

“ Optionholders ” means the Persons who hold Company Options as set forth on Exhibit D .

“ Order ” means any order, injunction, judgment, doctrine, decree, ruling, writ, assessment or arbitration award of a Governmental Body.

“ Ordinary Course of Business ” means the ordinary and usual course of day-to-day operations of the business of the Company, the Subsidiaries or the Underlying Projects, as the case may be, consistent with past practice; provided , however , that with respect to the operations or activities of the Underlying Projects which remain under construction (and have not achieved operational completion) or are in the development stages, the “ Ordinary Course of Business ” shall mean the normal day-to-day activities for a project in a similar state of construction or development.

“ Other Real Property Interest ” means an option of the Company, a Company Subsidiary or an Underlying Project to acquire on behalf of a Project either an Easement Interest in, license to, or right of way with respect to Real Property or an ownership or leasehold interest in Real Property pursuant to an RP Option Agreement, but excluding any Easement Interest.

“ Owned Property ” shall have the meaning set forth in Section 3.10(a) of this Agreement.

“ Parent ” shall have the meaning set forth in the Preamble hereto.

“ Parent Documents ” shall have the meaning set forth in Section 5.2 of this Agreement.

“ Parent Indemnified Parties ” shall have the meaning set forth in Section 9.2 of this Agreement.

 

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“ Parent Plans ” shall have the meaning set forth in Section 6.12(b)(ii) of this Agreement.

“ Permits ” means any approvals, authorizations, consents, licenses, permits or certificates of a Governmental Body.

“ Permitted Exceptions ” means (i) defects, exceptions, covenants, conditions, reservations, restrictions, easements, rights of way, encumbrances and other matters disclosed in policies of title insurance provided to Parent, provided the same do not materially interfere with the present or contemplated use of any Owned Property or Leased Property, as the case may be, or render title to same unmarketable or uninsurable; (ii) statutory liens for current Taxes, assessments or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith by appropriate proceedings and for which there has been an accrual on the Balance Sheet in accordance with GAAP; (iii) mechanics’, carriers’, workers’, and repairers’ Liens arising or incurred in the Ordinary Course of Business that are not, individually or in the aggregate, material to the business, operations or financial condition of the owner of any Owned Property or the lessor of any Leased Property, as the case may be, so encumbered; (iv) zoning, entitlement and other land use and environmental regulations by any Governmental Body; and (v) statutory or common law liens to secure landlords, lessors or renters under leases or rental agreements confined to the premises leased or rented that are not material to the business, operations or financial condition of the owner of any Owned Property or the lessor of any Leased Property, as the case may be, so encumbered and not validly waived pursuant to the terms of the documents creating the applicable Real Property Interest.

“ Person ” means any individual, corporation, limited liability company, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity.

“ Project ” means any electric power generation farm or facility, whether operating, currently under development, or proposed for development, in which the Company holds a direct or indirect ownership interest.

“ Project Company ” or “ Project Companies ” means, as of the date hereof, those Persons specified as a “ Project Company ” in Schedule 1.1(b) .

“ PUHCA ” shall have the meaning set forth in Section 3.20(a) of this Agreement.

“ PURA ” means the Public Utility Regulatory Act of Texas.

“ PURPA ” means the Public Utility Regulatory Policies Act.

“ QF ” shall have the meaning set forth in Section 3.20(b) of this Agreement.

“ Real Property ” means (i) each parcel of real property owned or leased by the Company, a Company Subsidiary or an Underlying Project, (ii) each parcel of real property over which the Company, a Company Subsidiary or an Underlying Project holds an Easement Interest, and (iii) each parcel of real property as to which the Company, a Company Subsidiary or an Underlying Project has an Other Real Property Interest.

 

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“ Real Property Interest ” means an interest in Real Property.

“ Real Property Lease ” shall have the meaning set forth in Section 3.10(b) of this Agreement.

“ Release ” means any release, spill, leak, discharge, abandonment, disposal, pumping, pouring, emitting, emptying, injecting, leaching, dumping, depositing, dispersing, or migration into or through the environment (including ambient air, surface water, groundwater, land surface and subsurface strata or within any building, structure, facility or fixture) of any Hazardous Material, including the abandonment or discarding of Hazardous Materials in barrels, drums, or other containers.

“ Remedial Action ” means all actions including any capital expenditures undertaken to (i) clean up, remove, treat or in any other way address any Hazardous Material; (ii) prevent the Release or threat of Release, or minimize the further Release of any Hazardous Material so it does not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (iii) perform pre-remedial studies and investigations or post-remedial monitoring and care; or (iv) correct a condition of noncompliance with Environmental Laws.

“ Responsible Party ” shall have the meaning set forth in Section 9.5(a) of this Agreement.

“ RP Option Agreement ” means with respect to any Project, the instruments creating options to enter into easements, leases, licenses, rights of way, other rights of access or to acquire ownership interests in Real Property, in each case pursuant to which, upon the exercise of the option, all or a part of the applicable facilities of a Project will be permitted to be constructed, installed, operated and maintained and will create easements, leases, licenses or rights of way or ownership interests in Real Property for such purpose that will become part of the applicable Project.

“ Rumford ” means Rumford Cogeneration Company Limited Partnership.

“ Ryegate ” means Ryegate Associates.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Securityholders ” means the Shareholders, the Optionholders and the Transaction Bonus Recipients.

“ Securityholder Indemnified Parties ” shall have the meaning set forth in Section 9.4 of this Agreement.

“ Shareholder ” and “ Shareholders ” shall have the meaning set forth in the Preamble hereto.

“ Shareholder Documents ” shall have the meaning set forth in Section 4.2 of this Agreement.

 

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“ Shareholder Related Persons ” shall have the meaning set forth in Section 3.21 of this Agreement.

“ Shareholders’ Representative ” shall have the meaning set forth in Section 10.2(a) of this Agreement.

“ Shareholders’ Representative Expense Account ” means the account designated by the Shareholders’ Representative in accordance with Section 2.8(b) of this Agreement.

“ Shareholders’ Representative Expense Amount ” shall have the meaning set forth in Section 10.2(c) of this Agreement.

“ Shares ” shall have the meaning set forth in the Recitals hereto.

“ Specified Parent Officers ” means Wouter van Kempen, President of Parent, David Marks, Senior Vice President of Parent, William Keeney, Vice President of Parent, Theodore Matula, Associate General Counsel of an Affiliate of Parent, and Andrew Dickson, Vice President of Parent.

“ Specified Projects ” means the Underlying Project associated with, and including, each of Rumford, Ryegate, the Sweetwater OPs and SweetwaterWind 6 LLC.

“ Subsidiary ” means, with respect to any Person, another Person of which (i) a majority of the outstanding share capital, voting securities or other voting equity interests are owned, directly or indirectly, by such first Person, or (ii) such first Person is entitled, directly or indirectly, to appoint a majority of the board of directors, board of managers or comparable body of such other Person.

“ Support Obligations ” shall have the meaning set forth in Section 4.6 of this Agreement.

“ Survival Expiration Date ” shall have the meaning set forth in Section 9.1 of this Agreement.

“ Surviving Corporation ” shall have the meaning set forth in Section 2.1(b) of this Agreement.

