PORTIONS OF THIS AGREEMENT ARE SUBJECT TO A REQUEST FOR CONFIDENTIAL TREATMENT
UNDER RULE 104(b)
SCEPTRE POWER COMPANY
SUCCESSION AGREEMENT
by and between
HORIZON ENERGY DEVELOPMENT, INC.
SCEPTRE RESOURCES, LTD.
SCEPTRE ENERGY, INC.
NOVERGAZ (1994), INC.
POWER PROJECT DEVELOPMENT, INC.
effective as of
September 15, 1995
TABLE OF CONTENTS
RECITALS......................................................................1
SECTION 1.....................................................................3
DEFINITIONS..... ....................................................3
SECTION 2.....................................................................4
AMENDMENT OF THE PARTNERSHIP AGREEMENT
OF SCEPTRE POWER COMPANY........................................4
SECTION 3....................................................................33
ADMISSION OF HORIZON ENERGY DEVELOPMENT, INC.
AS A PARTNER IN SCEPTRE POWER COMPANY..........................33
SECTION 4....................................................................33
TRANSFER OF INTERESTS IN CERTAIN PERSONAL PROPERTY..................33
SECTION 5....................................................................34
TRANSFER OF PROPERTY RIGHTS IN THE PARTNERSHIP......................34
SECTION 6....................................................................36
ADDITIONAL CONSIDERATION............................................36
SECTION 7....................................................................43
DISPOSITION OF CASH ON CLOSING......................................43
SECTION 8....................................................................43
DEVELOPMENT OF EXISTING PROJECTS....................................43
SECTION 9....................................................................44
OUTSTANDING LETTER OF CREDIT........................................44
SECTION 10...................................................................44
WAIVER OF CLAIMS BY PPD.............................................44
SECTION 11...................................................................44
REPRESENTATIONS AND WARRANTIES OF ALL PARTIES.......................44
SECTION 12...................................................................45
REPRESENTATIONS AND WARRANTIES OF
SRL, SEI, NOVERGAZ AND PPD..........................................45
SECTION 13...................................................................48
REPRESENTATIONS AND WARRANTIES BY
SRL, SEI AND NOVERGAZ..............................................48
SECTION 14...................................................................48
INDEMNIFICATION.....................................................48
SECTION 15...................................................................49
NOTICES 49
SECTION 16...................................................................52
WITHDRAWAL OF SEI AND NOVERGAZ AS PARTNERS
IN SCEPTRE POWER COMPANY............................................52
SECTION 17...................................................................52
MISCELLANEOUS.......................................................52
SECTION 18...................................................................54
CONSENT TO JURISDICTION: ATTORNIES' FEES............................54
SUCCESSION AGREEMENT
Sceptre Power Company
THIS AGREEMENT (the "Succession Agreement"), by and between
HORIZON ENERGY DEVELOPMENT, INC. ("HORIZON"), a wholly owned corporate
subsidiary of National Fuel Gas Company, duly organized under the laws of the
State of New York, SCEPTRE RESOURCES, LTD. ("SRL"), a corporation duly
incorporated under the laws of Canada, SCEPTRE ENERGY, INC. ("SEI"), a wholly
owned corporate subsidiary of SRL, duly organized under the laws of the State of
Delaware, NOVERGAZ (1994), INC. (successor in interest to Novergaz, Inc.)
"NOVERGAZ", a corporation duly incorporated under the laws of the Province of
Quebec, and POWER PROJECT DEVELOPMENT, INC. ("PPD"), a corporation duly
incorporated under the laws of the State of California, is entered into this
15th day of September 1995 (the "Closing Date"), in the context of the following
facts and circumstances:
RECITALS
A.) In 1992, SEI, NOVERGAZ, and PPD associated themselves
together as general co-partners in a California general partnership, doing
business under the firm name and style of "Sceptre Power Company" (hereinafter,
sometimes, the "Partnership"), for the purposes of developing, financing,
constructing and operating, if necessary, power projects, and to manage the
interests, if any, of the Partnership and/or SRL and NOVERGAZ in such power
projects after the same have been completed.
B.) The agreement establishing the terms and conditions of the
Partnership (the "Partnership Agreement") is unwritten, except as respects the
Sceptre Power Company Continuation Agreement. However, a summary of certain
provisions of the Partnership Agreement is set forth in Article 2 of that
certain Cogeneration Projects Agreement (the "Cogen Agreement") by and between
SRL, Novergaz, Inc. and PPD, dated November 13, 1992.
C.) Since its formation, the Partnership has been, and on the
date hereof is, engaged exclusively in the development of various power
projects, including, without limitation,
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
Neither of the latter power projects has attained Financial
Closing at the date hereof.
D.) In an agreement dated August 18, 1995 (the "August 18,
1995 Agreement"), SRL, SEI, NOVERGAZ, PPD, and National Fuel Gas Company agreed,
among other things, that (1) National Fuel Gas Company, or one of its wholly
owned subsidiaries (e.g., HORIZON), shall be admitted to the Partnership as a
general partner thereof, (2) NOVERGAZ and SEI shall transfer 100% of their
respective Partnership Property Rights to National Fuel Gas Company, or such
wholly owned subsidiary, and (3) upon the consummation of said transactions, SEI
and NOVERGAZ shall withdraw as partners of the Partnership, all as provided for
in the August 18, 1995 Agreement.
E.) The principals of PPD have formed, and are the sole
members of, Sceptre Power Company, L.L.C. ("SPCLLC"), a limited liability
company organized under the Limited Liability Company Act of the State of
California; SPCLLC and Horizon intend to negotiate an Agreement pursuant to
which SPCLLC will manage and conduct the day-to-day operations of Sceptre Power
Company (the "Management and Operating Agreement").
F.) Upon its admission to the Partnership, HORIZON will become
the Managing Partner of Sceptre Power Company, and HORIZON and SPCLLC have
agreed that, upon the negotiation and execution of the Management and Operation
Agreement, (1) SPCLLC shall be substituted for PPD as a partner of Sceptre Power
Company, and (2) the day-to-day operations of the Partnership will be conducted
by SPCLLC, under the terms and conditions of said Management and Operation
Agreement.
NOW, THEREFORE, with a view to implementing the August 18,
1995 Agreement and in consideration of the premises and the representations,
warranties, and covenants contained herein, the parties agree as follows:
SECTION 1
DEFINITIONS
-----------
1.1 "$" shall mean the lawful currency of the United
States of America.
1.2 "Financial Closing" bears the meaning attributable
thereto in Section 1.26 of the Implementation Agreement
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
1.3 "Going Forward Expenses" shall mean the Partnership's
monetary obligations, accrued on or after (but not before) July 1, 1995,
including, without limitation, such obligations incurred or accrued in respect
of goods and services obtained by the Partnership, accounts payable, salaries of
Partnership employees and officers, leases entered into by or on behalf of the
Partnership, Project development costs and letters of credit referable to
Projects, provided, however, that Going Forward Expenses shall not include
expenses incurred by or on behalf of SRL or SEI, Novergaz, or PPD, individually
or as partners of the Partnership, in connection with proposed other succession
arrangements, or any costs, expenses or losses related to or arising from draws
or attempted draws against the letter of credit referred to in Section 6.5(ii)
of this Succession Agreement.
1.4 "Premium Date" bears the meaning attributable thereto
in the Power Purchase Agreement
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b).
1.5 "Project" shall mean the development, design,
engineering, manufacture, financing, construction, permitting, completion,
commissioning, insurance, ownership, operation and maintenance of electricity
and steam generating plants, and all activities incidental thereto.
1.6 "Property Rights" in a partnership is defined as that
term is defined in Section 15024 of the California Corporations Code.
1.7 "Sceptre Power Company Continuation Agreement" denotes
the agreement thus described by and between PPD, NOVERGAZ, SRL and SEI executed
prior to the date hereof.
1.8 "Sellers" shall mean NOVERGAZ and SRL, collectively.
SECTION 2
AMENDMENT OF THE PARTNERSHIP AGREEMENT
--------------------------------------
OF SCEPTRE POWER COMPANY
------------------------
2.1 The Partnership Agreement of Sceptre Power Company is
unwritten. A summary of some of the terms and conditions upon which SEI, PPD,
and Novergaz, Inc. (predecessor in interest to NOVERGAZ) formed Sceptre Power
Company as a California general partnership appears in Article 2 of the Cogen
Agreement. Coincident with the admission of HORIZON as a partner of Sceptre
Power Company, that summary of the Partnership Agreement is amended and restated
as set forth in this Section 2.1, to wit:
(a) Paragraph 2.1(c)(ii) of the Cogen Agreement is
eliminated in its entirety, and the following is substituted in lieu
thereof, to wit: "The business of Sceptre Power Company is to develop, finance,
construct and operate, if necessary, Power Projects and to manage the interests
of the Partnership and the interest, if any, of any partner in such Power
Projects after the same have been completed. For purposes hereof, `Power
Projects' shall mean `Exempt Projects' and `Domestic Power Projects', as those
terms are defined in the United States Securities and Exchange Commission
Release No. 35-26364;70-8649, issued August 29, 1995 in National Fuel Gas
Company, et al."
(b) Paragraph 2.1(c)(iii) of the Cogen Agreement is
eliminated in its entirety, and the following is substituted in lieu
thereof, to wit: "Subject to subparagraphs viii and ix below, all ownership and
voting interest of the Partnership belong to Horizon Energy Development, Inc."
(c) Paragraph 2.1(c)(iv) of the Cogen Agreement is
eliminated in its entirety, and the following is substituted in lieu
thereof, to wit: "The Partnership shall be managed by Horizon Energy
Development, Inc., which, for such purpose, is hereby designated the `Managing
Partner' of Sceptre Power Company."
(d) Wherever it appears in Article 2 of the Cogen
Agreement, the phrase "Management Committee" is deleted, and the phrase
"Managing Partner" is substituted in lieu thereof.
(e) Paragraph 2.1(c)(viii) is amended by substituting in
lieu of the first sentence thereof, the following to wit: "Horizon Energy
Development, Inc. shall receive one hundred percent (100%) of any and all cash
distributions of the Partnership until such time as Horizon Energy Development,
Inc. shall have been reimbursed in respect of one hundred per cent (100%) of all
cash and the value of all tangible and intangible property contributed or
advanced by it and National Fuel Gas Company to the Partnership (`Payout')."
