TRANSITION ASSET MANAGEMENT
AGREEMENT
by and between
WELLHEAD ELECTRIC
EQUIPMENT, LLC, and
CALIFORNIA HOLDINGS McCALL,
LLC
and
MMC ENERGY, INC.,
MMC ENERGY NORTH AMERICA,
LLC, and
MMC CHULA VISTA, LLC
Dated as of May 21, 2009
TRANSITION ASSET MANAGEMENT
AGREEMENT
Chula Vista
Project
This Transition Asset Management Agreement (this
“ Agreement ”) dated as of May 21, 2009
(the “ Execution Date ”), is by and between
California Holdings McCall, LLC, a Delaware limited liability
company (“ Buyer ”), Wellhead Electric
Equipment, LLC, a Delaware limited liability company (the “
Guarantor ” and, together with Buyer, “ Buyer
Parties ”), and each of MMC Energy, Inc., a
Delaware corporation (“ Seller ”), MMC Energy
North America, LLC, a Delaware limited liability company(“
Parent ”) and MMC Chula Vista, LLC, a Delaware limited
liability company( “ Company ” and, together
with Seller and Parent, the “ Seller Parties ”
and each of (i) the Seller Parties collectively, on the one hand
and (ii) the Buyer Parties collectively, on the other hand, a
“ Party ”).
WHEREAS , Buyer, Seller and certain other parties have
entered into a Membership Interests Purchase Agreement, dated as of
May 21, 2009 (the “ Purchase Agreement ”; and
all capitalized terms not defined herein have the meanings ascribed
to them therein), pursuant to which among other things Seller has
agreed to sell to Buyer and Buyer has agreed to purchase from
Seller the MMC 1 Interest in MMC1, the Acquired Company to which
the relevant Purchased Assets and certain related liabilities (if
any) in respect thereof are to be transferred;
WHEREAS , the Purchased Assets under the Purchase
Agreement include that certain electric power generating facility
and related site located in Chula Vista, California (the “
Project ”) and certain assets related thereto, which
Project and related assets are owned, as of the date hereof, by the
Seller Parties;
WHEREAS , (i) by its execution of this Agreement, Seller
has agreed commencing on the Execution Date to allow Buyer,
Guarantor and their representatives access to the Project to
undertake, as they may elect, the maintenance, improvement or
upgrade of the equipment associated with the Project, and (ii) in
accordance with Section 4.16 of the Purchase Agreement, the Seller
Parties desire to transfer to Buyer the right to manage the
operation of the Project and certain related assets as specified in
this Agreement commencing on the date specified in writing by Buyer
to Seller, provided such date is at least three (3) Business Days
after the date of such notice (the “ Effective Date
”), in each case, for the applicable term set forth herein
for such rights of Buyer, and Buyer desires, as it may elect, to
undertake such maintenance, improvement or upgrade of the equipment
and such operational and management control over the Project and
such related assets, in each case, subject to the limitations set
forth herein;
NOW THEREFORE , the Seller Parties and Buyer, each agreeing to
be bound hereby and acknowledging the sufficiency of the
consideration, promises and commitments made one to the other agree
to the promises and obligations set forth herein:
ARTICLE I
TERM
1.1
Term . The term of this Agreement shall commence
on the Execution Date and shall continue until the earliest
of (i) the Closing; (ii) the date and time of
termination of this Agreement pursuant to Article VIII, or (iii)
such date and time as otherwise agreed by the parties (the “
Term ”); provided that (1) the applicable term
hereunder for the performance of, to the extent elected by Buyer,
of the Remediation Services hereunder and other rights and
obligations described herein in respect of the Remediation Services
shall commence upon the Execution Date and shall continue until the
end of the Term (such applicable term relating to the Remediation
Services, the “ Remediation Services Term ”) and
(2) the applicable term hereunder for the performance of the
Transition Services shall commence at 12:00 a.m. (the “
Effective Time ”) on the Effective Date and shall
continue until the end of the Term (such applicable term relating
to the Transition Services, the “ Transition Services
Term ”).