“ Sweetwater OPs ” means each of Sweetwater Wind 1 LLC, Sweetwater Wind 2 LLC, Sweetwater Wind 3 LLC, Sweetwater Wind 4 LLC and Sweetwater Wind 5 LLC.

“ Taxes ” means (i) all federal, state, local or foreign taxes, charges, fees, imposts, payments in lieu, levies and governmental fees or other assessments or charges of any kind whatsoever, whether payable by reason of contract, assumption, transferee liability, operation of law, closing agreement, or otherwise, including all income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, alternative or add-on minimum, single business, margin, inventory, capital stock, license, bulk, production, license, recording, registration, mortgage, stamp, real estate excise, withholding, payroll, employment, social security, unemployment, excise, title, severance, stamp, occupation, real property, personal

 

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property, environmental, intangible property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, and (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any Taxing Authority in connection with any item described in clause (i).

“ Taxing Authority ” means the IRS or any other Governmental Body responsible for the administration of any Tax.

“ Tax Return ” means any return, report or statement filed or required to be filed with respect to any Tax (including any attachments thereto, and any amendment thereof), including any information return, claim for refund, amended return or declaration of estimated Tax, and including, where permitted or required, combined, consolidated or unitary returns for any group of entities that includes the Company, any of its Subsidiaries or any of their Affiliates.

“ Termination Date ” shall have the meaning set forth in Section 8.1(e) of this Agreement.

“ Third Party Claim ” shall have the meaning set forth in Section 9.5(b) of this Agreement.

“ Title IV Plan ” shall have the meaning set forth in Section 3.14(a) of this Agreement.

“ Title Report Matters ” shall mean matters relating to a parcel of Real Property that would be disclosed in an accurate title report if one were to be issued as of the date hereof.

“ Transaction Bonus Payment ” means an amount, based on each Unallocated Class TV Stock Option set forth across from each Transaction Bonus Recipient’s name in the Unallocated Class TV Stock Options Spreadsheet, equal to (X) the product of (a) the excess, if any, of the Common Stock Payment over the Unallocated Class TV Stock Option Exercise Price with respect to one underlying share of Common Stock (if and as though such Unallocated Class TV Stock Option were issued and outstanding) and (b) the number of shares of Common Stock that would be subject to such Unallocated Class TV Stock Option (if and as though such Unallocated Class TV Stock Option were issued and outstanding) less (Y) the product of (a) the sum of (i) the Applicable Escrow Per Share Payment and (ii) the Applicable Shareholders’ Representative Expense Per Share Payment and (b) the number of shares of Common Stock subject to the applicable Unallocated Class TV Stock Option (if and as though such Unallocated Class TV Stock Option were issued and outstanding).

“ Transaction Bonus Recipient ” means each Person listed in the Unallocated Class TV Stock Options Spreadsheet.

“ Transaction Bonus Recipient Letter ” means a letter agreement between a Transaction Bonus Recipient, the Company and the Shareholders’ Representative in the form attached hereto as Exhibit H .

“ Transfer Taxes ” means any real property transfer, sales, use, value added, stamp, documentary, recording, registration, conveyance, stock transfer, real estate excise, intangible

 

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property transfer, personal property transfer, gross receipts, registration, duty, securities transactions or similar fees or Taxes or governmental charges (together with any interest or penalty, addition to Tax or additional amount imposed) as levied by any Governmental Body in connection with the transactions contemplated by this Agreement, including, without limitation, any payments made in lieu of any such Taxes or governmental charges, which become payable in connection with the transactions contemplated by this Agreement.

“ Unallocated Class TV Stock Option ” means each authorized, but unissued, Class TV Stock Option set forth across from the name of the Transaction Bonus Recipient in the Unallocated Class TV Stock Options Spreadsheet.

“Unallocated Class TV Stock Option Exercise Price” means $100.

“ Unallocated Class TV Stock Options Spreadsheet ” means the spreadsheet titled “Unallocated Class TV Stock Options” delivered by e-mail to Parent by the Company on June 24, 2008 at 5:53 p.m. E.D.T.

“ Underlying Project ” means each project specified in Schedule 1.1(c) , and shall include the applicable Subsidiary or Project Company and its operations, activities, resources and actions.

“ VBCA ” shall have the meaning set forth in the Recitals hereto.

“ WARN ” means the Worker Adjustment and Retraining Notification Act of 1988, as amended and any similar state or local “ mass layoff ” or “ plant closing ” Law.

1.2 Other Definitional and Interpretive Matters .

(a) Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

Calculation of Time Period . When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

Dollars . Any reference in this Agreement to $ shall mean U.S. dollars.

Exhibits/Schedules . The Exhibits and Schedules to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement.

Gender and Number . Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.

 

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Headings . The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references in this Agreement to any “ Section ” or “ Article ” are to the corresponding Section or Article of this Agreement unless otherwise specified.

Herein . The words such as “ herein ,” “ hereinafter ,” “ hereof ,” and “ hereunder ” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.

Including . The word “ including ” or any variation thereof means “ including, without limitation ” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.

Joint Preparation . The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

ARTICLE II

THE MERGER

2.1 The Merger .

(a) Upon the terms and subject to the conditions of this Agreement, at the Closing, articles of merger (the “ Articles of Merger ”) complying with Section 11.05 of the VBCA shall be delivered to the Secretary of State of the State of Vermont for filing. The Merger shall become effective at the time of the filing of the Articles of Merger (or at such later time reflected in such Articles of Merger as shall be agreed to by Parent and the Company). The date and time when the Merger shall become effective is hereinafter referred to as the “ Effective Time .”

(b) On the terms and subject to the conditions set forth in this Agreement and in accordance with the VBCA, at the Effective Time, Merger Sub shall be merged with and into the Company, and the separate corporate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation under the laws of the State of Vermont (the “ Surviving Corporation ”).

(c) From and after the Effective Time, the Merger shall have the effects set forth in Section 11.06 of the VBCA. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the properties, rights, privileges and powers of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become debts, liabilities and duties of the Surviving Corporation.

 

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2.2 Articles of Incorporation of the Surviving Corporation . The Articles of Incorporation of the Company, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation.

2.3 By-laws of the Surviving Corporation . The By-laws of the Company, as in effect immediately prior to the Effective Time, shall be the By-laws of the Surviving Corporation.

2.4 Directors and Officers of the Surviving Corporation .

(a) At the Effective Time, the directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation, each of such directors to hold office, subject to the applicable provisions of the Articles of Incorporation and By-laws of the Surviving Corporation, until their respective successors shall be duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Articles of Incorporation and the By-laws of the Surviving Corporation.

(b) At the Effective Time, the officers of Merger Sub immediately prior to the Effective Time shall, subject to the applicable provisions of the Articles of Incorporation and By laws of the Surviving Corporation, be the officers of, and hold the same positions with, the Surviving Corporation until their respective successors shall be duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Articles of Incorporation and the By-laws of the Surviving Corporation.