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
(h) Paragraph 2.1(c)(xi) of the Cogen Agreement is
eliminated in its entirety, and the following is substituted in lieu
thereof, to wit: "Horizon" will provide all guarantees or letters of credit in
support of Partnership obligations that may, in Horizon's reasonable business
judgement, be reasonably required in order for the Partnership to carry on its
business.
(i) Paragraph 2.1(c)(xii) of the Cogen Agreement is
eliminated in its entirety, and the following is substituted in lieu
thereof, to wit: "The Managing Partner will, from time to time, review the
structures and operations contemplated hereunder, with a view to ensuring that
such structures and operations are consistent with the interests of the
Partnership."
(j) Paragraph 2.2(a) of the Cogen Agreement is
eliminated in its entirety, and the following is substituted in lieu
thereof, to wit: "Horizon Energy Development, Inc. and/or other equity investors
in the respective Projects will determine the optimum structure thereof, taking
into consideration the Partnership's business interests."
(k) Paragraph 2.2(b) of the Cogen Agreement is
eliminated in its entirety, and the following is substituted in lieu
thereof, to wit: "The equity for each Project will be provided by Horizon Energy
Development, Inc. and/or other investor(s)."
(l) Paragraphs 2.2(c) and 2.2(d) of the Cogen Agreement
are amended insofar as necessary to substitute "Horizon Energy Development,
Inc." in lieu of "the Owners" wherever the latter phrase occurs in said
subparagraphs.
2.2 The parties hereto contemplate that SPCLLC will shortly
be substituted for PPD as a partner in Sceptre Power Company. Coincident
with the admission of SPCLLC as such partner, PPD shall withdraw as a partner of
Sceptre Power Company, and the Partnership Agreement of Sceptre Power Company is
hereby amended and restated, in its entirety, as follows, effective as of such
withdrawal and admission, to wit:
1. Definitions. As used in this Partnership Agreement, the
following terms shall have the following meanings:
(a) "Capital Account": shall mean the account of each
Partner determined pursuant to Paragraph 7(h) hereof.
(b) "Capital Contribution" shall mean all
contributions made to the capital of the Partnership by a Partner
pursuant to Paragraph 7 hereof, excluding loans to the Partnership.
(c) "Capital Item" shall mean the aggregate of net
proceeds received by the Partnership after retirement of applicable
Partnership debt or any portion thereof upon the occurrence of any of
the following events:
(i) any sale of all or part of the Partnership's
property,
(ii) receipt of insurance payments or damage
recoveries paid to the Partnership in respect of Partnership property,
to the extent not used to repair or restore such property,
(iii) receipt of condemnation proceeds by the
Partnership for the taking of all or part of the Partnership's
property, to the extent not used to repair or restore such property or
paid to Partnership creditors,
(iv) receipt of proceeds derived from any financing
or refinancing of a mortgage or other encumbrance upon Partnership
property, or
(v) restoration of any reserves previously set aside
from Capital Items which are deemed available for distribution by the
Managing Partner,
less
----
any expenses incurred in connection with the receipt or collection of
any such proceeds.
(d) "Net Cash Flow" means, for any accounting period,
the Partnership's revenues realized or derived during said period from
its operations (but not including any loan proceeds, advances or
Capital Contributions) less (i) expenses (including, but not limited
to, debt service and taxes), (ii) such reserves as the Managing Partner
deems reasonably necessary for the proper operation of the
Partnership's business, and (iii) any fees and expenditures authorized
by this Agreement, excepting expenditures paid out of capital or loan
proceeds.
(e) "Certificate" shall mean any doing business
certificate of the Partnership required to be filed pursuant to the
laws of the State of California or any other jurisdiction.
(f) "Code" shall mean the Internal Revenue Code of 1986,
as amended, or corresponding provisions of future laws.
(g) "Partnership Interest" or "Interest", when used
with respect to any Partner, shall refer to that percentage of the
total interest in capital and profits of the Partnership owned by the
Partner.
(h) "Liquidation of a Partner's Interest" shall occur
upon the earlier of the date upon which there is a liquidation of the
Partnership or the date upon which there is a termination of a
Partner's entire interest in the Partnership by means of a distribution
or series of distributions to the Partner by the Partnership.
(i) "Managing Partner" shall mean Horizon Energy
Development, Inc. (hereinafter, "Horizon"), or any other entity which
succeeds Horizon in such capacity.
(j) "Partners" shall refer, collectively, to the Managing
Partner and the general partner(s). Reference to a "Partner" shall be
to any one of the Partners.
(k) "Property Rights", when used with reference to a
Partner, is defined as that term is defined in Section 15024 of the
California Corporations Code.
(l) "Partnership" shall mean Sceptre Power Company, the
Partnership subject to this Agreement.
(m) "Partnership Law" shall mean Title 2, Chapter 1
of the California Corporations Code, as now in effect and as hereafter
amended.
(n) "Project" shall mean the whole or any part of an
"Exempt Project" or a "Domestic Power Project", as those terms are
defined in the United States Securities and Exchange Commission Release
No. 35-26364;70-8649, issued August 29, 1995 in National Fuel Gas
Company, et al.
2. Formation. Sceptre Energy, Inc., Novergaz, Inc. and Power
Project Development, Inc. have heretofore formed and constituted a
general partnership pursuant to the Partnership Law and an unwritten
partnership agreement. The Partners hereby ratify the formation of
Sceptre Power Company and hereby agree and constitute this agreement as
the amended and restated Partnership Agreement of Sceptre Power
Company.
3. Name and Place of Business. The Partnership is and shall
be conducted under the name of "Sceptre Power Company", or such other
name as the Managing Partner shall hereafter designate by written
notice to the Partner(s). The Partnership's principal place of
business shall be ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Managing Partner may, in its discretion, change
the location of the Partnership's principal place of business to
another location in Orange County, California, upon notice of such
change to all Partners.
4. Business Purpose. The business purpose of the
Partnership is to identify, perform due diligence upon, develop,
design, engineer, manufacture, finance, construct, and operate Projects
and to manage the interests, if any, of the Partnership and of the
Partners in Projects after the same have been completed, and to do all
things reasonably incident thereto, including, without limitation,
borrowing money for Partnership purposes, securing such borrowings by
mortgage, pledge or other lien, and selling or otherwise disposing of
its interest in a Project at any time. The Partnership shall not
engage in any other business except as provided herein.
5. Title to Partnership Property. The Partnership shall, in
the name of the Partnership, acquire title to property and any other
assets required to effect the purposes of the Partnership. The Managing
Partner shall execute such documents as may be necessary to reflect the
Partnership's ownership of its property and assets in such public
offices in the State and elsewhere, as may be required by, or
appropriate under, applicable law.
6. Term. Unless sooner dissolved and terminated in
accordance with the provisions hereof, or as otherwise provided by law,
the term of the Partnership shall continue until December 31, 1998,
provided, however, that, prior to the expiration thereof, the term of
the Partnership may be extended by the unanimous agreement of the
Partners.
7. Capital Contributions.
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
(b) Horizon shall make further cash working Capital
Contributions to the Partnership in amounts sufficient, and at times
appropriate, to discharge (i) the obligations undertaken by National
Fuel Gas Company under the August 18, 1995 Agreement, and (ii) the
obligations undertaken by the Partnership under the Management and
Operation Agreement with Sceptre Power Company, L.L.C., (the
"Management and Operation Agreement").
(c) Horizon and any other Partner shall have the
right, but not the obligation, to make cash contributions to the
Partnership in addition to those provided for in Paragraphs 7.(a) and
7.(b) hereof, under such terms and conditions as shall, in each such
case, be agreed upon by all Partners.
(d) In consideration of the Capital Contributions
identified above and of its becoming the Managing Partner, Horizon
shall receive the fees and the interest in the Partnership allocated to
it in Paragraphs 9 and 10 hereof.
(e) No Partner shall receive any interest, salary or
drawing with respect to its Capital Contributions or its Capital
Account or for services rendered on behalf of the Partnership or
otherwise in its capacity as a Partner except as otherwise provided in
this Agreement.
(f) No Partner shall have the right to withdraw its
Capital Contribution. Neither Horizon nor any other Managing Partner
shall be liable for the repayment of any Capital Contribution(s) of any
other Partner.
(g) Capital Accounts - The Partnership shall
establish for each Partner a Capital Account which shall be maintained
in accordance with the following provisions:
(i) To each Partner's Capital Account shall be
credited (A) such Partner's Capital Contribution(s) to the Partnership,
(B) items in the nature of income or gain that are allocated to such
Partner pursuant to Paragraph 10 hereof, and (C) the amount of
Partnership liabilities that are assumed by such Partner or are secured
by any Partnership property distributed to such Partner.
(ii) To each Partner's Capital Account shall be
debited the amount of (A) distributions made to such Partner pursuant
to Paragraph 11 hereof, (B) any items in the nature of expenses or
losses that are allocated to such Partner pursuant to Paragraph 10
hereof, and (C) the amount of any liabilities of the Partner assumed by
the Partnership or that are secured by any property contributed by such
Partner to the Partnership.
(iii) In the event any Interest in the Partnership is
transferred in accordance with the terms of this Partnership Agreement,
the transferee shall succeed to the Capital Account of the transferor
to the extent such account relates to the transferred Interest.
(iv) Partners' Capital Accounts shall be maintained
otherwise in accordance with Treasury Regulation Section 1.704-1(b) or
corresponding provisions of future regulations. The foregoing
provisions and other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Treasury
Regulation Section 1.704-1(b), and shall be interpreted and applied in
a manner consistent with such Regulations. In the event the Managing
Partner shall determine that it is prudent to modify the manner in
which the Capital Accounts, or any debits or credits thereto, are
computed in order to comply with such Regulation, the Managing Partner
may make such modification, provided that it is not likely to have a
material effect on the amounts distributable to any Partner pursuant to
Paragraph 18 hereof upon the dissolution of the Partnership.
8. Rights and Duties of the Managing Partner.
(a) Management of Partnership Business - Except as
otherwise provided in this Agreement, all management decisions
respecting the conduct and operation of the Partnership's business
shall be made and determined exclusively by the Managing Partner which,
for such purposes, shall have all rights and powers generally
permitted by law and held by the partners of a California general
partnership in the aggregate. The exercise by the Managing Partner
of any power conferred or permitted by this Agreement shall bind
the Partnership. The Managing Partner is hereby designated as the "Tax
Matters Partner" under the Code. The Partnership hereby indemnifies
and holds harmless the Managing Partner from and against any claim,
loss, expense, liability, action or damage (including, without
limitation, attorneys fees) resulting from its acting or its failure to
take any action as "Managing Partner" and the "Tax Matters Partner",
provided that any such action or failure to act does not constitute
either willful misconduct or the breach of a contract to which the
Partnership or a Partner is a party.
