Item 1. Business - ----------------
KENETECH Corporation ("KENETECH") is a Delaware corporation that has historically been involved in the development, construction, and management of independent power projects. The Company continues in project development activities at this time; however, it has ceased its construction and management activities. The Company is currently participating with other parties in developing two electric generating facilities and one oriented strand board facility. As used in this document, "Company" refers to KENETECH and its wholly-owned subsidiaries (including KENETECH Windpower, Inc. ("KWI") only through May 29, 1996).
In 1995 and 1996, the Company experienced severe liquidity constraints. In an effort to relieve such constraints, the Company undertook to sell its assets. As of December 31, 1999, the Company has disposed of substantially all its operating assets and has repaid substantially all of its indebtedness. The Company currently has substantial cash balances and net operating income tax losses and other tax attributes to carry forward to future years. While pursuing development projects, management continues to evaluate different businesses that the Company might pursue, through acquisition or otherwise. In addition, the Company is evaluating all strategic alternatives available to it. The Company has retained professionals to assist it in such evaluations.
The Company is participating with OSB Chateaugay, LLC ("OSB") in the development of an oriented strand board project in Chateaugay, New York (the "Project"). In addition to development services, the Company has agreed to fund up to $1.25 million to finance the development of the Project. The Project is expected to produce up to 475 million square feet of strand board per year. Construction is anticipated to commence in the second half of 2000. The funding made to OSB is scheduled to be repaid upon the financial closing or sale of the Project. In exchange for providing funding and services, the Company will receive certain participation distributions made by OSB which are contingent upon the success of the Project.
The Company has agreed to participate in the development process and to fund up to $5.0 million for the development of a 1,000 megawatt independent power plant to be located in Astoria, Queens, New York. The project is currently under development and is expected to commence construction in the second half of 2001. In exchange for the services and funding, the Company will be repaid the funding plus certain participation distributions, both of which are contingent upon the success of the Astoria project.
Subsequent to the close of year-end, the Company agreed to fund up to $600,000 for the development of a wind-powered electrical generating facility to be located in Whinash, Cumbria, England. The project is a 50 megawatt facility. In exchange for the funding, the Company will receive certain participation distributions which are contingent upon the sale or financial closing of the Whinash project.
See also discussion of KWI bankruptcy under Note 3 and sale of EcoElectrica Project Interest under Note 4 to the Financial Statements.
EMPLOYEES: The Company currently employs four persons.
Item 2.
Item 2 of Section 601 of Regulation S-K. 10.16(3) Electricity Purchase Agreement dated December 13, 1993, between KENETECH Ltd. and Hydro-Quebec (Site No. 1). 10.17(7) Form of Energy Service Agreement between KEM and the Host Customer. 10.18(3) Restatement of the Project Agreement dated January 29, 1993, between USW and the Sacramento Municipal Utility District.
DEVELOPMENT AGREEMENTS
10.19(6) Mutual Services and Financing Agreement dated April 28, 1989, between PG&E, Electric Power Research Institute, Inc. and KENETECH Windpower, Inc. and Sponsor Accession Agreement dated April 28, 1989, among PG&E, EPRI, KENETECH Windpower, Inc. and Niagara Mohawk Power Corporation. 10.20(7) Demonstration Agreement dated as of October 1, 1991, between Her Majesty the Queen in Right of Alberta and KENETECH Windpower, Inc. 10.21(6) Wind Energy Facility Sales Agreement made as of June 29, 1992, among Krimenergo, Ukrenerguresuorsy, PHB Ukraine Ltd. and KENETECH Windpower, Inc. 10.22(3) Development Agreement dated as of February 7, 1994, between KENETECH Windpower, Inc. and Sacramento Municipal Utility District. 10.23(3) Development Agreement dated as of February 14, 1994, among Puget Sound Power & Light Company, PacifiCorp, Portland General Electric Company and KENETECH Windpower, Inc. 10.24(3) Joint Development Agreement dated as of June 21, 1993, among Central Power Limited, The Wing-Merrill Group, Ltd., and KENETECH Windpower, Inc. 10.25(2) Development Agreement dated as of March 7, 1994, between PacifiCorp and KENETECH Windpower, Inc.
