Exhibit 4.4
PARTICIPATION AGREEMENT (__)
Dated as of December __, 2001, among
EME HOMER CITY GENERATION L.P.,
▇▇▇▇▇ CITY OL[1], LLC,
[OWNER PARTICIPANT],
[INSERT NAME OF OWNER MANAGER],
NOT IN ITS INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY PROVIDED HEREIN,
BUT SOLELY AS OWNER MANAGER,
[INSERT NAME OF SECURITY TRUSTEE],
NOT IN ITS INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY PROVIDED HEREIN,
BUT SOLELY AS SECURITY TRUSTEE,
▇▇▇▇▇ CITY FUNDING LLC,
[LEASE INDENTURE TRUSTEE],
NOT IN ITS INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY PROVIDED HEREIN,
BUT SOLELY AS THE LEASE INDENTURE TRUSTEE
AND
THE BANK OF NEW YORK, AS SUCCESSOR TO
UNITED STATES TRUST COMPANY OF NEW YORK,
NOT IN ITS INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY PROVIDED HEREIN,
BUT SOLELY AS THE BONDHOLDER TRUSTEE
▇▇▇▇▇ CITY
COAL-FIRED POWER GENERATION FACILITY
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT....................................2
ARTICLE II PARTICIPATION; CLOSING DATE; TRANSACTION EXPENSES.............................................2
Section 2.1 Agreements to Participate............................................................2
Section 2.2 Closing Date; Procedure for Participation............................................3
Section 2.3 Transaction Expenses and Overdue Rate................................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES...............................................................5
Section 3.1 Representations and Warranties of ▇▇▇▇▇ City.........................................5
Section 3.2 Representations and Warranties of the Owner Lessor..................................15
Section 3.3 Representations and Warranties of the Owner Manager and the OM Company..............17
Section 3.4 Representations and Warranties of the Owner Participant.............................19
Section 3.5 Representations and Warranties of Lease Indenture Trustee and the Lease
Indenture Company...............................................................21
Section 3.6 Representations and Warranties of the Bondholder Trustee and the Bondholder
Trustee Company.................................................................23
ARTICLE IV CLOSING CONDITIONS...........................................................................25
Section 4.1 Operative Documents and Project Documents...........................................25
Section 4.2 The Lessor Notes....................................................................25
Section 4.3 Organizational Documents, etc.......................................................26
Section 4.4 Representations and Warranties......................................................26
Section 4.5 Defaults, Events of Default, Events of Loss, Burdensome Buyout Event................26
Section 4.6 Consents............................................................................26
Section 4.7 Governmental Actions................................................................26
Section 4.8 Insurance...........................................................................27
Section 4.9 Consultants' Reports................................................................27
Section 4.10 Appraisal; Tax Opinion, Condition of the Facility...............................27
Section 4.11 Opinions of Counsel.............................................................27
Section 4.12 Recordings and Filings..........................................................28
Section 4.13 Taxes...........................................................................28
Section 4.14 No Changes in Requirements of Law...............................................28
Section 4.15 Registered Agent for ▇▇▇▇▇ City.................................................28
Section 4.16 FAS 13..........................................................................28
Section 4.17 No Material Adverse Change......................................................29
Section 4.18 Survey..........................................................................29
Section 4.19 Title Insurance.................................................................29
Section 4.20 Rating of the Lender............................................................29
Section 4.21 No Threatened Proceedings.......................................................29
Section 4.22 Financial Statements............................................................29
i
Section 4.23 Initial Annual Operating Budget.................................................29
Section 4.24 Closing Projections; Major Maintenance Projections..............................29
Section 4.25 No Liens........................................................................29
Section 4.26 Project Documents...............................................................29
Section 4.27 Amendments to Project Documents.................................................29
Section 4.28 Accounts........................................................................30
Section 4.29 Existing Debt...................................................................30
Section 4.30 Assignment of Material Project Agreements.......................................30
Section 4.31 No Material Adverse Tax Law Change..............................................30
Section 4.32 Payoff Notice...................................................................30
Section 4.33 Establishment of Debt Service Reserve Letter of Credit, Rent Account and
Reserve Account.................................................................30
Section 4.34 EME Side Letter.................................................................30
ARTICLE V AFFIRMATIVE COVENANTS OF ▇▇▇▇▇ CITY...........................................................31
Section 5.1 Financial Information; Other Information............................................31
Section 5.2 Notices.............................................................................32
Section 5.3 Information Concerning the Facility Lessee or Facility..............................33
Section 5.4 Maintenance of Existence and Properties.............................................33
Section 5.5 Compliance with Laws................................................................34
Section 5.6 Further Assurances..................................................................34
Section 5.7 ERISA...............................................................................34
Section 5.8 Regulatory Status...................................................................35
Section 5.9 Notice of Change in Address or Name.................................................35
Section 5.10 Insurance.......................................................................35
Section 5.11 Credit Support..................................................................35
Section 5.12 Intellectual Property Rights....................................................35
Section 5.13 Maintenance of Accounts, Use of Project Revenues................................35
Section 5.14 Annual Budgets and Major Maintenance Projections................................36
Section 5.15 Accounts Receivable.............................................................38
Section 5.16 Obligations.....................................................................38
Section 5.17 Books and Records, Access.......................................................38
Section 5.18 Special Purpose Covenants.......................................................38
Section 5.19 Warranty of Title to Facility Site..............................................39
ARTICLE VI NEGATIVE COVENANTS OF ▇▇▇▇▇ CITY.............................................................39
Section 6.1 Limitations on Merger, Consolidation or Sale of Substantially All Assets............39
Section 6.2 Sale of Assets......................................................................40
Section 6.3 Liens...............................................................................40
Section 6.4 [Intentionally omitted].............................................................40
Section 6.5 Certain Contracts and Agreements....................................................40
Section 6.6 Limitation on Transactions with Affiliates..........................................41
Section 6.7 Limitations on Incurrence of Indebtedness...........................................42
Section 6.8 Guarantees and Contingent Obligations...............................................43
Section 6.9 Limitations on Payments of Equity Portion of Basic Lease Rent.......................43
Section 6.10 Limitations on Restricted Payments..............................................44
Section 6.11 Restrictions on Capital Expenditures............................................45
ii
Section 6.12 No Subsidiaries.................................................................45
Section 6.13 Partnerships....................................................................45
Section 6.14 Dissolution.....................................................................45
Section 6.15 Amendment of Contracts, Etc.....................................................45
Section 6.16 Fiscal Year.....................................................................46
Section 6.17 Use of Facility Site............................................................46
Section 6.18 Abandonment of Facility.........................................................46
Section 6.19 Assignment of Rights............................................................46
Section 6.20 Regulations.....................................................................46
Section 6.21 Accounts........................................................................46
Section 6.22 PUHCA...........................................................................46
Section 6.23 Investments.....................................................................46
Section 6.24 Permitted Business..............................................................47
ARTICLE VII COVENANTS OF THE COMPANY, THE OWNER MANAGER AND THE OWNER LESSOR............................47
Section 7.1 Compliance with the Lessor LLC Agreement............................................47
Section 7.2 Owner Lessor Liens..................................................................47
Section 7.3 Amendments to Operative Documents...................................................48
Section 7.4 Transfer of the Owner Lessor's Interest.............................................48
Section 7.5 Owner Lessor; Lessor Estate.........................................................48
Section 7.6 Limitation on Indebtedness and Actions..............................................48
Section 7.7 Change of Location..................................................................48
Section 7.8 Bankruptcy of Owner Lessor..........................................................49
Section 7.9 Limitation On Subsidiaries And Investments..........................................49
Section 7.10 Limitation On Transactions With Affiliates......................................49
Section 7.11 Maintenance Of Existence........................................................49
Section 7.12 Compliance With Laws............................................................50
ARTICLE VIII COVENANTS OF THE OWNER PARTICIPANT.........................................................50
Section 8.1 Restrictions on Transfer of Lessor Membership Interest..............................50
Section 8.2 Owner Participant Liens.............................................................52
Section 8.3 Amendments or Revocation of Lessor LLC Agreement....................................52
Section 8.4 Bankruptcy Filings..................................................................52
Section 8.5 Instructions........................................................................53
Section 8.6 Appointment of Successor Owner Manager..............................................53
Section 8.7 Cooperation.........................................................................53
ARTICLE IX COVENANTS OF THE LEASE INDENTURE TRUSTEE AND SECURITY TRUSTEE................................54
Section 9.1 Security Interest of the Lease Indenture Trustee....................................54
Section 9.2 Security Interest of the Security Trustee...........................................54
ARTICLE X ▇▇▇▇▇ CITY'S INDEMNIFICATIONS.................................................................54
Section 10.1 General Indemnity...............................................................54
iii
Section 10.2 General Tax Indemnity...........................................................59
ARTICLE XI ▇▇▇▇▇ CITY'S RIGHT OF QUIET ENJOYMENT........................................................70
ARTICLE XII SUPPLEMENTAL FINANCING OF IMPROVEMENTS; OPTIONAL REFINANCINGS...............................70
Section 12.1 Financing Improvements..........................................................70
Section 12.2 Optional Refinancing of Lessor Loan.............................................72
Section 12.3 Owner Lessor's Right to Redeem Lessor Notes.....................................74
Section 12.4 Cooperation.....................................................................75
ARTICLE XIII [INTENTIONALLY DELETED]....................................................................75
ARTICLE XIV RIGHT OF FIRST REFUSAL; RIGHT OF FIRST OFFER................................................75
Section 14.1 Right of First Offer............................................................75
Section 14.2 Right of First Refusal..........................................................76
ARTICLE XV SPECIAL LESSEE TRANSFER......................................................................78
ARTICLE XVI COMMON FACILITIES...........................................................................79
ARTICLE XVII MISCELLANEOUS..............................................................................81
Section 17.1 Consents........................................................................81
Section 17.2 Successor Owner Manager.........................................................81