(b) Specific Rights and Powers - In addition to any
other rights and powers which it may possess under this Agreement or
applicable law, the Managing Partner shall have, subject to the
provisions of Paragraph 8.(c), all specific rights and powers required
or appropriate for its management of the Partnership's business which,
by way of illustration but not by way of limitation, shall include the
following rights and powers, to the extent they are in furtherance of
the interest of the Partnership:
(i) to sell, transfer, assign, convey, lease,
sublet, or otherwise dispose of or deal with all or any part of the
Partnership's property and assets;
(ii) to execute and deliver, on behalf of the
Partnership, all documents relating to the Partnership's property and
assets;
(iii) to pay fees relating to arrangements for
financing;
(iv) to borrow money for Partnership purposes
(in addition to those set forth in (ii) and (iii) above), and, if
security is required therefor, to pledge, mortgage or subject to any
other security device any portion of the Partnership's property and
assets, and to enter into any surety arrangements with respect thereto;
(v) to invest funds of the Partnership,
including funds held as reserves, in certificates of deposit,
interest-bearing time deposits in state or national banks having
assets of not less than twenty million dollars, in United States
Government securities, in bank repurchase agreements and bankers'
acceptances as the Managing Partner may, from time to time, deem
appropriate;
(vi) to acquire, enter into and pay for any
contract of insurance which the Managing Partner deems appropriate for
the protection of the Partnership and/or the conservation of its assets
or property, including, without limitation, any Project in which the
Partnership or any of its Partners may have a direct or indirect
beneficial interest;
(vii) to employ, retain or engage attorneys,
consultants, managers, accountants and other professionals (including
such individuals and/or entities affiliated with the Managing Partner)
on behalf of the Partnership;
(viii) to bring or defend, pay, collect,
compromise, arbitrate, resort to legal action, or otherwise adjust
claims or demands of or against the Partnership;
(ix) to establish reasonable reserve funds from
income derived from the Partnership's operations to provide for future
requirements of the Partnership;
(x) to perform or cause to be performed all of
the Partnership's obligations under any agreement to which the
Partnership is a party;
(xi) to lend, or cause to be lent, funds to the
Partnership in its discretion and charge interest thereon as provided
in Paragraph 7.(g);
(xii) to enter into management agreements on
behalf of the Partnership pursuant to which (A) the day-to-day
operations of the Partnership, (B) the implementation and execution of
the Managing Partner's management decisions, and/or (C) the development
or management of any Project may be delegated to any Partner or
affiliate of the Managing Partner upon such terms and conditions,
including, without limitation, compensation, as the Managing Partner
and such other entity(ies) may negotiate and deem appropriate and in
the interests of the Partnership;
(xiii) to maintain the Partnership account records
of all Partners, as well as the books of account of the Partnership;
(xiv) to make, execute and deliver any and all
documents of transfer and conveyance and any and all other
instruments and agreements which may be necessary or appropriate to
carry out the powers herein granted;
(xv) to cause any Certificate to be filed for
record where required, including any amendment thereto and to execute
and record any similar document which the Managing Partner deems
necessary to enable the Partnership to conduct its business as herein
contemplated;
(xvi) to take all actions which the Managing
Partner deems necessary or desirable to cause the Partnership to comply
with all applicable provisions of law and/or regulations;
(xvii) to execute and record financing statements
evidencing the granting of a security interest by the Partnership or
its Partners in any assets of the Partnership;
(xviii) to execute and deliver all documents which
may be necessary or appropriate for the Partnership to acquire,
directly or indirectly, title to or any beneficial interest in any
Project;
(xix) to execute, acknowledge and deliver any and
all instruments necessary to effectuate the foregoing.
By executing this Agreement, the Partners expressly
agree to the exercise by the Managing Partner of the foregoing rights
and powers.
(c) Limitations on Managing Partner's Authority -
Notwithstanding the general authority of the Managing Partner under
Paragraphs 8.(a) and 8.(b) hereof, the following matters shall require
the unanimous approval of all Partners:
(i) any amendment of this Agreement which
directly and deleteriously impacts any Partnership property right(s) of
any Partner other than the Managing Partner;
(ii) any lease, sale, exchange, conveyance or
other transfer or disposition of all, or substantially all, of the
assets of the Partnership (except that any pledge or grant of a
security interest in the assets of the Partnership in connection with
the development or financing of any Project shall be within the
authority of the Managing Partner);
(iii) engaging in a business other than as
provided in this Agreement;
(iv) the sale or assignment of any Partner's
Interest in the Partnership, but not such Partner's rights to receive
fees or other compensation as provided herein, or the admission of
a substitute Managing Partner; and
(v) any material amendment or revision of or
supplement to the Management and Operation Agreement with Sceptre
Power Company, L.L.C., contemplated in Paragraph 7.(b) of this
Agreement.
(d) Other Business Ventures - Any Partner or any
officer, director, employee, shareholder, partner or other person
holding a legal or beneficial interest in any entity that is a Partner
may engage in, or possess an interest in, other business ventures of
every nature and description, independently or with others, and neither
the Partnership nor the Partners shall have any right by virtue of this
Agreement in or to such independent ventures or to the income or
profits derived therefrom, provided, however, that no activity
contemplated in this Paragraph 8.(d) shall, in the Managing Partner's
sole reasonable discretionary business judgment, interfere with or
prejudice Sceptre Power Company, L.L.C.'s performance of the
obligations undertaken by it in the Management and Operation Agreement
contemplated in Paragraph 7.(b) of this Agreement.
(e) Liability of Managing Partner to Other Partner(s)
and Partnership. The Managing Partner shall not be required to devote
all of its time or business efforts or capital to the affairs of the
Partnership, but shall devote so much of such time, efforts and capital
to the business of the Partnership as the Managing Partner, in its sole
reasonable discretionary business judgment, believes to be necessary
and appropriate to manage the affairs of the Partnership and to advance
the business interests of the Partnership. Nor shall the Managing
Partner, as such partner or in its individual capacity, be obligated to
make an equity investment in, or a loan to, any Project unless the
Managing Partner in its sole discretionary business judgment shall deem
such investment or loan (as the case may be) in the individual business
interest of the Managing Partner (as distinguished from the business
interests(s) of the Partnership). Except as otherwise specifically set
forth herein, neither the Managing Partner nor any of its affiliates or
their respective officers, employees or directors shall be liable to
the other Partner(s) because any taxing authority disallows or adjusts
income, deductions or credits in the Partnership income tax returns. In
addition, the doing of any act or the omission to do any act by the
Managing Partner or any of its affiliates, the effect of which may
result in loss or damage to the Partnership, shall not subject the
Managing Partner and an affiliate or their respective officers,
employees or directors to any liability, if the Managing Partner or
such affiliate was acting in good faith in a manner which it
reasonably believed to be in accordance with reasonable business
judgment or otherwise in accordance with the terms of this
Agreement.
9. Managing Partner's Fees and Expenses -
(a) Fees of Managing Partner - In consideration for
performing services which do not constitute duties or obligations of a
general partner of the Partnership, the Managing Partner shall be
reimbursed for its actual expenses incurred in the performance of such
services, in an amount to be agreed upon by the Partners.
(b) Except as otherwise provided herein, the
Partnership shall pay all Partnership expenses (which expenses may be
either billed directly to the Partnership or reimbursed to the Managing
Partner or its affiliate) which may include, but are not limited to:
(i) all costs of borrowed money, taxes and assessments applicable to
the Partnership; (ii) all costs for goods, materials, and services,
whether purchased, engaged or obtained by the Partnership directly or
by the Managing Partner or its affiliate on behalf of the Partnership;
(iii) legal, audit, accounting and other professional fees; (iv)
printing and other expenses and taxes incurred in connection with the
issuance, distribution, transfer, registration and recording of
documents evidencing ownership of an Interest in the Partnership or in
connection with the business of the Partnership; (v) fees and expenses
paid to independent contractors, commercial or investment banks, other
financial institutions or advisors, consultants, insurance brokers and
other agents; (vi) expenses of revising, amending, converting,
modifying or terminating the Partnership; (vii) communication expenses
including, without limitation, expenses in connection with
distributions made by the Partnership to, and communications and
bookkeeping work necessary in maintaining relations with, the
Partners, (viii) expenses in connection with preparing and mailing
reports to be furnished to the Partners for tax reporting or other
purposes, and other reports the furnishing of which the Managing
Partner deems to be in the best interests of the Partnership or the
Partners; (ix) costs of any accounting, statistical or bookkeeping
equipment or services necessary for the maintenance of the books and
records of the Partnership; (x) the cost of preparation and
dissemination of informational material and documentation relating
to the Partnership; (xi) costs incurred in connection with any
litigation, arbitration or other dispute resolution process in which
the Partnership is involved, as well as in any examination or
investigation conducted by or against the Partnership, including
legal and accounting fees incurred in connection therewith; and (xii)
costs of any computer services or equipment or services of personnel
used on behalf of or by the Partnership.
10. Allocations of Profits, Losses and Credits.
(a) Generally - The profits, losses and credits of
the Partnership shall be determined for each taxable year at the end of
the taxable year in accordance with the accounting method followed by
the Partnership for federal income tax purposes and otherwise in
accordance with generally accepted accounting practices and procedures
applied in a consistent manner. Except as otherwise provided, profits
and losses shall be allocated to the Partners quarterly.
(i) The profits, losses and credits of the
Partnership, other than those specified below, shall be allocated to
the Partners in the proportions which their respective aggregate
positive Capital Contributions to the Partnership bear to the total of
such aggregate positive Capital Contributions, computed as of the time
of such allocation.