OTHER AGREEMENTS
10.26(7) Seaboard Surety Company Contractor's General Agreement of Indemnity dated November 15, 1989, among KENETECH, CNF Constructors, and C.N. Flagg & Co., Incorporated. 10.27(4) Stock Purchase Agreement dated as of June 30, 1993, among KENETECH, Weiss, Peck & Greer ("WP&G") and certain affiliates of WP&G. 10.28(1) $75,000,000 Credit Agreement among KENETECH Windpower, Inc., (Borrower), Morgan Guaranty Trust Company of New York (Administrative Agent, Issuing Bank and Lender, ABN AMRO Bank N.V. San Francisco International Branch (Collateral Agent and Lender) and The Bank of Nova Scotia, Sanwa Bank California, Shawmut Bank Connecticut, N.A., Banque Nationale de Paris, Banco Central Hispanoamericano, S.A., and San Francisco Agency (Lenders) dated as of September 30, 1994. 10.29(8) Wind Operated Electricity Generator Purchase Order - Order No: 1 between KENETECH Windpower, Inc. and ABAN Loyd Chiles Offshore Ltd. dated November 11, 1994. 10.30(8) Wind Operated Electricity Generator Purchase Order - Order No: 2 between KENETECH Windpower, Inc. and ABAN Loyd Chiles Offshore Ltd. dated December 22, 1994. 10.31(8) Amendment to Purchase Order dated December 15, 1994 between KENETECH Windpower, Inc. and ABAN Loyd Chiles Offshore Ltd. 10.32(8) Amendment No. 1 to Purchase Documents between KENETECH Windpower, Inc. and ABAN Loyd Chiles Offshore Ltd. dated December 22, 1994.
EMPLOYMENT AND SEVERANCE AGREEMENTS
10.33(8) Employment Agreement dated as of March 1, 1995 between KENETECH and Gerald R. Alderson. 10.34(8) Employment Agreement dated as of December 1, 1994 between KENETECH and Joel M. Canino. 10.35(8) Severance Agreement and Offer Letters both dated January 23, 1995 between KENETECH and Ralph B. Muse. 10.36(9) Employment Agreement dated as of December 31, 1995 between KENETECH and Mark D. Lerdal. 10.37(9) Employment Agreement, dated as of January 1, 1996, between KENETECH Energy Systems, Inc. and Michael U. Alvarez. 10.38(9) Agreement, dated November 1, 1995, between KENETECH and GGG Inc. 10.39(9) Agreement, dated April 2, 1996, between KENETECH and GGG Inc. 10.40(9) Separation Agreement and Mutual Release, dated as of October 12, 1995, between KENETECH and Jean-Yves Dexmier. 10.41(10) Employment Agreement Amendment, dated as of December 11, 1996, between KENETECH Energy Systems, Inc. and Michael U. Alvarez. 10.42(10) Employment Agreement, dated as of April 12, 1996, between KENETECH Corporation and James J. Eisen. 10.43(10) Employment Agreement, dated as of April 12, 1996, between KENETECH Corporation and Michael A. Haas. 10.44(10) Employment Agreement, dated as of April 1, 1996, between KENETECH Corporation and Mark D. Lerdal. 10.45(10) Employment Agreement, dated as of April 12, 1996, between KENETECH Corporation and Nicholas H. Politan. 10.46(10) Separation Agreement and Mutual Release, dated as of April 9, 1996, between KENETECH Corporation and Gerald R. Alderson. 10.47(10) Separation Agreement and Release, dated October 7, 1996, among KENETECH Corporation, CNF Industries, Inc. and Joel M. Canino.
10.48(10) First Amendment to Separation Agreement and Release, dated October 28, 1996, among KENETECH Corporation, CNF Industries, Inc. and Joel M. Canino. 10.49(10) Retention Agreement, dated February 2, 1996, by and between KENETECH Corporation and Mervin E. Werth. 10.50(10) Employment Agreement, dated as of April 12, 1996, between KENETECH Windpower, Inc. and Steven A. Kern. 10.51(11) Employment Agreement, effective December 1, 1997, among KENETECH Corporation, KENETECH Energy Systems, Inc., certain direct and in-direct subsidiaries of KENETECH Energy Systems and Michael U. Alvarez. 10.52(11) Separation Agreement and Mutual Release, dated as of June 30, 1997, between KENETECH Corporation and James J. Eisen. 10.53(11) Separation Agreement and Mutual Release, dated as of August 1, 1997, between KENETECH Corporation and Nicholas H. Politan. 10.54(11) Separation Agreement and Mutual Release, dated as of March 12, 1997, between KENETECH Corporation and Michael A. Haas.
