Exhibit 10.5
$431,407,000
CEDAR BRAKES II, L.L.C.
9.875% SERIES A SENIOR SECURED BONDS
DUE SEPTEMBER 1, 2013
PURCHASE AGREEMENT
December 7, 2001
CREDIT SUISSE FIRST BOSTON CORPORATION,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Cedar Brakes II, L.L.C., a Delaware limited liability
company (the "COMPANY"), proposes, subject to the terms and conditions stated
herein, to issue and sell to Credit Suisse First Boston Corporation as initial
purchaser (the "PURCHASER") U.S. $431,407,000 principal amount of its 9.875%
Series A Senior Secured Bonds due September 1, 2013 (the "SECURITIES") to be
issued under an indenture, dated as of December 12, 2001 (the "INDENTURE"),
between the Company and Bankers Trust Company, as Trustee. The United States
Securities Act of 1933 is herein referred to as the "SECURITIES ACT."
The holders of the Securities will be entitled to the benefits of a
Registration Rights Agreement of even date herewith among the Company and the
Purchaser (the "REGISTRATION RIGHTS AGREEMENT"), pursuant to which the Company
agrees to file a registration statement with the Securities Exchange Commission
(the "COMMISSION") registering the resale of the Offered Securities under the
Securities Act.
The Company hereby agrees with the Purchaser as follows:
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Purchaser that:
(a) A preliminary offering circular dated November 28, 2001 (as it may
be amended or supplemented, the "PRELIMINARY OFFERING CIRCULAR") and an offering
circular dated December 7, 2001 (as it may be amended or supplemented, the
"OFFERING CIRCULAR" and, together with the Preliminary Offering Circular, the
"OFFERING Document") relating to the Securities have been prepared by the
Company. On the date of this Agreement, the Offering Document does not include
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The preceding sentence
does not apply to statements in or omissions from the Offering Document based
upon written information
furnished to the Company by the Purchaser specifically for use therein, it being
understood and agreed that the only such information is that described as such
in Section 7(b) hereof.
(b) The Company has been duly formed and is an existing limited
liability company in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct its
business as described in the Offering Document; and the Company is duly
qualified to do business as a foreign company in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification, except when the failure to so qualify
would not, individually or in the aggregate, have a material adverse effect on
the condition (financial or other), business, properties or results of
operations of the Company ("Material Adverse Effect").
(c) The Indenture has been duly authorized by the Company; the
Securities have been duly authorized by the Company; and when the Securities are
delivered and paid for pursuant to this Agreement on the Closing Date (as
defined below), the Indenture will have been duly executed and delivered by the
Company, such Securities will have been duly executed, authenticated, issued and
delivered and will conform to the description thereof contained in the Offering
Document in all material respects and the Indenture and such Securities will
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
(d) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required for the consummation of
the transactions contemplated by this Agreement or the Registration Rights
Agreement except for (i) the filing with the Commission of the Exchange Offer
Registration Statement or the Shelf Registration Statement (each as defined in
the Registration Rights Agreement), (ii) the order of the Commission declaring
such registration statement effective, (iii) approval by the New Jersey Bureau
of Public Utilities of (A) the Amended Power Purchase Agreement (as defined in
the Offering Document), (B) the Interconnection Agreements between Public
Service Electric and Gas Company ("PSE&G") and Camden Cogen, L.P. ("CAMDEN") and
PSE&G and Cogen Technologies N.J. Venture ("BAYONNE"), each dated May 23, 2001
(such agreements, the "INTERCONNECTION AGREEMENTS"), and (C) the Gas Services
Agreements between PSE&G and Camden and PSE&G and Bayonne, each dated May 23,
2001 (such agreements, the "GAS SERVICES AGREEMENTS"), and (iv) the approval by
the Federal Energy Regulatory Commission pursuant to Section 205 of the Federal
Power Act of 1920, as amended (the "FPA") for the rates to be charged by the
Company under the Amended Power Purchase Agreement.
(e) The execution, delivery and performance of the Indenture, this
Agreement and the Registration Rights Agreement, and the issuance and sale of
the Securities and compliance with the terms and provisions thereof will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any of its properties, or any agreement or
instrument to which the Company is a party or by which the Company is bound or
to which any of the properties of the Company is subject, or the certificate of
formation or limited liability company agreement of the Company, and the Company
has full power and authority to authorize, issue and sell the Securities as
contemplated by this Agreement
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(f) This Agreement and the Registration Rights Agreement have been duly
authorized, executed and delivered by the Company.