Section 17.3 Bankruptcy of Lessor Estate.....................................................82
Section 17.4 Amendments and Waivers..........................................................82
Section 17.5 Notices.........................................................................82
Section 17.6 Survival........................................................................84
Section 17.7 Successors and Assigns..........................................................84
Section 17.8 Governing Law...................................................................84
Section 17.9 Severability....................................................................84
Section 17.10 Counterparts....................................................................84
Section 17.11 Headings and Table of Contents..................................................85
Section 17.12 Limitation of Liability.........................................................85
Section 17.13 Consent to Jurisdiction; Waiver of Trial by Jury, Process Agent.................86
Section 17.14 Further Assurances..............................................................87
Section 17.15 Effectiveness...................................................................87
Section 17.16 Measuring Life..................................................................87
Section 17.17 No Partnership, Etc.............................................................88
Section 17.18 [Intentionally deleted].........................................................88
Section 17.19 Confidentiality.................................................................88
Section 17.20 Termination.....................................................................88
Section 17.21 Entire Agreement................................................................88
Section 17.22 Subordination of Claims.........................................................89
iv
APPENDICES:
Appendix A Definitions
Appendix B Retained Assets
EXHIBITS:
Exhibit A Form of Facility Lease
Exhibit B Form of
Exhibit C Form of Facility Site Lease
Exhibit D Form of Facility Site Sublease
Exhibit E Form of Fundco Indenture
Exhibit F Form of Lessor Notes
Exhibit G Form of Lessor LOC Agreement
Exhibit H Form of OP LOC Agreement
Exhibit I Form of
Exhibit J Form of
Exhibit L [Opinion of SASM&F]
Exhibit M [Opinion of ______________]
Exhibit N [Opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP]
Exhibit O [Opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP]
Exhibit P [Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP]
Exhibit Q [Opinion of ---------------------------]
Exhibit R [Opinion of ---------------------------]
Exhibit S [Form of ]
SCHEDULES:
Schedule 2.3 Taxes Included as Transaction Expenses
Schedule 2.3(a) Maximum Transaction Expenses
Schedule 3.1(d) Governmental Approvals
Schedule 3.1(EE) Contracts with Affiliates
Schedule 4.12 Filings and Approvals
Schedule 6.3 Existing Liens
[Schedule 6.7(i) Indebtedness in Existence on the Closing Date]
Schedule 7.9 Unrelated Indebtedness
Schedule 8.2(c) Pricing Assumptions
v
This
PARTICIPATION AGREEMENT[(__)], dated as of December __,
2001 (as amended, supplemented or otherwise modified from time to time, in
accordance with the provisions hereof, this "
PARTICIPATION AGREEMENT" or this
"AGREEMENT"), among (i) EME HOMER CITY GENERATION L.P., a Pennsylvania limited
partnership, as Facility Lessee and Ground Lessor (herein, together with its
successors and permitted assigns, "▇▇▇▇▇ CITY"), (ii) [INSERT NAME OF OWNER
LESSOR], a [__________], as Facility Lessor and Ground Lessee (herein, together
with its successors and permitted assigns, the "OWNER LESSOR"), (iii) [INSERT
NAME OF OWNER MANAGER], a [__________], not in its individual capacity, except
as expressly provided herein, but solely as independent manager under the Lessor
LLC Agreement (as defined below) (herein in its capacity as independent manager
under the Lessor LLC Agreement, together with its successors and permitted
assigns, the "OWNER MANAGER," and herein in its individual capacity, together
with its successors and permitted assigns, the "OM COMPANY"), (iv) [GENERAL
ELECTRIC CAPITAL CORPORATION] [FULL SERVICE LEASE CORP.], a Delaware corporation
(herein, together with its successors and permitted assigns, the "OWNER
PARTICIPANT"), (v) ▇▇▇▇▇ CITY FUNDING, LLC, a Delaware limited liability
company, as lender (herein, together with its successors and permitted assigns,
the "LENDER"), (vi) [_________________________] not in its individual capacity,
except as expressly provided herein, but solely as holder representative under
the Indenture (herein in its capacity solely as trustee, together with its
successors and permitted assigns, the "LEASE INDENTURE TRUSTEE," and herein in
its individual capacity, together with its successors and permitted assigns, the
"LEASE INDENTURE COMPANY"), (vii) [_________________________] not in its
individual capacity, except as expressly provided herein, but solely as security
agent under the Lease Indenture (as defined below) (herein in its capacity
solely as security agent, together with its successors and permitted assigns,
the "SECURITY AGENT,"and (vii) THE BANK OF NEW YORK (as successor to the United
States Trust Company of New York), not in its individual capacity, except as
expressly provided herein, but solely as bondholder representative under the
Fundco Indenture (herein in its capacity solely as trustee, together with its
successors and permitted assigns, the "BONDHOLDER TRUSTEE," and herein in its
individual capacity, together with its successors and permitted assigns, the
"BONDHOLDER TRUSTEE COMPANY").
WITNESSETH:
WHEREAS, ▇▇▇▇▇ City owns certain coal-fired power generation
and related assets as more fully described on SCHEDULE [__] (the "▇▇▇▇▇ CITY
ASSETS") located in the Commonwealth of Pennsylvania, consisting of one 620 MW
unit, one 614 MW unit and one 650 MW unit;
WHEREAS, in consideration of Owner Lessor's payment of the
Purchase Price and assumption of the obligations of ▇▇▇▇▇ City under the
Indenture, ▇▇▇▇▇ City will sell, and the Owner Lessor will acquire, the
Undivided Interest pursuant to the Facility Deed and the ▇▇▇▇ of Sale;
WHEREAS, the Owner Lessor will lease the Undivided Interest to
▇▇▇▇▇ City pursuant to the Facility Lease;
WHEREAS, ▇▇▇▇▇ City will (i) lease the Ground Interest and
grant certain non-exclusive easements to the Owner Lessor pursuant to the
Facility Site Lease and (ii) sublease the Ground Interest from the Owner Lessor
pursuant to the Facility Site Sublease;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant has entered into the Lessor LLC Agreement
pursuant to which the Owner Participant authorizes the Owner Lessor to, among
other things, (i) issue the Lessor Notes and sell such Lessor Notes to the
Lender, (ii) lease the Undivided Interest to ▇▇▇▇▇ City pursuant to the Facility
Lease, (iii) lease the Ground Interest from ▇▇▇▇▇ City pursuant to the Facility
Site Lease, (iv) sublease the Ground Interest to ▇▇▇▇▇ City pursuant to the
Facility Site Sublease and (v) pursuant to the Indenture, grant the Security
Interest;
WHEREAS, the Lender has agreed to acquire the Lessor Notes in
the manner and subject to the conditions set forth herein;
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:
ARTICLE 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.
ARTICLE II
PARTICIPATION; CLOSING DATE; TRANSACTION EXPENSES
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 hereto agree to participate in the following transactions on or prior to
the Closing Date:
2
(a) The Owner Participant will provide to the Owner Lessor
funds in an amount sufficient to (i) fund the Equity Investment and (ii) pay the
Transaction Expenses 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 Lessor Notes, (ii)
sell the Lessor Notes to Lender and (iii) grant the Security Interest;
(c) The Owner Lessor will use the proceeds of the (i) Owner
Participant's Commitment and (ii) sale of the Lessor Notes to pay (x) the
Purchase Price for the Undivided Interest to ▇▇▇▇▇ City and (y) the Transaction
Expenses which the Owner Lessor is responsible to pay pursuant to SECTION 2.3(a)
hereof;
(d) ▇▇▇▇▇ City will convey the Undivided Interest to the Owner
Lessor pursuant to the Facility Deed and the ▇▇▇▇ of Sale;
(e) The Owner Lessor and ▇▇▇▇▇ City will enter into the
Facility Lease, pursuant to which the Owner Lessor will lease the Undivided
Interest to ▇▇▇▇▇ City and ▇▇▇▇▇ City will lease the Undivided Interest from the
Owner Lessor;
(f) ▇▇▇▇▇ City and the Owner Lessor will enter into the
Facility Site Lease, pursuant to which ▇▇▇▇▇ City will lease the Ground Interest
to the Owner Lessor and the Owner Lessor will lease the Ground Interest from
▇▇▇▇▇ City;
(g) The Owner Lessor and ▇▇▇▇▇ City will enter into the
Facility Site Sublease, pursuant to which the Owner Lessor will sublease the
Ground Interest to ▇▇▇▇▇ City and ▇▇▇▇▇ City will sublease the Ground Interest
from the Owner Lessor;
(h) The Owner Lessor, the Lease Indenture Trustee, the
Security Agent and the Lender will enter into the Lease Indenture, pursuant
to which the Owner Lessor will grant the Security Interest to the Security
Agent;
(i) The Owner Participant and ▇▇▇▇▇ City will enter into the
Tax Indemnity Agreement; and
(j) The parties hereto 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 closing date (the "CLOSING DATE"), at the offices of SASM&F, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
(b) PROCEDURES FOR FUNDING. Unless the Closing Date has been
postponed pursuant to SECTION 2.2(c), subject to the terms and conditions of
this
3
Agreement, the Owner Participant shall make the Owner Participant's Commitment
available at the time of Closing on the Scheduled Closing Date by transferring
or delivering such amount, in funds immediately available on the Scheduled
Closing Date to the [Trust Company].
(c) POSTPONEMENT OF THE CLOSING. The Scheduled Closing Date
may be postponed from time to time for any reason if ▇▇▇▇▇ City gives the Owner
Participant, the Owner Lessor, the Owner Manager, the Lender and the Lease
Indenture Trustee 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.
(d) EXPIRATION OF COMMITMENTS. The obligations of the parties
hereto shall expire on December 7, 2001, at 11:59 p.m., New York City time, if
the Closing Date has not occurred on or before that date. Upon such expiration,
the parties hereto shall have no obligation to consummate the transactions
contemplated under this Agreement except as provided in SECTIONS 2.3, 10.1 and
10.2 and all obligations of the Lease Financing Parties shall cease and
terminate.
SECTION 2.3 TRANSACTION EXPENSES AND OVERDUE RATE.
(a) If the transactions contemplated by this Agreement are
consummated, all Transaction Expenses up to an amount equal to the amount set
forth in SCHEDULE 2.3(a) incurred on or prior to the Closing Date and
substantiated or otherwise supported in reasonable detail shall be paid on the
Closing Date by the Owner Lessor with the funds provided by the Owner
Participant pursuant to SECTION 2.2(b) above. If Transaction Expenses are in
excess of the amount set forth on SCHEDULE 2.3(a), the Facility Lessee shall be
required to pay the fees of its counsel and other expenses to be agreed upon by
the Facility Lessee and the Owner Participant to the extent of such excess. If
the Overall Transaction is not consummated for any reason (including as a result
of the Facility Lessee's terminating this Agreement pursuant to ARTICLE XIII),
the Facility Lessee shall bear all Transaction Expenses; PROVIDED, HOWEVER, that
the Facility Lessee shall not be obligated to pay Transaction Expenses incurred
by the Owner Participant if the Overall Transaction is not consummated on the
basis of the provisions of this Agreement due to a failure of the Owner
Participant to satisfy any condition to the Closing required to be satisfied by
the Owner Participant.
(b) Subject to ARTICLE X below, the Facility Lessee will not
be responsible for any fees, costs or expenses of the Owner Participant incurred
prior to the Closing Date in respect of the Closing except as described in
paragraph (a) of this SECTION 2.3.
(c) Following the Closing Date, ▇▇▇▇▇ City will be responsible
for, and will pay as Supplemental Lease Rent on an After-Tax Basis to the Owner
Participant and the Owner Lessor, (i) the annual administration fees, if any,
and expenses of the Owner Manager and the independent director (if any) of the
Owner Participant, and (ii)
4
any appraiser's fees and expenses incurred in connection with fair market value
determinations in connection with any Renewal Option.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇ CITY.
▇▇▇▇▇ City represents and warrants that, as of the date of execution and
delivery hereof and as of the Closing Date:
(a) ORGANIZATION; POWER. ▇▇▇▇▇ City (A) is a limited
partnership, duly formed, validly existing and in good standing under the laws
of Pennsylvania with the sole legal name, as set forth in the public records
filed in Pennsylvania, of "EME Homer City Generation L.P. ," (B) is duly
qualified to do business and in good standing in each jurisdiction where the
nature of its business requires such qualification and (C) has all requisite
power and authority and holds all requisite Governmental Approvals to (i) hold
under lease the property it purports to own or hold under lease, (ii) carry on
its business as now being conducted and as presently proposed to be conducted
and (iii) enter into and perform its obligations under this Agreement and each
of the other Transaction Documents to which it is or will be a party and to
conduct the business of owning and operating the Facility and the sale and
marketing of wholesale electric power and other products and services related
thereto, except, with respect to clauses (B) and (C) 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, result in a Material
Adverse Effect. ME Westside and Chestnut Ridge are the sole general partner and
sole limited partner, respectively, of the Facility Lessee. Each of the Facility
Lessee, ME Westside and Chestnut Ridge is an indirect wholly-owned subsidiary of
EME.