ASSET SALE AGREEMENTS
10.55(11) Master Agreement of Dissolution, Distribution and Assignment, dated as of August 27, 1997, between Enron Power I (Puerto Rico), Inc. and CNF Penuelas, Inc. 10.56(11) Master Agreement of Dissolution, Distribution and Assignment, dated as of August 27, 1997, between Enron Equipment Procurement Company and CNF Equipment, Inc.
SEVERANCE AGREEMENTS
10.57(12) Separation Agreement and Mutual Release, dated as of March 31, 1999, among KENETECH Corporation, KENETECH Energy Systems, Inc., and certain subsidiaries and Aaron T. Samson.
10.58(12) Separation Agreement and Mutual Release, dated as of March 31, 1999, among KENETECH Corporation, KENETECH Energy Systems, Inc., and certain subsidiaries and Scott J. Taylor.
10.59(12) Separation Agreement and Mutual Release, dated as of March 31, 1999, among KENETECH Corporation and Mervin E. Werth.
SALE AGREEMENTS
10.60(12) Stock purchase and Assignment Agreement, December 23, 1998, among KES, certain subsidiaries and EME.
EMPLOYMENT AGREEMENTS
10.61 Retention Agreement, dated as of April 1, 1999, between KENETECH Corporation and Andrew M. Langtry.
10.62 Employment Agreement, dated as of December 22, 1998, between KENETECH Corporation and Dianne P. Urhausen.
16 LETTER RE: CHANGE IN CERTIFYING ACCOUNTANT
16.1 (9) Letter from Deloitte & Touche, LLP dated May 11, 1995. 16.2 (9) Letter from Deloitte & Touche, LLP dated May 17, 1995.
21 SUBSIDIARIES OF THE REGISTRANT
21.1 Subsidiaries
27 FINANCIAL DATA SCHEDULE
(1) Incorporated by reference to Form 10-Q filed with the Securities and Exchange Commission & by Registrant on November 16, 1994. (2) Incorporated by reference to Amendment No. 3 to Form S-1, File No. 33-76590 filed April 27, 1994. (3) Incorporated by reference to Form S-1, File No. 33-76590 filed with the Securities and Exchange Commission by the Registrant on March 18, 1994. (4) Incorporated by reference to Amendment No. 1 to Form S-1, File No. 33-65902, filed with the Securities and Exchange Commission by the Registrant on August 19, 1993. (5) Incorporated by reference to Form S-1, File No. 33-65902, filed with the Securities and Exchange Commission by Registrant on July 7, 1993. (6) Incorporated by reference to Amendment No. 2 to Form S-1, file No. 33-53132, filed with the Securities and Exchange Commission by the Registrant on December 19, 1992. (7) Incorporated by reference to Form S-1, File No. 33-53132, filed with the Securities and Exchange Commission by the Registrant on October 9, 1992. (8) Incorporated by reference to Form 10-K, File No. 33-53132, filed with the Securities and Exchange Commission by the Registrant on April 5, 1995. (9) Incorporated by reference to Form 10-K, File No. 33-53132, filed with the Securities and Exchange Commission by the Registrant on April 15, 1996. (10) Incorporated by reference to Form 10-K, File No. 33-53132, filed with the Securities and Exchange Commission by the Registrant on April 1, 1997.
(11) Incorporated by reference to Form 10-K, File No. 33-53132, filed with the Securities and Exchange Commission by the Registrant on March 30, 1998. (12) Incorporated by reference to Form 10-K, File No. 33-53132, filed with the Securities and Exchange Commission by the Registrant on March 31, 1999. (13) Incorporated by reference to Form 10-Q, File No. 33-53132, filed with the Securities and Exchange Commission by the Registrant on May 17, 1999.
(b) Reports on Form 8-K:
The Registrant filed a Report on Form 8-K, on October 14, 1999, reporting the ruling in favor of the Registrant on all counts in the PRIDES litigation described in Item 3