(ii) Profits and losses of the Partnership
attributable to the sale, exchange or other disposition of all or
substantially all of the Partnership's property, or any other
voluntary or involuntary conversion of the Partnership's property or
to a casualty or taking in condemnation affecting the Partnership's
property shall be allocated among the Partners as follows:
(A) Any such profits shall be allocated as
follows:
(1) ordinary income shall be
allocated in an amount equal to the aggregate deficit in the
Partner's Capital Accounts, to each Partner in the same ratio as
the deficit in such Partner's Capital Account bears to the aggregate
of all such Partners' deficits; any remaining ordinary income shall
be allocated in accordance with (2) below, prior to the allocation of
capital gain. If, after such allocation a deficit remains in the
Capital Accounts of the Partners, an amount of capital gain shall be
allocated to the Partners in proportion to any such deficits in an
amount sufficient to reduce such deficits to zero (in the event that,
by virtue of the preceding allocation or otherwise, there are deficits
in the Capital Accounts of some of the Partners, all such profits shall
be allocated to such Capital Accounts with deficits until such deficits
are reduced to zero);
(2) then to the Partners in the
proportions which their respective aggregate positive Capital
Contributions bear to the total of such aggregate positive Capital
Contributions, computed as of the time of such allocation, until such
time as the respective Partners shall have received allocations of
Capital Items equal to their respective aggregate positive Capital
Contributions plus five percent (5%) per annum (not compounded) for
each year or fraction thereof since such Partner's respective Capital
Contributions shall have been available to the Partnership; and
(3) then, to the respective Partners
in the proportion which their respective aggregate positive Capital
Contributions bear to the total of such aggregate positive Capital
Contributions, computed as of the time of such allocation.
(B) Any such loss shall be allocated:
(1) to the extent that Horizon has a
positive balance in its Capital Account and/or the respective balances
in the Capital Account(s) of the Partner(s) exceed the amount of their
respective aggregate Capital Contribution(s) (collectively, the "Excess
Balances"), in proportion to such Excess Balances until such Excess
Balances are reduced to zero;
(2) then, to and among the Partners
in the ratio which their respective Capital Account balances bear to
the aggregate of all Capital Account balances, until the balance in all
Capital Accounts shall be reduced to zero; and
(3) then, to and among the Partners
in the proportion which their respective aggregate positive Capital
Contributions bear to the total of such aggregate positive Capital
Contributions, computed as of the time of such allocation.
(iii) To the extent that the Partnership shall be
entitled to any deduction for federal income tax purposes as a result
of any interest in profits and losses granted to the Managing Partner,
such deduction shall be allocated for federal income tax purposes to
the Managing Partner.
(iv) Notwithstanding any other provision of this
Paragraph 10.(b), in the event a Partner unexpectedly receives an
adjustment, allocation or distribution described in Treasury Regulation
Sections 1.704-1(b)(2)(ii)(d)(4)-(6) or there is a net decrease in the
excess of the principal balance of any nonrecourse debt of the
Partnership over the Partnership's adjusted tax basis in the Property
securing such debt as allocated pursuant to 1.704-1(b)(4)(iv)(c), and a
Partner's Capital Account balance is reduced below zero in an amount
exceeding the amount of such Partner's deficit account that he is
obligated to restore within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii), items of Partnership income and gain shall be
specially allocated to such Partner in an amount and manner
sufficient to eliminate the deficit balances in his Capital Account
created by such adjustments, allocations, or distributions as quickly
as possible. Any special allocations of items of income or gain
pursuant to this subparagraph (v) shall be taken into account in
computing subsequent allocations of profits pursuant to this
Paragraph 10., so that the net amount of any items so allocated and
the profits, losses and all other items allocated to each Partner
pursuant to this Paragraph 10. shall, to the extent possible, be equal
to the net amount that would have been allocated to each such
Partner pursuant to the provisions of this Paragraph 10. if such
unexpected adjustments, allocations, distributions or decrease had
not occurred.
11. Distributions.
(a) The Partnership's Net Cash Flow shall be
distributed to and among the Partners, at such intervals as the
Managing Partner shall determine, as set forth in this Paragraph 11.
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
(c) Distributions of Capital Items - Distributions
of capital items shall be made and applied in the following order of
priority:
(i) First, to and among the Partners until
such time as each Partner shall have received distributions of
capital items sufficient to reduce the aggregate of its Capital
Contributions to zero plus Capital Contributions in an amount equal to
five percent (5%) per annum (not compounded) for each year or fraction
thereof since such Partner's respective Capital Contributions shall
have been available to the Partnership;
(ii) then, the balance, to and among the
Partners in the proportions which their respective aggregate positive
Capital Contributions bear to the total of such aggregate positive
Capital Contributions, computed as of the time of such distribution.
(d) Liquidating Distributions - Subject to the
applicable provisions of the Management and Operation Agreement, if
any, liquidating distributions shall be made in accordance with the
positive Capital Account balances of the Partners, as determined after
taking into account all Capital Account adjustments for the Partnership
taxable year during which such liquidation occurs.
(e) Standards - The methodology hereinabove set
forth by which distributions and allocations are to be effected are
hereby expressly consented to by each Partner as an express condition
to becoming a Partner.
12. Partners Other Than Managing Partner - The Partners
other than the Managing Partner shall take no part in the management,
conduct or control of the business of the Partnership and shall have
no right or authority to act for or to bind or obligate the
Partnership in any manner whatsoever, except as shall be expressly
provided for in the Management and Operation Agreement, provided,
however, that the Managing Partner will consult with the other
Partner(s) respecting material business decisions whenever
reasonably possible in the Managing Partner's reasonable business
judgement.
13. Assignment, Transfer, or Sale of Property Rights in
the Partnership.
(a) General. Neither all nor part of a Partner's
Property Rights in the Partnership may be assigned, transferred, or
sold without the consent of the other Partners, except as provided in
subparagraph 13.(b) below.
(b) Transfer; Option to Purchase. A Partner shall
not sell, assign, pledge, cause a lien to be placed against, or
encumber (individually or collectively "Transfer") all or any part of
such Partner's Property Rights in the Partnership to any entity other
than a Partner or a wholly owned subsidiary of such Partner unless (i)
the Transfer is part of a transaction in which the transferee is
admitted as a Partner in the Partnership, and (ii) the transferring
Partner shall first have complied with the provisions of this
subparagraph 13.(b). No Transfer of all or any part of a Partner's
Property Rights in the Partnership may be effected unless the
Property Right in question is first offered for sale to the other
Partner(s) by a written offer addressed and delivered to the principal
office of the other Partner(s). That notice shall give the other
Partner(s) the right to purchase the Property Right in question for
the consideration to be received as a result of the proposed
Transfer of the Property Right in question to a non-Partner. The
written offer shall contain all of the terms of the proposed Transfer,
including the name and address of the proposed Transferee. Thereupon,
the other Partner(s) shall have a period of thirty (30) days to notify
the transferring Partner of its (their) intention to purchase the
Property Right in question upon the terms and conditions set forth in
the offer.
(c) Substitution of Partner and Admission of New
Partner Without Substitution of Partner. As a condition to the
admission of any new Partner, the entity so to be admitted shall
execute and acknowledge such instruments (including the power of
attorney referred to in Paragraph 16. below) in form and substance
reasonably satisfactory to the Managing Partner, as the Managing
Partner may deem necessary or desirable to effect such admission and to
confirm the agreement of the entity being admitted as such Partner to
be bound by all the covenants, terms and conditions of this Agreement
as the same may have been amended. Such entity so to be admitted as a
new Partner shall also pay all reasonable expenses in connection with
its admission as a new Partner, including, but not limited to, the cost
of the preparation and filing any amendment to any Certificate which
the Managing Partner may deem necessary or desirable in connection with
the admission of such entity as a new Partner.
(d) Distributions and Allocations Subsequent to
Transfer - A transferee of, or substitute Partner for, a Partner's
Partnership Interest shall be entitled to receive distributions from
the Partnership with respect to such Partnership Interest only after
the Managing Partner has received satisfactory evidence of such
transfer and a transfer fee sufficient to cover the expenses of the
Partnership in connection with such transfer.
14. Books, Records, Accounting and Reports.
(a) Availability. At all times during the existence
of the Partnership, the Managing Partner shall keep or cause to be kept
full and true books of account in accordance with the accrual method of
accounting and otherwise in accordance with generally accepted
accounting principles and procedures applied in a consistent manner,
which shall reflect all Partnership transactions and shall be
appropriate and adequate for the Partnership's business. Such books of
account, together with a copy of this Agreement and any amendments
thereto, shall at all times be maintained at the principal place of
business of the Partnership. Any Partner or his or its duly authorized
representative shall have the right at any time to inspect and copy
from such books and documents during normal business hours upon five
(5) days' written notice to the Managing Partner, and shall have, on
demand, information on matters affecting the Partnership, to the extent
that such information is readily available or can be obtained without
undue expense.
(b) Taxable Year and Accounting Method. The
Partnership's taxable and fiscal years shall end on September 30. The
Partnership shall use the accrual method of accounting. All elections
required or permitted to be made by the Partnership under the Code
shall be made by the Managing Partner in such manner as will, in its
opinion, be most advantageous to the Partners, taking into account
their respective Interests in the Partnership.
15. Bank Accounts - All funds of the Partnership shall be
deposited in the Partnership's name in such bank account or accounts as
may be designated by the Managing Partner and shall be withdrawn on the
signature of the Managing Partner, and/or such other person or persons
as the Managing Partner may authorize.
16. Power of Attorney - Each Partner hereby
irrevocably designates the Managing Partner, including a successor
Managing Partner (or Managing Partners), as its true and lawful
attorney in its name, place and stead to execute and acknowledge
(i) any certificate or other instrument required to be filed by the
Partnership, including the Certificate and any amendment thereto,
and (ii) any and all documents appropriate or necessary in
connection with the continuation, termination, or dissolution of
this Partnership. The creation of the foregoing power of attorney
is coupled with an interest and shall be irrevocable.
17. Admission, Withdrawal or Bankruptcy of a Partner.
(a) Admission. The admission of a new Partner to the
Partnership shall not cause the dissolution of the Partnership unless
all then existing Partners shall agree otherwise in a writing signed by
all such existing Partners prior to or coincident with the admission of
such new Partner.
(b) Withdrawal. Any Partner may withdraw from the
Partnership upon giving each other Partner at least sixty (60) days
prior written notice of such withdrawal. If, at the time of such
notice, the Partnership consists of more than two (2) Partners, the
withdrawal of a Partner shall not cause the dissolution of the
Partnership unless (i) all remaining Partners shall agree otherwise in
a writing signed by all such Partners, prior to or coincident with the
withdrawal of such Partner, or (ii) less than one hundred percent
(100%) of such withdrawing Partner's interest in the Partnership is
sold pursuant to Paragraph 13 of this Agreement on or before the
effective date of such withdrawal.
(c) Bankruptcy. The bankruptcy or insolvency of any
Partner shall cause the dissolution of the Partnership, unless all
of the other Partners shall, within thirty (30) days after notice of
such event, elect to continue the Partnership in a writing signed by
all such Partners.