ARTICLE II
SCOPE OF SERVICES
2.1
Scope of Services .
(a) Commencing
on the Execution Date and continuing throughout the Remediation
Services Term, Buyer, at Buyer’s and Guarantor’s sole
cost and expense (except as specifically contemplated in Section
4.14(a) of the Purchase Agreement), may, if they so elect and in
their sole discretion, perform such items of maintenance,
improvement or upgrade of the Project (subject to (i) the reporting
requirements below and (ii) upon Buyer’s and/or
Guarantor’s request, the execution and delivery by Seller or
another applicable Seller Party to Buyer and/or Guarantor of one or
more bailment agreements (or similar agreements) in form and
substance reasonably satisfactory to all Parties with respect to
any Replacement Property pursuant to which Seller or such other
applicable Seller Party acknowledges the creation and existence of
a bailment and agrees to only accept instructions from the Buyer
and/or Guarantor with respect to the treatment, storage,
maintenance, use and disposition of any such Replacement Property),
as Buyer or Guarantor may elect to bring the equipment up to its
desired maintenance standards as and to the extent contemplated by
the Wellhead Reports or as otherwise notified in advance by Buyer
as remediation work in any advance notice (with material details
included therein) provided by Guarantor to Seller (collectively,
the “ Remediation Services”) , and Buyer and its
Affiliates and representatives are expressly authorized to perform
the Remediation Services.
(b) Commencing
at the Effective Time and continuing throughout the Transition
Services Term, each of the Seller Parties hereby engages Buyer, and
Buyer hereby accepts such engagement, to undertake all commercially
reasonable actions necessary or desirable for the management and
operation of the Project and any assets and activities related
thereto, including the management of the compliance by the Project
with and performance by the Project under the Resource Adequacy
Contracts and the other project contracts listed on Exhibit
C (the “ Project Contracts ”; and the
counterparty to each such Project Contract, individually a “
Project Contractor ”) and the Seller Permits related
to the Project, as the sole and exclusive agent of each Seller
Party. Buyer shall use commercially reasonable efforts
to perform such activities in a manner that does not give rise to
any breach or other violation on the part of a Seller Party under
the provisions of any Project Contract and shall use commercially
reasonable efforts to perform all the applicable Company and Parent
operational and asset management services appurtenant thereto,
including without limitation the services more specifically
described on Exhibit A (collectively, the “
Transition Services ”).
(c) As
part of the Transition Services, subject to the terms of this
Agreement, Buyer shall have the right and obligation and all
requisite authority to undertake all day-to-day operation and
management decisions of the Company and Parent relating to the
Project and its related assets except for decisions relating to the
actions or activities set forth below (“ Owner
Decisions ”) for which the Seller Parties shall have sole
responsibility; provided that, notwithstanding the foregoing, the
Seller Parties shall not take any of the Owner Decisions set forth
in Sections 2.1(c)(i) through 2.1(c)(iv) below without first
obtaining the consent and direction of Buyer with respect to such
actions or activities, which consent and direction from Buyer shall
not be unreasonably withheld:
(i) terminating,
amending or waiving, in any respect, any material duty of a Project
Contractor under any of the Project Contracts;
(ii) entering
into any new agreement on behalf of the Company or for the benefit
of the Project;
(iii) the
cancellation, amendment to or material diminution of the
Company’s or the Project’s right in any way under, any
Seller Permits, approvals, licenses or other similar rights or
benefits held by the Company;
(iv) the
termination of any material vendor account of the Company or
Parent, although nothing herein shall be construed as limiting
Buyer’s choice of reputable vendors to perform any services
as Buyer so desires;
(v) take
any action that would constitute a change in control under the
Federal Power Act , as amended, or the regulations and
administrative decisions promulgated thereunder or which affect the
Company’s market based rate tariff;
(vi) making
dispatch decisions under Energy Management Contracts (as defined in
Exhibit C ); provided, however, that the Seller Parties
shall make all such dispatch decisions in accordance with the
procedures and guidelines set forth in Exhibit F hereto;
and
(vii) taking
any action with respect to any Excluded Asset, including the cash
and accounts receivable held by Parent;
provided that nothing in this Section 2.1(c) shall be
construed to limit the obligations of any party under the Purchase
Agreement.
