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Search LLC Membership Agreement by:
MEMBERSHIP INTEREST PURCHASE AGREEMENT
by and among
MESC CAPITAL, LLC,
a Delaware limited liability company,
and
MOBILE ENERGY SERVICES HOLDINGS, INC.,
an Alabama corporation
Dated as of
January 30, 2004
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TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS; INTERPRETATION ........................................1
SECTION 1.1 Definitions ...............................................1
SECTION 1.2 Rules of Interpretation ...................................9
ARTICLE II. THE PURCHASE AND SALE.............................................10
SECTION 2.1 Purchase and Sale of Interests............................10
SECTION 2.2 Purchase Price and Payment................................10
SECTION 2.3 Available Cash............................................11
SECTION 2.4 Working Capital Balance...................................11
SECTION 2.5 Escrow Account............................................12
ARTICLE III. CLOSING..........................................................14
SECTION 3.1 Time and Place............................................14
SECTION 3.2 Transactions at Closing...................................14
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLER..........................16
SECTION 4.1 Corporate Organization....................................16
SECTION 4.2 Capitalization; Title.....................................16
SECTION 4.3 Subsidiaries and Equity Interests.........................16
SECTION 4.4 Validity of Agreement; Authorization......................16
SECTION 4.5 No Conflict or Violation..................................17
SECTION 4.6 Consents and Approvals....................................17
SECTION 4.7 Absence of Certain Changes or Events......................17
SECTION 4.8 Material Contracts........................................18
SECTION 4.9 Real Property Leases......................................18
SECTION 4.10 Title to Property and Assets.............................19
SECTION 4.11 Condemnation.............................................19
SECTION 4.12 Environmental; Health and Safety Matters.................19
SECTION 4.13 Equipment and Spare Parts................................20
SECTION 4.14 Qualifying Facility Status...............................20
SECTION 4.15 MESC Conduct of Business, Contracts and Liabilities......21
SECTION 4.16 Financial Statements.....................................21
SECTION 4.17 Licenses.................................................22
SECTION 4.18 Bankruptcy Proceedings...................................22
SECTION 4.19 Full Access..............................................22
SECTION 4.20 No Other Representations or Warranties...................22
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER............................23
SECTION 5.1 Corporate Organization....................................23
SECTION 5.2 Validity of Agreement.....................................23
SECTION 5.3 No Conflict or Violation; No Defaults.....................23
SECTION 5.4 Consents and Approvals....................................23
SECTION 5.5 Independent Investigation.................................24
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TABLE OF CONTENTS
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ARTICLE VI. COVENANTS.........................................................24
SECTION 6.1 Certain Changes and Conduct of Business ..................24
SECTION 6.2 Available Cash of MESC ...................................25
SECTION 6.3 Equipment and Spare Parts as of the Closing ..............25
SECTION 6.4 Access to Properties and Records .........................25
SECTION 6.5 Advice of Changes ........................................26
SECTION 6.6 Shareholders' Meeting ....................................26
SECTION 6.7 Consents and Approvals ...................................26
SECTION 6.8 Reasonable Efforts .......................................26
SECTION 6.9 Tax Covenants ............................................27
SECTION 6.10 Confidentiality .........................................27
SECTION 6.11 No Fees and Commissions .................................28
SECTION 6.12 No. 8 Power Boiler Casualty Claim .......................29
ARTICLE VII. CONDITIONS TO OBLIGATIONS OF BUYER ..............................30
SECTION 7.1 Representations and Warranties of Seller. ................30
SECTION 7.2 Performance of Seller's Obligations ......................31
SECTION 7.3 Consents and Approvals ...................................31
SECTION 7.4 No Violation of Orders ...................................31
SECTION 7.5 Ownership of MESC Units ..................................31
SECTION 7.6 Conduct of Business and Operations of MESC ...............31
SECTION 7.7 Operation and Maintenance Agreement ......................31
SECTION 7.8 Contract Employee Arrangements ...........................32
SECTION 7.9 Shareholder Approval. ....................................32
SECTION 7.10 Organizational Documents ................................32
SECTION 7.11 Opinions of Counsel.. ...................................32
SECTION 7.12 Required Approvals for Sale of MESC .....................33
SECTION 7.13 Preliminary Closing Statement ...........................33
SECTION 7.14 No Material Adverse Effect. .............................33
SECTION 7.15 FERC Approval. ..........................................33
SECTION 7.16 Tax-Exempt Financing Documents ..........................33
SECTION 7.17 Southern Company and Mirant Parties Liens ...............33
SECTION 7.18 EPA Acid Rain Program Determination .....................33
SECTION 7.19 Tax Certificate .........................................34
SECTION 7.20 Financing ...............................................34
SECTION 7.21 No. 8 Power Boiler Casualty Claim .......................34
SECTION 7.22 Repair and Restoration of No. 8 Power Boiler. ...........34
ARTICLE VIII. CONDITIONS TO OBLIGATIONS OF SELLER ............................35
SECTION 8.1 Purchase Price Payment ...................................35
