Exhibit 10.98
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PARTICIPATION AGREEMENT
(T1)
Dated as of December 15, 1999
among
▇▇▇▇▇▇▇ HOLDINGS EME, LLC
▇▇▇▇▇▇▇ TRUST I,
WILMINGTON TRUST COMPANY,
not in its individual capacity, except
as expressly provided herein, but solely
as Owner Trustee,
▇▇▇▇▇▇▇ GENERATION I, LLC,
EDISON MISSION MIDWEST HOLDINGS CO.,
MIDWEST GENERATION, LLC,
MIDWEST FUNDING LLC,
BAYERISCHE LANDESBANK INTERNATIONAL S.A.,
as issuer of the Midwest Letter of Credit,
BAYERISCHE LANDESBANK GIROZENTRALE,
as issuer of the RCE Letter of Credit
and
CITIBANK, N.A.,
as Holder Representative
▇▇▇▇▇▇▇ STATION
FOSSIL FUEL-FIRED ELECTRIC GENERATING FACILITY
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TABLE OF CONTENTS
Page
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SECTION I DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT ........................-3-
SECTION II PARTICIPATION; CLOSING DATE; TRANSACTION COSTS......................................-4-
SECTION 2.1 AGREEMENTS TO PARTICIPATE...........................................-4-
SECTION 2.2 CLOSING DATE; PROCEDURE FOR PARTICIPATION...........................-6-
SECTION 2.3 TRANSACTION COSTS...................................................-7-
SECTION III REPRESENTATIONS AND WARRANTIES......................................................-7-
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF MIDWEST...........................-7-
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF HOLDINGS.........................-14-
SECTION 3.3 REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇ HOLDINGS.................-18-
SECTION 3.4 REPRESENTATIONS AND WARRANTIES OF THE OWNER LESSOR.................-20-
SECTION 3.5 REPRESENTATIONS AND WARRANTIES OF THE OWNER TRUSTEE
AND THE TRUST COMPANY..............................................-23-
SECTION 3.6 REPRESENTATIONS AND WARRANTIES OF THE OWNER PARTICIPANT............-25-
SECTION IV CLOSING CONDITIONS.................................................................-27-
SECTION 4.1 OPERATIVE DOCUMENTS................................................-27-
SECTION 4.2 ACQUISITION OF THE FACILITY AND FACILITY SITE......................-28-
SECTION 4.3 THE LESSOR NOTES...................................................-28-
SECTION 4.4 THE FUNDING LLC NOTES..............................................-28-
SECTION 4.5 PURCHASE AGREEMENT.................................................-28-
SECTION 4.6 OTHER DOCUMENTS....................................................-28-
SECTION 4.7 LETTERS OF CREDIT..................................................-28-
SECTION 4.8 REPRESENTATIONS AND WARRANTIES.....................................-28-
SECTION 4.9 DEFAULTS, EVENTS OF DEFAULT, EVENTS OF LOSS........................-29-
SECTION 4.10 CONSENTS...........................................................-29-
SECTION 4.11 GOVERNMENTAL ACTIONS...............................................-29-
SECTION 4.12 INSURANCE..........................................................-29-
SECTION 4.13 ENGINEERING REPORT.................................................-29-
SECTION 4.14 ENVIRONMENTAL REPORT...............................................-29-
SECTION 4.15 REPORT OF ENVIRONMENTAL CONSULTANT.................................-29-
SECTION 4.16 APPRAISAL; CONDITION OF THE FACILITY...............................-30-
SECTION 4.17 FUEL REPORT........................................................-30-
PARTICIPATION AGREEMENT (T1)
SECTION 4.18 MARKET REPORT......................................................-30-
SECTION 4.19 OPINION WITH RESPECT TO CERTAIN TAX ASPECTS........................-30-
SECTION 4.20 RATING.............................................................-30-
SECTION 4.21 OPINIONS OF COUNSEL................................................-30-
SECTION 4.22 RECORDINGS AND FILINGS.............................................-31-
SECTION 4.23 TAXES..............................................................-31-
SECTION 4.24 NO CHANGES IN REQUIREMENTS OF LAW..................................-31-
SECTION 4.25 REGISTERED AGENT FOR MIDWEST, ▇▇▇▇▇▇▇ HOLDINGS
AND HOLDINGS.......................................................-31-
SECTION 4.26 FAS 13.............................................................-31-
SECTION 4.27 RENT ADJUSTMENTS...................................................-31-
SECTION 4.28 TITLE INSURANCE....................................................-32-
SECTION 4.29 PARENT GUARANTY....................................................-32-
SECTION 4.30 SURVEY.............................................................-32-
SECTION 4.31 MIDWEST LEASE GUARANTEES...........................................-32-
SECTION 4.32 HOLDINGS GUARANTEE.................................................-32-
SECTION 4.33 NO MATERIAL ADVERSE CHANGE.........................................-32-
SECTION V AFFIRMATIVE COVENANTS OF MIDWEST...................................................-32-
SECTION 5.1 DELIVERY OF CERTAIN INFORMATION....................................-32-
SECTION 5.2 MAINTENANCE OF EXISTENCE; CONDUCT OF BUSINESS......................-34-
SECTION 5.3 COMPLIANCE WITH REQUIREMENTS OF LAW AND
CONTRACTUAL OBLIGATIONS............................................-34-
SECTION 5.4 MAINTENANCE OF PROPERTIES..........................................-34-
SECTION 5.5 INSURANCE..........................................................-34-
SECTION 5.6 ENVIRONMENTAL COVENANT.............................................-35-
SECTION 5.7 ENVIRONMENTAL COVENANT WITH RESPECT TO THE FACILITY
AND THE FACILITY SITE..............................................-35-
SECTION 5.8 FURTHER ASSURANCES.................................................-36-
SECTION VI NEGATIVE COVENANTS OF MIDWEST......................................................-36-
SECTION 6.1 MERGER, CONSOLIDATION..............................................-36-
SECTION 6.2 SALE OF ASSETS.....................................................-37-
SECTION 6.3 MERGER AND CONSOLIDATION...........................................-37-
SECTION 6.4 CHANGES IN LEGAL FORM OR BUSINESS..................................-38-
SECTION VII AFFIRMATIVE COVENANTS OF HOLDINGS..................................................-38-
SECTION 7.1 FINANCIAL INFORMATION, REPORTS, NOTICES............................-38-
SECTION 7.2 EXISTENCE; CONDUCT OF BUSINESS.....................................-41-
SECTION 7.3 COMPLIANCE WITH REQUIREMENTS OF LAW AND
CONTRACTUAL OBLIGATIONS............................................-41-
SECTION 7.4 BOOKS AND RECORDS; INSPECTION RIGHTS...............................-41-
SECTION 7.5 IMPLEMENTATION OF YEAR 2000 PLAN...................................-42-
SECTION 7.6 FURTHER ASSURANCES.................................................-42-
SECTION VIII NEGATIVE COVENANTS OF HOLDINGS.....................................................-42-
SECTION 8.1 INDEBTEDNESS.......................................................-42-
SECTION 8.2 LIENS..............................................................-44-
SECTION 8.3 MERGER, CONSOLIDATION, SALE OF SUBSTANTIALLY ALL ASSETS............-45-
SECTION 8.4 SALE OF ASSETS.....................................................-46-
SECTION 8.5 INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND
ACQUISITIONS.......................................................-46-
SECTION 8.6 TRANSACTIONS WITH AFFILIATES.......................................-47-
SECTION 8.7 AMENDMENT, WAIVER OR ASSIGNMENT OF CERTAIN DOCUMENTS...............-47-
SECTION 8.8 SPECULATIVE TRANSACTIONS...........................................-47-
SECTION 8.9 RESTRICTIVE AGREEMENTS.............................................-47-
SECTION 8.10 CHANGES IN LEGAL FORM OR BUSINESS..................................-47-
SECTION 8.11 CAPITAL EXPENDITURES...............................................-47-
SECTION 8.12 DIVIDENDS AND OTHER PAYMENTS.......................................-48-
SECTION IX AFFIRMATIVE COVENANTS OF ▇▇▇▇▇▇▇ HOLDINGS..........................................-49-
SECTION 9.1 MAINTENANCE OF EXISTENCE; CONDUCT OF BUSINESS......................-49-
SECTION 9.2 COMPLIANCE WITH REQUIREMENTS OF LAW AND
CONTRACTUAL OBLIGATIONS............................................-49-
SECTION 9.3 MAINTENANCE OF PROPERTIES..........................................-49-
SECTION 9.4 NOTICES OF MATERIAL EVENTS.........................................-49-
SECTION 9.5 FURTHER ASSURANCES.................................................-51-
SECTION X NEGATIVE COVENANTS OF ▇▇▇▇▇▇▇ HOLDINGS.............................................-51-
SECTION 10.1 SOLE PURPOSE NATURE................................................-51-
SECTION 10.2 INDEBTEDNESS.......................................................-51-
SECTION 10.3 LIENS..............................................................-51-
SECTION 10.4 PROHIBITION OF FUNDAMENTAL CHANGES.................................-51-
SECTION 10.5 INVESTMENTS........................................................-52-
SECTION 10.6 BANKRUPTCY.........................................................-52-
SECTION XI COVENANTS OF THE TRUST COMPANY, THE OWNER
TRUSTEE AND THE OWNER LESSOR.......................................................-52-
SECTION 11.1 COMPLIANCE WITH THE TRUST AGREEMENT................................-52-
SECTION 11.2 OWNER LESSOR'S LIENS...............................................-52-
SECTION 11.3 AMENDMENTS TO OPERATIVE DOCUMENTS..................................-52-
SECTION 11.4 TRANSFER OF THE OWNER LESSOR'S INTEREST............................-53-
SECTION 11.5 OWNER LESSOR; TRUST ESTATE.........................................-53-
SECTION 11.6 LIMITATION ON INDEBTEDNESS AND ACTIONS.............................-53-
SECTION 11.7 CHANGE OF LOCATION.................................................-53-
SECTION 11.8 BANKRUPTCY OF TRUST................................................-54-
SECTION XII COVENANTS OF THE OWNER PARTICIPANT.................................................-54-
SECTION 12.1 RESTRICTIONS ON TRANSFER OF BENEFICIAL INTEREST....................-54-
SECTION 12.2 OWNER PARTICIPANT'S LIENS..........................................-56-
SECTION 12.3 AMENDMENTS OR REVOCATION OF TRUST AGREEMENT........................-56-
SECTION 12.4 PROHIBITION ON FUNDAMENTAL CHANGES.................................-57-
SECTION 12.5 BANKRUPTCY FILINGS.................................................-57-
SECTION 12.6 INSTRUCTIONS.......................................................-57-
SECTION 12.7 APPOINTMENT OF SUCCESSOR OWNER TRUSTEE.............................-57-
SECTION 12.8 COOPERATION........................................................-57-
SECTION XIII COVENANTS OF THE HOLDER REPRESENTATIVE.............................................-58-
SECTION 13.1 THE HOLDER REPRESENTATIVE'S LIENS..................................-58-
SECTION XIV MIDWEST'S INDEMNIFICATIONS.........................................................-58-
SECTION 14.1 GENERAL INDEMNITY..................................................-58-
SECTION 14.2 GENERAL TAX INDEMNITY..............................................-65-
SECTION XV MIDWEST'S AND ▇▇▇▇▇▇▇ HOLDINGS' RIGHT OF QUIET
ENJOYMENT..........................................................................-75-
SECTION XVI SUPPLEMENTAL FINANCING OF IMPROVEMENTS; OPTIONAL REFINANCINGS......................-75-
SECTION 16.1 FINANCING IMPROVEMENTS.............................................-75-
SECTION 16.2 OPTIONAL REFINANCING OF LESSOR LOAN................................-78-
SECTION 16.3 ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇................................................-▇▇-
▇▇▇▇▇▇▇ 16.4 COOPERATION........................................................-80-
SECTION XVII PRE-CLOSING ADJUSTMENTS TO BASIC LEASE RENT
AND TERMINATION VALUE..............................................................-81-
SECTION XVIII RIGHT OF FIRST REFUSAL; RIGHT OF FIRST OFFER.......................................-82-
SECTION 18.1 RIGHT OF FIRST OFFER...............................................-82-
SECTION 18.2 RIGHT OF FIRST REFUSAL.............................................-83-
SPECIAL LESSEE TRANSFER..................................................................................-84-
SECTION XX MIDWEST'S DIRECTIONS...............................................................-85-
SECTION XXI AGREEMENT WITH RESPECT TO ▇▇▇▇▇▇▇ HOLDINGS.........................................-86-
SECTION XXII MISCELLANEOUS......................................................................-86-
SECTION 22.1 CONSENTS.........................................................-86-
SECTION 22.2 SUCCESSOR OWNER LESSOR...........................................-86-
SECTION 22.3 BANKRUPTCY OF TRUST ESTATE.......................................-86-
SECTION 22.4 AMENDMENTS AND WAIVERS...........................................-87-
SECTION 22.5 NOTICES..........................................................-87-
SECTION 22.6 SURVIVAL.........................................................-89-
SECTION 22.7 SUCCESSORS AND ASSIGNS...........................................-89-
SECTION 22.8 GOVERNING LAW....................................................-89-
SECTION 22.9 SEVERABILITY.....................................................-90-
SECTION 22.10 COUNTERPARTS.....................................................-90-
SECTION 22.11 HEADINGS AND TABLE OF CONTENTS...................................-90-
SECTION 22.12 LIMITATION OF LIABILITY..........................................-90-
SECTION 22.13 CONSENT TO JURISDICTION; WAIVER OF TRIAL BY JURY,
PROCESS AGENT....................................................-91-
SECTION 22.14 FURTHER ASSURANCES...............................................-92-
SECTION 22.15 EFFECTIVENESS....................................................-92-
SECTION 22.16 MEASURING LIFE...................................................-92-
SECTION 22.17 NO PARTNERSHIP, ETC..............................................-93-
SECTION 22.18 RESTRICTIONS ON TRANSFER OF MEMBERSHIP INTEREST..................-93-
APPENDICES:
Appendix A Definitions
EXHIBITS:
Exhibit A Form of Land Deed
Exhibit A1 Letter instructions regarding transfer of Assets
Exhibit B Form of Facility Deed
Exhibit C Form of Facility Lease
EXHIBIT A: Description of Facility Site
EXHIBIT B: Description of Facility
EXHIBIT F: ▇▇▇▇▇▇▇ Improvements
SCHEDULE 1-1: Amount of Basic Lease Rent and Equity Portion
of Basic Lease Rent
SCHEDULE 1-2: Allocation of Basic Lease Rent
SCHEDULE 1-3: 467 Rent Allocation
SCHEDULE 2: Termination Dates and Termination Values and
Equity Portion of Termination Values
Exhibit D Form of Memorandum of the Facility Lease
EXHIBIT A: Description of Facility
EXHIBIT B: Description of Site
EXHIBIT D-1: Form of Facility Site Lease
Exhibit E Form of Facility Sublease
Exhibit F Form of Facility Site Lease
Exhibit G Form of Memorandum of the Facility Site Lease
Exhibit H Form of Facility Site Sublease
Exhibit I Form of Memorandum of the Facility Site Sublease
Exhibit J Form of Facility Site Sub-Sublease
Exhibit K Form of Memorandum of the Facility Site Sub-Sublease
Exhibit L Form of Lessor Loan Agreement
Exhibit M Form of Lessor Notes
Exhibit N Form of Mortgage
Exhibit O Form of Pledge Agreement (MGE)
Exhibit P Form of Pledge Agreement (Holdings)
Exhibit Q Form of Pledge Agreement (EMOC)
Exhibit R Form of Intercreditor Agreement
Exhibit S Form of APA and Finance Facility
Exhibit T Form of Funding LLC Notes
Exhibit U Form of Trust Agreement
Exhibit V Form of OP LLC Agreement
Exhibit W Form of Tax Indemnity Agreement
Exhibit X Form of Purchase Agreement
Exhibit Y Form of Owner Participant Guaranty
Exhibit Z Form of Midwest OP Lease Guaranty
Exhibit AA Form of Midwest Lessor Lease Guaranty
Exhibit BB Form of Holdings Guarantee
Exhibit CC Form of Midwest Letter of Credit
Exhibit DD Form of Midwest Reimbursement Agreement
Exhibit EE Form of RCE Letter of Credit
Exhibit FF Form of RCE Reimbursement Agreement
Exhibit GG Form of RCE Agreement
Exhibit HH Letter of Credit Guarantee
Exhibit II Form of ▇▇▇▇▇▇▇ Holdings, LLC Agreement
Exhibit JJ Opinion of SASM&F, special counsel to Midwest, ▇▇▇▇▇▇▇ Holdings
and Holdings
Exhibit KK Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, special Illinois regulatory counsel to
Midwest, ▇▇▇▇▇▇▇ Holdings and Holdings
Exhibit LL Opinion of Hunton & ▇▇▇▇▇▇▇▇, special New York Counsel to the
Owner Participant and the OP Guarantor
Exhibit MM Opinion of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, counsel to Midwest, ▇▇▇▇▇▇▇ Holdings,
Holdings and the Owner Participant
Exhibit NN Opinions of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Finger, P.A., counsel to the Owner
Lessor and the Owner Trustee
Exhibit OO Opinion of ▇▇▇▇▇▇ ▇▇▇▇, special counsel to the Holder Representative
Exhibit PP Opinion of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, special counsel
to the Securitization Company and the APA Purchasers
Exhibit QQ Opinion of ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, special federal regulatory counsel to
Midwest, ▇▇▇▇▇▇▇ Holdings and Holdings
Exhibit RR Form of Assignment and Assumption Agreement
Exhibit SS List of Competitors
SCHEDULES:
Schedule 3.1(c) Midwest Governmental Approvals
Part B - Non-final Approvals
Part C - Threatened Approvals
Schedule 3.1(d) Midwest Disclosures
Schedule 3.2(d) Holdings Governmental Approvals
Part B - Non-final Approvals
Part C - Threatened Approvals
Schedule 3.2(e) Holdings Disclosures
Schedule 3.3(d) ▇▇▇▇▇▇▇ Holdings Governmental Approvals
Part B - Non-final Approvals
Part C - Threatened Approvals
Schedule 4.22 Recordings and Filings
Schedule 12.1(c) Pricing Assumptions
Attachment A Attachment A to Schedules 3.1(c), 3.2(d) and 3.3(d)
PARTICIPATION AGREEMENT
(T1)
This PARTICIPATION AGREEMENT (T1), dated as of
December 15, 1999 (as amended, supplemented or otherwise modified from
time to time, in accordance with the provisions hereof, this
"PARTICIPATION AGREEMENT" or this "AGREEMENT"), among, (i) ▇▇▇▇▇▇▇
HOLDINGS EME, LLC, a Delaware limited liability company as the Facility
Lessee and as the Facility Sublessor (in, together with its successors
and permitted assigns, called "▇▇▇▇▇▇▇ HOLDINGS"), (ii) ▇▇▇▇▇▇▇ TRUST
I, a Delaware business trust created for the benefit of ▇▇▇▇▇▇▇
Generation I, LLC, as the Facility Lessor and as the Ground Lessee
(herein, together with its successors and permitted assigns, called the
"OWNER LESSOR"), (iii) WILMINGTON TRUST COMPANY, a banking corporation
organized and existing under the laws of the State of Delaware, not in
its individual capacity, except as expressly provided herein, but
solely as trustee under the Trust Agreement (herein in its capacity as
a trustee under the Trust Agreement, together with its successors and
permitted assigns, called the "OWNER TRUSTEE", and herein in its
individual capacity, together with its successors and permitted
assigns, called the "TRUST COMPANY"), (iv) ▇▇▇▇▇▇▇ GENERATION I, LLC, a
Delaware limited liability company (herein, together with its
successors and permitted assigns, called the "OWNER PARTICIPANT"), (v)
EDISON MISSION MIDWEST HOLDING CO., a corporation organized under the
laws of the State of Delaware (herein, together with its successors and
permitted assigns, called "HOLDINGS", (vi) MIDWEST GENERATION, LLC, a
Delaware limited liability company, as the Facility Sublessee and as
the Ground Lessor (herein, together with its successors and permitted
assigns, called "MIDWEST"), (vii) MIDWEST FUNDING LLC, a Delaware
limited liability company, as a lender (herein, together with its
successors and permitted assigns, called the "LENDER") (viii)
BAYERISCHE LANDESBANK INTERNATIONAL S.A., as issuer of the Midwest
Letter of Credit (herein, together with its Successors, called the
"MIDWEST LC ISSUER", (ix) BAYERISCHE LANDESBANK GIROZENTRALE, as issuer
of the RCE Letter of Credit (herein, together with its successors,
called the "RCE LC ISSUER") and (x) CITIBANK, N.A., a national banking
association not in its individual capacity, except as expressly
provided herein, but solely as holder representative under the Lessor
Loan Agreement (herein in its capacity as
PARTICIPATION AGREEMENT (T1)
holder representative, together with its successors and permitted
assigns, called the "HOLDER REPRESENTATIVE").
WITNESSETH:
WHEREAS, EME has entered into that certain Asset Sale Agree
ment, dated as of March 22, 1999 (the "ASA") for the acquisition of certain
electric generation and related assets located in the State of Illinois,
including the fossil fuel-fired electric generating facility known as the
▇▇▇▇▇▇▇ Station, consisting of two 554-megawatt (net) units and three
530-megawatt (net) units, located near the town of ▇▇▇▇▇▇, in Grundy County,
Illinois;
WHEREAS, pursuant to the ASA, Midwest (i) as designee of EME,
will acquire the ComEd Assets (except for the Facility) from ComEd and (ii) will
cause ComEd to transfer the Undivided Interest directly to the Owner Lessor;
WHEREAS, Midwest will (i) lease the Ground Interest to the
Owner Lessor pursuant to the Facility Site Lease, (ii) sub-sublease the Ground
Interest from ▇▇▇▇▇▇▇ Holdings pursuant to the Facility Site Sub-sublease, and
(iii) sublease the Undivided Interest from ▇▇▇▇▇▇▇ Holdings pursuant to the
Facility Sublease;
WHEREAS, the Owner Lessor will (i) lease the Ground Interest
from Midwest pursuant to the Facility Site Lease, (ii) sublease the Ground
Interest to ▇▇▇▇▇▇▇ Holdings pursuant to the Facility Site Sublease and (iii)
lease the Undivided Interest to ▇▇▇▇▇▇▇ Holdings pursuant to the Facility Lease;
WHEREAS, ▇▇▇▇▇▇▇ Holdings will (i) lease the Undivided
Interest from the Owner Lessor pursuant to the Facility Lease, (ii) sublease the
Undivided Interest to Midwest pursuant to the Facility Sublease, (iii) sublease
the Ground Interest from the Owner Lessor pursuant to the Facility Site Sublease
and (iv) sub-sublease the Ground Interest to Midwest pursuant to the Facility
Site Sub-sublease;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Equity Investor and Midwest have entered into the Purchase
Agreement pursuant to which the Equity Investor will acquire from Midwest its
membership interest in the Owner Participant;
-2-
WHEREAS, the Owner Participant has entered into the Trust
Agreement, pursuant to which the Owner Participant has authorized the Owner
Lessor to, among other things and subject to the terms and conditions thereof
and hereof, (i) issue the Lessor Notes and sell such Lessor Notes to the Lender,
(ii) lease the Ground Interest from Midwest pursuant to the Facility Site Lease,
(iii) lease the Undivided Interest to ▇▇▇▇▇▇▇ Holdings pursuant to the Facility
Lease, (iv) sublease the Ground Interest to ▇▇▇▇▇▇▇ Holdings pursuant to the
Facility Site Sublease and (v) grant to the Holder Representative for the
benefit of the Holders liens and security interests in the Trust Estate to
secure the Owner Lessor's obligations with respect to the Lessor Notes;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Lender has entered into the Funding LLC Financing Documents
pursuant to which the Funding LLC Note Holders will purchase the Funding LLC
Notes on the Closing Date from the Lender;
WHEREAS, the Owner Lessor will issue the Initial Lessor Notes
to the Lender and grant to the Holder Representative liens and security
interests in the Trust Estate to secure its obligations with respect to the
Lessor Notes;
WHEREAS, concurrently with the execution and delivery of this
Agreement, Holdings shall enter into the Holdings Guarantee for the benefit of
the Owner Lessor;
WHEREAS, concurrently with the execution and delivery of this
Agreement, Midwest shall enter into the Midwest Lessor Lease Guaranty for the
benefit of the Owner Lessor and the Midwest OP Lease Guarantee for the benefit
of the Owner Participant;
WHEREAS, concurrently with the execution and delivery of this
Agreement, Midwest and the Midwest LC Issuer will enter into the Midwest LC
Documents pursuant to which the Midwest LC Issuer will issue a Midwest Letter of
Credit;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Lessor and the RCE LC Issuer will enter into the RCE LC
Documents pursuant to which the RCE LC Issuer will issue an RCE Letter of
Credit.
WHEREAS, the Lender will use the proceeds from the sale of the
Funding LLC Notes to purchase the Initial Lessor Notes from the Owner Lessor;
-3-
WHEREAS, the OP Guarantor will guarantee the payment and
performance obligations of the Owner Participant and the Equity Investor under
the Operative Documents pursuant to the Owner Participant Guaranty; and
WHEREAS, the parties hereto desire to consummate the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION I DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT
The capitalized terms used in this Agreement, including the
foregoing recitals, and not otherwise defined herein shall have the respective
meanings specified in Appendix A hereto. The general provisions of Appendix A
shall apply to terms used in this Agreement and specifically defined herein.
SECTION II PARTICIPATION; CLOSING DATE; TRANSACTION COSTS
SECTION 2.1 AGREEMENTS TO PARTICIPATE.
Subject to the terms and conditions of this Agreement, and in
reliance on the agreements, representations and warranties made herein, the
parties agree to participate in the transactions described in this SECTION 2.1
on the Closing Date as follows:
(a) The Owner Participant will provide funds in
an amount sufficient to (i) fund the Equity Investment and (ii) pay the
Transaction Costs which the Owner Lessor is responsible to pay pursuant to
SECTION 2.3(a) hereof (collectively, the "OWNER PARTICIPANT'S COMMITMENT");
(b) The Owner Lessor will (i) issue the Initial
Lessor Notes, (ii) sell the Initial Lessor Notes to the Lender and (iii) grant
to the Holder Representative, for the benefit of the Holders, CERTAIN liens and
security interests in the Trust Estate to secure its obligations with respect to
the Lessor Notes;
(c) The Lender will (i) issue the Funding LLC
Notes (for an amount sufficient to fund the Lender's Commitment) and (ii) use
the proceeds of such issuance to purchase the Initial Lessor Notes from the
Owner Lessor (the "LESSOR LOANS");
-4-
(d) The Owner Lessor will use the proceeds of
the (i) Equity Commitment and (ii) the Lessor Loans to pay (x) the Purchase
Price for the Undivided Interest to ComEd and (y) the Transaction Costs which
the Owner Lessor is responsible to pay pursuant to SECTION 2.3(a) hereof;
(e) Midwest will (i) acquire the Other
Facilities from ComEd pursuant to the ▇▇▇▇ of Sale and Instrument of Assignment
on the terms and conditions set forth in the ASA and (ii) will cause ComEd to
transfer the Undivided Interest directly to the Owner Lessor by issuing the
Facility Deed and a ▇▇▇▇ of Sale to the Owner Lessor;
(f) The Owner Lessor and ▇▇▇▇▇▇▇ Holdings will
enter into the Facility Lease, pursuant to which the Owner Lessor will lease the
Undivided Interest to ▇▇▇▇▇▇▇ Holdings and ▇▇▇▇▇▇▇ Holdings will lease the
Undivided Interest from the Owner Lessor;
(g) ▇▇▇▇▇▇▇ Holdings and Midwest will enter into
a Facility Sublease, pursuant to which ▇▇▇▇▇▇▇ Holdings will sublease the
Undivided Interest to Midwest and Midwest will sublease the Undivided Interest
from ▇▇▇▇▇▇▇ Holdings;
(h) Midwest will (i) acquire the Facility Site
from ComEd pursuant to the Land Deed and the ▇▇▇▇ of Sale and Instrument of
Assignment on the terms and conditions set forth in the ASA and (ii) will enter
into the Facility Site Lease with the Owner Lessor, pursuant to which Midwest
will lease the Ground Interest to the Owner Lessor and the Owner Lessor will
lease the Ground Interest from Midwest;
(i) The Owner Lessor and ▇▇▇▇▇▇▇ Holdings will
enter into the Facility Site Sublease, pursuant to which the Owner Lessor will
sublease the Ground Interest to ▇▇▇▇▇▇▇ Holdings and ▇▇▇▇▇▇▇ Holdings will
sublease the Ground Interest from the Owner Lessor;
(j) ▇▇▇▇▇▇▇ Holdings and Midwest will enter into
the Facility Site Sub-sublease, pursuant to which ▇▇▇▇▇▇▇ Holdings will
sub-sublease the Ground Interest to Midwest and Midwest will sub-sublease the
Ground Interest from ▇▇▇▇▇▇▇ Holdings;
(k) Midwest and the Equity Investor will enter
into the Purchase Agreement, pursuant to which Midwest will sell its membership
interest in the Owner Participant to the Equity Investor and the Equity Investor
will purchase Midwest's membership interest in the Owner Participant from
Midwest;
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(l) The OP Guarantor will guarantee the
performance and payment obligations of the Owner Participant and the Equity
Investor under the Operative Documents pursuant to the Owner Participant
Guaranty;
(m) Holdings will enter into the Holdings
Guarantee and Letter of Credit Guarantee;
(n) The Owner Lessor and RCE LC Issuer will
enter into the RCE Documents and the RCE LC Issuer will issue the RCE Letters of
Credit;
(o) Midwest and the Midwest LC Issuer will enter
into the Midwest LC Documents and the Midwest LC Issuer will issue the Midwest
Letters of Credit.
(p) Midwest will enter into the Midwest Lessor
Lease Guaranty and the Midwest OP Lease Guaranty;
(q) The Owner Participant, ▇▇▇▇▇▇▇ Holdings and
Midwest will enter into the Tax Indemnity Agreement;
(r) The Owner Lessor will pay all Transaction
Costs which the Owner Lessor is responsible to pay pursuant to SECTION 2.3
hereof; and
(s) the parties will enter into the agreements
referred to above and the other Operative Documents, in each case, in
substantially the form attached hereto.
SECTION 2.2 CLOSING DATE; PROCEDURE FOR PARTICIPATION.
(a) CLOSING DATE. The closing of the
transactions contemplated hereby (the "CLOSING") shall take place after 10:00
a.m., New York City time, on the Scheduled Closing Date or such other date as
the parties hereto shall mutually agree (the "CLOSING DATE"), at the offices of
SASM&F, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
(b) PROCEDURES FOR FUNDING. Unless the Closing
Date shall have been postponed pursuant to SECTION 2.2(c), subject to the terms
and conditions of this Agreement, the Owner Participant and the Lender shall,
not later than 10:00 a.m., New York City time, on the Business Day immediately
preceding the Scheduled Closing Date (the "FUNDING DATE"), by transferring or
delivering the following amounts, in funds immediately available on the
Scheduled Closing Date pursuant to the terms of the Funding Agreement:
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(i) The Owner Participant shall make
the Owner Participant's Commitment available for the purpose of
providing (a) the funds needed to pay Transaction Costs required to
be paid by the Owner Lessor in accordance with the terms hereof and
(b) a portion of the funds necessary to pay the Purchase Price in an
amount equal to the Equity Investment, which equity contribution shall
be held in trust for the benefit of the Owner Participant (x) until
such Transaction Costs and Purchase Price are paid in accordance with
the terms hereof or (y) as otherwise agreed in writing by the parties
hereto (or, in the event that the Closing is postponed, to be held or
returned in accordance with the terms of the Funding Agreement);
(ii) Pursuant to the terms and
conditions of the Lessor Loan Agreement, the Lender shall make the
Lessor Loan to the Owner Lessor by purchasing the Lessor Notes from the
Owner Lessor for an amount equal to the Lender's Commitment, the
proceeds of the Lessor Loan to be held in trust for the benefit of the
Lender (x) until such proceeds are applied to payment of the Purchase
Price in accordance with the terms hereof or (y) as otherwise agreed in
writing by the parties hereto (or, in the event that the Closing is
postponed, to be held or returned in accordance with the terms of the
Funding Agreement); and
(iii) Pursuant to the terms of the ASA,
the proceeds of the Equity Investment and the Lessor Loan will be used
to pay the Purchase Price for the Undivided Interest.
(c) POSTPONEMENT OF THE CLOSING. The Scheduled
Closing Date may be postponed from time to time for any reason if Midwest gives
the Owner Participant, the Owner Lessor, the Owner Trustee, and the Holder
Representative a telex, telegraphic, facsimile or telephonic (confirmed in
writing) notice of such postponement and notice of the date to which the Closing
has been postponed, such notice of postponement to be received by each party no
later than 10:00 a.m., New York City time, on the Business Day immediately
preceding the Scheduled Closing Date. If, prior to receipt of a postponement
notice under this SECTION 2.2(c), the Owner Participant or the Lender shall have
provided funds in accordance with SECTION 2.2(b), such funds shall be returned
to the Owner Participant or the Lender, as applicable, as soon as reasonably
practicable, but in no event later than the Business Day, following the
Scheduled Closing Date, unless the Owner Participant or the Lender shall have
otherwise directed.
(d) EXPIRATION OF COMMITMENTS. The obligations
of the parties hereto shall expire at 11:59 p.m., New York City time, on
February 28, 2000. If the
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Closing Date has not occurred on or before February 28, 2000, the parties hereto
shall have no obligation to consummate the transactions contemplated under this
Agreement and, except as provided in SECTIONS 2.3, 14.1 and 14.2, all
obligations of the Lease Financing Parties shall cease and terminate.
SECTION 2.3 TRANSACTION COSTS.
(a) If the transactions contemplated by this
Agreement are consummated, all Transaction Costs not to exceed the Maximum
Transaction Costs, which shall be substantiated by an appropriate invoice or
otherwise supported in reasonable detail, shall be paid by the Owner Lessor
with the funds provided by the Owner Participant pursuant to SECTION 2.2(b)
above. Midwest shall be responsible for Transac tion Costs in excess of the
Maximum Transaction Costs. All other fees, costs and expenses incurred by the
parties hereto shall be for their respective accounts whether or not the Overall
Transaction is consummated.
(b) Following the Closing Date, ▇▇▇▇▇▇▇
Holdings, as the Facility Lessee, will be responsible for, and will pay as
Supplemental Lease Rent at no after-tax cost to the Owner Lessor (i) the annual
administration fees, if any, (ii) fees and expenses of the Owner Trustee, (iii)
Incidental Costs and (iv) other fees and costs (but in no event interest or
principal) payable with respect to the Lessor Notes (other than costs, fees and
expenses associated with or resulting from a Lessor Loan Event of Default which
is not a Lease Event of Default).
SECTION III REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF MIDWEST. Midwest
represents and warrants that, as of the Closing Date:
(a) ORGANIZATION; POWER. Midwest (i) is a
Delaware limited liability company, duly organized, validly existing and in good
standing under the laws of the State of Delaware, (ii) is duly qualified to do
business and in good standing in each jurisdiction where the nature of its
business requires such qualification, and (iii) has all requisite power and
authority and holds all material requisite Governmental Approvals to enter into
and perform its obligations under this Agreement and each of the other Operative
Documents to which it is or will be a party and to conduct the business of
owning and operating the ComEd Assets and the sale and marketing of wholesale
electric power and other products and service related thereto, except, with
respect to clauses (ii) and (iii) above, where failure to be so qualified or be
in good standing or the failure to obtain such Governmental Approvals would not,
individually or in the aggregate, cause a Material Adverse Effect on Midwest.
All of the equity interest in Midwest is owned by Holdings.
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(b) DUE AUTHORIZATION; NON-CONTRAVENTION. The
execution, delivery and performances of this Agreement and each of the Operative
Documents to which it is or will be a party have been or when executed and
delivered will be duly authorized by all necessary company action and do not and
will not:
(i) contravene the Organic Documents of
Midwest;
(ii) contravene any Requirement of Law
or Contractual Obligation, binding on or affecting Midwest; or
(iii) result in, or require the creation
or imposition of, any Lien (other than pursuant to the Operative
Documents) on any of the properties of Midwest.
In case of clauses (ii) and (iii), except where such
contravention, creation or imposition would not result in a Material Adverse
Effect on Midwest.
(c) GOVERNMENT APPROVALS. (i) As of the Closing
Date, all Governmental Approvals required in connection with the execution and
delivery of, or the transactions contemplated by, this Agreement and the other
Operative Documents to which Midwest is a party and the conduct of the business
by Midwest are listed on SCHEDULE 3.1 (c) and have been duly obtained or made
and are in full force and effect, in each case, other than (a) as may be
required under existing Requirements of Law to be obtained, given, accomplished
or renewed at any time after the Closing Date or from time to time after the
Closing Date in connection with the maintenance or operation of the Facility,
(b) which are routine in nature and which cannot be obtained and such failure to
obtain would not result in a Material Adverse Effect on Midwest, or are not
normally applied for, prior to the time they are required, and which Midwest has
no reason to believe will not be timely obtained, (c) as may be required in
connection with any refinancing of the Lessor Notes or the issuance of
Additional Lessor Notes, (d) as may be required in consequence of any transfer
of the Beneficial Interest or any transfer of ownership of the Undivided
Interest or the Trust Estate by the Owner Lessor or any relinquishment of the
use or operation of the Undivided Interest by Midwest and (e) filing and
recording to perfect the Lien of the Holder Representative, and the ownership
and leasehold interests conveyed pursuant to this Agreement to the extent
arrangements have been made satisfactory to the Owner Participant, the Owner
Lessor and the Holder Representative. Except as noted in Part B of SCHEDULE 3.1
(c), all Governmental Approvals that have been obtained pursuant to the first
sentence of this SECTION 3.1(c) are final and any period for the filing of
notice of rehearing or application for judicial review of the issuance of each
such Governmental Approval has expired without any such notice or
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application having been made. No such Governmental Approval is the subject of
any pending or, except as indicated in PART C of SCHEDULE 3.1 (c), threatened
judicial or administrative proceeding.
(ii) As of the Closing Date, all
consents and approvals required to be obtained from Persons other than
Governmental Authorities in connections with the transactions
contemplated by the Operative Documents and the ASA have been obtained
and are in full force and effect, other than such consents or approvals
the failure of which to obtain, would not, individually or in the
aggregate, result in a Material Adverse Effect on Midwest.
(d) ACCURACY OF INFORMATION. (i) All factual
information listed on SCHEDULE 3.1(d) (other than projection and
"forward-looking" information) is true and materially accurate in every material
respect on the date as of which such information is dated or certified, and to
the knowledge of Midwest, such information is not incomplete by omitting to
state any material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they are made, not
misleading.
(ii) All projections and other "forward-
looking" information heretofore or contemporaneously furnished by
Midwest and its Affiliates in writing to the Owner Participant, the OP
Guarantor, the Owner Lessor, the Holder Representative, the Lender and
any of the Funding LLC Note Holders for purposes of this Agreement or
the transactions contemplated by the other Operative Documents were
prepared in good faith and are based on reasonable assumptions.
(e) VALIDITY. Each of the Operative Documents to
which Midwest is a party constitutes, or, upon the due execution and delivery
thereof by Midwest, will constitute, the legal, valid and binding obligation of
Midwest enforceable in accordance with its terms (except as may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and general principles of equity and except as
indicated in the legal opinion of SASM&F delivered pursuant to SECTION 4.21
hereof).
(f) COMPLIANCE WITH REQUIREMENTS OF LAW. Midwest
is in compliance with all Requirements of Law (including ERISA and regulations
of the Federal Reserve System) and Contractual Obligations applicable to it,
except to the extent that failure to so comply would not result in a Material
Adverse Effect on Midwest.
(g) MARGIN REGULATION. Midwest is not engaged in
the business of extending credit for the purposes of purchasing or carrying
margin stock, and
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no proceeds of the Lessor Notes and the Equity Investment as contemplated by
this Agreement and the other Operative Documents will be used for a purpose
which violates, or would be inconsistent with, the Regulations T, U and X of the
Federal Reserve System. Terms for which meanings are provided in the Regulations
T, U and X of the Federal Reserve System or any regulations substituted
therefor, as from time to time in effect, are used in this SECTION 3.1 with such
meanings.
(h) LITIGATION. There is no pending or, to the
knowledge of Midwest, threatened, action, suit, investigation or proceeding or
labor controversy against Midwest or any of its properties, business, assets or
revenues or affecting any Governmental Approval before any Governmental
Authority which, if determined adversely to Midwest (taking into account any
insurance proceeds payable under a policy where the insurer has accepted
coverage without any reservations), would result in a Material Adverse Effect on
Midwest.
(i) TITLE; LIENS. (i) Midwest has good,
clear, marketable record fee title in the Facility Site, free and clear
of all Liens, encumbrances or title defects other than Permitted
Encumbrances and Lease Permitted Liens.
(ii) Upon execution and delivery of the
Operative Documents and recording of the instruments referred to in
SCHEDULE 4.19, good, clear, record and valid leasehold interest in the
Ground Interest will be duly, validly and effectively conveyed to the
Owner Lessor upon the terms and conditions in the Facility Site Lease,
free and clear of all Liens, encumbrances or title defects other than
Permitted Encumbrances and Lease Permitted Liens.
(iii) Giving effect to the transaction
contemplated by the ASA and upon execution and delivery of the
Operative Documents, good, clear, record and marketable fee simple
title to the Undivided Interest will be duly, validly and effectively
conveyed to the Owner Lessor, free and clear of all Liens,
encumbrances or title defects other than Permitted Encumbrances and
Lease Permitted Liens.
(iv) None of the Permitted Encumbrances
and Lease Permitted Liens will, on and after the Closing, materially
interfere with the use, operation or possession of the Facility (as
contemplated by the Operative Documents) or the use of or the exercise
by the Owner Lessor of its rights under the Facility Site Lease with
respect to the Facility.
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(j) TITLE, LIENS. Midwest has good and
marketable title to, or a valid leasehold in or other enforceable interest in,
all properties and assets, real and personal, tangible and intangible, of any
nature whatsoever (including patents, trademarks, trade names, service marks
and copyrights) purported to be owned, leased or held by it, free and clear of
all Liens, encumbrances or title defects, charges or claims (including
infringement claims with respect to patents, trademarks, copyrights and the
like) except Permitted Encumbrances and Permitted Liens.
(k) TAX RETURNS. Midwest has filed all federal,
state and local tax returns and reports required by law to have been filed by it
and has paid all Taxes shown to be due and payable on such returns or pursuant
to any assessment received by it (other than Taxes and assessments which are
being diligently contested in good faith by Midwest and with respect to which
adequate reserves have to the extent required by GAAP been set aside on its
books).
(l) INVESTMENT COMPANY ACT. Midwest is not
subject to any regulation as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(m) HOLDING COMPANY ACT. (i) Midwest is an
"exempt wholesale generator" under PUHCA, is interconnected with the high
voltage network and has access to transmission services and ancillary services
to sell wholesale electric power, and has the authority to sell wholesale
electric power at market-based rates.
(ii) Midwest is not subject to (i)
regulation as a "holding company", a "public utility company" or a
"subsidiary company" or an "affiliate" of a "holding company" required
to register under PUHCA or (ii) public utility regulation or regulation
as an alternative retail electric supplier under the laws of the State
of Illinois.
(n) ENVIRONMENTAL WARRANTIES. Except as has not
or would not, individually or in the aggregate, result in a Material Adverse
Effect on Midwest:
(i) (A) To the knowledge of Midwest,
all facilities and property owned, leased or operated by Midwest have
been, and continue to be, owned, leased or operated in compliance with
all applicable Environmental Laws and (B) Midwest is and has been in
compliance with all applicable Environmental Laws.
(ii) There are no pending or, to the
knowledge of Midwest, threatened Environmental Claims involving or
against Midwest.
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(iii) Midwest has obtained (or will
obtain in due course promptly after the Closing Date) and is in
compliance with all Governmental Approvals required under any
applicable Environmental Law necessary for its business and, with
respect to the Governmental Approvals not obtained by the Closing Date,
(a) Midwest has no reason to believe that such approvals will not be
timely obtained and (b) the failure to have obtained such Governmental
Approvals by the Closing Date will not result in a Material Adverse
Effect on Midwest.
(iv) No property owned, leased or
operated by Midwest is listed or, to the knowledge of Midwest, is
proposed for listing on the National Priorities List pursuant to any
Environmental Law, on the CERCLIS or on any similar state or local
list of sites requiring investigation or clean-up.
(v) To the knowledge of Midwest, no
Environmental Conditions exist at, on, under or about any property
owned, operated or leased by Midwest which, with the passage of time,
or the giving of notice or both, would give rise to any Environmental
Claim.
(vi) Other than as provided in the ASA,
Midwest has not assumed or retained, by contract or operation of law,
any liabilities of any kind, fixed or contingent, known or unknown,
under any applicable Environmental Law.
(o) YEAR 2000. The computer and management
information systems of Midwest which are material to its business taken as a
whole are Year 2000 Ready.
(p) PENSION AND WELFARE PLANS. During the
consecutive twelve-month period prior to each date as of which the following
representations are made or deemed made, no steps have been taken to terminate
any Pension Plan; no contribution failure has occurred with respect to any
Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA or
Section 412 of the Code; no condition exists or event or transaction has
occurred with respect to any Pension Plan which could reasonably be expected to
result in the incurrence by Midwest or any member of the Controlled Group of any
material liability (other than liabilities incurred in the ordinary course of
maintaining the Pension Plan), fine or penalty and none of the following events
or conditions, either individually or in the aggregate, has resulted or is
reasonably likely to result in a material liability to Midwest or any member of
the Controlled Group: (i) a Reportable Event; (ii) a complete or partial
withdrawal from any Multiemployer Plan by
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Midwest or any member of the Controlled Group; (iii) any liability of Midwest or
any member of the Controlled Group under ERISA if Midwest or any member of the
Controlled Group were to withdraw completely from all Multiemployer Plans as of
the annual valuation date most closely preceding the date on which this
representation is made or deemed made; or (iv) the Reorganization or Insolvency
of any Multiemployer Plan. Neither Midwest nor any member of the Controlled
Group has any contingent liability with respect to any post-retirement benefit
under a Welfare Plan which could reasonably be expected to have a Material
Adverse Effect on Midwest, other than liability for continuation coverage
described in Part 6 of Title I of ERISA.
(q) LOCATION OF CHIEF EXECUTIVE OFFICE AND
PRINCIPAL PLACE OF BUSINESS, ETC. The chief executive office and principal place
of business of Midwest and the office where Midwest keeps its corporate records
concerning the Facility, the Facility Site and the Operative Documents is
located at One Finance Place, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(r) ACCESS; EGRESS. Midwest has sufficient
access to public roads, easements of ingress and egress and other rights of
access to permit use and operation of the Facility and the Facility Site as
contemplated by the Operative Documents.