(d) For
the avoidance of doubt, the Remediation Services and Transition
Services shall not include, and Buyer shall not have any
responsibility for, any of the activities set forth in
Exhibit E , all of which shall remain the obligation of
Seller, the Company or Parent (collectively, the “ Seller
Obligations ”). In addition to the Seller
Obligations, the Seller Parties shall each (i) provide or cause to
be provided to Buyer, its subcontractors, agents, representatives
and employees full unconditional access to the Project at all times
and without prior notice (but without limiting the notice
requirements under Section 2.2(a)), for the purpose of conducting
the Remediation Services and Transition Services and the other
obligations of Buyer hereunder, (ii) cause each Project Contractor
to cooperate and coordinate with Buyer in order to permit Buyer to
perform the Remediation Services and Transition Services, (iii)
provide or cause to be provided to Buyer full access to any
computer monitoring systems and information systems relating to the
Project and the related assets and the performance by Buyer of the
Remediation Services and Transition Services and (iv) make such
payments under the Project Contracts required to be made by the
Seller Parties thereunder, and provide such funds, including those
contemplated pursuant to Sections 3.4 and 3.5, so as to permit
Buyer to perform its obligations hereunder; provided, however, that
the Seller Parties may withhold any such payments under the Project
Contracts in the event of a good faith dispute between the Seller
Parties and a Project Contractor and notice to
Buyer. Buyer shall in any event have no responsibility
for any failure or delay in performing the Transition Services due
to any failure of any Seller Party to perform the Seller
Obligations and its other obligations hereunder. Other
than the costs and expenses associated with the Remediation
Services (“ Remediation Expenses ”), which shall
be borne by Buyer or Guarantor (except as specifically contemplated
by Section 4.14(a) of the Purchase Agreement), Buyer may, but in no
event shall be obligated to, make payments on its own account on
behalf of a Seller Party in relation to its performance of the
Transition Services or otherwise.
(e) As
part of the Transition Services, subject to Section 2.1(c), Buyer
may arrange for the engagement of Affiliates or independent
contractors necessary for the performance by Buyer of the
Transition Services, and the costs of such Affiliates or
independent contractors shall, without duplication, be for the
account of the Seller Parties as an Operating Expense (as defined
below) or, if advanced by Buyer at Buyer’s sole option (but
without any obligation to do so), recoverable by Buyer
as a Buyer Operating Expense in accordance with this
Agreement.
2.2
Reporting Requirements .
(a)
Advance Notices . Buyer shall provide
commercially reasonable advance notice to Seller’s Designated
Representative before (i) undertaking the removal or replacement of
any material asset of the Company or Parent from the Project or
(ii) declaring an outage at the Project (other than any forced
outages).
(b)
Operations Reports .
(i) During
the Transition Services Term, the Seller Parties agree to cause Pro
Energy Services, Inc. (“ Pro ”) to provide
daily, weekly, and monthly reports consistent with its past
practice to each of Buyer and Seller, provided that Buyer
may tailor such reporting at its discretion. Buyer shall
cooperate with the Seller Parties in causing Pro to provide such
reports.