SECTION 8.2 Deposit of Aggregate Escrow Amount. ......................35
SECTION 8.3 Representations and Warranties of Buyer...................35
SECTION 8.4 Performance of Buyer's Obligations .......................35
SECTION 8.5 Consents and Approvals ...................................35
SECTION 8.6 No Violation of Orders ...................................35
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TABLE OF CONTENTS
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SECTION 8.7 Shareholder Approval. ....................................36
SECTION 8.8 Member Approval. .........................................36
SECTION 8.9 DTEES Guaranty ...........................................36
SECTION 8.10 Opinions of Counsel .....................................36
SECTION 8.11 Preliminary Closing Statement. ..........................36
SECTION 8.12 Repair and Restoration of No. 8 Power Boiler. ...........36
ARTICLE IX. TERMINATION AND ABANDONMENT ......................................36
SECTION 9.1 Methods of Termination; Upset Date .......................36
SECTION 9.2 Procedure Upon Termination ...............................37
SECTION 9.3 Effect of Termination ....................................38
ARTICLE X. MISCELLANEOUS PROVISIONS ..........................................38
SECTION 10.1 Non-Survival of Representations and Warranties ..........38
SECTION 10.2 Publicity ...............................................38
SECTION 10.3 Successors and Assigns; No Third-Party Beneficiaries ....38
SECTION 10.4 Fees and Expenses .......................................38
SECTION 10.5 Notices .................................................39
SECTION 10.6 Entire Agreement. .......................................40
SECTION 10.7 Waivers and Amendments ..................................40
SECTION 10.8 Severability ............................................40
SECTION 10.9 Titles and Headings .....................................41
SECTION 10.10 Signatures and Counterparts ............................41
SECTION 10.11 Enforcement of this Agreement; Damages .................41
SECTION 10.12 Governing Law ..........................................41
SECTION 10.13 Disclosure .............................................41
SECTION 10.14 Disclaimer of Warranties ...............................42
SECTION 10.15 Consent to Jurisdiction ................................43
SECTION 10.16 No Consequential Damages ...............................43
SECTION 10.17 Non-Recourse Obligations ...............................43
Exhibits
Exhibit 1.1 Contested Liens
Exhibit 8.9 DTEES Guaranty
Disclosure Schedules
Schedule 4.2 MESC Organizational Documents
Schedule 4.5 Conflicts or Violations
Schedule 4.6 Consents and Approvals
Schedule 4.7 Certain Changes or Events
Schedule 4.8 Material Contracts
Schedule 4.9(a) Real Property Leases
Schedule 4.9(b) Enforceability of and Events of Default Under Real
Property Leases
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TABLE OF CONTENTS
Schedule 4.10(a) Permitted Encumbrances
Schedule 4.10(c) Encumbrances and Violations Related to Real Property
Leases
Schedule 4.12(a) Environmental; Health and Safety Matters
Schedule 4.12(b) Environmental Permits
Schedule 4.13(a) MESC Energy Complex
Schedule 4.13(b) Equipment and Spare Parts
Schedule 4.16 Financial Statements
Schedule 4.17 Licenses
Schedule 4.20 Insurance Claims Related to No. 8 Power Boiler Casualty
Claim
Schedule 5.4 Consents and Approvals
Schedule 6.1 Certain Changes and Conduct of Business
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MEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this "Agreement") is
made and entered into as of this 30th day of January, 2004, by and among MESC
CAPITAL, LLC, a Delaware limited liability company ("Buyer"), and MOBILE ENERGY
SERVICES HOLDINGS, INC., an Alabama corporation ("Seller"). Each of Buyer and
Seller are referred to in this Agreement as a "Party" and together as the
"Parties."
RECITALS:
WHEREAS, prior to December 16, 2003 Seller and MESC (as defined in
SECTION 1.1) were involved in a proceeding under Chapter 11 (the "Chapter 11
Proceeding") of the Bankruptcy Code (as defined in SECTION 1.1) in the United
States Bankruptcy Court for the Southern District of Alabama (the "Bankruptcy
Court"); and
WHEREAS, the Bankruptcy Court has confirmed Seller's and MESC's
Third Joint Plan of Reorganization dated October 15,2001, as modified, proposed
by MESC and Seller (the "Joint Plan of Reorganization"), such Joint Plan of
Reorganization has become effective on December 16, 2003, and Seller and MESC
emerged from the Chapter 11 Proceeding and are no longer operating under or at
the direction of the Bankruptcy Court; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, all
of the outstanding membership interests of MESC, upon the terms and subject to
the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual terms, the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I.
DEFINITIONS; INTERPRETATION
SECTION 1.1 Definitions.
When used in this Agreement, the following terms shall have the
respective meanings set forth below:
"Acid Rain Program" shall mean the statutory and regulatory programs
established by Title IV of the Clean Air Act Amendments of 1990.
"Affiliate" of a Person shall mean a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with, the first mentioned Person.
"Aggregate Escrow Amount" shall have the meaning assigned to such
term in SECTION 2.5(a).
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"Agreement" shall have the meaning assigned to such term in the Preamble
to this Agreement.
"Amended and Restated Master Operating Agreement" shall mean that certain
Amended and Restated Master Operating Agreement dated as of July 13, 1995, by
and among Scott Paper Company (predecessor in interest to Kimberly-Clark), S.D.
Warren Company and Seller.
"Available Cash" shall mean all cash and cash equivalents of MESC, other
than cash and cash equivalents constituting insurance proceeds received by or on
behalf of MESC in respect of the No. 8 Power Boiler Casualty Claim.
"Bankruptcy Code" shall mean Chapter 11 of Title 11 of the United States
Code, 11 U.S.C.ss.ss.101 et seq., as amended.