(s) ABILITY TO DELIVER POWER. Midwest has
rights necessary to deliver power to the point of interconnection to the
electricity grid.
(t) POWER SALES AGREEMENTS AND OTHER CONTRACTS.
There are no contracts or agreements providing for sales of power and ancillary
services produced by the Facility or for the use and operation of the Facility
that have a term which extends beyond the expiration of the Basic Lease Term
other than the Interconnection Agreements.
(u) UTILITY SERVICES. The Facility and the
Facility Site have available all public utility necessary services for the use
and operation of the Facility as currently being used and as contemplated by the
Operative Documents.
(v) SUBDIVISION. No subdivision is necessary
in connection with the transaction contemplated by Operative Documents.
(w) ADEQUATE RIGHTS. Based upon Requirements of
Law in effect on the Closing Date, the rights and interests made, or to be made
available to the Owner Lessor or its permitted transferees pursuant to the
Operative Documents, together with the rights of the Owner Lessor as owner of
the Undivided Interest, are sufficient to permit the following actions by the
Owner Lessor or any such permitted transferee
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following the expiration or termination of the Facility Lease: (i) the
occupation, interconnection, maintenance and repair of the Facility, (ii) the
use, operation and possession of the Facility, (iii) the construction, use,
operation, possession, maintenance and renewal of all modifications, additions,
improvements, replacements and substitutions thereof and thereto, (iv)
appropriate ingress to and egress from the Facility for any reasonable purpose
in connection with the exercise of rights under the Operation Agreement and such
Person's interest in the Facility, (v) access to the off-site unloading dock,
transportation and storage areas for fuel handling, storage and transportation
and access to the off-site lake for water-cooling, (vi) transmission of the
electric energy and ancillary services provided by the Facility to the nearest
point of interconnection to the relevant electricity grid and (vii) the disposal
of by-products and waste from the Facility.
(x) RETURN ACCEPTANCE TESTS. Midwest has no
reason to believe that the Facility will not be able to satisfy the return
conditions set forth in SECTION 5 of the Facility Lease as of the expiration of
the Facility Lease Term if the Facility is maintained in accordance with Section
7 of the Facility Lease.
(y) REPRESENTATIONS OF ▇▇▇▇▇▇▇ HOLDINGS. The
representations of ▇▇▇▇▇▇▇ Holdings set forth in Section 3.3 hereof are true and
correct.
(z) NO DEFAULTS. NO EVENT OF LOSS. No Lease
Event of Default, Material Lease Default or event that with the passage of time
or notice or both would constitute a Lease Event of Default has occurred or will
occur upon execution and delivery of the Operative Documents. No Event of Loss
has occurred or will occur upon the execution and delivery of the Operative
Documents.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF HOLDINGS. Holdings
represents and warrants that, as of the Closing Date:
(a) PRO-FORMA FINANCIAL STATEMENTS. The pro
forma financial statements furnished by Holdings to the Funding LLC Note
Holders, the Owner Lessor, the Owner Participant and the Holder Representative
on and as of the Closing Date (i) are based on reasonable assumptions as to all
legal and factual matters material to the estimates set forth therein and (ii)
such assumptions were developed and utilized consistently and in good faith.
(b) ORGANIZATION; POWER. Holdings (i) is a
Delaware corporation, duly organized, validly existing and in good standing
under the laws of the State of Delaware, (ii) is duly qualified to do business
and in good standing in each jurisdiction where the nature of its business
requires such qualification, and (iii) has all requisite power and authority and
holds all material requisite Governmental Approvals to enter into and perform
its obligations under this Agreement and each of the other Operative
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Documents to which it is or will be a party and to conduct its business as
currently conducted and currently expected to be conducted, except, with respect
to clauses (ii) and (iii) above, where failure to be so qualified or be in good
standing or the failure to obtain such Governmental Approvals would not,
individually or in the aggregate, cause a Material Adverse Effect on Holdings.
All of the equity interest in Holdings is owned by MGE.
(c) DUE AUTHORIZATION; NON-CONTRAVENTION. The
execution, delivery and performances of this Agreement and each of the Operative
Documents to which it is or will be a party have been or when executed and
delivered will be duly authorized by all necessary company action and do not and
will not:
(i) contravene the Organic Documents of
Holdings;
(ii) contravene any Requirement of Law or
Contractual Obligation, binding on or affecting Holdings; or
(iii) result in, or require the creation or
imposition of, any Lien (other than pursuant to the Operative
Documents) on any of the properties of Holdings.
In case of clauses (ii) and (iii), except where such
contravention, creation or imposition would not result in a Material Adverse
Effect on Holdings.
(d) GOVERNMENT APPROVALS. (i) As of the
Closing Date, all Governmental Approvals required in connection with the
execution and delivery of, or the transactions contemplated by, this Agreement
and the other Operative Documents to which Holdings is a party and the conduct
of the business by Holdings are listed on SCHEDULE 3.2 (d) and have been duly
obtained or made and are in full force and effect, in each case, other than (A)
as may be required under existing Requirements of Law to be obtained, given,
accomplished or renewed at any time after the Closing Date or from time to time
after the Closing Date in connection with the transactions contemplated by the
Operative Documents and (B) which are routine in nature and which cannot be
obtained and such failure to obtain would not result in a Material Adverse
Effect on Holdings, or are not normally applied for, prior to the time they are
required, and which Holdings has no reason to believe will not be timely
obtained. Except as noted in Part B of SCHEDULE 3.2 (d), all Governmental
Approvals that have been obtained pursuant to the first sentence of this SECTION
3.2(d) are final, and any period for the filing of notice of rehearing or
application for judicial review of the issuance of each such Governmental
Approval has expired without any such notice or application having been made. No
such Governmental Approval is the subject of any pending or, except as
indicated in PART C of SCHEDULE 3.2 (d), threatened judicial or administrative
proceeding.
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(ii) As of the Closing Date, all consents and
approvals required to be obtained from Persons other than
Governmental Authorities in connection with the transactions
contemplated by the Operative Documents and the ASA have been
obtained and are in full force and effect, other than such
consents or approvals the failure of which to obtain, would
not, individually or in the aggregate, result in a Material
Adverse Effect on Holdings.
(e) ACCURACY OF INFORMATION. (i) All factual
information listed on SCHEDULE 3.2(e) (other than projections and
"forward-looking" information) is true and materially accurate in every material
respect on the date as of which such information is dated or certified, and to
the knowledge of Holdings, such information is not incomplete by omitting to
state any material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they are made, not
misleading.
(ii) All projections and other "forward-looking"
information heretofore or contemporaneously furnished by Holdings and its
Affiliates in writing to the Owner Participant, the OP Guarantor, the Owner
Lessor, the Holder Representative, the Lender and any of the Funding LLC Note
Holders for purposes of this Agreement or the transactions contemplated by the
other Operative Documents were prepared in good faith and are based on
reasonable assumptions.
(f) VALIDITY. Each of the Operative Documents to
which Holdings is a party constitutes, or, upon the due execution and delivery
thereof by Holdings, will constitute, the legal, valid and binding obligation of
Holdings enforceable in accordance with its terms (except as may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and general principles of equity and except as
indicated in the legal opinion of SASM&F delivered pursuant to SECTION 4.21
hereof).
(g) COMPLIANCE WITH REQUIREMENTS OF LAW.
Holdings is in compliance with all Requirements of Law (including ERISA and
regulations of the Federal Reserve System) and Contractual Obligations
applicable to it, except to the extent that failure to so comply would not
result in a Material Adverse Effect on Holdings.
(h) MARGIN REGULATION. Holdings is not engaged
in the business of extending credit for the purposes of purchasing or carrying
margin stock, and no proceeds of the Lessor Notes and the Equity Investment as
contemplated by this Agreement and other Operative Documents will be used for a
purpose which violates, or would be inconsistent with, the Regulations T, U and
X of the Federal Reserve System. Terms for which meanings are provided in the
Regulations T, U and X of the Federal
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Reserve System or any regulations substituted therefor, as from time to time in
effect, are used in this SECTION 3.2 with such meanings.
(i) LITIGATION. There is no pending or, to the
knowledge of Holdings, threatened, action, suit, Environmental Claim,
investigation, proceeding or labor controversy against Holdings or any of its
properties, business, assets or revenues or affecting any Governmental Approval
before any Governmental Authority hereto which, if determined adversely to
Holdings (taking into account any insurance proceeds payable under a policy
where the insurer has accepted coverage without any reservations), would result
in a Material Adverse Effect on Holdings.
(j) TITLE, LIENS. Holdings has good and
marketable title to, or a valid leasehold in or other enforceable interest in,
all properties and assets, real and personal, tangible and intangible, of any
nature whatsoever (including patents, trademarks, trade names, service marks
and copyrights) purported to be owned, leased or held by it, free and clear of
all Liens, charges or claims (including infringement claims with respect to
patents, trademarks, copyrights and the like) except Permitted Liens.
(k) TAX RETURNS. Holdings has filed all federal,
state and local tax returns and reports required by law to have been filed by it
and has paid all Taxes shown to be due and payable on such returns or pursuant
to any assessment received by it (other than Taxes and assessments which are
being diligently contested in good faith by Holdings by appropriate proceedings
and with respect to which adequate reserves have to the extent required by GAAP
been set aside on its books).
(l) INVESTMENT COMPANY ACT. Holdings is not
subject to regulation as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(m) HOLDING COMPANY ACT. Holdings is not subject
to (i) regulation as a "holding company," a "public utility company," or a
"subsidiary company" or an "affiliate " of a "holding company" required to
register under PUHCA or (ii) public utility regulation or regulation as an
alternative retail electric supplier under the laws of the State of Illinois.
(n) YEAR 2000. The computer and management
information systems of Holdings which are material to its business taken as a
whole are Year 2000 Ready.
(o) PENSION AND WELFARE PLANS. During the
consecutive twelve-month period prior to each date as of which the following
representations are made or deemed made, no steps have been taken to terminate
any Pension Plan; no
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contribution failure has occurred with respect to any Pension Plan sufficient to
give rise to a Lien under Section 302(f) of ERISA or Section 412 of the Code; no
condition exists or event or transaction has occurred with respect to any
Pension Plan which could reasonably be expected to result in the incurrence by
Holdings or any member of the Controlled Group of any material liability (other
than liabilities incurred in the ordinary course of maintaining the Pension
Plan), fine or penalty and none of the following events or conditions, either
individually or in the aggregate, has resulted or is reasonably likely to result
in a material liability to Holdings or any member of the Controlled Group: (i) a
Reportable Event; (ii) a complete or partial withdrawal from any Multiemployer
Plan by Holdings or any member of the Controlled Group; (iii) any liability of
Holdings or any member of the Controlled Group under ERISA if Holdings or any
member of the Controlled Group were to withdraw completely from all
Multiemployer Plans as of the annual valuation date most closely preceding the
date on which this representation is made or deemed made; or (iv) the
Reorganization or Insolvency of any Multiemployer Plan. Neither Holdings nor any
member of the Controlled Group has any contingent liability with respect to any
post-retirement benefit under a Welfare Plan which could reasonably be expected
to have a Material Adverse Effect on Holdings, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.
(p) LOCATION OF CHIEF EXECUTIVE OFFICE AND
PRINCIPAL PLACE OF BUSINESS, ETC. The chief executive office and principal place
of business of Holdings and the office where Holdings keeps its corporate
records is located at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
SECTION 3.3 REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇ HOLDINGS. ▇▇▇▇▇▇▇
Holdings represents and warrants that, as of the Closing Date:
(a) ORGANIZATION; POWER. ▇▇▇▇▇▇▇ Holdings (i) is
a Delaware limited liability company, duly organized, validly existing and is in
good standing under the laws of the State of Delaware, (ii) is duly qualified to
do business and is in good standing in each jurisdiction where the nature of its
business requires such qualification, and (iii) has all requisite power and
authority and holds all material requisite Governmental Approvals to enter into
and perform its obligations under this Agreement and each of the other Operative
Documents to which it is or will be a party, except, with respect to clauses
(ii) and (iii) above, where failure to be so qualified or be in good standing or
the failure to obtain such Governmental Approvals would not, individually or in
the aggregate, cause a Material Adverse Effect on ▇▇▇▇▇▇▇ Holdings. All of the
membership interest in ▇▇▇▇▇▇▇ Holdings is owned by MGE.
(b) DUE AUTHORIZATION; NON-CONTRAVENTION. The
execution, delivery and performance of this Agreement and each of the Operative
Documents to
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which it is or will be a party have been or when executed and delivered will be
duly authorized by all necessary company action and do not and will not:
(i) contravene the Organic Documents of
▇▇▇▇▇▇▇ Holdings;
(ii) contravene any Requirement of Law
or Contractual Obligation, binding on or affecting ▇▇▇▇▇▇▇ Holdings; or
(iii) result in, or require the creation
or imposition of, any Lien (other than pursuant to the Operative
Documents) on any of the properties of ▇▇▇▇▇▇▇ Holdings.
In case of clauses (ii) and (iii), except where such
contravention, creation or imposition would not result in a Material Adverse
Effect on ▇▇▇▇▇▇▇ Holdings.
(c) VALIDITY. Each of the Operative Documents to
which ▇▇▇▇▇▇▇ Holdings is a party constitutes, or, upon the due execution and
delivery thereof by ▇▇▇▇▇▇▇ Holdings, will constitute, the legal, valid and
binding obligation of ▇▇▇▇▇▇▇ Holdings enforceable in accordance with its terms
(except as may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and general principles
of equity and except as indicated in the legal opinion of SASM&F delivered
pursuant to SECTION 4.21 hereof).
(d) GOVERNMENT APPROVALS. As of the Closing
Date, all Governmental Approvals required in connection with the transactions
contemplated by this Agreement and the other Operative Documents to which
▇▇▇▇▇▇▇ Holdings is a party and the conduct of business by ▇▇▇▇▇▇▇ Holdings are
listed on SCHEDULE 3.3 (d) and have been duly obtained or made and are in full
force and effect, in each case, other than (i) as may be required under existing
Requirements of Law to be obtained, given, accomplished or renewed at any time
after the Closing Date or from time to time after the Closing Date in connection
with the maintenance or operation of the Facility, (ii) which are routine in
nature and which cannot be obtained and such failure to obtain would not result
in a Material Adverse Effect on ▇▇▇▇▇▇▇ Holdings, or are not normally applied
for, prior to the time they are required, and which ▇▇▇▇▇▇▇ Holdings has no
reason to believe will not be timely obtained, (iii) as may be required in
connection with any refinancing of the Lessor Notes or the issuance of
Additional Lessor Notes, (iv) as may be required in consequence of any transfer
of the Beneficial Interest or any transfer of ownership of the Undivided
Interest or the Trust Estate by the Owner Lessor or any relinquishment of the
use or operation of the Undivided Interest by ▇▇▇▇▇▇▇ Holdings and (v)
appropriate filing and recording to perfect the Lien of the Holder
Representative, and the ownership and leasehold interests conveyed pursuant to
this Agreement to the extent arrangements have
-20-
been made satisfactory to the Owner Participant, the Owner Lessor and the Holder
Representative. Except as noted in Part B of SCHEDULE 3.3 (d), all Governmental
Approvals that have been obtained pursuant to the first sentence of this
SECTION 3.3(d) are final and any period for the filing of notice of rehearing or
application for judicial review of the issuance of each such Governmental
Approval has expired without any such notice or application having been made. No
such Governmental Approval is the subject of any pending or, except as indicated
in PART C of SCHEDULE 3.3 (d) threatened judicial or administrative proceeding.
(e) COMPLIANCE WITH REQUIREMENTS OF LAW. ▇▇▇▇▇▇▇
Holdings is in compliance with all Requirements of Law (including ERISA and
regulations of the Federal Reserve System) and Contractual Obligations
applicable to it, except to the extent that failure to so comply would not
result in a Material Adverse Effect on ▇▇▇▇▇▇▇ Holdings.
(f) MARGIN REGULATION. ▇▇▇▇▇▇▇ Holdings is not
engaged in the business of extending credit for the purposes of purchasing or
carrying margin stock, and no proceeds of the Lessor Notes and the Equity
Investment as contemplated by this Agreement and other Operative Documents will
be used for a purpose which violates, or would be inconsistent with, the
Regulations T, U and X of the Federal Reserve System. Terms for which meanings
are provided in the Regulations T, U and X of the Federal Reserve System or any
regulations substituted therefor, as from time to time in effect, are used in
this SECTION 3.3 with such meanings.
(g) LITIGATION. There is no pending or, to the
knowledge of ▇▇▇▇▇▇▇ Holdings, threatened, action, suit, Environmental Claim,
investigation or proceeding or labor controversy against ▇▇▇▇▇▇▇ Holdings or any
of its properties, business, assets or revenues or affecting any Governmental
Approval before any Governmental Authority hereto which, if determined
adversely to it (taking into account any insurance proceeds payable under a
policy where the insurer has accepted coverage without any reservations), would
result in a Material Adverse Effect on ▇▇▇▇▇▇▇ Holdings.
(h) TITLE; LIENS. ▇▇▇▇▇▇▇ Holdings has good and
marketable title to, or a valid leasehold in or other enforceable interest in,
all properties and assets, real and personal, tangible and intangible, of any
nature whatsoever (including patents, trademarks, trade names, service marks and
copyrights) purported to be owned, leased or held by it, free and clear of all
Liens, charges or claims (including infringement claims with respect to patents,
trademarks, copyrights and the like) except Permitted Encumbrances and Lease
Permitted Liens.
(i) TAX RETURNS. ▇▇▇▇▇▇▇ Holdings has filed all
federal, state and local tax returns and reports required by law to have been
filed by it and has paid all
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Taxes shown to be due and payable on such returns or pursuant to any assessment
received by it.
(j) INVESTMENT COMPANY ACT. ▇▇▇▇▇▇▇ Holdings is
not subject to any regulation as an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(k) HOLDING COMPANY ACT. ▇▇▇▇▇▇▇ Holdings is not
subject to (i) regulation as a "holding company" or a "subsidiary company" or an
"affiliate " of a "holding company" required to register under PUHCA or (ii)
public utility regulation under the laws of the State of Illinois.
(l) YEAR 2000. The computer and management
information systems of ▇▇▇▇▇▇▇ Holdings which are material to its business taken
as a whole are Year 2000 Ready.
(m) LOCATION OF CHIEF EXECUTIVE OFFICE AND
PRINCIPAL PLACE OF BUSINESS, ETC. The chief executive office and principal place
of business of ▇▇▇▇▇▇▇ Holdings and the office where ▇▇▇▇▇▇▇ Holdings keeps its
corporate records is located at One Financial Place, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
SECTION 3.4 REPRESENTATIONS AND WARRANTIES OF THE OWNER LESSOR. The
Owner Lessor represents and warrants that as of the Closing Date:
(a) DUE ORGANIZATION. The Owner Lessor is a duly
organized and validly existing "business trust" as such term is defined in 12
Del. C. Section 3801 (a) under the laws of the State of Delaware of which the
Owner Participant is the beneficial owner, and has the power and authority to
enter into and perform its obligations under this Agreement and each of the
other Operative Documents to which it is or will be a party.
(b) DUE AUTHORIZATION, ENFORCEABILITY; ETC. (i)
This Agreement and each of the other Operative Documents (other than the Lessor
Notes) to which the Owner Lessor is or will be a party has been or when executed
and delivered will be duly authorized, executed and delivered by the Owner
Lessor, and assuming the due authorization, execution and delivery of this
Agreement by each party hereto other than the Owner Lessor, this Agreement
constitutes, and when executed and delivered each of the other Operative
Documents (other than the Lessor Notes) to which it is or will be a party, will
be the legal, valid and binding obligations of the Owner Lessor, enforceable
against the Owner Lessor in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
arrangement, moratorium or other laws relating to or affecting the rights of
creditors generally and by general principles of equity.
-22-
(ii) Upon the execution of the Lessor
Notes by the Owner Lessor and delivery of such Lessor Notes against
payment therefor, the Lessor Notes will constitute legal, valid and
binding obligations of the Owner Lessor, enforceable against the Owner
Lessor in accordance with their terms, except as the same may be
limited by bank ruptcy, insolvency, fraudulent conveyance,
reorganization, arrangement, moratorium or other laws relating to or
affecting the rights of creditors generally and by general principles
of equity.
(c) NON-CONTRAVENTION. The execution and
delivery by the Owner Lessor of this Agreement and the other Operative Documents
to which it is or will be a party, the consummation by the Owner Lessor of the
transactions contemplated hereby and thereby, and the compliance by the Owner
Lessor with the terms and provisions hereof and thereof, do not and will not
contravene (except where such contravention would not result in a Material
Adverse Effect on the Owner Lessor) (i) the Trust Agreement or any of the
Organic Documents of the Owner Lessor or (ii) any Requirement of Law or the
provisions of, or constitute a default by the Owner Lessor under any indenture,
mortgage, deed of trust or other material contract, agreement or instrument to
which the Owner Lessor is a party or by which the Owner Lessor or its property
is bound, or in the creation of any Owner Lessor's Lien upon the Trust Estate;
PROVIDED, HOWEVER, that no representation is made with respect to the right,
power or authority of the Owner Lessor to act as operator of the Facility
following a Lease Event of Default or the expiration or termination of the
Facility Lease.
(d) GOVERNMENTAL ACTIONS. Assuming the
representation and warranties of Midwest contained in paragraphs (c), (f), (l),
(m) and (n) of SECTION 3.1 and the representations and warranties of ▇▇▇▇▇▇▇
Holdings contained in paragraphs (d), (e), (j) and (k) of SECTION 3.3 are true,
no authorization or approval or other action by, and no notice to or filing or
registration with, any Governmental Authority is required for the due execution,
delivery or performance by the Owner Lessor, as the case may be, of the Trust
Agreement, the Lessor Notes, this Agreement or the other Operative Documents to
which the Owner Lessor is or will be a party, other than any such authorization
or approval or other action or notice or filing as has been duly obtained, taken
or given; PROVIDED, HOWEVER, that no representation is made with respect to the
right, power or authority of the Owner Lessor to act as operator of the Facility
following a Lease Event of Default or the expiration or termination of the
Facility Lease.
(e) LITIGATION. There is no pending or, to the
knowledge of the Owner Lessor, threatened, action, suit, investigation or
proceeding against the Owner Lessor before any Governmental Authority which, if
determined adversely to it, would materially adversely affect the ability of the
Owner Lessor to perform its obligations
-23-
under the Trust Agreement, the Lessor Notes, this Agreement or the other
Operative Documents to which it is or will be a party or would materially
adversely affect the Facility, the Facility Site or any interest therein or part
thereof or the Lien of the Holder Representative on the Trust Estate or which
questions the validity or enforceability of any Operative Document to which the
Owner Lessor is or will be a party.
(f) LIENS. The Owner Lessor's right, title and
interest in and to the Trust Estate is free of any Owner Lessor's Liens.
(g) COMPLIANCE WITH REQUIREMENTS OF LAW. The
Owner Lessor is in compliance with all Requirements of Law, rules, regulations,
orders, judgments, writs and decrees (including ERISA and regulations of the
Federal Reserve System), except where failure to so comply, individually or in
the aggregate, would not result or has not resulted in a Material Adverse Effect
on the Owner Lessor.
(h) INVESTMENT COMPANY ACT; PUBLIC UTILITY
HOLDING COMPANY ACT. The Owner Lessor is not (i) an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended, (ii) a "holding company," a "public
utility company" or a "subsidiary company" of a "holding company" within the
meaning of PUHCA, or (iii) subject to any other Requirement of Law which
purports to restrict or regulate its ability to borrow money.
(i) SECURITIES ACT. Neither the Owner Lessor nor
anyone authorized by it has directly or indirectly offered or sold any interest
in the Lessor Notes or any part thereof, or in any similar security or lease,
the offering of which for the purposes of the Securities Act would be deemed to
be part of the same offering as the offering of the Lessor Notes or any part
thereof or solicited any offer to acquire any of the same in violation of the
registration requirements of Section 5 of the Securities Act.
(j) LOCATION OF CHIEF EXECUTIVE OFFICE;
PRINCIPAL PLACE OF BUSINESS; SITUS. The chief executive office and principal
place of business of the Owner Lessor where the Owner Lessor will keep its
corporate records concerning the Facility, the Facility Site and the Operative
Documents is located in Wilmington, Delaware. The situs of the Owner Lessor is
in Delaware.
(k) PAYMENT OF TAXES. The Owner Lessor has filed
all federal, state and local tax returns and reports required by law to have
been filed by it and has paid all Taxes shown to be due and payable on such
returns or pursuant to any assessment received by it (other than Taxes and
assessments which are being diligently contested in good faith by the Owner
Lessor and with respect to which adequate reserve have, to the extent required
by GAAP, been set aside on its books).
-24-
SECTION 3.5 REPRESENTATIONS AND WARRANTIES OF THE OWNER TRUSTEE AND THE
TRUST COMPANY. The Trust Company (only with respect to representations and
warranties relating to the Trust Company) and the Owner Trustee hereby severally
represent and warrant that, as of the Closing Date:
(a) DUE INCORPORATION; ETC. The Trust Company is
a banking corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, has the corporate power and authority,
as the Owner Trustee and/or in its individual capacity to the extent expressly
provided herein or in the Trust Agreement, to enter into and perform its
obligations under the Trust Agreement, this Agreement and each of the other
Operative Documents to which it is or will be a party.
(b) DUE AUTHORIZATION, ENFORCEABILITY; ETC. (w)
The Trust Agreement has been duly authorized, executed and delivered by the
Trust Company, and (x) assuming the due authorization, execution and delivery of
the Trust Agreement by the Owner Participant, the Trust Agreement constitutes
the legal, valid and binding obligation of the Trust Company, enforceable
against it in its individual capacity or as Owner Trustee, as the case may be,
in accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, arrangement, moratorium or
other laws relating to or affecting the rights of creditors generally and by
general principles of equity.
(i) (y) This Agreement has been duly
authorized, executed and delivered by the Owner Trustee and the Trust
Company, and (z) assuming the due authorization, execution and delivery
of this Agreement by each party hereto other than the Owner Trustee and
the Trust Company, this Agreement constitutes a legal, valid and
binding obligation of the Owner Trustee and the Trust Company,
enforceable against the Trust Company or the Owner Trustee, as the case
may be, in accordance with its terms, except as the same may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization,
arrangement, moratorium or other laws relating to or affecting the
rights of creditors generally and by general principles of equity.
(ii) (x) Each of the other Operative
Documents to which the Trust Company or the Owner Trustee is or will be
a party has been or when executed and delivered will be duly
authorized, executed and delivered by the Trust Company or the Owner
Trustee and (y) assuming the due authorization, execution and delivery
of each of the other Operative Documents by each party thereto other
than the Trust Company or the Owner Trustee, each of the other
Operative Documents to
-25-
which the Trust Company or the Owner Trustee is or will be a party
constitutes or when executed and delivered will constitute a legal,
valid and binding obligation of the Trust Company or the Owner Trustee,
as the case may be, enforceable against the Trust Company or the Owner
Trustee in accordance with its terms, except as the same may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization,
arrangement, moratorium or other laws relating to or affecting the
rights of creditors generally and by general principles of equity.
(c) NON-CONTRAVENTION. The execution and
delivery by the Trust Company, in its individual capacity or as Owner Trustee,
as the case may be, of the Trust Agreement, this Agreement and the other
Operative Documents to which it is or will be a party, the consummation by the
Trust Company, in its individual capacity or as Owner Trustee, as the case may
be, of the transactions contemplated hereby and thereby, and the compliance by
the Trust Company, in its individual capacity or as Owner Trustee, as the case
may be, with the terms and provisions hereof and thereof, do not and will not
(i) contravene any Requirement of Law of the State of Delaware or the United
States governing the banking or trust powers of the Trust Company, the Trust
Agreement, or its Organic Documents, or (ii) contravene the provisions of, or
constitute a default by the Trust Company under, or result in the creation of
any Owner Lessor's Lien attributable to it in its individual capacity and
unrelated to the transactions contemplated by the Operative Documents upon the
Trust Estate under any indenture, mortgage or other material contract, agreement
or instrument to which the Trust Company is a party or by which the Trust
Company or its property is bound; PROVIDED, HOWEVER, that no representation is
made with respect to the right, power or authority of the Trust Company or the
Owner Trustee to act as operator of the Facility following a Lease Event of
Default.
(d) GOVERNMENTAL ACTIONS. Assuming the
representations and warranties of Midwest contained in paragraphs (c), (f), (l),
(m) and (n) of SECTION 3.1 and the representations and warranties of ▇▇▇▇▇▇▇
Holdings contained in paragraphs (d), (e), (j) and (k) of SECTION 3.3 are true,
no authorization or approval or other action by, and no notice to or filing or
registration with, any Governmental Authority of the State of Delaware or the
United States governing the banking or trust powers of the Trust Company is
required for the due execution, delivery or performance by the Trust Company or
the Owner Trustee, as the case may be, of the Trust Agreement, this Agreement or
the other Operative Documents to which the Trust Company or the Owner Trustee is
or will be a party, other than any such authorization or approval or other
action or notice or filing as has been duly obtained, taken or given.
(e) LITIGATION. There is no pending or, to the
actual knowledge of the Trust Company, threatened action, suit, investigation or
proceeding against the Trust Company either in its individual capacity or as the
Owner Trustee, as the case may
-26-
be, before any Governmental Authority of the State of Delaware or the United
States governing its banking and trust powers which, if determined adversely to
it, would materially adversely affect the ability of the Trust Company, in its
individual capacity or as Owner Trustee, as the case may be, to perform its
obligations under the Trust Agreement, this Agreement or the other Operative
Documents to which it is or will be a party or would materially adversely affect
the Facility, the Facility Site or any interest therein or part thereof or the
security interest of the Holder Representative in the Trust Estate or which
question the validity or enforceability of any Operative Document to which the
Trust Company, in its individual capacity or as the Owner Trustee, is or will be
a party.
(f) LIENS. The Trust Estate is free of any Owner
Lessor's Liens attributable to the Trust Company or the Owner Trustee.
SECTION 3.6 REPRESENTATIONS AND WARRANTIES OF THE OWNER PARTICIPANT.
The Owner Participant represents and warrants that, as of the Closing Date and
giving effect to the transactions contemplated by the Purchase Agreement:
(a) DUE ORGANIZATION. The Owner Participant is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the necessary power and
authority to enter into and perform its obligations under this Agreement, the
Trust Agreement, the OP LLC Agreement and the Tax Indemnity Agreement.
(b) DUE AUTHORIZATION, ENFORCEABILITY; ETC. This
Agreement, the Trust Agreement, the Tax Indemnity Agreement and the other
Operative Documents to which it is or will be a party have been or when executed
and delivered will be duly authorized, executed and delivered by the Owner
Participant and assuming the due authorization, execution and delivery by each
other party thereto, this Agreement, the Trust Agreement, the Tax Indemnity
Agreement and the other Operative Documents to which it is or will be a party
constitute or when executed and delivered will constitute the legal, valid and
binding obligations of the Owner Participant, enforceable against the Owner
Participant in accordance with their respective terms, except as the same may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
arrangement, moratorium or other laws relating to or affecting the rights of
creditors generally and by general principles of equity.
(c) NON-CONTRAVENTION. The execution and
delivery by the Owner Participant of this Agreement, the Trust Agreement, the OP
LLC Agreement and the Tax Indemnity Agreement, the consummation by the Owner
Participant of the transactions contemplated hereby and thereby, and the
compliance by the Owner Participant with the terms and provisions hereof and
thereof, do not and will not contravene any Requirement of Law binding on the
Owner Participant (except where such contravention
-27-
would not result in a Material Adverse Effect on the Owner Participant), or its
Organic Documents, or contravene the provisions of, or constitute a default
under, or result in the creation of any Owner Participant's Lien (other than any
Lien created under any Operative Document) upon the Trust Estate under any
indenture, mortgage or other material contract, agreement or instrument to which
the Owner Participant is a party or by which the Owner Participant or its
property is bound (it being understood that no representation or warranty is
being made as to any Requirement of Law relating to the Facility or the Facility
Site other than its representations set forth in SECTION 3.6(g) hereof or
Section 4975 of the Code).
(d) GOVERNMENTAL ACTION. Assuming the
representations and warranties of ▇▇▇▇▇▇▇ Holdings contained in paragraphs (d),
(e), (j) and (k) of SECTION 3.3 and the representation and warranties of Midwest
contained in (c), (f), (l), (m) and (n) of SECTION 3.1 are true, no
authorization or approval or other action by, and no notice to or filing or
registration with, any Governmental Authority is required for the due execution,
delivery or performance by the Owner Participant of this Agreement, the Trust
Agreement, the OP LLC Agreement or the Tax Indemnity Agreement, other than any
authorization or approval or other action or notice or filing as has been duly
obtained, taken or given (it being understood that no representation or warranty
is being made as to any Requirements of Law relating to the ownership or
operation of the Facility or the Facility Site).
(e) LITIGATION. There is no pending or, to the
knowledge of the Owner Participant, threatened action, suit, investigation or
proceeding against the Owner Participant before any Governmental Authority
which, if determined adversely to it, would materially adversely affect the
Owner Participant's ability to perform its obligations under this Agreement,
the Trust Agreement, the OP LLC Agreement or the Tax Indemnity Agreement or
would materially adversely affect the Facility, the Facility Site or any
interest therein or part thereof or the Lien of the Holder Representative in the
Trust Estate or which questions the validity or enforceability of any Operative
Document to which the Owner Participant is or will be a party.
(f) LIENS. The Trust Estate is free of any Owner
Participant's Liens.
(g) ERISA. No part of the funds to be used by
the Owner Participant to make its investment pursuant to this Agreement,
directly or indirectly, constitutes or is deemed to constitute assets (within
the meaning of ERISA and any applicable rules, regulations and court decisions
thereunder) of any Plan.
-28-
(h) REGULATORY EVENT OF LOSS. The Owner
Participant is not aware of any fact or circumstance that would constitute or
cause a Regulatory Event of Loss.
(i) SECURITIES ACT. Neither the Owner
Participant nor anyone authorized by it has directly or indirectly offered or
sold any interest in the Beneficial Interest, the Lessor Notes or any part
thereof, or in any similar security or lease, the offering of which for the
purposes of the Securities Act would be deemed to be part of the same offering
as the offering of the Beneficial Interest, the Lessor Notes or any part thereof
or solicited any offer to acquire any of the same in violation of the
registration requirements of Section 5 of the Securities Act.
(j) HOLDING COMPANY ACT AND FEDERAL POWER ACT.
Immediately prior to executing this Agreement, the Owner Participant is not (i)
an "electric utility", "electric utility company", "public utility",
"public-utility company", "holding company" under the Federal Power Act or PUHCA
or (ii) a "subsidiary" or "affiliate" of a "holding company" required to
register under PUHCA.
(k) PAYMENT OF TAXES. The Owner Participant has
filed all federal, state and local tax returns and reports required by law to
have been filed by it and has paid all Taxes shown to be due and payable on such
returns or pursuant to any assessment received by it (other than Taxes and
assessments which are being diligently contested in good faith by the Owner
Participant and with respect to which adequate reserve have, to the extent
required by GAAP, been set aside on its books).
SECTION IV CLOSING CONDITIONS
The obligations of the Owner Participant, the Owner Lessor, the Owner
Trustee, ▇▇▇▇▇▇▇ Holdings, Midwest, Holdings, the Lender, the Midwest LC Issuer,
the RCE LC Issuer and the Holder Representative to consummate the transactions
contemplated hereby on the Closing Date shall be subject to prior or concurrent
satisfaction or waiver of the following conditions, except that the obligations
of any Person shall not be subject to such Person's own performance or
compliance.
SECTION 4.1 OPERATIVE DOCUMENTS. On or before the Closing Date, each of
the Operative Documents to be delivered at the Closing shall have been duly
authorized, executed and delivered by the parties thereto in substantially the
form attached as an Exhibit hereto, shall each be in full force and effect, and
executed counterparts of each shall have been delivered to each of the parties
hereto.
SECTION 4.2 ACQUISITION OF THE FACILITY AND FACILITY SITE. All
conditions precedent contained in the ASA shall have been satisfied or waived
and (i) the Owner
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Trust shall have purchased the Undivided Interest from ComEd and (ii) Midwest
shall have purchased the Ground Interest from ComEd;
SECTION 4.3 THE LESSOR NOTES. Each of the conditions precedent
contained in the Lessor Loan Agreement shall have been satisfied or waived and
the Initial Holder shall have purchased the Initial Lessor Notes pursuant to,
and in accordance with, the terms of the Lessor Loan Agreement;
SECTION 4.4 THE FUNDING LLC NOTES. Each of the conditions precedent
contained in the Funding LLC Financing Documents shall have been satisfied or
waived and the Funding LLC Note Holders shall have purchased the Funding LLC
Notes pursuant to, and in accordance with the terms of, the Funding LLC
Financing Documents and the proceeds from the sale by the Lender of the Funding
LLC Notes shall have been provided to the Owner Lessor through the purchase by
the Initial Holder of the Initial Lessor Notes.
SECTION 4.5 PURCHASE AGREEMENT. The Equity Investor shall have
purchased Midwest's membership interest in the Owner Participant pursuant to the
Purchase Agreement.
SECTION 4.6 OTHER DOCUMENTS. Each of ▇▇▇▇▇▇▇ Holdings, the Owner
Lessor, the Owner Trustee, the Owner Participant, Holdings, Midwest, the Lender,
the Midwest LC Issuer, the RCE LC Issuer and the Holder Representative shall
have received certified copies of the Organic Documents of each of the other
parties hereto (except for the Holder Representative, the Midwest LC Issuer and
the RCE LC Issuer, who shall not be required to provide such documents) and
resolutions of the board of directors or managers (or managing members), as the
case may be, of each such other Lease Financing Party duly authorizing the
Overall Transaction and such documents and such evidence as each party may
reasonably request in order to establish the authority of each such other party
to consummate the transactions contemplated by this Agreement, the taking of all
corporate and other proceedings in connection therewith and compliance with the
conditions herein or therein set forth and the incumbency of all officers
signing any of the Operative Documents. Each of the foregoing documents shall be
reasonably satisfactory to the recipient.
SECTION 4.7 LETTERS OF CREDIT. The Midwest LC Issuer shall have issued
the Midwest Letters of Credit and the RCE LC Issuer shall have issued the RCE
Letters of Credit.
SECTION 4.8 REPRESENTATIONS AND WARRANTIES. The representation and
warranties set forth in SECTION 3 hereof shall be true and correct on and as of
the Closing Date with the same effect as though made on and as of the Closing
Date and each of the Lease
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Financing Parties shall have received a certificate of each of the other parties
hereto to such effect.
SECTION 4.9 DEFAULTS, EVENTS OF DEFAULT, EVENTS OF LOSS. No Lease Event
of Default, or Event of Loss or event that, with the passage of time or giving
of notice or both, would constitute a Lease Event of Default or an Event of Loss
shall have occurred and be continuing.
SECTION 4.10 CONSENTS. All material permits, licenses, approvals and
consents necessary to consummate the Overall Transaction shall have been duly
obtained and shall be in full force and effect and in the form and substance
satisfactory to each of the Lease Financing Parties.
SECTION 4.11 GOVERNMENTAL ACTIONS. All actions, if any, required to
have been taken by any Governmental Authority on or prior to the Closing Date in
connection with the transactions contemplated by any Operative Documents on the
Closing Date, including, without limitation, the FERC Orders, shall have been
taken and all orders, permits, waivers, exemptions, authorizations and approvals
of and registrations with such Governmental Authorities required to be in effect
on the Closing Date in connection with the transactions contemplated by the
Operative Documents on the Closing Date shall have been issued; and all such
orders, permits, waivers, exemptions, authorizations and approvals shall be in
full force and effect on the Closing Date.
SECTION 4.12 INSURANCE. Insurance (including all related endorsements)
complying with the requirements of SECTION 11 of the Facility Lease shall be in
full force and effect and all premiums thereon shall be current. The Owner
Participant, the OP Guarantor, the Owner Trustee, the Owner Lessor, the Lender,
the Midwest LC Issuer, the RCE LC Issuer and the Holder Representative shall
have received a certificate or certificates dated the Closing Date of an
independent insurance broker or carrier reasonably satisfactory to such Persons
stating that such insurance is in full force and effect. The Equity Investor and
the Owner Participant shall have received a report from their insurance
consultant in form and substance satisfactory to them.
SECTION 4.13 ENGINEERING REPORT. The Owner Participant, the OP
Guarantor, the Lender, the Midwest LC Issuer, the RCE LC Issuer and the Holder
Representative shall have received, on or before the Closing Date, a copy of the
Engineering Report and a reliance letter issued by the Engineering Consultant,
each such document in form and substance reasonably satisfactory to the
recipients.
SECTION 4.14 ENVIRONMENTAL REPORT. The Owner Participant, the OP
Guarantor, the Lender, the Midwest LC Issuer, the RCE LC Issuer and the Holder
Representative
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shall have received copies of the Environmental Report in form and substance
reasonably satisfactory to the recipients.
SECTION 4.15 REPORT OF ENVIRONMENTAL CONSULTANT. The Owner Participant,
the OP Guarantor, the Lender, the Midwest LC Issuer, the RCE LC Issuer and the
Holder Representative shall have received a copy of the Report of Environmental
Consultant in form and substance reasonably satisfactory to the recipients.
SECTION 4.16 APPRAISAL; CONDITION OF THE FACILITY. The Owner
Participant and the OP Guarantor shall have received the Closing Date Appraisal
prepared by the Appraiser addressed and delivered only to the Equity Investor
and the Owner Participant and satisfactory in form and substance to the
recipients. The Owner Participant shall be satisfied that the Facility shall be
in the condition described in the Closing Date Appraisal. The Lender and the
Holder Representative shall have received a copy of the verification of value,
useful life and estimated residual value prepared by the Appraiser in connection
with the appraisal of assets subject to the Facility Lease, each of which will
be reasonably satisfactory to the recipients.
SECTION 4.17 FUEL REPORT. The Owner Participant, the OP Guarantor, the
Lender, the Midwest LC Issuer, the RCE LC Issuer and the Holder Representative
shall have received copies of the Fuel Report in form and substance reasonably
satisfactory to the recipients.
SECTION 4.18 MARKET REPORT. The Owner Participant, the OP Guarantor,
the Lender and the Holder Representative shall have received copies of the
Market Report in form and substance reasonably satisfactory to the recipients.
SECTION 4.19 OPINION WITH RESPECT TO CERTAIN TAX ASPECTS. The Owner
Participant and the OP Guarantor shall have received a satisfactory tax opinion,
dated the Closing Date, of Hunton & ▇▇▇▇▇▇▇▇ addressed and delivered only to the
Owner Participant and the OP Guarantor.
SECTION 4.20 RATING. The Funding LLC Loans shall be rated at least BBB-
and Baa3 by S&P and ▇▇▇▇▇'▇, respectively.
SECTION 4.21 OPINIONS OF COUNSEL. Each of the relevant Lease Financing
Parties shall have received an opinion or opinions, dated the Closing Date, of
(a) SASM&F, special counsel to Midwest, ▇▇▇▇▇▇▇ Holdings and Holdings,
substantially in the form of Exhibit JJ, (b) ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, special Illinois
regulatory counsel to Midwest, ▇▇▇▇▇▇▇ Holdings and Holdings, substantially in
the form of Exhibit KK, (c) Hunton & ▇▇▇▇▇▇▇▇, special New York counsel to the
Owner Participant and the OP Guarantor, substantially in the form of Exhibit LL,
(d) ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, counsel to Midwest, ▇▇▇▇▇▇▇ Holdings,
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Holdings and the Owner Participant, substantially in the form of Exhibit MM, (e)
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A., counsel to the Owner Lessor, the Trust Company,
and the Owner Trustee, substantially in the form of Exhibit NN, (f) ▇▇▇▇▇▇ ▇▇▇▇,
special counsel to the Holder Representative, substantially in the form of
Exhibit OO, (g) Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special counsel to the
Securitization Company and APA Purchasers, substantially in the form of Exhibit
PP addressed to such Person, and (h) ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, special federal
regulatory to Midwest, ▇▇▇▇▇▇▇ Holdings and Holdings, substantially in the form
of Exhibit QQ. Each such Person expressly consents to the rendering by its
counsel of the opinion referred to in this SECTION 4.21 and acknowledges that
such opinion shall be deemed to be rendered at the request and upon the
instructions of such Person, each of whom has consulted with and has been
advised by its counsel as to the consequences of such request, instructions and
consent. Furthermore, each such counsel shall, to the extent requested, permit
the Rating Agencies and the Funding LLC Note Holders to rely on their opinion as
if such opinion were addressed to such parties.
SECTION 4.22 RECORDINGS AND FILINGS. All filings and recordings listed
on Schedule 4.22 hereto shall have been duly made and all filing, recordation,
transfer and other fees payable in connection therewith shall have been paid;
and the filing of all precautionary financing statements under the Uniform
Commercial Code of Illinois and any other mortgages, security agreements or
other documents as may be reasonably requested by counsel to the Owner
Participant or the Holder Representative to perfect the right, title and
interest of the Owner Lessor in the Owner Lessor's Interest, or any part thereof
or interest therein and the Lien of the Holder Representative in the Trust
Estate, shall have been made.
SECTION 4.23 TAXES. All Taxes, if any, due and payable on or before the
Closing Date in connection with the execution, delivery, recording and filing of
this Agreement or any other Operative Document, or any document or instrument
contemplated thereby shall have been duly paid in full.
SECTION 4.24 NO CHANGES IN REQUIREMENTS OF LAW. No change shall have
occurred in Requirements of Law or the interpretation thereof by any competent
court or other Governmental Authority that would make it illegal for the Equity
Investor, the Owner Participant, the Owner Lessor, the Owner Trustee, Holdings,
▇▇▇▇▇▇▇ Holdings or Midwest, to participate in any of the transactions
contemplated by the Operative Documents or would materially adversely affect
the Other Facilities, the Undivided Interest or the Ground Interest. No change
in the Tax law shall have occurred with respect to which no adjustment has been
made pursuant to Section 17 hereof.
SECTION 4.25 REGISTERED AGENT FOR MIDWEST, ▇▇▇▇▇▇▇ HOLDINGS AND
HOLDINGS. CT Corporation System shall have been appointed by Midwest, ▇▇▇▇▇▇▇
Holdings and
PARTICIPATION AGREEMENT (T1)
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Holdings as registered agent for service of process in the State of New York as
provided in the Operative Documents and CT Corporation System shall have
accepted such appointment.
SECTION 4.26 FAS 13. The present value of Basic Lease Rent payable
during the Basic Lease Term under the Facility Sublease (taking into account any
rent adjustment through or contemplated on the Closing Date), together with all
rent payable under the Facility Site Sublease and all Transaction Costs financed
through the Facility Lease, discounted at the Discount Rate, shall satisfy the
90 percent test for operating lease treatment under FAS 13.