(b) DUE AUTHORIZATION; NON-CONTRAVENTION. The execution,
delivery and performance by ▇▇▇▇▇ City of this Agreement and each of the other
Transaction 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 ▇▇▇▇▇ City or
(ii) contravene any Requirement of Law, binding on or affecting ▇▇▇▇▇ City,
except where such contravention could not reasonably be expected to have a
Material Adverse Effect.
(c) NO VIOLATION. The execution, delivery and performance by
▇▇▇▇▇ City of the Transaction Documents to which it is a party do not (i)
violate, in a manner which has had or could reasonably be expected to have a
Material Adverse Effect, or a material adverse effect on any material contract,
agreement or instrument to which ▇▇▇▇▇ City is a party or by which ▇▇▇▇▇ City or
any of its property is bound; (ii) constitute, in a manner which has had or
could reasonably be expected to have a Material Adverse Effect, a default by
▇▇▇▇▇ City under any such contract, agreement or instrument; or (iii) result, in
a manner which has had or could reasonably be expected to have a Material
Adverse Effect, in the creation of any Lien upon the property of ▇▇▇▇▇ City
(other than pursuant to any Operative Document).
5
(d) GOVERNMENT APPROVALS AND THIRD PARTY CONSENTS.
(i) All Governmental Approvals required (1) in connection
with the execution and delivery of, or performance of the
transactions contemplated by, this Agreement and the other
Transaction Documents to which ▇▇▇▇▇ City is or will be a party and
for the conduct of the business by ▇▇▇▇▇ City and (2) without regard
to any other transactions of the Owner Participant, the Owner
Lessor, the Owner Manager or any Affiliate of any of them and
assuming that none of the Owner Participant, the Owner Lessor, the
Owner Manager or any Affiliate of any of them is an "electric
utility" or a "public utility" or a "public utility holding company"
or any similar entity subject to public utility regulation under any
Requirement of Law immediately prior to the Closing Date, with
respect to the participation by the Owner Participant, the Owner
Lessor or the Owner Manager in the transactions contemplated by this
Agreement and the other Operative Documents, are listed on SCHEDULE
3.1(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 date of execution and delivery hereof
or from time to time after the Closing Date in connection with the
maintenance or operation of the Facility and other assets and
properties of ▇▇▇▇▇ City, (B) which are routine in nature and which
cannot be obtained and such failure to obtain would not result in a
Material Adverse Effect, or are not normally applied for, prior to
the time they are required, and which ▇▇▇▇▇ City 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 Lessor Membership Interest or the Member
Interest or any transfer of ownership of the Undivided Interest or
the Lessor Estate by the Owner Lessor or any relinquishment of the
use or operation of the Undivided Interest by ▇▇▇▇▇ City, (E) filing
and recording to perfect the Lien of the Security Agent 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, the Security Agent and the
Lease Indenture Trustee to effect such filings, and (F) as may be
required under Environmental Laws to transfer or modify Governmental
Approvals relating to the operation of the Facility as a result of
the transactions contemplated by this Agreement. Except as noted in
Part B of SCHEDULE 3.1(d), all Governmental Approvals that have been
obtained pursuant to the first sentence of this SECTION 3.1(d) are
final, 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 (in each case, other than those for
which the failure to be final would not have a Material Adverse
Effect). No such Governmental Approval is the subject of any pending
or, except as noted in Part C of SCHEDULE 3.1(d), threatened
judicial or administrative proceeding, which judicial review or
proceeding could have a Material Adverse Effect.
(ii) All consents and approvals required to be obtained from
Persons other than Governmental Authorities in connection with the
transactions
6
contemplated by the Transaction Documents have been obtained and are in
full force and effect and are set forth in SCHEDULE 3.1(d), 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.
(e) TITLE; LIENS.
(i) On or before the Closing Date, (x) ▇▇▇▇▇ City will have
good, clear, record and marketable title to the Facility Site and the
easements relating thereto free and clear of all Liens other than
Permitted Encumbrances and (y) ▇▇▇▇▇ City will have good and marketable
title or will have valid rights to lease or otherwise use all items of
real and personal property which are material to its business, in each
case free and clear of all Liens and title defects except Permitted
Encumbrances, and other title defects and rights which defects and
invalidity of rights would not reasonably, individually or in the
aggregate, be expected to have a Material Adverse Effect.
(ii) Upon execution and delivery of the Operative Documents
and recording or filing (as appropriate) of the documents and
instruments referred to in SCHEDULE 4.12 in accordance with SECTION
4.12, 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 other than Permitted Encumbrances.
(iii) Upon execution and delivery of, and after giving effect
to the transactions contemplated by, the Operative Documents, good,
clear, record and marketable 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.
(iv) Assuming the representations and warranties of the
Owner Lessor contained in SECTION 3.2 are true, when duly
authorized, executed and delivered by each of the parties thereto,
the Lease Indenture will create a valid Lien in favor of the
Security Agent in the Indenture Estate and no filing, recording,
registration or notice with any federal or state Governmental
Authority or other action will be necessary to establish or, except
for such filings and recordings and other actions referred to in
SCHEDULE 4.12 hereto as will be made pursuant to SECTION 4.12, to
perfect, or give record notice of, the Lien in favor of such
Security Agent in the Indenture Estate to the extent such Lien may
be perfected by filings, recordings, registrations or notices.
(v) None of the Permitted Encumbrances could reasonably be
expected to, on and after the Closing Date, materially interfere with
the ownership, 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 Deed, the ▇▇▇▇ of
Sale, the Facility Site Lease, the Easements, and Facility Site
Sublease.
7
(f) SECURITIES ACT. Neither the Facility Lessee nor anyone
authorized by it (not including GECC or any of its Affiliates) has directly or
indirectly offered or sold any interest in the Beneficial Interest or the Lessor
Notes or any part thereof, or in any similar security or lease, or in any
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 or the Lessor Notes or any part thereof or solicited any
offer to acquire any of the same, in any such case, in violation of the
registration requirements of Section 5 of the Securities Act.
(g) VALIDITY. Each of the Transaction Documents to which ▇▇▇▇▇
City is or will be a party constitutes, or, upon the due execution and delivery
thereof by ▇▇▇▇▇ City, will constitute, the legal, valid and binding obligation
of ▇▇▇▇▇ City, enforceable in accordance with its terms (except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and general principles
of equity).
(h) COMPLIANCE WITH REQUIREMENTS OF LAW. Each of ▇▇▇▇▇ City
and the Facility is in compliance with all Requirements of Law (including all
applicable zoning, use and building codes, laws, regulations and ordinances
relating to the operation, maintenance, use, lease or ownership of the
Facility, the Facility Site and the Easements, ERISA and regulations of the
Federal Reserve System) applicable to it, except to the extent that failure
to so comply would not result or has not resulted in a Material Adverse
Effect or involve any (i) material risk of foreclosure, sale, forfeiture or
loss of, or imposition of a Lien (other than Permitted Encumbrances) on, the
Facility or the Facility Site or the impairment of the use, operation or
maintenance of the Facility or the Facility Site in any material respect,
(ii) risk of criminal liability being imposed on the Owner Participant, the
Owner Lessor, the Owner Manager, the Security Agent, the Lease Indenture
Trustee, or the Lender or any of their Affiliates or (iii) material risk of
the occurrence of any material adverse effect being incurred by the Owner
Participant, the Owner Lessor, the Owner Manager, the Security Agent, the
Lease Indenture Trustee, or the Lender, including subjecting the Owner
Participant or the Owner Lessor to public utility regulation under
Requirements of Law.
(i) MARGIN REGULATION. ▇▇▇▇▇ City 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 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.
(j) LITIGATION. There is no pending or, to the Actual
Knowledge of ▇▇▇▇▇ City, threatened, litigation, arbitration or administrative
proceeding against ▇▇▇▇▇ City, any of the ▇▇▇▇▇ City Parties or EME which, if
determined adversely to it, could reasonably be expected to have a Material
Adverse Effect.
8
(k) TAX RETURNS. ▇▇▇▇▇ City, and each entity holding a
partnership interest in ▇▇▇▇▇ City, has filed all material federal, state and
local tax returns and reports that are required by law to have been filed by it
and have paid all material 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 such Person and with
respect to which adequate reserves have to the extent required by GAAP been set
aside) and neither ▇▇▇▇▇ City nor any entity holding a partnership interest in
▇▇▇▇▇ City has Actual Knowledge of any threatened actual or proposed deficiency
or additional assessment in connection therewith that, either in any case or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
(l) INVESTMENT COMPANY ACT. ▇▇▇▇▇ City is not subject to
regulation as an "investment company" or an "affiliated person" of a registered
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(m) HOLDING COMPANY ACT. ▇▇▇▇▇ City is not subject to
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. The execution, delivery and performance of the Operative Documents to
which ▇▇▇▇▇ City is or will be a party do not violate any provision of PUHCA or
any rule or regulation thereunder.
(n) EWG STATUS. ▇▇▇▇▇ City is an "exempt wholesale generator"
under PUHCA. The Facility is interconnected with the high voltage network and
has access to transmission services and ancillary services to sell wholesale
electric power. ▇▇▇▇▇ City has the authority to sell wholesale electric power at
market-based rates.
(o) ENVIRONMENTAL WARRANTIES. Except as has not or would not,
individually or in the aggregate, result in a Material Adverse Effect:
(i) The Facility and the Facility Site are, and to the Actual
Knowledge of ▇▇▇▇▇ City have been, owned, leased and operated in
compliance with all applicable Environmental Laws, and ▇▇▇▇▇ City is
and has been in compliance with all applicable Environmental Laws.
(ii) There are no pending or, to the Actual Knowledge of ▇▇▇▇▇
City, threatened Environmental Claims involving or against ▇▇▇▇▇ City,
the Facility or the Facility Site.
(iii) ▇▇▇▇▇ City has obtained and is in compliance with all
Governmental Approvals required under any applicable Environmental Law
for its business, and with respect to the Governmental Approvals not
obtained by the date of execution and delivery hereof, including those
that may be required as a result of the transactions contemplated by
this Agreement, ▇▇▇▇▇ City does not have any reason to believe that
such approvals will not be timely obtained.
(iv) Neither the Facility nor the Facility Site is listed on
(A) the National Priorities List (B) the CERCLIS or (C) the priority
list of sites under the
9
Pennsylvania Hazardous Site Clean Up Act or, to the Actual Knowledge of
▇▇▇▇▇ City, on any similar state list of sites requiring investigation
or clean-up.