2.5 Conversion of Stock . At the Effective Time:

(a) Each Share issued and outstanding immediately prior to the Effective Time (other than any Shares which are held by any wholly-owned Subsidiary of the Company or in the treasury of the Company, all of which shall cease to be outstanding and be canceled and none of which shall receive any payment with respect thereto) and all rights in respect thereof shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and represent the right to receive consideration equal to:

(i) an amount in cash (without interest) equal to the Closing Common Stock Payment; and

(ii) a conditional amount of cash (without interest, other than as may be provided under the terms of the Escrow Agreement), equal to the sum of (i) the Applicable Escrow Per Share Payment, in accordance with the terms of the Escrow Agreement, and (ii) the Applicable Shareholders’ Representative Expense Per Share Payment, in accordance with the terms of this Agreement. A schedule illustrating the calculation of the foregoing amounts, based on certain assumptions as set forth therein, is set forth in Exhibit G hereto.

(b) Each share of common stock, par value $0.01 per share, of Merger Sub, then issued and outstanding, shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

 

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2.6 Payments to Shareholders . At the Effective Time, upon the terms and conditions of this Agreement, (i) each Shareholder shall deliver to the Surviving Corporation stock certificates representing all of the Shares held by such Shareholder, duly endorsed or accompanied by stock transfer powers and a Letter of Transmittal, in each case duly executed, and (ii) Parent shall pay, or shall cause the Surviving Corporation to pay, to each such Shareholder an amount equal to the product of (x) the Closing Common Stock Payment and (y) the number of Shares held by such Shareholder, as set forth under the heading “ Number of Shares ” on Exhibit A , and such amount shall be paid by wire transfer of immediately available United States funds into the account designated by each such Shareholder at least three business days prior to Closing. Upon surrender of a Shareholder’s stock certificate as described in clause (i) above, such Shareholder shall be entitled to receive in exchange therefor, in addition to the payment described in clause (ii) above, the right to receive amounts payable from the Escrow Account in accordance with the Escrow Agreement.

2.7 Treatment of Company Options; Unallocated Class TV Stock Options .

(a) Immediately prior to the Effective Time, each outstanding Class TV Stock Option, whether or not then vested or exercisable shall no longer be exercisable for the purchase of Common Stock but shall entitle the corresponding Optionholder, in cancellation and settlement therefor, to the following payments, subject to Section 2.7(c) :

(i) a payment in cash (without interest) equal to the Closing Option Consideration; and

(ii) a conditional amount of cash (without interest, other than as may be provided under the terms of the Escrow Agreement), equal to (a) the sum of (i) the Applicable Escrow Per Share Payment, in accordance with the terms of the Escrow Agreement, and (ii) the Applicable Shareholders’ Representative Expense Per Share Payment, in accordance with the terms of this Agreement, multiplied by (b) the number of Shares subject to the underlying Class TV Stock Option. A schedule illustrating the calculation of the foregoing amounts, based on certain assumptions as set forth therein, is set forth in Exhibit G hereto.

(b) Each Transaction Bonus Recipient shall be entitled to receive, subject to Section 2.7(c) , (X) a Transaction Bonus Payment and (Y) a conditional amount of cash (without interest, other than as may be provided under the terms of the Escrow Agreement), equal to (a) the sum of (i) the Applicable Escrow Per Share Payment, in accordance with the terms of the Escrow Agreement and (ii) the Applicable Shareholders’ Representative Expense Per Share Payment, in accordance with the terms of this Agreement, multiplied by (b) the number of shares of Common Stock that would be subject to the underlying Unallocated Class TV Stock Option set forth across from such Transaction Bonus Recipient’s name on the Unallocated Class TV Stock Options Spreadsheet (if and as though such Unallocated Class TV Stock Options were issued and outstanding).

(c) At the Effective Time, upon the terms and conditions of this Agreement, Parent shall pay or cause to be paid to the Company an amount equal to the sum of (X) the aggregate Closing Option Consideration payable to each Optionholder holding a Class

 

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TV Stock Option who has executed and delivered an Option Cancellation Agreement and (Y) the aggregate Transaction Bonus Payments payable to each Transaction Bonus Recipient who has executed and delivered a Transaction Bonus Recipient Letter, which the Surviving Corporation shall pay to the Optionholders and Transaction Bonus Recipients, as applicable, after deduction of income and employment tax withholdings, as well as any other required withholdings, on the Closing Date or as soon as practicable thereafter. After the Closing, each such Optionholder holding a Class TV Stock Option shall have the right to receive, subject to the Escrow Agreement and in addition to the payment described in the first sentence of this subsection (c), amounts payable in accordance with clause (ii) of Section 2.7(a) above, and each such Transaction Bonus Recipient shall have the right to receive, subject to the Escrow Agreement and in addition to the payment described in the first sentence of this subsection (c), amounts payable in accordance with clause (Y) of Section 2.7(b) above.

(d) Unless otherwise required by law, Parent and the Company shall treat the payment of any consideration pursuant this Section 2.7 (including any release of such amounts from the Escrow Account pursuant to the Escrow Agreement) as properly allocable under Treasury Regulation Section 1.1502-76(b)(1)(ii)(B) to the portion of the Closing Date following Parent’s acquisition of the Company Consolidated Group and shall not take any inconsistent position therewith.

(e) Immediately prior to the Effective Time, each outstanding Class DT Stock Option whether or not then vested or exercisable shall be cancelled without consideration.

2.8 Payment to Escrow Account; Company Transaction Expenses; Shareholders’ Representative Expense Amount .

(a) At the Effective Time, upon the terms and conditions of this Agreement, Parent shall deposit an amount of cash equal to * * * (such amount the “ Escrow Amount ”) in an interest bearing account (the “ Escrow Account ”) with Wilmington Trust Company (the “ Escrow Agent ”), for the purpose of securing the indemnification obligations set forth in Article IX . The portion of the Escrow Amount to be withheld from each Shareholder, Optionholder or Transaction Bonus Recipient shall be based upon the Shareholder, Optionholder or Transaction Bonus Recipient’s applicable Escrow Percentage. The Escrow Amount, together with all interest, dividends and other income thereon (the “ Escrow Funds ”), shall be held and released, from time to time, by the Escrow Agent under an escrow agreement in substantially the form attached hereto as Exhibit C to be entered into among the Shareholders, Parent, the Company and the Escrow Agent (the “ Escrow Agreement ”).

(b) At the Effective Time, upon the terms and conditions of this Agreement, Parent shall deposit an amount of cash equal to the Shareholders’ Representative Expense Amount to such account as shall be designated by the Shareholders’ Representative to Parent in writing at least three Business Days prior to Closing.

(c) At least three Business Days prior to Closing, the Company shall deliver to Parent a written notice specifying the dollar amount of Company Transaction Expenses that have been paid or are payable to each Person to whom such expenses are owed.

 

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Such notice shall include wire instructions for accounts designated by each such Person to whom such Company Transaction Expenses will remain unpaid immediately prior to the Effective Time, as well as a “payoff” letter as a final invoice from each such Person, confirming the amount to be paid to such Person. Immediately after the Effective Time, upon the terms and conditions of this Agreement, the Surviving Corporation shall pay by wire transfer of immediately available funds all Company Transaction Expenses that are unpaid as of immediately prior to the Effective Time, with such payments to be made in the amounts and to the Persons designated in such written notice.

2.9 No Further Rights of Transfers . At and after the Effective Time, each holder of Shares shall cease to have any rights as a shareholder of the Company, except as otherwise required by applicable law and except for, in the case of a holder of a certificate representing Shares (other than Shares to be canceled pursuant to Section 2.5(a) ), the right to surrender such certificate in exchange for payment in accordance with this Article II , and no transfer of Shares shall be made on the stock transfer books of the Surviving Corporation. Certificates presented to the Surviving Corporation after the Effective Time shall be canceled and exchanged for cash as provided in this Article II . At the close of business on the day of the Effective Time the stock ledger of the Company with respect to the Shares shall be closed.