SECTION 4.27 RENT ADJUSTMENTS. No rent adjustment made or contemplated
on the Closing Date (other than adjustments to reflect a change in Transaction
Costs or the actual interest rate on the Lessor Loan) shall cause either (i) the
after-tax present value of Basic Lease Rent discounted at 6% per annum,
compounded annually to increase by more than 100 basis points or (ii) the total
Basic Lease Rent to increase by more than 2.0%.
SECTION 4.28 TITLE INSURANCE. Each of the Title Policies shall have
been delivered to ▇▇▇▇▇▇▇ Holdings, the Owner Participant, the Owner Lessor, the
Owner Trustee and the Holder Representative.
SECTION 4.29 PARENT GUARANTY. The OP Guarantor shall have executed and
delivered to the other Lease Financing Parties an Owner Participant Guaranty
substantially in the form of Exhibit Y hereto.
SECTION 4.30 SURVEY. The Owner Participant, the OP Guarantor, the
Lender and the Holder Representative shall have received a copy of the Survey in
form and substance reasonably satisfactory to the recipients.
SECTION 4.31 MIDWEST LEASE GUARANTEES. Midwest shall have executed and
delivered to the Midwest OP Lease Guaranty substantially in the form of Exhibit
Z hereto and the Midwest Lessor Lease Guaranty substantially in the form of
Exhibit AA hereto.
SECTION 4.32 HOLDINGS GUARANTEES. Holdings shall have executed and
delivered the Holdings Guarantee and the Letter of Credit Guarantee.
SECTION 4.33 NO MATERIAL ADVERSE CHANGE. No material adverse change
shall have occurred with respect to Midwest, ▇▇▇▇▇▇▇ Holdings, the Facility or
the Facility Site since September 24, 1999.
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SECTION V AFFIRMATIVE COVENANTS OF MIDWEST
Midwest covenants and agrees that it will perform the obligations set
forth in this SECTION 5. From and following the date when the Funding LLC Notes
are repaid in full and each Lessor Note (or participation interest therein), if
any, that shall have been assigned or otherwise transferred to the APA
Purchasers pursuant to Section 18(n) of the APA has been paid in full, (i) the
obligations of Midwest set forth in SECTIONS 5.4 and 5.5 hereof shall apply with
respect to the Facility only and (ii) the covenants set forth in SECTION 5.6
shall no longer have any force or effect.
SECTION 5.1 DELIVERY OF CERTAIN INFORMATION. (i) Midwest shall furnish
prompt written notice to the Owner Trustee, the Owner Lessor, the Owner
Participant and the Holder Representative:
(a) as soon as possible and in any event within
five Business Days after any Authorized Officer of Midwest obtains knowledge of
the occurrence of any default under any material agreement to which Midwest is a
party or any termination thereof, in each case, together with a statement of an
Authorized Officer of Midwest setting forth details of such event of default,
default or termination and the action Midwest has taken and proposes to take
with respect thereto;
(b) as soon as possible and in any event within
five Business Days after the commencement of, or the occurrence of any material
adverse development with respect to, any litigation, action, proceeding, or
labor controversy of the type described in SECTION 3.1(h), notice thereof;
(c) immediately upon becoming aware of the
institution of any steps by Midwest to terminate any Pension Plan (other than a
standard termination under ERISA Section 4041(b)), or the failure to make a
required contribution to any Pension Plan if such failure is sufficient to give
rise to a Lien under Section 302(f) of ERISA or Section 412 of the Code, or the
taking of any action with respect to a Pension Plan which could result in the
requirement that Midwest furnish a bond or other security to the PBGC or such
Pension Plan, or the occurrence of any event with respect to any Pension Plan
which could result in the incurrence by Midwest or any member of the Controlled
Group of any material liability (other than liabilities incurred in the ordinary
course of maintaining the Pension Plan), fine or penalty, or any increase in
the contingent liability of Midwest with respect to any post-retirement Welfare
Plan benefit, the occurrence or expected occurrence of any Reportable Event or
the termination, Reorganization or Insolvency of any Multiemployer Plan or the
complete or partial withdrawal by Midwest or any member of the Controlled Group
from a Multiemployer Plan, notice thereof and copies of all documentation
relating thereto;
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(d) as soon as possible and in any event within
five Business Days after any Authorized Officer of Midwest obtains knowledge of
the occurrence thereof, notice that any Governmental Authority may revoke, or
refuse to grant or renew, or materially modify, any material Governmental
Approval described in SECTION 3.1(c);
(e) promptly following any request therefor,
such other information regarding the operations, business affairs and financial
condition of Midwest, or compliance with the terms of this Agreement or the
other Operative Documents, as the Owner Trustee, the Owner Lessor, the Owner
Participant and the Holder Representative may reasonably request;
(f) concurrently with the payment of Contingent
Prepaid Rent, notice of such payment and the amount thereof;
(g) immediately upon becoming aware of any
change in operations of Midwest that would cause Midwest to fail to qualify for
EWG status or to lose exemption from regulation under PUHCA; and
(h) concurrently with the delivery of any
notice, report, request, demand, certificate, financial statement or other
instrument to the Owner Lessor pursuant to the Facility Lease (but without
duplication of deliveries required under SECTION 5.1(i)), Midwest shall furnish
a copy of the same to the Holder Representative with sufficient copies for each
Holder.
SECTION 5.2 MAINTENANCE OF EXISTENCE; CONDUCT OF BUSINESS. Midwest
shall continue to engage in the business of owning and operating the Generating
Assets and the sale and marketing of wholesale electric power and other products
and services related thereto, and preserve, renew and keep in full force and
effect its limited liability company existence and take all reasonable action to
maintain all material rights, privileges and franchises necessary or desirable
in the normal conduct of its business, except, in each case, as otherwise
permitted by SECTIONS 6.1, 6.2 OR 6.3.
SECTION 5.3 COMPLIANCE WITH REQUIREMENTS OF LAW AND CONTRACTUAL
OBLIGATIONS. Midwest shall comply with all Requirements of Law and Contractual
Obligations, such compliance to include the payment, before the same, become
delinquent, of all taxes, assessments and governmental charges or levies, except
to the extent such non-compliance would not result in a Material Adverse Effect
on Midwest.
SECTION 5.4 MAINTENANCE OF PROPERTIES. Midwest shall (a) maintain the
Generating Assets in all material respects (i) in good condition, repair and
working order (ordinary wear and tear excepted), except where the failure to do
so would not result in a Material Adverse Effect on Midwest, (ii) in accordance
with Prudent Industry Practice,
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and (iii) in accordance with the terms of all insurance policies required to be
maintained pursuant to SECTION 5.5, and (b) make such repairs, renewals,
replacements, betterments and improvements to the Generating Assets as in the
reasonable judgment of Midwest are necessary so that the Generating Assets may
be operated in accordance with their intended purpose. The provisions of this
SECTION 5.4 shall be deemed to be supplemental to, but not duplicative of, the
other provisions of the Operative Documents that relate to the use and
maintenance of the Facility.
SECTION 5.5 INSURANCE. (i) Midwest shall maintain with financially
sound and reputable insurance companies insurance in such amounts against such
risks, loss, damage and liability as are customarily insured against by other
enterprises of like size and type as that of the Generating Assets, subject to
the availability of such coverage on commercially reasonable terms, all on terms
and conditions which are in accordance with Prudent Industry Practice. All such
policies shall comply with the insurance requirements of the Operative
Documents.
(ii) The provisions of this SECTION 5.5
shall be deemed to be supplemental to, but not duplicative of, the
provisions of any of the Operative Documents that require the
maintenance of insurance.
SECTION 5.6 ENVIRONMENTAL COVENANT. Midwest shall:
(a) comply, and make all reasonable efforts to
cause other Persons to comply, with all applicable Environmental Laws and
obtain, comply with and maintain all necessary Governmental Approvals required
under any applicable Environmental Law, in each case, except where such
noncompliance or failure, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect on Midwest; and
(b) promptly upon the request of the Owner
Trustee, the Owner Lessor, the Owner Participant, the Lender or the Holder
Representative if there has been a Lease Event of Default which has not been
fully and timely cured, permit, and be responsible for all reasonable costs and
expenses incurred by, an environmental consultant whom the Owner Participant
(which environmental consultant shall, so long as the Lessor Notes are
outstanding, be reasonably acceptable to the Holder Representative) in its
discretion designates to perform an environmental assessment (including,
reviewing documents; interviewing knowledgeable employees and representatives of
Midwest; and sampling and analyzing soil, air, surface water, groundwater,
and/or other media in or about property owned or leased by Midwest, or on which
operations of Midwest otherwise take place). Such environmental assessment
shall be in form, scope and substance reasonably satisfactory to the Owner
Participant and, so long as the Lessor Notes are
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outstanding, the Holder Representative. Midwest shall cooperate fully in the
conduct of such environmental assessment upon written demand by the Owner
Participant or the Holder Representative. The Owner Participant shall perform,
or cause its agents and representatives to perform, the environmental assessment
in such a manner as to minimize to the extent practicable any disruption with
the conduct of operations of the involved property. Pursuant to this SECTION 5.6
(b), the Owner Participant or the Holder Representative shall have the right,
but shall not have any duty, to request and/or obtain such environmental
assessment; and
(c) provide copies of such information to
evidence compliance with this SECTION 5.6 as the Owner Trustee, the Owner
Lessor, the Owner Participant, the Lender or the Holder Representative may
reasonably request from time to time.
SECTION 5.7 ENVIRONMENTAL COVENANT WITH RESPECT TO THE FACILITY AND THE
FACILITY SITE. Midwest shall:
(a) comply, and make all reasonable efforts to
cause other Persons to comply, with all applicable Environmental Laws and
obtain, comply with and maintain all necessary Governmental Approvals required
under any applicable Environmental Law in connection with the use, operation
and maintenance of the Facility and the Facility Site, in each case, except
where such noncompliance or failure, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect on Midwest;
(b) promptly upon the request of the Owner
Trustee, the Owner Lessor or the Owner Participant, if there has been a Lease
Event of Default which has not been fully and timely cured, arrange for, and be
responsible for all costs and expenses incurred in connection with, the
environmental surveys in accordance with the terms of SECTION 5.2(f) of the
Facility Lease.
(c) provide copies of such information to
evidence compliance with this SECTION 5.7 as the Owner Trustee, the Owner Lessor
or the Owner Participant, may reasonably request from time to time.
SECTION 5.8 FURTHER ASSURANCES. Upon written request of the Owner
Trustee, the Owner Lessor, the Owner Participant, the Lender or the Holder
Representative, Midwest shall promptly perform or cause to be performed any and
all acts and execute or cause to be executed any and all documents (including
financing statements and continuation statements) for filing under the
provisions of the Uniform Commercial Code or any other Requirement of Law which
are necessary or advisable to preserve, protect and perfect the ownership of the
Undivided Interest and the interest of the Owner Lessor in the Facility Site
Lease and to maintain Liens on the Lessor Collateral in favor of the
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Holder Representative that are duly perfected in accordance with all applicable
Requirements of Law.
SECTION 5.9 REPLACEMENT LETTER OF CREDIT. In the event that the rating
of the Midwest LC Issuer and/or its Parent, respectively, falls below "AA-" from
S&P or "Aa3" by ▇▇▇▇▇'▇ (the "ISSUER DOWNGRADE EVENT"), Midwest shall (i)
promptly upon an occurrence of such event, give a written notice to the Owner
Lessor of such occurrence and (ii) if such Issuer Downgrade Event is continuing,
(A) replace the Midwest Letter of Credit and (B) if the RCE Letter of Credit
Issuer is an Affiliate of the Midwest LC Issuer, acting as an agent for the
Owner Lessor pursuant to SECTION 20 hereof, cause the RCE Letter of Credit to be
replaced within 45 days of the occurrence of the Issuer Downgrade Event with a
replacement letter of credit (collectively, the "REPLACEMENT LETTERS OF CREDIT")
issued by a financial institution acceptable to the RCE Agent and the Owner
Lessor. The expiration date of the Replacement Letters of Credit shall be the
later of (i) the expiration date of the Midwest Letter of Credit or the RCE
Letter of Credit, as the case may be, and (ii) the next Business Day following
the first anniversary of the payment of the Contingent Prepaid Rent (the
"REPLACEMENT LC TERMINATION DATE"). The obligation of Midwest to comply with
this covenant shall terminate on such Replacement LC Termination Date.
SECTION VI NEGATIVE COVENANTS OF MIDWEST
Midwest covenants and agrees that it will perform the obligations set
forth in each of SECTIONS 6.1, 6.2, 6.3 and 6.4. From and following the date
when the Funding LLC Notes are paid in full and each Lessor Note (or
participation interest therein), if any, that shall have been assigned or
otherwise transferred to the APA Purchasers pursuant to Section 18(n) of the APA
has been paid in full, the covenants set forth in SECTIONS 6.1 and 6.2 hereof
shall no longer have any force or effect and Midwest shall be required only to
comply with the covenants set forth in SECTION 6.3.
SECTION 6.1 MERGER, CONSOLIDATION. Midwest shall not consolidate or
merge with or into any other Person, or purchase or otherwise acquire all or
substantially all of the assets of any Person, unless:
(a) No Lessor Loan Event of Default has occurred
and is continuing or would occur after giving effect to such consolidation,
merger or asset acquisition;
(b) Midwest is the entity resulting from such
consolidation or surviving in such merger; and
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(c) after giving effect to such transaction no
Rating Event shall occur and be continuing.
SECTION 6.2 SALE OF ASSETS. Midwest shall not sell, transfer, lease,
contribute or otherwise convey, or grant options, warrants or other rights with
respect to, all or any substantial part of its assets (including accounts
receivable and capital stock of or other ownership interests in Subsidiaries) to
any Person (each such event, an "ASSET DISPOSITION"), unless the aggregate net
book value of all such assets, together with the net book value of all other
assets sold, transferred, leased, contributed or conveyed by Midwest pursuant to
this SECTION 6.2 since the Closing Date, does not exceed the Permitted
Percentage; PROVIDED, HOWEVER, that notwithstanding anything to the contrary
contained herein, Midwest may (i) sell or otherwise dispose of assets as and to
the extent necessary to comply with Requirements of Law; PROVIDED, HOWEVER, that
if after giving effect to any Asset Dispositions required to be made under this
CLAUSE (i) the aggregate net book value of sales made under this SECTION 6.2
would exceed the Permitted Percentage, Midwest shall make a prepayment of all
Net Cash Proceeds therefrom pursuant to the terms of the Holdings Credit
Agreement, (ii) sell or otherwise dispose of Cash Equivalent Investments, (iii)
enter into the Facility Site Lease and the Other Facility Site Leases and (iv)
transfer certain railcars or rights to railcars as part of the Transco
Transaction; PROVIDED, FURTHER, that any Asset Disposition pursuant to this
proviso shall not be included in the calculation of the aggregate net book value
of assets sold pursuant to this SECTION 6.2.
SECTION 6.3 MERGER AND CONSOLIDATION. Midwest shall not consolidate or
merge with any other Person (unless it is the surviving entity) or sell,
transfer or otherwise dispose of all or substantially all of its assets in one
or a series of transactions, unless (i) no Lease Event of Default shall have
occurred and be continuing prior to and after giving effect to such merger,
consolidation or sale, (ii) the entity resulting from such consolidation,
surviving such merger or to whom such assets are transferred shall (a) be a
corporate entity organized under the laws of the United States of America, any
state thereof or the District of Columbia, and (b) expressly assume, pursuant to
an agreement reasonably acceptable to the other Lease Financing Parties, each
obligation of Midwest under the Operative Documents, (iii) the Owner Participant
shall have received an opinion reasonably satisfactory to it from Hunton &
▇▇▇▇▇▇▇▇, or from a nationally recognized tax counsel selected by the Owner
Participant and reasonably acceptable to Midwest to the effect that such
consolidation, merger or sale of assets would not result in any material
indemnified, or any unindemnified, incremental tax risk to the Owner
Participant, (iv) the Owner Participant and, so long as the Lessor Notes are
outstanding, the Holder Representative shall have received an opinion of counsel
reasonably satisfactory to each such Person (y) with respect to the agreement
referred to in the immediately preceding clause (ii) (b) and (z) addressing
other customary matters and (v) after giving effect to such transaction, the
credit rating of Holdings or any successor or surviving
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entity shall be equal to or greater than the credit rating of Holdings
immediately prior to consummating such transaction. Midwest shall not sell more
than 50% of its assets without the prior written consent of the Owner Lessor
and, so long as the Lessor Notes are outstanding, the Holder Representative
which consent may not be unreasonably withheld, PROVIDED, HOWEVER, that such
consent shall not be required in connection with such sale or disposition if the
Funding LLC Notes or the senior unsecured long-term debt obligations of Holdings
are rated at least Baa3 by ▇▇▇▇▇'▇ and BBB- by S&P taking into account such sale
of the assets.
SECTION 6.4 CHANGES IN LEGAL FORM OR BUSINESS. Midwest shall not change
its legal form or Organic Documents except as permitted by SECTION 6.1, change
its Fiscal Year or engage in any business other than the construction,
ownership, maintenance and operation of the Generating Assets, the sale of
wholesale electric power therefrom and related products and services and such
other business as may be reasonably incidental thereto.
SECTION VII AFFIRMATIVE COVENANTS OF HOLDINGS
Holdings covenants and agrees that it will perform the obligations set
forth in this SECTION 7. From and following the date when the Funding LLC Notes
are repaid in full and each Lessor Note (or participation interest therein), if
any, that shall have been assigned or otherwise transferred to the APA
Purchasers pursuant to Section 18(h) of the APA has been paid in full, (i) the
obligations of Holdings set forth in SECTION 7.1 (d),(e), (l) and 7.4 hereof
shall apply with respect to the Facility only and (ii) the covenant set forth in
SECTION 7.1(n) hereof shall no longer have any force and effect.
SECTION 7.1 FINANCIAL INFORMATION, REPORTS, NOTICES. Holdings shall
furnish to the Owner Trustee, the Owner Lessor, the Owner Participant, the
Midwest LC Issuer, the RCE LC Issuer and the Holder Representative:
(a) as soon as available and in any event within 60 days
after the end of each of the first three Fiscal Quarters of each Fiscal Year of
Holdings, consolidated balance sheets of Holdings (which will include results
for its Consolidated Subsidiaries) as of the end of such Fiscal Quarter and
consolidated statements of income and cash flows of Holdings (which will include
results for its Consolidated Subsidiaries) for such Fiscal Quarter and for the
period commencing at the end of the previous Fiscal Year and ending with the end
of such Fiscal Quarter, certified by an Authorized Officer of Holdings with
responsibility for financial matters;
(b) as soon as available and in any event within 120 days
after the end of each Fiscal Year of Holdings, commencing with the 1999 Fiscal
Year, a copy of the annual audit report for such Fiscal Year for Holdings (which
will include results for its
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Consolidated Subsidiaries), including therein consolidated balance sheets of
Holdings (which will include results for its Consolidated Subsidiaries) as of
the end of such Fiscal Year and consolidated statements of income and cash flows
of Holdings (which will include results for its Consolidated Subsidiaries) for
such Fiscal Year, and accompanied by the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. or
other internationally recognized independent auditors selected by Holdings,
which report shall state that such consolidated financial statements present
fairly in all material respects the financial position for the periods indicated
in conformity with GAAP applied on a basis consistent with prior periods;
(c) concurrently with the delivery of the financial
statements referred to in SECTION 7.1(a), and on each Quarterly Payment Date on
which Holdings intends to make any capital expenditure pursuant to SECTION 8.11
or any Restricted Payment pursuant to SECTION 8.12 and, commencing January 1,
2000, within 60 days after each other Quarterly Payment Date, a certificate,
executed by an Authorized Officer of Holdings with responsibility for financial
matters, showing (i) the Debt Service Coverage Ratio for the 12-month period
ended on the last day of the immediately preceding Fiscal Quarter, (ii) the
projected Debt Service Coverage Ratio for the 12-month period commencing on the
first day of the then current Fiscal Quarter, (iii) the projected Debt Service
Coverage Ratio for the 12-month period commencing on the first anniversary of
the first day of the then current Fiscal Quarter and (iv) the Debt to Capital
Ratio as at the last day of the immediately preceding Fiscal Quarter, in each
case, in reasonable detail with appropriate calculations and computations and,
in the case of projections, calculated on the basis of stated assumptions
reasonably acceptable to the Owner Lessor and, so long as the Lessor Notes are
outstanding, the Holder Representative;
(d) within 120 days after the end of each calendar year,
Holdings shall deliver a report for the preceding calendar year with respect to
the Generating Assets covering the following matters: (i) production, including
availability, output, planned outages and unplanned outages (and the reason for
such unplanned outages); (ii) environmental matters to the extent the same
shall have given rise to material claims against Holdings or any of its
Subsidiaries; (iii) health and safety matters to the extent the same shall have
given rise to material claims against Holdings or any of its Subsidiaries; (iv)
significant plant activities, such as major plant overhauls, alterations,
modifications and other capital expenditures, significant changes in plant
operations and major operating incidents; and (v) market activities, quantities
and average price of delivered energy and capacity;
(e) concurrently with the delivery of the annual report
referred to in Section 7.1(d) above, Holdings shall furnish an operating budget
for the Generating Assets for the current calendar year, together with, in the
case of each calendar year beginning with the year 2000, an "income statement
variance report" showing the actual
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experience for the preceding calendar year (or portion thereof) against the
income statement projections for the preceding calendar year (or portion
thereof);
(f) as soon as possible and in any event within five
Business Days after any Authorized Officer of Holdings obtains knowledge of the
occurrence of (i) each Default under this Agreement and (ii) any default under
any other material agreement to which Holdings or any of its subsidiaries is a
party or any termination thereof, in each case, together with a statement of
such Authorized Officer setting forth details of such Default, default or
termination and the action which Holdings or such subsidiary of Holdings has
taken and proposes to take with respect thereto;
(g) as soon as possible and in any event within five
Business Days after the commencement of, or the occurrence of any material
adverse development with respect to, any litigation, action, proceeding, or
labor controversy of the type described in SECTION 3.2(i);
(h) promptly after the sending or filing thereof, copies
of all reports and registration statements which Holdings files with the
Securities and Exchange Commission or any national securities exchange;
(i) immediately upon becoming aware of the institution of
any steps by Holdings or any other Person to terminate any Pension Plan (other
than a standard termination under ERISA Section 4041(b)), or the failure to make
a required contribution to any Pension Plan if such failure is sufficient to
give rise to a Lien under Section 302(f) of ERISA or Section 412 of the Code, or
the taking of any action with respect to a Pension Plan which could result in
the requirement that Holdings furnish a bond or other security to the PBGC or
such Pension Plan, or the occurrence of any event with respect to any Pension
Plan which could result in the incurrence by Holdings or any member of the
Controlled Group of any material liability (other than liabilities incurred in
the ordinary course of maintaining the Pension Plan), fine or penalty, or any
increase in the contingent liability of Holdings with respect to any
post-retirement Welfare Plan benefit, the occurrence or expected occurrence of
any Reportable Event or the termination, Reorganization or Insolvency of any
Multiemployer Plan or the complete or partial withdrawal by Holdings or any
member of the Controlled Group from a Multiemployer Plan, notice thereof and
copies of all documentation relating thereto;
(j) as soon as possible and in any event within five
Business Days after any Authorized Officer of Holdings obtains knowledge or
notice of the occurrence of any changes in Holdings' Debt Rating by ▇▇▇▇▇'▇ or
S&P;
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(k) within ten Business Days after each anniversary of the
Closing Date, a certificate from Holdings's insurers or insurance agents
evidencing that the insurance policies in place satisfy the requirements of the
Operative Documents;
(l) as soon as possible and in any event within five
Business Days after any Authorized Officer of Holdings obtains (i) knowledge of
the occurrence thereof, notice of any casualty, damage or loss to the Generating
Assets, whether or not insured, through fire, theft, other hazard or casualty,
involving a probable loss of $5,000,000 or more or (ii) knowledge of (A) the
occurrence, notice of any cancellation, notice of threatened or potential
cancellation or (B) any material change in the terms, coverage or amounts of any
policy of insurance which would result in such policy deviating from Prudent
Industry Practice;
(m) as soon as possible and in any event within five
Business Days after any Authorized Officer of Holdings obtains knowledge of the
occurrence thereof, notice that any Governmental Authority may revoke, or refuse
to grant or renew, or materially modify, any material Governmental Approval
described in SECTION 3.1(c);
(n) concurrently with the delivery of the financial
statements referred to in SECTION 7.1(b), Holdings shall cause to be delivered
to the Lender and the Holder Representative, letters from each of S&P and
▇▇▇▇▇'▇ ("RATING LETTERS") setting forth, as of the date of such letters, each
Debt Rating; and
(o) promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of Holdings, or compliance with the terms of this Agreement or the other
Operative Documents, as the Owner Trustee, the Owner Lessor, the Owner
Participant, the Lender and the Holder Representative may reasonably request.
SECTION 7.2 EXISTENCE; CONDUCT OF BUSINESS. Holdings will do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its corporate existence and take all reasonable action to maintain all
material rights, privileges and franchises necessary or desirable in the normal
conduct of its business except, in each case as permitted by SECTION 8.3. For as
long as the Funding LLC Notes are outstanding and so long as no Lessor Note or
Lessor Notes (or participation interests therein) shall have been assigned or
otherwise transferred to the APA Purchasers pursuant to Section 18(n) of the APA
and remain outstanding, Holdings shall not, and shall cause each of its
subsidiaries not to, engage in any business other than owning and operating
electrical generating assets and selling and marketing wholesale electric power
and other products and services related thereto or investing in entities that
engage in the foregoing.
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SECTION 7.3 COMPLIANCE WITH REQUIREMENTS OF LAW AND CONTRACTUAL
OBLIGATIONS. Holdings shall, and shall cause each of its Subsidiaries to,
comply with all Requirements of Law and Contractual Obligations, such
compliance to include the payment, before the same become delinquent, of all
taxes, assessments and governmental charges or levies, except to the extent
non-compliance would not have a Material Adverse Effect on Holdings.
SECTION 7.4 BOOKS AND RECORDS; INSPECTION RIGHTS. Holdings shall, and
shall cause each of its Subsidiaries to, keep books and records which accurately
reflect all of its business affairs and transactions and permit the Owner
Lessor, the Owner Participant, the Lender, the Holder Representative and each of
the Funding LLC Note Holders or any of their respective representatives (at the
Holder Representative's or such Funding LLC Note Holders' expense), at
reasonable times and intervals upon reasonable prior notice, to visit all of its
offices and sites and to discuss its financial matters with its officers and
independent public accountant. Holdings shall, at any reasonable time and from
time to time upon reasonable prior notice, permit the Owner Lessor, the Owner
Participant, the Lender, the Holder Representative and each of the Funding LLC
Note Holders or any of their respective agents or representatives to examine and
make copies of and abstracts from the records and books of account of Holdings
and its subsidiaries; PROVIDED that by virtue of this SECTION 7.4, Holdings
shall not be deemed to have waived any right to confidential treatment of the
information obtained, subject to the provisions of Requirements of Law or court
order. The provisions of this SECTION 7.4 shall be deemed to be supplemental to,
but not duplicative of, the other provisions of the Operative Documents that
relate to inspection of the Facility and the books and records relating thereto.
SECTION 7.5 IMPLEMENTATION OF YEAR 2000 PLAN. Holdings shall ensure
that its, and its Subsidiaries', computer based systems are able to effectively
process data including dates on and after January 1, 2000.
SECTION 7.6 FURTHER ASSURANCES. Upon written request of the Owner
Lessor, the Owner Participant, the Lender or the Holder Representative, Holdings
shall, and shall cause each of its subsidiaries to, promptly perform or cause to
be performed any and all acts and execute or cause to be executed any and all
documents (including, financing statements and continuation statements) for
filing under the provisions of the Uniform Commercial Code or any other
Requirement of Law which are necessary or advisable to preserve, protect and
perfect the ownership of the Undivided Interest and the interest of the Owner
Lessor in the Ground Lease and to maintain Liens on the Lessor Collateral in
favor of the Holder Representative that are duly perfected in accordance with
all applicable Requirements of Law.
SECTION VIII NEGATIVE COVENANTS OF HOLDINGS
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For as long as any of the Funding LLC Notes are outstanding and each
Lessor Note (or participation interest therein), if any, that shall have been
assigned or otherwise transferred to the APA Purchasers pursuant to Section
18(n) of the APA has been paid in full, Holdings covenants and agrees to perform
the obligations set forth in this SECTION 8.
SECTION 8.1 INDEBTEDNESS. Holdings shall not and shall not permit its
Subsidiaries to create, incur, assume or permit to exist any Indebtedness,
other than:
(a) Indebtedness under the Holdings Credit Agreement;
(b) Capitalized Lease Liabilities and Operating Lease
Liabilities outstanding (or anticipated to be outstanding) on the Closing Date
and set forth on Schedule 8.2.1(a) to the Holdings Credit Agreement and other
Capitalized Lease Liabilities and Operating Lease Liabilities entered into in
the ordinary course of business not to exceed at any time an aggregate principal
amount equal to $50,000,000;
(c) Indebtedness under Interest Rate Hedging Transactions;
(d) subject to SECTION 8.11, Indebtedness of the Holdings
Loan Parties incurred to finance the acquisition, construction or improvement of
any fixed or capital assets in accordance with and subject to SCHEDULE 8.2.1(d)
to the Holdings Credit Agreement;
(e) Indebtedness consisting of reimbursement obligations
of the Holdings Loan Parties in respect of (i) letters of credit (other than the
Midwest Letters of Credit), surety bonds and performance bonds used by the
Holdings Loan Parties in the ordinary course of business in an aggregate amount
not to exceed $40,000,000 at any time and (ii) the Midwest Letters of Credit;
(f) Indebtedness of Holdings incurred to refinance (x) the
Holdings Facility, (y) any other Existing Indebtedness of Holdings or (z) the
Funding LLC Loans (in part to the extent of amortization of the Lessor Notes or
in whole in the event that the Facility Lease and the Facility Sublease are
terminated) (each such refinancing of the Funding LLC Loans, a "FUNDING LLC
REFINANCING"), PROVIDED that (A) the average life of any such Indebtedness shall
not be less than, in the case of Indebtedness incurred to refinance the Holdings
Loans (other than the Holdings Loans borrowed for working capital), five (5)
years, or, in the case of Indebtedness incurred to refinance other Indebtedness
of Holdings, the average life of the Indebtedness so refinanced and (B) the
principal amount of such Indebtedness shall not exceed the amount of the
Indebtedness so refinanced, plus the amount of fees and expenses incurred in
connection with such issuance;
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(g) Indebtedness (including guarantees thereof by Midwest)
in the form of commercial paper in an amount which, when added to the sum of (x)
the aggregate outstanding principal amount of Holdings Loans (other than
Holdings Loans borrowed for working capital) and (y) the outstanding principal
amount of any Indebtedness incurred pursuant to SECTION 8.1(g) (or subsequent
refinancings of such Indebtedness) does not exceed the sum of (A)
$1,679,000,000 PLUS (B) the aggregate principal amount of Funding LLC
Refinancings by Holdings;
(h) Indebtedness in the form of subordinated, unsecured
intercompany loans between the Holdings Loan Parties that are subject to the
EMOC Loan Documents;
(i) Indebtedness in the form of guarantees made by and
reimbursement obligations with respect to letters of credit issued for the
account of Holdings in the ordinary course of business related to the Generating
Assets in connection with fuel procurement, sales, transportation or management
purchases or exchanges made by affiliates of Holdings related to physical
capacity, energy and emission credits related to the Generating Assets and
financial instruments related thereto and purchases, sales or exchanges of
energy or emission credits;
(j) Indebtedness of Holdings under the Letter of Credit
Guarantee;
(k) Indebtedness of Midwest under the Midwest Lessor Lease
Guaranty, the Midwest OP Lease Guaranty; and
(l) other Indebtedness of Holdings, provided that (A)
Holdings shall have delivered a PRO FORMA calculation of the Debt Service
Coverage Ratio for the preceding 12-month period (or, if such calculation is
being delivered prior to the first anniversary of the Closing Date, for such
shorter period of not less than six months) indicating that, had such
Indebtedness been outstanding and had the maximum amount of Indebtedness
available to be drawn under the tranche of the Holdings Facility available for
working capital been outstanding during such period, the Debt Service Coverage
Ratio for such period would have been equal or greater than 2.50 to 1.00; (B)
the most recently delivered Ratings Letters confirm that the Debt Ratings are at
least BBB- and Baa3 by S&P and ▇▇▇▇▇'▇ respectively; and (C) to the extent that
such Indebtedness incurred since the date of the most recently delivered Ratings
Letters would exceed $200 million in the aggregate, Holdings shall have received
written confirmation that the incurrence of such Indebtedness would not result
in a downgrade of the Holdings' Debt Rating below BBB- or Baa3 from S&P and
▇▇▇▇▇'▇, respectively.
SECTION 8.2 LIENS. Holdings shall not and shall not permit its
Subsidiaries to create, incur, assume or permit to exist any Liens on such
Person's respective property, revenues or assets, whether now owned or hereafter
acquired, other than:
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(a) Liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter payable without
penalty or which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books;
(b) Liens of carriers, warehousemen, mechanics, material
men and landlords incurred in the ordinary course for sums not overdue or which
are being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books;
(c) Liens incurred in the ordinary course in connection
with workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits;
(d) Liens granted in the ordinary course as security for
the performance of tenders, statutory obligations, leases and contracts (other
than for Indebtedness) or to secure obligations on surety or appeal bonds;
(e) easements, rights-of-way, zoning or other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case materially
detract from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of Holdings or such Subsidiary;
(f) Liens on cash collateral securing investments and
guarantee obligations;
(g) judgment Liens in existence (i) less than 30 days
after the entry thereof so long as the payment thereof is effectively bonded or
otherwise adequately secured or (ii) less than 60 days after entry thereof so
long as no enforcement, levy, collection or foreclosure proceeding has commenced
or with respect to which execution has been stayed or payment of which is
covered in full by insurance;
(h) Liens, title defects and adverse claims that neither
individually nor in the aggregate materially diminish the use or value of the
property affected thereby;
(i) Permitted Encumbrances;
(j) Liens specifically permitted under or created pursuant
to the Operative Documents;
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(k) Liens to secure Indebtedness permitted by clauses
8.1(b), 8.1(f), 8.1(k), 8.1(l) and 8.1(g), provided that such Indebtedness shall
be secured on a pro rata basis with the Holdings Loans and Holdings' Guarantee;
(l) purchase money Liens to secure Indebtedness permitted
by clause 8.1(e), provided that such Liens do not encumber any assets other than
those acquired or constructed with the proceeds of such Indebtedness; and
(m) extensions or renewals of any Lien otherwise permitted
to be incurred under this SECTION 8.2 securing Indebtedness in an amount not
exceeding the principal amount of, and accrued interest on, the Indebtedness
secured by such Lien as so extended or renewed at the time of such extension or
renewal; PROVIDED that such Lien shall apply only to the same property
theretofore previously securing such Indebtedness.
SECTION 8.3 MERGER, CONSOLIDATION, SALE OF SUBSTANTIALLY ALL ASSETS.
Holdings will not liquidate or dissolve, consolidate or merge with or into any
other Person, or purchase or otherwise acquire all or substantially all of the
assets of Person, unless:
(a) No Lessor Loan Event of Default has occurred and is
continuing or would occur after giving effect to such liquidation, dissolution,
consolidation, merger or asset acquisition;
(b) Holdings is the entity resulting from such
consolidation or surviving in such merger; and
(c) after giving effect to such transaction no Rating
Event shall occur and be continuing.
SECTION 8.4 SALE OF ASSETS. Holdings shall not, and shall not permit
its Subsidiaries to, consummate any Asset Disposition, unless the aggregate net
book value of all such assets, together with the net book value of all other
assets sold, transferred, leased, contributed or conveyed by Holdings and its
Subsidiaries pursuant to this SECTION 8.4 since the Closing Date, does not
exceed the Permitted Percentage; PROVIDED, HOWEVER, that notwithstanding
anything to the contrary contained herein, Holdings and its Subsidiaries may
(i) sell or otherwise dispose of assets as and to the extent necessary to comply
with Requirements of Law; PROVIDED, HOWEVER, that if after giving effect to any
Asset Dispositions required to be made under this CLAUSE (i) the aggregate net
book value of sales made under this SECTION 8.4 would exceed the Permitted
Percentage, Holdings shall make a prepayment of all Net Cash Proceeds therefrom
pursuant to the terms of the Holdings Loan Agreement, (ii) sell or otherwise
dispose of Cash Equivalent Investments, (iii) enter into the Facility Site Lease
and the Other Facility Site Leases and (iv) transfer certain railcars or rights
to railcars as part of the Transco Transaction; PROVIDED, FURTHER,
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that any Asset Disposition pursuant to clauses (i) through (iv) of this
paragraph shall not be included in the calculation of the aggregate net book
value of assets sold pursuant to this SECTION 8.4.
SECTION 8.5 INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND ACQUISITIONS.
Holdings shall not, and shall not permit any of its Subsidiaries to, create or
acquire, make, incur, assume or suffer to exist any Investment in any other
Person, except:
(i) Investments existing on the Closing Date;
(ii) Investments into Midwest, provided that no
Lease Event of Default shall be in existence or shall occur after
giving effect to the making of such Investment;
(iii) Investments in the form of payments made
under the Facility Sublease and the Other Facility Subleases; and
(iv) Cash Equivalent Investments, PROVIDED that any
Investment which when made complies with the requirements of the
definition of the term "CASH EQUIVALENT INVESTMENT" may continue to be
held notwithstanding that such Investment if made thereafter would not
comply with such requirements.
SECTION 8.6 TRANSACTIONS WITH AFFILIATES. Holdings shall not, and shall
not permit its Subsidiaries to, enter into, or cause, suffer or permit to exist,
any Transaction with an Affiliate unless such arrangement or contract is fair
and reasonable to Holdings and is an arrangement or contract of the kind which
would be entered into by a prudent Person in the position of Holdings with a
Person which is not one of its Affiliates.
SECTION 8.7 AMENDMENT, WAIVER OR ASSIGNMENT OF CERTAIN DOCUMENTS.
Holdings shall not, and shall not permit any of its Subsidiaries to terminate,
amend, supplement or otherwise modify any ComEd Agreement (i) in any materially
adverse manner with respect to its term, offtake requirement or payment
provision or (ii) otherwise in a manner which would result in a Material
Adverse Effect on Holdings without the prior written consent of the Holder
Representative, which consent shall not be unreasonably withheld or delayed.
SECTION 8.8 SPECULATIVE TRANSACTIONS. Holdings shall not, and shall not
permit its Subsidiaries to, directly or indirectly engage in transactions for
(or incur Indebtedness under SECTION 8.1(i) in connection with) any speculative
purpose, including speculative transactions relating to (x) fuel procurement or
sales, (y) purchases, sales or exchanges
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related to capacity and energy from the Generating Assets or financial
instruments related thereto or (z) purchases, sales or exchanges of energy or
emission credits.
SECTION 8.9 RESTRICTIVE AGREEMENTS. Holdings shall not and shall not
permit any of its Subsidiaries to enter into any agreement (other than the
Holdings Credit Documentation and the Operative Documents as in effect on the
Closing Date) (a) expressly restricting the ability of Holdings to amend or
otherwise modify the Holdings Credit Documentation, (b) restricting the ability
of any Holdings Loan Party to make any payments, directly or indirectly, to
Holdings by way of dividends or make distributions on its capital stock or
member or other ownership interests or to pay any Indebtedness owed to any
Holdings Loan Party or (c) restricting the ability of any Holdings Loan Party to
make loans or advances to Holdings or any other Holdings Loan Party.
SECTION 8.10 CHANGES IN LEGAL FORM OR BUSINESS. Holdings shall not
change its legal form or Organic Documents except as permitted by SECTION 8.3,
change its Fiscal Year or engage in any business other than the business
contemplated by the Operative Documents.
SECTION 8.11 CAPITAL EXPENDITURES. Holdings will not and will not
permit its Subsidiaries to make any capital expenditures (other than Necessary
Capital Expenditures) or other asset purchases in excess of $5,000,000 per
annum so long as (a) the Debt Service Coverage Ratio for the preceding 12-month
period ended on the last day of the immediately preceding Fiscal Quarter is less
than 1.75 to 1.00 (to be computed for the first time on the date which is 12
months after the Closing Date) and (b) the projected Debt Service Coverage Ratio
for each of the two succeeding 12-month periods is less than 1.75 to 1.00 or (c)
any Debt Rating falls into ▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇ or ▇▇▇▇▇ ▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇.
SECTION 8.12 DIVIDENDS AND OTHER PAYMENTS. Holdings shall not, and
shall not permit any of its Subsidiaries to, declare or pay any dividend (other
than dividends payable solely in common stock of the Person making such
dividend) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of capital stock of
or other ownership interest in any Holdings Loan Party or any warrants or
options to purchase any such stock or ownership interest, whether now or
hereafter outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of any
Holdings Loan Party (such declarations, payments, setting apart, purchases,
redemptions, defeasances, retirements, acquisitions and distributions being
herein called "RESTRICTED PAYMENTS"); PROVIDED, HOWEVER, that: (a) any
Subsidiary of Holdings may make Restricted Payments to Holdings; and (b)
Holdings may make Restricted Payments in respect of its capital stock on any
Quarterly Payment Date if: (i) Holdings has paid all amounts then due and
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payable in respect of the Holdings Loans; (ii) no Lessor Loan Event of Default
shall have occurred and be continuing or will occur after giving effect to the
making of such payment; and (iii) (A) the Debt Service Coverage Ratio for the
12-month period ended on the last day of the immediately preceding Fiscal
Quarter, (B) the projected Debt Service Coverage Ratio for the 12-month period
commencing on the first day of the then current Fiscal Quarter and (C) the
projected Debt Service Coverage Ratio for the 12-month period commencing on the
first anniversary of the first day of the then current Fiscal Quarter, in each
case shall be no less than 1.75 to 1.00; PROVIDED, that (x) on any Quarterly
Payment Date on which any Debt Rating falls into ▇▇▇▇▇ ▇ of the CAPEX Limita-
tion Grid, 50% of any Excess Cash Flow shall be deposited into the Cashflow
Recapture Fund until the amount on deposit in such Cashflow Recapture Fund
equals the amount of the Fixed Charges payable during the next six months
calculated as of such Quarterly Payment Date; (y) on any Quarterly Payment Date
on which any Debt Rating falls into ▇▇▇▇▇ ▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ %
of any Excess Cash Flow shall be deposited into the Cashflow Recapture Fund; and
(z) at any time any Debt Rating falls into ▇▇▇▇▇ ▇ of the CAPEX Limitation Grid,
all Excess Cash Flow generated by Holdings, if any, and all amounts on deposit
in the Cashflow Recapture Fund will be used to make prepayments of the Holdings
Loans pursuant to the Holdings Credit Agreement. To the extent that any funds
have been deposited into the Cashflow Recapture Fund, the funds will be held as
security for the repayment of the Holdings Loans and Holdings' obligations under
its guarantee of the lease obligations of ▇▇▇▇▇▇▇ Holdings under the Facility
Lease and will only be released once each Debt Rating falls into ▇▇▇▇▇ ▇ ▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
SECTION IX AFFIRMATIVE COVENANTS OF ▇▇▇▇▇▇▇ HOLDINGS
▇▇▇▇▇▇▇ Holdings covenants and agrees that it will perform the
obligations set forth in this SECTION 9.
SECTION 9.1 MAINTENANCE OF EXISTENCE; CONDUCT OF BUSINESS. ▇▇▇▇▇▇▇
Holdings shall preserve, renew and keep in full force and effect its legal
existence and take all necessary action to maintain all material rights,
privileges and franchises necessary or desirable in the normal conduct of its
business.
SECTION 9.2 COMPLIANCE WITH REQUIREMENTS OF LAW AND CONTRACTUAL
OBLIGATIONS. ▇▇▇▇▇▇▇ Holdings shall comply with all Requirements of Law and
Contractual Obligations, such compliance to include the payment, before the
same become delinquent, of all taxes, assessments and governmental charges
or levies, except to the extent such non-compliance would not result in a
Material Adverse Effect on ▇▇▇▇▇▇▇ Holdings.
SECTION 9.3 MAINTENANCE OF PROPERTIES. ▇▇▇▇▇▇▇ Holdings shall (a)
maintain its properties which are necessary or useful in the proper conduct of
its business (i) in good
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condition, repair and working order (ordinary wear and tear excepted), except
where the failure to do so would not result in a Material Adverse Effect on
▇▇▇▇▇▇▇ Holdings, (ii) in accordance with Prudent Industry Practice, and (iii)
in compliance with all material Requirements of Law, and (b) make such repairs,
renewals, replacements, betterments and improvements to such properties as in
the reasonable judgment of ▇▇▇▇▇▇▇ Holdings are necessary so that such
properties may be operated in accordance with their intended purpose. The
provisions of this Section 9.3 shall be deemed to be supplemental to, but not
duplicative of, the provisions of the Facility Lease.