(v) To the Actual Knowledge of ▇▇▇▇▇ City, there is not and
has not been any Environmental Condition (A) at, on or under the
Facility or the Facility Site or any Component thereof or (B)
resulting from or arising in connection with the operation of the
Facility that could have a Material Adverse Effect or involve any
(1) material risk of foreclosure, sale, forfeiture or loss of, or
imposition of a lien on, the Undivided Interest, the Facility or the
Facility Site or the impairment of the use, operation or maintenance
of the Facility or the Facility Site in any material respect, or (2)
risk of criminal liability being incurred by the Owner Participant,
the Owner Lessor, the Owner Manager, the Security Agent, the Lease
Indenture Trustee or the Lender or any of their respective
Affiliates, or (3) material risk of the occurrence of any material
adverse effect being incurred by the Owner Participant, the Owner
Lessor, the Owner Manager, the Security Agent, the Lease Indenture
Trustee or the Lender, including subjecting the Owner Participant or
the Owner Lessor to public-utility regulation under Requirements of
Law.
(p) ERISA. Assuming the correctness of the representations of
the other parties hereto, the transactions contemplated hereunder and by the
other Operative Documents will not constitute a "prohibited transaction" under
ERISA and will not result in the imposition of a Tax under Section 4975 of the
Code.
(q) LOCATION OF CHIEF EXECUTIVE OFFICE AND PRINCIPAL PLACE OF
BUSINESS, ETC.
(i) The chief executive office and principal place of business
of ▇▇▇▇▇ City and the office where ▇▇▇▇▇ City keeps its corporate
records concerning the Facility, the Facility Site and the Transaction
Documents is located at One Financial Place; ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇; ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
(ii) The Facility is located on the Facility Site.
(iii) The condition of the Facility is substantially identical
to the condition it was in when inspected by the Appraiser in
connection with the Closing Appraisal.
(r) ACCESS; EGRESS. ▇▇▇▇▇ City 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
Transaction Documents. To ▇▇▇▇▇ City's Actual Knowledge, there are no plans of
any governmental entity to change the highway or road system in the vicinity of
the Facility or the Facility Site, or to restrict or change access from any such
highway or road to the Facility or the Facility Site, in either case, in any
manner which could reasonably be expected to have a Material Adverse Effect.
10
(s) ABILITY TO DELIVER POWER. ▇▇▇▇▇ City has all rights that
are necessary and sufficient to deliver the net electric power output of the
Facility to at least one of the two points of interconnection of the Facility 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 Agreement.
(u) UTILITY SERVICES. The Facility and the Facility Site have
available all public utility services necessary for the use and operation of the
Facility as currently being used and as contemplated by the Transaction
Documents.
(v) SUBDIVISION. Following the contemplated subdivision of the
Facility Site, the Owner Lessor will have a ground lease which entitles it to
operate the Facility as currently operated.
(w) ADEQUATE RIGHTS. Assuming the representations and
warranties of the Owner Lessor set forth in SECTION 3.2(d) and of the Owner
Participant set forth in SECTION 3.2(d) are true, based upon Requirements of Law
in effect on the Closing Date and upon ▇▇▇▇▇ City's reasonable expectations,
and, in the case of such actions after the Facility Lease Term, subject to the
Owner Lessor obtaining any necessary Governmental Approvals (which ▇▇▇▇▇ City
reasonably believes are obtainable by the Owner Lessor in the ordinary course
other than those Governmental Approvals the failure to maintain or obtain which
could not reasonably be expected to have a material adverse effect on the Owner
Lessor's ability, on a commercially practicable basis, to have the rights and
take the actions set forth in clauses (i) through (v) below), the rights and
interests made available to the Owner Lessor pursuant to the Transaction
Documents and the rights contemplated by the Facility Lease to be made available
under the Transaction Documents are sufficient to permit the following actions
by the Facility Lessee during the Facility Lease Term and by the Owner Lessor or
any such permitted transferee following the expiration or termination of the
Facility Lease until the end of the expected economic useful life of the
Facility as set forth in the Closing Date Appraisal: (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, replacement, repair and renewal of all modifications,
additions, improvements, replacements and substitutions of and to the Facility,
(iv) appropriate ingress to and egress from the Facility and the Facility Site
for any reasonable purpose in connection with the exercise of rights under the
Ownership and Operation Agreement and such Person's interest in the Facility and
(v) transmission of the electric energy and ancillary services provided by the
Facility to a point of interconnection to the relevant electricity grid.
(x) RETURN ACCEPTANCE TESTS. ▇▇▇▇▇ City 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.
11
(y) NO DEFAULT; NO EVENT OF LOSS; NO BURDENSOME BUYOUT EVENT.
No Lease Event of Default, or event that, with the passage of time or giving of
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
default under the Existing Debt, or event that, with the passage of time or
giving of notice, or both, would constitute such an event of default has
occurred or will occur upon execution and delivery of the Operative Documents.
▇▇▇▇▇ City is not in default, and to the Actual Knowledge of ▇▇▇▇▇ City, no
condition exists that with notice or lapse of time or both would constitute a
default, under any mortgage, indenture or other contract, agreement or
instrument to which ▇▇▇▇▇ City is a party or by which it or its property is
bound in any such case where any such default, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect. No Event of
Loss, other than a Regulatory Event of Loss, has occurred or will occur upon the
execution and delivery of the Operative Documents, and ▇▇▇▇▇ City does not have
Actual Knowledge of any event that could reasonably be expected to result in a
Regulatory Event of Loss. No Burdensome Buyout Event has occurred or will occur
upon the execution and delivery of the Operative Documents, and ▇▇▇▇▇ City does
not have Actual Knowledge of any event that could reasonably be expected to
result in a Burdensome Buyout Event.
(z) REGULATORY MATTERS. None of the Owner Lessor, the Owner
Participant, the Security Agent or the Lease Indenture Trustee solely as a
result of the execution, delivery and performance of, and the consummation of
the transactions contemplated by the Operative Documents shall be or become
(i) subject to regulation as a "public-utility company," a "holding company,"
an "affiliate" of a "holding company" or a "subsidiary company" of a "holding
company" within the meaning of PUHCA, (ii) a "public utility," a
"transmitting utility," or an "electric utility" within the meaning of the
Federal Power Act or (iii) subject to state financial or rate regulation.
(aa) NOTICES. To ▇▇▇▇▇ City's Actual Knowledge, (i) there are
no outstanding written notices from any Governmental Authority of any violation
of, or that the Facility or the Facility Site are not in compliance with, any
and all Requirements of Law relating to the Facility and the Facility Site or
the ownership, use, occupancy and operation thereof and (ii) there are no
outstanding written notices that any repairs or work or capital improvements are
required to be done at or with respect to the Facility or the Facility Site by
any Governmental Authority or by any insurance company which currently issues
any insurance to ▇▇▇▇▇ City or by any board of fire underwriters or other body
exercising similar functions, except, in either case with respect to (i) or (ii)
above, where such violation, noncompliance or repairs could not reasonably be
expected to have a Material Adverse Effect.
(bb) ACCURACY OF INFORMATION. All factual information provided
in writing by ▇▇▇▇▇ City or its Affiliates to (i) the Engineering Consultant, in
connection with the preparation of the Engineering Consultant's Report, (ii) the
Appraiser, in connection with the preparation of the Closing Date Appraisal,
(iii) the Environmental Consultant, in connection with the preparation of the
Environmental Consultant's Report, (iv) the Insurance Consultant, in connection
with the preparation of the Insurance Consultant's Report, (v) the Power Market
Consultant, in connection with the preparation
12
of the report of the Power Market Consultant and (vi) the Owner Manager, the
Owner Participant, the Lease Indenture Trustee and the Lender in connection with
the transactions contemplated hereby (other than projections and
"forward-looking" information) is true and accurate in every material respect on
the date as of which such information is dated or certified and such information
does not omit 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. The assumptions used for projections and "forward-looking"
information contained in the items (i) through (vi) above were prepared in good
faith and are based upon reasonable assumptions.
(cc) CONTRACTS WITH AFFILIATES. Other than as set forth on
SCHEDULE 3.1(cc) hereto or as contemplated by the Operative Documents, there are
no material contracts or agreements in effect on the Closing Date between ▇▇▇▇▇
City and any Affiliate of ▇▇▇▇▇ City. ▇▇▇▇▇ City has delivered to the Owner
Participant copies of each of the contracts and agreements set forth on SCHEDULE
3.1(cc) hereto as in effect on the Closing Date.
(dd) INSURANCE. All insurance required to be obtained pursuant
to SECTION 5.10 hereof has been obtained and is in full force and effect.
(ee) NO DEFAULT OF JUDGMENT. ▇▇▇▇▇ City is not in default of
any judgments, orders or decrees of any governmental authority relating to the
Facility which could reasonably be expected to have a Material Adverse Effect.
(ff) EMINENT DOMAIN. There is no action pending with respect
to, or, to the Facility Lessee's Actual Knowledge, threatened by a governmental
entity or other Person to initiate, a Requisition of the Facility, the Facility
Site or the Easements, which could reasonably be expected to have a Material
Adverse Effect.
(gg) LABOR DISPUTES AND ACTS OF GOD. Neither the business nor
the properties of the Facility Lessee are affected by any fire, explosion,
accident, strike, lockout, or to the Actual Knowledge of the Facility Lessee
pending or threatened unfair labor practice complaint or proceeding or other
labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the
public enemy, or other casualty (whether or not covered by insurance), which
could reasonably be expected to have a Material Adverse Effect.
(hh) INTELLECTUAL PROPERTY. To the Actual Knowledge of the
Facility Lessee, the Facility Lessee has the right to use all patents,
trademarks, service marks, trade names, copyrights, licenses and other rights
which are necessary or material for the operation of its business as presently
conducted. To the Actual Knowledge of the Facility Lessee, (a) no material
product, process, method, substance, part or other material presently
contemplated to be sold by or employed by the Facility Lessee in connection with
its business infringes upon any patent, trademark, service ▇▇▇▇, trade name,
copyright, license or other intellectual property right of any other Person, (b)
there are no pending or threatened claims or litigation against or affecting the
Facility Lessee contesting or calling into question its right to sell or use any
such product, process,
13
method, substance, part or other material and (c) there is no existing, pending
or proposed patent, invention or device, or any application or principle of any
applicable law, standard or code, in any such case, with respect to clauses (a),
(b) and (c) above, which could reasonably be expected to have a Material Adverse
Effect.
(ii) NO FRAUDULENT CONVEYANCES. The Facility Lessee is
consummating the transactions contemplated hereby, including transfer of certain
of its assets and properties to the Owner Lessor, in good faith and without any
intent to defraud creditors of the Facility Lessee or subsequent purchasers.