"Bankruptcy Court" shall have the meaning assigned to such term in the
Recitals to this Agreement.
"Boiler Repair Contract" shall have the meaning assigned to such term in
SECTION 6.12(e).
"Boiler Restoration Plan" shall have the meaning assigned to such term in
SECTION 6.12(d).
"Business Day" shall mean a day other than a Saturday, a Sunday or a day
on which banks are required or authorized to be closed in the state of Alabama.
"Buyer" shall have the meaning assigned to such term in the Preamble to
this Agreement.
"Cahoon" shall mean Philip R. Cahoon.
"Cahoon Agreement" shall mean that certain letter agreement dated December
18, 2003, by and between MESC and Cahoon setting forth the terms and conditions
of Cahoon's engagement by MESC, as amended.
"Cahoon Success Fee" shall mean all amounts payable to Cahoon as a success
fee or similar fee or compensation under the terms and conditions of the Cahoon
Agreement in respect to the consummation of the transactions contemplated by
this Agreement.
"CERCLA" shall have the meaning assigned to such term in the definition of
Environmental Law set forth in SECTION 1.1.
"Chapter 11 Proceeding" shall have the meaning assigned to such term in
the Recitals to this Agreement.
"Closing" shall have the meaning assigned to such term in SECTION 3.1.
"Closing Date" shall have the meaning assigned to such term in SECTION
3.1.
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"Closing Statement" shall have the meaning assigned to such term in
SECTION 2.4(b).
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended.
"Collateral Agent" has the meaning set forth in the Joint Plan of
Reorganization.
"Confidentiality Agreement" shall mean that certain Confidentiality
Agreement dated as of April 12, 2002, by and between DTEES and MESC.
"CPA Firm" shall mean PricewaterhouseCoopers or such other nationally
recognized firm of independent certified public accountants selected jointly by
Buyer and Seller pursuant to SECTION 2.4(b).
"Current Assets" shall mean the current assets of MESC as reflected in the
financial statements of MESC as of the relevant date of determination, excluding
(i) uncollected receivables that are more than 120 days old as of the relevant
date of determination, (ii) inventory, (iii) all insurance proceeds received by
MESC in respect of the No. 8 Power Boiler Casualty Claim, to the extent of the
amount on deposit in a bank account of MESC identified to Buyer as of the
relevant date of determination and (iv) all insurance proceeds to be received by
MESC in respect of the No. 8 Power Boiler Casualty Claim, except to the extent
of any expenses incurred by MESC in connection with the repair and restoration
to service of the No. 8 Power Boiler in excess of the Deductible Amount that
have already been paid by MESC but for which MESC has yet to receive
reimbursement as of the relevant date of determination.
"Current Liabilities" shall mean the current liabilities of MESC as
reflected in the financial statements of MESC as of the relevant date of
determination, excluding all liabilities in connection with or in respect of the
No. 8 Power Boiler Casualty, including, without limitation, all liabilities
related to the repair or restoration to service of the No. 8 Power Boiler.
"Damages" shall mean any and all liabilities, losses, damages, demands,
assessments, claims, costs and expenses, including, without limitation,
interest, awards, judgments, penalties, settlements, fines, costs of
remediation, diminution of value, reasonable fees and expenses of attorneys,
accountants and other professionals sustained or incurred in connection with the
defense or investigation of any claim or cause of action.
"Deductible Amount" means the aggregate total of all deductibles and/or
self-insurance payable by MESC in connection with the No. 8 Power Boiler
Casualty under all policies of insurance, binders and other evidences of
insurance coverage covering the No. 8 Power Boiler Casualty.
"DTEES" shall mean DTE Energy Services, Inc., a Michigan corporation.
"DTEES Guaranty" means a guaranty to be issued by DTEES at Closing in
substantially the form of Exhibit 8.9.
"Easement Agreements" shall have the meaning assigned to such term in
SECTION 4.9(a).
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"Effective Date" shall have the meaning assigned to such term in the Joint
Plan of Reorganization.
"Encumbrances" shall mean, any pledges, options, restrictions on transfer,
proxies and voting or other agreements, liens, claims, charges, mortgages,
security interests, defects, judgments, abstracts or other legal or equitable
encumbrances, limitations or restrictions of any nature whatsoever.
"Environmental Indemnity Agreements" means collectively the: (i) the Pulp
Mill Environmental Indemnity Agreement by and between MESC and Kimberly-Clark
(as successor to Scott Paper Company, a Pennsylvania corporation ("Scott
Paper")) dated December 12, 1994; (ii) the Tissue Mill Environmental Indemnity
Agreement by and between MESC and Kimberly-Clark (as successor to Scott Paper)
dated December 12, 1994; (iii) the Paper Mill Environmental Indemnity Agreement
by and between MESC and S.D. Warren Company a Pennsylvania corporation dated
December 12, 1994; and (iv) the Scott Environmental Indemnity Agreement by and
between MESC and Kimberly-Clark (as successor to Scott Paper) dated as of
December 12, 1994.