2.10 Withholding Rights . The Company or the Surviving Corporation shall be entitled to deduct and withhold, or cause to be deducted or withheld, from any payment made pursuant to this Article II, such amounts as are required to be deducted and withheld with respect to the making of such payment under the Code, or any provision of applicable state, local or foreign tax law. To the extent that amounts are so deducted and withheld, such deducted and withheld amounts shall be treated for all purposes of this Agreement as having been paid to such holders in respect of which such deduction and withholding was made.

2.11 Amendment of Schedule 1.1(d) . Not later than three Business Days prior to Closing, the Company shall have the right to amend Schedule 1.1(d) to reflect changes in applicable Escrow Percentages resulting from modifications to the underlying assumptions thereto, by delivering to Parent an amended Schedule 1.1(d) ; provided that, in all cases, the sum of such Escrow Percentages shall equal 100%.

2.12 Closing Date . Unless this Agreement shall have been terminated pursuant to Section 8.1 , and subject to the satisfaction or waiver of the conditions set forth in Article VII , the closing of the transactions contemplated herein (the “ Closing ”) shall take place at a location and on a date to be specified by the parties (such date, the “ Closing Date ”), which date shall be no later than the third Business Day after the satisfaction or waiver of the conditions set forth in Article VII (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time), unless another date is agreed to in writing by the parties hereto.

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and Merger Sub as follows:

3.1 Organization and Good Standing . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Vermont, and the Company has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now conducted and as currently proposed to be conducted. The Company is duly qualified or authorized to do business as a foreign corporation in each jurisdiction in which the nature of its business or the ownership of its property makes such qualification necessary and is in good standing under the laws of each jurisdiction in which it owns or leases real property and each other jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where the failure to be so qualified, authorized or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

3.2 Authorization of Agreement . The Company has all requisite power, authority and legal capacity to execute and deliver this Agreement and each other agreement, document, or instrument or certificate contemplated by this Agreement or to be executed by the Company in connection with the transactions contemplated by this Agreement (the “ Company Documents ”), to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and each of the Company Documents, and the consummation of the Merger and other transactions contemplated hereby and thereby, have been duly authorized and approved by the Board and by each of the Shareholders, and no other corporate action on the part of the Company (other than, in each case, as required by the VBCA and the filing of appropriate merger documents with the Secretary of State of the State of Vermont) is necessary to authorize the execution, delivery and performance of this Agreement and each of the Company Documents and the consummation of the Merger and other transactions contemplated hereby and thereby. This Agreement has been, and each of the Company Documents required to be delivered at the Closing will be at or prior to the Closing, duly and validly executed and delivered by the Company and (assuming due authorization, execution and delivery by Parent, Merger Sub and the Shareholders) this Agreement constitutes, and each of the Company Documents when so executed and delivered will constitute, legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium, or other equivalent Laws affecting the enforcement of creditors’ rights in general and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

3.3 Conflicts; Consents of Third Parties .

(a) Except as set forth in Schedule 3.3(a) , none of the execution and delivery by the Company of this Agreement or the Company Documents, the consummation of

 

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the transactions contemplated hereby or thereby, or compliance by the Company with any of the provisions hereof or thereof will conflict with, or result in any violation or breach of, conflict with or cause a default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a material benefit under, or give rise to any obligation of the Company, its Subsidiaries or any of the Project Companies, to make any payment under, or to the increased, additional, accelerated or guaranteed rights or entitlements of any Person under, or give rise to any right to purchase or sell (including any rights of first refusal or comparable obligations) any direct or indirect interest in the Company, its Subsidiaries or any of the Underlying Projects, or result in the creation of any Liens upon any of the properties or assets of the Company, any of its Subsidiaries or any of the Underlying Projects under, any provision of (i) the certificate of incorporation, by-laws, limited liability company agreement, operating agreement, partnership agreement or comparable organizational documents of the Company, any of its Subsidiaries or any of the Underlying Projects or any Material Contract; (ii) any Permit or Contract that is not a Material Contract to which the Company, any of its Subsidiaries or any of the Underlying Projects is a party or by which any of the properties or assets of the Company, any of its Subsidiaries or any of the Underlying Projects are bound; (iii) any Order applicable to the Company, any of its Subsidiaries or any of the Underlying Projects or any of the properties or assets of the Company, any of its Subsidiaries or any of the Underlying Projects; or (iv) any applicable Law, other than, in the case of clauses (ii) and (iv), such conflicts, violations, defaults, terminations or cancellations that would not have a Material Adverse Effect.

(b) Except as set forth in Schedule 3.3(b) , no material consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of the Company, any of the Company’s Subsidiaries or any of the Underlying Projects in connection with (i) the execution and delivery of this Agreement or the Company Documents, the compliance by the Company with any of the provisions hereof and thereof, or the consummation of the transactions contemplated hereby or thereby, or (ii) the continuing validity and effectiveness immediately following the Closing of any Permit or Contract of the Company, any of its Subsidiaries or any of the Underlying Projects, except for (1) compliance with the applicable requirements of the HSR Act, and (2) such other consents, waivers, approvals, Orders, Permits or authorizations under Antitrust Law, FPA, PURA or otherwise, the failure of which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

3.4 Capitalization .

(a) The authorized capital stock of the Company consists of 1,999,999 shares of Class A Common Stock, and one (1) share of Class B Common Stock. The Shares are the only issued and outstanding shares of Common Stock. The Shares have been duly authorized and validly issued and are fully paid and non-assessable.

(b) Except as set forth in Schedule 3.4(b) , as of the date hereof there is no existing option, warrant, call, right or Contract to which the Company is a party requiring, and there are no securities of the Company outstanding, which upon conversion or exchange would require the issuance, sale or transfer of any shares of capital stock or other equity securities of the Company or other securities convertible into, exchangeable for or evidencing the right to

 

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subscribe for or purchase shares of capital stock or other equity securities of the Company. Except as set forth in Schedule 3.4(b) , (i) there are no obligations, contingent or otherwise, of the Company, any of its Subsidiaries or any of the Underlying Projects to repurchase, redeem or otherwise acquire any shares of Common Stock or the capital stock or other equity interests of any of its Subsidiaries or any of the Underlying Projects, and (ii) there are no obligations, contingent or otherwise, of the Company, any of its Subsidiaries, any of the Managed Projects or, to the Knowledge of the Company, any of the Specified Projects to provide material funds to, or make any material investment in (in the form of a loan, capital contribution or otherwise), or provide any guarantee with respect to the obligations of, any Person. Except as set forth in Schedule 3.4(b) , there are no outstanding stock appreciation, phantom stock, profit participation or similar rights with respect to the Company, any of its Subsidiaries, any of the Managed Projects or, to the Knowledge of the Company, any of the Specified Projects. There are no bonds, debentures, notes or other Indebtedness of the Company, any of its Subsidiaries or any of the Underlying Projects having the right to vote or consent (or, convertible into, or exchangeable for, securities having the right to vote or consent) on any matters on which stockholders (or other equityholders) of the Company, any of such Subsidiaries or any of such Underlying Projects may vote. There are no voting trusts, irrevocable proxies or other Contracts or understandings to which the Company, any of its Subsidiaries, any of the Managed Projects or, to the Knowledge of the Company, any of the Specified Projects is a party or is bound with respect to the voting or consent of any shares of Common Stock or the equity interests of any of the Company’s Subsidiaries or any of the Underlying Projects.