(ii) For
each two week period falling after the Effective Date and during
the Transition Services Term (each, a “ Reporting
Period ”), Buyer shall use commercially reasonable
efforts to provide to Seller a report setting forth in reasonable
detail the expenses incurred by the Buyer in the performance of the
Transition Services in accordance with the terms of this Agreement
(collectively, the “ Buyer Operating Expenses” )
for each Reporting Period, said report to be delivered on the
Friday after each respective Reporting Period. For the
avoidance of doubt, Buyer Operating Expenses shall not include (x)
any expenses or costs incurred by Buyer or its Affiliates in
connection with or as Remediation Expenses or (y) any costs to
Buyer of any insurance obtained by Buyer pursuant to Sections 6.2
and 6.3. Such bi-weekly report shall also (1) specify
material scheduled activities to occur in the future, (2) identify
any of the material Project assets physically removed and/or
replaced, and (3) identify all other material equipment or other
items installed as part of the Project. The bi-weekly
report shall have attached detailed time sheets for any of
Buyer’s personnel working at the Project and shall clearly
distinguish between Remediation Expenses and Buyer Operating
Expenses. Seller shall have the right to review such
time sheets and allocations.
(iii) During
the Transition Services Term, the Seller Parties shall cause
Macquarie Cook Power Inc. (“ Macquarie ”) to
provide periodic revenue reports to Buyer concurrent with their
delivery to any Seller Party.
(iv) During
the Transition Services Term, Buyer shall reasonably communicate
with Seller regarding the status of the Transition Services at such
times as Seller may reasonably request.
(c)
Financial Reports to Buyer . The Seller Parties
shall continue to have responsibility for and to keep the books and
records of the Project, the Company and Parent in accordance with
GAAP, and, during the Transition Services Term, shall use
commercially reasonable efforts to provide to Buyer (i) separate
monthly financial statements (consisting of an income statement,
balance sheet, detailed general ledger and detailed check register)
for the Project and each of Company and Parent, and (ii) a
calculation of the EBITDA as determined in accordance with Article
III hereunder, in each case within thirty (30) days of
the end of each month during the Transition Services
Term. Buyer shall promptly forward to Seller for
processing any invoices relating to Buyer Operating Expenses (which
invoices shall be issued on a monthly basis) and any other third
party invoices for payments or expenses or other similar financial
record with respect to the Project, the Company or Parent received
directly by Buyer, and shall copy Seller on any purchase orders
issued by Buyer.
(d)
Reports to Third Parties . To the extent not
otherwise required to be prepared or submitted by a Project
Contractor under a Project Contract, during the Transition Services
Term, Buyer shall prepare and submit as agent for and on behalf of
Seller, all those reports as required by the North American
Electricity Reliability Council, the U.S. Department of Energy,
California Public Utilities Commission, the U.S. Energy Information
Administration, the California Independent System Operator or any
other governmental entities or self-regulatory organizations
relative to the operations of the Project; provided that
Seller shall have provided Buyer on a timely basis with such
information as is necessary to prepare such reports that is not
otherwise available to Buyer pursuant to its performance of the
Transition Services. During the Transition Services
Term, (i) Seller shall cooperate with Buyer in the collection of
relevant information and preparation of such reports to the extent
reasonably necessary and (ii) Buyer shall provide to Seller a copy
of all reports prepared and submitted by Buyer pursuant to this
subsection 2.2(d).
2.3
Standard of Care . Buyer shall use commercially
reasonable efforts to perform the Transition Services and any
Remediation Services it undertakes in a commercially reasonable
manner and (i) in the case of the Transition Services, in
accordance with the terms and conditions of the Project Contracts
(it being acknowledged, however, that Buyer is assuming the
operations and management of the Project as of the Effective Date
in its existing condition, and Buyer makes no guarantee or
warrantee of any nature whatsoever as to the performance (or
non-performance) of the Project during the Term) and (ii) in the
case of the Remediation Services, so as not give rise to any breach
or other violation on the part of a Seller Party under the
provisions of the Project Contracts in respect of the Project, or
under the terms of any Seller Permit or applicable Law and to plan
such Remediation Services to minimize both the length and number of
outages and other operational disruptions. No other
obligation or duty (fiduciary or otherwise) or standard of care of
Buyer shall be implied under the terms of this Agreement or under
applicable Law except as expressly set forth in this Section
2.3.
2.4
Dealings with Seller . In all dealings with any
Seller Party and in performing the Transition Services and any
Remediation Services, Buyer shall be entitled to rely upon any
instruction, statement or approval given to Buyer by the
Seller’s Designated Representatives, who shall have the
authority to act and make decisions on behalf of each Seller Party
with respect to this Agreement.