18. Winding up of the Partnership.
(a) Upon a dissolution of the Partnership, the
Managing Partner (or Court-appointed fiduciary if there be no Managing
Partner or the Managing Partner is unable to act) shall take full
account of the Partnership's liabilities and assets and the assets
shall be liquidated as promptly as consistent with obtaining the fair
value thereof, and the proceeds therefrom, to the extent sufficient
therefor, shall be applied and distributed in the following order:
(i) to the payment and discharge of all of the
Partnership's debts and liabilities (other than those to Partners),
including the establishment of any necessary reserves;
(ii) to the payment of any debts and liabilities
owed to the Managing Partner; and
(iii) to the Partners in accordance with their
Capital Accounts.
(b) Compliance with Timing Requirements of
Regulations. In the event the Partnership is "liquidated" within the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g), (i)
distributions shall be made pursuant to this Paragraph. (if such
liquidation constitutes a dissolution of the Partnership) or Section 11
hereof (if it does not) to the Partners who have positive Capital
Accounts in compliance with Treasury Regulation Section
1.704-1(b)(2)(ii)(b)(2), and (ii) if the Managing Partner's Capital
Account has a deficit balance (after giving effect to all
contributions, distributions, and allocations for all taxable years,
including the year during which such liquidation occurs), the Managing
Partner shall contribute to the capital of the Partnership the amount
necessary to restore such deficit balance to zero in compliance with
Treasury Regulation Section 1.704-1(b)(2)(ii)(b)(3). Distributions
pursuant to the preceding sentence may be distributed to a trust
established for the benefit of the Partners for the purposes of
liquidating Partnership assets, collecting amounts owed to the
Partnership, and paying any contingent or unforeseen liabilities
or obligations of the Partnership or of the Managing Partner arising
out of or in connection with the Partnership. The assets of any such
trust shall be distributed to the Partners and, from time to time, in
the reasonable discretion of the Managing Partner, in the same
proportions as the amount distributed to such trust by the Partnership
would otherwise have been distributed to the Partners pursuant to this
Agreement.
19. General Provisions.
(a) Except as otherwise provided in this Agreement or
required by law, any notice, demand or other communication required or
permitted to be given pursuant to this Agreement shall have been
sufficiently given for all purposes if (i) delivered personally to the
entity or an executive officer of the entity to whom that notice,
demand or other communication is directed, or (ii) sent first-class
mail (postage prepaid), by overnight courier or by facsimile
transmission, directed to such entity at its then principal place of
business. Except as otherwise provided in this Agreement, any such
notice sent by first class mail shall be deemed to have been given
three (3) business days after the same was mailed.
(b) Entire Agreement/Amendments. This Agreement
constitutes and contains the entire agreement of the parties hereto
with respect to the matters set forth herein and supersedes any prior
understanding or agreement, oral or written, with respect thereto. No
amendment of this Agreement shall be effective unless the same shall be
set forth in a writing signed by all of the Partners.
(c) Severability. If any term or other provision of
this Agreement shall be declared to be invalid, illegal, or incapable
of being enforced by any rule of law or public policy, all other terms,
provisions and conditions of this Agreement shall nevertheless remain
in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner
materially adverse to any party to this Agreement. Upon any binding
determination that any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced, the Partners shall
negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties to this Agreement as closely as possible
in an acceptable and legally enforceable manner, to the end that the
transactions contemplated hereby may be effected to the full extent
possible.
(d) Binding Effect and Benefit. This Agreement shall
be binding upon and inure to the benefit of all Partners and each of
the permitted successors and assigns of the Partners. No Partner may
assign rights or delegate obligations hereunder except pursuant to the
provisions hereof and as expressly authorized herein. Nothing in this
Agreement is intended to benefit any entity which is not, at the
relevant time, a Partner of the Partnership.
(e) Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original and
all of which shall constitute one and the same instrument.
(f) Applicable Law - Notwithstanding the place where
this Agreement may be executed by any of the parties hereto, the
parties expressly agree that all the terms and provisions hereof shall
be construed under the laws of the State of California, except where
specifically provided otherwise herein. The partnership aspects of this
Agreement shall be construed under the Partnership Law as now adopted
or as hereafter amended. In the event that any matter relating to the
rights or obligations of any Partner, as such (or the relations of the
Partners to each other) is not provided for herein, such matter shall
be governed by the Partnership Law, if applicable. To the extent
permitted by governing law, this Agreement shall constitute a waiver by
each Partner of all rights under the Partnership Law which are
inconsistent with the provisions of this Agreement, and to the extent
permitted by governing law, the provisions of this Agreement shall
override the provisions of the Partnership Law to the extent of such
inconsistency or contradiction.
(g) Qualification in Other States - In the event the
business of the Partnership is carried on or conducted in states in
addition to the State of California, then the parties agree that this
Partnership shall exist under the laws of each state in which business
is actually conducted by the Partnership, and they severally agree to
execute such other and further documents as may be required or
requested in order that the Managing Partner legally may qualify this
Partnership in such other states. The power of attorney granted to the
Managing Partner by each Partner referred to in Paragraph 16. hereof
shall constitute the authority of the Managing Partner to perform the
ministerial duty of qualifying this Partnership under the laws of any
other state in which it is necessary to file documents or instruments
of qualification. A Partnership office or principal place of business
in any state may be designated from time to time by the Managing
Partner.
(h) Attorneys' Fee. If any legal action arises under
this Agreement or by reason of any asserted breach thereof, the party
which ultimately prevails in such action (including any appeals related
thereto) shall be entitled to recover all costs and expenses, including
reasonable attorneys' fees, incurred in enforcing or attempting to
enforce any of the terms, covenants, or conditions of this Agreement,
including costs incurred prior to commencement of legal action.
SECTION 3
ADMISSION OF HORIZON ENERGY DEVELOPMENT, INC.
---------------------------------------------
AS A PARTNER IN SCEPTRE POWER COMPANY
-------------------------------------
3.1 HORIZON is hereby admitted as a general partner of
Sceptre Power Company, subject to HORIZON'S execution of the Sceptre Power
Company Continuation Agreement.
SECTION 4
TRANSFER OF INTERESTS IN CERTAIN PERSONAL PROPERTY
--------------------------------------------------
4.1 (a) CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE
104(b).
In the aggregate, said payments represent the book
value of Sceptre Power Company's fixed assets at the Closing Date. In
consideration of said payments and other valuable consideration received by
them, respectively, from HORIZON, to their full satisfaction, SRL,
individually, and SEI, NOVERGAZ and PPD, individually and as partners of
Sceptre Power Company, do hereby sell, assign, transfer, deliver and set over
to HORIZON, its successors and assigns, without representations and warranties,
all of their respective rights, titles, and interests in and to the personal
property identified on Schedule 4 to this Agreement.
(b) Each of SRL and NOVERGAZ shall be entitled to audit,
at such party's sole cost and expense, the data and computations which underly
the amount of the payments set forth in Section 4.1 (a) of this Sucession
Agreement, provided, however, that such audit shall be conducted at Sceptre
Power Company's sole cost and expense in the event that the amount of such
respective payments is increased by five percent (5%) as the result of such
audit.
4.2 If at any time after the date hereof, HORIZON shall be
advised that further transfers, assignments, assurances in law, or other acts or
things are necessary or desirable to confirm in HORIZON the title to any of the
personal property identified on said Schedule 4, SRL, SEI, NOVERGAZ and PPD
will, at HORIZON'S expense, as and when requested by HORIZON, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
any and all proper and appropriate instruments of transfer, and will do or cause
to be done all such other acts and deeds as HORIZON may reasonably deem
necessary or appropriate to confirm title to such property in HORIZON and to
otherwise carry out the intent and purposes of this Section 4.
4.3 Other than as set forth in Sections 12 and 13 of this
Succession Agreement, SRL, SEI, NOVERGAZ and PPD make no warranties of any kind
in, under, or by virtue of this Section 4, either express or implied. However,
to the extent permitted by applicable law, this Section 4 is made with full
substitution and subrogation of HORIZON for each of SRL, SEI, NOVERGAZ and PPD
in and to all covenants and warranties by others heretofore given or made for or
in connection with the acquisition of any of the property identified on said
Schedule 4. SRL, SEI, NOVERGAZ AND PPD HEREBY EXPRESSLY DISCLAIM ANY WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE IN REGARD TO THE PROPERTY
IDENTIFIED ON SAID SCHEDULE 4.
SECTION 5
TRANSFER OF PROPERTY RIGHTS IN THE PARTNERSHIP
----------------------------------------------
5.1 Each of NOVERGAZ and SEI, individually and as partners of
Sceptre Power Company, hereby sell, assign, transfer and set over to HORIZON and
its permitted successors and assigns one hundred percent (100%) of their
respective rights, title, and interests in and to the Partnership and its assets
together with all of their respective Property Rights in the Partnership,
including, without limitation, the following:
(a) The business, assets, property and name of Sceptre
Power Company, all of their respective right, title and interest in and to the
same and the goodwill of Sceptre Power Company;
(b) The accounts receivable of Sceptre Power Company;
(c) The contracts and arrangements identified on
Schedule 5.1(c) attached to this Succession Agreement;
(d) The books, records, business files and all other
records of every type and description relating to the business, assets or
property of Sceptre Power Company or any Project; and
(e) Except as expressly provided in Section 6 of this
Succession Agreement, all of Sceptre Power Company's rights, claims and
interests of any nature (whether known or unknown and whether pertaining to
benefits presently existing or arising in the future) that NOVERGAZ or SEI
may have in or arising out of or in any way relating to the
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(B)
including, without limitation (i) the
right to provide any equipment or materials to or for, or perform any services
for, any Project or or its shareholders or affiliates,
or to receive any fees, or recover any costs, from any Project
or its shareholders or affiliates; (ii) the right to own or acquire any equity
or ownership interest in any Project or any shareholder or
affiliate ; (iii) the right to receive any cash flow,
dividends or other distributions of cash or property or other profit or
beneficial interest from any Project, or cash flow, dividends or other
distributions of cash or property or other profit or beneficial interest
or its shareholders or affiliates; and (iv)
any other rights, claims or interests of any nature arising out of or in
any way related to any Project or its
shareholders or affiliates. Such rights, claims and interests are hereinafter
collectively referred to as "Project Rights".
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
5.2 PPD, individually and as a partner of Sceptre Power
Company, hereby expressly consents to the sale, assignments, and transfers
referred to in Section 5.1 of this Succession Agreement.