3.5 Subsidiaries; Project Companies; Investments .

(a) Schedule 3.5(a) sets forth the name of each Subsidiary of the Company, and, with respect to each Subsidiary, the jurisdiction in which it is incorporated or organized, the jurisdictions, if any, in which it is qualified as a foreign corporation or other entity because the nature of its business or the ownership of property makes such qualification necessary, the number of shares of its authorized capital stock or equivalent equity interests, the number and class of shares or equivalent equity interests thereof duly issued and outstanding, the names of all stockholders or other equity owners (including any partners) and the number of shares of stock or equivalent equity interests owned by each stockholder or other equity owner (including any partners) or the amount of equity owned by each equity owner (including any partners). Each Subsidiary of the Company is a duly organized and validly existing corporation, limited liability company, partnership or other entity in good standing under the laws of the jurisdiction of its incorporation, formation or organization. Except as set forth in Schedule 3.5(a) , each Subsidiary of the Company is duly qualified or authorized to do business as a foreign corporation, limited liability company, partnership or other entity in each jurisdiction in which the nature of its business or the ownership of its property makes such qualification necessary and is in good standing under the laws of each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where the failure to be so qualified, authorized or in good standing has not had and would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Subsidiary has all requisite corporate or entity power and authority to own its properties and carry on its business as presently and proposed to be conducted. The outstanding shares of capital stock or equivalent equity interests of each Subsidiary are validly issued, fully paid and non-assessable and were not issued in violation of any purchase or call option, right of first

 

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refusal, subscription right, preemptive right or any similar right. All such shares or other equivalent equity interests of any Subsidiary represented as being owned by the Company or any of its Subsidiaries are owned by them free and clear of any and all Liens, except as set forth in Schedule 3.5(a) . Except as set forth in Schedule 3.5(a) , there is no existing option, warrant, call, right or Contract requiring, and there are no convertible securities of any of the Company’s Subsidiaries outstanding which upon conversion would require, the issuance of any shares of capital stock or other equivalent equity interests of any Subsidiary or other securities convertible into shares of capital stock or other equivalent equity interests of any such Subsidiary. Except as set forth in Schedule 3.5(a) , there are no material restrictions on the ability of any of the Company’s Subsidiaries to make distributions of cash to their respective equity holders.

(b) Schedule 3.5(b) sets forth the name of each Project Company, and, with respect to each Project Company the jurisdiction in which it is incorporated or organized, the jurisdictions, if any, in which it is qualified to do business as a foreign corporation because the nature of its business or the ownership of property makes such qualification necessary, the number of shares of its authorized capital stock or equivalent equity interests, the number and class of shares or equivalent equity interests thereof duly issued and outstanding, the names of all stockholders or other equity owners (including any partners) and the number of shares of stock or equivalent equity interests owned by each stockholder or other equity owner (including any partners) or the amount of equity owned by each equity owner (including any partners), in each case, as of the date hereof. To the Knowledge of the Company, each Project Company is a duly organized and validly existing corporation, limited liability company, partnership or other entity in good standing under the laws of the jurisdiction of its incorporation, formation or organization. To the Knowledge of the Company, each Project Company is duly qualified or authorized to do business as a foreign corporation, limited liability company, partnership or other entity in each jurisdiction in which the nature of its business or the ownership of its property makes such qualification necessary and is in good standing under the laws of each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where the failure to be so qualified, authorized or in good standing has not had and would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. To the Knowledge of the Company, each Project Company has all requisite corporate or entity power and authority to own its properties and carry on its business as presently and proposed to be conducted. To the Knowledge of the Company, the outstanding shares of capital stock or equivalent equity interests of each Project Company that are owned, directly or indirectly, by the Company are validly issued, fully paid and non-assessable and were not issued in violation of any purchase or call option, right of first refusal, subscription right, preemptive right or any similar right. All such shares or other equivalent equity interests represented as being owned, directly or indirectly, by the Company or any of its Subsidiaries are owned by them free and clear of any and all Liens, except as set forth in Schedule 3.5(b) . Except as set forth in Schedule 3.5(b) , there is no existing option, warrant, call, right or Contract requiring, and there are no convertible securities of any of the Project Companies outstanding that upon conversion would require, the issuance of any shares of capital stock or other equity interests of any Project Company or other securities convertible into shares of capital stock or other equity interests of any such Project Company. Except as set forth in Schedule 3.5(b) , there are no material restrictions on the ability of any of the Project Companies to make distributions of cash to their respective equity holders.

 

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(c) The Company does not own, directly or indirectly, any Investment in any Person other than the Subsidiaries and the Project Companies and there are no Contracts providing for the Company, directly or indirectly, to acquire any such Investment.

3.6 Financial Statements .

(a) The Company has delivered to Parent copies of (i) the audited consolidated balance sheets of the Company and its Subsidiaries as at December 31, 2005, 2006 and 2007 and the related audited consolidated statements of income and of cash flows of the Company and its Subsidiaries for the years then ended, and (ii) the unaudited consolidated balance sheet of the Company and its Subsidiaries as at March 31, 2008 and the related unaudited consolidated statement of income and of cash flows of the Company and its Subsidiaries for the three month period then ended (such audited and unaudited statements, including the related notes and schedules thereto, are referred to as the “ Financial Statements ”). Except as set forth in Schedule 3.6(a) , each of the Financial Statements has been prepared in accordance with GAAP (subject, in the case of unaudited Financial Statements, to the absence of notes) consistently applied by the Company (except as may be indicated in the notes thereto) and presents fairly in all material respects the consolidated financial position, results of operations and cash flows of the Company and its Subsidiaries as at the dates and for the periods indicated therein.

The audited consolidated balance sheet of the Company and its Subsidiaries as at December 31, 2007 is referred to herein as the “ Balance Sheet ” and December 31, 2007 is referred to herein as the “ Balance Sheet Date .”

(b) All the books, records and accounts of the Company, its Subsidiaries and the Managed Projects are maintained in all material respects in accordance with commercially reasonable business practice. The Company has established and maintains internal controls and procedures that are commercially reasonable and provide reasonable assurance regarding the reliability of the Company’s financial statements, to the Knowledge of the Company, such disclosure controls and procedures are effective in timely alerting the Company’s principal executive officer or its principal financial officer to material information which such principal officers deem necessary to be provided to them. To the Knowledge of the Company, all books, records and accounts of the Specified Projects are maintained in all material respects in accordance with commercially reasonable business practice and the Specified Projects maintain systems of internal accounting controls that are commercially reasonable and provide reasonable assurance regarding the reliability of the financial statements prepared by such Specified Project.