2.5
Guaranty . Without limiting Section 7.3,
Guarantor hereby absolutely, unconditionally and irrevocably
guarantees, as a primary obligor and not merely as a surety, to
Seller Parties the punctual performance of all covenants,
agreements, undertakings and obligations of the Buyer under this
Agreement.
ARTICLE III
CONSIDERATION
3.1
Buyer Reimbursement and Purchase Price Reduction
. In consideration for Buyer’s providing the
Transition Services, from and after the commencement of the
Transition Services Term, Buyer shall (i) be reimbursed for the
Buyer Operating Expenses as provided in Section 3.4 and (ii) in the
event the Closing under the Purchase Agreement shall occur, be
entitled to a reduction of the Purchase Price payable at the
Closing under the Purchase Agreement in an amount equal to (1) from
and after the commencement of the Transition Services Term until
the giving of the Buyer EBITDA Notice, 50% of the EBITDA arising
from the Project during such portion of the Transition
Services Term and (2) from and after the giving of a Buyer EBITDA
Notice until the end of the Transition Services Term, 100% of the
EBITDA arising from the Project during such portion of the
Transition Services Term, if such aggregate EBITDA over the
Transition Services Term allocated to Buyer is a positive number
(the “ Positive EBITDA Amount ”). For
purposes of this Agreement, “ EBITDA” arising
from the Project during the Transition Services Term (or the
applicable portion thereof) shall mean the following items as
determined in accordance with GAAP:
(a) the
sum (without duplication) of:
(x) all
revenue generated or accrued by the Project and its related assets
(including the Project Contracts) during the Transition Services
Term (or the applicable portion thereof);
(y) except
as otherwise expressly provided in Section 3.6(c) or (d), all
proceeds payable under any insurance maintained by any Seller Party
with respect to property damage or loss with respect to the Project
that occurs during the Transition Services Term (or the applicable
portion thereof); and
(z) if
Buyer so elects, all proceeds payable under any insurance
maintained by Buyer for Seller-owned equipment with respect to
property damage or loss with respect to the Project that occurs
during the Transition Services Term (or the applicable portion
thereof);
less
(b) the
sum of:
(w) Buyer
Operating Expenses actually reimbursed by the Seller Parties
pursuant to Section 3.3;
(x) operating
and maintenance expenses (other than Buyer Operating Expenses) with
respect to the Project and its related assets (including the
Project Contracts) accrued during the Transition Services Term (or
the applicable portion thereof) and, to the extent not arising
under the Project Contracts or otherwise representing a recurring
cost, reasonably approved by Buyer in the performance of the
Transition Services, including, without duplication, all amounts
payable for the period falling in the Transition Services Term (or
the applicable portion thereof) (1) to Project Contractors under
the Project Contracts, (2) under leases, (3) for property taxes and
other non-income or franchise taxes payable with respect to the
Project (as pro-rated for the period falling under the Transition
Services Term (or the applicable portion thereof)), (4) utilities
(including telecommunications), (5) interconnection costs, (6) in
connection with compliance with ongoing requirements of existing
permits relating to the Project, (7) in connection with the
consulting services of Donelle Griffon with respect to the current
permitting activities with respect to the Project (and excluding,
for the avoidance of doubt, any services relating to the transfer
of any permits as contemplated under the Purchase Agreement) and
(8) other repair and maintenance expenses and other
direct operating expenses (but excluding Remediation Expenses, any
extraordinary or non-recurring items and damage or loss with
respect to the Project for which an insurance claim may be made
(which damage or loss is covered by clause (y) below));
(y) except
as otherwise expressly provided in Section 3.6(c) or (d), any costs
of repairs and other expenses incurred with respect to property
damage or loss with respect to the Project that occurs during the
Transition Services Term (or the applicable portion thereof) for
which an insurance claim may be made under any insurance maintained
by Buyer or any Seller Party; and
(z) any
fines or penalties assessed on the Project, Company or Parent by a
Governmental Authority or under a Project Contract as a result of
the performance of the Transition Services or the Remediation
Services by Buyer hereunder during the Transition Services Term (or
the applicable portion thereof) to the extent (i) not borne or
payable by Buyer or Guarantor under Section 3.8 or (ii) not borne
or payable by any Project Contractor under the terms of the related
Project Contract or otherwise;
(collectively,
all such expenses in this clause (b), “ Operating
Expenses ”); provided that, for the avoidance of
doubt, Operating Expenses shall not include (A) any cost, expense,
charge, fine or penalty of any nature arising as a result of events
or acts that occurred prior to or after the Transition Services
Term, (B) notwithstanding any allocation under GAAP to the
contrary, any item of cost or expense that does not directly result
from acts or operations occurring during the Transition Services
Term, and (C) any allocation to the Project, Company or Parent of
any employee or overhead expense of any Seller Party or any of
their Affiliates or any costs and expenses of any Seller Party
arising from activities other than those directly related to the
Project.