(g) Except as disclosed in the Offering Document, the Company has good
and marketable title to all assets owned by it, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or to be made thereof by it.
(h) The Company possesses adequate certificates, authorities or permits
issued by appropriate governmental agencies or bodies necessary to conduct the
business now operated by it and has not received any notice of proceedings
relating to the revocation or modification of any such certificate, authority or
permit that, if determined adversely to the Company, would individually or in
the aggregate have a Material Adverse Effect.
(i) Except as disclosed in the Offering Document, the Company is not in
violation of any statute, any rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "ENVIRONMENTAL LAWS"), does not own or operate
any real property contaminated with any substance that is subject to any
environmental laws, is not liable for any off-site disposal or contamination
pursuant to any environmental laws, and is not subject to any claim relating to
any environmental laws, which violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse Effect; and the Company
is not aware of any pending investigation which might lead to such a claim.
(j) Except as disclosed in the Offering Document, there are no pending
actions, suits or proceedings against or affecting the Company or any of its
properties that, if determined adversely to the Company, would individually or
in the aggregate have a Material Adverse Effect, or would materially and
adversely affect the ability of the Company to perform its obligations under the
Indenture, this Agreement or the Registration Rights Agreement, or which are
otherwise material in the context of the sale of the Securities; and no such
actions, suits or proceedings are threatened or, to the Company's knowledge,
contemplated.
(k) The financial statements of the Company included in the Offering
Document present fairly the financial position of the Company as of the date
shown and, except as otherwise disclosed in the Offering Document, such
financial statements have been prepared in conformity with the generally
accepted accounting principles in the United States applied on a consistent
basis.
(l) Except as disclosed in the Offering Document, since the date of the
latest audited financial statements included in the Offering Document there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company, and, except as
disclosed in or contemplated by the Offering Document, there has been no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its membership interests.
(m) The Company is not an open-end investment company, unit investment
trust or face-amount certificate company that is or is required to be registered
under Section 8 of the United States
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Investment Company Act of 1940 (the "INVESTMENT COMPANY ACT"); and the Company
is not and, after giving effect to the offering and sale of the Securities and
the application of the proceeds thereof as described in the Offering Document,
will not be an "investment company" as defined in the Investment Company Act.
(n) No securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as the Securities are listed on any
national securities exchange registered under Section 6 of the United States
Securities Exchange Act of 1934 ("EXCHANGE ACT") or quoted in a U.S. automated
inter-dealer quotation system.
(o) Assuming the accuracy of the representations of the Purchaser
herein, the offer and sale of the Securities in the manner contemplated by this
Agreement will be exempt from the registration requirements of the Securities
Act by reason of Section 4(2) thereof, Rule 144A thereunder and Regulation S
thereunder; and it is not necessary to qualify an indenture in respect of the
Securities under the United States Trust Indenture Act of 1939, as amended (the
"TRUST INDENTURE ACT").
(p) Neither the Company nor any of its affiliates, nor any person
acting on its or their behalf (i) has, within the six-month period prior to the
date hereof, offered or sold in the United States or to any U.S. person (as such
terms are defined in Regulation S under the Securities Act) the Securities or
any security of the same class or series as the Securities or (ii) has offered
or will offer or sell the Securities (A) in the United States by means of any
form of general solicitation or general advertising within the meaning of Rule
502(c) under the Securities Act or (B) with respect to any such securities sold
in reliance on Rule 903 of Regulation S ("REGULATION S") under the Securities
Act, by means of any directed selling efforts within the meaning of Rule 902(c)
of Regulation S. The Company and its affiliates and any person acting on its or
their behalf have complied and will comply with the offering restrictions
requirement of Regulation S. The Company has not entered and will not enter into
any contractual arrangement with respect to the distribution of the Securities
except for this Agreement.
3. Purchase, Sale and Delivery of Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Purchaser, and the Purchaser agrees to purchase from the Company, all of the
Securities, at a purchase price of 97.64% of the principal amount thereof plus
accrued interest from December 12, 2001 to the Closing Date (as hereinafter
defined).