5.3 SRL hereby expressly consents to the sale, assignments
and transfers referred to in Section 5.1 of this Succession Agreement, and
hereby sells, assigns, transfers and sets over to HORIZON and its permitted
successors and assigns one hundred percent (100%) of its right, title, and
interest, if any, in any and all of the business, goodwill, accounts
receivable, contracts, and Project Rights referred to in Section 5.1 of
this Succession Agreement.
SECTION 6
ADDITIONAL CONSIDERATION
------------------------
6.1 Except as provided in Section 6.2 of this Succession
Agreement, HORIZON hereby assumes and agrees to discharge the obligations
undertaken by NOVERGAZ and SEI, individually and/or as partners of Sceptre Power
Company, in and under each of the contracts and arrangements identified on
Schedule 5.1(c) attached to this Succession Agreement insofar as, and only
insofar as, such obligations accrue or arise after the Closing Date. It is
specifically understood and agreed that HORIZON has neither assumed nor agreed
to assume any obligation of SRL or Sceptre Power Company, or of NOVERGAZ, SEI
and/or PPD, individually or as partners of Sceptre Power Company, or of any of
their respective affiliates or shareholders, other than (i) as expressly set
forth in this ss. 6.1, (ii) obligations arising under or by virtue of the
contracts and arrangements identified on said Schedule 5.1 (c) and the
transactions contemplated therein, and (iii) expenses incurred in the routine
day-to-day ordinary course of Sceptre Power Company's businesss since the date
of the most recent balance sheets.
6.2 (a) HORIZON, on the one hand, and Sellers, on the other
hand, shall each be responsible for fifty percent (50%) of Sceptre Power
Company's aggregate Going Forward Expenses through the close of business on the
Closing Date (hereinafter, the "Shared Section 6.2 Expenses"). In this
connection, the parties hereto agree as follows:
(b) On or before October 13, 1995, Sceptre Power Company
shall compile and cause to be forwarded to each of HORIZON, SRL and NOVERGAZ
cash disbursements and receipt schedules which identify and quantify, as such,
the following data as respects Sceptre Power Company:
(A) Cash per books, as reconciled to bank
statement(s) at the close of business on June 30, 1995;
(B) cash contributions by National Fuel Gas Company
and HORIZON, booked during the period beginning July 1, 1995 and ending
at the close of business on the Closing Date (hereinafter, the "True-up
Period");
(C) cash contributions, if any, by SRL and/or
NOVERGAZ, booked during the True-up Period;
(D) disbursements in respect of the expenses of
Sceptre Power Company incurred or accrued at or before June 30, 1995;
(E) cash distributions, if any, to SRL and NOVERGAZ
during the True-up Period;
(F) cash distributions, if any, to HORIZON during
the True-up Period;
(G) the balance of Sceptre Power Company's cash
disbursements during the True-up Period; and
(H) cash per books as reconciled to bank
statement(s) at the close of business on the Closing Date.
Said schedules (hereinafter, the "Section 6.2(b) Schedules") shall accurately
reflect the indicated information, as developed in accordance with the payment
and accounting principles, practices and procedures employed by Sceptre Power
Company prior to July 1, 1995. Further, such schedules shall provide sufficient
information and detail to enable the respective recipients thereof to verify the
same.
(c) Unless HORIZON, SRL, or NOVERGAZ shall timely
transmit the notification provided for in Section 6.2(d) of this Succession
Agreement, the Section 6.2(b) Schedules shall, for all purposes, be deemed
accurate and binding upon the parties hereto (hereinafter, "Final Schedule
Data").
(d) Upon written notification provided via facsimile
transmission to Sceptre Power Company and to each other recipient of the Section
6.2(b) Schedules on or before 12:00 noon PDT, October 20, 1995, any recipient
of the Section 6.2(b) Schedules may request an audit of any information set
forth on any such schedule, in which event, one (and only one) audit of the
Seciton 6.2(b) Schedules shall be conducted. Such audit shall be conducted at
the offices of Sceptre Power Company, Suite 1200, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at a mutually convenient date and time, not later than
November 16, 1995. In the event that such audit resolves all issues related to
the Section 6.2(b) Schedules, HORIZON, SRL and NOVERGAZ shall acknowledge the
accuracy of the respective schedules (as originally compiled, or as revised in
light of the audit, as the case may be) by initialing the same, and the said
initialed schedules shall be deemed to reflect Final Schedule Data.
(e) In the event that any question remains following the
audit described in Section 6.2(d) of this Succession Agreement, the same
shall be referred to Sceptre Power Company's independent auditors, whose
decision respecting the same shall be final and binding upon each of the parties
to this Succession Agreement. The Section 6.2(b) Schedules, adjusted, as
necessary, to reflect (i) the parties' agreement(s) resulting from the audit,
and/or (ii) such auditors' determination(s), as the case may be, shall be deemed
to reflect Final Schedule Data.
(f) The audit and referral to Sceptre Power Company's
independent auditors described in Sections 6.2 (d) and 6.2 (e) of this
Succession Agreement shall be conducted at the requesting party's sole cost and
expense, unless such audit and/or referral, as the case may be, results in a
reduction in the requesting party's Shared Section 6.2 Expense allocation in
excess of five percent (5%), in which event, such audit shall be conducted at
Sceptre Power Company's sole cost and expense.
(g) The Shared Section 6.2 Expenses shall be computed,
as hereinafter set forth, using Final Schedule Data, exclusively, and
HORIZON, on the one hand, and Sellers, on the other hand, shall each be
responsible for .5(G).
(h) Sellers shall be credited with the following portion
of .5(G), to wit: [(A + C - D - E)/(A + B + C - D - E - F - H)] x (G),
hereinafter "Sellers' Section 6.2 Credit".
(i) HORIZON shall be credited with the following portion
of .5(G), to wit: [(B - F - H)/(A + B + C - D - E - F - H)] x (G), hereinafter,
"HORIZON'S Section 6.2 Credit".
(j) In the event that Sellers' Section 6.2 Credit is
less than .5(G), each of SRL and NOVERGAZ shall pay HORIZON, on or before
the tenth (10th) business day following the establishment of Final Schedule
Data, an amount equal to fifty percent (50%) of the amount necessary to increase
Sellers' Section 6.2 Credit to .5(G).
(k) In the event that HORIZON'S Section 6.2 Credit is
less than .5(G), HORIZON shall pay to each of SRL and NOVERGAZ, on or
before the tenth (10th) business day following the establishment of Final
Schedule Data, an amount equal to fifty percent (50%) the amount necessary to
increase HORIZON'S Section 6.2 Credit to .5(G).
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
6.8 As respect SRL's and NOVERGAZ' contingent entitlements
under any or all of Sections 6.3, 6.4, 6.5, 6.6 and 6.7 of this Succession
Agreement, SRL & NOVERGAZ shall have the right (i) to review the books and
records of Sceptre Power Company and/or HORIZON referable to the
contingency(ies) involved and to the transaction(s) and event(s) which give rise
to such entitlement(s) or the failure thereof (as the case my be), and (ii) to
audit, at such party's(ies') sole cost and expense, the computations and
calculations pursuant to which Sceptre Power Company and/or HORIZON quantified
the respective entitlement(s) involved, provided, however, that such audit shall
be conducted at Sceptre Power Company's sole cost and expense in the event that
SRL's and/or NOVERGAZ's respective individual entitlements shall be increased by
an amount in excess of five percent (5%) as the result of such audit.
6.9 No assignment by HORIZON or Sceptre Power Company of an
interest in either
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
shall relieve such assignor of any obligation under Sections 6.3, 6.4 or 6.7 of
this Succession Agreement, and the provisions thereof shall operate as though
such assignor had retained such interest until such time as SRL and
NOVERGAZ have accepted such assignee and mutually satisfactory novation
agreements have been entered into.
SECTION 7
DISPOSITION OF CASH ON CLOSING
------------------------------
7.1 The parties acknowledge that no distributions authorized
in Seciton 6.3 of the August 18, 1995 Agreement were effected prior to the
Closing Date and that, accordingly, the reserve provided for in the second
sentence of said Section 6.3 was not established.
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
SECTION 8
DEVELOPMENT OF EXISTING PROJECTS
--------------------------------
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b).
SECTION 9
OUTSTANDING LETTER OF CREDIT
----------------------------
9.1 Except as provided in Section 6.4 of this Succession
Agreement, SRL, SEI, and/or NOVERGAZ, as the case may be, shall bear ultimate
responsibility as respects all costs, expenses and losses related to or arising
from draws or attempted draws against the letter of credit referred to in
Section 6.4 a(ii) of this Succession Agreement.
SECTION 10
WAIVER OF CLAIMS BY PPD
-----------------------
10.1 PPD hereby acknowledges that its waiver of claims against
SRL, SEI and NOVERGAZ, under the Cogen Agreement or otherwise, provided for in
Section 7 of the August 18, 1995 Agreement has been in effect since August 18,
1995 and shall continue to be effective after the Closing Date.
SECTION 11
REPRESENTATIONS AND WARRANTIES OF ALL PARTIES
---------------------------------------------
11.1 Each party to this Succession Agreement represents and
warrants to each and every other party to this Succession Agreement as follows:
(a) Such party is a corporation, duly organized,
validly existing and in good standing under the laws of the relevant
jurisdiction aforesaid and, insofar as requisite to the consummation of the
transactions contemplated herein is duly qualified as a foreign corporation in
all relevant jurisdictions.
(b) Such party has full corporate power and authority
to enter into this Succession Agreement and to perform its undertakings
hereunder.
(c) Insofar as required under Section 3.2(s) of the
August 18, 1995 Agreement, the execution and delivery of this Succession
Agreement and the consummation of the transactions contemplated thereunder have
been duly authorized by the Board of Directors of such party.
(d) This Succession Agreement has been duly executed
and delivered by such party and is valid and binding upon such party in
accordance with its terms.
(e) Such party has incurred no liability, contingent or
otherwise, for brokers', finders', or consultants' fees relating to (i) the
transactions contemplated in this Succession Agreement, or (ii) the equity
or debt funding of any Project, for which Sceptre Power Company or any other
such party shall or may have any responsibility, whatsoever.
SECTION 12
REPRESENTATIONS AND WARRANTIES OF
---------------------------------
SRL, SEI, NOVERGAZ AND PPD
--------------------------
12.1 Each of SRL, SEI, NOVERGAZ and PPD represents as
follows:
(a) Sceptre Power Company is a general partnership duly
organized, validly existing and in good standing under the laws of the State of
California.
(b) At the date of this Succession Agreement, SEI,
NOVERGAZ and PPD are the general partners, and the only partners, of Sceptre
Power Company.