Based upon the Closing Date Appraisal and the Closing Projections, the execution
and delivery of the Operative Documents to which the Facility Lessee is a party
and the granting of any Liens pursuant to such Operative Documents by the
Facility Lessee will not render the Facility Lessee insolvent under GAAP or
leave the Facility Lessee with assets whose present fair valuation is less than
the present fair valuation of the Facility Lessee's debts. As used in this
SECTION 3.1(ii), "debts" includes any and all liabilities, whether matured or
unmatured, liquidated or unliquidated, absolute, fixed or contingent, and
whether or not such liabilities are required under GAAP to be shown on the
Facility Lessee's balance sheet. Based upon the Closing Date Appraisal and the
Closing Projections, the execution and delivery of the Operative Documents to
which the Facility Lessee is a party and the granting of the Liens pursuant to
such Operative Documents by the Facility Lessee will not leave the Facility
Lessee with property remaining in its hands which would constitute unreasonably
small assets or capital, and the Facility Lessee has and, after giving effect to
such transactions will have, an adequate amount of assets and capital to engage
in its business now and in the future, based on the actual and anticipated needs
for capital of the businesses anticipated to be conducted by the Facility
Lessee, and based upon the Closing Projections and other information described
herein. Based upon the Closing Date Appraisal and the Closing Projections, after
giving effect to the transactions contemplated under the Operative Documents,
the Facility Lessee will be able to pay all of its debts and liabilities,
including unrecorded contingent liabilities, as they mature, the Facility Lessee
will have positive cash flow after paying all of its scheduled and anticipated
debt as it matures, and the Facility Lessee will realize sufficient monies from
current assets in the ordinary and usual course of business to pay recurring
current debt, short-term debt and long-term debt as such debts mature.
(jj) NO ADDITIONAL FEES. Except for the fees referred to in
clause (__) of the definition of Transaction Expenses [or as set forth on
SCHEDULE 3.1(jj)], the Facility Lessee has not paid or become obligated to pay
any fee or commission to any broker, finder or intermediary for or on account of
arranging the financing of the transactions contemplated by the Operative
Documents.
(kk) FINANCIAL STATEMENTS. The financial statements of ▇▇▇▇▇
City for the Fiscal Quarter ending September 30, 2001 (i) were prepared in
accordance with GAAP, and (ii) fairly present in all material respects the
financial position and the results of the operations of ▇▇▇▇▇ City as of such
date and for the period then ended in accordance with GAAP.
14
(ll) LAND NOT IN FLOOD ZONE. No portion of the Facility or the
Facility Site includes improved real property that is located in an area that
has been identified by the Director of the Federal Emergency Management Agency
as an area having special flood hazards and in which flood insurance has been
made available under the National Flood Insurance Act of 1968, as amended,
except for such areas as are covered by such insurance.
(mm) BUSINESS, DEBT, CONTRACTS, ETC. The Facility Lessee does
not conduct any business other than the development, ownership, operation,
maintenance, leasing and financing of the Facility and the Facility Site and
activities incidental thereto. The Facility Lessee does not have any outstanding
Indebtedness or other material liabilities other than pursuant to the
Transaction Documents, and is not a party to or bound by any material contract
other than the Transaction Documents to which it is a party.
(nn) PROJECT DOCUMENTS. The copies of the Energy Sales
Agreement, the NOX Agreement, the real property documents under which the
Facility Lessee has an interest in the Facility Site and the Easements, the Fuel
Supply Agreement, the ▇▇▇▇▇ City Partnership Agreement and the Interconnection
Agreement, provided by the Facility Lessee to the Owner Participant as of the
Closing Date constitute true and correct copies of all such documents as of such
date, and no such document has been amended, supplemented or otherwise modified
except as copies of such amendments, supplements and modifications have been
provided to the Owner Participant as of such date. Except for the agreements
described in the immediately preceding sentence, no other material or long term
Project Document exists as of the Closing Date.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF THE OWNER
LESSOR. The Owner Lessor represents and warrants that as of the date of
execution and delivery hereof and as of the Closing Date:
(a) DUE ORGANIZATION. The Owner Lessor is a duly formed and
validly existing limited liability company in good standing under the laws of
the State of Delaware with the sole legal name, as set forth in the public
records filed in Delaware, of "▇▇▇▇▇ City OL[1]". The Owner Participant is the
sole member of the Owner Lessor. The Owner Lessor has the limited liability
company power and authority to enter into and perform its obligations under this
Agreement and each of the other Operative Documents to which it is 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
15
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.
(ii) Upon the execution of the Lessor Notes by the Owner
Lessor, authentication of the Lessor Notes by the Lease Indenture
Trustee 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 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
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) Lessor LLC Agreement or any of the Organic Documents of the
Owner Lessor, (ii) any Requirement of Law binding on the Owner Lessor or (iii)
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 Lien; 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 representations and
warranties of ▇▇▇▇▇ City contained in paragraphs [(d), (g), (h), (k), (l), (m),
(o) and (z) 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 Lessor, as the case may be, of the Organic Documents of the Owner Lessor,
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, and other than as may be required under Environmental Laws to transfer or
modify Governmental Approvals relating to the operation of the Facility as a
result of the transactions contemplated by this Agreement; 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 Actual
Knowledge of the Owner Lessor, threatened, action, suit, investigation or
proceeding against the Owner
16
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 under 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 Security Agent on the Indenture 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 Lessor Estate is free of any Owner Lessor 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's ability to perform its obligations under the Operative
Documents.
(h) 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 [___________]. The situs of the Owner Lessor is in [Delaware].
(E) 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).
SECTION 3.3 REPRESENTATIONS AND WARRANTIES OF THE OWNER
MANAGER AND THE OM COMPANY. The OM Company (only with respect to representations
and warranties relating to the OM Company) and the Owner Manager hereby
severally represent and warrant that, as of the date of execution and delivery
hereof and as of the Closing Date:
(a) DUE INCORPORATION; ETC. The OM Company is a limited
liability company duly organized, validly existing and in good standing under
the laws of Delaware, has the corporate power and authority, as the Owner
Manager and/or in its individual capacity to the extent expressly provided
herein or in the Lessor LLC Agreement, to enter into and perform its obligations
under the Lessor LLC Agreement, this Agreement and each of the other Operative
Documents to which it is or will be a party.
17
(b) DUE AUTHORIZATION, ENFORCEABILITY; ETC.
(i) (x) The Lessor LLC Agreement has been duly authorized,
executed and delivered by the OM Company, and (y) assuming the due
authorization, execution and delivery of the Certificate of Formation
of the Owner Lessor by the Owner Participant, Lessor LLC Agreement
constitutes the legal, valid and binding obligation of the OM Company,
enforceable against it in its individual capacity or as Owner Manager,
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) This Agreement has been duly authorized, executed and
delivered by the Owner Manager and the OM Company, and (y) assuming the
due authorization, execution and delivery of this Agreement by each
party hereto other than the Owner Manager and the OM Company, this
Agreement constitutes a legal, valid and binding obligation of the
Owner Manager and the OM Company, enforceable against the OM Company or
the Owner Manager, 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.
(iii) (x) Each of the other Operative Documents to which the
OM Company or the Owner Manager is or will be a party has been or when
executed and delivered will be duly authorized, executed and delivered
by the OM Company or the Owner Manager and (y) assuming the due
authorization, execution and delivery of each of the other Operative
Documents by each party thereto other than the OM Company or the Owner
Manager, each of the other Operative Documents to which the OM Company
or the Owner Manager is or will be a party constitutes or when executed
and delivered will constitute a legal, valid and binding obligation of
the OM Company or the Owner Manager, as the case may be, enforceable
against the OM Company or the Owner Manager 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 OM
Company, in its individual capacity or as Owner Manager, of the Lessor LLC
Agreement, this Agreement and the other Operative Documents to which it is or
will be a party, the consummation by the OM Company, in its individual capacity
or as Owner Manager, of the transactions contemplated hereby and thereby, and
the compliance by the OM Company, in its individual capacity or as Owner
Manager, 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 OM
18
Company, or contravene the provisions of its Organic Documents or (ii)
contravene the provisions of, or constitute a default by the OM Company under,
or result in the creation of any Owner Lessor Lien attributable to it under any
indenture, mortgage or other material contract, agreement or instrument to which
the OM Company is a party or by which the OM Company or its property is bound;
PROVIDED, HOWEVER, that no representation is made with respect to the right,
power or authority of the OM Company or the Owner Manager to act as operator of
the Facility following a Lease Event of Default.
(d) GOVERNMENTAL ACTIONS. Assuming the representations and
warranties of ▇▇▇▇▇ City contained in [paragraphs (d), (g), (h), (k), (l), (m),
(o) and (z) 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 of the State of Delaware or the United States governing the banking or
trust powers of the OM Company is required for the due execution, delivery or
performance by the OM Company or the Owner Manager, of the Lessor LLC Agreement,
this Agreement or the other Operative Documents to which the OM Company or the
Owner Manager 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 OM Company, threatened action, suit, investigation or
proceeding against the OM Company either in its individual capacity or as the
Owner Manager, 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 OM
Company, in its individual capacity or as Owner Manager, to perform its
obligations under the Lessor LLC 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 Security Agent in the Indenture
Estate or which question the validity or enforceability of any Operative
Document to which the OM Company, in its individual capacity or as the Owner
Manager, is or will be a party.
(f) LIENS. The Lessor Estate is free of any Owner Lessor Liens
attributable to the OM Company or the Owner Manager.
SECTION 3.4 REPRESENTATIONS AND WARRANTIES OF THE OWNER
PARTICIPANT. The Owner Participant represents and warrants that as of the date
of execution and delivery hereof and as of the Closing Date:
(a) DUE ORGANIZATION. The Owner Participant is a corporation
duly formed, 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, Lessor LLC Agreement, the Organic
Documents of the Owner Participant, and the Tax Indemnity Agreement.
19
(b) DUE AUTHORIZATION, ENFORCEABILITY; ETC. This Agreement,
the Lessor LLC 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 Lessor LLC 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 Lessor LLC Agreement, the Organic Documents
of the Owner Participant 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 (i) any Requirement of Law binding on
the Owner Participant (except where such contravention would not result in a
material adverse effect on the Owner Participant), (ii) its Organic Documents,
or (iii) 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) 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 (PROVIDED, HOWEVER, that
no representation or warranty is being made as to any Requirement of Law
relating to (1) the Facility, (2) the Facility Site, (3) the Undivided Interest
or (4) ERISA (other than as set forth in Section 3.4(g) hereof) or Section 4975
of the Code)).
(d) GOVERNMENTAL ACTION. Assuming the representations and
warranties of ▇▇▇▇▇ City contained in paragraphs [(d), (g), (h) (k), (l), (m),
(o) and (z)] 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 Lessor LLC Agreement, the Organic
Documents of the Owner Participant, 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; PROVIDED, HOWEVER, 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 Actual
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
Lessor LLC Agreement, the Organic Documents of the Owner Participant, 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
20
the Security Agent in the Indenture Estate or which questions the validity or
enforceability of any Operative Document to which the Owner Participant is a
party.
(f) LIENS. The Lessor 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.
(h) REGULATORY EVENT OF LOSS. To the Actual Knowledge of the
Owner Participant, there exists no 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
Lessor Membership Interest, the Lessor Notes or any part thereof, or in any
similar security or lease or in any 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 Membership 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," or a "holding company" under the Federal Power Act or PUHCA or (ii) a
"subsidiary company" or "affiliate" of a "holding company", as such terms are
defined in PUHCA, 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 reserves have, to the extent required by GAAP,
been set aside on its books) except to the extent non-payment thereof would not
have a material adverse effect on the Owner Participant.