The Company will deliver against payment of the purchase price the
Securities in the form of one or more permanent global Securities in definitive
form (the "GLOBAL SECURITIES") deposited with the Trustee as custodian for The
Depository Trust Company ("DTC") and registered in the name of Cede & Co., as
nominee for DTC. Interests in any permanent Global Securities will be held only
in book-entry form through DTC, except in the limited circumstances described in
the Offering Document. Payment for the Securities shall be made by the Purchaser
in Federal (same day) funds by wire transfer to an account of the Company at a
bank designated by the Company acceptable to the Purchaser at the office of
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP at 10:00 A.M. (New York time), on December 12, 2001, or
at such other time not later than ten (10) full business days thereafter as the
Purchaser and the Company determine, such time being herein referred to as the
"CLOSING DATE", against delivery to the Trustee as custodian for DTC of the
Global Securities representing all of the Securities. The Global Securities will
be made available for checking at the above office of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP at
least 24 hours prior to the Closing Date.
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Notwithstanding the foregoing, any Securities sold to Institutional
Accredited Investors (as hereinafter defined) pursuant to Section 4(c) shall be
issued in definitive, fully registered form and shall bear the legend relating
thereto set forth under "Transfer Restrictions" in the Offering Document, but
shall be paid for in the same manner as any Securities to be purchased by the
Purchaser hereunder and to be offered and sold by it in reliance on Rule 144A
under the Securities Act.
4. Representations by Purchaser; Resale by Purchaser. (a) The Purchaser
represents and warrants to the Company that it is an "accredited investor"
within the meaning of Regulation D under the Securities Act.
(b) The Purchaser acknowledges that the Securities have not been
registered under the Securities Act and may not be offered or sold within the
United States except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. The Purchaser
represents and agrees that it has not offered or sold, and will not offer or
sell, any Securities constituting part of its allotment within the United
States, except in accordance with Rule 144A or Rule 903 under the Securities Act
or to a limited number of Institutional Accredited Investors (as defined below)
in accordance with subsection (c). Accordingly, neither the Purchaser nor its
affiliates, nor any persons acting on its or their behalf, have engaged or will
engage in any directed selling efforts with respect to the Securities. Terms
used in this subsection (b) have the meanings given to them by Regulation S.
(c) The Purchaser may offer and sell the Securities in definitive,
fully registered form to a limited number of institutions, each of which is
reasonably believed by the Purchaser to be an "accredited investor" within the
meaning of Rule 501(a)(1),(2), or (3) under the Securities Act or an entity in
which all of the equity owners are accredited investors within the meaning of
Rule 501(a)(l),(2), or (3) under the Securities Act (each, an "INSTITUTIONAL
ACCREDITED INVESTOR"); provided that each such Institutional Accredited Investor
executes and delivers to the Purchaser and the Company, prior to the
consummation of any sale of Securities to such Institutional Accredited
Investor, a purchaser's letter in substantially the form attached hereto as
Annex A (a "PURCHASER'S LETTER").
(d) The Purchaser agrees that it and each of its affiliates has not
entered and will not enter into any contractual arrangement with respect to the
distribution of the Securities except with the prior written consent of the
Company.
(e) The Purchaser agrees that it and each of its affiliates have not
and will not offer or sell the Securities in the United States by means of any
form of general solicitation or general advertising within the meaning of Rule
502(c) under the Securities Act, including, but not limited to (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. The Purchaser agrees, with respect to
resales made in reliance on Rule 144A of any of the Securities, to deliver
either with the confirmation of such resale or otherwise prior to settlement of
such resale a notice to the effect that the resale of such Securities has been
made in reliance upon the exemption from the registration requirements of the
Securities Act provided by Rule 144A.
(f) The Purchaser represents and agrees that (i) it has not offered or
sold and prior to the date six months after the date of issue of the Securities
will not offer or sell any Securities to persons in the
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United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has complied with all applicable provisions of the Financial Services ▇▇▇ ▇▇▇▇
(the "FSA") and following their coming into force, it will comply with all
applicable provisions of the Financial Services and Markets Act 2000 (the
"FSMA") with respect to anything done by it in relation to the Securities in,
from or otherwise involving the United Kingdom; and (iii) it has only issued or
passed on in the United Kingdom, before the repeal of Section 57 of the FSA, any
document received by it in connection with the issue of the Securities to a
person who is of a kind described in Article 11(3) of the Financial Services ▇▇▇
▇▇▇▇ (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom
such document may otherwise lawfully be issued or passed on, and following the
repeal of Section 57 of the FSA, it has only communicated or caused to be
communicated and it will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity (within the meaning of
Section 21 of the FSMA) received by it in connection with the issue or sale of
any Securities in circumstances in which Section 21(1) of the FSMA does not
apply to the Company.