3.2
Buyer EBITDA Notice . At any time during the
Transition Services Term, Buyer may deliver a written notice to
Seller that, from and after the date of such written notice, Buyer
desires to have the benefit of 100% of the Positive EBITDA Amount
for purposes of Section 3.1 arising after the date of such written
notice until the end of the Transition Services Term (a “
Buyer EBITDA Notice ”).
3.3
Seller Purchase Price Increase . In the event (i)
the Closing under the Purchase Agreement shall occur and (ii) the
aggregate amount of the EBITDA of the Company from the Project
allocated to Buyer during the Transition Services Term as
calculated pursuant to Section 3.1 (including the specified
allocation to Buyer of such EBITDA before and after the giving of
any Buyer EBITDA Notice, if any) is a negative number (the “
Negative EBITDA Amount ”), then Seller shall be
entitled to an increase of the Purchase Price payable at the
Closing under the Purchase Agreement in an amount equal to the
lesser of (1) such Negative EBITDA Amount and (2) the Negative
EBITDA Amount based on a calculation where (x) the maximum Negative
EBITDA Amount during the portion of the Transition Services Term
when Buyer shall be entitled to 50% of the EBITDA under Section 3.1
shall be $250,000 and (y) the maximum Negative EBITDA Amount during
the portion of the Transition Services Period when Buyer shall be
entitled to 100% of the EBITDA under Section 3.1, together with any
Negative EBITDA Amount allocated under clause (x), shall be
$500,000 (the “ Capped Negative EBITDA Amount
”); provided that in no event shall the amount of the
adjustment to the Purchase Price to be made pursuant to this
Section 3.3, together with any other amounts payable by Buyer under
this Agreement, exceed the Maximum Liability Amount.
3.4
Reimbursement of Buyer Operating Expenses . From
and after the commencement of the Transition Services Term, the
Seller Parties shall reimburse Buyer for all Buyer Operating
Expenses and any other Operating Expenses advanced by Buyer (at its
sole discretion) on behalf of the Project or any Seller Party
within thirty (30) days of the receipt by Seller of Buyer’s
invoice therefor pursuant to Section 2.2(c); provided that
the amount of Buyer Operating Expenses required to be reimbursed by
the Seller Parties under this Section 3.4 with respect to routine
labor costs of Buyer shall not exceed $10,000 per month or such
higher amount as shall be approved by Seller (the “ Buyer
Labor Cost Monthly Cap ”), it being expressly
acknowledged and agreed by the parties that such Buyer Labor Cost
Monthly Cap shall not apply to any major repairs undertaken by
Buyer as part of its performance of the Transition
Services. This obligation of the Seller Parties shall
remain in effect whether or not the Closing occurs under the
Purchase Agreement
3.5
Revenue and Operating Expense Allocation During the Term
. Notwithstanding anything to the contrary set forth in
this Agreement (but without limiting the adjustments to the
Purchase Price contemplated pursuant to Sections 3.1 and 3.3 or the
Termination Payment contemplated in Section 3.6), (i) all revenue
generated or accrued by the Project and its related assets
(including the Project Contracts) during the Term shall be for the
account of the Seller, the Company or Parent, as the case may be,
and (ii) all Operating Expenses during the Term shall be the
responsibility of the Seller Parties.