"Environmental Law" shall mean current local, county, state, federal,
and/or foreign law (including common law), statute, code, ordinance, rule,
regulation or other legal obligation relating to the protection of human health
or safety, the environment or natural resources and in effect from time to time,
including, without limitation, the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. section 9601 et seq.), as amended
("CERCLA"), the Resource Conservation and Recovery Act (42 U.S.C. section 6901
et seq.), as amended, the Federal Water Pollution Control Act (33 U.S.C. section
1251 et seq.), as amended, the Clean Air Act (42 U.S.C. section 7401 et seq.),
as amended ("Clean Air Act"), the Toxic Substances Control Act (15 U.S.C.
section 2601 et seq.), as amended, the Occupational Safety and Health Act (29
U.S.C. section 651 et seq.), as amended, the Safe Drinking Water Act (42 U.S.C.
section 300(f) et seq.), as amended, the Hazardous Materials Transportation Act
(49 U.S.C. 5101 et seq), as amended, analogous state, tribal or local laws, and
any similar, implementing or successor law, and any amendment, rule, regulation,
or directive issued thereunder.
"Environmental Permits" shall have the meaning assigned to such term in
SECTION 4.12(a)(v).
"EPA" shall have the meaning assigned to such term in SECTION 4.12(c).
"Escrow Account" shall have the meaning assigned to such term in SECTION
2.5(a).
"Escrow Agent" shall mean a Person to be determined by mutual agreement of
Buyer and Seller.
"Escrow Agreement" shall mean that certain Escrow Agreement by and among
Buyer, Seller and the Escrow Agent to be executed at or before the Closing as
provided herein.
"FERC" shall mean the U.S. Federal Energy Regulatory Commission.
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"Final Closing Statement" shall have the meaning assigned to such term in
SECTION 2.4(b).
"Final Working Capital Balance" shall have the meaning assigned to such
term in SECTION 2.4(b).
"GAAP" shall mean generally accepted accounting principles in the United
States.
"Governmental Authority" shall have the meaning assigned to such term in
SECTION 4.5.
"Hazardous Material" shall mean any substance, material or waste which is
regulated by any Environmental Law as hazardous, toxic, a pollutant, contaminant
or words of similar meaning, including, without limitation, petroleum, petroleum
products, asbestos, urea formaldehyde and polychlorinated biphenyls.
"HRSG" shall mean the heat recovery steam generator manufactured by
Deltak, LLC owned by MESC.
"IDB" shall mean the Industrial Development Board of the City of Mobile,
Alabama.
"IDB Lease Agreement" shall mean the Amended and Restated Lease and
Agreement dated as of August 1, 1995 among MESC, Seller and the IDB, as amended.
"Intercreditor Agreement" shall mean the Amended and Restated
Intercreditor and Collateral Agency Agreement dated as of November 1, 2003 among
MESC, IDB, the Tax-Exempt Trustee, The Southern Company, the Mirant Parties and
the Collateral Agent, as amended.
"IRS" shall mean the United States Internal Revenue Service.
"Joint Plan of Reorganization" shall have the meaning assigned to such
term in the Recitals.
"Kimberly-Clark" or "KC" shall mean Kimberly-Clark Corporation, a Delaware
corporation.
"Knowledge" shall mean the actual knowledge, after reasonable inquiry, of
either of Stewart or Cahoon.
"License" or "Licenses" shall mean licenses, permits, certificates,
franchises, authorizations and approvals issued or granted by any Governmental
Authority necessary for the conduct of the business of Seller or MESC as
currently conducted.
"Material Adverse Effect" shall mean a material adverse effect on the
assets, properties, business, operations or financial condition of MESC, taken
as a whole, it being understood that none of the following shall be deemed to
constitute a Material Adverse Effect: (i) any effect resulting from entering
into this Agreement or the announcement of the transactions contemplated
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by this Agreement, (ii) any effect resulting from changes in general economic
conditions in the industry in which MESC operates, and (iii) any effect
resulting from changes in the United States or global economy as a whole.
"Material Contract" shall mean any contract, agreement or commitment
(other than the Real Property Leases) to which MESC is a party that (i) involves
the payment or receipt by MESC of amounts in excess of $50,000, (ii) has a
remaining term as of the Closing Date in excess of 6 months or (iii) is
reasonably expected to be material to the business or operations of MESC or the
MESC Energy Complex.
"MESC" shall mean Mobile Energy Services Company, LLC., an Alabama limited
liability company and a wholly-owned subsidiary of Seller.
"MESC Energy Complex" means the energy and chemical recovery complex owned
by MESC and located at the Mobile Facility, as more fully described in Schedule
4.13(a).
"MESC Units" shall mean one-hundred percent (100%) of the outstanding
membership units of MESC.
"Mirant Parties" shall mean Mirant Corporation, a Delaware corporation,
and Mirant Services L.L.C., a Delaware limited liability company.
"Mobile Facility" means, collectively, the tissue mill, pulp mill and
paper mill complex and related assets which are owned by KC and the MESC Energy
Complex located in Mobile, Alabama.
"Negative Working Capital Adjustment" shall have the meaning assigned to
such term in SECTION 2.5(b)(iii).
"Notice of Special Meeting" shall have the meaning assigned to such term
in SECTION 6.6.
"Notice of Self-Certification" shall have the meaning assigned to such
term in SECTION 4.14(a).
"No. 8 Power Boiler" means the No. 8 Power Boiler comprising a part of the
MESC Energy Complex and the equipment and facilities of the MESC Energy Complex
pertaining to the No. 8 Power Boiler.