SECTION 9.4 NOTICES OF MATERIAL EVENTS. (i) ▇▇▇▇▇▇▇ Holdings will
furnish to the Owner Trustee, the Owner Lessor, the Owner Participant, the
Midwest LC Issuer, the RCE LC Issuer and the Holder Representative prompt
written notice of the following:
(a) as soon as possible and in any
event within five Business Days after any Authorized Officer of ▇▇▇▇▇▇▇
Holdings obtains knowledge of the occurrence of (i) any Lease Event of
Default and (ii) any default under any other material agreement to
which ▇▇▇▇▇▇▇ Holdings is a party or any termination thereof, in each
case, together with a statement of an Authorized Officer of ▇▇▇▇▇▇▇
Holdings setting forth details of such Lease Event of Default, default
or termination and the action ▇▇▇▇▇▇▇ Holdings has taken and proposes
to take with respect thereto;
(b) as soon as possible and in any
event within five Business Days after the commencement of, or the
occurrence of any material adverse development with respect to, any
litigation, action, proceeding, Environmental Claim or labor
controversy of the type described in SECTION 3.3(g);
(c) immediately upon becoming aware of
the institution of any steps by ▇▇▇▇▇▇▇ Holdings to terminate any
Pension Plan (other than a standard termination under ERISA Section
4041(b)), or the failure to make a required contribution to any Pension
Plan if such failure is sufficient to give rise to a Lien under Section
302(f) of ERISA or Section 412 of the Code, or the taking of any action
with respect to a Pension Plan which could result in the requirement
that ▇▇▇▇▇▇▇ Holdings furnish a bond or other security to the PBGC or
such Pension Plan, or the occurrence of any event with respect to any
Pension Plan which could result in the incurrence by ▇▇▇▇▇▇▇ Holdings
or any member of the Controlled Group of any material liability (other
than liabilities incurred in the ordinary course of maintaining the
Pension Plan), fine or penalty, or any increase in the contingent
liability of ▇▇▇▇▇▇▇ Holdings with respect to any
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post-retirement Welfare Plan benefit, the occurrence or expected
occurrence of any Reportable Event or the termination, Reorganization
or Insolvency of any Multiemployer Plan or the complete or partial
withdrawal by ▇▇▇▇▇▇▇ Holdings or any member of the Controlled Group
from a Multiemployer Plan, notice thereof and copies of all
documentation relating thereto;
(d) as soon as possible and in any
event within five Business Days after any Authorized Officer of ▇▇▇▇▇▇▇
Holdings obtains knowledge of the occurrence thereof, notice of any
casualty, damage or loss to properties owned by ▇▇▇▇▇▇▇ Holdings which
are necessary or useful in the proper conduct of its business, whether
or not insured, through fire, theft, other hazard or casualty,
involving a probable loss of $5,000,000 or more;
(e) as soon as possible and in any
event within five Business Days after any Authorized Officer of ▇▇▇▇▇▇▇
Holdings obtains knowledge of the occurrence thereof, notice that any
Governmental Authority may revoke, or refuse to grant or renew, or
materially modify, any material Governmental Approval described in
SECTION 3.3(d);
(f) concurrently with the payment of
Contingent Prepaid Rent, notice of such prepayment and the amounts
thereof;
(g) promptly following any request
therefor, such other information regarding the operations, business
affairs and financial condition of ▇▇▇▇▇▇▇ Holdings, or compliance with
the terms of this Agreement or the other Operative Documents, as the
Owner Trustee, the Owner Lessor, the Owner Participant and the Holder
Representative may reasonably request; and
(h) concurrently with the delivery of
any notice, report, request, demand, certificate, financial statement
or other instrument (but without duplication of deliveries required
under SECTION 9.1(i)) to the Owner Lessor pursuant to the Facility
Lease, ▇▇▇▇▇▇▇ Holdings shall furnish a copy of the same to the Holder
Representative with sufficient copies for each Holder.
Each notice delivered under SECTION 9.4(i) shall be accompanied by a
statement of an Authorized Officer or other executive officer of ▇▇▇▇▇▇▇
Holdings setting forth the details of the event or development requiring such
notice and any action taken or proposed to be taken with respect thereto.
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SECTION 9.5 FURTHER ASSURANCES. Upon written request of the Owner
Trustee, the Owner Lessor, the Owner Participant, the Lender or the Holder
Representative, ▇▇▇▇▇▇▇ Holdings shall promptly perform or cause to be performed
any and all acts and execute or cause to be executed any and all documents
(including, financing statements and continuation statements) for filing under
the provisions of the Uniform Commercial Code or any other Requirement of Law
which are necessary or advisable to preserve, protect and perfect the ownership
of the Undivided Interest and the interest of the Owner Lessor in the Ground
Lease and to maintain Liens on the Lessor Collateral in favor of the Holder
Representative that are duly perfected in accordance with all applicable
Requirements of Law.
SECTION X NEGATIVE COVENANTS OF ▇▇▇▇▇▇▇ HOLDINGS
SECTION 10.1 SOLE PURPOSE NATURE. ▇▇▇▇▇▇▇ Holdings shall not enter into
or engage in any business other than as contemplated by the Facility Lease, the
Facility Sublease, the Facility Site Sublease, the Facility Site Sub-sublease
and the Tax Indemnity Agreement and the activities related thereto.
SECTION 10.2 INDEBTEDNESS. ▇▇▇▇▇▇▇ Holdings shall not create, incur,
assume, suffer to exist or otherwise become or remain directly or indirectly
liable with respect to any Indebtedness, other than Indebtedness incurred
hereunder and under the other Operative Documents.
SECTION 10.3 LIENS. ▇▇▇▇▇▇▇ Holdings shall not create, incur, assume or
suffer or permit to exist, directly or indirectly, any Lien on any of its
property now owned or hereafter acquired, except the Liens specifically
permitted under the Operative Documents.
SECTION 10.4 PROHIBITION OF FUNDAMENTAL CHANGES. ▇▇▇▇▇▇▇ Holdings shall
not enter into any transaction of merger or consolidation, change its form of
organization or its business, liquidate or dissolve itself (or suffer any
liquidation or dissolution) or discontinue its business or sell all or
substantially all of its assets.
SECTION 10.5 INVESTMENTS. ▇▇▇▇▇▇▇ Holdings shall not form or have any
Subsidiaries, make investments, loans or advances or otherwise acquire any
stock, obligations or securities of any person, except that ▇▇▇▇▇▇▇ Holdings may
make investments specifically permitted under the Operative Documents.
SECTION 10.6 BANKRUPTCY. ▇▇▇▇▇▇▇ Holdings shall not commence any case,
proceeding or other action under any existing or future law of any jurisdiction,
relating to bankruptcy, insolvency, reorganization, agreement, adjustment,
winding-up, liquidation, dissolution, composition, or other relief with respect
to it or its debts, or seek appoint-
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ment of a receiver, trustee, custodian, or other similar official for it or for
all or any substantial part of its assets, or make a general assignment for the
benefit of its creditors or take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in this
Section 10.6.
SECTION XI COVENANTS OF THE TRUST COMPANY, THE OWNER TRUSTEE AND THE
OWNER LESSOR
SECTION 11.1 COMPLIANCE WITH THE TRUST AGREEMENT. Each of the Owner
Lessor, the Trust Company and the Owner Trustee hereby severally covenants and
agrees severally and as to itself only that it will:
(a) comply with all of the terms of the Trust
Agreement applicable to it; and
(b) not amend, supplement, or otherwise modify
SECTION 9.01, SECTION 10.01 or SECTION 10.02 of the Trust Agreement without the
prior written consent of Midwest so long as no Material Lease Default or Lease
Event of Default has occurred and is continuing or the Holder Representative so
long as the Lessor Notes are outstanding.
SECTION 11.2 OWNER LESSOR'S LIENS. The Trust Company, the Owner Trustee
and the Owner Lessor each covenants severally and as to itself only that it will
not directly or indirectly create, incur, assume or suffer to exist any Owner
Lessor's Lien attributable to it and will promptly notify in writing ▇▇▇▇▇▇▇
Holdings, the Owner Participant and Holder Representative of the imposition of
any such Lien of which it has actual knowledge and shall promptly, at its own
expense, take such action as may be necessary to duly discharge such Owner
Lessor's Lien attributable to it.
SECTION 11.3 AMENDMENTS TO OPERATIVE DOCUMENTS. The Owner Trustee and
the Trust Company each covenants severally and as to itself only that it will
not unless such action is expressly contemplated by the Operative Documents, or
with respect to the Owner Trustee and the Owner Lessor, unless it is expressly
directed by the Owner Participant in writing, (a) through its own action
terminate any Operative Document to which it is a party, (b) amend, supplement,
waive or modify (or consent to any such amendment, supplement, waiver or
modification) any Operative Document (other than the Trust Agreement, amendments
to and modifications of which are governed by SECTION 11.1 hereof) in any manner
other than with respect to administrative or ministerial matters or (c) except
as provided in SECTION 16.2 hereof, take any action to prepay or refund the
Lessor Notes or amend any of the payment terms of the Lessor Notes without, in
each case, the prior written consent of Midwest so long as no Material Lease
Default or Lease Event of Default shall have occurred and be continuing and, in
the case of clause (a) or
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(b), the Holder Representative so long as the Funding LLC Notes are outstanding
and so long as no Lessor Note or Lessor Notes (or participation interests
therein) shall have been assigned or otherwise transferred to the APA Purchasers
pursuant to Section 18(n) of the APA and remain outstanding.
SECTION 11.4 TRANSFER OF THE OWNER LESSOR'S INTEREST. Other than as
contemplated by the Operative Documents, each of the Owner Lessor and the Owner
Trustee covenants severally and as to itself only that it will not assign,
pledge, sell, lease, convey or otherwise transfer any of its then existing
right, title or interest in and to the Owner Lessor's Interest, the Trust Estate
or the other Operative Documents without the consent of Midwest and, so long as
the Lessor Notes are outstanding, the Holder Representative, which consent may
not be unreasonably withheld. Nothing in this SECTION 11.4 shall limit the
ability of the Owner Trustee or the Owner Participant to appoint a successor
Owner Trustee pursuant to SECTION 9 of the Trust Agreement.
SECTION 11.5 OWNER LESSOR; TRUST ESTATE. Each of the Owner Trustee and
the Owner Lessor covenants severally and as to itself only that it will not
voluntarily take any action to subject the Owner Lessor or the Trust Estate to
the provisions of any applicable bankruptcy or insolvency law (as now or
hereafter in effect).
SECTION 11.6 LIMITATION ON INDEBTEDNESS AND ACTIONS. Each of the Owner
Trustee and the Owner Lessor covenants severally and as to itself only that it
will not incur any indebtedness nor enter into any business or activity except
as required or expressly permitted or contemplated by any Operative Document.
SECTION 11.7 CHANGE OF LOCATION. The Owner Trustee shall use all
reasonable efforts to give the Owner Participant, the Holder Representative, the
Lender, Midwest and ▇▇▇▇▇▇▇ Holdings 30 days' written notice of any relocation
of the Owner Trustee's chief executive office or the place where documents and
records relating to the Owner Trustee or the Trust Estate are kept from the
location set forth in SECTION 3.4(j) and of any change in its name, but in any
event the Owner Trustee and the Owner Lessor shall give such notice within 30
days after such relocation or name change.
SECTION 11.8 BANKRUPTCY OF TRUST. Each of the Trust Company, the Owner
Trustee and the Owner Lessor hereby agrees severally and as to itself only that
it shall not voluntarily take any action that shall, or cause any action to be
taken that is intended to, submit the Owner Lessor, as debtor, to any proceeding
under any Requirement of Law involving bankruptcy, insolvency, reorganization or
other laws affecting the rights of creditors generally unless a Lease Event of
Default or a Material Lease Default shall have occurred and be continuing (in
which case, if the Lien of the Lessor Collateral shall not have been discharged,
the Trust Company, the Owner Trust or the Owner Lessor shall not
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take such action unless the Holder Representative shall have given its prior
written consent to such action in its sole discretion).
SECTION XII COVENANTS OF THE OWNER PARTICIPANT
SECTION 12.1 RESTRICTIONS ON TRANSFER OF BENEFICIAL INTEREST.
(a) The Owner Participant covenants and agrees that it
shall not during the Facility Lease Term assign, convey or transfer any of its
right, title or interest in the Beneficial Interest without the prior written
consent of Midwest and, so long as the Lessor Notes are outstanding, without the
prior written consent of the Holder Representative; PROVIDED, HOWEVER, that the
Owner Participant may assign, convey or transfer all or any part of its interest
in the Beneficial Interest without such consent to a Person (the "TRANSFEREE")
which shall assume the duties and obligations of the Owner Participant under the
Operative Documents with respect to the interest being transferred pursuant to
an Assignment and Assumption Agreement substantially in the form of Exhibit RR
hereto, if each of the following conditions shall have been satisfied:
(i) Midwest, the Owner Trustee and, so long as
the Lessor Notes are outstanding, the Holder Representative shall have
received an opinion of counsel, which opinion and counsel are
reasonably satisfactory to each recipient thereof, to the effect that
such Assignment and Assumption Agreement is a legal, valid and binding
obligation of, and is enforceable against, each party thereto, that all
regulatory approvals required in connection with such transfer or
necessary to assume the Owner Participant's obligations under the
Operative Documents shall have been obtained and that the proposed
transfer of the Beneficial Interest will not require registration the
Securities Act;
(ii) the Transferee shall be a "United States
person" within the meaning of Section 7701 (a)(30) of the Code;
(iii) the Transferee or a guarantor of such
Transferee meets the following criteria: (1) the Consolidated
Tangible Net Assets of at least equal to $75 million calculated
in accordance with GAAP, (2) agrees to be bound by the terms of the
Operative Documents pursuant to an Assumption and Assignment Agreement
substantially in the form of Exhibit RR hereto, and (3) so long as no
Lease Event of Default shall have occurred and be continuing, such
Transferee is not a Competitor of, or in material litigation with,
Midwest or any Affiliate of Midwest, unless waived by Midwest;
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(iv) the transferring Owner Participant shall
pay, without any right of indemnification from Midwest or any other
Person, all reasonable documented out-of-pocket costs, fees and
expenses incurred in connection with any such transfer by (x) the other
Lease Financing Parties, except Midwest, and (y) Midwest, so long as no
Lease Event of Default shall have occurred and be continuing; and
(v) following such transfer, there shall be not
more than four Owner Participants with interests (Undivided Interests
or beneficial trust interests) in the Facility.
(b) For purposes of the preceding clause (a), a
"COMPETITOR" of Midwest shall be an entity which, or an Affiliate of which, is
significantly involved as a seller or trader of capacity or energy in the
electric market; PROVIDED that, the foregoing restriction shall not apply in the
case of a Transferee that is an Affiliate of such a seller or trader so long as
(i) such Transferee is an entity involved in making passive investments such as
the Owner Participant's contemplated investment in this transaction, (ii) such
Transferee has in place procedures which shall be reasonably acceptable to
Midwest to prevent such Affiliate that is a seller or trader of capacity from
acquiring confidential information relating to such passive investments and
agrees in writing with Midwest to maintain and abide by such procedures, and
(iii) neither such Transferee nor any Affiliate thereof is an entity that is (x)
actively involved in the generation of electricity in Mid-American
Interconnected Network and/or the East Central Reliability Council or any
successor thereto, or (y) on the List of Competitors, attached hereto as Exhibit
SS, which may, from time to time, but no more often than once per year, be
modified by Midwest, and shall contain a list of up to six entities (including
Affiliates) which Midwest reasonably believes in its good faith judgment are
Competitors of Midwest. Notwithstanding the foregoing, the restrictions set
forth in clause (i) or (iii) (1) and (iii) (3) of SECTION 12.1(a) above shall
not inure to the benefit of Midwest if such transfer is in connection with the
exercise of remedies during a Lease Event of Default.
(c) Midwest shall not be responsible for any adverse tax
consequence to the Owner Lessor or the Owner Participant resulting from any
transfer pursuant to this SECTION 12.1 and the Pricing Assumptions (as set forth
on SCHEDULE 12.1 (c) hereto) shall not be changed as a result of any such
transfer except if such transfer is in connection with the exercise of remedies
during a Lease Event of Default.
(d) The Owner Participant shall give the Owner Lessor,
the Owner Trustee, the Holder Representative, ▇▇▇▇▇▇▇ Holdings and Midwest 30
days' prior written notice of such transfer, or 10 days in the case of a
transfer to an Affiliate of the Owner Participant, specifying the name and
address of any proposed Transferee and such additional information as shall be
necessary to determine whether the proposed transfer
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satisfies the requirements of this SECTION 12.1. If requested by the Owner
Participant or the Holder Representative, Midwest shall acknowledge qualifying
transfers.
(e) Upon any such transfer in compliance with this
SECTION 12.1 (i) such Transferee shall, to the extent of the Beneficial Interest
conveyed to the Transferee, (x) be deemed the "Owner Participant" for all
purposes, and (y) enjoy the rights and privileges and perform the obligations of
the Owner Participant hereunder and under the Assignment and Assumption
Agreement, the Owner Participant Guaranty and each other Operative Document to
which such Owner Participant is a party, and each reference in this Agreement,
the Assignment and Assumption Agreement, the Owner Participant Guaranty and each
other Operative Document to the "Owner Participant" shall thereafter be deemed
to include such Transferee, to the extent of the Beneficial Interest conveyed to
the Transferee, for all purposes and (ii) the transferor Owner Participant and
the Guarantor, if any, of such transferor Owner Participant's obligations shall
be released from all obligations hereunder and under each other Operative
Document to which such transferor or Guarantor is a party or by which such
transferor Owner Participant or Guarantor is bound to the extent such
obligations are expressly assumed by a Transferee; PROVIDED, HOWEVER, that in no
event shall any such transfer waive or release the transferor or its Guarantor
from any liability existing immediately prior to or occurring simultaneously
with such transfer.
SECTION 12.2 OWNER PARTICIPANT'S LIENS. The Owner Participant covenants
that it will not directly or indirectly create, incur, assume or suffer to exist
any Owner Participant's Lien and the Owner Participant shall promptly notify
Midwest, ▇▇▇▇▇▇▇ Holdings, the Lender and Holder Representative in writing of
the imposition of any such Lien of which the Owner Participant has actual
knowledge and shall promptly, at its own expense, take such action as may be
necessary to duly discharge such Owner Participant's Lien.
SECTION 12.3 AMENDMENTS OR REVOCATION OF TRUST AGREEMENT. The Owner
Participant covenants that it will not (a) amend, supplement, or otherwise
modify SECTION 9.01, SECTION 10.01 or SECTION 10.02 of the Trust Agreement
except for amendments required by the Operative Documents or by Requirements of
Law or which are administrative or ministerial in nature without the prior
written consent of Midwest so long as no Material Lease Default or Lease Event
of Default has occurred and is continuing, and without the prior written consent
of the Holder Representative so long as the Lessor Notes are outstanding, or (b)
revoke, or otherwise waive compliance with or terminate the Trust Agreement
without the prior written consent of Midwest so long as no Material Lease
Default or Lease Event of Default has occurred and is continuing, and the Holder
Representative so long as the Lessor Notes are outstanding.
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SECTION 12.4 PROHIBITION ON FUNDAMENTAL CHANGES. The Owner Participant
shall not change its form of organization and shall not enter into or engage in
any business other than as contemplated by the Operative Documents and the
activities related thereto.
SECTION 12.5 BANKRUPTCY FILINGS. The Owner Participant agrees that it
will not file a petition, or join in the filing of a petition, seeking
reorganization, arrangement, adjustment or composition of, or in respect of, the
Owner Lessor under the Bankruptcy Code, or any other applicable Federal or state
law or the law of the District of Columbia.
SECTION 12.6 INSTRUCTIONS. The Owner Participant agrees that it will
not instruct the Owner Lessor to take any action prohibited by this Agreement or
any other Operative Document.
SECTION 12.7 APPOINTMENT OF SUCCESSOR OWNER TRUSTEE. Notwithstanding
any other provision of this Agreement, a successor Owner Trustee shall not be
appointed by the Owner Participant without the consent of Midwest and, so long
as the Lessor Notes are outstanding, the Holder Representative unless such
successor Owner Trustee (a) meets the requirements of the Trust Agreement, (b)
has a combined capital and surplus of at least $150 million, and (c) Midwest
and, so long as the Lessor Notes are outstanding, the Holder Representative
shall have received at the expense of the Owner Participant: (i) an opinion or
opinions of counsel, such counsel and such opinion to be reasonably acceptable
to such parties, to the effect that no regulatory consents or approvals are
required, or (ii) such other documentation reasonably satisfactory to Midwest or
the Holder Representative, as the case may be; PROVIDED, HOWEVER, that if
Wilmington Trust Company resigns as Owner Trustee, is terminated for cause, or
shall become incapable of acting or shall be adjudged bankrupt or insolvent or a
receiver of the Owner Trustee or its properties shall be appointed or any public
officer shall take charge or control of the Owner Trustee or its property or
affairs for the purpose of rehabilitation, conservation or liquidation, the
opinion required by clause (c) shall be at the expense of Midwest.
SECTION 12.8 COOPERATION. Owner Lessor agrees, and each of the Owner
Participant and the Owner Trustee agree to cause the Owner Lessor to, at the
request of Midwest and at the sole After-Tax cost and expense of Midwest, take
such actions as may be necessary for the Owner Lessor to take as the owner of
the Facility for purposes of obtaining the valid and effective issue, transfer
or amendment, as the case may be, of all Governmental Approvals to the extent
the same are required for the use, ownership, operation or maintenance of the
Facility, the Facility Site, the Undivided Interest, the Ground Interest or any
Component by Midwest or ▇▇▇▇▇▇▇ Holdings or any permitted assignee of Midwest or
▇▇▇▇▇▇▇ Holdings in the manner contemplated by the Operative Documents. Midwest
shall pay on an After-Tax Basis all reasonable costs and expenses
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(including, without limitation, the reasonable fees and expenses of counsel) of
Owner Lessor and each other Person party to an Operative Document incurred in
connection with any such action. It is understood and agreed that, with respect
to any action requested of it, and taken by it, under this Section, the Owner
Lessor, the Owner Participant and the Owner Trustee shall make no
representation or warranty as to, and shall have no responsibility for the
effectiveness of such action to accomplish or promote the objective intended by
the Person making such request.
SECTION XIII COVENANTS OF THE HOLDER REPRESENTATIVE
SECTION 13.1 THE HOLDER REPRESENTATIVE'S LIENS. The Holder
Representative will not directly or indirectly create, incur, assume or suffer
to exist any Holder Representative's Lien attributable to it and arising out of
events or conditions not related to its rights in the Lessor Collateral or the
administration thereof, and will promptly notify the Owner Participant, the OP
Guarantor, the Owner Trustee, ▇▇▇▇▇▇▇ Holdings and Midwest in writing of the
imposition of any such Lien of which it has actual knowledge and shall promptly,
at its own expense, take such action as may be necessary to duly discharge such
Holder Representative's Lien.
SECTION XIV MIDWEST'S INDEMNIFICATIONS
SECTION 14.1 GENERAL INDEMNITY.
(a) CLAIMS IDENTIFIED. Subject to the exclusions stated
in paragraph (b) below, Midwest and ▇▇▇▇▇▇▇ Holdings jointly and severally agree
to indemnify, protect, defend and hold harmless, and do hereby indemnify the
Owner Participant, the OP Guarantor, the Owner Lessor, the Trust Company in its
individual capacity, the Owner Trustee, the Equity Investor, the Holder
Representative, each Holder, the Midwest LC Issuer, the RCE LC Issuer, Funding
LLC and each Funding LLC Note Holder, the RCE Agent, the APA Agent, each APA
Purchaser, Citicorp North America, Inc., Lord Securities Corporation, Midwest
Funding, Inc. and the Surety and their respective Affiliates, successors,
assigns, agents, members, partners, directors, officers or employees (each an
"INDEMNITEE") against any and all Claims (including Environmental Claims)
(whether or not any of the transactions contemplated by the Operative Documents
are consummated) imposed on, incurred or suffered by or asserted against such
Indemnitee in any way relating to or resulting from or arising out of or
attributable to:
(i) the construction, financing, refinancing,
acquisition, operation, rebuilding, warranty, ownership, use,
possession, maintenance, repair, lease, condition, alteration,
modification, restoration, refurbishing, return, purchase, sale or
other disposition, insuring, sublease, or other use or non-use of the
Facility, the Facility Site, the Undivided
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Interest, the Ground Interest or any Component or any portion thereof
or any interest therein;
(ii) the conduct of the business or affairs of
Midwest or ▇▇▇▇▇▇▇ Holdings at the Facility and the Facility Site;
(iii) the manufacture, design, purchase,
acceptance, rejection, delivery or condition of, or improvement to,
the Facility, the Facility Site, the Undivided Interest, the Ground
Interest, or any Component, or any portion of any thereof or any
interest therein;
(iv) the Facility Lease, the Facility Site Lease,
the Facility Site Sublease, the Facility Site Sub-sublease or any other
Operative Document, the execution or delivery thereof or the
performance, enforcement, attempted enforcement or amendment,
supplement or modification of any terms thereof, or the transactions
contemplated thereby or resulting therefrom;
(v) any actual or alleged Environmental
Condition or Environmental Claim at, in, on, under, from or related in
any way to the Facility or the Facility Site or any portion thereof or
any Component;
(vi) the reasonable costs and expenses of any
Indemnitee in connection with amendments or supplements to the
Operative Documents requested or consented to by Midwest or required
or necessary as a result of a Lease Event of Default;
(vii) the imposition of any Lien other than, with
respect to a particular Indemnitee (or a Related Party), a Lien arising
by or through such Indemnitee that is prohibited by the terms of this
Agreement or other Operative Documents;
(viii) any violation by, or liability relating to,
Midwest or ▇▇▇▇▇▇▇ Holdings of, or under, any Requirement of Law,
whether now or hereafter in effect (including Environmental Laws), or
any action of any Governmental Authority or other Person taken with
respect to the Facility or the Facility Site, the Operative Documents
or the interest of any Indemnitee under the Operative Documents or the
presence, Release, generation, management, recycling, use, storage,
transportation, treatment or manufacture of any Hazardous Material in,
at, under, to or from the Facility, the Facility Site or any Component;
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(ix) the non-performance or breach by Midwest,
Holdings or ▇▇▇▇▇▇▇ Holdings of any obligation contained in this
Agreement or any other Operative Document or the falsity or inaccuracy
of any representation, warranty or obligation of Midwest, Holdings or
▇▇▇▇▇▇▇ Holdings contained in this Agreement or any other Operative
Document;
(x) the continuing fees (if any) and expenses
of the Owner Lessor and the Owner Trustee (including the reasonable
compensation and expenses of their counsel, accountants and other
professional persons) arising out of the Owner Lessor's or the Owner
Trustee's discharge of their respective duties under or in connection
with the Operative Documents;
(xi) the continuing fees (if any) and expenses of
Holder Representative, the Lender and the Funding LLC Note Holders
(including the reasonable compensation and expenses of their respective
counsel, accountants and other professional persons) arising out of the
discharge of their respective duties under or in connection with the
Operative Documents;
(xii) the applications of Part 4 and 5 of Subtitle
B of Title I of ERISA (including, without limitation, any penalties
imposed under Section 501(i) or (1) of ERISA) or any excise taxes,
charges or penalties imposed under Section 4975 of the Code;
(xiii) the issuance of Lessor Notes in accordance
with Section 2.03 of the Lessor Loan Agreement; and
(xiv) in any other way relating to the
transactions contemplated by the Operative Documents and Additional
Covered Documents.
(b) CLAIMS EXCLUDED. Any Claim, to the extent relating to
or resulting from or arising out of or attributable to any of the following, is
excluded from Midwest's and ▇▇▇▇▇▇▇ Holdings' agreement to indemnify any
Indemnitee under this SECTION 14.1:
(i) acts, omissions or events occurring after
expiration or other termination of the Facility Lease and, where
required by the Facility Lease, return of the Facility to the Owner
Lessor or its designee in compliance with the provisions of the
Facility Lease, except to
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the extent such Claim is an Environmental Claim that relates to,
results from, arises out of or is attributable to an Environmental
Condition that was in existence at the Facility or the Facility Site
prior to or as of such expiration or termination of the Facility Lease
and the return of the Facility;
(ii) with respect to a particular Indemnitee and
Related Parties, any offer, sale, assignment, transfer or other
disposition (voluntary or involuntary) by or on behalf of (a) in the
case of the Owner Participant of any of its interest in the Beneficial
Interest, or (b) in the case of the Owner Lessor, and if such action is
taken at the written direction of the Owner Participant, the Owner
Participant and Related Parties, of all or any of the Owner Lessor's
interest in the Facility or the Facility Site, or (c) all or any of the
Lender's interest in the Lessor Notes or the collateral therefor,
unless such transfer is required by the terms of the Operative
Documents or occurs in connection with the exercise of remedies during
a Lease Event of Default;
(iii) with respect to any Indemnitee and Related
Parties, any Claim attributable to the gross negligence or willful
misconduct of the Indemnitee seeking indemnification or a Related
Party of such Indemnitee;
(iv) as to any Indemnitee, any Claim attributable
to the noncompliance of such Indemnitee or a Related Party, with any of
the terms of, or any misrepresentation or breach of warranty by such
Indemnitee contained in any Operative Document or any breach by such
Indemnitee or a Related Party of any covenant contained in any
Operative Document attributable to such Indemnitee or Related Party,
unless attributable to Midwest or ▇▇▇▇▇▇▇ Holdings or the breach by
another Person of its obligations under the Operative Documents or
imputed to the Indemnitee;
(v) with respect to the Owner Trustee and the
Trust Company, any Claim constituting or arising from an Owner Lessor's
Lien attributable to it;
(vi) with respect to Holder Representative, any
Claim arising from a Holder Representative's Lien;
(vii) with respect to the Owner Participant, any
claim constituting or arising from an Owner Participant's Lien;
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(viii) any Claim relating to the payment of any
amount which constitutes Transaction Costs which the Owner Participant
is obligated to pay pursuant to SECTION 2.3(a) hereof or any other
amount to the extent such Indemnitee or a Related Party has expressly
agreed in any Operative Document to pay such amount without a right of
reimbursement;
(ix) any Claim that is a Tax, or is a cost of
contesting a Tax, whether or not Midwest is required to indemnify
therefor pursuant to SECTION 14.2 or under the Tax Indemnity
Agreement;
(x) any failure on the part of the Owner Trustee
to distribute in accordance with the Trust Agreement any amounts
received by it under the Operative Documents and distributable by it
thereunder;
(xi) any Claim relating to the costs and expenses
of any Indemnitee in connection with any amendments or supplements to
the Operative Documents requested by such Indemnitee or a Related Party
if such amendment or supplement is not required by the Operative
Documents;
(xii) any Claim that constitutes principal and/or
interest on the Lessor Notes, any Additional Lessor Notes or the
corresponding payments under the Funding LLC Notes on any Additional
Funding LLC Notes, respectively;
(xiii) any Claim that constitutes the RCE LC
Reimbursement Obligations and any interest thereon; and
(xiv) any Claim arising out of obligations
expressly assumed by the Indemnitee seeking indemnification or a
Related Party thereof.
PROVIDED that the terms "omission," "gross negligence" and "willful misconduct,"
when applied with respect to the Owner Trustee, the Owner Participant, the OP
Guarantor, the Equity Investor, the Owner Lessor, Citicorp North America, Inc.,
Lord Securities Corporation, Midwest Funding, Inc., the Holder Representative,
any Holder, the Midwest LC Issuer, the RCE LC Issuer, any Funding LLC Note
Holder, the RCE Agent, the APA Agent, each APA Purchaser, the Surety or any
Affiliate of any thereof, shall not include any liability imputed as a matter of
law to such Indemnitee solely by reason of such
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entity's interest in the Facility or the Facility Site or such Indemnitee's
failure to act in respect of matters which are or were the obligation of Midwest
under this Agreement or any other Operative Document.
(c) INSURED CLAIMS. Subject to the provisions of
paragraph (e) of this SECTION 14.1, in the case of any Claim indemnified by
Midwest hereunder which is covered by a policy of insurance maintained by
Midwest, each Indemnitee agrees, unless it and each other Indemnitee shall waive
its rights to indemnification (for itself and each Related Party thereto) in a
manner reasonably acceptable to Midwest, to cooperate, at the sole cost and
expense of Midwest, with insurers in exercise of their rights to investigate,
defend or compromise such Claim.
(d) AFTER-TAX BASIS. Midwest agrees that any payment or
indemnity pursuant to this SECTION 14.1 in respect of any Claim shall be made on
an After-Tax Basis to the Indemnitees.
(e) CLAIMS PROCEDURE. Each Indemnitee shall promptly
after such Indemnitee shall have actual knowledge thereof notify Midwest in
writing of any Claim as to which indemnification is sought; PROVIDED, that the
failure so to notify Midwest shall not reduce or affect Midwest's liability
which it may have to such Indemnitee under this SECTION 14.1. Any amount payable
to any Indemnitee pursuant to this SECTION 14.1 shall be paid within fifteen
(15) days after receipt of such written demand therefor from such Indemnitee,
accompanied by a certificate of such Indemnitee stating in reasonable detail the
basis for the indemnification thereby sought and (if such Indemnitee is not a
party hereto) an agreement to be bound by the terms hereof as if such Indemnitee
were such a party. The foregoing shall not, however, constitute an obligation to
disclose confidential information of any kind without the execution of an
appropriate confidentiality agreement. Promptly after Midwest receives
notification of such Claim accompanied by a written statement describing in
reasonable detail the Claims which are the subject of and basis for such
indemnity and the computation of the amount so payable, Midwest shall notify
such Indemnitee in writing whether it intends to pay, object to, compromise or
defend any matter involving the asserted liability of such Indemnitee. Midwest
shall have the right to investigate and so long as no Material Lease Default or
Lease Event of Default shall have occurred and be continuing, Midwest shall have
the right in its sole discretion, to defend or compromise any Claim for which
indemnification is sought under this SECTION 14.1 which Midwest acknowledges in
writing to the applicable Indemnitee is subject to indemnification hereunder;
PROVIDED that no such defense or compromise shall involve any danger of (i)
foreclosure, sale, forfeiture or loss of, or imposition of a Lien on any part of
the Undivided Interest, the Ground Interest, the Trust Estate or the Lessor
Collateral or the impairment of the Facility in any material respect or (ii) any
criminal liability being incurred or any material adverse effect on such
Indemnitee, PROVIDED, FURTHER, that no Claim shall be compromised by Midwest on
a basis that admits any
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criminal violation or gross negligence or willful misconduct on the part of such
Indemnitee without the express written consent of such Indemnitee; and PROVIDED,
FURTHER, that to the extent that other Claims unrelated to the transactions
contemplated by the Operative Documents are part of the same proceeding
involving such Claim, Midwest may assume responsibility for the contest or
compromise of such Claim only if the same may be and is severed from such other
Claims (and each Indemnitee agrees to use reasonable efforts to obtain such a
severance). If Midwest elects, subject to the foregoing, to compromise or
defend any such asserted liability, it may do so at its own expense and by
counsel selected by it and reasonably satisfactory to such Indemnitee. Upon
Midwest's election to compromise or defend such asserted liability and prompt
notification to such Indemnitee of its intent to do so, such Indemnitee shall
cooperate at Midwest's expense with all reasonable requests of Midwest in
connection therewith and will provide Midwest with all information not within
the control of Midwest as is reasonably available to such Indemnitee which
Midwest may reasonably request; PROVIDED, HOWEVER, that such Indemnitee shall
not, unless otherwise required by Requirement of Law, be obligated to disclose
to Midwest or any other Person, or permit Midwest or any other Person to examine
(i) any income tax returns of the Owner Participant or (ii) any confidential
information or pricing information not generally accessible by the public
possessed by the Owner Participant (and, in the event that any such information
is made available, Midwest shall treat such information as confidential and
shall take all actions reasonably requested by such Indemnitee for purposes of
obtaining a stipulation from all parties to the related proceeding providing for
the confidential treatment of such information from all such parties). Where
Midwest, or the insurers under a policy of insurance maintained by Midwest,
undertake the defense of such Indemnitee with respect to a Claim (with counsel
reasonably satisfactory to each such Person such Indemnitee and without
reservation of rights against such Indemnitee), no additional legal fees or
expenses of such Indemnitee in connection with the defense of such Claim shall
be indemnified hereunder unless such fees or expenses were incurred at the
request of Midwest or such insurers. Notwithstanding the foregoing, an
Indemnitee may participate at its own expense in any judicial proceeding
controlled by Midwest pursuant to the preceding provisions, but only to the
extent that such party's participation does not in the reasonable opinion of
counsel to Midwest interfere with such control; PROVIDED, HOWEVER, that such
party's participation does not constitute a waiver of the indemnification
provided in this SECTION 14.1; PROVIDED, FURTHER, that if and to the extent that
(i) such Indemnitee is advised by counsel that an actual or potential conflict
of interest exists where it is advisable for such Indemnitee to be represented
by separate counsel or (ii) there is a risk that such Indemnitee may be indicted
or otherwise charged in a criminal complaint and such Indemnitee informs Midwest
that such Indemnitee desires to be represented by separate counsel, such
Indemnitee shall have the right to control its own defense of such Claim and the
reasonable fees and expenses of such defense (including, without limitation, the
reasonable fees and expenses of such separate counsel) shall be borne by
Midwest. So long as no Lease Event of Default shall have occurred and be
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continuing, no Indemnitee shall enter into any settlement or other compromise
with respect to any Claim without the prior written consent of Midwest unless
(i) the Indemnitee waives its rights to indemnification hereunder or (ii)
Midwest has not acknowledged its indemnity obligation with respect thereto and
there is a significant risk that a default judgment will be entered against such
Indemnitee. Nothing contained in this SECTION 14.1(e) shall be deemed to require
an Indemnitee to contest any Claim or to assume responsibility for or control of
any judicial proceeding with respect thereto.
(f) SUBROGATION. To the extent that a Claim indemnified
by Midwest under this SECTION 14.1 is in fact paid in full by Midwest or an
insurer under an insurance policy maintained by Midwest, Midwest (so long as no
Lease Event of Default shall have occurred and be continuing) or such insurer
shall be subrogated to the rights and remedies of the Indemnitee on whose behalf
such Claim was paid to the extent of such payment (other than rights of such
Indemnitee under insurance policies maintained at its own expense) with respect
to the transaction or event giving rise to such Claim. Should an Indemnitee
receive any refund, in whole or in part, with respect to any Claim paid by
Midwest hereunder, it shall promptly pay over to Midwest the lesser of (i) the
amount refunded reduced by the amount of any Tax incurred by reason of the
receipt or accrual of such refund and increased by the amount of any Tax (but
not in excess of the amount of such reduction) saved as a result of such payment
or (ii) the amount Midwest or any of its insurers has paid in respect of such
Claim; PROVIDED that, so long as a Material Lease Default or Lease Event of
Default shall have occurred and is continuing such amount may be held by the
Owner Lessor as security for Midwest's obligations under the Facility Lease and
the other Operative Documents.
Any Person seeking indemnity under this SECTION 14.1 who is not a party
to this Agreement shall agree to the terms and conditions set forth in this
SECTION 14.1 as a condition to making any such claim for indemnity under this
SECTION 14.1.
SECTION 14.2 GENERAL TAX INDEMNITY.
(a) INDEMNITY. Except as provided in paragraph (b),
Midwest and ▇▇▇▇▇▇▇ Holdings, jointly and severally, agree to indemnify on an
After-Tax Basis each of the Owner Participant, the OP Guarantor, the Equity
Investor, the Owner Lessor, the Trust Company in its individual capacity, the
Owner Trustee, the OP Member, the Holder Representative, the Funding LLC
Noteholders, the Lessor Noteholders and the Funding LLC, their respective
successors and assigns, the past and present partners or members of or holders
of the ownership interests in, as the case may be, the Owner Participant and the
Affiliates of each of the foregoing (each a "TAX INDEMNITEE") and to hold each
Tax Indemnitee harmless from and to defend each Tax Indemnitee against all Taxes
that are imposed upon any Tax Indemnitee, the Facility, the Facility Site, the
Undivided Interest, the Ground Interest, or any portion or Component thereof or
any interest therein, or upon
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any Operative Document or interest therein, arising out of, in connection with
or relating to, any of the following:
(i) the construction, financing, refinancing,
acquisition, operation, warranty, ownership, use, possession,
maintenance, repair, lease, condition, alteration, modification,
restoration, refurbishing, return, purchase, sale or other disposition,
insuring, sublease, or other use or non-use of the Facility, Undivided
Interest, Ground Interest or the Facility Site, or any portion or
Component thereof or any interest therein;
(ii) the conduct of the business or affairs of
Midwest at the Facility and the Facility Site;
(iii) the manufacture, design, purchase,
acceptance, rejection, delivery or condition of, or improvement to, the
Facility, the Undivided Interest, the Ground Interest, the Facility
Site, or any portion or Component thereof, or any interest therein;
(iv) the Facility Lease, the Facility Site Lease,
the Facility Site Sublease, any Lessor Note, any Funding LLC Note or
any other Operative Document, the execution or delivery thereof, or the
performance, enforcement or amendment of any terms thereof;
(v) the payment or receipt of Basic Lease Rent,
Renewal Lease Rent, Supplemental Lease Rent, any amount due on any
Lessor Note or Funding LLC Note or any other amount payable under the
Facility Lease; or
(vi) otherwise relating to the transactions
contemplated by the Operative Documents.
(b) EXCLUDED TAXES. The indemnity provided for in
paragraph (a) above shall not extend to any of the following Taxes (the
"EXCLUDED TAXES"):
(i) Taxes imposed on, based on or measured by
gross or net income or receipts or capital or net worth (other than
sales, use, property, ad valorem, rental, stamp, transfer, excise,
license and value added taxes, and other than franchise tax imposed by
the State of Illinois upon the Owner Participant, the Owner Lessor or
their respective Affiliates under the Business Corporation Act of
1983, as amended, or any successor legislation thereto);
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(ii) Taxes attributable to any period after
expiration or other termination of the Facility Lease and, where
required by the Facility Lease, return of the Facility to the Owner
Lessor or its designee in accordance with the Facility Lease (or, (a)
in the case of the Holder Representative, after the repayment of the
Lessor Notes, or (b) in case of the Funding LLC and the Funding LLC
Note Holders, after the sale or other disposition of the Lessor Notes
by the Funding LLC);
(iii) Taxes imposed on a Tax Indemnitee
attributable to the gross negligence or willful misconduct of such Tax
Indemnitee or any Related Party of such Tax Indemnitee;
(iv) Taxes in the nature of capital gain,
accumulated earnings, personal holding company, excess profits,
succession or estate, minimum, alternative minimum, preference,
franchise, conduct of business and other similar taxes (other than
franchise tax imposed by the State of Illinois upon the Owner
Participant, the Owner Lessor or their respective Affiliates under the
Business Corporation Act of 1983, as amended, or any successor
legislation thereto);
(v) Taxes imposed on a Tax Indemnitee that arise
out of, or are caused by, any act or omission of such Tax Indemnitee
(or any Related Party thereof) that is expressly prohibited by any
Operative Document or by a breach by such Tax Indemnitee (or any
Related Party thereof) of any of its representations, warranties or
covenants under any Operative Document;
(vi) Taxes arising out of, or caused by, any
voluntary assignment, sale, transfer or other voluntary disposition, or
any involuntary transfer or disposition resulting from a bankruptcy or
similar proceeding for relief of debtors in which such Tax Indemnitee
is a debtor, by (or a foreclosure by a creditor of) (A) the Owner
Participant of any of its Beneficial Interest, (B) the Owner Lessor of
all or any of its interest in the Facility or the Facility Site, or (C)
the Funding LLC of any interest in the Lessor Notes or the Collateral,
unless (i) such transfer or disposition occurs during the continuance
of a Lease Event of Default, or (ii) such transfer or disposition is
required under, or occurs pursuant to, the Operative Documents and the
price paid is other than Fair Market Sales Value;
(vii) Taxes arising in connection with Owner
Participant's Liens or Owner Lessor's Liens;
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(viii) Taxes imposed on any assignee or
successor-in-interest to a Tax Indemnitee to the extent any such Taxes
exceed the Taxes that would have been imposed had no assignment or
transfer taken place determined under the law as in effect on the date
of transfer; PROVIDED that this exclusion shall not apply to the
computation of the gross-up amounts necessary to make a payment on an
After-Tax Basis, nor to a transferee, assignee or successor in interest
that acquires the interest of a Tax Indemnitee pursuant to a transfer
or disposition in connection with the exercise of remedies during the
continuance of a Lease Event of Default;
(ix) Taxes that are included as a part of
Transaction Costs;
(x) Taxes imposed on, based on, or measured by
any compensation that any Owner Trustee, the Holder Representative or
the Funding LLC receives for its services;
(xi) any U.S. federal income taxes, including
with respect to the Owner Participant, Taxes for which Midwest is
obligated to indemnify the Owner Participant under the Tax Indemnity
Agreement (or which are expressly excluded from indemnification
thereunder);
(xii) other than with respect to any Funding LLC
Note Holder, the Funding LLC, Lessor Noteholders or Holder
Representative or any Related Party in respect of any thereof (a
"LENDER INDEMNITEE"), Taxes resulting from the Owner Lessor not being
treated as a grantor trust or a nonentity for federal, state or local
income tax purposes;
(xiii) Taxes attributable to the failure of any Tax
Indemnitee to comply with certification, information, documentation,
reporting or other similar requirements concerning the nationality,
residence, identity, connection with the jurisdiction imposing such
Taxes or other similar matters; PROVIDED that the foregoing exclusion
shall only apply if such Tax Indemnitee is eligible and obligated to
comply with such requirement and shall have been given timely written
notice of such requirement by Midwest;
(xiv) Taxes imposed on a Tax Indemnitee where the
Tax Indemnitee's breach of its contest obligations under Section
14.2(g) effectively precludes Midwest's ability to contest the Taxes;
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(xv) Taxes imposed on any Tax Indemnitee
resulting from an amendment, modification, supplement or waiver to any
Operative Document which was not requested by Midwest and as to which
Midwest is not a party and the Tax Indemnitee (or, in the case of the
Owner Participant, the Facility Lessor if acting at the express
direction of the Owner Participant) is a party unless such amendment,
modification, supplement or waiver (A) was required by applicable law
or the Operative Documents, (B) may be necessary or appropriate to, and
is in conformity with, any amendment, modification, supplement or
waiver to any Operative Document agreed to by Midwest in writing, or
(C) is made while a Lease Event of Default shall have occurred and be
continuing;
(xvi) Taxes imposed under Section 4975 of the
Code, Section 406 of ERISA or any comparable laws of any governmental
authority to the extent resulting from action by such Tax Indemnitee
other than, in the case of the Owner Participant, the taking of any
action at the request or direction of Midwest;
(xvii) Taxes imposed to the extent such Taxes
result from the Tax Indemnitee (and in the case of the Owner Lessor,
only if acting at the written direction of the Owner Participant) being
organized under the laws of a jurisdiction other than the United States
or any State thereof (other than, in the case of a Lender Indemnitee,
such Taxes which did not exist under law in effect on the date such
Lender Indemnitee became a party to this transaction);
(xviii) Any Taxes imposed on a Tax Indemnitee to the
extent that such taxes would not have been imposed but for the
activities of such Tax Indemnitee unrelated to the transactions
contemplated hereby;
(xix) Taxes imposed on a Tax Indemnitee in the
nature of interest, penalties, fines and additions to tax (i) payable
as a result of such Tax Indemnitee's failure to file, in a procedurally
proper manner and on a timely basis, any tax reports, returns or
statements as to which Midwest has timely notified such Tax Indemnitee
in writing of the requirement to file, unless such failure is otherwise
caused by the failure of Midwest to fulfill its obligations, if any,
with respect to such return (including provision of information
sufficient to enable such Tax Indemnitee to file such report, return or
statement), or (ii) to the extent not attributable to or resulting from
Taxes for which an indemnity is provided hereunder; and
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(xx) Taxes for as long as such Taxes are being
contested pursuant to the contest provisions contained in Section
14.2(g).