5. Certain Agreements of the Company. The Company agrees with the
Purchaser that:
(a) The Company will advise the Purchaser promptly of any proposal to
amend or supplement the Offering Document and will not effect such amendment or
supplementation without the Purchaser's consent, which consent will not be
unreasonably withheld or delayed. If, at any time prior to the completion of the
resale of the Securities by the Purchaser, any event occurs as a result of which
the Offering Document as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, the Company promptly will notify the
Purchaser of such event and promptly will prepare, at its own expense, an
amendment or supplement which will correct such statement or omission. Neither
the Purchaser 's consent to, nor its delivery to offerees or investors of, any
such amendment or supplement shall constitute a waiver of any of the conditions
set forth in Section 6.
(b) The Company will furnish to the Purchaser copies of the Preliminary
Offering Circular, the Offering Document and all amendments and supplements to
such documents, in each case as soon as reasonably available and in such
quantities as the Purchaser reasonably requests, and the Company will furnish to
the Purchaser on the date hereof two copies of the Offering Document signed by a
duly authorized officer of the Company, one of which will include the
independent accountants' reports therein manually signed by such independent
accountants. At any time when the Company is not subject to Section 13 or 15(d)
of the Exchange Act, the Company will promptly furnish or cause to be furnished
to the Purchaser and, upon request of holders and prospective purchasers of the
Securities, to such holders and purchasers, copies of the information required
to be delivered to holders and prospective purchasers of the Securities pursuant
to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto)
in order to permit compliance with Rule 144A in connection with resales by such
holders of the Securities. The Company will pay the expenses of printing and
distributing to the Purchaser, such holders and prospective purchasers all such
documents.
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(c) The Company will arrange for the qualification of the Securities
for sale and the determination of their eligibility for investment under the
laws of such applicable jurisdictions in the United States and Canada as the
Purchaser reasonably designates and the Company agrees to and will continue such
qualifications in effect so long as required for the resale of the Securities by
the Purchaser, provided that the Company will not be required to qualify as a
foreign corporation or dealer in securities or to file a general consent to
service of process in any such jurisdiction or subject itself to taxation in any
jurisdiction in which it is not otherwise so subject.
(d) During the period of two years hereafter, the Company will furnish
to the Purchaser, as soon as available, a copy of each description of reports,
notices or communications sent to securityholders. From time to time, the
Company will furnish to the Purchaser such other information concerning the
Company as the Purchaser may reasonably request.
(e) During the period of two years after the Closing Date or until the
Securities are registered under the Securities Act, the Company will, upon
request, furnish to the Purchaser and any holder of Securities a copy of the
restrictions on transfer applicable to the Securities.
(f) During the period of two years after the Closing Date, the Company
will not, and will not permit any of its affiliates (as defined in Rule 144
under the Securities Act) to, resell any of the Securities that have been
reacquired by any of them.
(g) During the period of two years after the Closing Date, the Company
will not be or become, an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered under
Section 8 of the Investment Company Act.
(h) The Company will pay all expenses incidental to the performance of
its obligations under this Agreement, the Indenture and the Registration Rights
Agreement, including (i) the fees and expenses of the Trustee and its counsel;
(ii) all expenses in connection with the execution, issue, authentication,
packaging and initial delivery of the Securities and, as applicable, the
Exchange Securities (as defined in the Registration Rights Agreement), the
preparation and printing of this Agreement, the Registration Rights Agreement,
the Securities, the Indenture, the Offering Document and amendments and
supplements thereto, and any other document relating to the issuance, offer,
sale and delivery of the Securities and as applicable, the Exchange Securities;
(iii) the cost of any advertising approved by the Company in connection with the
issue of the Securities; (iv) any reasonable expenses (including fees and
disbursements of counsel) incurred in connection with qualification of the
Securities or the Exchange Securities for sale under the laws of such
jurisdictions in the United States and Canada as the Purchaser designates and
the printing of memoranda relating thereto; (v) any fees charged by investment
rating agencies for the rating of the Securities or the Exchange Securities; and
(vi) reasonable expenses incurred in distributing the Preliminary Offering
Circular and the Offering Document (including any amendments and supplements
thereto) to the Purchaser. The Company will also pay or reimburse the Purchaser
(to the extent incurred by them) for all travel expenses of the Purchaser and
the Company's officers and employees and any other expenses of the Purchaser and
the Company in connection with attending or hosting meetings with prospective
purchasers of the Securities from the Purchaser.