(c) Immediately prior to each such party's execution of
this Succession Agreement, the only written evidence of the Partnership
Agreement of Sceptre Power Company is (i) the summary of certain provisions
thereof set forth in Article 2 of the Cogen Agreement, and (ii) those portions,
if any, of the Sceptre Power Company Management Committee Minutes which reflect
one or more of the terms and conditions of the Partnership Agreement.
12.2 Each of SRL, SEI, NOVERGAZ and PPD represent and
warrant, to the best of their respective knowledge, information and belief
following reasonable inquiry, as follows:
(a) Sceptre Power Company has filed all tax returns
which are required by law to be filed and has paid or set up an adequate
reserve for the payment of all (i) taxes required to be paid in respect of the
period covered by those returns, if any, (ii) income, franchise, property,
sales, use, employment or other taxes which have or may become due pursuant to
those returns, and (iii) assessments made and all other accrued taxes whether or
not the returns or payments are yet due; and all filed tax returns of Sceptre
Power Company are correct and true in all material respects; there is no
outstanding claimed deficiency with respect to any tax period, no formal or
informal notice of a proposed deficiency, and no notification of any pending
audit of tax returns and no waiver or extension granted by Sceptre Power Company
with respect to any period of limitations affecting assessment of any tax.
(b) There are no material liabilities or obligations of
Sceptre Power Company of any kind, whether accrued, absolute, contingent or
otherwise, which will or might become liabilities of HORIZON by reason of the
transactions contemplated by this Succession Agreement, except those which are
reflected on the balance sheets of Sceptre Power Company or arise under or are
related to contracts and arrangements identified on Schedule 5.1(c) attached to
this Succession Agreement; and no material liabilities or obligations have
arisen since the date of the most recent balance sheets, other than pursuant to
or under the said contracts or arrangements.
(c) The bank accounts and cash of Sceptre Power Company
reflected on the books of Sceptre Power Company, including any certificates
of deposit are not subject to any material bank offset or other charges, and
there have been no uses of cash or reduction of bank deposits since the date of
the most recent interim financial statement, except as necessary to pay current
expenses of Sceptre Power Company.
(d) Sceptre Power Company makes and keeps accurate
books and records reflecting its assets and liabilities and maintains
internal accounting controls that provide reasonable assurance that (i)
transactions are executed with Management's authorization, and (ii) transactions
are recorded as necessary to permit preparation of Sceptre Power Company's
financial statements and to maintain accountability for its assets.
(e) Sceptre Power Company owns, holds and controls
non-assessable and totally unencumbered certificate(s) representing one
hundred percent (100%) of the issued and outstanding stock of Sceptre Kabirwala
Power, Inc.
(f) Sceptre Power Company is in compliance with all
federal, state and local governmental laws and regulations relating to the
employment of labor, including provisions relating to wages, fringe benefits,
hours, working conditions, collective bargaining, or payment of social security
and unemployment taxes and is not liable for arrears on wages or tax or
penalties for failure to comply with such laws.
(g) Other than as set forth in the documents comprising
the contracts and arrangements identified on Schedule 5.1(c) attached to
this Succession Agreement, Sceptre Power Company is not subject to or a party to
any plan, arrangement or contract providing for bonuses, deferred compensation,
retirement payments, profit sharing or other employee benefits to or for which
HORIZON may become subject or liable upon the consummation of the transactions
contemplated in this Succession Agreement.
(h) No suit, action or other proceeding is pending or
threatened before any court, governmental agency, or alternative dispute
resolution tribunal, and, to the best of such party's knowledge, information and
belief, no cause of action or claim exists against Sceptre Power Company, with
respect to the contracts and arrangements identified in Schedule 5.1(c) attached
to this Succession Agreement, or otherwise, which might result in a material
adverse effect upon Sceptre Power Company or, upon consummation of the
transactions contemplated in this Succession Agreement, upon HORIZON, and
neither Sceptre Power Company nor any of its affiliates is in default under any
contract or arrangement identified in Schedule 5.1(c) attached to this
Succession Agreement.
(i) Sceptre Power Company has good, marketable and
unencumbered title to all of the assets identified on Schedule 4 attached
to this Succession Agreement, and upon the consummation of the transactions
contemplated hereby, HORIZON will acquire good and marketable title to said
property.
SECTION 13
REPRESENTATIONS AND WARRANTIES BY
---------------------------------
SRL, SEI AND NOVERGAZ
---------------------
13.1 Each of SRL, SEI and NOVERGAZ represents and warrants
that to the best of such party's knowledge, information and belief, following
reasonable inquiry, and subject to the provisions of the contracts and
arrangement listed on Schedule 5.1 (c) attached to this Succession Agreement,
(i) it has good and marketable title to the interests in the Partnership which
it is conveying pursuant to this Succession Agreement; (ii) that said interests
are free and clear of restrictions on, or conditions to, transfer and are free
and clear of mortgages, liens, privileges, charges, encumbrances, equities,
claims, covenants, conditions or restrictions, of any kind, created by, through
or under such party or Sceptre Power Company; and (iii) that it has the absolute
right and power to convey said interests to HORIZON, without seeking the
approval of any person or entity not a party to this Succession Agreement.
SECTION 14
INDEMNIFICATION
---------------
14.1 SRL, SEI and NOVERGAZ shall indemnify HORIZON and hold
it harmless against and in respect to all claims, causes of action,
liabilities, costs and damages of every kind and character (including, without
limitation, those arising under the contracts and arrangements identified in
Schedule 5.1(c) attached to this Succession Agreement, and reasonable attorneys
fees and expenses) that may be asserted against HORIZON, or said parties, or any
of them, or against the properties and assets or any of them which are subject
to this Succession Agreement and which accrue or accrued at or prior to (or
relate to a time or times prior to) the Closing Date (but not including those
that result from or are attributable to any representation of HORIZON contained
in this Succession Agreement being untrue or a breach of any warranty or
covenant of HORIZON contained in this Succession Agreement).
14.2 HORIZON shall indemnify SRL, SEI and NOVERGAZ and hold
them harmless against and in respect to all claims, causes of action,
liabilities, costs and damages of every kind and character (including, without
limitation, those arising under the contracts and arrangements identified in
Schedule 5.1(c) attached to this Succession Agreement, and reasonable attorneys
fees and expenses) that may be asserted against SRL, SEI and NOVERGAZ or
HORIZON, or any of them, or against the properties and assets or any of them
which are subject to this Succession Agreement and which accrue or accrued after
(or relate to a time or times after) the Closing Date (but not including those
that result from or are attributable to any representation of SRL, SEI or
NOVERGAZ contained in this Succession Agreement being untrue or a breach of any
warranty or covenant of SRL, SEI or NOVERGAZ contained in this Succession
Agreement).
SECTION 15
NOTICES
-------
15.1 Except as otherwise provided in this Agreement or
required by law, any notice, demand or other communication required or permitted
to be given pursuant to this Agreement shall have been sufficiently given for
all purposes if (i) delivered personally to the entity or an executive officer
of the entity to whom that notice, demand or other communication is directed, or
(ii) sent first-class mail (postage prepaid), by overnight courier, or by
facsimile transmission, directed to such entity and addressed as follows:
SCEPTRE:
Sceptre Resources Limited
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: President & CEO
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Sceptre Energy, Inc.
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: President & CEO
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Sceptre Power Company
▇▇▇▇▇ ▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
NOVERGAZ:
Novergaz (1994), Inc.
Suite 1400, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: President & CEO
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
POWER PROJECT DEVELOPMENT, INC.:
Power Project Development, Inc.
▇▇▇▇▇ ▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
HORIZON ENERGY DEVELOPMENT, INC.:
Horizon Energy Development, Inc.
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 16
WITHDRAWAL OF SEI AND NOVERGAZ AS PARTNERS
------------------------------------------
IN SCEPTRE POWER COMPANY
------------------------
16.1 SEI and NOVERGAZ hereby withdraw as Partners in Sceptre
Power Company effective the close of business on the Closing Date. Nothing in
this Succession Agreement is intended to or shall be interpreted or construed to
create or continue a partnership, joint venture, or any other fiduciary
relationship by and between any or all of SRL, SEI and NOVERGAZ, on the one
hand, and any or all of the other parties to this Succession Agreement, on the
other hand, after the close of business on the Closing Date.
SECTION 17
MISCELLANEOUS
-------------
17.1 Negotiated Agreement. This Agreement is a negotiated
agreement and the terms, provisions, and conditions thereof, except insofar as
defined therein, shall be interpreted and construed in accordance with their
usual and customary meaning. The parties expressly, knowingly and voluntarily
waive the application of any rule of law or procedure to the effect that
ambiguous or conflicting terms shall be interpreted or construed against the
party whose attorney prepared the executed version or any prior draft of this
Agreement.
17.2 Effect of Waiver. No waiver by a party of any provision
of this Agreement shall be considered a waiver of any other provision or of any
subsequent non-performance of the same or any other provision of this Agreement,
including the time for performance of any such provision. The exercise by a
party of any remedy provided in this Agreement or at law shall not prevent the
exercise by that party of any other remedy provided in this Agreement or at law.
17.3 Counterparts. This Agreement and all amendments thereof
and supplements thereto may be executed in counterparts, which upon
execution thereof by all of the parties thereto, shall be deemed one document.
Further, this Agreement and all amendments thereto and supplements thereof shall
be deemed to have been executed and delivered by a party when that party
has (i) provided each other party thereto, via facsimile transmission, with a
copy of the signature page bearing that party's signature, and (ii) has placed
into the custody of an overnight courier, for delivery to each other party
thereto, a copy of said signature page bearing that party's signature in
original.
17.4 Entire Agreement/Amendments. This Agreement constitutes
and contains the entire agreement of the parties hereto with respect to the
matters set forth herein and supersedes any prior understanding or agreement,
oral or written, with respect thereto. No amendment of this Agreement shall be
effective unless the same shall be set forth in a writing signed by all of the
Partners.
17.5 Severability. If any term or other provision of this
Agreement shall be declared to be invalid, illegal, or incapable of being
enforced by any rule of law or public policy, all other terms, provisions and
conditions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party to this
Agreement. Upon any binding determination that any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties to this Agreement as closely as possible in
an acceptable and legally enforceable manner, to the end that the transactions
contemplated hereby may be effected to the full extent possible.