SECTION 3.5 REPRESENTATIONS AND WARRANTIES OF LEASE INDENTURE
TRUSTEE AND THE LEASE INDENTURE COMPANY. Each of the Lease Indenture Company and
the Lease Indenture Trustee hereby severally represents and warrants that, as of
the date of execution hereof and as of the Closing Date:
(a) DUE ORGANIZATION. The Lease Indenture Company is a
national banking association duly organized, validly existing and in good
standing under the laws of the United States of America, has the corporate power
and authority, as Lease Indenture Trustee and/or in its individual capacity to
the extent expressly provided herein or in the Lease
21
Indenture, to enter into and perform its obligations under the Lease Indenture,
this Agreement and each of the other Operative Documents to which it is or will
be a party.
(b) DUE AUTHORIZATION, ENFORCEABILITY; ETC.
(i) (A) This Agreement has been duly authorized, executed and
delivered by the Lease Indenture Trustee and the Lease Indenture
Company, and (B) assuming the due authorization, execution and delivery
of this Agreement by each party hereto other than the Lease Indenture
Trustee and the Lease Indenture Company, this Agreement constitutes a
legal, valid and binding obligation of the Lease Indenture Company and
the Lease Indenture Trustee, enforceable against the Lease Indenture
Company or the Lease Indenture 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) (A) Each of the other Operative Documents to which the
Lease Indenture Trustee is or will be a party has been or when executed
and delivered will be duly authorized, executed and delivered by the
Lease Indenture Trustee, and (B) assuming the due authorization,
execution and delivery of each of the other Operative Documents by each
party thereto other than the Lease Indenture Trustee, each of the other
Operative Documents to which the Lease Indenture Trustee is or will be
a party constitutes or when executed and delivered will be a legal,
valid and binding obligation of the Lease Indenture Trustee,
enforceable against the Lease Indenture 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 Lease
Indenture Company, in its individual capacity or as Lease Indenture Trustee, as
the case may be, of this Agreement and the other Operative Documents to which it
is or will be a party, the consummation by the Lease Indenture Company, in its
individual capacity or as Lease Indenture Trustee, as the case may be, of the
transactions contemplated hereby and thereby, and the compliance by the Lease
Indenture Company, in its individual capacity or as Lease Indenture Trustee, as
the case may be, with the terms and provisions hereof and thereof, do not and
will not contravene any Requirement of Law of the United States of America or
the State of [__________] governing the Lease Indenture Company or the banking
or trust powers of the Lease Indenture Company, or its organizational documents
or bylaws, or contravene the provisions of, or constitute a default by the Lease
Indenture Company under, or result in the creation of any Lien attributable to
the Lease Indenture Company upon the Indenture Estate or any indenture, mortgage
or other material contract, agreement or instrument to which the Lease Indenture
Company is a party or by which the Lease Indenture Company or its property is
bound which would materially adversely affect the ability of the Lease Indenture
Company, in its individual capacity or as Lease Indenture Trustee, as the case
may be, to perform its obligations under this
22
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 Lease Indenture
Trustee in the Indenture Estate; PROVIDED, HOWEVER, that no representation is
made with respect to the right, power or authority of the Lease Indenture
Company or the Lease Indenture Trustee to act as operator of the Facility
following a Lease Event of Default.
(d) GOVERNMENTAL ACTION. Assuming the representations and
warranties of ▇▇▇▇▇ City contained in paragraphs [(d), (g), (h), (k), (l), (m),
(o) and (z)] 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 governing its banking or trust powers is required for the due
execution, delivery or performance by the Lease Indenture Company or the Lease
Indenture Trustee, as the case may be, of this Agreement or the other Operative
Documents to which the Lease Indenture 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 Lease Indenture Company, threatened action, suit,
investigation or proceeding against the Lease Indenture Company either in its
individual capacity or as Lease Indenture Trustee, before any Governmental
Authority which, if determined adversely to it, would materially adversely
affect the ability of the Lease Indenture Company, in its individual capacity
or as Lease Indenture Trustee, as the case may be, to perform its obligations
under 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
Security Agent in the Indenture Estate or which questions the validity or
enforceability of any Operative Document to which the Lease Indenture Trustee
or the Lease Indenture Company is a party.
SECTION 3.6 REPRESENTATIONS AND WARRANTIES OF THE BONDHOLDER
TRUSTEE AND THE BONDHOLDER TRUSTEE COMPANY. Each of the Bondholder Trustee
Company and the Bondholder Trustee hereby severally represents and warrants
that, as of the date of execution hereof and as of the Closing Date:
(a) DUE ORGANIZATION. The Bondholder Trustee Company is a
banking corporation duly organized, validly existing and in good standing under
the laws of the State of New York, has the corporate power and authority, as
Bondholder Trustee and/or in its individual capacity to the extent expressly
provided herein or in the [______________] Agreement, to enter into and perform
its obligations under the [_______________] Agreement, this Agreement and each
of the other Operative Documents to which it is or will be a party.
(b) DUE AUTHORIZATION, ENFORCEABILITY; ETC.
(i) (A) This Agreement has been duly authorized, executed and
delivered by the Bondholder Trustee and the Bondholder Trustee Company
and (B) assuming the due authorization, execution and delivery of this
Agreement by
23
each party hereto other than the Bondholder Trustee and the Bondholder
Trustee Company, as the case may be, this Agreement constitutes a
legal, valid and binding obligation of the Bondholder Trustee Company
and the Bondholder Trustee, enforceable against the Bondholder Trustee
Company or the Bondholder 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) (A) Each of the other Operative Documents to which the
Bondholder Trustee Company or the Bondholder Trustee is or will be a
party has been or when executed and delivered will be duly authorized,
executed and delivered by the Bondholder Trustee Company or the
Bondholder Trustee, as the case may be, and (B) assuming the due
authorization, execution and delivery of each of the other Operative
Documents by each party thereto other than the Bondholder Trustee
Company or the Bondholder Trustee, as the case may be, each of the
other Operative Documents to which the Bondholder Trustee Company or
the Bondholder Trustee is or will be a party constitutes or when
executed and delivered will constitute a legal, valid and binding
obligation of the Bondholder Trustee Company or the Bondholder Trustee,
enforceable against the Bondholder Trustee Company or the Bondholder
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.
(c) NON-CONTRAVENTION. The execution and delivery by the
Bondholder Trustee Company, in its individual capacity or as Bondholder Trustee,
as the case may be, of this Agreement and the other Operative Documents to which
it is or will be a party, the consummation by the Bondholder Trustee Company, in
its individual capacity or as Bondholder Trustee, as the case may be, of the
transactions contemplated hereby and thereby, and the compliance by the
Bondholder Trustee Company, in its individual capacity or as Bondholder Trustee,
as the case may be, with the terms and provisions hereof and thereof, do not and
will not contravene any Requirement of Law of the United States of America or
the State of New York governing the Bondholder Trustee Company or the banking or
trust powers of the Bondholder Trustee Company, or its organizational documents
or by-laws, or contravene the provisions of, or constitute a default by the
Bondholder Trustee Company under, or result in the creation of any Lien
attributable to the Bondholder Trustee Company upon the Certificates or any
indenture, mortgage or other material contract, agreement or instrument to which
the Bondholder Trustee Company is a party or by which the Bondholder Trustee
Company or its property is bound which would materially adversely affect the
ability of the Bondholder Trustee Company, in its individual capacity or as
Bondholder Trustee, as the case may be, to perform its obligations under this
Agreement or the other Operative Documents to which it is 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 Bondholder Trustee in
the Indenture Estate; PROVIDED, HOWEVER, that no representation is made with
respect to the
24
right, power or authority of the Bondholder Trustee Company or the Bondholder
Trustee to act as operator of the Facility following a Lease Event of Default.
(d) GOVERNMENTAL ACTION. Assuming the representation and
warranties of ▇▇▇▇▇ City contained in paragraphs [(d), (h), (1), (m) and (o) 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 governing
its banking or trust powers is required for the due execution, delivery or
performance by the Bondholder Trustee Company or the Bondholder Trustee, as the
case may be, of this Agreement or the other Operative Documents to which the
Bondholder 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 knowledge of
the Bondholder Trustee Company, threatened action, suit, investigation or
proceeding against the Bondholder Trustee Company either in its individual
capacity or as Bondholder Trustee, before any Governmental Authority which, if
determined adversely to it, would materially adversely affect the ability of the
Bondholder Trustee Company, in its individual capacity or as Bondholder Trustee,
as the case may be, to perform its obligations under this Agreement or the other
Operative Documents to which it is 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 Bondholder Trustee in the Indenture Estate.
ARTICLE IV
CLOSING CONDITIONS
The obligations of the Owner Participant, the Owner Lessor,
the Owner Manager, the Lease Indenture Trustee, the Security Agent, the
Lender and ▇▇▇▇▇ City 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 AND PROJECT 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 (if attached as an Exhibit hereto, in substantially the form attached as
such Exhibit or if not so attached, in form and substance satisfactory to each
Transaction Party), shall each be in full force and effect, and executed
counterparts of each shall have been delivered to each of the parties hereto
(other than the Tax Indemnity Agreement, which shall only be provided to the
parties thereto). On or before the Closing Date, ▇▇▇▇▇ City shall have delivered
to the Owner Lessor each of the Material Project Agreements all of which shall
have been duly authorized, executed and delivered by ▇▇▇▇▇ City and shall be in
full force and effect.
SECTION 4.2 THE LESSOR NOTES. Each of the conditions precedent
contained in the Lease Indenture shall have been satisfied or waived and the
Lender shall
25
have purchased the Initial Lessor Notes pursuant to, and in accordance with, the
terms thereof.
SECTION 4.3 ORGANIZATIONAL DOCUMENTS, ETC. Each of the
Lease Financing Parties shall have received certified copies of the Organic
Documents of each of the other parties hereto (except for the Security Agent,
the Lease Indenture Trustee and the Bondholder Trustee, 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 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 4.4 REPRESENTATIONS AND WARRANTIES. The
representations 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 Financing Parties shall have
received a certificate of each of the parties hereto to such effect.
SECTION 4.5 DEFAULTS, EVENTS OF DEFAULT, EVENTS OF LOSS,
BURDENSOME BUYOUT EVENT. No Lease Event of Default, Lease Indenture Event of
Default, Event of Loss, Burdensome Buyout Event, or event that, with the passage
of time or giving of notice or both, would constitute a Lease Event of Default,
Lease Indenture Event of Default, an Event of Loss or Burdensome Buyout Event
shall have occurred and be continuing and the Owner Participant shall be
satisfied that the Facility shall be in the condition described in the Closing
Date Appraisal.
SECTION 4.6 CONSENTS. All 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 form and substance
satisfactory to each of the Lease Financing Parties, as applicable, except any
such permits, licenses, approvals and consents the failure of which to obtain or
maintain could not reasonably be expected to have a material adverse effect on
any of the Lease Financing Parties.
SECTION 4.7 GOVERNMENTAL ACTIONS. All actions, if any,
required to have been taken by any Governmental Authority including, without
limitation, the issuance of the FERC Orders, each of which shall be in full
force and effect; shall have been taken and all orders, permits, waivers,
exemptions, authorizations and approvals of and registrations with Governmental
Authorities required to be in effect on the Closing Date in connection with the
transactions contemplated by the Transaction Documents 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, except any such
Governmental Approvals that may be required as a result of the transactions
contemplated hereunder pursuant to Environmental Laws, provided that the failure
to
26
obtain, maintain, transfer or modify such Governmental Approvals could not
reasonably be expected to have a material adverse effect on any of the Lease
Financing Parties.