"No. 8 Power Boiler Casualty" means the casualty event that occurred at
the MESC Energy Complex on November 5, 2003, pursuant to which the No. 8 Power
Boiler was severely damaged, and all damage to persons or property incurred by
MESC in connection therewith.
"No. 8 Power Boiler Casualty Claim" means collectively, all insurance
claims of MESC under all policies of insurance, binders and other evidences of
insurance coverage covering the No. 8 Power Boiler Casualty.
"O&M Agreement" shall have the meaning assigned to such term in SECTION
7.7(a).
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"Objection" shall have the meaning assigned to such term in SECTION
2.4(b).
"OEC" means Operational Energy Corp.
"OPCO" shall have the meaning assigned to such term in SECTION 7.7(b).
"OPCO Agreement" shall have the meaning assigned to such term in SECTION
7.7(b).
"Organizational Documents" shall mean articles or certificates of
incorporation, bylaws, articles or certificates of formation or organization,
limited liability company operating agreements or regulations, partnership or
limited partnership agreements or other formation or governing documents of a
particular entity.
"Owner's Title Policy" shall mean an owners policy of title insurance
issued to MESC by the Title Company at Buyer's sole cost and expense, pursuant
to which the Title Company insures MESC's leasehold interests under the Real
Property Leases, subject only to Permitted Encumbrances. The Owner's Title
Policy shall be acceptable in form and substance to Buyer.
"Party" shall have the meaning assigned to such term in the Preamble to
this Agreement.
"Permitted Encumbrance" shall mean: (i) liens, encumbrances or
imperfections of title that do not materially detract from the value of, or the
present use or marketability of the property affected thereby; (ii) mortgage and
security interests granted pursuant to the Tax-Exempt Financing Documents, which
have been subordinated to the liens granted to Buyer's financing parties on
terms and conditions satisfactory to Buyer and such financing parties; (iii)
minor imperfections of title which are not, individually or in the aggregate,
reasonably expected to have a Material Adverse Effect; (iv) liens for current
Taxes that are not yet due and payable; (v) mechanics, materialmans or other
similar statutory liens arising in the ordinary course of MESC's business and
securing obligations that are not yet due and payable, or that are being
contested in good faith pursuant to appropriate proceedings and that are
specifically identified on Exhibit 1.1; (vi) liens specifically identified on
the financial statements set forth in Schedule 4.16 or on any other Schedule to
this Agreement; and (vii) zoning, building, use and other applicable
governmental ordinances, if any, that do not impair the present use of the
property affected thereby.
"Person" shall mean an individual, corporation, association, trust,
limited liability company, limited partnership, limited liability partnership,
partnership, incorporated organization, other entity or group (as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended).
"Preliminary Working Capital Balance" shall have the meaning assigned to
such term in SECTION 2.4(a).
"Project Documents" shall have the meaning assigned to such term in
Exhibit A of the Amended and Restated Master Operating Agreement.
"PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
amended, and the rules and regulations promulgated pursuant thereto.
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"Purchase Price" shall have the meaning assigned to such term in SECTION
2.2(a), as adjusted pursuant to SECTION 2.2(b) and SECTION 2.5.
"PURPA" shall mean The Public Utility Regulatory Policies Act of 1978.
"Qualifying Facility" shall have the meaning set forth in 18 C.F.R. Sec.
292.101 (b)(1) or such successor regulation(s) as FERC may promulgate from time
to time hereafter.
"Real Property Leases" shall have the meaning assigned to such term in
SECTION 4.9(a).
"Remaining Deductible Amount" shall mean the portion of the Deductible
Amount that remains unpaid as of the Closing, if any.
"Review Period" shall have the meaning assigned to such term in SECTION
2.4(b).
"Seller" shall have the meaning assigned to such term in the Preamble of
this Agreement.
"Shareholder Mailing" shall have the meaning assigned to such term in
SECTION 6.6.
"Shareholder Materials" shall have the meaning assigned to such term in
SECTION 6.6.
"Shareholders" shall mean all of the holders of the Shares as of the
Closing.
"Shareholders' Meeting" shall have the meaning assigned to such term in
SECTION 6.6.
"Shares" shall mean all of the outstanding shares of the capital stock of
Seller.
"Stewart" shall mean James T. Stewart.
"Stewart Agreement" shall mean that certain letter agreement dated
December 18, 2003, by and between MESC and Stewart setting forth the terms and
conditions of Stewart's engagement as the Chief Executive Officer of MESC, as
amended.
"Stewart Success Fee" shall mean all amounts payable to Stewart as a
success fee or similar fee or compensation under the terms and conditions of the
Stewart Agreement in respect to the consummation of the transactions
contemplated by this Agreement.
"Tax" or "Taxes" shall mean any and all federal, state, local and foreign
taxes and other governmental levies, fees, imposts and duties of whatever kind
(including any interest, penalties or additions to the tax imposed in connection
therewith or with respect thereto), including, without limitation, taxes imposed
on, or measured by, income, franchise, profits or gross receipts, and also ad
valorem, value added, sales, use, service, real or personal property, capital
stock, license, payroll, withholding, employment, social security, workers'
compensation, unemployment compensation, utility, severance, production, excise,
stamp, occupation, premium, windfall profits, transfer and gains taxes and
customs duties.
"Tax-Exempt Debt" shall have the meaning assigned to such term in SECTION
2.2(c).