3.7 No Undisclosed Liabilities . Except as set forth in Schedule 3.7 , none of the Company nor any of its Subsidiaries has any Indebtedness or Liabilities (whether or not required under GAAP to be reflected on a balance sheet or the notes thereto), other than those (i) specifically reflected on and fully reserved against in the Balance Sheet, (ii) incurred in the Ordinary Course of Business of the Company and its Subsidiaries since the Balance Sheet Date, (iii) that are immaterial to the Company and its Subsidiaries, taken as a whole, or (iv) that have been discharged or paid in full prior to the date hereof. Except as set forth in Schedule 3.7 , none of the Managed Projects or, to the Knowledge of the Company, the Specified Projects have any

 

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Liabilities other than those incurred in the Ordinary Course of Business of such applicable Managed Project or Specified Project, those paid that have been discharged or paid in full prior to the date hereof, or those that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

3.8 Absence of Certain Developments . Except as expressly contemplated by this Agreement or as set forth in Schedule 3.8 , between the Balance Sheet Date and the date hereof, the Company, its Subsidiaries, the Managed Projects and, to the Knowledge of the Company, the Specified Projects have conducted their respective businesses only in the Ordinary Course of Business thereof, and there has not been any event, change, occurrence or circumstance that has had a Material Adverse Effect, nor has there occurred or arisen any event, condition or state of facts of any character specifically related to any Shareholder, the Company, any of its Subsidiaries, any of the Managed Projects or, to the Knowledge of the Company, any of the Specified Projects that has had or could reasonably be expected to result in a Material Adverse Effect. Without limiting the generality of the foregoing, except as set forth in Schedule 3.8 , between the Balance Sheet Date and the date hereof:

(i) there has not been any damage, destruction or loss, whether or not covered by insurance, with respect to the property and assets of the Company, any of its Subsidiaries, and of the Managed Projects or, to the Knowledge of the Company, any of the Specified Projects having a replacement cost of more than $150,000 for any single loss or $250,000 for all such losses;

(ii) there has not been any declaration, setting aside or payment of any dividend or other distribution in respect of any shares of capital stock of the Company or any of its Subsidiaries or any repurchase, redemption or other acquisition by the Company, any of its Subsidiaries or any of the Project Companies of any outstanding shares of capital stock or other securities of, or other ownership interest in, the Company, any of its Subsidiaries or any of the Project Companies;

(iii) none of the Company nor any of its Subsidiaries has awarded or paid any bonuses to employees of the Company or any of its Subsidiaries except to the extent accrued on the Balance Sheet, or entered into any employment, deferred compensation, severance, collective bargaining or similar agreement (nor amended or modified in any respect any such agreement) or agreed to increase the compensation payable or to become payable by it to any of the Company’s or any of its Subsidiaries’ directors, officers, employees, agents or representatives or agreed to increase the coverage or benefits available under any Company Plan;

(iv) except as required by law or under GAAP, there has not been any change by the Company, any of its Subsidiaries, any of the Managed Projects or, to the Knowledge of the Company, any of the Specified Projects in any material accounting or Tax reporting principles, methods or policies;

(v) none of the Company, any of its Subsidiaries or any of the Managed Projects has made or rescinded any material election relating to Taxes or settled or compromised any material claim relating to Taxes and, to the Knowledge of the Company, none

 

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of the Specified Projects, has made or rescinded any material election relating to Taxes or settled or compromised any material claim relating to Taxes;

(vi) none of the Company, any of its Subsidiaries, any of the Managed Projects or, to the Knowledge of the Company, any of the Specified Projects has terminated any Material Contract (other than any such terminations pursuant to which none of the Company, any of its Subsidiaries, any of the Managed Project or any of the Specified Projects has any post-termination obligations with a value in excess of, or that are payable or may potentially become payable in an amount in excess of, $150,000 for any such individual termination or in excess of $250,000 in the aggregate for all such terminations) or relinquished, waived or released any rights under any Material Contract or failed in any material respect to perform obligations under or suffered the occurrence of any uncured default under any Material Contract;

(vii) none of the Company, any of its Subsidiaries, any of the Managed Projects or, to the Knowledge of the Company, any of the Specified Projects, has failed to pay any creditor any material amount owed to such creditor when due or granted any extensions of credit other than in the Ordinary Course of Business;

(viii) none of the Company or any of its Subsidiaries has entered into financial arrangements for the benefit of any Shareholder other than financial arrangements with respect to any Shareholder in his capacity as an officer or employee of the Company or any of its Subsidiaries;

(ix) none of the Company, any of its Subsidiaries or any of the Managed Projects has (A) except as would constitute a Permitted Exception, mortgaged, pledged or subjected to any Lien any of its assets, or (B) other than in the Ordinary Course of Business, acquired any assets, tangible or intangible, or sold, assigned, transferred, conveyed, leased or otherwise disposed of any assets, tangible or intangible, of the Company, any of its Subsidiaries or any of the Managed Projects, in each case greater than $150,000 individually or $250,000 in the aggregate;

(x) to the Knowledge of the Company, none of the Specified Projects has (A) except as would constitute a Permitted Exception, mortgaged, pledged or subjected to any Lien any of its assets, or (B) other than in the Ordinary Course of Business, acquired any assets, tangible or intangible, or sold, assigned, transferred, conveyed, leased or otherwise disposed of any assets, tangible or intangible, of such Specified Project, in each case greater than $150,000 individually or $250,000 in the aggregate;

(xi) none of the Company, any Subsidiary or any Managed Project has discharged or satisfied any Lien, or paid any Liability and, to the Knowledge of the Company, none of the Specified Projects has discharged or satisfied any Lien, or paid any Liability, other than, with respect to a Lien or Liability incurred in the Ordinary Course of Business, the payment, discharge or satisfaction in the Ordinary Course of Business, greater than $150,00 individually or $250,000 in the aggregate;

 

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(xii) except as set forth in the 2008 Budget, in the form as set forth in Exhibit E (the “ Budget ”), none of the Company, any of its Subsidiaries or any of the Managed Projects has made or committed to make any capital expenditures or capital additions or betterments and, to the Knowledge of the Company, none of the Specified Projects has made or committed to make any capital expenditures or capital additions or betterments in excess of $150,000 individually or $250,000 in the aggregate;

(xiii) except as set forth in the Budget, neither the Company, any of its Subsidiaries or any of the Managed Projects has issued, created, incurred, assumed, guaranteed, endorsed or otherwise become liable or responsible with respect to (whether directly, contingently, or otherwise) any Indebtedness and, to the Knowledge of the Company, other than in the Ordinary Course of Business, none of the Specified Projects has issued, created, incurred, assumed, guaranteed, endorsed or otherwise become liable or responsible with respect to (whether directly, contingently, or otherwise) any Indebtedness in excess of $150,000 individually or $250,000 in the aggregate;

(xiv) none of the Company, any Subsidiary or any Managed Project has instituted or settled any Legal Proceeding and, to the Knowledge of the Company, none of the Specified Projects has instituted or settled any Legal Proceeding resulting in a loss of revenue in excess of $150,000 individually or $250,000 in the aggregate; and

(xv) none of the Company, any of its Subsidiaries, any of the Managed Projects, and, to the Knowledge of the Company, none of the Specified Projects has agreed, committed, arranged or entered into any understanding to do anything prohibited by this Section 3.8 .