(i) In connection with the offering, until the Purchaser shall have
notified the Company of the completion of the resale of the Securities, neither
the Company nor any of its affiliates has or will, either
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alone or with one or more other persons, bid for or purchase for any account in
which it or any of its affiliates has a beneficial interest any Securities or
attempt to induce any person to purchase any Securities; and neither it nor any
of its affiliates will make bids or purchases for the purpose of creating
actual, or apparent, active trading in, or of raising the price of, the
Securities.
(j) For a period of 180 days after the date of the initial offering of
the Securities by the Purchaser, the Company will not offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, or file with the
Commission a registration statement under the Securities Act relating to, any
United States dollar-denominated debt securities issued or guaranteed by the
Company and having a maturity of more than one year from the date of issue
(other than the Securities) or publicly disclose the intention to make any such
offer, sale, pledge or disposition, without the prior written consent of the
Purchaser. The Company will not at any time offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any securities under
circumstances where such offer, sale, pledge, contract or disposition would
cause the exemption afforded by Section 4(2) of the Securities Act or the safe
harbor of Regulation S thereunder to cease to be applicable to the offer and
sale of the Securities.
6. Conditions of the Obligation of the Purchaser. The obligation of the
Purchaser to purchase and pay for the Securities will be subject to the accuracy
of the representations and warranties made by the Company herein, to the
accuracy of the statements of officers of the Company made pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions precedent:
(a) The Purchaser shall have received a letter, dated the date of this
Agreement, of PricewaterhouseCoopers in form and substance satisfactory to the
Purchaser concerning the financial information with respect to the Company set
forth in the Offering Document.
(b) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event involving a
prospective change, in the condition (financial or other), business, properties
or results of operations of the Company which, in the judgment of the Purchaser,
is material and adverse and makes it impractical or inadvisable to proceed with
the offering or the sale of and payment for the Securities; (ii) any downgrading
in the rating of any debt securities of the Company by any "nationally
recognized statistical rating organization" (as defined for purposes of Rule
436(g) under the Securities Act), or any public announcement that any such
organization has under surveillance or review its rating of any debt securities
of the Company (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating); (iii) any change in U.S. or international financial, political or
economic conditions or currency exchange rates or exchange controls as would, in
the judgment of the Purchaser, be likely to prejudice materially the success of
the proposed issue, sale or distribution of the Securities, whether in the
primary market or in respect of dealings in the secondary market; (iv) any
material suspension or material limitation of trading in securities generally on
the New York Stock Exchange, or any setting of minimum prices for trading on
such exchange, or any suspension of trading of any securities of the Company on
any exchange or in the over-the-counter market; (v) any banking moratorium
declared by U.S. Federal or New York authorities; (vi) any major disruption of
settlements of securities or clearance services in the United States; or (vii)
any attack on, outbreak or escalation of hostilities or major act of terrorism
involving the United States, any declaration of war by Congress or any other
national or international calamity or emergency if, in the judgment of the
Purchaser, the effect of any such attack, outbreak,
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escalation, act, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the offering or sale of and payment
for the Securities.
(c) The Purchaser shall have received opinions, dated the Closing Date,
from each of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the Company, and in-house
counsel for the Company, with customary and appropriate qualifications and
exceptions, which taken together provide that:
(i) The Company has been duly formed and is an existing limited
liability company in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Offering
Document; and the Company is duly qualified to do business as a foreign
company in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification;
(ii) The Indenture has been duly authorized by the Company; the
Securities have been duly authorized; and when the Securities are
delivered and paid for pursuant to this Agreement on the Closing Date
(as defined below), the Indenture will have been duly executed and
delivered by the Company, such Securities will have been duly executed,
authenticated, issued and delivered and will conform to the description
thereof contained in the Offering Document in all material respects;
and the Indenture and such Securities will constitute valid and legally
binding obligations of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(iii) The Company is not or, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof
as described in the Offering Document, will not be an "investment
company" as defined in the Investment Company Act.
(iv) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement and the
Registration Rights Agreement in connection with the issuance or sale
of the Securities by the Company, except such as may be required under
state securities laws, and except for (i) the filing with the
Commission of the Exchange Offer Registration Statement or the Shelf
Registration Statement (each as defined in the Registration Rights
Agreement), (ii) the order of the Commission declaring such
registration statement effective, (iii) approval by the New Jersey
Bureau of Public Utilities of the Amended Purchase Agreement, the
Interconnection Agreements, and the Gas Services Agreement, and (iv)
the approvals by the Federal Energy Regulatory Commission pursuant to
Section 205 of the FPA for the rates to be charged by the Company under
the Amended Power Purchase Agreement;
(v) Except as disclosed in the Offering Document, there are no
pending actions, suits or proceedings against or affecting the Company
or any of its properties that, if determined adversely to the Company,
would individually or in the aggregate have a Material Adverse Effect,
or would materially and adversely affect the ability of the Company to
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perform its obligations under the Indenture, this Agreement, or the
Registration Rights Agreement, or which are otherwise material in the
context of the sale of the Securities; and no such actions, suits or
proceedings are threatened or contemplated.