(c) PAYMENT. Each payment required to be made by Midwest
or ▇▇▇▇▇▇▇ Holdings to a Tax Indemnitee pursuant to this Section 14.2 shall be
paid either (i) when due directly to the applicable taxing authority by Midwest
if it is permitted to do so, or (ii) where direct payment is not permitted and
with respect to gross up amounts in immediately available funds to such Tax
Indemnitee by the latest of (A) 15 days following Midwest's receipt of the Tax
Indemnitee's written demand for the payment (which demand shall be accompanied
by a statement of the Tax Indemnitee describing in reasonable detail the Taxes
for which the Tax Indemnitee is demanding indemnity and the computation of such
Taxes), (B) in the case of amounts which are being contested pursuant to such
paragraph (g), 15 days following the time and in accordance with a final
determination of such contest or (C) in the case of any indemnity demand for
which Midwest has requested review and determination pursuant to paragraph (d)
below, the completion of such review and determination, but in no event later
than the date which is three Business Days prior to the date payment of such
Taxes is due. Any amount payable to Midwest pursuant to paragraph (e) or (f)
below shall be paid within 15 days after the Tax Indemnitee realizes a Tax
Benefit giving rise to a payment under paragraph (e) or receives a refund or
credit giving rise to a payment under paragraph (f), as the case may be, and
shall be accompanied by a statement of the Tax Indemnitee computing in
reasonable detail the amount of such payment. Upon the final determination of
any contest pursuant to paragraph (g) below in respect of any Taxes for which
Midwest has made a Tax Advance, the amount of Midwest's obligation under
paragraph (a) above shall be determined as if such Tax Advance had not been
made. Any obligation of Midwest under this Section 14.2 and the Tax Indemnitee's
obligation to repay the Tax Advance will be satisfied first by set off against
each other, and any difference owing by either party will be paid within 10 days
of such final determination.
(d) INDEPENDENT EXAMINATION. Within 15 days after Midwest
receives any computation from the Tax Indemnitee, Midwest may request in writing
that an independent public accounting firm selected by the Tax Indemnitee and
reasonably acceptable to Midwest review and determine on a confidential basis
the amount of any indemnity payment by Midwest to the Tax Indemnitee pursuant to
this Section 14.2 or any payment by a Tax Indemnitee to Midwest pursuant to
paragraph (e) or (f) below. The Tax Indemnitee and Midwest shall cooperate with
such accounting firm and supply it with all information reasonably necessary for
the accounting firm to conduct such review and determination, PROVIDED that such
accounting firm shall agree in writing in a manner satisfactory to the Tax
Indemnitee, or Midwest, as the case may be, to maintain the confidentiality of
such information, and PROVIDED FURTHER that neither any Tax Indemnitee nor
Midwest shall be required to disclose any of its tax returns or books that such
Tax Indemnitee or Midwest, as the case may be, reasonably deems to be
confidential in
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connection with such verification, and the parties hereto agree that such Tax
Indemnitee, or Midwest, as the case may be, shall have sole control over the
positions taken with respect to such party's tax returns and filings. The
fees and disbursements of such accounting firm will be paid by Midwest;
PROVIDED that such fees and disbursements will be paid by the Tax Indemnitee
if the accountants determine that the present value of the total payments as
calculated by the Tax Indemnitee is more than 105 percent of the present
value of the correct payments (such present values in each case to be
determined by the Discount Rate). In the event such accounting firm
determines that such computations are incorrect, then such firm shall
determine what it believes to be the correct computations. The computations
of the accounting firm shall be final, binding and conclusive upon Midwest
and the Tax Indemnitee. The parties hereto agree that the independent public
accounting firm's sole responsibility shall be to verify the computation of
any payment pursuant to this Section 14.2 and that matters of interpretation
of this Participation Agreement or any other Operative Document are not
within the scope of the independent accountant's responsibility. Such
accounting firm shall be requested to make its determination within 30 days.
(e) TAX BENEFIT. If, as the result of any Taxes paid or
indemnified against by Midwest under this Section 14.2, the aggregate Taxes
actually paid by the Tax Indemnitee in connection with such payment for any
taxable year and not subject to indemnification pursuant to this Section 14.2
are less (whether by reason of a deduction, credit, allocation or apportionment
of income or otherwise) than the amount of such Taxes that otherwise would have
been payable by such Tax Indemnitee (a "TAX BENEFIT"); then to the extent such
Tax Benefit was not taken into account in determining the amount of
indemnification payable by Midwest under paragraph (a) above and provided no
Lease Event of Default shall have occurred and be continuing (in which event the
payment provided under this Section 14.2(e) shall be deferred until the Lease
Event of Default has been cured), such Tax Indemnitee shall pay to Midwest the
lesser of (A) (y) the amount of such Tax Benefit, plus (z) an amount equal to
any United States federal, state or local income tax benefit resulting to the
Tax Indemnitee from the payment under clause (y) above and this clause (z)
(determined using the same assumptions as set forth in the second sentence under
the definition of After-Tax Basis) and (B) the amount of the indemnity paid
pursuant to this Section 14.2 giving rise to such Tax Benefit, provided that any
excess of the amount described in clause (A) over the amount described in clause
(B) shall be carried forward and applied to reduce pro tanto any subsequent
obligations of Midwest to make payment to such Tax Indemnitee pursuant to this
Section 14.2. If it is subsequently determined that the Tax Indemnitee was not
entitled to such Tax Benefit, the portion of such Tax Benefit that is required
to be repaid or recaptured will be treated as Taxes for which Midwest must
indemnify the Tax Indemnitee pursuant to this Section 14.2 without regard to
paragraph (b) hereof.
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(f) REFUND. If a Tax Indemnitee obtains a refund or
credit or would have received such refund or credit but for a counterclaim or
other claim not indemnified by Midwest hereunder against which such refund or
credit has not been applied (an "offset refund or credit") of all or part of any
Taxes paid, reimbursed or advanced by Midwest pursuant to this Section 14.2, the
Tax Indemnitee shall pay to Midwest within 15 days of such receipt, or in the
case of an offset refund or credit, within 15 days of the resolution of such
contest (x) the amount of such refund or credit (net of any Tax payable by the
Tax Indemnitee as a result of the receipt or accrual of such refund or credit)
plus (y) an amount equal to any Tax Benefit realized by such Tax Indemnitee by
reason of such payment to Midwest (determined using the same assumptions as set
forth in the second sentence under the definition of After-Tax Basis), PROVIDED
that (A) if at the time such payment is due to Midwest a Lease Event of Default
shall have occurred and be continuing, such amount shall not be payable until
such Lease Event of Default has been cured, and (B) the amount payable to
Midwest pursuant to this sentence shall not exceed the amount of the indemnity
payment in respect of such refunded or credited Taxes that was made by Midwest
(and such excess shall be carried forward and applied to reduce pro tanto any
subsequent obligations of Midwest to make payments to such Tax Indemnitee
pursuant to this Section 14.2). If it is subsequently determined that the Tax
Indemnitee was not entitled to such refund or credit, the portion of such refund
or credit that is required to be repaid or recaptured will be treated as Taxes
for which Midwest must indemnify the Tax Indemnitee pursuant to this Section
14.2 without regard to paragraph (b) hereof. If, in connection with a refund or
credit of all or part of any Taxes paid, reimbursed or advanced by Midwest
pursuant to this Section 14.2, a Tax Indemnitee receives an amount representing
interest on such refund or credit, the Tax Indemnitee shall pay to Midwest
within 15 days (1) the amount of such interest that shall be fairly attributable
to such Taxes paid, reimbursed or advanced by Midwest prior to the receipt of
such refund or credit (net of Taxes payable in respect of the receipt or accrual
of such interest) and (2) any Tax savings resulting from payments made by the
Tax Indemnitee under this Section 14.2.
(g) CONTEST.
(i) NOTICE OF CONTEST. If a written claim is
made by any taxing authority against a Tax Indemnitee for any Taxes
with respect to which Midwest may be required to indemnify against
hereunder (a "TAX CLAIM"), such Tax Indemnitee shall give Midwest
written notice of such Tax Claim promptly after its receipt, and shall
furnish Midwest with copies of such Tax Claim and all other writings
received from the taxing authority to the extent relating to such
claim, provided that failure so to notify Midwest shall not relieve
Midwest of any obligation to indemnify the Tax Indemnitee hereunder
except to the extent such failure effectively precludes Midwest from
contesting such Tax. The Tax Indemnitee shall
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not pay such Tax Claim until at least 30 days after providing Midwest
with such written notice, unless (a) the Tax Indemnitee is required to
do so by law or regulation and (b) in the written notice described
above, the Tax Indemnitee has notified Midwest of such requirement.
(ii) CONTROL OF CONTEST. Subject to subsection
(g)(iii) below, Midwest will be entitled to contest (acting through
counsel selected by Midwest and reasonably satisfactory to the Tax
Indemnitee), and control the contest of, any Tax Claim if (i) such Tax
Claim may be segregated procedurally and contested independently from
tax claims for which Midwest is not obligated to indemnify the Tax
Indemnitee, PROVIDED that if the Tax Indemnitee reasonably determines
at any time that permitting Midwest to conduct or continue to conduct
such contest could have material adverse business or other consequences
to such Tax Indemnitee, such Tax Indemnitee shall have the right to
control or reassert control over such contest, or (ii) the Tax
Indemnitee requests that Midwest control such contest; PROVIDED that in
the case of any such contest pursuant to (i) or (ii) Midwest shall use
all reasonable efforts to contest such Tax Claim in its own name, and
PROVIDED FURTHER that such contest shall be at Midwest's sole cost and
expense. Midwest shall consult in good faith with the Tax Indemnitee
and its counsel and shall provide the Tax Indemnitee with copies of any
reports or claims issued by the relevant auditing agent or taxing
authority, but the decisions regarding what actions to be taken shall
be made by Midwest in its sole judgment.
In the case of all other Tax Claims, the Tax
Indemnitee will contest the Tax Claim at Midwest's expense if Midwest
shall request that the Tax be contested (in accordance with subsection
(g)(iii) below), and the following rules shall apply with respect to
such contest:
(1) the Tax Indemnitee will control the
contest of such Tax Claim in good faith (acting through counsel
selected by the Tax Indemnitee and reasonably satisfactory to Midwest),
(2) at Midwest's written request, if
payment is made to the applicable taxing authority, the Tax Indemnitee
shall use all reasonable efforts to obtain a refund thereof in
appropriate administrative or judicial proceedings,
(3) the Tax Indemnitee conducting such
contest shall consult with and keep reasonably informed Midwest and its
designated counsel with respect to such Tax Claim and shall consider
and
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consult in good faith with Midwest regarding any request (a) to resist
payment of Taxes if practical and (b) not to pay such Taxes except
under protest if protest is necessary and proper, but the decision
regarding what actions to be taken shall be made by the Tax Indemnitee
in its sole judgment.
(4) Notwithstanding paragraph (3),
above, the Tax Indemnitee shall not otherwise settle, compromise or
abandon such contest without Midwest's prior written consent except as
provided in paragraph (g)(iv) below.
(iii) CONDITIONS OF CONTEST. Notwithstanding the
foregoing, no contest with respect to a Tax Claim will be required or
permitted pursuant to this Section 14.2, and Midwest shall be required
to pay the applicable Taxes without contest, unless:
(1) within 30 days after notice by the
Tax Indemnitee to Midwest of such Tax Claim, Midwest shall request in
writing to the Tax Indemnitee that such Tax Claim be contested,
provided that if a shorter period is required for taking action with
respect to such Tax Claim and the Tax Indemnitee notifies Midwest of
such requirement, Midwest shall use reasonable best efforts to request
such contest within such shorter period, and such Tax Indemnitee shall
take no action for as long as it is legally able to do so,
(2) no Lease Event of Default has
occurred and is continuing,
(3) there is no risk of sale, forfeiture
or loss of, or the creation of a Lien (other than a Permitted Lien) on
the Facility, Owner Lessor's or Owner Participant's interest in the
Facility, the Facility Site, the Undivided Interest, the Ground
Interest or any portion or Component thereof or any interest therein
as a result of such Tax Claim; PROVIDED that this clause (3) shall not
apply if Midwest shall have posted and maintained a bond or otherwise
provided security for Midwest's obligations under Section 14.2
satisfactory to the Tax Indemnitee in its reasonable discretion, or
the Tax is fully paid in either manner specified in clause (5) below,
(4) there is no risk of imposition of
any criminal penalties,
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(5) if such contest involves payment of
such Tax, Midwest will either advance to the Tax Indemnitee on an
interest-free basis and with no after-tax cost to such Tax Indemnitee
(a "TAX ADVANCE") or pay such Tax Indemnitee the amount payable by
Midwest pursuant to Section 14.2(a) above with respect to such Tax, and
such Tax Indemnitee shall promptly pay to Midwest any net Tax Benefit
recognized which results from any imputed interest deduction arising
from such interest free Tax Advance plus any net Tax Benefit recognized
which result from making any such payment.
(6) Midwest agrees to pay (and pays on
demand) and with no after-tax cost to such Tax Indemnitee all
reasonable costs, losses and expenses incurred by the Tax Indemnitee
in connection with the contest of such claim (including, without
limitation, all reasonable legal, accounting and investigatory fees
and disbursements),
(7) the Tax Indemnitee has been provided
at Midwest's sole expense with an opinion, reasonably acceptable to
such Tax Indemnitee, of independent tax counsel of recognized standing
selected by Midwest and reasonably acceptable to the Tax Indemnitee to
the effect that there is a Reasonable Basis for contesting such Tax
Claim,
(8) in the case of a judicial appeal,
no appeal to the U.S. Supreme Court shall be required of the Tax
Indemnitee or shall be permitted by Midwest.
(9) In the case of a judicial contest,
Midwest shall have delivered to the Tax Indemnitee a written
acknowledgment of its liability under this Section 14.2 for such Taxes,
PROVIDED, HOWEVER, that Midwest shall not be bound by its
acknowledgment of liability if the contest is resolved on the basis of
a written decision of the adjudicator that clearly indicates the basis
for the conclusion that Midwest has no liability under this Section
14.2 with respect to such Tax, unless Midwest's conduct of the contest
has materially prejudiced the Tax Indemnitee.
(iv) WAIVER OF INDEMNIFICATION. Notwithstanding
anything to the contrary contained in this Section 14.2, the Tax
Indemnitee at any time may elect to decline to take any action or any
further action with respect to a Tax Claim and may in its sole
discretion settle or compromise any contest with respect to such Tax
Claim without Midwest's consent if the Tax Indemnitee:
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(1) waives its right to any indemnity
payment by Midwest pursuant to this Section 14.2 in respect of such Tax
Claim (and any other claim for Taxes with respect to any other taxable
year the contest of which is effectively precluded by the Tax
Indemnitee's declination to take action with respect to the Tax
Claim), and
(2) promptly repays to Midwest any Tax
Advance and any amount paid to such Tax Indemnitee under Section 14.2
(a) above in respect of such Taxes.
Except as provided in the preceding sentence, any such waiver shall be
without prejudice to the rights of the Tax Indemnitee with respect to any other
Tax Claim.
(h) REPORTS.
(i) If any report, statement or return
is required to be filed by a Tax Indemnitee with respect to any Tax
that is subject to indemnification under this Section 14.2, Midwest
will (1) notify the Tax Indemnitee in writing of such requirement not
later than 30 days prior to the date such report, statement or return
is required to be filed (determined without regard to extensions) and
(2) either (y) if permitted by applicable law, prepare such report,
statement or return for filing by Midwest in such manner as will show
the ownership of the Facility by the Owner Lessor for United States
federal, state and local income tax purposes (if applicable), send a
copy of such report, statement or return to the Tax Indemnitee and
timely file such report, statement or return with the appropriate
taxing authority, or (z) if so directed by the Tax Indemnitee or in any
event if practicable and if the return to be filed reflects only
information in respect of the transactions contemplated by the
Operative Documents, prepare and furnish to such Tax Indemnitee not
later than 30 days prior to the date such report, statement or return
is required to be filed (determined without regard to extensions) a
proposed form of such report, statement or return for filing by the Tax
Indemnitee.
(ii) Each of the Tax Indemnitee or
Midwest, as the case may be, will timely provide the other, at
Midwest's expense, with all information in its possession that the
other party may reasonably require and request to satisfy its
obligations under this paragraph (h), but only if and to the extent
that such Tax Indemnitee is legally entitled to furnish such
information.
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(i) NON-PARTIES. If a Tax Indemnitee is
not a party to this Agreement, Midwest may require such Tax Indemnitee
to agree in writing, in a form reasonably acceptable to Midwest, to the
terms of this Section 14 (to the extent applicable to such Tax
Indemnitee) prior to making any payment to such Tax Indemnitee under
this Section.
SECTION XV MIDWEST'S AND ▇▇▇▇▇▇▇ HOLDINGS' RIGHT OF QUIET ENJOYMENT
Each party to this Agreement acknowledges notice of, and consents in
all respects to, the terms of the Facility Lease, the Facility Sublease, the
Facility Site Sublease and the Facility Site Sub-sublease and expressly,
severally and as to its own actions only, agrees that, so long as no Lease Event
of Default has occurred and is continuing, neither it nor any party acting by,
through or under such party shall take or cause to be taken any action contrary
to ▇▇▇▇▇▇▇ Holdings' rights under the Facility Lease and the Facility Site
Sublease and Midwest's rights under the Facility Sublease and the Facility Site
Sub-sublease, including the right to possession, use and quiet enjoyment of the
Undivided Interest and the Ground Interest.
SECTION XVI SUPPLEMENTAL FINANCING OF IMPROVEMENTS; OPTIONAL
REFINANCINGS
SECTION 16.1 FINANCING IMPROVEMENTS.
Upon the written request of Midwest delivered at least 90 days prior to
any proposed financing of the cost of any Required or Non-Severable Improvement,
the Owner Lessor and the Holder Representative agree to cooperate with Midwest
to (a) issue Additional Lessor Notes by the Owner Lessor to finance such
Improvement which will rank pari passu with the Lessor Notes then outstanding;
and (b) execute and deliver an amendment to the Facility Lease to reflect the
adjustments required by clause (v) below; PROVIDED, HOWEVER, that the Owner
Participant shall have been given the opportunity, but shall have no
obligation, to provide all or part of the funds required to finance the Owner
Lessor's Percentage of any such Improvement by making an Additional Equity
Investment in such amount, if any, as it may determine in its sole discretion.
Midwest shall have no obligation to accept and the Owner Participant shall not
be obligated to provide such Additional Equity Investment. The obligation to
finance such Improvement through the issuance of Additional Lessor Notes (any
financing of Improvements through the issuance of such Additional Lessor Notes
being called a "SUPPLEMENTAL FINANCING") is subject to the limitations on
incurrence of additional Indebtedness set forth in the Operative Documents and
the following additional conditions:
(i) there shall be no more than one
such financing in any calendar year;
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(ii) Improvements shall be made in
compliance with the Operative Documents;
(iii) such Improvement is a Required
Improvement;
(iv) subject to Section 2.03 of the
Lessor Loan Agreement, the Additional Lessor Notes shall have a final
maturity date no later than the expiration date of the Basic Lease Term
or any Renewal Term then in effect or already elected by ▇▇▇▇▇▇▇
Holdings as instructed by Midwest and will be fully repaid out of
additional Basic Lease Rent or Renewal Rent and Termination Value as
adjusted pursuant to the Operative Documents;
(v) appropriate adjustments to Basic
Lease Rent and Termination Value (determined without regard to any tax
benefits associated with such Improvements, unless the Owner
Participant is making an Additional Equity Investment) shall also be
made to protect the Owner Participant's Expected Return;
(vi) Midwest shall have paid, on an
After-Tax Basis, all reasonable out-of-pocket costs and expenses of
the Lease Financing Parties, including the reasonable fees and expenses
of counsel to the Owner Participant, the Owner Lessor, the Owner
Trustee and the Holder Representative, in each case to the extent
incurred in connection with any financing or refinancing pursuant to
this SECTION 16;
(vii) no Lease Event of Default shall
have occurred and be continuing unless the Improvements to be
constructed with the proceeds of the Additional Lessor Notes shall cure
such Lease Event of Default, and any such Improvements shall be made in
compliance with the Operative Documents;
(viii) the sum of (y) the principal amount
of such Additional Lessor Notes and (z) the principal amount of all
comparable additional lessor notes used to finance such Improvements
pursuant to the Other Facility Leases, is not less than $20 million and
not greater than 100% of the cost of the Improvements being financed;
PROVIDED that the sum of (I) the outstanding balance of the Lessor
Notes and (II) all comparable lessor notes issued and outstanding of
the Other Owner Lessors under the respective lessor loan agreements to
which such Other Owner
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Lessors are party never exceeds (x) 90% of the lesser of (1) the fair
market value of the Facility taking into account such Improvements, as
determined pursuant to the Appraisal Procedure, and (2) the sum of (t)
the Purchase Price, (u) the comparable purchase price for each of the
Other Undivided Interests and (v) the cost of the Improvement being
financed;
(ix) the Owner Participant shall have
received a favorable opinion reasonably satisfactory to it from Hunton
& ▇▇▇▇▇▇▇▇, or from nationally recognized tax counsel selected by the
Owner Participant and reasonably acceptable to Midwest, to the effect
that such financing would not result in any material indemnified, or
any unindemnified, incremental tax risk to the Owner Participant;
(x) the Owner Participant shall not
suffer any material adverse accounting effects under GAAP as a result
of providing such additional financing;
(xi) the cost of the Improvement,
together with the cost of all previous Improvements financed with
Additional Lessor Notes is not greater than 25% of the sum of (x) the
Purchase Price and (y) the comparable purchase price for each of the
Other Undivided Interests; unless the Facility Lessee shall have
received confirmation that giving effect to the financing in connection
with such Improvement, the Funding LLC Debt rating will not fall below
BBB- or Baa3 from S&P and ▇▇▇▇▇'▇, respectively; and
(xii) Midwest shall have made or
delivered such representations, warranties, covenants, opinions or
certificates as the Owner Participant may reasonably request.
(xiii) such Additional Lessor Notes are
issued pursuant to and in accordance with SECTION 2.03 of the Lessor
Loan Agreement and Midwest and ▇▇▇▇▇▇▇ Holdings shall have delivered
such certificates, reports and other documents and shall have taken all
other actions which are required to be delivered or taken by them
pursuant to SECTION 2.03 of the Lessor Loan Agreement.
Notwithstanding the prior provision dealing with the financing of
Improvements through the Facility Lease, Midwest shall at all times have the
right to finance Improvements to the Facility other than through the Facility
Lease; PROVIDED that Improvements may only be financed other than through the
Facility Lease if such financing would not result in any Lien on the Facility or
the Facility Land and shall be subject to the limita-
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tions on incurrence of additional Indebtedness contained in the other Operative
Documents; PROVIDED FURTHER, that Required Improvements and Non-Severable
Improvements shall automatically, upon being affixed to the Facility, become the
property of the Owner Lessor and subject to the Facility Lease.
SECTION 16.2 OPTIONAL REFINANCING OF LESSOR LOAN. Midwest will have the
right, exercisable on no more than three occasions, for as long as no Material
Lease Default or Lease Event of Default shall have occurred and be continuing,
to request the Owner Lessor, and the Owner Lessor shall reasonably consider and
shall not unreasonably refuse, to refund or refinance the Lessor Notes, in the
public or private market, in whole but not in part, through the issuance of new
notes to the public (notes issued in such refinancing, the "NEW LESSOR NOTES"),
to the Funding LLC, to a pass through trust or to such other funding vehicles as
may be used at that time or to any other party that is not the Facility Lessee,
the Facility Sublessee or any Affiliate thereof; PROVIDED that any refinancing
under this SECTION 16.2 shall also be subject to satisfaction of the following
conditions:
(i) the Owner Lessor shall be able to
issue and sell the New Lessor Notes in an amount adequate to accomplish
such refunding or refinancing;
(ii) the Owner Participant shall receive
an opinion reasonably satisfactory to it from Hunton & ▇▇▇▇▇▇▇▇ or from
nationally recognized tax counsel selected by the Owner Participant and
reasonably acceptable to the Facility Lessee, to the effect that such
refinancing (as opposed to the right to request such refinancing)
would not result in any material indemnified or any unindemnified
incremental tax risk to the Owner Participant (including tax risks
relating to the classification of the Lessor Notes as qualified
nonrecourse indebtedness; provided, however, that absent a change in
law or judicial, administrative or legislative interpretation thereof
after the Closing Date, there would not be incremental tax risk with
respect to the allocation of interest expense for foreign tax credit
purposes from a refinancing consummated in accordance with the
provisions set forth below);
(iii) all documentation in connection
with such refinancing shall be reasonably satisfactory to the Owner
Lessor, the Owner Trustee, and the Owner Participant and conditions set
forth therein shall be met;
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(iv) other than for the first such
refinancing, the Owner Participant shall be entitled to a consent fee
of $25,000 in connection therewith;
(v) the refinancing shall not result in
any other material adverse effect on the rights or interests of the
Owner Lessor or the Owner Participant;
(vi) New Lessor Notes shall be issued in
compliance with Section 467 of the Code and any proposed, temporary, or
final regulation thereunder, in each case as modified and in effect on
the date of such issuance.
(vii) all necessary authorizations,
approvals and consents in connection with such refinancing shall have
been obtained from each Person whose authorization, approval or consent
is necessary to consummate such refinancing with respect to the
Facility Lessee, the Owner Lessor and the Holder Representative, and
such authorizations, approvals and consents shall be in full force and
effect on the closing date of such refinancing;
(viii) if (i) the principal amount of the
New Lessor Notes exceeds that of the Lessor Notes existing on the
refinancing date or (ii) the final maturity date of the New Lessor
Notes is different from that of the existing Lessor Notes, the
consummation of the transactions contemplated by the refinancing shall
not cause the Owner Participant to account for the transactions
contemplated by the Operative Documents as other than a "leveraged
lease" under FAS 13;
(ix) all payment dates for principal and
interest payments on the New Lessor Notes shall become Rent Payment
Dates;
(x) on the closing date of such
refinancing, each of the Facility Lessee, the Owner Lessor and the
Holder Representative shall have executed and delivered all
appropriate supplements to the Operative Documents that are necessary
to consummate such refinancing, in form and substance reasonably
satisfactory to the Owner Lessor and the Holder Representative;
(xi) each of the Owner Lessor, the Owner
Participant and the Holder Representative shall have received an
opinion
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of counsel for the Facility Lessee on such matters as they may
reasonably request and in form and substance reasonably satisfactory to
the Owner Participant and the Holder Representative;
(xii) Midwest and ▇▇▇▇▇▇▇ Holdings shall
have delivered such certificates, reports and other documents and shall
have taken all other actions which are required to be delivered or
taken by them pursuant to SECTION 2.03 of the Lessor Loan Agreement;
(xiii) each of the Owner Lessor, the Owner
Participant and the Holder Representative shall have received from the
Facility Lessee a certificate dated the date of the issuance of the New
Lessor Notes executed on behalf of the Facility Lessee by an Authorized
Officer thereof stating that all conditions precedent to the issuance
of such New Lessor Notes have been satisfied or waived;
(xiv) the consummation of any transaction
contemplated by such refinancing shall not violate any Requirements of
Law except to the extent that such non-compliance with the Requirements
of Law would not have a material adverse effect on the Owner Lessor.
(xv) the New Lessor Notes shall have a
final maturity date no later than six months after the stated maturity
date of the Initial Lessor Notes as set forth in Section 2.02(a) of the
Lessor Loan Agreement and the weighted average life to maturity of the
New Lessor Notes shall not vary from the remaining weighted average
life-to-maturity of the Lessor Notes (immediately prior to such
refinancing) by more than six months; and
(xvi) the principal amount of the New
Lessor Notes shall not exceed by more than 5 percent the remaining
principal amount of the Lessor Notes (immediately prior to such
refinancing).
(xvii) the New Lessor Notes shall satisfy
the requirements of Temp. Treas. Reg. Section 1.861 - 10T(b)(2)(iii),
(iv) and (v) and not be excluded by reason of Temp. Treas. Reg.
Section 1.861 - 10T(b)(4).
SECTION 16.3 ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇. ▇▇ any time the Facility Lessee is
notified in writing by the Owner Lessor or the Holder Representative that the
Lessor Loan Rate will increase to Level 7 as a result of the occurrence of a
Level 7 Event, the Facility Lessee shall, subject to the conditions set forth in
SECTION 16.2 above, arrange for the refinancing
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of the Lessor Notes. The Facility Lessee and the Owner Lessor shall make
corresponding changes to Basic Lease Rent and the Termination Value in
accordance with the rent adjustment provisions set forth in SECTION 3 of the
Facility Lease.
SECTION 16.4 COOPERATION. The Owner Participant will cooperate with and
reasonably assist Midwest in connection with any refinancing and/or assumption
of the Lessor Notes, so long as such refinancing is in accordance with the terms
of the Operative Documents. The Owner Participant will execute such agreements
and documents as may be necessary with respect to any such refinancing and will
instruct the Owner Lessor to act accordingly. Nothing contained in this SECTION
16 shall limit Midwest's right to request a refinancing in accordance with
SECTION 16.2, above, refinance the Lessor Notes and to make corresponding
changes to Basic Lease Rent and the Termination Value in accordance with the
rent adjustment provisions set forth in SECTION 3 of the Facility Lease.
SECTION 16.5 LETTER OF CREDIT. Contemporaneously with any refinancing
of the Lessor Notes pursuant to Section 16.2 or 16.3 effected at a time when the
Midwest Letter of Credit or RCE Letter of Credit is outstanding or Midwest LC
Reimbursement Obligations or RCE LC Reimbursement Obligations are outstanding,
(a) Midwest shall cause any such outstanding Midwest Letter of Credit to be
cancelled or otherwise terminated and all such Midwest LC Reimbursement
Obligations to be paid in full and (b) the Owner Lessor shall cause any such
outstanding RCE Letter of Credit to be cancelled or otherwise terminated and
all such RCE LC Reimbursement Obligations to be paid in full.
SECTION XVII PRE-CLOSING ADJUSTMENTS TO BASIC LEASE RENT AND
TERMINATION VALUE
(a) Prior to or on the Closing Date, Basic Lease
Rent and Termination Values (and the allocations of Basic Lease Rent and 467
Fixed Rent) shall be adjusted, either upward or downward, in accordance with the
Facility Lease:
(i) at Midwest's option, to re-optimize
the Lessor Loan; and
(ii) to reflect any changes in the
Pricing Assumptions, including, without limitation, (x) the initial
interest rate on any of the Lessor Notes which is different from the
applicable Lessor Loan Rate set forth in the Pricing Assumptions, (y)
an increase in the Maximum Transaction Costs amount assumed in the
Pricing Assumptions, unless Midwest has elected to pay such increase,
and (z) a Closing Date other than the Scheduled Closing Date; and
(iii) at the request of Midwest or the
Owner Participant to reflect any enactment, promulgation, release or
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adoption of, amendment to or change in the Code, Treasury Regulations,
Revenue Rulings or Revenue Procedures ("TAX LAW CHANGE") enacted prior
to the Closing;
PROVIDED that if any adjustment required by this paragraph would cause (x) on an
After-Tax Basis the present value of Basic Lease Rent as a percentage of the
Purchase Price discounted at 6% to increase by more than 100 basis points or (y)
the total Basic Lease Rent to increase by more than 2.0%, Midwest shall not be
obligated to close the Overall Transaction.
(b) Any adjustment pursuant to this SECTION 17
shall be calculated (A) so as not to negatively affect the Owner Participant's
Expected Return through the Basic Lease Term and (B) to maintain operating lease
treatment for Midwest; PROVIDED, HOWEVER, that to the extent it is not possible
as the transaction is then structured to achieve both (A) and (B), the Owner
Trust, the Owner Participant and Midwest shall work in good faith to restructure
the transaction in a manner which would achieve both results; and PROVIDED,
FURTHER, that to the extent consistent with preserving both such objectives, all
adjustments shall at the option of Midwest be calculated to (x) minimize the
average annual Basic Lease Rent over the Basic Lease Term for Midwest's GAAP
accounting purposes and/or (y) minimize, to the extent possible, the present
value to Midwest of the Basic Lease Rent; and PROVIDED, FURTHER, that to the
extent that any adjustment pursuant to this SECTION 17 fails to maintain
operating lease treatment for Midwest, Midwest shall not be obligated to close
the Overall Transaction. Adjustments will be made using the same method of
computation, assumptions and pricing constraints originally used (other than
those that have changed as the result of the event giving rise to the
adjustment) in the calculation of the Basic Lease Rent (and the allocation of
Basic Lease Rent and 467 Fixed Rent) and corresponding adjustments to
Termination Values will be made. Adjustments may not result in a book loss to
the Owner Participant in the year of adjustment and will be computed by the
Owner Participant (or the OP Guarantor if prior to the Closing Date) based upon
the Tax Assumptions and the Pricing Assumptions used to calculate the Basic
Lease Rent and Termination Values and shall be subject to verification procedure
set forth in the Facility Lease.
SECTION XVIII RIGHT OF FIRST REFUSAL; RIGHT OF FIRST OFFER.
SECTION 18.1 RIGHT OF FIRST OFFER. In the event the Owner Participant
desires to sell, lease, convey or otherwise transfer some or all of its
Beneficial Interest other than to an Affiliate of the Owner Participant (other
than in connection with the exercise of remedies following a Lease Event of
Default) prior to the expiration of the Facility Lease Term, the Owner
Participant must first offer to sell such Beneficial Interest to the Facility
Lessee on the terms and conditions set forth in this SECTION 18.1. Such offer
shall be made to the Facility Lessee in the form of a proposed term sheet, which
proposed term
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sheet shall include an outline of the price and of the terms, conditions and
provisions upon which the Owner Participant would be willing to transfer such
Beneficial Interest or any part thereof. The Facility Lessee will thereafter
have the right within a period of forty-five (45) days from and after the
receipt by the Facility Lessee of such proposed term sheet to notify the Owner
Participant of its intent to exercise its right to purchase hereunder. If the
Facility Lessee elects to exercise the right provided in the preceding sentence,
it shall within 60 days of such notice purchase, and the Owner Participant shall
sell, the Beneficial Interest on the same terms and conditions as the offer
giving rise to such right. If the Facility Lessee does not give such notice to
the Owner Participant within the forty-five (45) day period or does not purchase
the Beneficial Interest within 60 days of such notice, the Owner Participant
will be free to so sell, lease, convey or otherwise transfer such Beneficial
Interest, or a portion thereof, at a price no less than the price set forth in
the proposed term sheet and on terms and conditions, taken as a whole, that,
other than in an immaterial respect, are no less favorable to the Owner
Participant than the terms and conditions set forth in the proposed term sheet,
unless the failure to purchase the Beneficial Interest within 60 days is
attributable to the Owner Participant. In the event that the terms or conditions
are revised in any way that the price is reduced or any of the other terms and
conditions thereof, taken as a whole change the agreement for sale, lease,
conveyance or transfer such that the terms and conditions of any such subsequent
transaction are less favorable, other than in an immaterial respect, to the
Owner Participant, the Owner Participant must again comply with the notice and
acceptance provisions of this SECTION 18.1. It is understood and agreed among
the parties hereto that the transaction contemplated by this SECTION 18.1 shall
not effect a merger of the Facility Lessee's ownership interest in the Facility
and the Facility Site with the Owner Lessor's Interest.
SECTION 18.2 RIGHT OF FIRST REFUSAL. In the event the Owner Participant
desires to sell, lease, convey or otherwise transfer some or all of its
Beneficial Interest or cause the Owner Lessor to sell, lease, convey or
otherwise transfer its Owner Lessor's Interest at any time within three years
after expiration or termination other than to an Affiliate of the Owner
Participant (other than pursuant to SECTION 13 and 14 of the Facility Lease) of
the Facility Lease to any Person other than the Facility Lessee or an Affiliate
thereof, the Facility Lessee shall have the right, unless such sale, lease,
conveyance or transfer is in connection with the exercise of remedies upon a
Lease Event of Default, to purchase, lease or otherwise acquire such interest on
the terms and conditions set forth in the bid that the Owner Participant intends
to accept. The Owner Participant shall give the Facility Lessee prompt written
notice of all bona fide offers that have been received from any other Person to
purchase or acquire the Owner Lessor's Interest or Owner Participant's
Beneficial Interest or any part of either during such three-year period
following the expiration or termination of the Facility Lease, and which offers
it wishes to accept, together with a full and complete statement of the price
and all of the material terms, conditions and provisions contained in such
offers. The Facility Lessee shall thereafter
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have the right within a period of forty-five (45) days from and after the
receipt by the Facility Lessee of such notice to notify the Owner Participant of
its intent to exercise its rights of first refusal. If the Facility Lessee
elects to exercise the right provided in the preceding sentence, it shall within
60 days of such notice purchase, and the Owner Participant shall sell, the
Beneficial Interest on the same terms and conditions as the offer giving rise to
such right. If the Facility Lessee does not give such notice to the Owner
Participant within the forty-five (45) day period or does not purchase the
Beneficial Interest within sixty (60) days of such notice, the Owner Participant
shall be free to proceed under the terms and conditions as set forth in its
irrevocable notice to the Facility Lessee, unless the failure to purchase the
Beneficial Interest within sixty (60) days is attributable to the Owner
Participant. In the event that the terms or conditions are revised in any way
that changes the agreement for sale, lease, conveyance or transfer such that the
terms and conditions thereof, other than in immaterial respects, are less
favorable to the Owner Participant (including any reduction in price or a change
in the terms of payment thereof in a manner that is beneficial to the potential
purchaser), the Owner Participant must again comply with the notice and
acceptance provisions of this SECTION 18.2. In connection with the Facility
Lessee's exercise of the right of first refusal pursuant to this SECTION 18.2
with respect to the Owner Lessor's Interest, the Ground Interest shall be
conveyed to the Facility Lessee.
SECTION XIX SPECIAL LESSEE TRANSFER
In the case of a Regulatory Event of Loss or Burdensome Buyout Event
under the Facility Lease, the Facility Lessee (or its designee), so long as the
Facility Lessee shall remain liable under the Facility Lease to pay Basic Lease
Rent and all other payments under the Facility Lease, upon not less than 30
days' written notice to the Owner Participant and the Holder Representative, on
the applicable Termination Date, may purchase the Owner Participant's Beneficial
Interest, or, in the case of a Burdensome Buyout Event, the membership interest
in the Owner Participant, and keep the Facility Lease (and the Lessor Loan) in
place; PROVIDED, that (i) the Owner Participant shall not suffer any detriment
(including tax or book consequences) from such purchase (as compared to that
which would have resulted had the Facility Lessee terminated the Facility Lease
and purchased the Owner Lessor's Interest), (ii) the Facility Lessee satisfies
the transferee requirements contained in SECTION 12.1 hereof applicable to
transfers by the Owner Participant, if applicable and (iii) the Facility Lessee
pays all expenses incurred by the other Lease Financing Parties in connection
therewith. If the Facility Lessee chooses to purchase the Owner Participant's
Beneficial Interest or the membership interest in the Owner Participant, as the
case may be, pursuant to the preceding sentence, on the applicable Termination
Date, the Facility Lessee (or its designee) shall pay to the Owner Participant
or to the Equity Investor, as the case may be, the Special Lessee Transfer
Amount determined as of such date, plus all amounts due and payable to the Owner
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Participant or Equity Investor, as the case may be, on such date under the
Operative Documents.
Concurrently with the payment of all sums required to be paid pursuant
to this SECTION 19 (or on such later date of transfer of the Owner Participant's
Beneficial Interest or membership interest in the Owner Participant, as the case
may be, in accordance with clause (ii) below) (i) the Facility Lessee shall
cease to have any liability to the Owner Participant with respect to the
Operative Documents, except for obligations (including those under SECTIONS 14.1
and 14.2 hereof and the Tax Indemnity Agreement) surviving pursuant to the
express terms of any Operative Document or which have otherwise accrued but not
been paid as of such date and (ii) the Owner Participant or the Equity Investor,
as the case may be, will transfer (by an appropriate instrument of transfer in
form and substance reasonably satisfactory to the Owner Lessor and prepared and
recorded at the Facility Lessee's expense) the Owner Participant's Beneficial
Interest or membership interest in the Owner Participant, as the case may be, to
the Facility Lessee (or its designee); PROVIDED, HOWEVER, that if the Lessor
Notes are outstanding, such transfer shall not be made to the Facility Lessee,
but shall be made to the Facility Lessee's designee promptly upon the Facility
Lessee's designation of such designee and such designee will agree not to
transfer the Owner Participant's Beneficial Interest or the membership interest
in the Owner Participant, as the case may be, to the Facility Lessee for as long
as the Lessor Notes are outstanding. The Owner Participant or Equity Investor,
as the case may be, shall make any transfer under this SECTION 19 on an "as is,"
"where is" basis, without warranty other than as to the absence of Owner
Lessor's Liens and Owner Participant's Liens on the Owner Participant's
Beneficial Interest or the membership interest in the Owner Participant, as the
case may be. It is understood and agreed among the parties hereto that the
transaction contemplated by this SECTION 19 shall not effect a merger of the
Facility Lessee's leasehold interest in the Facility and subleasehold interest
in the Facility Site with the Owner Lessor's Interest. The Facility Lessee will
pay all reasonable costs and expenses of the Lease Financing Parties in
connection with any transfer pursuant to this SECTION 19. Subsequent to such
transfer, the Facility Lessee and the Owner Lessor may, without the consent of
the Holder Representative, waive the Regulatory Event of Loss or Burdensome
Buyout Event that gave rise to the right to purchase the Owner Participant's
Beneficial Interest or the membership interest in the Owner Participant, as the
case may be, and the Facility Lease shall continue in full force and effect in
accordance with its terms.
SECTION XX MIDWEST'S DIRECTIONS
▇▇▇▇▇▇▇ Holdings, the Owner Lessor, the Owner Trustee, the
Owner Participant, Holdings, Midwest, the Lender, the Holder Representative, the
Midwest LC Issuer and the RCE LC Issuer hereby agree that, so long as no
Material Lease Default,
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Material Sublease Event of Default, Lease Event of Default or Sublease Event of
Default shall have occurred and be continuing:
(a) Midwest shall have the exclusive right to
make all elections contemplated by Section 2.02(d) of the Lessor Loan Agreement,
including, without limitation, all elections with respect to conversions and
continuations of Base Rate Advances (as defined in the APA) and Eurodollar
Advances (as defined in the APA) as contemplated by Section 18(a) and 18(h) of
the APA;
(b) Midwest shall have the exclusive right to
make all elections contemplated by Annex C to the RCE Reimbursement Agreement,
including without limitation, all elections with respect to conversions and
continuations of Base Rate Loans (as defined in the RCE Reimbursement Agreement)
and LIBO Rate Loans (as defined in the RCE Reimbursement Agreement) as
contemplated by Sections 1.3 and 2.2 of such Annex C;
(c) Midwest shall have the exclusive right to
instruct the Holder Representative to invest funds in Permitted Investments as
contemplated by Section 3.07 of the Lessor Loan Agreement;
(d) Midwest shall receive copies of all notices
delivered to the Owner Lessor under the Lessor Loan Agreement;
(e) the Lender or the Holder Representative, as
the case may be, shall deliver to Midwest copies of all notices delivered to the
Lender or the Holder Representative, respectively under the APA or the Finance
Facility within one Business Day of its receipt thereof;
(f) pursuant to Section 18(d) of the APA, the
Lender shall, within one Business Day of request therefor from Midwest, request
that the APA Purchasers extend the Stated Commitment Termination Date (as
defined in the APA) for an additional 364 days;
(g) pursuant to Section 18(h) of the APA, the
Lender shall, within one Business Day of request therefor from Midwest, notify
an APA Purchaser of its intent to prepay in full any Eurodollar Rate Advances
(as defined in the APA) owing to such APA Purchaser; and
(h) pursuant to Section 2 of the Finance
Facility, the Lender shall request Advances (as defined in the Finance
Facility), within one Business Day of request therefor from Midwest.
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SECTION XXI AGREEMENT WITH RESPECT TO ▇▇▇▇▇▇▇ HOLDINGS
Each of the parties hereto agrees that it shall not institute against,
or solicit or join any other Person in instituting against, ▇▇▇▇▇▇▇ Holdings any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding,
or any other proceeding under any federal or state bankruptcy or similar law,
for one year and a day after the payment in full of all amounts due by and
satisfaction of all obligations of, ▇▇▇▇▇▇▇ Holdings under the Facility Lease.
SECTION XXII MISCELLANEOUS
SECTION 22.1 CONSENTS. The Owner Participant covenants and agrees that
it shall not unreasonably withhold its consent to any consent requested of the
Owner Lessor under the terms of the Operative Documents that by its terms is not
to be unreasonably withheld by the Owner Lessor.
SECTION 22.2 SUCCESSOR OWNER LESSOR. The parties hereto agree that the
transfer or assignment pursuant to the terms of the Trust Agreement by the Owner
Lessor to a successor Owner Lessor, pursuant to the trust created thereunder,
will not violate the terms of any Operative Document.
SECTION 22.3 BANKRUPTCY OF TRUST ESTATE. If (i) all or any part of the
Trust Estate becomes the property of a debtor subject to the reorganization
provisions of Title 11 of the United States Code, as amended from time to time,
(ii) pursuant to such reorganization provisions the Owner Participant is
required, by reason of the Owner Participant being held to have recourse
liability to the debtor or the trustee of the debtor directly or indirectly, to
make payment on account of any amount payable as principal or interest on the
Lessor Notes, and (iii) the Holder Representative actually receives any Excess
Amount, as defined below, which reflects any payment by the Owner Participant on
account of clause (ii) above, the Holder Representative shall promptly refund to
the Owner Participant such Excess Amount. For purposes of this SECTION 22.3,
"EXCESS AMOUNT" means the amount by which such payment exceeds the amount which
would have been received by the Holder Representative if the Owner Participant
had not become subject to the recourse liability referred to in clause (ii)
above. Nothing contained in this SECTION 22.3 shall prevent the Holder
Representative from enforcing any personal recourse obligations (and retaining
the proceeds thereof) of the Owner Participant as contemplated by this Agreement
(other than referred to in clause (ii)).
SECTION 22.4 AMENDMENTS AND WAIVERS. No term, covenant, agreement or
condition of this Agreement may be terminated, amended or compliance therewith
waived (either generally or in a particular instance, retroactively or
prospectively) except by an instrument or instruments in writing, executed by
each party hereto.