3.9 Taxes . Except as set forth in Schedule 3.9 :

(a) The Company, each of its Subsidiaries, each of the Managed Projects, any Affiliated Group or other consolidated, combined, unitary or aggregate group of which the Company, any of its Subsidiaries or any Managed Project is or was a member and, to the Knowledge of the Company, the Specified Projects have (i) filed all material Tax Returns (relating to such Persons) required to be filed by or on behalf thereof with the appropriate Taxing Authority in all jurisdictions in which such Tax Returns are required to be filed (after giving effect to any valid extensions of time in which to make such filings) within the time and manner prescribed by law, and all such Tax Returns are true, complete and correct in all material respects; (ii) fully and timely paid all material amounts of Taxes (including withholding taxes) relating to such Persons that are due and payable or to the extent not due and payable made due and sufficient accruals for the amount of such Taxes on the Financial Statements in accordance with GAAP. There are no Liens for Taxes (other than Permitted Exceptions) on any of the assets of the Company, the Subsidiaries, the Managed Projects or, to the Knowledge of the Company, on the assets of the Specified Projects. None of the Company, the Subsidiaries, the Managed Projects or, to the Knowledge of the Company, the Specified Projects, (x) is a party to any Tax allocation, Tax indemnity or Tax sharing agreement or similar arrangements with any Person, or (y) has any Liability for the Taxes of any other Person (other than a member of the Company Consolidated Group) under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract or otherwise.

 

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(b) The Company, each of its Subsidiaries, the Managed Projects and, to the Knowledge of the Company, each of the Specified Projects has complied in all material respects with applicable Law relating to the payment and withholding of Taxes, including satisfying all reporting, recordkeeping, and information reporting requirements related thereto.

(c) To the extent requested in writing by Parent, prior to the date hereof, the Company has made available to Parent copies of the following: (i) all material federal, state, local and foreign income or franchise Tax Returns of the Company, its Subsidiaries, the Managed Projects and, to the extent reasonably available to the Company, the Specified Projects, relating to all taxable periods ending on or after December 31, 2003, and (ii) any written audit report, information document request, other written request for information or notice of claim, controversy or investigation issued within the last two years relating to material amounts of Taxes due from or with respect to the Company, any of its Subsidiaries any of the Managed Projects or, to the extent reasonably available to the Company or any of its Subsidiaries, the Specified Projects.

(d) Within the period beginning on October 31, 2005 or otherwise to the Knowledge of the Company, no claim has been made in writing by a Taxing Authority in a jurisdiction where the Company, any of its Subsidiaries, any of the Managed Projects or, to the Knowledge of the Company, any of the Specified Projects does not file Tax Returns such that it is or may be subject to taxation by that jurisdiction.

(e) There are no other audits, claims, controversies, proceedings, litigations or investigations in progress with respect to Taxes of the Company, its Subsidiaries, the Managed Projects or, to the Knowledge of the Company, any Specified Project, nor has the Company, any of its Subsidiaries, any Managed Project or, to the Knowledge of the Company, any of the Specified Projects received any written notice of a deficiency, audit, claim, controversy, reassessment, proceeding, litigation or investigation (including any audit or investigation that could result in an adjustment under Section 481 of the Code).

(f) None of the Company, any of its Subsidiaries, any of the Managed Projects, any other Person on their behalf, or, to the Knowledge of the Company, any Specified Project has (i) agreed to make any adjustments pursuant to Section 481(a) of the Code or any similar provision of Law, (ii) executed or entered into a closing agreement pursuant to Section 7121 of the Code or any similar provision of Law with respect to the Company, any of its Subsidiaries or any of the Underlying Projects, (iii) requested any extension of time within which to file any Tax Return, which Tax Return has since not been filed, (iv) granted any extension for the assessment or collection of Taxes, which Taxes have not since been paid, or (v) granted to any Person any power of attorney that is currently in force with respect to any Tax matter or any extension of any statute of limitations with respect to liabilities for Taxes, but only to the extent such agreement, request, extension or power of attorney will have continuing effect after the Closing Date.

(g) None of the Company, any of its Subsidiaries, any of the Managed Projects or, to the Knowledge of the Company, any of the Specified Projects (i) has any application pending with any Taxing Authority requesting permission for any changes in its accounting methods, (ii) is subject to any private letter ruling of the IRS or comparable rulings of

 

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any Taxing Authority, or (iii) except as set forth in Schedule 3.9(g) , has received written notice from any Governmental Body that any interest in real property held or enjoyed by such Person is, or shall become, subject to rollback taxes, tax penalties, or tax assessment increases under any local, state or federal law, statute, code, ordinance or regulation pursuant to which any such interest, or any portion or parcel thereof, may have been or may be entitled to a preferential or special real estate tax assessment or tax treatment, but with respect to clauses (i) and (ii) above, only to the extent such application or ruling will have continuing effect after the Closing Date.

(h) For federal income tax purposes, (i) the Company and each of the Subsidiaries and Project Companies in Schedule 3.9(h)(i) is and has been, since its formation, treated as a corporation, (ii) each of the entities listed in Schedule 3.9(h)(ii) is and has been, since its formation, treated as a partnership, and (iii) each of the entities listed in Schedule 3.9(h)(iii) is and has been, since its formation, disregarded as an entity separate from its owners.

(i) As a result of entering into the transactions contemplated by this Agreement, no abatement, payment in lieu or other agreements entered into with a Governmental Authority by the Company, any of its Subsidiaries, any of the Managed Projects or, to the Knowledge of the Company, any of the Specified Projects that affects the amount of Taxes imposed on or paid by the Company, any of its Subsidiaries, or any of the Underlying Projects (or with respect to such Persons, the assets thereof) will be terminated, voided or otherwise caused to no longer have effect for periods after the Closing Date.

(j) Except as set forth in Schedule 3.9(j) , no grants, tax exempt bonds or financing of the type described in Section 45(b)(3) of the Code has been provided in connection with, or with respect to, any of the assets of the Company, its Subsidiaries or, to the Knowledge of the Company, the Project Companies.

(k) The Company and its domestic corporate Subsidiaries are all members of a single Affiliated Group of which the Company is the common parent (the “ Company Consolidated Group ”) that has elected to file its United States federal income tax return on a consolidated basis, and such group does not include any other members.

(l) Schedule 3.9(l) lists all of the jurisdictions in which the Company, its Subsidiaries, the Managed Projects and to the Knowledge of the Company, the Specified Projects file Tax Returns and lists and describes any currently outstanding audits, negotiations, written claims or litigations relating to Taxes.

(m) None of the Company, its Subsidiaries, the Managed Projects or, to the Knowledge of the Company, the Specified Projects has (i) engaged in any transaction or agreement (including without limitation, an installment sale) prior to the Closing Date which could result in the recognition of a material amount of income or gain in any period ending after the Closing Date, (ii) has a material amount of deferred intercompany gain (as described in Section 1.1502-13 of the Treasury Regulations), (iii) has been a “distributing corporation” in a transaction intended to be governed by Section 355 of the Code (A) in the two years prior to the date of this Agreement or (B) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” in conjunction with the transactions contemplated by this Agreement, (iv) is projected to have an amount includible in its income for the current taxable

 

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year under Section 951 of the Code, (v) has been a passive foreign investment company within the meaning of Section 1296 of the Code, or (vi) has an unrecaptured overall foreign loss within the meaning of Section 904(f) of the Code.