(vi) The execution, delivery and performance of the Indenture,
this Agreement and the Registration Rights Agreement and the issuance
and sale of the Securities and compliance with the terms and provisions
thereof will not result in a breach or violation of any of the terms
and provisions of, or constitute a default under, any statute, any
rule, regulation or order of any governmental agency or body or any
court having jurisdiction over the Company or any of its properties, or
any agreement or instrument to which the Company is a party or by which
the Company is bound or to which any of the properties of the Company
is subject, or the certificate of formation or limited liability
agreement of the Company, and the Company has full power and authority
to authorize, issue and sell the Securities as contemplated by this
Agreement;
(vii) Nothing has come to the attention of such counsel that would
lead them to believe that the Offering Circular, or any amendment or
supplement thereto as of the date hereof and as of the Closing Date,
contained any untrue statement of a material fact or omitted to state
any material fact necessary to make the statements therein not
misleading; the descriptions in the Offering Circular of statutes,
legal and governmental proceedings and contracts and other documents
are accurate and fairly present the information shown; it being
understood that such counsel need express no opinion as to the
financial statements or other financial or related statistical data
contained in the Offering Circular;
(viii) This Agreement and the Registration Rights Agreement have
each been duly authorized, executed and delivered by the Company; and
(ix) It is not necessary in connection with (i) the offer, sale
and delivery of the Securities by the Company to the Purchaser pursuant
to this Agreement or (ii) the initial resales of the Securities by the
Purchaser in the manner contemplated by this Agreement, to register the
Securities under the Securities Act or to qualify an indenture in
respect thereof under the Trust Indenture Act.
(d) The Purchaser shall have received from Skadden, Arps, Slate ▇▇▇▇▇▇▇
& ▇▇▇▇ LLP ("SASMF"), counsel for the Purchaser, such opinion or opinions, dated
the Closing Date, with respect to the validity of the Securities, the Offering
Circular, the exemption from registration for the offer and sale of the
Securities by the Company to the Purchaser and the resales by the Purchaser as
contemplated hereby and other related matters as the Purchaser may require, and
the Company shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such matters,
with reference to same in the Offering Circular.
(e) The Purchaser shall have received a certificate, dated the Closing
Date, of the President or any Vice President and a principal financial or
accounting officer of the Company in which such officers, to the best of their
knowledge after reasonable investigation, shall state that the representations
and warranties of the Company in this Agreement are true and correct, that the
Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to
10
the Closing Date, and that, subsequent to the date of the most recent financial
statements of the Company in the Offering Document there has been no material
adverse change, nor any development or event involving a prospective material
adverse change, in the condition (financial or other), business, properties or
results of operations of the Company taken as a whole except as set forth in or
contemplated by the Offering Document or as described in such certificate.
(f) The Purchaser shall have received a letter, dated the Closing Date,
of PricewaterhouseCoopers which meets the requirements of subsection (a) of this
Section, except that the specified date referred to in such subsection will be a
date not more than three days prior to the Closing Date for the purposes of this
subsection.
(g) The Purchaser shall have received a letter, dated the date of this
Agreement, from El Paso Corporation ("EL PASO") in the form of Exhibit A
attached hereto, regarding certain representations and warranties of El Paso to
the Purchaser.
(h) The Purchaser shall have received a letter dated the date of this
Agreement from El Paso in the form of Exhibit B attached hereto regarding the
indemnification of the Purchaser by El Paso.
(i) The Purchaser shall have received a letter, dated the date of this
Agreement, from Mesquite Investors, L.L.C. ("MESQUITE") in the form of Exhibit C
attached hereto, regarding the indemnification of the Purchaser by Mesquite.