17.6 Successors, Assignment, Benefit. This Agreement inures
to the benefit of, and is binding upon, the parties thereto and there
respective permitted successors and assigns, provided, however, that no
assignment of this Agreement shall relieve the assignor of any of its
obligations hereunder without the consent of the other parties to this
Agreement, which said consent shall not be unreasonably withheld. Nothing in
this Agreement is intended to benefit any entity which is not a party to this
Agreement.
17.7 Governing Law. Except as hereinafter provided, and
notwithstanding the place where this Agreement may be executed by any of the
parties hereto, the parties expressly agree that this Agreement shall be
governed in all respects, including validity, interpretation and effect by, and
shall be enforceable in accordance with, the law of the State of New York,
without reference to provisions governing choice of law or conflicts of law,
provided, however, that the Partnership aspects of this Agreement shall be
governed by and construed under the law of the State of California.
17.8 Survival. The representations, warranties and covenants
contained herein shall survive the closing of the transaction contemplated in
this Agreement.
17.9 Additional Instruments. The parties hereto shall
deliver or cause to be delivered on the Closing Date, and at such other
times and places as shall be reasonably agreed on, such additional instruments
as any party may reasonably request for the purpose of carrying out this
Agreement.
17.10 No Dissolution. Nothing in this Succession Agreement
shall constitute or be deemed to constitute a "dissolution" of the Partnership
as that concept is defined in relevant provisions of California Law.
SECTION 18
CONSENT TO JURISDICTION: ATTORNIES' FEES
----------------------------------------
18.1 Any suit, action or proceeding arising out of or
relating to this Agreement or any alleged breach thereof shall be brought
in the United States District Court for the Western District of New York in the
City of Buffalo, Erie County, New York, or, in the event that subject matter
jurisdiction shall not lie in said Court, then in the New York State Supreme
Court, Erie County, New York. The respective parties hereto expressly waive
any objection which they may now or hereafter have to the Erie County, New York
venue of any such suit, action or proceeding; irrevocably submit to the
jurisdiction of said United States District Court for the Western District of
New York and said New York State Supreme Court, Erie County, New York (as the
case may be) as respects any such suit, action or proceeding; and irrevocably
waive any right to a trial by jury which might otherwise be available in respect
of any or all of the issues tendered in said suit, action or proceeding.
18.2 Attorneys' Fee. If any legal action arises under this
Agreement or by reason of any asserted breach thereof, the party which
ultimately prevails in such action (including any appeals related thereto) shall
be entitled to recover all costs and expenses, including reasonable attorneys'
fees, incurred in enforcing or attempting to enforce any of the terms,
covenants, or conditions of this Agreement, including costs incurred prior to
commencement of legal action.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement on the dates written below.
Sceptre Resources, Ltd.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date: September 15, 1995
----------------------------------- -------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date: September 15, 1995
----------------------------------- -------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Sceptre Energy, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date: September 15, 1995
----------------------------------- ------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date: September 15. 1995
----------------------------------- -------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
NOVERGAZ (1994), Inc.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Date: September 15, 1995
----------------------------------- -------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
Power Project Development, Inc.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇ Date: September 15, 1995
----------------------------------- -------------------
▇▇▇ ▇. ▇▇▇▇▇▇, President
Horizon Energy Development, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date: September 15, 1995
----------------------------------- ------------------
SCHEDULE 4
----------
OFFICE EQUIPMENT INVENTORY
--------------------------
OFFICE NO./TITLE QUANTITY DESCRIPTION
---------------- -------- -----------
10/ Reception 1 Swivel Chair
1 Computer Monitor, Keyboard, Hard Drive,
1 Mouse
1 Hewlett Packard Laser Jet III Printer
1 AT&T Legend MLX-201 Console Phone
1 Mobile Security Filing Cabinet
1 Coat Rack and 2 Hangers
11/ Lobby 1 Overstuffed Lounge Chairs
1 Overstuffed Lounge Chairs
1 Overstuffed Lounge Chairs
1 Overstuffed Lounge Chairs
1 Coffee Table
2 Cricket End Tables
1 The ▇▇▇▇▇▇▇ Wall Stand
1 AT&T Legend MLX-10D Phone
2 Table Lamps
12/ Storage 1 IBM Selectric II Typewriter
1 Fireproof Metal Filing Cabinet
1 AT&T Legend MLX-10D Phone
13/ Office 2 Hanging Picture
1 Desk
1 Swivel Chair
2 Guest Chairs
2 Bookcase
1 Credenza
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
1 Hewlett Packard Laser Jet IV Printer
1 AT&T Legend MLX-28D Phone
14/ Executive Conference
Rm 1 Octagonal Conference Table
4 Guest Chairs
1 Hanging Picture
1 Phone Stand
1 AT&T Legend MLX-10D Phone
15/ Office 1 Sunset Desk (Mahogany)
1 Wall Unit
1 Credenza
2 Guest Chairs
1 Swivel Chair
1 Overstuffed Lounge Chair
1 Couch
1 End Table
1 Drop Leaf Coffee Table
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
1 Hewlett Packard Laser Jet III Printer
1 Hanging Picture
1 AT&T Legend MLX-10D Phone
16/ Office 1 Sunset Desk (Mahogany)
1 Wall Unit
2 Guest Chairs
1 Swivel Chair
2 2 Drawer Filing Cabinet
1 Overstuffed Lounge Chair
1 Couch
1 End Table
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
1 Hewlett Packard Laser Jet III Printer
1 Hanging Picture
1 AT&T Legend MLX-10D Phone
17/ Office 1 Desk
2 Bookcases
1 Credenza
1 Swivel Chair
2 Guest Chairs
1 Hewlett Packard Laser Jet III Printer
1 Hanging Picture
1 AT&T Legend MLX-10D Phone
1 AT&T Legend MLX-10D Phone
19/ Office 1 Desk
1 Credenza
2 Bookcases
1 Computer Table
1 Swivel Chair
2 Guest Chairs
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
1 Hewlett Packard Laser Jet III Printer
1 Hanging Picture
1 AT&T Legend MLX-10D Phone
20/ Office 1 Desk
1 Credenza
2 Bookcases
1 Computer Table
1 Swivel Chair
2 Guest Chairs
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
1 Hewlett Packard Laser Jet III Printer
1 Hanging Picture
1 AT&T Legend MLX-10D Phone
21/ Office 1 Desk
1 Credenza
2 Bookcases
1 Swivel Chair
2 Guest Chairs
1 Table Stand
1 Hewlett Packard Laser Jet IV Printer
1 Hanging Picture
1 AT&T Legend MLX-10D Phone
22/ Office 1 Desk
1 Credenza
1 Swivel Chair
1 Computer Stand
2 Guest Chairs
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
1 Hewlett Packard Laser Jet III Printer
1 Hanging Picture
1 AT&T Legend MLX-10D Phone
23/ Office 1 Desk
1 Credenza
1 Bookcase
1 Swivel Chair
2 Guest Chair
1 AT&T Legend MLX-10D Phone
24/ Office 1 Desk
1 Swivel Chair
2 Guest Chairs
1 Credenza
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
1 Hewlett Packard Laser Jet IV Printer
1 AT&T Legend MLX-10D Phone
1 Metal Filing Cabinet - 4 Drawer
1 Metal Filing Cabinet - 4 Drawer
25/ Kitchen 1 Kitchen Table w/ 4 Chairs
1 Microwave
26/ Office 1 Round Conference Table
6 Guest Chairs
1 Phone Stand
1 AT&T Legend MLX-10D Phone
27/ Office 1 Desk
1 Credenza
1 Bookcase
1 Metal Filing Cabinet - 4 Drawer
1 Metal Filing Cabinet - 4 Drawer
1 Metal Filing Cabinet - 4 Drawer
1 AT&T Legend MLX-10 Phone
28/ Office Bay Area 1 Desk
1 Credenza
1 Guest Chair
1 Swivel Chair
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
1 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Laser 4 Jet Printer
1 AT&T Legend MLX-28D Phone
1 Metal Filing Cabinets - 4 Drawer
1 Metal Filing Cabinets - 4 Drawer
1 Metal Filing Cabinets - 4 ▇▇▇▇▇▇
▇▇/ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇ Desk
1 Credenza
1 Swivel Chair
1 Guest Chair
1 AT&T Legend MLX-28D Phone
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
1 Hewlett Packard Laser Jet IV Printer
1 Metal Filing Cabinets - 5 Drawer
1 Metal Filing Cabinets - 5 Drawer
30/ Conference Room 1 Conference Table
1 Boardroom Sideboard
1 Swivel Chair
1 Swivel Chair
1 Swivel Chair
1 Swivel Chair
1 Swivel Chair
1 Swivel Chair
1 Swivel Chair
1 Swivel Chair
1 Swivel Chair
1 Swivel Chair
1 Hanging Picture
1 AT&T Legend MLX-10D Phone
Executive Vestibule 1 Antique Display Case
1 Antique Display Cabinet
1 Antique Table
1 Hanging Picture
1 Hanging Picture
1 Metal Filing Cabinet - 4 Drawer
1 Metal Filing Cabinet - 4 Drawer
Office Corridor 1 Metal Filing Cabinets - 4 Drawer
1 Bookcase
1 Wall Unit Bookcase/Cabinet
Miscellaneous Asset
Items 1 Hanging Pictures
1 Hanging Pictures
1 Hanging Pictures
N/A Computer Software
N/A Plants
Sceptre Resources Desks, Credenzas, Bookcases, Conference
Limited Tables, Sideboard, Wall Units
(See Attached
Memo)
City Office Furniture Desks, Credenzas, Wall Units, Exec
(See Attached) Conference Table, Swivel Chairs, Guest
Chairs, Lateral Files, Hutch
1 Nokia Cellular Phone
(Serial #: 16501701693)
Miscellaneous Asset
Items 1 Nokia Cellular Phone
(Serial #: 16501700296)
1 Nokia Cellular Phone
(Serial #: 16501658212)
1 Nokia Cellular Phone
(Serial #: 16501700161)
1 Nokia Cellular Phone
(Serial #: 16501699918)
1 Nokia Cellular Phone
(Serial #: 16502203034)
1 Nokia Cellular Phone
(Serial #: 16501685121)
1 Reception Area Desk w/ pencil drawers,
file drawer cabinet & countertop glass
1 Toshiba Portable Laptop Computer
1 Toshiba Portable Laptop Computer
1 Toshiba Portable Laptop Computer
1 Acer Portable Laptop Computer
1 Acer Portable Laptop Computer
1 19" Emmerson Television w/Video Player
SCHEDULE 5.1 (c)
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
SCHEDULE 6.6
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)