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SECTION 22.5 NOTICES. Unless otherwise expressly specified or permitted
by the terms hereof, all communications and notices provided for herein shall be
in writing or by a telecommunications device capable of creating a written
record, and any such notice shall become effective (a) upon personal delivery
thereof, including, without limitation, by overnight mail or courier service,
(b) in the case of notice by United States mail, certified or registered,
postage prepaid, return receipt requested, upon receipt thereof, or (c) in the
case of notice by such a telecommunications device, upon transmission thereof,
provided such transmission is promptly confirmed by either of the methods set
forth in clauses (a) or (b) above, in each case addressed to each party hereto
at its address set forth below or, in the case of any such party hereto, at such
other address as such party may from time to time designate by written notice to
the other parties hereto:
If to Midwest:
One Financial Place
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to Holdings at the address below
If to Holdings:
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
If to the Owner Lessor, the Owner Trustee or the Trust Company:
Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
with a copy to the Owner Participant
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If to the Owner Participant:
▇▇▇▇▇▇▇ Generation I, LLC
c/o PSEG Resources Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇)-▇▇▇-▇▇▇▇
Attention: President
If to the Lender:
Midwest Funding LLC
c/o Lord Securities Corporation
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.:
Facsimile No.:
If to the Holder Representative:
Citibank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, Zone 2
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Global Trust & Agency Services
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇▇ Holdings:
One Financial Place
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to Holdings
A copy of all notices provided for herein shall be sent by the party giving such
notice to each of the other parties hereto. In addition, Midwest shall (unless
otherwise directed by the applicable Rating Agency) provide to each Rating
Agency a copy of any information,
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report or notice it gives to the Holder Representative hereunder or any other
Operative Documents.
SECTION 22.6 SURVIVAL. All warranties, representations, indemnities and
covenants made by any party hereto, herein or in any certificate or other
instrument delivered by any such party or on the behalf of any such party under
this Agreement shall be considered to have been relied upon by each other party
hereto and shall survive the consummation of the transactions contemplated
hereby and in the other Operative Documents regardless of any investigation made
by any such party or on behalf of any such party. In addition, the
indemnifications by Midwest under SECTIONS 14.1 and 14.2 of this Agreement
shall, subject to SECTIONS 14.1(B) and 14.2(B), respectively, expressly survive
the expiration or early termination (in either case, for whatever reason) of the
Facility Lease or the transfer or other disposition (including by resignation
and removal) of the respective interests of the Owner Participant, the Owner
Lessor, the Trust Com pany, the Owner Trustee and the Holder Representative in,
to and under this Agreement and other Operative Documents.
SECTION 22.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of, and shall be enforceable by, the parties
hereto and their respective successors and assigns as permitted by and in
accordance with the terms hereof, including each successive holder of the Owner
Participant's Beneficial Interest permitted under SECTION 12.1. Except as
expressly provided herein or in the other Operative Documents, no party hereto
may assign its interests herein without the consent of the other parties hereto.
SECTION 22.8 GOVERNING LAW. This Agreement has been delivered in the
State of New York and shall be in all respects governed by and construed in
accordance with the laws of the State of New York including all matters of
construction, validity and performance without giving effect to the conflicts of
laws provisions thereof except New York General Obligations Law Section 5-1401.
SECTION 22.9 SEVERABILITY. If any provision hereof shall be invalid,
illegal or unenforceable under Requirement of Law, the validity, legality and
enforceability of the remaining provisions hereof shall not be affected or
impaired thereby.
SECTION 22.10 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each executed counterpart constituting an original but
all together only one agreement.
SECTION 22.11 HEADINGS AND TABLE OF CONTENTS. The headings of the
sections of this Agreement and the Table of Contents are inserted for purposes
of convenience only
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and shall not be construed to affect the meaning or construction of any of the
provisions hereof.
SECTION 22.12 LIMITATION OF LIABILITY.
(a) None of the Owner Participant, the Owner
Lessor, the Owner Trustee, the Trust Company, the Lender, the Holder
Representative or any Holder shall have any obligation or duty to Midwest or to
others with respect to the transactions contemplated hereby, except those
obligations or duties expressly set forth in this Agreement and the Operative
Documents, and neither the Owner Lessor, the Owner Trustee, the Trust Company,
the Lender, any Holder nor the Holder Representative shall be liable for
performance by any other party hereto of such other party's obligations or
duties hereunder. Without limitation of the generality of the foregoing, under
no circumstances whatsoever shall the Owner Participant be liable to Midwest,
Holdings or ▇▇▇▇▇▇▇ Holdings for any action or inaction on the part of the Owner
Lessor or the Owner Trustee in connection with the transactions contemplated
herein, whether or not such action or inaction is caused by willful misconduct
or gross negligence of the Owner Lessor, unless such action or inaction is at
the written direction of the Owner Participant.
(b) The Trust Company is executing the Operative
Documents to which it is a party solely as trustee under the Trust Agreement and
not in its individual capacity, except as expressly provided herein or therein,
and in no case whatsoever shall the Trust Company be personally liable for, or
for any loss in respect of, any of the statements, representations, warranties,
agreements or obligations of the Owner Lessor or the Owner Trustee hereunder or
under any other Operative Document, as to all of which the other parties hereto
agree to look solely to the Trust Estate; PROVIDED, HOWEVER, that the Trust
Company shall be liable hereunder for its own gross negligence or willful
misconduct or for a breach of its representations, warranties and covenants made
in its individual capacity.
(c) The Holder Representative is entering into
the Operative Documents to which it is a party solely as a Holder
Representative under the Lessor Security Documents, and not in its individual
capacity, except as expressly provided herein or therein, and in no case
whatsoever shall the Holder Representative be personally liable for, or for any
loss in respect of, any of the statements, representations, warranties,
agreements or obligations of the Owner Lessor hereunder or under any other
Operative Document, as to all of which the other parties hereto agree to look
solely to the Trust Estate and Lessor Collateral; PROVIDED, HOWEVER, that the
Holder Representative shall be liable hereunder for its own gross negligence,
willful misconduct, bad faith or a breach of its representations, warranties and
covenants made in its individual capacity.
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(d) The right of the Holder Representative to
perform any discretionary act enumerated herein or in any other Operative
Document (including, without limitation, the right to consent to any action
which requires its consent and the right to waive any provision of, or consent
to any change or amendment to, any of the Operative Documents) shall not be
construed as a duty, and the Holder Representative shall not be accountable or
liable for other than its gross negligence, willful misconduct or bad faith in
the performance or non-performance of such acts. In connection with any such
discretionary acts, the Holder Representative may in its own judgement (but
shall not, except as otherwise provided in the Lessor Security Documents or as
otherwise required by Requirement of Law, have any obligation to) request in
writing the approval of the holders of the Funding LLC Notes.
(e) The Owner Participant will give Midwest at
least 15 days' prior notice of any proposed amendment or supplement to the Trust
Agreement (other than amendments solely effecting a transfer of the Owner
Participant's interest in the Trust Estate or with respect to administrative
matters) and deliver true, complete and fully executed copies to Midwest of any
amendment or supplement to the Trust Agreement. No amendment or supplement to
the Trust Agreement that could materially adversely affect the interests of the
Holder Representative shall become effective without the prior written consent
of the Holder Representative.
SECTION 22.13 CONSENT TO JURISDICTION; WAIVER OF TRIAL BY JURY, PROCESS
AGENT.
(a) Each of the parties hereto (i) hereby
irrevocably submits to the nonexclusive jurisdiction of the Supreme Court of the
State of New York, New York County (without prejudice to the right of any party
to remove to the United States District Court for the Southern District of New
York) and to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York for the purposes of any suit, action or
other proceeding arising out of this Agreement, the other Operative Documents,
or the subject matter hereof or thereof or any of the transactions contemplated
hereby or thereby brought by any of the parties hereto or their successors or
assigns; (ii) hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such New York State court,
or in such federal court; and (iii) to the extent permitted by Requirement of
Law, hereby irrevocably waives, and agrees not to assert, by way of motion, as a
defense, or otherwise, in any such suit, action or proceeding any claim that it
is not personally subject to the jurisdiction of the above-named courts, that
the suit, action or proceeding is brought in an inconvenient forum, that the
venue of the suit, action or proceeding is improper or that this Agreement, the
other Operative Documents, or the subject matter hereof or thereof may not be
enforced in or by such court.
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(b) TO THE EXTENT PERMITTED BY REQUIREMENT OF
LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES THE RIGHT TO DEMAND A
TRIAL BY JURY, IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS
AGREEMENT, THE OTHER OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR
THEREOF OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY
OF THE PARTIES HERETO OR THEIR SUCCESSORS OR ASSIGNS.
(c) By the execution and delivery of this
Agreement, Midwest Holdings and ▇▇▇▇▇▇▇ Holdings designate, appoint and empower
CT Corporation System as their authorized agent to receive for and on their
behalf service of any summons, complaint or other legal process in any such
action, suit or proceeding in the State of New York for so long as any
obligation of Midwest, Holdings and ▇▇▇▇▇▇▇ Holdings shall remain outstanding
hereunder or under any of the other Operative Documents. Midwest Holdings and
▇▇▇▇▇▇▇ Holdings shall grant an irrevocable power of attorney to CT Corporation
System in respect of such appointment and shall maintain such power of attorney
in full force and effect for so long as any obligation of Midwest Holdings and
▇▇▇▇▇▇▇ Holdings shall remain outstanding hereunder or under any of the
Operative Documents.
SECTION 22.14 FURTHER ASSURANCES. Each party hereto will promptly and
duly execute and deliver such further documents to make such further assurances
for and take such further action reasonably requested by any party to whom such
first party is obligated, all as may be reasonably necessary to carry out more
effectively the intent and purpose of this Agreement and the other Operative
Documents.
SECTION 22.15 EFFECTIVENESS. This Agreement has been dated as of the
date first above written for convenience only. This Agreement shall be effective
on the date of execution and delivery by each of the parties hereto.
SECTION 22.16 MEASURING LIFE. If and to the extent that any of the
options, rights and privileges granted under this Agreement, would, in the
absence of the limitation imposed by this sentence, be invalid or unenforceable
as being in violation of the rule against perpetuities or any other rule or law
relating to the vesting of interests in property or the suspension of the power
of alienation of property, then it is agreed that notwithstanding any other
provision of this Agreement, such options, rights and privileges, subject to
the respective conditions hereof governing the exercise of such options, rights
and privileges, will be exercisable only during (a) the longer of (i) a period
which will end twenty-one (21) years after the death of the last survivor of the
descendants living on the date of the execution of this Agreement of the
following Presidents of the United States: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or (ii) the period
provided under the Uniform Statutory Rule Against Perpetuities or (b) the
specific applicable period of time expressed in this Agreement, whichever of (a)
and (b) is shorter.
SECTION 22.17 NO PARTNERSHIP, ETC. The parties hereto intend that
nothing contained in this Agreement or any other Operative Document shall be
deemed or construed to create a partnership, joint venture or other co-ownership
arrangement by and among any of them.
SECTION 22.18 RESTRICTIONS ON TRANSFER OF MEMBERSHIP INTEREST.
(a) No OP Member shall, during the Facility
Lease Term, assign, convey or transfer any of its right, title or interest in
the Membership Interest or cause the Owner Participant to issue additional
membership interests without the prior written consent of Midwest and, so long
as the Lessor Notes are outstanding, the Holder Representative; PROVIDED,
HOWEVER, that an OP Member may assign, convey or transfer all or any part of its
interest in the Membership Interest without such consent to a Person (the
"MEMBER TRANSFEREE"), if the Owner Participant Guaranty shall remain outstanding
and in full force and effect or each of the following conditions shall have been
satisfied:
(i) the Member Transferee shall be
either (A) an Affiliate of the Owner Participant which does not
otherwise qualify under clause (B) below provided the Owner Participant
Guaranty shall remain in full force and effect, or (B) a Person which
guarantees all of the Owner Participant's obligations under the
Operative Documents pursuant to a guaranty substantially in the form of
Exhibit Y hereto and meets the following criteria: (1) the tangible net
worth of the Member Transferee is at least equal to $75 million
calculated in accordance with GAAP; and (2) unless waived by Midwest,
and so long as no Material Lease Default or Lease Event of Default
shall have occurred and be continuing, such Member Transferee is not a
Competitor (as defined in SECTION 12.1(b)) of, or in material
litigation with, Midwest or any Affiliate of Midwest;
(ii) the total number of Unrelated
Members, after giving effect to such transactions shall not exceed
three; and
(iii) the Member Transferee agrees in the
guaranty or in another written instrument reasonably acceptable to
Midwest and, so long as the Lessor Notes are outstanding, the Holder
Representative to be bound by this SECTION 22.18.
-100-
(b) Neither the Facility Lessee, nor the
Facility Sublessee shall be responsible for any adverse tax consequence to the
Owner Lessor, the Owner Participant or the Guarantor resulting from any transfer
pursuant to this SECTION 22.18 and the Pricing Assumptions shall not be changed
as a result of any such transfer.
(c) The OP Member shall give the Owner Lessor,
the Owner Trustee, the Midwest LC Issuer, the RCE LC Issuer and Midwest 30 days
prior written notice of such transfer, or 10 days in the case of a transfer to
an Affiliate of the Owner Participant, specifying the name and address of any
proposed Member Transferee and such additional information as shall be necessary
to determine whether the proposed transfer satisfies the requirements of this
SECTION 22.18. If requested by the OP Member, the Owner Participant, the Midwest
LC Issuer, the RCE LC Issuer or the Holder Representative, Midwest shall
acknowledge qualifying transfers. All reasonable fees, expenses and charges of
the Holder Representative and Midwest (including reasonable attorneys' fees and
expenses in connection with any such transfer or proposed transfer), including
any of the foregoing relating to any amendments to the Operative Documents
required in connection therewith, shall be paid by the OP Member, without any
right of indemnification from Midwest or any other Person; PROVIDED, HOWEVER,
that the OP Member shall have no obligation to pay fees, expenses or charges of
Midwest as a result of any transfer while a Material Lease Default or a Lease
Event of Default is continuing, in which case Midwest shall be obligated to pay
such costs.
(d) Upon any transfer to a Member Transferee
specified in clause (a)(i)(B) of this SECTION 22.18 and compliance with all of
the other provisions of this SECTION 22.18, (i) the Member Transferee shall, to
the extent of the Membership Interest conveyed to the Member Transferee, be
deemed an "OP Member" for purposes of this SECTION 22.18 and the Person
executing the guaranty pursuant to such clause (a)(i)(B) shall be deemed a
"Guarantor" for all purposes and each reference in this Agreement and each other
Operative Document to the "Guarantor" shall thereafter be deemed to include such
Member Transferee or the Person executing such guaranty, as the case may be, to
the extent of the obligations expressly transferred to the Member Transferee and
guaranteed by such Person, for all purposes and (ii) the existing Guarantor
shall be released from all obligations under its Owner Participant Guaranty to
the extent such obligations are expressly guaranteed by the Member Transferee or
such Affiliate; PROVIDED, HOWEVER, that in no event shall any such transfer
waive or release the existing Guarantor from any liability existing immediately
prior to or occurring simultaneously with such transfer. Except as expressly
provided in the immediately preceding sentence, no transfer of any Membership
Interest shall effect the obligations of the existing Guarantor under the Owner
Participant Guaranty or any other Guarantor under its Guaranty.
(e) Notwithstanding anything herein to the
contrary, any transfer of Membership Interest pursuant to this SECTION 22.18
shall be subject to Midwest's right of
-101-
first offer and right of first refusal set forth in SECTION 18.1 and 18.2,
respectfully, to the same extent as if such transfer were a transfer by the
Owner Participant of its Beneficial Interest.
SECTION 22.19 ISSUER DOWNGRADE EVENT. Each of the Midwest LC Issuer and
the RCE LC Issuer hereby covenants and agrees that it will promptly furnish to
Midwest, ▇▇▇▇▇▇▇ Holdings and the Owner Participant a written notice of any
downgrade of its rating.
-102-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized.
▇▇▇▇▇▇▇ HOLDINGS EME, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
Date: December 15, 1999
▇▇▇▇▇▇▇ TRUST I
By: Wilmington Trust Company,
not in its individual capacity but solely as
Owner Trustee
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Authorized Signer
Date: December 15, 1999
WILMINGTON TRUST COMPANY, not
in its individual capacity,
except as ex pressly provided
herein, but solely as Owner
Trustee
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Authorized Signer
Date: December 15, 1999
▇▇▇▇▇▇▇ GENERATION I, LLC
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
Date: December 15, 1999
EDISON MISSION MIDWEST HOLDINGS
CO.,
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
Date: December 15, 1999
MIDWEST GENERATION, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
Date: December 15, 1999
CITIBANK, N.A.
not in its individual capacity, but solely as
Holder Representative
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Date: December 15, 1999
MIDWEST FUNDING LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
Date: December 15, 1999
BAYERISCHE LANDESBANK
INTERNATIONAL S.A., a banking institution
organized under the laws of Luxembourg, as issuer
of the Midwest Letter of Credit
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------- -------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇
------------------------ --------------------------
Title: Directeur - Adjoint Title: Mandataire Commercial
----------------------- -------------------------
Date: December 15, 1999 Date: December 15, 1999
BAYERISCHE LANDESBANK GIROZENTRALE,
as issuer of the RCE Letter of Credit
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
----------------------------- -------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
------------------------ --------------------------
Title: First Vice President Title: Second Vice President
----------------------- -------------------------
Date: December 15, 1999 Date: December 15, 1999
EXHIBIT RR
TO THE PARTICIPATION
AGREEMENT
FORM OF
ASSIGNMENT AND ASSUMPTION AGREEMENT
--------------------------------------------------------------------------------
ASSIGNMENT AND ASSUMPTION AGREEMENT
(T1)
Dated as of [ ]
between
[ ]
as Transferor
and
[ ]
as Transferee
▇▇▇▇▇▇▇ Station
Fossil Fuel-Fired Electric Generating Facility
--------------------------------------------------------------------------------
ASSIGNMENT AND ASSUMPTION AGREEMENT
(T1)
This ASSIGNMENT AND ASSUMPTION AGREEMENT (T1), dated as of [ ]
(this "Agreement"), between [ ], a [ ],
(the "Transferor"), and [ ], a [ ] (the "Transferee").
WITNESSETH:
WHEREAS, the Transferor entered into the Participation Agreement (T1) and
certain other Operative Documents; and
WHEREAS, the Transferor desires to sell and assign to the Transferee the
Beneficial Interest and all of the Transferor's right, title and interest in, to
and under the Operative Documents, and the Transferee desires to (i) purchase
the Beneficial Interest and accept from the Transferor the assignment of all of
the Transferor's right, title and interest in, to and under the Operative
Documents and (ii) assume all of the duties and obligations of the Transferor
under the Operative Documents.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
SECTION 1. DEFINITIONS
Capitalized terms used in this Agreement, including the recitals, and not
otherwise defined herein shall have the respective meanings specified in
Appendix A to the Participation Agreement (T1), dated as of December 15, 1999
(the "Participation Agreement"), among ▇▇▇▇▇▇▇ Holdings EME, LLC ("CHE"),
▇▇▇▇▇▇▇ Trust I (the "Owner Lessor"), ▇▇▇▇▇▇▇ Generation I, LLC (the "Owner
Participant"), Wilmington Trust Company (the "Owner Trustee"), Edison Mission
Midwest Holdings Co. ("Holdings"), Midwest Generation, LLC ("Midwest"), Midwest
Funding, LLC ("Funding LLC"), Bayerische Landesbank International S.A., as
issuer of the Midwest Letter of Credit, Bayerische Landesbank Girozentrale, as
issuer of the RCE Letter of Credit and Citibank, N.A., as Holder Representative,
in their capacities referred to therein, and the Transferor, unless the context
hereof shall otherwise require. The general provisions of Appendix A to the
Participation Agreement shall apply to terms used in this Agreement and
specifically defined herein.
SECTION 2. ASSIGNMENT BY THE TRANSFEROR
In accordance with Section 12.1 of the Participation Agreement, the
Transferor hereby sells, assigns, conveys and transfers to the Transferee as of
the date hereof (the "Transfer Date") the Beneficial Interest and all of the
Transferor's right, title and interest in, to and under each Operative Document
to which it is a party and all other contracts, agreements, documents and
instruments relating to the Beneficial Interest by which the Transferor is
bound, and any proceeds therefrom, together with all other documents and
instruments evidencing any of such right, title and interest, except such rights
of the Transferor as have accrued to the Transferor prior to the Transfer Date
(such excepted rights include the right to receive any amounts due or accrued to
the Transferor with respect to the Beneficial Interest under the Trust Agreement
or other Operative Documents as of the Transfer Date and the right to receive
any Excepted Payments pursuant to the Participation Agreement or the Tax
Indemnity Agreement as of or in respect of events occurring or arising on or
prior to the Transfer Date).
SECTION 3. ASSUMPTION BY THE TRANSFEREE
The Transferee hereby assumes, and agrees it is unconditionally bound in
respect of, as of the date hereof, all duties and obligations of the Transferor
pursuant to the Trust Agreement and under each of the other Operative Documents
to which the Transferor is a party and all other contracts, agreements,
documents and instruments relating to the Beneficial Interest to which the
Transferor is a party or by which the Transferor is bound. The Transferee agrees
as of the date hereof, it shall be deemed a party to each of the Operative
Documents to which the Transferor is a party and any other contract, agreement,
document or other instrument relating to the Beneficial Interest to which the
Transferor is a party or by which it is bound and the Transferee agrees that it
is liable for all of the duties and obligations of the Transferor under the
Operative Documents to which the Transferor is a party and all other contracts,
agreements, documents and instruments relating to the Beneficial Interest to
which the Transferor is a party or by which the Transferor is bound as though it
were identified as the "Owner Participant" therein.
SECTION 4. TRANSFEREE AS OWNER PARTICIPANT
In consequence of the assumption set forth in Section 3, (a) the
Transferee shall be deemed the "Owner Participant" for all purposes, and shall
enjoy the rights and privileges and perform the obligations of the Owner
Participant under each Operative Document, and each reference in each other
Operative Document to the "Owner Participant" shall be deemed to include the
Transferee for all purposes, and (b) the Transferor and the guarantor, if any,
of the Transferor's obligations shall be released from all obligations under
each Operative Document and shall have no further duty, obligation, liability or
burden under any Operative Document; PROVIDED,
HOWEVER, that in no event shall the assignment and assumption effected by this
Agreement waive or release the Transferor from any liability on account of any
breach of its obligations thereunder existing immediately prior to or occurring
simultaneously with the assignment and assumption effected hereby or of any of
its representations, warranties, covenants or obligations set forth in the
Operative Documents.
SECTION 5. PAYMENTS
The Transferor hereby covenants and agrees to pay over to the Transferee,
if and when received following the Transfer Date any amounts (including any sums
payable as interest in respect thereof) paid to or for the benefit of the
Transferor that, under Section 2 hereof, belong to the Transferee, and the
Transferee hereby covenants and agrees to pay over to the Transferor, if and
when received following the Transfer Date, any amounts (including any sums
payable as interest in respect thereof) paid to or for the benefit of the
Transferee that, under Section 2 hereof, belong to the Transferor.
SECTION 6. CERTAIN REPRESENTATIONS OF THE TRANSFEREE
The Transferee represents and warrants that such Transferee, or a
guarantor of such Transferee, meets the following criteria: (a) has Consolidated
Tangible Net Assets of at least $75 million calculated in accordance with GAAP;
(b) is "a United States person" within the meaning of section 7701(a)(30) of the
Code; and (c) neither the Transferee nor any of its Affiliates is a Competitor
of, or engaged in material litigation with, Midwest, or any Affiliate of
Midwest.(1)
SECTION 7. OPINION OF COUNSEL
----------------
(1) The representation in Section 6(c) hereof shall be replaced with the
following representation if the Transferee or any of its Affiliates
is a Competitor of, or engaged in material litigation with, Midwest
and the criteria contained in the following representation shall
have been met: The Transferee represents and warrants that (i) the
Transferee is an entity involved in making passive investments such
as the Transferor's contemplated investment in this transaction,
(ii) such Transferee has in place procedures which shall be
reasonably acceptable to Midwest to prevent its Affiliate that is a
Competitor from acquiring confidential information relating to such
passive investments and agrees in writing with Midwest to maintain
and abide by such procedures, and (iii) neither such Transferee nor
any Affiliate thereof is an entity that is (x) actively involved in
the generation of electricity in Mid-American Interconnected Network
and/or the East Central Reliability Council or any successor
thereto, or (y) on the List of Competitors, attached as Exhibit SS
to the Participation Agreement, which may, from time to time, but no
more often than once per year, be modified by Midwest, and shall
contain a list of up to six entities (including Affiliates) which
Midwest reasonably believes in its good faith judgment are
Competitors of Midwest or its Affiliates.
SECTION 7. OPINION OF COUNSEL
Prior to, or on the date hereof, the Transferor shall have delivered to
Midwest, the Owner Trustee and, so long as the Lessor Notes are outstanding, the
Holder Representative an opinion of counsel relating to this Agreement. Such
opinion and counsel shall be reasonably satisfactory to each recipient thereof,
to the effect that this Agreement is a legal, valid and binding obligation of,
and is enforceable against, each party hereto and (ii) to the effect that all
regulatory approvals required in connection with the transfer contemplated by
this Agreement or necessary to assume the Transferor's obligations under the
Operative Documents shall have been obtained and that the proposed transfer of
the Beneficial Interest will not require registration the Securities Act.
SECTION 8. BENEFICIARIES
CHE, Holdings, Midwest, Funding LLC, the Owner Lessor, the Owner Trustee,
and so long as the Lessor Notes are outstanding, the Holder Representative,
together with their respective successors and permitted assigns, are each third
party beneficiaries of this Agreement (each, a "Beneficiary" or, together, the
"Beneficiaries").
SECTION 9. MISCELLANEOUS
SECTION 9.1.AMENDMENTS AND WAIVERS. No term, covenant, agreement or
condition of this Agreement may be terminated, amended or compliance therewith
waived (either generally or in a particular instance, retroactively or
prospectively) except by an instrument or instruments in writing executed by
each party hereto.
SECTION 9.2.NOTICES. The Transferee hereby designates that copies of all
communications and notices to the Transferor pursuant to the Operative
Documents shall be sent to the Transferee at its address set forth below. Unless
otherwise expressly specified or permitted by the terms hereof, all
communications and notices provided for herein shall be in writing or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (a) upon personal delivery thereof, including by
overnight mail or courier service, (b) in the case of notice by United States
mail, certified or registered, postage prepaid, return receipt requested, upon
receipt thereof, or (c) in the case of notice by such a telecommunications
device, upon transmission thereof, provided such transmission is promptly
confirmed by either of the methods set forth in clauses (a) or (b) above, in
each case addressed to each party hereto at its address set forth below or, in
the case of either party hereto, at such other address as such party may from
time to time designate by written notice to the other party hereto:
If to the Transferor:
Facsimile No.:
Telephone No.:
Attention:
If to the Transferee:
Facsimile No.:
Telephone No.:
Attention:
SECTION 9.3. SURVIVAL. All warranties, representations, indemnities and
covenants made by any party hereto, herein or in any certificate or other
instrument delivered by either party or on the behalf of either party under this
Agreement, shall be considered to have been relied upon by the other party
hereto and shall survive the consummation of the transactions contemplated
hereby on the date of execution and delivery of this Agreement regardless of any
investigation made by either party or on behalf of such party.
SECTION 9.4. SUCCESSORS AND ASSIGNS. The Transferee covenants and agrees
that it shall obtain any and all consents required under the Operative Documents
if the Transferee assigns its interest under this Agreement. If the Transferee
assigns such interest under this Agreement, then this Agreement shall be binding
upon and shall inure to the benefit of, and shall be enforceable by, the
respective successors and assigns as permitted by and in accordance with the
terms hereof.
SECTION 9.5. GOVERNING LAW. This Agreement shall be in all respects
governed by and construed in accordance with the laws of the State of New York,
including all matters of construction, validity and performance (without giving
effect to the conflicts of laws provisions thereof, other than New York General
Obligations Law Section 5-1401).
SECTION 9.6. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforce-
able such provision in any other jurisdiction.
SECTION 9.7. COUNTERPARTS. This Agreement may be executed by the
parties hereto in separated counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 9.8. HEADINGS. The headings of the sections of this Agreement
are inserted for purposes of convenience only and shall not be construed to
affect the meaning or construction of any of the provisions hereof.
SECTION 9.9. FURTHER ASSURANCES. Each party hereto will promptly and
duly execute and deliver such further documents to make such further assurances
for and take such further action reasonably requested by any party to whom such
first party is obligated, all as may be reasonably necessary to carry out more
effectively the intent and purpose of this Agreement.
SECTION 10. WAIVER OF RIGHT TO PARTITION
So long as the Facility or any part thereof as originally constructed,
reconstructed or added to is used or useful for the generation of electrical
power and energy, or to the end of the period permitted by applicable law,
whichever first occurs, the Transferee waives its right to partition whether by
partition in kind or sale and division of the proceeds thereof, and agrees that
it will not resort to any action at law or in equity to partition and further
waive the benefit of all laws that may now or hereafter authorize such partition
of the properties comprising the Facility. It is agreed that this covenant shall
be deemed to run with the land. All instruments of conveyance which effect,
evidence or vest the ownership interest of the Transferee in the Transferee
shall contain this waiver of right to partition.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized.
[ ],
as Transferor
By: ---------------------------------------
Name:
Title:
Date:
[ ],
as Transferee
By: ---------------------------------------
Name:
Title:
Date:
SCHEDULE 3.1(c)
TO THE PARTICIPATION
AGREEMENT
MIDWEST GOVERNMENTAL APPROVALS
PART A: Governmental Approvals
1. Approval under Section 203 of the Federal Power Act for sale of step-up
transformers.
2. Exempt Wholesale Generator determinations under Section 32 of the Public
Utility Holding Company Act of 1935 (one for each of Midwest Generation,
LLC, ▇▇▇▇▇▇▇ Trust I, ▇▇▇▇▇▇▇ Trust II, ▇▇▇▇▇▇▇ Trust III and ▇▇▇▇▇▇▇
Trust IV).
3. Acceptance for filing of market-based rates for sales of power and
reassignment of transmission from the Facilities under Section 205 of the
Federal Power Act.
4. Acceptance for filing of transition Power Purchase Agreements between the
Borrower and ComEd under Section 205 of the Federal Power Act: to be filed
within 30 days of commencement of service.
5. Acceptance for filing of the Interconnection Agreements under Section 205
of the Federal Power Act.
6. Receipt of all permits and licenses that are required under any
Requirement of Law for the operation of the ComEd Assets in order to
comply in all material respects with its obligations under the Power
Purchase Agreements. See Attachment A to Schedules 3.1(c), 3.2(d) and
3.3(d).
7. Expiration of notice period for blanket preapproval under 18 CFR part 34.
8. Illinois Commerce Commission approval of transfer of assets.
9. The Illinois statute that makes the public interest findings requisite to
obtaining EWG status at FERC, as required under section 32(c) of PUHCA.
PART B: Final Governmental Approvals for which the period for the filing of
notice of rehearing or application for judicial review have not yet
expired.
GOVERNMENTAL APPROVAL DEADLINE TO SEEK REHEARING TIME TO FILE APPEAL
OR TO PROTEST PREAPPROVALS
---------------------------- ---------------------------- --------------------------------
1. 203 Order (issued Novem- December 8, 1999 60 days after order on rehear-
ber 8, 1999) ing
2. EWG order (issued No- no rehearing provided for in no statutory deadline to file an
vember 9, 1999) PUHCA appeal under PUHCA
3. Acceptance for filing of 30 days after order 60 days after order on rehear-
transition Power Purchase ing
Agreements under Section 205
of the Federal Power Act: to
be filed within 30 days of
commencement
PART C: Possible Appeals of Governmental Approvals
No approval listed in Part C above is the subject of any pending, or
threatened judicial or administrative proceeding.
SCHEDULE 3.1(d)
TO THE PARTICIPATION
AGREEMENT
FACTUAL INFORMATION OF MIDWEST
1. Factual information provided in writing by EME pertaining to EME and
its Affiliates in the ASA.
2. Factual information provided in writing by EME pertaining to all
reports and registration statements filed by EME with the Securities
and Exchange Commission or any national securities exchange.
3. Factual information provided in writing by EME pertaining to the
Information Memorandum, dated October, 1999.
4. Factual information provided in writing by EME or its Affiliates to:
(a) the Engineering Consultant, in connection with the
preparation of the Engineering Report;
(b) the Market Consultant, in connection with the preparation
of the Market Report;
(c) the Fuel Consultant, in connection with the preparation of
the Fuel Report; and
(d) the Appraiser, in connection with the preparation of the
Closing Date Appraisal.
5. Factual information provided in writing by EME or its Affiliates to
FERC and to the Commerce Commission of the State of Illinois in
connection with the Overall Transaction.
SCHEDULE 3.2(d)
TO THE PARTICIPATION
AGREEMENT
HOLDINGS GOVERNMENTAL APPROVALS
PART A: Governmental Approvals
1. Approval under Section 203 of the Federal Power Act for sale of step-up
transform ers.
2. Exempt Wholesale Generator determinations under Section 32 of the
Public Utility Holding Company Act of 1935 (one for each of Midwest
Generation, LLC, ▇▇▇▇▇▇▇ Trust I, ▇▇▇▇▇▇▇ Trust II, ▇▇▇▇▇▇▇ Trust III
and ▇▇▇▇▇▇▇ Trust IV).
3. Acceptance for filing of market-based rates for sales of power and
reassignment of transmission from the Facilities under Section 205 of
the Federal Power Act.
4. Acceptance for filing of transition Power Purchase Agreements between
the Borrower and ComEd under Section 205 of the Federal Power Act: to
be filed within 30 days of commencement of service.
5. Acceptance for filing of the Interconnection Agreements under Section
205 of the Federal Power Act.
6. Receipt of all permits and licenses that are required under any
Requirement of Law for the operation of the ComEd Assets in order to
comply in all material respects with its obligations under the Power
Purchase Agreements. See Attachment A to Schedules 3.1(c), 3.2(d) and
3.3(d).
7. Expiration of notice period for blanket preapproval under 18 CFR part
34.
8. Illinois Commerce Commission approval of transfer of assets.
9. The Illinois statute that makes the public interest findings requisite
to obtaining EWG status at FERC, as required under section 32(c) of
PUHCA.
PART B: Final Governmental Approvals for which the period for the
filing of notice of rehearing or application for judicial
review have not yet expired.
GOVERNMENTAL APPROVAL DEADLINE TO SEEK REHEARING TIME TO FILE APPEAL
OR TO PROTEST PREAPPROVALS
----------------------------- ----------------------------- --------------------------------
1. 203 Order (issued Novem- December 8, 1999 60 days after order on rehear-
ber 8, 1999) ing
2. EWG order (issued No- no rehearing provided for in no statutory deadline to file an
vember 9, 1999) PUHCA appeal under PUHCA
3. Acceptance for filing of 30 days after order 60 days after order on rehear-
transition Power Purchase ing
Agreements under Section 205
of the Federal Power Act: to
be filed within 30 days of
commencement
PART C: Possible Appeals of Governmental Approvals
No approval listed in Part C above is the subject of any pending, or
threatened judicial or administrative proceeding.
SCHEDULE 3.2(e)
TO THE PARTICIPATION
AGREEMENT
FACTUAL INFORMATION OF HOLDINGS
1. Factual information provided in writing by EME pertaining to EME and
its Affiliates in the ASA.
2. Factual information provided in writing by EME pertaining to all
reports and registration statements filed by EME with the Securities
and Exchange Commission or any national securities exchange.
3. Factual information provided in writing by EME pertaining to the
Information Memorandum, dated October, 1999.
4. Factual information provided in writing by EME or its Affiliates to:
(a) the Engineering Consultant, in connection with the
preparation of the Engineering Report;
(b) the Market Consultant, in connection with the preparation
of the Market Report;
(c) the Fuel Consultant, in connection with the preparation of
the Fuel Report; and
(d) the Appraiser, in connection with the preparation of the
Closing Date Appraisal.
5. Factual information provided in writing by EME or its Affiliates to
FERC and to the Commerce Commission of the State of Illinois in
connection with the Overall Transaction.
SCHEDULE 3.3(d)
TO THE PARTICIPATION
AGREEMENT
▇▇▇▇▇▇▇ HOLDINGS GOVERNMENTAL APPROVALS
PART A: Governmental Approvals
1. Approval under Section 203 of the Federal Power Act for sale of step-up
transformers.
2. Exempt Wholesale Generator determinations under Section 32 of the
Public Utility Holding Company Act of 1935 (one for each of Midwest
Generation, LLC, ▇▇▇▇▇▇▇ Trust I, ▇▇▇▇▇▇▇ Trust II, ▇▇▇▇▇▇▇ Trust III
and ▇▇▇▇▇▇▇ Trust IV).
3. Acceptance for filing of market-based rates for sales of power and
reassignment of transmission from the Facilities under Section 205 of
the Federal Power Act.
4. Acceptance for filing of transition Power Purchase Agreements between
the Borrower and ComEd under Section 205 of the Federal Power Act: to
be filed within 30 days of commencement of service.
5. Acceptance for filing of the Interconnection Agreements under Section
205 of the Federal Power Act.
6. Receipt of all permits and licenses that are required under any
Requirement of Law for the operation of the ComEd Assets in order to
comply in all material respects with its obligations under the Power
Purchase Agreements. See Attachment A to Schedules 3.1(c), 3.2(d) and
3.3(d).
7. Expiration of notice period for blanket preapproval under 18 CFR part
34.
8. Illinois Commerce Commission approval of transfer of assets.
9. The Illinois statute that makes the public interest findings requisite
to obtaining EWG status at FERC, as required under section 32(c) of
PUHCA.
PART B: Final Governmental Approvals for which the period for the
filing of notice of rehearing or application for judicial
review have not yet expired.
GOVERNMENTAL APPROVAL DEADLINE TO SEEK REHEARING TIME TO FILE APPEAL
OR TO PROTEST PREAPPROVALS
----------------------------- ----------------------------- --------------------------------
1. 203 Order (issued Novem- December 8, 1999 60 days after order on rehear-
ber 8, 1999) ing
2. EWG order (issued No- no rehearing provided for in no statutory deadline to file an
vember 9, 1999) PUHCA appeal under PUHCA
3. Acceptance for filing of 30 days after order 60 days after order on rehear-
transition Power Purchase ing
Agreements under Section 205
of the Federal Power Act: to
be filed within 30 days of
commencement
PART C: Possible Appeals of Governmental Approvals
No approval listed in Part C above is the subject of any pending, or
threatened judicial or administrative proceeding.
SCHEDULE 4.22 TO
PARTICIPATION AGREEMENT
RECORDINGS AND FILINGS
LESSOR SECURITY PACKAGE
- Mortgage (T1), dated as of December 15, 1999, by ▇▇▇▇▇▇▇ Trust
I, to Citibank, N.A., filed for record in the Grundy County
Recording Offices.
- Illinois Real Property Transfer Affidavit executed by ▇▇▇▇▇▇▇
Trust I, filed for record in the Grundy County Recording
Offices.
- Memorandum of Site Lease (T1), dated as of December 15, 1999
between Midwest Generation, LLC, as Ground Lessor and ▇▇▇▇▇▇▇
Trust I, as Ground Lessee, filed for record in the Grundy
County Recording Offices.
- Memorandum of Site Sublease (T1), dated as of December 15,
1999, between ▇▇▇▇▇▇▇ Trust I, as Ground Sublessor, and
▇▇▇▇▇▇▇ Holdings EME, LLC, as Ground Sublessee, filed for
record in the Grundy County Recording Offices.
- Memorandum of Site Sub-Sublease (T1), dated as of December 15,
1999, between ▇▇▇▇▇▇▇ Holdings EME, LLC, as Ground
Sub-Sublessor and Midwest Generation, LLC, as Ground
Sub-Sublessee, filed for record in the Grundy County Recording
Offices.
- Facility Sublease Agreement (T1), dated as of December 15,
1999, among ▇▇▇▇▇▇▇ Holdings EME, LLC, as Facility Sublessor,
Midwest Generation, LLC, as Facility Sublessee and ▇▇▇▇▇▇▇
Trust I, as Owner Trustee, filed for record in the Grundy
County Recording Offices.
- UCC-1 filed in Grundy County, Illinois and with the Secretary
of State of the State of Delaware under the Lessor Loan
Agreement (T1).
HOLDINGS SECURITY PACKAGE
- UCC-1 filed with the Secretary of State of California under
the EMOC Pledge Agreement.
- UCC-1 to be filed with the Secretary of State of California
under the Holdings Pledge Agreement.
- UCC-1 to be filed with the Secretaries of State of California
and Illinois under the MGE Pledge Agreement.
- UCC-1 to be filed with the Secretary of State of California
under the Intercreditor Agreement.
PAGE
APPENDIX A
TO PARTICIPATION
AGREEMENT
DEFINITIONS
APPENDIX A - DEFINITIONS
(T1)
GENERAL PROVISIONS
In this Appendix A and each Operative Document (as hereinafter
defined), unless, otherwise provided herein or therein:
- the terms set forth in this Appendix A or in any such
Operative Document shall have the meanings herein
provided for and any term used in an Operative
Document and not defined therein or in this Appendix
A but in another Operative Document shall have the
meaning, herein or therein provided for in such other
Operative Document;
- any term defined in this Appendix A by reference to
another document, instrument or agreement shall
continue to have the meaning ascribed thereto whether
or not such other document, instrument or agreement
remains in effect;
- words importing the singular include the plural and
vice versa;
- words importing a gender include any gender;
- a reference to a part, clause, section, paragraph,
article, party, annex, appendix, exhibit, schedule or
other attachment to or in respect of an Operative
Document is a reference to a part, clause, section,
paragraph, or article of, or a party, annex,
appendix, exhibit, schedule or other attachment to,
such Operative Document unless, in any such case,
otherwise expressly provided in any such Operative
Document;
DEFINITIONS TO PARTICIPATION AGREEMENT (T1)
1
- a reference to any statute, regulation, proclamation,
ordinance or law includes all statutes, regulations,
proclamations, ordinances or laws varying,
consolidating or replacing the same from time to
time, and a reference to a statute includes all
regulations, policies, protocols, codes,
proclamations and ordinances issued or otherwise
applicable under that statute unless, in any such
case, otherwise expressly provided in any such
statute or in such Operative Document;
- a definition of or reference to any document,
instrument or agreement includes an amendment or
supplement to, or restatement, replacement,
modification or novation of, any such document,
instrument or agreement unless otherwise specified in
such definition or in the context in which such
reference is used;
- a reference to a particular section, paragraph or
other part of a particular statute shall be deemed to
be a reference to any other section, paragraph or
other part substituted therefor from time to time;
- if a capitalized term describes, or shall be defined
by reference to, a document, instrument or agreement
that has not as of any particular date been executed
and delivered and such document, instrument or
agreement is attached as an exhibit to the
Participation Agreement (as hereinafter defined),
such reference shall be deemed to be to such form
and, following such execution and delivery and
subject to paragraph (vii) above, to the document,
instrument or agreement as so executed and delivered;
- a reference to any Person (as hereinafter defined)
includes such Person's successors and permitted
assigns;
- any reference to "days" shall mean calendar days
unless "Business Days" (as hereinafter defined) are
expressly specified;
- if the date as of which any right, option or election
is exercisable, or the date upon which any amount is
due and payable, is stated to be on a day that is not
a Business Day, such right, option or election may be
2
exercised, and such amount shall be deemed due and
payable, on the next succeeding Business Day with the
same effect as if the same was exercised or made on
such date or day and interest shall accrue and be
payable with respect to such payment;
- words such as "hereunder", "hereto", "hereof" and
"herein" and other words of similar import shall,
unless the context requires otherwise, refer to the
whole of the applicable document and not to any
particular article, section, subsection, paragraph or
clause thereof; and
- a reference to "including" means including without
limiting the generality of any description preceding
such term, and for purposes hereof and of each
Operative Document the rule of EJUSDEM GENERIS shall
not be applicable to limit a general statement,
followed by or referable to an enumeration of
specific matters, to matters similar to those
specifically mentioned.
3
DEFINED TERMS
"ACCESS ROUTES" shall have the meaning set forth in the recitals to the Facility
Site Lease.
"ADDITIONAL COVERED DOCUMENTS" shall mean the Insurance Agreement among the
Surety, the Insured Parties party thereto and Citicorp North America, Inc., as
agent thereunder, the Management Agreement between the Lender and Lord
Securities Corporation and the Servicing Agreement between the Lender, Citicorp
North America, Inc. and Lord Securities Corporation, in each case dated as of
the date hereof, and the Limited Liability Company Agreement of the Lender and
the By-Laws of Midwest Funding, Inc., as any of the foregoing agreements,
instruments and other documents may be amended, supplemented and otherwise
modified and in effect from time to time.
"ADDITIONAL EQUITY INVESTMENT" shall mean the amount, if any, the Owner
Participant shall provide (in its sole and absolute discretion) to finance all
or a portion of the Owner Lessor's Percentage of the cost of any Required
Improvement or Non-Severable Improvement financed pursuant to SECTION 16.1 of
the Participation Agreement.
"ADDITIONAL FUNDING LLC NOTES" shall mean any additional notes issued by Funding
LLC in connection with the issuance of Additional Lessor Notes relating thereto.
"ADDITIONAL INSUREDS" shall have the meaning specified in SECTION 11.3 of the
Facility Lease.
"ADDITIONAL LESSOR NOTES" shall have the meaning specified in SECTION 2.03 of
the Lessor Loan Agreement.
"ADDITIONAL RENT PAYMENT DATE" shall have the meaning specified in SECTION 3.2
of the Facility Lease.
"ADMINISTRATIVE AGENT" shall mean The Chase Manhattan Bank, a banking
institution organized under the laws of the State of New York, in its capacity
as administrative agent for the Holdings Lenders, together with its successors
and assigns in such capacity.
"AFFILIATE" of any particular Person shall mean any other Person which, directly
or indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Pension
4
Plan or Welfare Plan). A Person shall be deemed to be "controlled by" any other
Person if such other Person possesses, directly or indirectly, power to direct
or cause the direction of the management and policies of such Person whether by
contract or otherwise; PROVIDED, HOWEVER, that under no circumstances shall the
Trust Company be considered to be an Affiliate of any of the Owner Lessor, the
Owner Trustee, or the Owner Participant, nor shall any of the Owner Lessor, the
Owner Trustee, or the Owner Participant be considered to be an Affiliate of the
Trust Company.
"AFTER-TAX BASIS" shall mean, in the context of determining the amount of a
payment to be made on such basis, the payment of an amount which, after
reduction by the net increase in Taxes of the recipient (actual or constructive)
of such payment, which net increase shall be calculated by taking into account
any reduction in such Taxes resulting from any tax benefits realized or to be
realized by the recipient as a result of such payment, shall be equal to the
amount required to be paid. In calculating the amount payable by reason of this
provision in the case of any person that is a U.S. Person, all income taxes
payable and tax benefits realized or to be realized shall be determined on the
assumptions that (i) the recipient is subject to (a) U.S. Federal income taxes
at the highest marginal rate then applicable to corporations for the relevant
period or periods, and (b) state and local income taxes at the highest marginal
rates then applicable to corporations for the relevant period or periods, and
(ii) all related tax benefits are utilized (a) with regard to U.S. Federal
income taxes, at the highest marginal rates then applicable to corporations for
the relevant period or periods, and (b) with regard to state and local income
taxes, at the highest marginal rate then applicable to corporations for the
relevant period or periods.