The Company will furnish the Purchaser with such conformed copies of
such opinions (other than the opinion of SASMF), certificates, letters and
documents as the Purchaser reasonably requests. The Purchaser may in its sole
discretion waive compliance with any conditions to the obligations of the
Purchaser hereunder.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless the Purchaser, its partners, directors and officers and each
person, if any, who controls the Purchaser within the meaning of Section 15 of
the Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which the Purchaser may become subject, under the Securities Act or
the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
breach of any of the representations and warranties of the Company contained
herein or any untrue statement or alleged untrue statement of any material fact
contained in the Offering Document, or any amendment or supplement thereto, or
any related preliminary offering circular, or arise out of or are based upon the
omission or alleged omission to state therein a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, including any losses, claims, damages or
liabilities arising out of or based upon the Company's failure to perform its
obligations under Section 5(a) of this Agreement, and will reimburse the
Purchaser for any legal or other expenses reasonably incurred by the Purchaser
in connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with written information furnished
to the Company by the Purchaser specifically for use therein, it being
understood and agreed that the only such information consists of the information
described as such in
11
subsection (b) below; and provided, further that, with respect to any untrue
statement or alleged untrue statement in or omission or alleged omission from
the Preliminary Offering Circular, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of the Purchaser on account of any
loss, claim, damage, liability or action arising from the sale of any Securities
to any person by the Purchaser, to the extent that such sale was an initial
resale by the Purchaser, and any such loss, claim, damage, liability or action
results from the fact that there was not sent or given to such person, at or
prior to the written confirmation of the sale of such Securities to such person,
a copy of the Offering Circular (exclusive of any material included therein but
not attached thereto), as the same may be amended or supplemented, if the
Company had previously furnished copies thereof to the Purchaser.
(b) The Purchaser will indemnify and hold harmless the Company, its
directors and officers and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act, against any losses, claims,
damages or liabilities to which the Company may become subject, under the
Securities Act or the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Offering Document, or any amendment or supplement thereto, or
the Preliminary Offering Circular, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by the Purchaser specifically for use
therein, and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are incurred,
it being understood and agreed that the only such information furnished by the
Purchaser consists of the following information in the Offering Document under
the caption "Plan of Distribution" paragraph 5 and the second and third
sentences of paragraph 8; provided, however, that the Purchaser shall not be
liable for any losses, claims, damages or liabilities arising out of or based
upon the Company's failure to perform its obligations under Section 5(a) of this
Agreement.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party such consent
not to be unreasonably withheld, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and
12
indemnity could have been sought hereunder by such indemnified party unless such
settlement (i) includes an unconditional release of such indemnified party from
all liability on any claims that are the subject matter of such action and (ii)
does not include a statement as to or an admission of fault, culpability or
failure to act by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Purchaser on the other from the offering of the Securities or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and the Purchaser on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Purchaser on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
discounts and commissions received by the Purchaser from the Company under this
Agreement. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Purchaser and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), the
Purchaser shall not be required to contribute any amount in excess of the amount
by which the total price at which the Securities purchased by it were resold
exceeds the amount of any damages which the Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
(e) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Purchaser within the meaning of the Securities Act or the Exchange Act; and the
obligations of the Purchaser under this Section 7 shall be in addition to any
liability which the Purchaser may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act.
8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the Purchaser set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of
the Purchaser, the Company or any of their respective representatives, officers
or directors or any controlling person, and will survive delivery of and payment
for the Securities. If for any reason the purchase of the Securities by the
Purchaser is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 hereof and the
respective obligations of the Company and the
13
Purchaser pursuant to Section 7 hereof shall remain in effect. In addition to
the foregoing, if the purchase of the Securities by the Purchaser is not
consummated for any reason other than solely because of the occurrence of any
event specified in clause (iii), (iv), (v), (vi) or (vii) of Section 6(b), the
Company will reimburse the Purchaser for all out-of-pocket expenses (including
fees and disbursements of counsel), reasonably incurred by it in connection with
the offering of the Securities, not to exceed $200,000.
9. Notices. All communications hereunder will be in writing and, if
sent to the Purchaser will be mailed, delivered or faxed and confirmed to the
Purchaser at Eleven Madison Avenue, New York, N.Y. 10010-3629, Attention:
Transactions Advisory Group (fax: ▇▇▇-▇▇▇-▇▇▇▇), or, if sent to the Company,
will be mailed, delivered or faxed and confirmed to it at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: President, with a copy to El Paso Corporation
at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel (fax:
▇▇▇-▇▇▇-▇▇▇▇).
10. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7, and no other person will have any
right or obligation hereunder, except that holders of Securities shall be
entitled to enforce the agreements for their benefit contained in the second and
third sentences of Section 5(b) hereof against the Company as if such holders
were parties thereto.