SECTION 4.8 INSURANCE. Insurance (including all related
endorsements) complying with the requirements of SECTION 5.10 hereof shall be
in full force and effect and all premiums thereon shall be current. The Owner
Participant, the Owner Lessor, the Lease Indenture Trustee, the Security
Agent, the Bondholder Trustee and the Lender shall have received a
certificate or certificates dated the Closing Date of the Insurance Advisor
or an independent insurance broker or carrier reasonably satisfactory to such
Persons stating that such insurance is in full force and effect. The Owner
Participant shall have received a report from its insurance consultant in
form and substance satisfactory to it.
SECTION 4.9 CONSULTANTS' REPORTS. The Owner Participant, the
Owner Lessor, the Lease Indenture Trustee, the Bondholder Trustee and the Lender
shall have received the Power Market Consultant's report and the final report
prepared by the Engineering Consultant, which reports shall be in form and
substance satisfactory to the Owner Participant. The Owner Participant, the
Bondholder Trustee and the Lender shall have received the Phase I and Phase II
environmental reports prepared in 1999 with respect to the Facility Site from
the Environmental Consultants, which reports shall be satisfactory to the Owner
Participant, the Bondholder Trustee and the Lender. ▇▇▇▇▇ City shall cause the
Environmental Consultants to deliver at the same time a reliance letter
addressed to the Owner Lessor and the Owner Participant allowing them to rely on
such reports as if addressed to each of them.
SECTION 4.10 APPRAISAL; TAX OPINION, CONDITION OF THE
FACILITY. The Owner Participant shall have received the Closing Date Appraisal
prepared by the Appraiser and an opinion from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP as to certain
tax matters, in each case satisfactory in form and substance to the recipient.
The Closing Date Appraisal and such opinion shall each be addressed and
delivered only to the Owner Participant. The Owner Participant shall be
satisfied that the Facility shall be in the condition described in the Closing
Date Appraisal. The Lender, the Lease Indenture Trustee and ▇▇▇▇▇ City shall
have received a copy of the verification of value and useful life 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 4.11 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 New York counsel to ▇▇▇▇▇ City, substantially in
the form of Exhibit [ ], (b) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, special New York counsel to
the Owner Participant, substantially in the form of Exhibit [_], (c) ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, special Pennsylvania counsel to the Owner Participant, substantially
in the form of Exhibit [_], (d) [________________], counsel to the Owner Lessor,
the Owner Participant, the OM Company, and the Owner Manager, substantially in
the form of Exhibit [_], (e) [_______________], special counsel to the Lender,
substantially in the form of Exhibit [_], (f) ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP,
special Pennsylvania counsel to ▇▇▇▇▇ City, substantially in the form of Exhibit
[__], and (g) ▇▇▇▇▇ & ▇▇▇▇▇▇▇, special regulatory counsel to ▇▇▇▇▇ City,
substantially in the form of Exhibit [__]. Each such Person
27
expressly consents to the rendering by its counsel of the opinion referred to in
this SECTION 4.11 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 Initial Purchasers to
rely on their opinion as if such opinion were addressed to such parties.
SECTION 4.12 RECORDINGS AND FILINGS. All filings and
recordings listed on SCHEDULE 4.12 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 Pennsylvania and any other
mortgages, security agreements or other documents as may be reasonably
requested by counsel to the Owner Participant, the Lease Indenture Trustee or
the Lender to perfect (i) the right, title and interest of the Owner Lessor
in the Owner Lessor's Interest, or any part thereof or interest therein; (ii)
the Lien of the Security Agent on the Indenture Estate; (iii) the Lien of the
Owner Lessor over the equity interests in ME Westside, Inc. pursuant to the
Pledge and Collateral Agreement; (iv) the Lien of the Owner Lessor over the
general intangibles of the Facility Lessee (other than emission allowances
and credits) pursuant to the Collateral and Guarantee Agreement, and (v) the
Lien of the Owner Lessor over the Pledged Accounts.
SECTION 4.13 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 4.14 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 Owner Participant, the Owner Lessor, the Owner Manager, the
Security Agent, the Lease Indenture Trustee, the Bondholder Trustee, the
Lender or ▇▇▇▇▇ City to participate in any of the transactions contemplated
by the Operative Documents or would materially adversely affect the Facility,
the Facility Site, the Undivided Interest or the Ground Interest. In
addition, no Tax Law Change shall have occurred with respect to which no
adjustment has been made pursuant to ARTICLE XIII(a) hereof.
SECTION 4.15 REGISTERED AGENT FOR ▇▇▇▇▇ CITY. CT Corporation
System shall have been appointed by ▇▇▇▇▇ City 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 4.16 FAS 13. The present value of Basic Lease Rent
payable during the Basic Lease Term under the Facility Lease (taking into
account any rent adjustment through or contemplated on the Closing Date),
together with all rent payable under the related Facility Site Sublease,
discounted at the Discount Rate, shall satisfy the 90 percent test for operating
lease treatment under FAS 13 and ▇▇▇▇▇ City shall have
28
been advised by its auditor that the Facility Lease qualifies for such operating
lease treatment.
SECTION 4.17 NO MATERIAL ADVERSE CHANGE. No material adverse
change shall have occurred with respect to (i) the financial condition, business
assets or operation of ▇▇▇▇▇ City, since the date of ▇▇▇▇▇ City's last audited
or unaudited financial statements provided to the Owner Participant or (ii) the
Facility or the Facility Site since the date of the Closing Date Appraisal.
SECTION 4.18 SURVEY. The Owner Lessor, the Owner Participant,
the Lender, the Bondholder Trustee and the Lease Indenture Trustee shall have
received a copy of the Survey in form and substance reasonably satisfactory to
the recipients.
SECTION 4.19 TITLE INSURANCE. Each of the Title Policies shall
have been delivered to the Owner Lessor, the Lease Indenture Trustee, the
Bondholder Trustee and the Lender.
SECTION 4.20 RATING OF THE LENDER. The Existing Debt shall be
rated at least "Baa3" by ▇▇▇▇▇'▇ and "BBB-" by S&P.
SECTION 4.21 NO THREATENED PROCEEDINGS. No action, suit,
investigation or proceeding shall have been instituted nor shall governmental
action be threatened before any governmental entity, nor shall any order,
judgment or decree have been issued or proposed to be issued by any governmental
entity at the time of the Closing Date, to set aside, restrain, enjoin or
prevent the consummation of the Transaction Documents or any of the transactions
contemplated by any of the Transaction Documents.
SECTION 4.22 FINANCIAL STATEMENTS. The Owner Participant and
the Lender shall have received the most recent financial statements of ▇▇▇▇▇
City referred to in SECTION 3.1(kk).
SECTION 4.23 INITIAL ANNUAL OPERATING BUDGET. The Owner
Participant shall have received a copy of the initial Annual Operating Budget.
SECTION 4.24 CLOSING PROJECTIONS; MAJOR MAINTENANCE
PROJECTIONS. The Owner Participant shall have received a certified copy of the
Closing Projections and the Major Maintenance Projections, in form and substance
satisfactory to such party.
SECTION 4.25 NO LIENS. The Owner Participant (with a copy to
the Lease Indenture Trustee) shall have received Lien searches with respect to
the Facility Lessee and other ▇▇▇▇▇ City Parties in form and substance
satisfactory to such party.
SECTION 4.26 PROJECT DOCUMENTS. The Owner Participant and the
Lender shall have received copies of all Project Documents existing as of the
Closing Date.
SECTION 4.27 AMENDMENTS TO PROJECT DOCUMENTS. [The agreements
with Tanoma, Cabot Oil and Gas Corporation and ▇▇▇▇▇ City Property Holdings,
Inc. (the
29
"EXISTING THIRD-PARTY LESSEES") shall have been amended to, among other things,
recognize the interests of the Lessor.]
SECTION 4.28 ACCOUNTS. Each of the Accounts required pursuant
to the Security Deposit Agreement shall have been established at the Depositary.
SECTION 4.29 EXISTING DEBT. No litigation shall have been
commenced or, to the Actual Knowledge of ▇▇▇▇▇ City, threatened with respect to
the Existing Debt (including as a result of modifications thereto contemplated
by the Operative Documents).
SECTION 4.30 ASSIGNMENT OF MATERIAL PROJECT AGREEMENTS.. Each
of the Material Project Agreements shall have been assigned to the Owner Lessors
and each of the Owner Lessors shall have sub-assigned their respective interest
in such agreements back to the Facility Lessee, and to the extent necessary for
such assignment and subassignment, the consents of the third parties party to
the Material Project Agreements shall have been obtained.
SECTION 4.31 NO MATERIAL ADVERSE TAX LAW CHANGE. No material
adverse Tax Law Change shall have occurred since July 1, 2001.
SECTION 4.32 PAYOFF NOTICE. On or prior to the Closing Date,
▇▇▇▇▇ City shall have provided evidence reasonably satisfactory to the Owner
Participant of arrangements for the payment in full on the Closing Date of its
outstanding indebtedness under the ▇▇▇▇▇ City Credit Facilities including
termination and release of all liens of existing creditors, including its
approximately $35 million letter of credit reimbursement obligations and its
working capital facility, but excluding the intercompany loan evidenced by [ ].
SECTION 4.33 ESTABLISHMENT OF DEBT SERVICE RESERVE LETTER OF
CREDIT, RENT ACCOUNT AND RESERVE ACCOUNT.On or prior to the Closing Date, ▇▇▇▇▇
City shall have provided evidence reasonably satisfactory to the Owner
Participant (a) that it has established the Debt Service Reserve Letter of
Credit in full force and effect and the amount available for drawing thereunder
is at least equal to the Debt Service Reserve Amount; (b) that it has
established the Reserve Account and that immediately following the Closing, the
amounts on deposit therein shall be at least [$40] million, and (c) that it has
established the Rent Account and that immediately following the Closing, the
amounts on deposit therein shall be at least [$94] million.
SECTION 4.34 EME SIDE LETTER.On or prior to the Closing
Date, EME shall have entered into an agreement with the Owner Lessor pursuant
to which EME (i) shall covenant that it will not voluntarily take any action
to subject the Facility Lessee to the provisions of any applicable bankruptcy
or insolvency law (as now or hereafter in effect), and (ii) shall provide
certain tax related indemnities to the Owner Lessor.
30
ARTICLE V
AFFIRMATIVE COVENANTS OF ▇▇▇▇▇ CITY
▇▇▇▇▇ City covenants and agrees that it will perform the
obligations set forth in this ARTICLE V.