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"Tax-Exempt Financing Documents" shall mean the Tax-Exempt Indenture, the
IDB Lease Agreement, the Intercreditor Agreement and the security documents
securing the same in favor of the Collateral Agent.
"Tax-Exempt Indenture" shall mean the Amended and Restated Trust Indenture
dated as of August 1, 1995 between the IDB and the Tax-Exempt Trustee, as
amended.
"Tax-Exempt Trustee" has the meaning set forth in the Joint Plan of
Reorganization.
"Tax Returns" shall mean returns, reports, exhibits, schedules,
information statements and other documentation (including any additional or
supporting material) filed or maintained, or required to be filed or maintained,
in connection with the calculation, determination, assessment or collection of
any Tax and shall include any amended returns required as a result of
examination adjustments made by the IRS or other Tax authority.
"Title Company" shall mean a title insurance company selected by Buyer and
authorized to conduct a title insurance business in the State of Alabama.
"Transaction Documents" shall mean this Agreement, the Escrow Agreement
and the DTEES Guaranty.
"Transfer Taxes" shall have the meaning assigned to such term in SECTION
6.9(c).
"Underlying Real Property Leases" shall mean, with respect to each Real
Property Lease under which MESC is the sublessee, the real property leases or
subleases directly or indirectly between the lessor under such Real Property
Lease and the fee owner of the real property subject to such Real Property
Lease.
"Underwriter" means Lloyd's and Companies, the underwriter for all
insurance policies, binders and other evidences of insurance coverage covering
the No. 8 Power Boiler Casualty.
"Working Capital" shall mean Current Assets less Current Liabilities.
"Working Capital Baseline Amount" shall mean Zero Dollars ($0).
SECTION 1.2 Rules of Interpretation.
Unless the context clearly requires otherwise, in this Agreement:
(i) all references to Articles, Sections, Schedules and Exhibits shall be
construed as references to Articles and Sections of and Schedules and Exhibits
to this Agreement; (ii) all references to agreements, documents or other
instruments shall include all amendments, modifications and supplements thereto
and replacements thereof; (iii) a reference to any Person shall include such
Person's successors and permitted assigns; and (iv) the words "include" or
"including" shall be construed to mean "including, but not limited to."
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ARTICLE II.
THE PURCHASE AND SALE
SECTION 2.1 Purchase and Sale of Interests.
On and subject to the terms and conditions of this Agreement, Seller
agrees to sell, convey, transfer and assign all of its right, title and interest
in the MESC Units to Buyer, and Buyer agrees to purchase, accept and receive
from Seller, the MESC Units.
SECTION 2.2 Purchase Price and Payment.
(a) Purchase Price. The purchase price for the sale, conveyance, transfer
and assignment of the MESC Units to Buyer (the "Purchase Price") shall be an
amount equal to Thirty Million Dollars ($30,000,000), less the Remaining
Deductible Amount, which Purchase Price shall be subject to further adjustment
in accordance with SECTION 2.2(b) and SECTION 2.5.
(b) Purchase Price Adjustments.
The Purchase Price determined in accordance with SECTION 2.2(a)
shall be further adjusted pursuant to this SECTION 2.2(b).
(i) If MESC sells or otherwise disposes of the HRSG and associated
inventoried components prior to the Closing, the Purchase Price shall be
reduced by Nine Hundred Fifty Thousand Dollars ($950,000).
(ii) If the Preliminary Working Capital Balance determined as of the
Closing Date in accordance with SECTION 2.4(a) is less than or equal to
the Working Capital Baseline Amount, the Purchase Price shall be decreased
by the amount by which the Preliminary Working Capital Balance is less
than the Working Capital Baseline Amount.
(iii) If the Preliminary Working Capital Balance determined as of
the Closing Date in accordance with SECTION 2.4(a) exceeds the Working
Capital Baseline Amount, the Purchase Price shall be increased by the
amount of such excess.
(iv) If the quantity and quality of equipment and spare parts owned
by MESC and located at the MESC Energy Complex as of the Closing Date are
determined by Buyer to be less than the quantity and quality of equipment
and spare parts shown on Schedule 4.13(b), the Purchase Price shall be
reduced by the difference between the value of the equipment and spare
parts shown on Schedule 4.l3(b) (excluding those spare parts specified as
such on Schedule 4.13(b) consisting of inventoried components associated
with the HRSG if MESC sells or otherwise disposes of the HRSG prior to the
Closing in accordance with SECTION 2.2(b)(i)) and the value of the
equipment and spare parts as of the Closing Date.
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(v) If the Closing occurs after April 30, 2004, in addition to the
adjustments to the Purchase Price set forth in SECTIONS 2.2(b)(i)-(iv),
the Parties shall negotiate in good faith further appropriate adjustments
to the Purchase Price.
(c) Payment. On the Closing Date Buyer shall wire transfer to Seller in
immediately available funds, to the account or accounts specified by Seller to
Buyer on or prior to the Business Day immediately preceding the Closing Date, an
amount equal to: (i) the Purchase Price as adjusted in accordance with SECTION
2.2(b), less (ii) One Million Dollars ($1,000,000) as a credit to the Purchase
Price relating to the One Million Dollars ($1,000,000) principal amount of 6.95%
Solid Waste Revenue Refunding Bonds Series 1995 due 2020 (the "Tax-Exempt Debt")
with respect to which MESC then remains obligated to pay pursuant to the IDB
Lease Agreement; and less (iii) the Aggregate Escrow Amount, which amount shall
be deposited with the Escrow Agent in accordance with SECTION 2.5.