11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
12. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without regard to
principles of conflicts of laws.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. The Company irrevocably appoints CT
Corporation System, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as
its authorized agent in the Borough of Manhattan in The City of New York upon
which process may be served in any such suit or proceeding, and agrees that
service of process upon such agent, and written notice of said service to the
Company, by the person serving the same to the address provided in Section 10,
shall be deemed in every respect effective service of process upon the Company
in any such suit or proceeding. The Company further agrees to take any and all
action as may be necessary to maintain such designation and appointment of such
agent in full force and effect for a period of seven years from the date of this
Agreement.
14
If the foregoing is in accordance with the Purchaser's understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and the
Purchaser in accordance with its terms.
Very truly yours,
CEDAR BRAKES II, L.L.C.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Managing Director
15
ANNEX A
FORM OF LETTER TO BE DELIVERED BY INSTITUTIONAL-ACCREDITED INVESTORS
Cedar Brakes II, L.L.C.
c/o El Paso Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Credit Suisse First Boston Corporation
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Dear Sirs:
We are delivering this letter in connection with an offering of
$431,407,000 9.875% Series A Senior Secured Bonds due September 1, 2013 (the
"SECURITIES") of Cedar Brakes II, L.L.C., Delaware limited liability company
(the "COMPANY"), all as described in the Confidential Offering Circular (the
"OFFERING CIRCULAR") relating to the offering.
We hereby confirm that:
(i) we are an "accredited investor" within the meaning of Rule
501(a)(l),(2) or (3) under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), or an entity in which all of the equity owners are accredited
investors within the meaning of Rule 501(a)(l), (2) or (3) under the Securities
Act (an "INSTITUTIONAL ACCREDITED INVESTOR");
(ii) (A) any purchase of the Securities by us will be for our own
account or for the account of one or more other Institutional Accredited
Investors or a fiduciary for the account of one or more trusts, each of which is
an "accredited investor" within the meaning of Rule 501(a)(7) under the
Securities Act and for each of which we exercise sole investment discretion or
(B) we are a "bank", within the meaning of Section 3(a)(2) of the Securities
Act, or a "savings and loan association" or other institution described in
Section 3(a)(5)(A) of the Securities Act that is acquiring the Securities as
fiduciary for the account of one or more institutions for which we exercise sole
investment discretion;
(iii) in the event that we purchase any of the Securities, we will
acquire Securities having a minimum purchase price of not less than $100,000 for
our own account or for any separate account for which we are acting;
(iv) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of purchasing the
Securities;
(v) we are not acquiring the Securities with a view to distribution
thereof or with any present intention of offering or selling any of the
Securities, except inside the United States in accordance with Rule 144A under
the Securities Act or outside the United States in accordance with Regulation S
under the Securities Act, as provided below; provided that the disposition of
our property and the
Annex A-1
property of any accounts for which we are acting as fiduciary shall remain at
all times within our control; and
(vi) we have received a copy of the Offering Circular relating to the
offering of the Securities and acknowledge that we have had access to such
financial and other information, and have been afforded the opportunity to ask
such questions of representatives of the Company and receive answers thereto, as
we deem necessary in connection with our decision to purchase the Securities.
We understand that the Securities are being offered in a transaction
not involving any public offering within the United States within the meaning of
the Securities Act and that the Securities have not been and will not be
registered under the Securities Act, and we agree, on our own behalf and on
behalf of each account for which we acquire any Securities that if in the future
we decide to resell, pledge or otherwise transfer such Securities, such
Securities may be offered, resold, pledged or otherwise transferred only (i)
pursuant to an effective registration statement under the Securities Act, (ii)
inside the United States to a person ho we reasonably believe is a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of Rule l44A, (iii) outside the United
States in a transaction meeting the requirements of Rule 904 under the
Securities Act or (iv) pursuant to an exemption from registration under the
Securities Act provided by Rule 144 thereunder (if available) and (v) in each
case, in accordance with any applicable securities laws of any State of the
United States or any other applicable jurisdiction. We understand that the
registrar and transfer agent for the Securities, will not be required to accept
for registration of transfer any Securities acquired by us, except upon
presentation of evidence satisfactory to the Company and the transfer agent that
the foregoing restrictions on transfer have been complied with. We further
understand that any Securities acquired by us, will be in the form of definitive
physical certificates and that such certificates will bear a legend reflecting
the substance of this paragraph.
We acknowledge that you, the Company and others will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.
Date:____________________ ______________________________
(Name of Purchaser)
By:____________________
Name:
Title:
Address:
Annex A-2
EXHIBIT A
[Letter from El Paso]
EXHIBIT B
[Letter from Mesquite]