"APA" shall mean the Asset Purchase Agreement dated as of December 15, 1999
among Funding LLC, the Securitization Company, each APA Purchaser party thereto,
the APA Agent, and Citicorp North America, Inc. as operating agent for the
Securitization Company and as RCE Agent, as the same may from time to time be
amended, amended and restated, supplemented or otherwise modified in accordance
with the terms thereof.
"APA AGENT" shall mean Citibank, N.A., a national banking association, in its
capacity as APA Agent under the APA, together with its successors and assigns in
such capacity.
"APA PURCHASERS" shall mean each financial institution party to the APA as a
"Purchaser".
5
"APPRAISAL PROCEDURE" shall mean (except with respect to the Closing Date
Appraisal), an appraisal conducted by an appraiser or appraisers in accordance
with the following procedures. The Owner Participant and the Facility Lessee
will consult with the intent of selecting a mutually acceptable Independent
Appraiser. If a mutually acceptable Independent Appraiser is selected, the Fair
Market Sales Value, the Fair Market Rental Value, the remaining useful life or
other determination that is the subject of the appraisal shall be determined by
such Independent Appraiser. If the Facility Lessee and the Owner Participant are
unable to agree upon a single Independent Appraiser within a 15-day period, one
shall be appointed by the Owner Participant, and one shall be appointed by the
Facility Lessee (or its designee), which Independent Appraisers shall attempt to
agree upon the value, period, amount or other determination that is the subject
of the appraisal. If either the Owner Participant or the Facility Lessee or its
designee does not appoint its Independent Appraiser, the determination of the
other Independent Appraiser shall be conclusive and binding on the Owner
Participant and the Facility Lessee. If the Independent Appraisers appointed by
the Owner Participant and the Facility Lessee are unable to agree upon the
value, period, amount or other determination that is the subject of the
appraisal, such Independent Appraisers shall jointly appoint a third Independent
Appraiser or, if such Independent Appraisers do not appoint a third Independent
Appraiser, the Owner Participant and the Facility Lessee shall jointly appoint
the third Independent Appraiser. In such case, the average of the determinations
of the three Independent Appraisers shall be conclusive and binding on the Owner
Participant and the Facility Lessee, unless the determination of one such
Independent Appraiser is disparate from the middle determination by more than
twice the amount by which the third determination is disparate from the middle
determination, in which case the determination of the most disparate Independent
Appraiser shall be excluded, and the average of the remaining two determinations
shall be conclusive and binding on the Owner Participant and the Facility
Lessee.
"APPRAISER" shall mean Deloitte and Touche LLP Valuation Group.
"ASA" shall mean the Asset Sale Agreement, dated as of March 22, 1999, by and
between ComEd and EME.
"ASSET DISPOSITION" shall have the meaning assigned to it in SECTION 6.2 of the
Participation Agreement.
6
"ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and assumption
agreement in form and substance substantially in the form of EXHIBIT RR to the
Participation Agreement.
"AUTHORIZED OFFICER" shall mean, with respect to any Person, (i) its Chairman of
the Board, its President, any Senior Vice President, the Chief Financial
Officer, any Vice President, the Treasurer or any other person authorized by or
pursuant to the Organic Documents or any resolution of the board of directors or
managers (or managing members) of such Person, and (ii) with respect to the
Owner Trustee, an officer in its corporate trust department.
"BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978, as
amended from time to time, 11 U.S.C. Section 101 ET SEQ.
"BASIC LEASE RENT" shall have the meaning specified in SECTION 3.2 of the
Facility Lease.
"BASIC LEASE TERM" shall have the meaning specified in SECTION 3.1 of the
Facility Lease.
"BENEFICIAL INTEREST" shall mean the interest of the Owner Participant in the
Owner Lessor.
"▇▇▇▇ OF SALE AND INSTRUMENT OF ASSIGNMENT" shall mean the ▇▇▇▇ of Sale and
Instrument of Assignment, dated as of December 15, 1999, executed by ComEd, as
the same may from time to time be amended, amended and restated, supplemented or
otherwise modified in accordance with the terms thereof.
"▇▇▇▇ OF SALE" shall mean the ▇▇▇▇ of Sale (▇▇▇▇▇▇▇ Trust I), dated as of
December 15, 1999, executed by Unicom Investments Inc. in favor of the Owner
Lessor, as the same may from time to time be amended, amended and restated,
supplemented or otherwise modified in accordance with the terms thereof.
"BURDENSOME BUYOUT EVENT" shall mean any event giving rise to the Facility
Lessee's Burdensome Buyout Option under the Facility Lease.
"BURDENSOME BUYOUT OPTION" shall have the meaning specified in SECTION 13.3 of
the Facility Lease.
7
"BURDENSOME BUYOUT PERIOD" shall have the meaning specified in SECTION 13.3 of
the Facility Lease.
"BUSINESS DAY" shall mean:
(i) any day which is neither a Saturday or Sunday nor a legal holiday
on which commercial banking institutions are authorized or required by
law, regulation or executive order to be closed in New York, New York
and Wilmington, Delaware; and
(ii) relative to the making, continuing, prepaying or repaying of any
LIBO Rate Loans, any day on which dealings in Dollars are carried on in
the London interbank market.
"CAPEX LIMITATION GRID" shall mean the CAPEX Limitation Grid attached as
ANNEX II to the Holdings Credit Agreement.
"CAPITAL EXPENDITURES" shall mean expenditures made or liabilities incurred for
the acquisition of any fixed assets or improvements, replacements, substitutions
or additions thereto that have a useful life of more than one year.
"CAPITAL LEASE" shall mean, with respect to any Person, a lease of (or other
Indebtedness arrangements conveying the right to use) real or personal property
of such Person which is required to be classified and accounted for as a capital
lease or a liability set forth on the balance sheet of such Person or such
Person's Subsidiaries in accordance with GAAP.
"CAPITALIZED LEASE LIABILITIES" of any Person shall mean all monetary
obligations of such Person under any Capital Lease, and, for purposes of each
Operative Document, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP.
"CASH EQUIVALENT INVESTMENTS" shall mean, at any time:
(i) any evidence of Indebtedness, maturing not more than one year after
such time, issued or guaranteed by the United States government or an agency
thereof;
8
(ii) other investments in securities or bank instruments rated at
least "A" by S&P and "A2" by ▇▇▇▇▇'▇ or "A-1" by S&P and "P-1" by ▇▇▇▇▇'▇ and
with maturities of less than 366 days; or
(iii) other securities as to which the Person incurring such
Indebtedness has demonstrated adequate liquidity through secondary markets or
deposit agreements.
"CASH FLOW AVAILABLE FOR FIXED CHARGES" shall mean, in respect of any period,
the excess, if any, of Revenues (excluding proceeds of permitted asset sales and
amounts available in the Cash Flow Recapture Fund) during such period OVER
Operating Expenses during such period.
"CASHFLOW RECAPTURE FUND" shall have the meaning set forth in SECTION 5.1 of the
Holdings Credit Agreement.
"CERCLIS" shall mean the Comprehensive Environmental Response, Compensation and
Liability Information System list.
"CLAIM" shall mean any liability (including, without limitation, in respect of
negligence (whether passive or active or other torts), strict or absolute
liability in tort or otherwise, warranty, latent or other defects (regardless of
whether or not discoverable), statutory liability, property damage, bodily
injury or death), obligation, loss, settlement, damage, penalty, claim,
Environmental Claim, action, suit, proceeding (whether civil or criminal),
judgment, penalty, fine and other legal or administrative sanction, judicial or
administrative proceeding, cost, expense or disbursement, including reasonable
legal, investigation and expert fees, expenses and related charges, of
whatsoever kind and nature.
"CLOSING" shall have the meaning specified in SECTION 2.2(a) of the
Participation Agreement.
"CLOSING DATE" shall mean the Scheduled Closing Date or such later date on which
the Closing shall occur.
"CLOSING DATE APPRAISAL" shall mean the appraisal, dated the Closing Date,
addressed to the Equity Investor prepared by the Appraiser with respect to the
Facility.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
9
"COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT" shall mean the Collateral Agency
and Intercreditor Agreement dated as of December 15, 1999, among MGE, Holdings,
EMOC, Midwest, ▇▇▇▇▇▇▇ Holdings, the Owner Lessor, the Other Owner Lessors,
Funding LLC, the Administrative Agent, each Holder Representative (as defined
therein), each Other Representative (as defined therein), the Depositary Bank
(as defined therein), the Depositary Agent (as defined therein), the Midwest LC
Issuer and the Holdings Collateral Agent (as defined therein), as from time to
time amended, supplemented, amended and restated, or otherwise modified and in
effect from time to time.
"▇▇▇▇▇▇▇ FACILITY OPERATING AGREEMENTS" shall mean, collectively, the Power
Purchase Agreement, the Interconnection Agreements and the Operation Agreement.
"▇▇▇▇▇▇▇ HOLDINGS" shall mean ▇▇▇▇▇▇▇ Holdings EME, LLC, a wholly-owned
Subsidiary of MGE and a special purpose, bankruptcy-remote limited liability
company organized under the laws of the State of Delaware.
"▇▇▇▇▇▇▇ IMPROVEMENTS" shall have the meaning set forth in the recitals to the
Facility Site Lease.
"▇▇▇▇▇▇▇ LAND" shall have the meaning set forth in the recitals to the Facility
Site Lease.
"▇▇▇▇▇▇▇ OPERATING AGREEMENT" shall mean the operating agreement of ▇▇▇▇▇▇▇
Holdings EME, LLC.
"COMED" shall mean the Commonwealth Edison Company, an Illinois corporation or
its successors or assigns.
"COMED ASSETS" shall mean certain electric generation and related assets subject
to the ASA.
"COMMISSION" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"COMPETITOR" shall have the meaning specified in SECTION 12.1(b) of the
Participation Agreement.
10
"COMPONENT" shall mean any appliance, part, instrument, appurtenance, accessory,
furnishing, equipment or other property of whatever nature that may from time to
time be incorporated in the Facility, except to the extent constituting
Improvements.
"CONSOLIDATED SUBSIDIARY" shall mean, at any date, any Subsidiary or other
entity the accounts of which would be consolidated with those of Holdings in its
consolidated financial statements if its consolidated financial statements were
prepared as of such date.
"CONSOLIDATED TANGIBLE NET ASSETS" shall mean, as of the date of any
determination thereof, the total amount of all assets of Holdings and its
Subsidiaries (determined on a consolidated basis in accordance with GAAP), less
the sum of (a) the consolidated liabilities of Holdings and its Subsidiaries
(determined on a consolidated basis in accordance with GAAP) and (b) assets
properly classified as "intangible assets" in accordance with GAAP.
"CONTINGENT LIABILITY" shall mean any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount of the debt, obligation or other liability guaranteed thereby;
PROVIDED, HOWEVER, that if the maximum amount of the debt, obligation or other
liability guaranteed thereby has not been established, the amount of such
Contingent Liability shall be the maximum reasonably anticipated amount of the
debt, obligation or other liability; PROVIDED, FURTHER, HOWEVER, that any
agreement to limit the maximum amount of such Person's obligation under such
Contingent Liability shall not, of and by itself, be deemed to establish the
maximum reasonably anticipated amount of such debt, obligation or other
liability.
"CONTINGENT PREPAID RENT" shall have the meaning specified in SECTION 16(t) of
the Facility Lease.
"CONTRACTUAL OBLIGATION" shall mean, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
11
"CONTROLLED GROUP" shall mean all corporations which are members of a
controlled group of corporations within the meaning of Section 1563(a) of the
Code determined without regard to Sections 1563(a)(4) and 1563(e)(3)(C) and all
trades or businesses (whether or not incorporated) under common control which,
together with Holdings and its Consolidated Subsidiaries, are treated as a
single employer under Section 414(b) or 414(c) of the Code or Section 4001 of
ERISA.
"DEBT RATING" shall mean a rating by each of ▇▇▇▇▇'▇ and S&P of each of the
Tranche A Loans, the Tranche B Loans, the Tranche C Loans or the Funding LLC
Loans. If ▇▇▇▇▇'▇ or S&P shall have changed its system of classifications after
the date hereof, a Debt Rating shall be considered to be at or above a
specified level if it is at or above the new rating which most closely
corresponds to the specified level under the old rating system.
"DEBT SERVICE COVERAGE RATIO" shall mean, for any period, the ratio of (a)
Cashflow Available for Fixed Charges for such period to (b) Fixed Charges for
such period.
"DEBT TO CAPITAL RATIO" shall mean, with respect to Holdings and its
Consolidated Subsidiaries, the ratio as of the end of the last Fiscal Quarter
for which financial statements are available of (i) the aggregate principal
amount of Indebtedness of Holdings and its Consolidated Subsidiaries then
outstanding to (ii) Total Capitalization.
"DISCOUNT RATE" shall mean 8.33% per annum.
"DOLLARS" and the sign "$" shall mean lawful money of the United States.
"EDISON MISSION ENERGY" or "EME" shall mean Edison Mission Energy, a California
corporation.
"EMOC" shall mean Edison Mission Overseas Co., a subsidiary of Holdings and a
corporation organized under the laws of Delaware.
"EMOC ACQUISITION NOTES" shall mean the one or more promissory notes dated the
Closing Date by Midwest payable to EMOC in an aggregate principal amount of at
least $3,380,000,000.
"EMOC LOAN DOCUMENTS" shall mean each of (i) the Intercompany Loan
Subordination Agreement, (ii) the Subordinated Loan Agreement dated as of
December 15, 1999 entered
12
into by and among EMOC and Midwest as from time to time amended, supplemented,
amended and restated, or otherwise modified and in effect from time to time,
(iii) the Subordinated Revolving Loan Agreement dated as of December 15, 1999
entered into by and among EMOC and Midwest as from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect from
time to time and (iv) the EMOC Acquisition Notes.
"ENGINEERING CONSULTANT" shall mean Stone & ▇▇▇▇▇▇▇ Management Consultants, Inc.
"ENGINEERING REPORT" shall mean the report of the Engineering Consultant, dated
September 27, 1999 and the bring-down of such report.
"ENSR" shall mean ENSR Corporation.
"ENVIRONMENTAL CLAIM" shall mean any administrative, regulatory or judicial
action, fee, cause of action, obligation, suit, liability, loss, damage,
proceeding, decree, judgment, penalty, fine, demand, demand letter, order,
directive, claim (including any claim involving liability in tort, strict,
absolute or otherwise), lien, sanction, notice of noncompliance or violation,
legal or consultant fee or expense, or cost of investigation or proceeding,
relating in any way to any Environmental Law, or arising from the actual or
alleged presence or Release of any Hazardous Material (hereinafter
"LIABILITIES") including, without limitation, and regardless of the merit of
such Liability, any and all Liabilities for (i) investigation, assessment,
abatement, correction, enforcement, mitigation, cleanup, removal, response,
remediation or other activities related to the actual or alleged presence or
Release of Hazardous Materials, (ii) damages, contribution, indemnification,
cost recovery, compensation or injunctive or declaratory relief related to
violations of Environmental Law or the actual or alleged presence or Release of
Hazardous Materials, or (iii) any alleged or actual injury or threat of injury
to human health, safety, natural resources or the environment in connection
with a violation of Environmental Law or the actual or alleged presence or
Release of Hazardous Materials.
"ENVIRONMENTAL CONDITION" shall mean the presence or Release of any Hazardous
Material at, into, on or under any land, water, air or otherwise into the
environment, which does or reasonably could (i) require assessment,
investigation, abatement, correction, clean-up, mitigation, removal,
remediation or any other response action, (ii) give rise to an Environmental
Claim or any obligation or liability of any nature (whether civil or criminal,
arising under a theory of negligence or strict liability, or otherwise) under
any Environmen-
13
tal Law, (iii) create or constitute a public or private nuisance or trespass,
(iv) constitute a violation of or non-compliance with any Environmental Law or
(v) result in or contribute to the actual or threatened loss of or damage to
any property, natural resource or environmental media, or the death of or
injury to any Person.
"ENVIRONMENTAL CONSULTANT" shall mean Stone & ▇▇▇▇▇▇▇ Management Consultants,
Inc.
"ENVIRONMENTAL LAWS" shall mean all federal, state and local statutes, laws,
ordinances, codes, rules, regulations, consent decrees, administrative orders,
administrative directives, injunctions, deed restrictions, applicable judgments
and any other legally enforceable requirements of any Governmental Authority
relating to, regulating or imposing liability or standards of conduct
concerning Hazardous Materials, public health, safety or the environment or
natural resources, as have been, are now, or may at any time hereafter be in
effect.
"ENVIRONMENTAL REPORT" shall mean the Phase I and Phase II environmental
surveys concerning the Facility, prepared by ENSR, dated November 1998 and
December 1998, respectively, and the reliance letter issued by ENSR to the
Owner Participant Parent.
"EQUITY INVESTMENT" shall mean $29,172,990.67.
"EQUITY INVESTOR" shall mean PSEG ▇▇▇▇▇▇▇ Generation, LLC, a Delaware limited
liability company.
"EQUITY INVESTOR'S ADVISOR" shall mean Cornerstone Financial Advisors Limited
Partnership.
"EQUITY PORTION OF BASIC LEASE RENT" shall mean the amounts set forth as
Component A of Basic Lease Rent (Column A) as set forth on SCHEDULE 1-1 to the
Facility Lease.
"EQUITY PORTION OF TERMINATION VALUE" shall mean the amounts under the column
titled "Equity Portion of Termination Value" in SCHEDULE 2 to the Facility
Lease.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
14
"EVENT OF LOSS" shall mean any of the following events:
(i) the loss of the Facility or use thereof, due to destruction or
damage to the Facility or the Facility Site that renders repair uneconomic or
that renders the Facility permanently unfit for normal use; or
(ii) any damage to the Facility that results in an insurance
settlement with respect thereto on the basis of a total loss or an agreed
constructive or a compromised total loss of the Facility; or
(iii) seizure, condemnation, confiscation or taking of, or requisition
of title to or use of, the Facility or the Facility Site by any Governmental
Authority (a "REQUISITION") that shall have resulted in loss by the Owner
Lessor of title to or use of the Undivided Interest or the Ground Interest
following exhaustion of all permitted appeals or an election by the Facility
Lessee not to pursue such appeals; PROVIDED, that (i) no such contest may be
conducted if a Material Lease Default or a Lease Event of Default shall have
occurred and be continuing and (ii) no such contest shall extend beyond the
earlier of (x) the date which is one year after the loss of such title, or (y)
the date which is 36 months prior to the end of the Basic Lease Term or any
Renewal Term then in effect or already elected by the Facility Lessee;
PROVIDED, FURTHER, that in any case involving Requisition of use of the
Facility or the Facility Site, but not of the Owner Lessor's title to the
Undivided Interest or interest in the Facility Lease, such event shall be an
Event of Loss only if such Requisition of use continues beyond the Basic Lease
Term or any Renewal Lease Term then in effect or already elected by the
Facility Lessee; or
(iv) if elected by the Owner Participant, and only in circumstances
where the termination of the Facility Lease and transfer of the Facility to the
Facility Lessee (or its designee) shall remove the basis of the regulation
described below, subjection of the Owner Participant's interest in the
Facility, the Facility Lease or the Trust Estate to any rate of return
regulation by any Governmental Authority, or subjection of the Owner
Participant or the Owner Lessor to any public utility regulation of any
Governmental Authority (other than Requirements of Law in effect on the Closing
Date) or law which in the reasonable opinion of the Owner Participant is
burdensome, in either case by reason of the participation of the Owner Lessor
or the Owner Participant in the transactions contemplated by the Operative
Documents and not, in any event, as a result of (a) investments, loans or other
business activities of the Owner Participant or any of its Affiliates in
respect of equipment or facilities similar in nature to the Facility or any
part thereof or in any other electrical, steam,
15
cogeneration or other energy or utility related equipment or facilities or the
general business or other activities of the Owner Participant or any of its
Affiliates or the nature of any of the properties or assets from time to time
owned, leased, operated, managed or otherwise used or made available for use by
the Owner Participant or any of its Affiliates or (b) a failure of the Owner
Participant or any of its Affiliates to perform routine, administrative or
ministerial actions the performance of which would not subject the Owner
Participant or such Affiliate to any adverse consequence (in the reasonable
opinion of the Owner Participant acting in good faith), PROVIDED THAT the
Facility Lessee, the Owner Lessor and the Owner Participant agree to cooperate
and to take reasonable measures to alleviate the source or consequence of any
regulation constituting an Event of Loss under this paragraph (iv), at the cost
and expense of the party requesting such cooperation and so long as there shall
be no adverse consequences to the Owner Lessor or Owner Participant as a result
of such cooperation or the taking of such reasonable measures.
"EVENT OF LOSS PAYMENT" shall have the meaning specified in SECTION 10.2(a) of
the Facility Lease.
"EXCEPTED PAYMENTS" shall mean and include (i)(A) any indemnity (whether or not
constituting Supplemental Lease Rent and whether or not a Lease Event of
Default exists) payable to either the Trust Company, the Owner Trustee or the
Owner Participant or to their respective Indemnitees and successors and
permitted assigns (other than the Holder Representative) pursuant to SECTION
2.3, 14.1, 14.2, 16.1 OR 16.2 of the Participation Agreement, SECTION 5.03,
7.01 OR 7.05 of the Trust Agreement or SECTION 18 of the Collateral Agency and
Intercreditor Agreement, and any payments under the Tax Indemnity Agreement or
(B) any amount payable by the Facility Lessee or Midwest to the Owner Lessor or
the Owner Participant to reimburse any such Person for its costs and expenses
in exercising its rights or comply with its obligations under the Operative
Documents, (ii)(A) insurance proceeds, if any, payable to the Owner Lessor or
the Owner Participant under insurance separately maintained by the Owner Lessor
or the Owner Participant with respect to the Facility as permitted by SECTION
11.5 of the Facility Lease or (B) proceeds of personal injury, property damage
liability or other liability insurance maintained under any Operative Document
for the benefit of the Owner Lessor or the Owner Participant, (iii) any amount
payable to the Owner Participant as the purchase price for the Beneficial
Interest or to any OP Member as the purchase price for such OP Member's
membership interest in the Owner Participant, (iv) any amounts payable to the
Owner Participant upon exercise by the Facility Lessee (or its designee) of the
rights pursuant to SECTION 19 of the Participation Agreement, (v) all other
fees expressly payable to the Owner Participant, the Owner Trustee or the Trust
16
Company under the Operative Documents, (vi) any payments made pursuant to the
Midwest Letter of Credit and (vii) any payments in respect of interest, or any
payments made on an After-Tax Basis, to the extent attributable to payments
referred to in clause (i) through (vi) above that constitute Excepted Payments.
"EXCESS AMOUNT" shall have the meaning specified in SECTION 19.3 of the
Participation Agreement.
"EXCESS CASHFLOW" shall mean, for any period, the excess, if any, of Cashflow
Available for Fixed Charges during such period OVER Fixed Charges for such
period.
"EXISTING INDEBTEDNESS" shall mean, with respect to any Person, Indebtedness of
such Person in existence at the time of the Closing.
"FACILITY" shall mean the ▇▇▇▇▇▇▇ Station, a 2,698 Megawatt Fossil Fuel Fired
Electric Generating Plant located near the town of Morris, Grundy County,
Illinois and more fully described in Exhibit B to the Facility Lease.
"FACILITY DEED" shall mean the Facility Deed, dated as of December 15, 1999,
between ComEd and the Owner Lessor duly completed, executed and delivered on
the Closing Date pursuant to which ComEd will transfer the Undivided Interest
to the Owner Lessor.
"FACILITY LAND" shall have the meaning set forth in the recitals to the
Facility Site Lease.
"FACILITY LEASE" shall mean the Facility Lease Agreement (T1), dated as of
December 15, 1999, between the Owner Lessor and the Facility Lessee.
"FACILITY LEASE TERM" shall mean the term of the Facility Lease, including the
Basic Lease Term and all Renewal Lease Terms.
"FACILITY LESSEE" shall mean ▇▇▇▇▇▇▇ Holdings, as lessee of the Undivided
Interest under the Facility Lease.
"FACILITY LESSEE'S INTEREST" shall mean the Facility Lessee's right, title and
interest in and to the Undivided Interest under the Facility Lease and the
Ground Interest under the Facility Site Sublease.
17
"FACILITY LESSOR" shall mean the Owner Lessor, as lessor of the Undivided
Interest under the Facility Lease.
"FACILITY SITE" shall have the meaning specified in the recitals to the
Facility Site Lease.
"FACILITY SITE LEASE" shall mean the Facility Site Lease Agreement (T1), dated
as of December 15, 1999, between Midwest as Ground Lessor and the Owner Lessor
as Ground Lessee.
"FACILITY SITE SUBLEASE" shall mean the Facility Site Sublease Agreement (T1),
dated as of December 15, 1999, between the Owner Lessor as Ground Sublessor and
▇▇▇▇▇▇▇ Holdings as Ground Sublessee.
"FACILITY SITE SUB-SUBLEASE" shall mean the Facility Site Sub-Sublease
Agreement (T1), dated as of December 15, 1999, between ▇▇▇▇▇▇▇ Holdings as
Ground Sub-Sublessor and Midwest as Ground Sub-Sublessee.
"FACILITY SUBLEASE" shall mean the Facility Sublease Agreement (T1), dated as
of December 15, 1999, between ▇▇▇▇▇▇▇ Holdings and Midwest.
"FACILITY SUBLESSOR" shall mean ▇▇▇▇▇▇▇ Holdings, as sublessor of the Undivided
Interest under the Facility Sublease.
"FACILITY SUBLESSEE" shall mean Midwest or any other Person which shall have
become a sublessee of the Facility from the Facility Lessee in accordance with
the Facility Lease.
"FAIR MARKET RENTAL VALUE" or "FAIR MARKET SALES VALUE" shall mean with respect
to any property or service as of any date, the cash rent or cash price
obtainable in an arm's length lease, sale or supply, respectively, between an
informed and willing lessee or purchaser under no compulsion to lease or
purchase and an informed and willing lessor or seller or supplier under no
compulsion to lease or sell or supply the property or service in question, and
shall, in the case of the Undivided Interest or the Owner Lessor's Interest, be
determined (except pursuant to SECTION 17 of the Facility Lease or as otherwise
provided below or in the Operative Documents) on the basis that (i) the
conditions contained in SECTIONS 7 and 8 of the Facility Lease shall have been
complied with in all respects, (ii) the lessee or buyer shall have rights in,
or an assignment of, the Operative Documents to which the Owner Lessor is a
party and the obligations relating thereto, (iii) the Undivided Interest
18
or the Owner Lessor's Interest, as the case may be, is free and clear of all
Liens (other than Owner Lessor's Liens, Owner Participant's Liens and Security
Document Liens), (iv) taking into account the remaining term of the Facility
Site Lease, and (v) in the case the Fair Market Rental Value, taking into
account the terms of the Facility Lease and the other Operative Documents. If
the Fair Market Sales Value of the Owner Lessor's Interest is to be determined
during the continuance of a Lease Event of Default or in connection with the
exercise of remedies by the Owner Lessor pursuant to SECTION 17 of the Facility
Lease, such value shall be determined by an appraiser appointed solely by the
Owner Lessor on an "as-is", "where-is" and "with all faults" basis and shall
take into account all Liens (other than Owner Lessor's Liens, Owner
Participant's Liens and Security Document Liens); PROVIDED, HOWEVER, in any
such case where the Owner Lessor shall be unable to obtain constructive
possession sufficient to realize the economic benefit of the Owner Lessor's
Interest, Fair Market Sales Value of the Owner Lessor's Interest shall be
deemed equal to $0. If in any case other than in the preceding sentence the
parties are unable to agree upon a Fair Market Sales Value of the Owner
Lessor's Interest within 30 days after a request therefor has been made, the
Fair Market Sales Value of the Owner Lessor's Interest shall be determined by
appraisal pursuant to the Appraisal Procedure. Any fair market value
determination of a Severable Improvement shall take into consideration any
liens or encumbrances to which the Severable Improvement being appraised is
subject and which are being assumed by the transferee.
"FAS 13" shall mean Statement of Financial Accounting Standards (SFAS) No. 13,
as amended and interpreted from time to time.
"FEDERAL POWER ACT" shall mean the Federal Power Act, 16 USC Sections 791a-825r
(1994), as amended.
"FERC" shall mean the Federal Energy Regulatory Commission of the United States
or any successor or predecessor agency thereto.
"FERC EWG ORDERS" shall mean each of the orders issued by the FERC on November
9, 1999, in Docket Nos. EG99-224-000, EG99-225-000, EG99-226-000, EG99-227-000
and EG99-228-000, granting to Midwest, the Owner Lessor and each of the Other
Owner Lessors "exempt wholesale generator" status under the Holding Company Act.
"FERC NOTICE" shall mean the Notice of Issuance of Order issued by the FERC on
September 21, 1999, in Docket No. ER99-3693-000, allowing any person until
October 21,
19
1999 to protest the FERC's blanket preapproval for all future issuances of
securities and assumptions of liabilities by Midwest.
"FERC ORDERS" shall mean, collectively, the FERC EWG Orders, the FERC Section
203 Order, the FERC Section 205 Orders and the FERC Notice.
"FERC SECTION 203 ORDER" shall mean the order issued by the FERC on November 8,
1999, in Docket No. EC99-96-000, granting approval under Section 203 of the
Federal Power Act for the transfer of the Facility's transmission facilities to
Midwest, transfer of the facilities for financing purposes to the Owner Lessor
and the Other Owner Lessors, lease of the facilities by the Owner Lessor and
the Other Owner Lessors to an affiliate of Midwest, and sublease of the
facilities to Midwest.
"FERC SECTION 205 ORDERS" shall mean (i) the order issued by the FERC on
September 15, 1999, in Docket No. ER99-3693-000, granting approval under
Section 205 of the Federal Power Act for Midwest to sell power at market based
rates and granting blanket preapproval under Section 204 of the Federal Power
Act for all future issuances of securities and assumptions of liabilities by
Midwest, and (ii) the order issued by the FERC on September 3, 1999, in Docket
No. ER99-3691-000, accepting for filing three Facilities and Interconnection
Agreements.
"FINAL DETERMINATION" shall have the meaning specified in SECTION 1 of the Tax
Indemnity Agreement.
"FINANCE FACILITY" shall mean the Uncommitted Finance Facility dated December
15, 1999 among Funding LLC and the Securitization Company, as the same may from
time to time be amended, amended and restated, supplemented or otherwise
modified in accordance with the terms thereof.
"FIRST WINTERGREEN RENEWAL LEASE TERM" shall have the meaning specified in
SECTION 15.1(a) of the Facility Lease.
"FISCAL QUARTER" shall mean any quarter of a Fiscal Year.
"FISCAL YEAR" shall mean any period of twelve consecutive calendar months
ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year
20
(E.G. the "1999 Fiscal Year") shall refer to the Fiscal Year ending on December
31 occurring during such calendar year.
"FIXED CHARGES"shall mean, in respect to Holdings for any period, an amount
equal to the aggregate of, without duplication, (i) all interest due and
payable on the Holdings Loans plus or minus any net amount due and payable in
respect of Interest Rate Hedging Transactions during such period, including (A)
all capitalized interest and (B) the interest portion of any deferred payment
obligation, (ii) amounts due and payable under SECTIONS 3.3.1 and 3.3.2 of the
Holdings Credit Agreement during such period, (iii) amounts due and payable to
the Holdings Lenders with respect to the deduction of withholding tax on such
payments pursuant to SECTION 4.7 of the Holdings Credit Agreement during such
period, (iv) the interest portion of any deferred payment obligation due and
payable during such period, (v) the aggregate amount of the Lease Obligations
due and payable during such period, and (vi) all other amounts due and payable
by the Holdings Loan Parties with respect to Indebtedness permitted under the
Operative Documents during such period.
"FMV RENEWAL LEASE TERM" shall have the meaning specified in SECTION 15.2 of
the Facility Lease.
"467 FIXED RENT" shall mean the amount specified as 467 Fixed Rent as set forth
in Schedule 1-3 to the Facility Lease.
"FUEL CONSULTANT" shall mean PHB ▇▇▇▇▇▇ Bailly, Inc.
"FUEL REPORT" shall mean the report of the Fuel Consultant, dated September 21,
1999 and the bring-down of such report.
"FUNDING AGREEMENT" shall mean the Funding Agreement, dated as of December 13,
1999 by and among The Chase Manhattan Bank, EME, Holdings, MGE, Midwest, the
Owner Participant, the Other Owner Participants, the Owner Lessor, the Other
Owner Lessors, Funding LLC, The Chase Manhattan Bank, as administrative agent
for the lenders under the EME Credit Agreement, The Chase Manhattan Bank, as
Administrative Agent, the Equity Investor, Citibank, N.A. as Holder
Representative and as "Holder Representative" under the Other ▇▇▇▇▇▇▇ Lease
Transactions, the Securitization Company and Citicorp North America Inc., as
Operating Agent (as such term is defined therein) for the Securitization
Company.
21
"FUNDING DATE" shall have the meaning specified in SECTION 2.2(b) of the
Participation Agreement.
"FUNDING LLC" or "LENDER" shall mean Midwest Funding LLC, a special purpose
bankruptcy remote Delaware limited liability company.
"FUNDING LLC FINANCE PARTY" shall mean, individually and collectively, as the
context may require, any bank, financial institution or other institutional
investor providing financing under or credit enhancement with respect to a
Funding LLC Financing Document and any agent, trustee or other representative
acting on behalf of such person.
"FUNDING LLC FINANCING DOCUMENTS" shall mean (a) initially, the APA, the
Finance Facility and the RCE Agreement and (b) any credit agreement, bond
indenture, note purchase agreement or similar document or documents pursuant to
which Funding LLC obtains financing to refinance, refund or otherwise replace
its indebtedness under the Funding LLC Notes.
"FUNDING LLC LOANS" shall mean the loans made to the Funding LLC pursuant to
the Funding LLC Financing Documents.
"FUNDING LLC NOTE HOLDER" shall mean each of the Persons holding a percentage
interest in the Funding LLC Notes or any advance in respect thereof, and each
of such holder's successors and permitted assigns.
"FUNDING LLC NOTES" shall have the meaning given to the term Midwest Funding
Note in the APA.
"FUNDING RATE" shall mean, with respect to any Initial Lessor Note, the rate
specified as such in such Initial Lessor Note.
"GAAP" shall mean generally accepted accounting principles in the United States
of America as in effect from time to time, consistently applied.
"GENERATING ASSETS" shall mean (i) the ComEd Assets and (ii) any other electric
generation facilities and other related assets associated therewith and
ancillary thereto (or interests therein) owned, directly or indirectly, by
Midwest from time to time.
22
"GOVERNMENTAL APPROVAL" shall mean any authorization, consent, approval,
license, permit, order, certificate, waiver, variance, filing or registration
with or issued by any Governmental Authority.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any state,
provincial or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GROUND INTEREST" shall have the meaning specified in the recitals to the
Facility Site Lease.
"GROUND LESSEE" shall mean the Owner Lessor as lessee of the Ground Interest
under the Facility Site Lease.
"GROUND LESSOR" shall mean Midwest as lessor of the Ground Interest under the
Facility Site Lease.
"GROUND SUBLESSEE" shall mean ▇▇▇▇▇▇▇ Holdings as sublessee of the Ground
Interest under the Facility Site Sublease.
"GROUND SUBLESSOR" shall mean the Owner Lessor as sublessor of the Ground
Interest under the Facility Site Sublease.
"GROUND SUB-SUBLESSEE" shall mean Midwest as sub-sublessee of the Ground
Interest under the Facility Site Sub-Sublease.
"GROUND SUB-SUBLESSOR" shall mean ▇▇▇▇▇▇▇ Holdings as sub-sublessor of the
Ground Interest under the Facility Site Sub-Sublease.
"HAZARDOUS MATERIAL" shall mean:
(i) any "hazardous substance", as defined by any Environmental Law:
(ii) any "hazardous waste", as defined by any Environmental Law,
(iii) any petroleum product (including crude oil or any fraction
thereof); or
23
(iv) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material, force or substance (including polychlorinated biphenyls,
urea formaldehyde insulation, asbestos or radioactivity) that is regulated,
prohibited or restricted pursuant to any Environmental Laws or that could give
rise to an Environmental Claim.
"HOLDER" shall mean the Initial Holder and each holder from time to time of
Lessor Notes.
"HOLDER REPRESENTATIVE" shall mean Citibank, N.A., a national banking
association, in its capacity as Holder Representative under the Lessor Loan
Agreement together with its successors and assigns in such capacity.
"HOLDER REPRESENTATIVE'S ACCOUNT" shall mean an account at Citibank, N.A., for
the account of the Owner Lessor as the Holder Representative may from time to
time specify in a notice to the other parties to the Participation Agreement.
"HOLDER REPRESENTATIVE'S LIEN" shall mean any Lien on the Trust Estate or any
part thereof arising as a result of (i) Taxes against or affecting the Holder
Representative, or any Affiliate thereof that is not related to, or that is in
violation of, any Operative Document or the transactions contemplated thereby,
(ii) Claims against or any act or omission of the Holder Representative, or
Affiliate thereof that is not related to, or that is in violation of, any
Operative Document or the transactions contemplated thereby or that is in
breach of any covenant or agreement of the Holder Representative specified
therein, (iii) Taxes imposed upon the Holder Representative, or any Affiliate
thereof that are not indemnified against by Midwest pursuant to any Operative
Document or (iv) Claims against or affecting the Holder Representative, or any
Affiliate thereof arising out of the voluntary or involuntary transfer by the
Holder Representative of any portion of the interest of the Holder
Representative in the Trust Estate, other than pursuant to the Operative
Documents.
"HOLDING COMPANY ACT" or "PUHCA" shall mean the Public Utility Holding Company
Act of 1935, as amended.
"HOLDINGS" shall mean Edison Mission Midwest Holdings Co., a Delaware
corporation.
"HOLDINGS COLLATERAL AGENT" shall mean Citibank, N.A., a national banking
association, in its capacity as collateral agent under the Collateral Agency
and Intercreditor Agreement together with its successors and assigns in such
capacity.
24
"HOLDINGS COMMITMENTS" shall mean "Commitments" as defined in the Holdings
Credit Agreement.
"HOLDINGS CREDIT AGREEMENT" shall mean the Credit Agreement, dated as of
December 15, 1999, by and among Holdings, the Holdings Lenders and The Chase
Manhattan Bank, as the Administrative Agent.
"HOLDINGS FACILITY" shall mean the senior secured credit facilities established
by Holdings pursuant to the Holdings Credit Agreement.
"HOLDINGS GUARANTEE" shall mean the Guarantee, dated December 15, 1999, issued
by Holdings in favor of the Owner Lessor, as the same may from time to time be
amended, amended and restated, supplemented or otherwise modified in accordance
with the terms thereof.
"HOLDINGS LENDERS" shall mean The Chase Manhattan Bank, Citicorp USA, Inc.,
Societe Generale and Westdeutsche Landesbank Girozentrale, New York Branch and
such other institutions that become lenders in accordance with the Holdings
Credit Agreement.
"HOLDINGS LOAN PARTIES"shall mean Holdings and each of Holdings' direct and
indirect Subsidiaries.
"HOLDINGS LOANS" shall mean the loans made to Holdings pursuant to the Holdings
Credit Agreement.
"HOLDINGS REQUIRED LENDERS" shall mean, at any time, Holdings Lenders holding
at least 50.1% of the Holdings Commitments.
"IMPROVEMENT" shall mean a modification, alteration, addition or improvement to
the Facility.
"INCIDENTAL COSTS" shall have the meaning specified in the Lessor Loan
Agreement.
"INDEBTEDNESS" of any Person shall mean, without duplication:
(i) all indebtedness for borrowed money;
25
(ii) all obligations issued, undertaken or assumed as the deferred
purchase price of property or services which purchase price is due more
than six months from the date of incurrence of the obligation in respect
thereof or is evidenced by a note or other instrument, except trade
accounts arising in the ordinary course of business;
(iii) all reimbursement obligations with respect to surety bonds, letters
of credit (to the extent not collateralized with cash or Cash Equivalent
Investments), bankers' acceptances and similar instruments (in each case,
whether or not matured);
(iv) all obligations evidenced by notes, bonds, debentures or similar
instruments including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses;
(v) all indebtedness created or arising under any conditional sale or
other title retention agreement, or incurred as financing, in either
case with respect to property acquired by the Person (even though the
rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property);
(vi) all Capitalized Lease Liabilities and Operating Lease Liabilities;
(vii) all net obligations with respect to interest rate cap agreements,
interest rate swap agreements, sales of foreign exchange options and other
hedging agreements or arrangements;
(viii) all indebtedness referred to in clauses (i) through (vii) above
secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien
upon or in property (including accounts and contracts rights) owned by
such Person, even though such Person has not assumed or become liable
for the payment of such Indebtedness; and
(ix) all Contingent Liabilities.
The Indebtedness of any Person shall include the Indebtedness of any partnership
or joint venture in which such Person is a general partner or a joint venturer.
26
"INDEMNITEE" shall have the meaning specified in SECTION 14.1(a) of the
Participation Agreement.
"INDEPENDENT APPRAISER" shall mean a disinterested, licensed professional
appraiser of industrial property who (a) meets the personal property
qualifications criteria established by the Appraisal Foundation; (b) is a
member of the Appraisal Institute or holds the senior accreditation of the
American Society of Appraisers; (c) is in the regular employ, or is a principal
of, a nationally recognized appraisal firm; and (d) has substantial experience
in the business of appraising facilities similar to the Facility.
"INITIAL HOLDER" shall mean Funding LLC as holder of the Initial Lessor Notes.
"INITIAL LESSOR NOTES" shall have the meaning specified in SECTION 2.02 of the
Lessor Loan Agreement.
"INSOLVENCY" shall mean, with respect to any Multiemployer Plan, the condition
that such plan is insolvent within the meaning of Section 4245 of ERISA.
"INSURANCE CONSULTANT" shall mean ▇▇▇▇▇ Inc.
"INTERCOMPANY LOAN SUBORDINATION AGREEMENT" shall mean the Subordination
Agreement, dated as of December15, 1999, among EMOC, Midwest and the Holdings
Collateral Agent.
"INTERCONNECTION AGREEMENTS" shall mean each of the Facilities, Interconnection
and Easement Agreements dated as of December 15, 1999 between Midwest and
ComEd, as the same may from time to time be amended, amended and restated,
supplemented or otherwise modified in accordance with the terms thereof.
"INTEREST ON 467 FIXED RENT" shall mean the amount set forth on Schedule 1-3 to
the Facility Lease.
"INTEREST PAYMENT DATE" shall mean, with respect to any Initial Lessor Note,
each Interest Payment Date as specified in such Initial Lessor Note.
"INTEREST RATE HEDGING TRANSACTIONS" shall mean, as to any Holdings Loan Party,
all interest rate swaps, caps or collar agreements or similar arrangements
entered into by such
27
Person (i) in order to protect against fluctuations in interest rates or the
exchange of nominal interest obligations, either generally or under specific
contingencies, and, in any event, not for speculative purposes and (ii) either
(A) with a counterparty who is also then a Holdings Lender, or (B) with the
prior approval of the Holdings Required Lenders or an affiliate of a Holdings
Lender, such approval to be based on the Holdings Required Lenders' reasonable
judgement.
"INVESTMENT" shall mean, relative to any person: (i) any loan or advance made
by such Person to any other Person (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business);
(ii) any Contingent Liability of such Person; and (iii) any ownership or
similar interest held by such person in any other Person.
"ISSUER DOWNGRADE EVENT" shall have the meaning specified in SECTION 5.9 of the
Participation Agreement.
"LAND DEED" shall mean the deed dated as of December 15, 1999, by ComEd in
favor of Midwest duly completed, executed and delivered on the Closing Date
pursuant to which Midwest will acquire the Facility Site from ComEd.
"LEASE EVENT OF DEFAULT" shall have the meaning set forth in the Facility Lease.
"LEASE FINANCE DOCUMENTS" shall mean the Lessor Loan Agreement, the Lessor
Notes, the Holdings Guarantee and the other agreements, documents and
instruments delivered in connection with the Lessor Loan Agreement and the
Lessor Notes.
"LEASE FINANCING PARTY" shall mean, individually or collectively, as the
context shall require, all or any of the parties to the Operative Documents,
including the Trust Company, the RCE Agent, the APA Agent, each APA Purchaser,
Citicorp North America, Inc., Lord Securities Corporation, the Surety, Midwest
Funding, Inc. and the Holder Representative (but not including ComEd).
"LEASE OBLIGATIONS" shall mean the obligations of Midwest and ▇▇▇▇▇▇▇ Holdings
to make Basic Lease Rent, Renewal Lease Rent, Supplemental Lease Rent and other
payments under the Subleases and the Leases, respectively.
"LEASE PERMITTED LIENS" shall mean (i) any Lien created by any Operative
Document; (ii) the Owner Lessor's Liens and the Owner Participant's Liens;
(iii) Liens for Taxes, water, sewage, license, permit or inspection fees either
not yet due and payable or being contested
28
in good faith by appropriate proceedings so long as such proceedings do not
involve a material danger of the sale, forfeiture or loss of the Facility; (iv)
construction materialmen's, mechanics', workers', repairmen's, employees' or
other like Liens arising in the ordinary course of business for amounts either
not overdue for a period of not more than 45 days or being contested in good
faith by appropriate proceedings so long as such proceedings do not involve a
material danger of the sale, forfeiture or loss of the Facility or are bonded
for the amount required under Requirements of Law to release any such Lien; (v)
Liens arising out of judgments or awards against the Facility Lessee which at
the time are being contested in good faith by appropriate proceedings so long
as such proceedings do not involve a material danger of the sale, forfeiture or
loss of the Facility but in any event not to exceed $1,000,000 in the aggregate
at any one time unless the full amount in dispute is bonded in a manner
reasonably acceptable to the Owner Lessor; (vi) applicable zoning and building
regulations and ordinances from time to time in effect which do not affect the
use or operation of the Facility (or the Undivided Interest therein) except to
an insignificant extent; (vii) the interest of a sublessee in the Undivided
Interest in the Facility under a permitted sublease; and (viii) Liens,
easements, encumbrances, restrictions, defects or irregularity of title and in
the aggregate are not substantial in amount, do not materially detract from the
value of the Facility or the Facility Site (or the Undivided Interest therein)
and do not materially impair the use of the Facility or the Facility Site (or
the Undivided Interest therein) in the ordinary course of business.
"LEASES" shall mean, collectively, the Facility Lease and the Other Facility
Leases.
"LENDER" shall mean Midwest Funding LLC.
"LENDER'S COMMITMENT" shall mean $185,827,009.33.
"LESSOR COLLATERAL" shall have the meaning specified in the Granting Clause of
the Lessor Loan Agreement.
"LESSOR LOAN AGREEMENT" shall mean the Lessor Loan Agreement (TI), dated as of
December 15, 1999, among the Owner Lessor, the Funding LLC and Citibank, N.A.,
as Holder Representative.