Notwithstanding any provision in this Agreement to the contrary, the only representations and warranties made by the Shareholders and the Company with respect to all matters relating to Taxes shall be representations and warranties set forth in this Section 3.9 and in Section 3.14 and Sections 3.8(iv) and (v) , and this Agreement shall not be interpreted in any manner that is contrary thereto. For purposes of this Section 3.9, any Underlying Project that is also a Subsidiary shall be treated as a Subsidiary.

3.10 Real Property .

(a) Schedule 3.10(a) sets forth a complete list of all real property and interests in real property owned in fee by the Company, its Subsidiaries, the Managed Projects or, to the Knowledge of the Company, any Specified Project as of the date hereof (individually, an “ Owned Property ” and collectively, the “ Owned Properties ”). The Owned Properties are in material compliance with all Laws relating to the ownership, use and operation of the Owned Properties (including building codes and zoning laws). Except as set forth on Schedule 3.10(a) , all material Permits required in order to own, use, construct and operate the Owned Properties have been obtained and are in full force and effect, and the certificates of occupancy for the Owned Properties (as applicable) permit their current uses in all material respects. Except for Title Report Matters, the Company, its Subsidiaries, the Managed Projects or, to the Knowledge of the Company, the Specified Projects, as applicable, each have good and insurable fee title to all Owned Properties, free and clear of all Liens, other than Permitted Exceptions. Except as set forth in Schedule 3.10(a) , there are no other Owned Properties.

(b) Schedule 3.10(b)(i) sets forth a complete list, as of the date hereof, of all real property leases (including amendments thereto) involving aggregate annual payments in excess of $50,000 under which the Company, its Subsidiaries, the Managed Projects or, to the Knowledge of the Company, any Specified Project is the lessee or lessor as of the date hereof (individually, a “ Real Property Lease ” and collectively, the “ Real Property Leases ”), including a description of each such Real Property Lease (including the name of the third party lessor or lessee, the date of the lease or sublease and all amendments thereto). True, complete and correct copies of the Real Property Leases and all amendments thereto have previously been delivered to, or otherwise made available to, Parent by the Company. The Company, its Subsidiaries or Underlying Project, as applicable, is the owner and holder of the leasehold estates purported to be granted to it as lessee by the Real Property Leases. Except for Title Report Matters and except as set forth in Schedule 3.10(b)(ii) , the Real Property Leases are in full force and effect and are binding and enforceable against the Company, its Subsidiary, the Managed Project or, to the Knowledge of the Company, the Specified Project, as applicable, and to the Knowledge of the Company, each of the other parties thereto in accordance with their respective terms. Neither the Company, its Subsidiaries nor any Underlying Project, as applicable, nor, to the Knowledge of the Company, any other party to a Real Property Lease, has given or received any written notice of a breach or default which remains uncured under any Real Property Lease, nor, to the Knowledge of the Company, has there occurred any event that with the passage of time or the giving of notice or both would constitute a material breach or default which remains uncured

 

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thereunder. The Company, its Subsidiaries, the Managed Projects or, to the Knowledge of the Company, each Specified Project, as applicable, has paid all amounts due and payable under the Real Property Leases by it as of the date hereof. Except for Title Report Matters, the Company, its Subsidiaries, the Managed Projects and, to the Knowledge of the Company, each Specified Project, as applicable, enjoys peaceful and undisturbed possession of the Real Property under all Real Property Leases, none of which contain any provisions that will materially impair or adversely affect its ability to continue to use the Real Property leased thereunder as it currently does.

(c) Except as listed in Schedule 3.10(c) , to the Knowledge of the Company, (A) except for Title Report Matters, there are no third-party options to purchase, easements, easement options, leases, lease options, uses, rights-of-way, tenancies, subleases, licenses, occupancies, co-tenancies or non-exclusive rights to use real property in effect, oral or written, related to or affecting the Real Property or any portion thereof or any improvements thereon that could reasonably be expected to adversely affect the interest therein or use thereof by any LSDP or any Operating Project, as applicable, in any material respect (including by permitting uses that would conflict with or interfere with, as applicable, any LSDP’s or any Operating Project’s use or enjoyment of their respective Real Property Interests), and (B) except for Permitted Exceptions and Title Report Matters, there are no encumbrances, covenants, conditions, reservations, restrictions, easements, rights of way or other matters affecting the Real Property or any portion thereof or any improvements thereon that could reasonably be expected to adversely affect the interest therein or use thereof by any LSDP or any Operating Project, as applicable, in any material respect.

(d) Schedule 3.10(d)(i) contains a list of, as of the date hereof, all Easement Agreements with respect to the Company, its Subsidiaries, the Managed Projects and, to the Knowledge of the Company, the Specified Projects pursuant to which Real Property Interests were created, and true, complete and correct copies of such Easement Agreements (and all amendments thereto) have previously been delivered to, or otherwise made available to, Parent by the Company. All payments required to renew or extend any Easement Agreement set forth on Schedule 3.10(d)(i) that have become due have been paid when required to maintain such Easement Agreement in full force and effect. Except for Title Report Matters and except as set forth in Schedule 3.10(d)(ii) , each Easement Agreement set forth in Schedule 3.10(d)(i) is in full force and effect and is binding and enforceable against the Company, its Subsidiaries, the Managed Projects or, to the Knowledge of the Company, the Specified Projects, as applicable, and to the Knowledge of the Company, each of the other parties thereto in accordance with its respective terms. None of the Company, its Subsidiaries, any Managed Projects nor, to the Knowledge of the Company, any Specified Projects, as applicable, nor, to the Knowledge of the Company, any other party to any Easement Agreement set forth in Schedule 3.10(d)(i) , has given or received any written notice of breach or default which remains uncured under any Easement Agreement, nor, to the Knowledge of the Company, has there occurred any event that with the passage of time or the giving of notice or both would constitute a material breach or default which remains uncured thereunder.

(e) Except for limitations which are now, or may in the future be, imposed by any Permit, except for Title Report Matters and except as set forth on Schedule 3.10(e)(i) , to the Knowledge of the Company, there are no facts or circumstances related to the

 

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Real Property for any LSDP that would preclude its development, construction, operation and maintenance as presently designed and configured completely within the boundaries and other limits of the Real Property upon which the Company, its Subsidiary or Underlying Project, as applicable, has the right to locate the LSDP (or upon which the Company, its Subsidiary, or Underlying Project, as applicable, will have the right to locate the LSDP upon exercise of its options pursuant to the RP Option Agreements), in the Ordinary Course of Business, without encroaching upon any contiguous or adjoining property, easements or rights-of-way so as to violate any rights therein or granted thereunder. Except as set forth on Schedule 3.10(e)(ii) , to the Knowledge of the Company, there is no action pending or threatened by any Governmental Body or other Person against or affecting any Real Property for any LSDP or the improvements located or to be located thereon.

(f) Schedule 3.10(f)(i) contains a list of, as of the date hereof, RP Option Agreements with respect to the Company, its Subsidiaries, the Managed Projects and, to the Knowledge of the Company, the Specified Projects pursuant to which Other Real Property Interests were created, and true, complete and correct copies of such RP Option Agreements (and all amendments thereto) have previously been delivered to, or otherwise made available to, Parent by the Company. All payments required to renew or extend any RP Option Agreement set forth on Schedule 3.10(f)(i) that have become due have bee