SECTION 2.3 Available Cash.
At any time, and from time to time, prior to the Closing, Seller
may, to the extent available and permitted to be used for such purpose under
applicable law and the Tax-Exempt Financing Documents and other Contracts
applicable to MESC or its properties, cause MESC to distribute or pay all or any
portion of Available Cash held by MESC to Seller or to the creditors of MESC,
and no adjustment of the Purchase Price shall be made in respect of any such
distribution or payment except to the extent effected as part of any Working
Capital adjustments made pursuant to and in accordance with SECTION 2.2(b) and
SECTION 2.5.
SECTION 2.4 Working Capital Balance.
(a) Prior to the Closing, Buyer and Seller shall in good faith, using
their reasonable efforts, prepare a statement (the "Preliminary Closing
Statement"), which shall set forth in reasonable detail an estimate of the
amount of Working Capital of MESC as of the Closing Date based upon a pro forma
balance sheet as of Closing prepared no more than 10 days prior to the
anticipated Closing Date. The Working Capital balance shown on the Preliminary
Closing Statement shall be referred to as the "Preliminary Working Capital
Balance."
(b) Within 60 days following the Closing, Buyer shall prepare and deliver
to Seller a statement (the "Closing Statement"), which shall set forth in
reasonable detail the amount of Working Capital of MESC as of the Closing Date
(calculated before giving effect to any changes to Working Capital effected
after the Closing). Following its receipt from Buyer of the Closing Statement,
Seller shall have 30 Business Days to review the Closing Statement and to inform
Buyer in writing of any disagreement (the "Objection") which it may have with
the Closing Statement, which Objection shall specify in reasonable detail
Seller's disagreement with the Closing Statement. Buyer agrees to cause MESC to
give Seller and its authorized representatives reasonable access to such
employees, offices and other facilities and such books and records of MESC as
are reasonably necessary to allow Seller and its authorized representatives to
examine and evaluate the Closing Statement. If Buyer does not receive the
Objection within such 30 Business Day period, the amount of Working Capital set
forth on the Closing Statement delivered pursuant to this SECTION 2.4(b) shall
be deemed to have been
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accepted by Seller and shall become binding upon Seller. If Seller timely
delivers an Objection to Buyer, Buyer shall then have 15 Business Days from the
date of receipt of such Objection (the "Review Period") to review and respond to
the Objection. Buyer and Seller shall attempt in good faith to resolve any
disagreements with respect to the determination of Working Capital of MESC as of
the Closing Date. If they are unable to resolve all of their disagreements with
respect to the determination of Working Capital of MESC as of the Closing Date
within 15 Business Days following the expiration of the Review Period, they may,
at the option of either Buyer or Seller, refer their differences to the CPA
Firm, or if the CPA Firm declines to accept such engagement, a nationally
recognized firm of independent certified public accountants selected jointly by
Buyer and Seller (which jointly selected firm shall then constitute the "CPA
Firm"), who shall determine only with respect to the differences so submitted,
whether and to what extent, if any, the amount of Working Capital of MESC as of
the Closing Date as set forth in the Closing Statement requires adjustment.
Buyer and Seller shall direct the CPA Firm to use its reasonable efforts to
render its determination within 30 Business Days after the issue is first
submitted to the CPA Firm. The CPA Firm's determination shall be conclusive and
binding upon Buyer and Seller. The fees and disbursements of the CPA Firm shall
be shared equally by Buyer and Seller. Buyer and Seller shall make readily
available to the CPA Firm all relevant books and records relating to the Closing
Statement and all other items reasonably requested by the CPA Firm. The Closing
Statement as agreed to by Buyer and Seller or as determined by the CPA Firm
shall be referred to as the "Final Closing Statement," shall be executed by
Buyer and Seller and a copy thereof shall be delivered to the Escrow Agent. The
Working Capital balance shown on the Final Closing Statement shall be referred
to as the "Final Working Capital Balance."
(c) The Preliminary Closing Statement, the Closing Statement and the Final
Closing Statement shall be prepared in accordance with GAAP and on a basis
consistent with MESC's financial statements attached hereto as Schedule 4.16,
using the same accounting methods, policies, practices, procedures and
adjustments as were used in the preparation of such financial statements.
Notwithstanding the foregoing, to the extent the accounting policies and
practices used in preparing the Preliminary Closing Statement and MESC's
financial statements attached hereto as Schedule 4.16 are not in accordance with
GAAP, the accounting policies and practices used in preparing the Preliminary
Closing Statement and MESC's financial statements attached hereto as Schedule
4.16 will be used in preparing the Closing Statement and the Final Closing
Statement.
SECTION 2.5 Escrow Account.
(a) At the Closing, Buyer shall deposit with the Escrow Agent an amount
equal to the greater of (i) the Preliminary Working Capital Balance and (ii) One
Million Five Hundred Thousand Dollars ($1,500,000) (the "Aggregate Escrow
Amount"), which Aggregate Escrow Amount shall be held by the Escrow Agent in an
interest bearing account (the "Escrow Account") and distributed by the Escrow
Agent in accordance with the Escrow Agreement.