"LESSOR LOAN EVENT OF DEFAULT" shall have the meaning specified in SECTION 4.02
of the Lessor Loan Agreement.
"LESSOR LOAN RATE" shall mean the interest rate under applicable Lessor Notes.
29
"LESSOR LOANS" shall mean the loans evidenced by the Lessor Notes.
"LESSOR NOTEHOLDERS" shall mean any holder from time to time of the Lessor
Notes.
"LESSOR NOTES" shall mean any Initial Lessor Notes, Additional Lessor Notes or
New Lessor Notes issued pursuant to the Lessor Loan Agreement.
"LESSOR SECURITY DOCUMENTS" shall mean the Lessor Loan Agreement and the
Mortgage.
"LETTER OF CREDIT GUARANTEE" means the Guarantee (T1) dated as of December 15,
1999 by Holdings in favor of the Midwest LC Issuer as from time to time
amended, supplemented, amended and restated, or otherwise modified and in
effect from time to time.
"LEVEL 7 EVENT" shall mean, at any time, the Funding LLC Loans shall have
reached maturity and shall not have been repaid or refinanced in full.
"LIBO RATE" shall have the meaning set forth in SECTION 3.2.1. of the Holdings
Credit Agreement.
"LIBO RATE LOAN" shall mean a Holdings Loan bearing interest, at all times
during an interest period applicable to such Holdings Loan, at a fixed rate of
interest determined by reference to the LIBO Rate.
"LIEN" shall mean any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property, in each case of any kind, to secure
payment of a debt or performance of an obligation.
"LIST OF COMPETITORS" shall mean the initial list attached to the Participation
Agreement as EXHIBIT SS, as amended from time to time pursuant to SECTION
12.1(b) of the Participation Agreement, which list shall not exceed six
unaffiliated entities at any one time.
"LOAN DOCUMENTS" shall mean the Holdings Credit Agreement, the Notes, the
Security Documents and the other agreements, documents and instruments
delivered in connection with the Holdings Credit Agreement and the Notes.
"MARKET CONSULTANT" shall mean PHB ▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc.
"MARKET REPORT" shall mean the report of the Market Consultant, dated September
24,
30
1999, addressed to the Equity Investor and the bring-down of such report.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person, any event,
development or circumstance that has had or could reasonably be expected to
have a material adverse effect on (i) the business, assets, property, financial
condition or operations of such Person and its Subsidiaries since the Closing
Date, (ii) the ability of such Person to perform or comply with its obligations
under any of the Operative Documents or (iii) the validity and enforceability
of the Operative Documents, the liens granted thereunder or the rights and
remedies thereto.
"MATERIAL LEASE DEFAULT" shall mean any event which, with notice, lapse of time
or both notice and lapse of time, would become a Lease Event of Default
described in clause (a), (b), (f) or (g) of the definition thereof set forth in
SECTION 16 of the Facility Sublease.
"MATERIAL SUBLEASE DEFAULT" shall mean a Material Lease Default as such term is
incorporated by reference into the Facility Sublease pursuant to paragraph 1 of
the Facility Sublease.
"MAXIMUM TRANSACTION COST" shall mean 2.0% of the Purchase Price.
"MEMBERSHIP INTEREST" shall mean the membership interest in the Owner
Participant.
"MEMBER TRANSFEREE" shall have the meaning specified in SECTION 22.18(a) of the
Participation Agreement.
"MEMORANDUM OF THE FACILITY LEASE" shall mean the Memorandum of the Facility
Lease (T1), dated as of December 15, 1999, between the Owner Lessor and the
Facility Lessee and filed with the Registries of Deeds, Grundy County, Illinois.
"MEMORANDUM OF THE FACILITY SITE LEASE" shall mean the Memorandum of the
Facility Site Lease (T1), dated as of December 15, 1999, between the Ground
Lessor and the Ground Lessee and filed with the Registries of Deeds, Grundy
County, Illinois.
"MEMORANDUM OF THE FACILITY SITE SUBLEASE" shall mean the Memorandum of the
Facility Site Sublease (T1), dated as of December 15, 1999, between the Ground
Sublessor and the Ground Sublessee and filed with the Registries of Deeds,
Grundy County, Illinois.
"MEMORANDUM OF THE FACILITY SITE SUB-SUBLEASE" shall mean the Memorandum of the
31
Facility Site Sub-Sublease (T1), dated as of December 15, 1999, between the
Ground Sub-Sublessor and the Ground Sub-Sublessee and filed with the Registries
of Deeds, Grundy County, Illinois.
"MGE" shall mean Midwest Generation EME LLC, a Subsidiary of Edison Mission
Energy and a limited liability company organized under the laws of the State of
Delaware.
"MIDWEST" shall mean Midwest Generation LLC, a Subsidiary of Holdings and a
limited liability company organized under the laws of the State of Delaware.
"MIDWEST ADVISOR" shall mean ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Inc.
"MIDWEST GUARANTEE" shall mean the Guarantee made by Midwest in favor of the
Administrative Agent, dated as of December 15, 1999, as the same may from time
to time be amended, amended and restated, supplemented or otherwise modified in
accordance with the terms thereof.
"MIDWEST INTEREST" shall mean Midwest's right, title and interest in, to and
under, (i) the Undivided Interest under the Facility Sublease, (ii) the Ground
Interest under the Facility Site Sublease and (iii) in the Facility Site
Sub-Sublease.
"MIDWEST LC DOCUMENTS" shall mean the Midwest Letter of Credit, the Midwest
Reimbursement Agreement and the other documents, agreements and instruments
delivered in connection with the Midwest Letter of Credit and the Midwest
Reimbursement Agreement.
"MIDWEST LC ISSUER" shall mean Bayerische Landesbank International S.A. as
issuer of the Midwest Letter of Credit.
"MIDWEST LC REIMBURSEMENT OBLIGATIONS" shall mean the undrawn face amount of
the Midwest Letter of Credit together with the aggregate principal amount of
all reimbursement obligations of Midwest in respect of all drawings made under
the Midwest Letter of Credit.
"MIDWEST LESSOR LEASE GUARANTY" shall mean a guaranty by Midwest in favor of
the Owner Lessor, guaranteeing the obligations of ▇▇▇▇▇▇▇ Holdings under the
Operative Documents.
"MIDWEST LETTER OF CREDIT" shall mean the letter of credit issued by the
Midwest LC Issuer under the Midwest Reimbursement Agreement for the account of
Midwest and for the
32
benefit of the Owner Lessor.
"MIDWEST LETTERS OF CREDIT" shall mean the Midwest Letter of Credit and the
other letters of credit issued by the Midwest LC Issuer under the Other Midwest
Reimbursement Agreements for the account of Midwest and for the benefit of the
Other Owner Lessors.
"MIDWEST OP LEASE GUARANTY" shall mean a guaranty by Midwest in favor of the
Owner Participant, guaranteeing the obligations of ▇▇▇▇▇▇▇ Holdings under the
Operative Documents.
"MIDWEST REIMBURSEMENT AGREEMENT" shall mean the Reimbursement Agreement (TI)
dated as of December 15, 1999 between Midwest and the Midwest LC Issuer as from
time to time amended, supplemented, amended and restated, or otherwise modified
and in effect from time to time.
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investors Service, Inc., a division of Dun &
Bradstreet Corporation, and its successors and assigns.
"MORTGAGE" shall mean the Mortgage (T1) dated as of December 15, 1999 executed
by the Owner Lessor in favor of the Holder Representative.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as such term is defined
in Section 4001(a)(3) of ERISA.
"NECESSARY CAPITAL EXPENDITURES" shall mean any Capital Expenditures that, in
the exercise of Prudent Industry Practices, is reasonably necessary for the
continued operation or maintenance of the Generating Assets or is required by
applicable law. "NECESSARY CAPITAL EXPENDITURE" does not include any Capital
Expenditure undertaken primarily to increase the efficiency of, expand or
re-power the Generating Assets or Capital Expenditures for environmental
purposes which are not required by applicable law.
"NET CASH PROCEEDS" shall mean (i) in connection with any Recovery Event, the
proceeds thereof in the form of cash and cash equivalents of such Recovery
Event, net of any expenses reasonably incurred in respect of such Recovery
Event, including attorneys' fees, amounts required to be applied to the
repayment of Indebtedness secured by a Lien expressly permitted under the
Operative Documents on any asset which is the subject of such Recovery Event
(other than any Lien pursuant to a Security Document) and net of taxes paid or
reasonably estimated to be payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), to the extent that, in
33
the case of Recovery Events relating to property or casualty insurance
claims, the amount of such proceeds exceeds $10,000,000 with respect to any
asset of any Holdings Loan Party, (ii) in connection with any issuance or
sale of debt securities, the cash proceeds received from such issuance or
incurrence, net of attorneys' fees, investment banking fees accountants'
fees, underwriting discounts and commissions and other customary fees and
expenses actually incurred in connection therewith and (iii) in connection
with any sale, transfer, lease, contribution, conveyance, grant of options,
warrants or other rights with respect to all or substantially all of
Holdings' or its Subsidiaries' assets (including accounts receivable and
capital stock of other ownership interests in Subsidiaries), the cash
proceeds received from such asset disposition, net of attorney's fees,
investment banking fees, accountants' fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in
connection therewith.
"NEW LESSOR NOTES" shall have the meaning specified in SECTION 2.03 of the
Lessor Loan Agreement.
"NON-SEVERABLE IMPROVEMENTS" shall mean any Improvement to the Facility that is
not a Severable Improvement.
"NOTES" shall mean, as the context may require, a Tranche A Note, a Tranche B
Note or a Tranche C Note.
"OBSOLESCENCE TERMINATION DATE" shall have the meaning specified in SECTION 14.1
of the Facility Lease.
"OFFICER'S CERTIFICATE" shall mean with respect to any Person, a certificate
signed by any Authorized Officer of such Person.
"OPERATING EXPENSES" shall mean, in respect of any period, all cash amounts paid
by the Holdings Loan Parties in the conduct of their business during such
period, including premiums for insurance policies, fuel supply and
transportation costs, utilities, costs of maintaining, renewing and amending
Governmental Approvals, franchise, licensing, property, real estate and income
taxes, sales and excise taxes, general and administrative expenses, employee
salaries, wages and other employment-related costs, business management and
administrative services fees, fees for letters of credit, surety bonds and
performance bonds, Necessary Capital Expenditures and all other fees and
expenses necessary for the continued operation and maintenance of the Generating
Assets and the conduct of the business of the Holdings Loan Parties.
34
"OPERATING LEASE" shall mean any lease other than a Capital Lease (and, solely
by virtue of the intended classification under GAAP, shall include the Leases
and Subleases).
"OPERATING LEASE LIABILITY" of any Person shall mean all monetary obligations of
such Person under any Operating Lease, and, for purposes of each Loan Document,
the amount of such obligations shall be the termination value under and as
defined in such Operating Lease.
"OPERATION AGREEMENT" shall mean the Operation Agreement, dated as of December
15, 1999, among Midwest and each of the entities identified in Annex A thereto
as a "Trust".
"OPERATIVE DOCUMENTS" shall mean the Participation Agreement, the Land Deed, the
Facility Deed, the Facility Lease, the Memorandum of the Facility Lease, the
Facility Sublease, the Facility Site Lease, the Memorandum of the Facility Site
Lease, the Facility Site Sublease, the Memorandum of the Facility Site Sublease,
the Facility Site Sub-Sublease, the Memorandum of the Facility Site
Sub-Sublease, the Lessor Loan Agreement, the Lessor Notes, the Mortgage, the
Security Documents, the Funding LLC Financing Documents, the Funding LLC Notes,
the Trust Agreement, the OP LLC Agreement, the Tax Indemnity Agreement, the
Purchase Agreement, the Assignment and Assumption Agreement (as attached to the
Purchase Agreement as Exhibit A), the Owner Participant Guaranty, the Holdings
Guarantee, the Midwest Lessor Lease Guaranty, the Midwest OP Lease Guaranty, the
▇▇▇▇▇▇▇ Operating Agreement, the Midwest Letter of Credit, the RCE Letter of
Credit, the Midwest Reimbursement Agreement, the RCE Reimbursement Agreement,
the RCE Agreement, the Letter of Credit Guarantee and the Operation Agreement.
"OP GUARANTOR" shall mean PSEG Resources Inc. or any other Person that shall
guarantee the obligations of the Owner Participant or a Member Transferee under
the Operative Documents pursuant to the Owner Participant Guaranty.
"OP LLC AGREEMENT" shall mean the Limited Liability Company Agreement of ▇▇▇▇▇▇▇
Generation I, LLC, dated as of December 15, 1999.
"OP MEMBER" shall mean any Person holding a membership interest in the Owner
Participant pursuant to the OP LLC Agreement.
"OPTIONAL IMPROVEMENT" shall have the meaning specified in SECTION 8.2 of the
Facility Lease.
"ORGANIC DOCUMENT" shall mean, with respect to any Person that is a corporation,
its
35
certificate of incorporation, its by-laws and all shareholder agreements,
voting trusts and similar arrangements applicable to any of its authorized
shares of capital stock; with respect to any Person that is a limited
partnership, its certificate of limited partnership and partnership
agreement; and with respect to any Person that is a limited liability
company, its certificate of formation and its limited liability company
agreement, in each case, as from time to time amended, supplemented, amended
and restated, or otherwise modified and in effect from time to time.
"OTHER ▇▇▇▇▇▇▇ LEASE TRANSACTIONS" shall mean the transactions involving the
transfer of the Other Undivided Interests and the lease of the Other Ground
Interests to the Other Owner Lessors, and the simultaneous lease and sublease of
the Other Undivided Interests to ▇▇▇▇▇▇▇ Holdings and Midwest, respectively, and
the simultaneous sublease and sub-sublease of the Other Ground Interests to
▇▇▇▇▇▇▇ Holdings and Midwest, respectively, on substantially the same terms and
conditions as under, and dated the same date as, the Overall Transaction.
"OTHER FACILITIES" shall mean the ComEd Assets, but shall exclude the Facility.
"OTHER FACILITY LEASES" shall mean the other Facility Lease Agreements, each
dated as of December 15, 1999, by and between ▇▇▇▇▇▇▇ Holdings and the Other
Owner Lessors relating to the Other ▇▇▇▇▇▇▇ Lease Transactions, pursuant to
which ▇▇▇▇▇▇▇ Holdings will lease the Other Undivided Interests from the Other
Owner Lessors.
"OTHER FACILITY LESSEES" shall mean the Facility Lessees under the Other
Facility Leases.
"OTHER FACILITY SITE LEASES" shall mean the other Facility Site Leases, each
dated as of December 15, 1999 by and between Midwest and the Other Owner
Lessors, pursuant to which Midwest will lease the Other Ground Interests to the
Other Owner Lessors.
"OTHER FACILITY SUBLEASES" shall mean the other Facility Sublease Agreements,
each dated as of December 15, 1999 by and between ▇▇▇▇▇▇▇ Holdings and Midwest,
pursuant to which Midwest will sublease the Other Undivided Interests from
▇▇▇▇▇▇▇ Holdings.
"OTHER FACILITY SITE SUBLEASES" shall mean the other Facility Site Subleases,
each dated as of December 15, 1999 by and between the Other Owner Lessors and
▇▇▇▇▇▇▇ Holdings, pursuant to which the Other Owner Lessors will sublease the
Other Ground Interests to ▇▇▇▇▇▇▇ Holdings.
"OTHER FACILITY SITE SUB-SUBLEASES" shall mean the other Facility Site
Sub-Subleases,
36
each dated as of December 15, 1999 by and between Midwest and the ▇▇▇▇▇▇▇
Holdings, pursuant to which ▇▇▇▇▇▇▇ Holdings will lease the Other Ground
Interests to the Midwest.
"OTHER GROUND INTERESTS" shall mean the undivided leasehold interests in the
Facility Site not conveyed to the Owner Lessor under the Facility Site Lease.
"OTHER MIDWEST REIMBURSEMENT AGREEMENTS" shall mean the other Midwest
Reimbursement Agreements, each dated as of December 15, 1999 between Midwest and
the Midwest LC Issuer as each is from time to time amended, supplemented,
amended and restated, or otherwise modified and in effect from time to time.
"OTHER OWNER LESSORS" shall mean ▇▇▇▇▇▇▇ Trust II, ▇▇▇▇▇▇▇ Trust III and
▇▇▇▇▇▇▇ Trust IV.
"OTHER OWNER PARTICIPANTS" shall mean ▇▇▇▇▇▇▇ Generation II, LLC, ▇▇▇▇▇▇▇
Generation III, LLC and ▇▇▇▇▇▇▇ Generation IV, LLC.
"OTHER RCE REIMBURSEMENT AGREEMENTS" shall mean the other RCE Reimbursement
Agreements, each dated as of December 15, 1999 between the Other Owner Lessors
and the RCE LC Issuer as each is from time to time amended, supplemented,
amended and restated, or otherwise modified and in effect from time to time.
"OTHER UNDIVIDED INTERESTS" shall mean the undivided ownership interest in the
Facility Site not conveyed to the Owner Lessor under the Facility Deed and the
Land Deed.
"OVERALL TRANSACTION" shall mean the transactions contemplated by the
Operative Documents.
"OVERDUE RATE" shall mean the Applicable Rate as such term is defined in
Schedule 1-1 to the Facility Lease plus 2% per annum.
"OWNER LESSOR" shall mean ▇▇▇▇▇▇▇ Trust I, a Delaware business trust created for
the benefit of the Owner Participant.
"OWNER LESSOR'S INTEREST" shall mean the Owner Lessor's right, title and
interest in and to (i) the Undivided Interest and (ii) the Ground Interest under
the Facility Site Lease.
"OWNER LESSOR'S LIEN" shall mean any Lien on the Trust Estate or any part
thereof arising as a result of (i) Claims against or any act or omission of the
Trust Company or the Owner Trustee, or Affiliate thereof that is not related to,
or that is in violation of, any Operative
37
Document or the transactions contemplated thereby or that is in breach of
any covenant or agreement of the Trust Company or the Owner Trustee specified
therein, (ii) Taxes imposed upon the Trust Company or the Owner Trustee, or
any Affiliate thereof that are not indemnified against by Midwest or the
Facility Lessee pursuant to any Operative Document or are not related to, or
that are in violation of any Operative Document or the transactions
contemplated thereby, (iii) Claims against or affecting, the Trust Company or
the Owner Trustee, or any Affiliate thereof arising out of the voluntary or
involuntary transfer by the Trust Company or the Owner Trustee of any portion
of the interest of the Trust Company or the Owner Trustee in the Owner
Lessor's Interest, other than as contemplated or permitted by the Operative
Documents.
"OWNER LESSOR'S PERCENTAGE" shall mean 25%.
"OWNER PARTICIPANT" shall mean ▇▇▇▇▇▇▇ Generation I, LLC, a Delaware limited
liability company.
"OWNER PARTICIPANT GUARANTY" shall mean the guaranty provided by the OP
Guarantor pursuant to SECTION 4.26 or SECTION 12.1 of the Participation
Agreement.
"OWNER PARTICIPANT'S BENEFICIAL INTEREST" shall mean the Owner Participant's
interest in the Owner Lessor.
"OWNER PARTICIPANT'S COMMITMENT" shall mean the Owner Participant's investment
in the Owner Lessor contemplated by SECTION 2.1 of the Participation Agreement.
"OWNER PARTICIPANT'S EXPECTED RETURN," with respect to the Owner Participant's
Commitment, shall mean the Owner Participant's anticipated (1) net after-tax
yield, calculated according to the multiple investment sinking fund method of
analysis (as described in FAS 13), and (ii) aggregate GAAP income, general
pattern of after-tax earnings and after-tax cash flow.
"OWNER PARTICIPANT'S LIEN" shall mean any Lien on the Trust Estate or any part
thereof arising as a result of (i) Claims against or any act or omission of the
Owner Participant that is not related to, or that is in violation of, any
Operative Document or the transactions contemplated thereby or that is in breach
of any covenant or agreement of the Owner Participant set forth therein, (ii)
Taxes against the Owner Participant that are not indemnified against by Midwest
pursuant to the Operative Documents or (iii) Claims against or affecting the
Owner Participant arising out of the voluntary or involuntary transfer by the
Owner Participant (except as contemplated or permitted by the Operative
Documents) of
38
any portion of the interest of the Owner Participant in the Beneficial
Interest.
"OWNER TRUST" shall mean the Owner Lessor.
"OWNER TRUSTEE" shall mean Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity, but solely as Owner Trustee under
the Trust Agreement and each other Person which may from time to time be acting
as Owner Trustee in accordance with the provisions of the Trust Agreement.
"PARENT" shall mean any Person, any corporation, partnership, limited liability
company or other entity which, directly or indirectly, owns more than 50% of the
outstanding capital stock, partnership interests or other equity interests
having ordinary voting power to elect a majority of the board of directors of
any corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency) or controls the management of any partnership,
limited liability company or other entity.
"PARTICIPATION AGREEMENT" shall mean the Participation Agreement (T1), dated as
of December 15, 1999, among ▇▇▇▇▇▇▇ Holdings, the Owner Lessor, Owner Trustee,
Owner Participant, Holdings, Midwest, Funding LLC, the Midwest LC Issuer, the
RCE LC Issuer and the Holder Representative.
"PAYMENT DATES" shall have the meaning specified in SECTION 2.02(b) of the
Lessor Loan Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PENSION PLAN" shall mean a "pension plan", as such term is defined in Section
3(2) of ERISA (other than a Multiemployer Plan), and to which any member of the
Controlled Group has any liability, including any liability by reason of having
been a substantial employer within the meaning of Section 4063 of ERISA at any
time during the preceding five years, or by reason of being deemed to be a
contributing sponsor under the preceding five years, or by reason of being
deemed to be a contributing sponsor under Section 4069 of ERISA or having an
obligation to contribute under Section 4212 of ERISA.
"PERMITTED ENCUMBRANCES" shall mean all matters shown as exceptions on Schedule
B to each of the Title Policies as in effect on the Closing Date.
39
"PERMITTED INVESTMENTS" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within one year from the date of acquisition
thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from
Moody's;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of
any commercial bank organized under the laws of the United States of
America or any State thereof which has a combined capital and surplus
and undivided profits of not less than $500,000,000; and
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above and
entered into with a financial institution satisfying the criteria
described in clause (c) above.
"PERMITTED LIENS" shall mean the Liens permitted under SECTION 8.2 of the
Participation Agreement.
"PERMITTED PERCENTAGE" shall mean 15% of the Consolidated Tangible Net Assets of
Holdings as of the beginning of the most recently ended Fiscal Quarter.
"PERSON" shall mean any natural person, corporation, partnership, limited
liability company, firm, association, trust, government, governmental agency or
any other entity, whether acting in an individual, fiduciary or other capacity.
"PHASE I ENVIRONMENTAL SURVEY" shall mean a study, conducted in accordance with
standards promulgated by the American Society for Testing and Materials or an
equivalent environmental site assessment conducted pursuant to current good
customary and commercial practice, that (i) evaluates the potential for
Environmental Conditions to exist at the property that is the subject of the
study as a result of historical or current operations or activities at said
property and (ii) evaluates whether the subject property is in substantial
40
compliance with applicable Environmental Laws.
"PHASE II ENVIRONMENTAL SURVEY" shall mean a study, conducted pursuant to
current good customary and commercial practice, to evaluate potential
Environmental Conditions identified as a result of a Phase I Environmental
Survey through the collection and analysis of samples of environmental media
(including, in the reasonable judgment of the consultant performing the study,
samples of soils, subsurface soils, groundwater, surface water, sediments, air
or other environmental media) at the site which is the subject of the study.
Such study shall be designed to confirm the existence (or nonexistence) of
Environmental Conditions at the subject property that may require further
investigation, abatement, removal, monitoring, clean-up, remediation or other
response actions in accordance with applicable Environmental Laws and,
consistent with customary and commercial practice, determine the nature, scope
and extent of such Environmental Conditions.
"PLAN" shall mean any "employee benefit plan" (as defined in Section 3(3) of
ERISA) that is subject to ERISA, any "plan" (as defined in Section 4975(e)(1) of
the Code) that is subject to Section 4975 of the Code, any trust created under
any such plan or any "governmental plan" (as defined in Section 3(32) of ERISA
or Section 414(d) of the Code) that is organized in a jurisdiction having
prohibitions on transactions with government plans similar to those contained in
Section 406 of ERISA or Section 4975 of the Code.
"PLEDGE AGREEMENTS" shall mean each of (i) the Pledge Agreement, dated as of
December 15, 1999, between EMOC and the Holdings Collateral Agent, (ii) the
Pledge Agreement, dated as of December 15, 1999, between MGE and the Holdings
Collateral Agent and (iii) the Pledge Agreement, dated as of December 15, 1999,
between Holdings and the Holdings Collateral Agent, as from time to time
amended, supplemented, amended and restated, or otherwise modified and in effect
from time to time.
"POWER PURCHASE AGREEMENT" shall mean the Power Purchase Agreement dated as of
December 15, 1999 between Midwest and ComEd, as the same may from time to time
be amended, amended and restated, supplemented or otherwise modified in
accordance with the terms thereof.
"PRICING ASSUMPTIONS" shall mean the "Pricing Assumptions" attached as Schedule
12.1(c) to the Participation Agreement.
"PRUDENT INDUSTRY PRACTICE" shall mean, at a particular time, (i) any of the
practices, methods and acts engaged in or approved by a significant portion of
the competitive electric generating industry operating in the United States at
such time, or (ii) with respect to any
41
matter to which clause (i) does not apply, any of the practices, methods and
acts which, in the exercise of reasonable judgment at the time the decision
was made, could have been expected to accomplish the desired result at a
reasonable cost consistent with good business practices, reliability, safety
and expedition. "Prudent Industry Practice" is not intended to be limited to
the optimum practice, method or act to the exclusion of all others, but
rather to be a spectrum of possible practices, methods or acts having due
regard for, among other things, manufacturers' warranties and the
requirements of any Governmental Authority of competent jurisdiction.
"PUHCA" see "Holding Company Act."
"PURCHASE AGREEMENT" shall mean the Purchase and Sale Agreement (T1), dated as
of December 15, 1999, between Midwest and the Equity Investor.
"PURCHASE PRICE" shall mean the Owner Lessor's Percentage of $860,000,000.
"QUARTERLY PAYMENT DATE" shall mean the first Business Day of each January,
April, July and October.
"RATING AGENCIES" shall mean S&P and ▇▇▇▇▇'▇.
"RATING EVENT" shall mean, at any time, any Debt Rating is below (a) with
respect to long-term debt, BBB- or Baa3 by S&P and Moody's respectively or (b)
with respect to short-term debt, A-2 or P-2 by S&P and Moody's respectively.
"RCE AGENT" shall mean Citicorp North America Inc., in its capacity as RCE Agent
under the APA, together with its successors and assigns in such capacity.
"RCE AGREEMENT" shall mean the Residual Credit Enhancement Agreement, dated as
of December 15, 1999 between Bayerische Landesbank Girozentrale and Funding LLC,
as from time to time amended, supplemented, amended and restated, or otherwise
modified and in effect from time to time.
"RCE LC DOCUMENTS" shall mean the RCE Letter of Credit, the RCE Reimbursement
Agreement and the other documents, agreements and instruments delivered in
connection with the RCE Letter of Credit and the RCE Reimbursement Agreement.
"RCE LC ISSUER" shall mean Bayerische Landesbank Girozentrale as issuer of the
RCE Letter of Credit.
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"RCE LC REIMBURSEMENT OBLIGATIONS" shall mean the undrawn face amount of the RCE
Letter of Credit together with the aggregate principal amount of all
reimbursement obligations (or related loans under the RCE Reimbursement
Agreement) of the Owner Lessor in respect of all drawings made under the RCE
Letter of Credit.
"RCE LETTER OF CREDIT" means the letter of credit issued by the RCE LC Issuer
under the RCE Reimbursement Agreement for the account of the Owner Lessor and
for the benefit of the RCE Agent (as defined in the Lessor Loan Agreement).
"RCE LETTERS OF CREDIT" shall mean the RCE Letter of Credit and the other
letters of credit issued by the RCE LC Issuer under the Other RCE Reimbursement
Agreements for the account of the Other Owner Lessors and each for the benefit
of the RCE Agent.
"RCE REIMBURSEMENT AGREEMENT" means the Reimbursement Agreement (TI) dated as of
December 15, 1999 between Owner Lessor and the RCE LC Issuer as from time to
time amended, supplemented, amended and restated, or otherwise modified and in
effect from time to time.
"REASONABLE BASIS" for a position shall exist if tax counsel may properly advise
reporting such position on a tax return in accordance with Formal Opinion 85-352
issued by the Standing Committee on Ethics and Professional Responsibility of
the American Bar Association (or any successor to such opinion).
"REBUILDING CLOSING DATE" shall have the meaning specified in of SECTION 10.4(f)
of the Facility Lease.
"RECOVERY EVENT" shall mean any settlement of or payment of $10,000,000 or more
in respect of (i) any property or casualty insurance claim relating to any asset
of any Holdings Loan Party or (ii) any seizure, condemnation, confiscation or
taking of, or requisition of title or use of, the Generating Assets or any part
thereof by any Governmental Authority.
"REGULATIONS T, U AND X" shall mean Regulations T, U and X of the Federal
Reserve System of the United States (or any successors thereto).
"REGULATORY EVENT OF LOSS" shall mean an Event of Loss specified in clause (iv)
of the definition of "Event of Loss".
"REGULATORY VIOLATION" shall mean (i) any Holdings Loan Party (A) becoming
subject to regulation as a "holding company" or a "subsidiary company" or an
"affiliate" of a "holding
43
company" required to register under PUHCA or (B) becoming subject to public
utility regulation under the laws of the State of Illinois or (ii) the failure
of Midwest to (A) be an "exempt wholesale generator" under PUHCA, (B) be
interconnected with the high voltage network or to have access to transmission
services and ancillary services to sell wholesale electric power or (C) have
the authority to sell wholesale electric power at market-based rates and, in
the case of clause (i) or (ii), such circumstance could reasonably be expected
to result in a Material Adverse Effect on any Holdings Loan Party.
"RELATED PARTY" shall mean, with respect to any Person or its successors and
assigns, an Affiliate of such Person or its successors and assigns and any
director, officer, servant, employee or agent of that Person or any such
Affiliate or their respective successors and assigns; PROVIDED, THAT the Trust
Company shall not be treated as a Related Party to any other party, the Owner
Trustee and the Owner Lessor shall not be treated as Related Parties to each
other and neither Owner Lessor nor Owner Trustee shall be treated as a Related
Party to any Owner Participant except that, for purposes of SECTION 14.1 of the
Participation Agreement, the Owner Lessor will be treated as a Related Party to
an Owner Participant to the extent that the Owner Lessor acts on the express
written direction or with the express written consent of an Owner Participant.
"RELEASE" shall mean the actual or threatened release, deposit, disposal or
leakage of any Hazardous Material at, into, upon or under any land, water or
air, or otherwise into the environment, including, without limitation, by means
of burial, disposal, discharge, emission, injection, spillage, leakage, seepage,
leaching, dumping, pumping, pouring, escaping, emptying and placement, except as
expressly authorized by a Governmental Approval.
"RENEWAL LEASE RENT" shall mean the scheduled Rent payable on each Rent Payment
Date during any First Wintergreen Renewal Lease Term, Second Wintergreen Renewal
Lease Term or FMV Renewal Lease Term, in each case as determined in accordance
with SECTION 15.3 of the Facility Lease.
"RENEWAL LEASE TERM" shall mean the First Wintergreen Renewal Lease Term, the
Second Wintergreen Renewal Lease Term or any FMV Renewal Lease Term.
"RENT" shall mean Basic Lease Rent, Renewal Lease Rent, if any, and
Supplemental Lease Rent.
"RENT PAYMENT ACCOUNT" shall mean an account at Bank of America for the account
of the Facility Lessee or such other account of the Facility Lessee as the
Facility Lessee may from
44
time to time specify in a notice to the other parties to the Participation
Agreement.
"RENT PAYMENT DATE" shall mean the January 6th, April 6th, July 6th and October
6th of each year during the Facility Lease Term and September 15, 2033.
"REPLACEMENT LETTER OF CREDIT" shall have the meaning specified in SECTION 5.9
of the Participation Agreement.
"REPLACEMENT COMPONENT" shall have the meaning specified in SECTION 7.2 of the
Facility Lease.
"REPORT OF ENVIRONMENTAL CONSULTANT" shall mean SECTION 5 of the Engineering
Report and the bring-down of such report.
"REPORTABLE EVENT" shall mean any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. Section
2615.
"REQUIRED IMPROVEMENT' shall have the meaning specified in SECTION 8.1 of the
Facility Lease.
"REQUIRED HOLDERS" shall mean Lessor Noteholders holding at least 50.1% of the
principal amount of the Lessor Notes outstanding (disregarding for such
computation any Lessor Notes held directly or beneficially by the Facility
Lessee, the Facility Sublessee, the Owner Lessor, the Owner Participant, the
Equity Investor, any OP Guarantor or any Affiliate of any of them, unless such
Person owns all of the Lessor Notes in accordance with the provisions of the
Lessor Loan Agreement).
"REQUIREMENT OF LAW" shall mean, as to any person, the Organic Documents of such
Person, and any law (including any Environmental Law), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"REQUISITION" shall have the meaning specified in clause (iii) of the definition
of "Event of Loss".
"RESTRICTED PAYMENT" shall have the meaning set forth in SECTION 8.2.7 of the
Holdings Credit Agreement.
45
"RETURN ACCEPTANCE TESTS" shall mean the testing procedures set forth in
Appendix C to the Power Purchase Agreement.
"REVENUES" shall mean, in respect of any period, all cash amounts received by
the Holdings Loan Parties during such period, including revenues from the sale
of energy and capacity, proceeds of business interruption insurance and all
interest and other income earned on amounts in the Cashflow Recapture Fund.
"S&P" shall mean Standard & Poor's Ratings Services (a division of ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc.) and its successors and assigns.
"SASM&F" shall mean Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP.
"SCHEDULED CLOSING DATE" shall mean December 15, 1999, and any date set for
Closing in a notice of postponement pursuant to SECTION 2.2(c) of the
Participation Agreement.
"SECOND WINTERGREEN RENEWAL LEASE TERM" shall have the meaning specified in
SECTION 15.1(b) of the Facility Lease.
"SECURITIES ACT" shall mean the Securities Act of 1933, or any similar federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
"SECURITIZATION COMPANY" shall mean CXC Incorporated, a Delaware corporation.
"SECURITY DOCUMENTS" shall mean (i) the Collateral Agency and Intercreditor
Agreement, (ii) the Holdings Guarantee, (iii) each Pledge Agreement and (iv) any
other agreement or instrument hereafter entered into by Holdings or any other
Person which guarantees or secures payment of the indebtedness evidenced by the
Notes or payment or performance of any other obligation.
"SEVERABLE IMPROVEMENT" shall mean any Improvement that is removable without,
other than in an immaterial respect, causing irreparable damage to the Facility.
"SPECIAL LESSEE TRANSFER AMOUNT" shall mean for any date the Equity Portion of
Termination Value on such date; PLUS (i) any unpaid Basic Lease Rent or Renewal
Lease Rent, as the case may be, due on or before the date of such determination,
PLUS (ii) if the determination date is a Rent Payment Date or an Additional Rent
Payment Date, the Basic Lease Rent or Renewal Lease Rent due on such Rent
Payment Date, PLUS (iii) any other Rent payment under the Facility Lease or the
Other Operative Documents due and unpaid on such date.
46
"SUBLEASE EVENT OF DEFAULT" shall mean Lease Event of Default as such term is
incorporated by reference into the Facility Sublease pursuant to paragraph 1 of
the Facility Sublease.
"SUBLEASE GROUND INTEREST" shall mean Ground Interest as such term is
incorporated by reference into the Facility Site Sublease pursuant to SECTION 3
of the Facility Site Sublease.
"SUBLEASE RENT" shall mean Rent as such term is incorporated by reference into
the Facility Sublease pursuant to paragraph 1 of the Facility Sublease.
"SUBLEASES" shall mean, collectively, the Facility Sublease and the Other
Facility Subleases.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation,
partnership, limited liability company or other entity of which more than 50% of
the outstanding capital stock, partnership interests or other equity interests
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency) or to control the management of such partnership,
limited liability company or other entity is at the time directly or indirectly
owned by such Person, by such Person and one or more other Subsidiaries of such
Person, or by one or more other Subsidiaries of such Person.
"SUB-SUBLEASE GROUND INTEREST" shall mean Ground Interest as such term is
incorporated by reference into the Facility Site Sub-Sublease pursuant to
SECTION 3 of the Facility Site Sub-Sublease.
"SUPPLEMENTAL FINANCING" shall have the meaning specified in SECTION 16.1 of the
Participation Agreement.
"SUPPLEMENTAL LEASE RENT" shall mean any and all amounts, liabilities,
indemnities and obligations (other than Basic Lease Rent) which ▇▇▇▇▇▇▇ Holdings
assumes or agrees to pay under the Operative Documents (whether or not
identified as "Supplemental Lease Rent") to the Owner Lessor or any other
Person, including, but not limited to, Termination Value, Incidental Costs and
Transaction Costs (other than costs, fees and expenses associated with or
resulting from a Lessor Loan Event of Default which is not a Lease Event of
Default).
"SUPPORT SERVICES" shall mean all services and rights necessary for the Facility
Lessor (or any of its successors or permitted assigns) to own, operate, use and
maintain (and to transmit the power generated from) the Facility during and
after expiration or termination of the
47
Facility Lease in addition to and together with those services or rights
provided pursuant to the conveyance of the Ground Interest by the Ground
Lessor to the Ground Lessee under the Facility Site Lease.
"SURETY" shall mean MBIA Insurance Company, a New York domiciled stock insurance
company and its successors.
"SURVEY" shall mean the survey of the ▇▇▇▇▇▇▇ Generating Station Lease Parcel
(as such term is defined therein) prepared by SDI Consultants, Ltd. for Edison
Mission Energy, dated as of October 13, 1999, including revisions thereto.
"TAX" or "TAXES" shall mean all fees (including, without limitation, license,
documentation and registration fees), taxes (including, without limitation,
income, gross receipt, franchise, rental, turn over, excise, sales taxes, use
taxes, stamp taxes, value-added taxes, ad valorem taxes and property taxes
(personal and real, tangible and intangible), license, levies, exports, duties,
recording charges or fees, assessments, withholdings and other charges and
impositions of any nature, plus all related interest, penalties, fines and
additions to tax, now or hereafter imposed by any federal, state, local or
foreign government or other taxing authority.
"TAX INDEMNITY AGREEMENT" shall mean the Tax Indemnity Agreement (T1), dated as
of December 15, 1999 between ▇▇▇▇▇▇▇ Holdings, Midwest and the Owner
Participant.
"TAX LAW CHANGE" shall have the meaning specified in SECTION 17 of the
Participation Agreement.
"TERMINATION DATE" shall mean each of the monthly dates during the Facility
Lease Term identified as a "Termination Date" on Schedule 2 of the Facility
Lease, which dates shall be the same days on which Basic Lease Rent and Renewal
Lease Rent, if any, are payable under the Facility Lease.
"TERMINATION VALUE" shall mean for any Termination Date shall mean the
Termination Values set forth in Column D on Schedule 2 of the Facility Lease for
such Termination Date.
"TITLE POLICIES" shall mean the following title policies, issued by Chicago
Title Insurance Company: (a) that certain Owner's Policy No. 17572-O issued to
Midwest Generation, LLC, dated as of December 15, 1999, insuring Midwest
Generation, LLC's (i) fee interest in the Facility Site, (ii) sub-subleasehold
interest in the Facility Site as sub-sublessee under the Facility Site
Sub-Sublease and the Other Facility Site Sub-Subleases, and (iii) subleasehold
48
interest in the Facility as sublessee under the Facility Sublease and the Other
Facility Subleases; (b) that certain Leasehold Owner's Policy No. 17572-L1
issued to the Owner Lessor dated as of December 15, 1999, insuring the Owner
Lessor's (i) 25% undivided leasehold interest in the Facility Site as lessee
under the Facility Site Lease, and (ii) 25% undivided fee interest in the
Facility; (c) that certain Leasehold Owner's Policy No. 17572-BL, issued to
▇▇▇▇▇▇▇ Holdings, dated as of December 15, 1999, insuring ▇▇▇▇▇▇▇ Holdings'
(i) subleasehold interest in the Facility Site as sublessee under the Facility
Site Sublease and the Other Facility Site Subleases, and (ii) leasehold
interest in the Facility as lessee under the Facility Lease; and (d) that
certain Leasehold Mortgagee's Policy No. 17572-MTG, issued to Citibank, N.A.,
as Holder Representative and mortgagee, dated as of December 15, 1999, insuring
Citibank, N.A.'s security interest in the Owner Lessor's and the Other Owner
Lessors' (i) leasehold interests in the Facility Site Lease, and (ii) fee
interests in the Facility.
"TOTAL CAPITALIZATION" shall mean, with respect to any Person, the sum, without
duplication, of (i) total common stock equity or analogous ownership interests
of such Person and its Consolidated Subsidiaries, (ii) preferred stock and
preferred securities of such Person and its Consolidated Subsidiaries,
(iii) additional paid in capital or analogous interests of such Person and its
Consolidated Subsidiaries, (iv) retained earnings of such Person and its
Consolidated Subsidiaries, (v) the aggregate principal amount of Indebtedness of
such Person and its Consolidated Subsidiaries then outstanding and (vi) the
total equity contributed to such Person and its Subsidiaries on the Closing
Date.
"TRANCHE A LOAN" shall have the meaning set forth in SECTION 2.1.1 of the
Holdings Credit Agreement.
"TRANCHE A NOTE" shall mean a promissory note of Holdings payable to any
Holdings Lender, evidencing the aggregate Indebtedness of Holdings to such
Holdings Lender resulting from outstanding Tranche A Loans and also means all
other promissory notes accepted from time to time in substitution therefor or
renewal thereof.
"TRANCHE B LOAN"shall have the meaning set forth in SECTION 2.1.3 to the
Holdings Credit Agreement.
"TRANCHE B NOTE" shall mean a promissory note of Holdings payable to any
Holdings Lender, evidencing the aggregate Indebtedness of Holdings to such
Holdings Lender resulting from outstanding Tranche B Loans, and also means all
other promissory notes accepted from time to time in substitution therefor or
renewal thereof.
"TRANCHE C LOAN" shall have the meaning set forth in SECTION 2.1.5 of the
Holdings Credit Agreement.
49
"TRANCHE C NOTE" shall mean a promissory note of Holdings payable to any
Holdings Lender, evidencing the aggregate Indebtedness of Holdings to such
Holdings Lender resulting from outstanding Tranche C Loans, and also means all
other promissory notes accepted from time to time in substitution therefor or
renewal thereof.
"TRANSACTION COSTS" shall mean the following costs and expenses incurred in
connection with the negotiation, due diligence and consummation of the Overall
Transaction:
(a) the cost of the Closing Date Appraisal, the cost of title
insurance, filing and recording fees, the fees and expenses of the Engineering
Consultant, the Fuel Consultant, the Environmental Consultant, the Market
Consultant, the Insurance Consultant, and any other consultants retained by the
Owner Participant (excluding any fees or compensation to its advisors) and
approved by EME, which approval may not be unreasonably withheld;
(b) the reasonable legal fees, expenses and disbursements of the Equity
Investor, the Owner Participant and the Owner Trustee and out-of-pocket expenses
of the Equity Investor's Advisor;
(c) the reasonable legal fees, expenses and disbursements of the other
Lease Financing Parties associated with the Lessor Loan and the Funding LLC
Loans;
(d) the Midwest Advisor's fee and its reasonable out-of-pocket costs
and expenses;
(e) at EME's option, all or a portion of EME's, Midwest's and the
Facility Lessee's legal fees and reasonable out-of-pocket cost and expenses
related thereto;
(f) the fees of the Rating Agencies in connection with rating the
Funding LLC Financing Documents; and
(g) other reasonable, documented out-of-pocket expenses of the Lease
Financing Parties.
"TRANSACTION WITH AN AFFILIATE" shall mean, with respect to any Person (i) any
agreement or contract with any Affiliate or Subsidiary of such Person and any
amendment, modification or supplement thereof or thereto or (ii) any other
transaction or business arrangement with an Affiliate or Subsidiary of such
Person not otherwise expressly permitted by the Operative Documents.
"TRANSCO PARTNERSHIP" shall mean a partnership or joint venture in which Midwest
is a partner or joint venturer formed solely to facilitate the Transco
Transaction.
50
"TRANSCO TRANSACTION" shall mean a transaction involving (i) the contribution to
the Transco Partnership by Midwest of certain railcars or rights to rail cars,
(ii) the Transco Partnership engaging in certain coal supply and coal
transportation activities in connection with the operation by Midwest of its
generating assets and (iii) the sharing by the partners or the joint venturers
of the Transco Partnership of certain cost savings achieved by the Transco
Partnership in such coal supply and coal transportation activities.
"TRANSFEREE" shall have the meaning specified in SECTION 12.1(a) of the
Participation Agreement.
"TREASURY REGULATIONS" shall mean regulations, including temporary regulations,
promulgated under the Code.
"TRUST AGREEMENT" shall mean the Amended and Restated Trust Agreement (T1),
dated as of December 15, 1999, between the Owner Participant and the Trust
Company relating to ▇▇▇▇▇▇▇ Trust I.
"TRUST COMPANY" shall mean the Wilmington Trust Company.
"TRUST ESTATE" shall have the meaning specified in SECTION 2.03 of the Trust
Agreement.
"UNDIVIDED INTEREST" shall have the meaning specified in the Recitals to the
Facility Lease.
"UNIFORM COMMERCIAL CODE" or "UCC" shall mean the Uniform Commercial Code as in
effect in the applicable jurisdiction.
"UNITED STATES" or "U.S." shall mean the United States of America.
"UNRELATED MEMBERS" shall mean any members of the Owner Participant or the Other
Owner Participants which are not Affiliates of the other members of either the
Owner Participant or the Other Owner Participants; PROVIDED, HOWEVER, that for
purposes of this definition, if any two or more members are Affiliates, such
members, together, shall be considered as one Unrelated Member.
"VERIFIER" shall mean ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Inc. or a nationally recognized firm of
accountants or lease advisors chosen by the Owner Participant and reasonably
acceptable to the Facility Lessee.
"WELFARE PLAN" shall mean a "welfare plan", as such term is defined in Section
3(1) of ERISA.
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"WILMINGTON TRUST COMPANY" shall mean Wilmington Trust Company, a Delaware
banking corporation.
"YEAR 2000 READY" shall mean that the individual systems will be compliant or
their characteristics which are non-compliant have been evaluated and determined
to be suitable for use into the year 2000.
52