3.6
Termination Consideration . (a) In the
event that (i) the Closing does not occur, (ii) the Purchase
Agreement is terminated, (iii) in connection with such termination
Buyer shall be entitled to a return of the Deposit under the terms
of the Purchase Agreement and (iv) there shall be a Positive EBITDA
Amount for the Transition Services Term so that a decrease to the
Purchase Price would have been in effect under Section 3.1 if the
Closing had occurred, then, in addition to the reimbursement of the
Buyer Operating Expenses pursuant to Section 3.4, the Seller
Parties shall pay or cause to be paid to Buyer a termination
payment under this Agreement in an amount equal to the Positive
EBITDA Amount that would have been applied as a decrease to the
Purchase Price under Section 3.1 (the “ Seller
Termination Payment ”).
(b) In
the event that (i) the Closing does not occur, (ii) the Purchase
Agreement is terminated, (iii) in connection with such termination
Buyer shall be entitled to a return of the Deposit under the terms
of the Purchase Agreement and (iv) there shall be Negative EBITDA
Amount for the Transition Services Term so that an increase to the
Purchase Price would have been in effect under Section 3.3 if the
Closing had occurred, then Buyer shall pay or cause to be paid to
Seller a termination payment under this Agreement in an amount
equal to the Negative EBITDA Amount that would have been applied as
an increase to the Purchase Price under Section 3.3 (the “
Buyer Termination Payment ”).
(c) Notwithstanding
the foregoing provisions of this Section 3.6 or anything to the
contrary set forth in Section 6.1, if (i) the Closing does not
occur, (ii) the Purchase Agreement is terminated, (iii) in
connection with such termination Buyer shall be entitled to a
return of the Deposit under the terms of the Purchase Agreement and
(iv) there has been an event of loss with respect to the Project
such that there shall be proceeds under the Existing Project
Insurance constituting all, or substantially all, of the
replacement value of the Project (a “ Total Loss Event
”), then for purposes of calculating any termination payment
payable to Buyer or Seller under this Section 3.6, (x) 50% of the
amount of such insurance proceeds paid under the Existing Project
Insurance with respect to such Total Loss Event shall be payable by
the Seller Parties to Buyer as an additional termination payment
hereunder (a “ Total Loss Payment ”), and (y)
the amount of such insurance proceeds payable under the Existing
Project Insurance and any amounts relating to the cost of repair or
replacement cost of the Project shall not be included in the
calculation of EBITDA under Section 3.1.
(d) Notwithstanding
the foregoing provisions of this Section 3.6 or anything to the
contrary set forth in Section 6.1, if (i) there shall have been an
event of loss (other than a Total Loss Event) with respect to the
Project (a “ Material Insured Event ”), (ii)
Buyer shall elect not to proceed with a Closing under the Purchase
Agreement solely on the basis of such Material Insured Event in
accordance with the terms of the Purchase Agreement, (iii) the
Purchase Agreement is terminated as a result thereof and (iv) in
connection with such termination Buyer shall be entitled to a
return of the Deposit under the terms of the Purchase Agreement,
then for purposes of calculating any termination payment payable to
Buyer or Seller under this Section 3.6, (i) the amount of insurance
proceeds payable under the Existing Project Insurance with respect
to such Material Insured Event shall not be included for purposes
of Section 3.1(a)(y) of the EBITDA calculation and (ii) the costs
of all repairs and other expenses incurred with respect to such
Material Insured Event shall not be included for purposes of
Section 3.1(b)(y) of the EBITDA calculation.
(e) For
purposes of the calculation of any termination payment under this
Section 3.6, each Party shall provide to the o