(b) The Aggregate Escrow Amount and all accrued interest and other
earnings thereon shall be distributed by the Escrow Agent in accordance with the
Escrow Agreement, which shall provide, among other things, as follows:
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(i) The Escrow Agent shall hold the Aggregate Escrow Amount until such
time as the Working Capital of MESC as of the Closing Date has been finally
determined pursuant to the Final Closing Statement in accordance with the
provisions of SECTION 2.4 and the Escrow Agent has received a copy of such Final
Closing Statement executed by both Buyer and Seller.
(ii) Final Working Capital Balance exceeds Preliminary Working Capital
Balance.
(A) If the Final Working Capital Balance of MESC exceeds the
Preliminary Working Capital Balance, the Purchase Price shall be
increased by the amount of such excess (the "Positive Working
Capital Adjustment"), and the Escrow Agent shall immediately pay to
Seller the entire Aggregate Escrow Amount and all accrued interest
and other earnings thereon. In addition, Buyer shall wire transfer
to Seller to the account or accounts specified by Seller immediately
available funds in an amount equal to the Positive Working Capital
Adjustment.
(iii) Preliminary Working Capital Balance exceeds Final Working Capital
Balance.
(A) If the Preliminary Working Capital Balance exceeds the
Final Working Capital Balance of MESC, the Purchase Price shall be
decreased by the amount of such excess (the "Negative Working
Capital Adjustment"), and the Escrow Agent shall immediately pay to
Buyer in cash out of the Escrow Account the amount of the Negative
Working Capital Adjustment and all accrued interest and other
earnings which have accrued thereon up to the amount available in
the Escrow Account. Within five (5) Business Days following the
aforementioned payment to Buyer, the Escrow Agent shall distribute
to Seller all funds remaining in the Escrow Account after such
payment. If funds are insufficient in the Escrow Account to make
such payment to Buyer, because for example, the Final Working
Capital Balance is less than zero, then Seller shall wire transfer
to Buyer to the account or accounts specified by Buyer immediately
available funds in an amount equal to the difference between the
Negative Working Capital Adjustment and the Aggregate Escrow Amount.
(iv) Preliminary Working Capital Balance equals Final Working Capital
Balance.
(A) If the Preliminary Working Capital Balance equals the
Final Working Capital Balance of MESC, the Escrow Agent shall
immediately pay to Seller the entire Aggregate Escrow Amount and all
accrued interest and other earnings thereon.
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(c) Each of Buyer and Seller shall be responsible for and shall pay 50% of
all fees, costs and expenses payable to the Escrow Agent pursuant to the Escrow
Agreement.
ARTICLE III.
CLOSING
SECTION 3.1 Time and Place.
Subject to the provisions of ARTICLE IX hereof as to termination of
this Agreement, the purchase and sale of the MESC Units will take place at a
closing (the "Closing") at the offices of Hunton & Williams at 11:00 a.m. local
time on the earliest practicable date after all of the conditions precedent to
each Party's obligations hereunder as specified in ARTICLE VII and ARTICLE VIII
have been satisfied or waived or such other time and place as Buyer and Seller
may mutually agree in writing. The date on which the Closing is actually held is
the "Closing Date."
SECTION 3.2 Transactions at Closing.
At the Closing, the following shall occur:
(a) The Purchase Price shall be payable to Seller in accordance with the
provisions of SECTION 2.2;
(b) Seller shall assign and transfer the MESC Units to Buyer, free of any
Encumbrances, by execution and delivery of a bill of sale with respect to such
MESC Units and such other instruments of transfer or documents necessary to
effect transfer of the title of the MESC Units to be sold by Seller to Buyer and
to permit registration of such transfer in the registry of members of MESC in
accordance with this Agreement.
(c) Buyer, Seller and the Escrow Agent shall execute and deliver the
Escrow Agreement contemplated by SECTION 2.5(b);
(d) Buyer shall deposit the Aggregate Escrow Amount with the Escrow Agent
in accordance with the provisions of SECTION 2.5(a);
(e) Seller shall cause MESC to deliver to Buyer evidence reasonably
satisfactory to Buyer that the Cahoon Agreement and the Stewart Agreement and
all other agency and employment arrangements with MESC have been terminated and
that all of MESC's obligations therein and claims against MESC arising
therefrom, if any, have been fully discharged and paid in full, waived or
released;
(f) Seller shall cause MESC to deliver to Buyer evidence reasonably
satisfactory to Buyer that the O&M Agreement has been terminated and that all of
MESC's obligations therein and claims against MESC arising therefrom, if any,
have been fully discharged and paid in full, waived or released;
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(g) Buyer shall cause DTEES to execute and deliver to Seller the DTEES
Guaranty;
(h) Seller shall cause MESC to deliver to Buyer written resignations,
effective as of the Closing, by Seller, Stewart, Cahoon and each other Person,
if any, who, immediately prior to the Closing, is a manager, a director or an
officer of MESC;
(i) Seller shall deliver to Buyer a certificate of Seller certifying as to
(i) MESC's articles of organization, limited liability company agreement and
incumbency of officers immediately prior to the Closing; (ii) Seller's articles
of incorporation, by-laws, and incumbency of officers immediately prior to the
Closing; and (iii) the resolutions of the board of directors of Seller approving
this Agreement and the transactions contemplated hereby and the vote of the
Shareholders of Seller approving this Agreement and the transactions
contemplated hereby as required under applicable law;