SECTION 5.1 FINANCIAL INFORMATION; OTHER INFORMATION. ▇▇▇▇▇
City will furnish to the Owner Participant, the Lease Indenture Trustee, the
Bondholder Trustee, the Lender, each of the Rating Agencies, and, with respect
to clause (a) below, upon written request, to any Bondholder the following:
(i) (a) audited annual financial statements of ▇▇▇▇▇ City on a
consolidated basis within 120 days following the end of each fiscal
year of ▇▇▇▇▇ City, and (b) unaudited, certified, consolidated balance
sheets and unaudited consolidated statements of income and cash flow on
a consolidated basis within 60 days following the end of each of the
first three Fiscal Quarters of each fiscal year of ▇▇▇▇▇ City;
(ii) together with the financial statements delivered in
clause (i), a certificate in the form of Exhibit [__] (the "COMPLIANCE
CERTIFICATE") signed by an authorized officer of the Facility Lessee
shall be delivered, certifying (A) that to such officer's knowledge
after due inquiry of the Facility Lessee, no Lease Default, Lease Event
of Default or Indenture Event of Default exists, or if any such event
or condition exists, the nature thereof and the corrective actions that
such Person has taken or proposes to take with respect thereto and (B)
that the attached calculations of the Debt Service Coverage Ratio and
the [Basic Lease] Rent Service Coverage Ratio for the twelve (12) month
period ending on the date as of which such financial statements are
prepared are true and correct;
(iii) promptly, but in no event later than thirty (30) days
after the receipt thereof by the Facility Lessee, copies of (A) all
Applicable Permits obtained by the Facility Lessee after the Closing
Date, and (B) any material amendment, supplement or other modification
to any Applicable Permits received by the Facility Lessee after the
Closing Date;
(iv) promptly, but in no event later than thirty (30) days
after the end of each Fiscal Quarter, (A) a statement in a form
reasonably satisfactory to the Owner Lessor, the Owner Participant and
the Lender, showing all operating data for the Facility for the
previous Fiscal Quarter (the "QUARTERLY OPERATING REPORT"), including
availability, capacity, total energy produced, total Project Revenues
for the Facility, down time, aggregate O&M Costs incurred, Major
Maintenance incurred, Capital Expenditures incurred, (B) updated Power
Market Consultant Reports and such other operating information as the
Owner Lessor, the Owner Participant or the Lender may reasonably
request; and
31
(v) (A) promptly after each Fiscal Quarter (but in no event
later than the date of delivery of the unaudited financial statements
delivered pursuant to Section 5.1(i)(b) hereof) reports with respect to
any Capital Expenditures for the Facility.
SECTION 5.2 NOTICES. Promptly upon obtaining Actual Knowledge
thereof, the Facility Lessee shall give written notice to the Owner Lessor, the
Owner Participant, the Lease Indenture Trustee, the Security Agent, the
Bondholder Trustee and the Lender of:
(i) Any litigation pending or threatened against the Facility
Lessee, the Owner Lessor or the Owner Participant involving claims
against the Facility Lessee, the Owner Lessor, the Owner Participant,
the Facility or the Facility Site in excess of $5 million per claim or
$10 million in the aggregate or involving any injunctive or declaratory
relief, such notice to include copies of all papers filed in such
litigation and to be given monthly if any such papers have been filed
since the last notice given;
(ii) Any dispute or disputes which may exist between the
Facility Lessee, the Owner Lessor or the Owner Participant and any
Governmental Authority and which involve (a) claims against any such
Person which exceeds $5 million per claim or $10 million in the
aggregate, (b) injunctive or declaratory relief, (c) revocation or
material violation of any material Applicable Permit or (d) any Liens
for taxes due but not paid;
(iii) Any (a) Lease Default or Lease Event of Default or (b)
any Indenture Default or Indenture Event of Default;
(iv) Any casualty, damage or loss, whether or not insured,
through fire, theft, other hazard or casualty, or any act or omission
of the Facility Lessee, its respective employees, agents, contractors,
consultants or representatives, or of any other Person if such
casualty, damage or loss affects the Facility Lessee, the Facility or
the Facility Site, in excess of $500,000 for any one casualty or loss,
or an aggregate of $1 million;
(v) Any cancellation or material change in the terms,
coverages or amounts of any insurance required to be maintained
pursuant to the Facility Lease;
(vi) Any matter which has resulted or is reasonably likely to
have a Material Adverse Effect;
(vii) Initiation of any condemnation proceedings involving the
Facility or any material portion of the Facility Site or the Easements;
(viii) Any termination or material default or notice thereof
under any Material Project Agreement;
32
(ix) Any material Environmental Condition;
(x) The execution and delivery of any additional Project
Document relating to the Facility, including delivery of a copy thereof
to the Owner Lessor, the Owner Participant, the Lease Indenture
Trustee, the Bondholder Trustee and the Lender; provided, however, that
the execution of trading confirmations between ▇▇▇▇▇ City and EMMT
pursuant to the Material Project Agreements shall not be considered
additional project documents requiring notification for purposes of
this subsection, but shall be provided to the Owner Lessor and Owner
Participant on a quarterly basis;
(xi) Any situation requiring the Facility Lessee to make any
payment of Supplemental Lease Rent pursuant to the Operative Documents,
such notice to set forth the reason for and amount of such payment.
SECTION 5.3 INFORMATION CONCERNING THE FACILITY LESSEE OR
FACILITY. The Facility Lessee shall, to the extent reasonably requested, deliver
to the Owner Lessor, the Owner Participant and their respective authorized
representatives, information from time to time with respect to the Facility
Lessee, the condition, use, operation and maintenance of the Facility, and such
other financial or operating information and other matters with regard to the
Facility Lessee, the Facility or the generation, transmission or sale of power
therefrom, including any information to support the calculations set forth in
the certificate delivered pursuant to [SECTION 6.8(d)], as may be reasonably
requested by such Person; PROVIDED, that, except for delivery of quarterly and
annual financial statements required pursuant to SECTION 5.1(i) above and the
related certificate with respect to defaults described in SECTION 5.1(ii), the
Facility Lessee reserves the right not to provide to any transferee Owner
Participant which is not an Affiliate of the Owner Participant any information
that is not otherwise publicly available, if the Facility Lessee reasonably
believes in its good faith judgment that such transferee Owner Participant is a
Competitor or is an Affiliate of a Competitor; PROVIDED, FURTHER, that the
Facility Lessee shall have no obligation under this SECTION 5.3 to any Person or
such Person's representatives unless and until such Person becomes party hereto
or has executed an agreement to be bound by the provisions of SECTION 17.19.
SECTION 5.4 MAINTENANCE OF EXISTENCE AND PROPERTIES. Except as
permitted under SECTION 6.1, ▇▇▇▇▇ City will, at its own cost and expense, (i)
do or cause to be done all things necessary to preserve, renew and keep in full
force and effect the legal existence of ▇▇▇▇▇ City; (ii) do or cause to be done
all things reasonably necessary to preserve, renew and keep in full force and
effect any rights and Governmental Approvals material to the conduct of the
business of ▇▇▇▇▇ City; (iii) keep and maintain all property material to the
conduct of the business of ▇▇▇▇▇ City (a) in good working order and condition
(ordinary wear and tear excepted), except where failure to do so could not
reasonably be expected to result in a Material Adverse Effect, (b) in compliance
with all Requirements of Law of any Governmental Authority having jurisdiction,
including without limitation, all Environmental Laws, unless such noncompliance
could not reasonably be expected to result in a Material Adverse Effect, or
unless such noncompliance was attributable to an Event of Force Majeure and (c)
in
33
accordance with Prudent Industry Practice. The foregoing shall not prohibit
any merger, consolidation, liquidation, dissolution or other transaction
permitted under the Operative Documents.
SECTION 5.5 COMPLIANCE WITH LAWS. At its own expense, ▇▇▇▇▇
City will comply with all Requirements of Law, such compliance to include (i)
those relating to pollution control, environmental protection, equal employment
opportunity plans, ERISA plans and employee safety, (ii) with respect to the
Facility Lessee, the Facility or the Facility Site whether or not compliance
therewith shall require structural changes in the Facility or any part thereof
or require major changes in operational practices or interfere with the use and
enjoyment of the Facility or any part thereof and (iii) the payment, before the
same become delinquent, of all taxes, assessments and governmental charges or
levies (including those with respect to the Lender), except, in each case, where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.6 FURTHER ASSURANCES. Upon written request of the
Owner Manager, the Owner Lessor, the Owner Participant, the Lender, the Security
Agent, the Bondholder Trustee or the Lease Indenture Trustee, or as is otherwise
necessary, ▇▇▇▇▇ City, at its own cost and expense, 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)
as may be necessary in order to carry out the intent and purposes of this
Participation Agreement and the transactions contemplated hereby and thereby,
including those documents necessary for filing under the provisions of the
Uniform Commercial Code or any Requirement of Law which are necessary or
advisable in order to establish, preserve, protect and perfect the right, title
and interest of the Owner Lessor in and to the Undivided Interest, the Ground
Interest under the Facility Site Lease, or any portion of any thereof or any
interest therein and the first priority Lien intended to be created by the Lease
Indenture therein. The Facility Lessee shall promptly from time to time furnish
to the Owner Participant, the Owner Lessor, the Owner Manager and, so long as
the Lien of the Lease Indenture shall not have been terminated or discharged,
the Lease Indenture Trustee and the Security Agent, the Lender or Bondholder
Trustee such information with respect to the Facility or the Facility Site or
the transactions contemplated by the Operative Documents to which the Facility
Lessee is a party as may be required to enable the Owner Participant, the Owner
Lessor, the Owner Manager and, so long as the Lien of the Lease Indenture shall
not have been terminated or discharged, the Lease Indenture Trustee and the
Security Agent, or the Lender, as the case may be, to timely file with any
governmental entity any reports and obtain any licenses or permits required to
be filed or obtained by the Owner Manager or the Owner Lessor under any
Operative Document, the Owner Participant as the owner of the Beneficial
Interest, the Lease Indenture Trustee, the Security Agent or the Lender.
SECTION 5.7 ERISA. ▇▇▇▇▇ City will not permit the occurrence
of any event or condition with respect to a Pension Plan if such event or
condition, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect or involve any (1) material risk of
foreclosure, sale, forfeiture or loss of, or imposition of a Lien (other than a
Permitted Lien) on, the Facility, the Undivided Interest or the Facility
34
Site or the impairment of the use, operation or maintenance of the Facility or
the Facility Site in any material respect, (2) risk of criminal liability being
incurred by the Owner Lessor, the Owner Participant, or, so long as the Lien of
the Lease Indenture has not been terminated or discharged, the Lease Indenture
Trustee and the Security Agent or any of their respective Affiliates or (3)
material risk of any material adverse effect on the interests of the Owner
Lessor, the Owner Participant, or, so long as the Lien of the Lease Indenture
has not been terminated or discharged, the Lease Indenture Trustee and the
Security Agent or any of their respective Affiliates (including, without
limitation, subjecting any such Person to regulation as a public utility under
any applicable law).
SECTION 5.8 REGULATORY STATUS. ▇▇▇▇▇ City shall comply in all
material respects with the applicable requirements of FERC imposed on it as a
public utility with authorization to sell electric power at wholesale at
market-based rates and with the provisions of 18 C.F.R. ss. 365 to the extent
necessary to maintain its status as an "exempt wholesale generator" under
Section 32 of the Holding Company Act.
SECTION 5.9 NOTICE OF CHANGE IN ADDRESS OR NAME. ▇▇▇▇▇ City
shall provide the Owner Participant, the Owner Lessor, the Owner Manager and, so
long as the Lien of the Lease Indenture has not been terminated or discharged,
the Lease Indenture Trustee and the Security Agent, prompt written notice of any
anticipated change in its jurisdiction of organization, chief executive office,
principal place of business, or name, or the place where it maintains its
business records concerning the Facility and the Operative Documents, which
notice shall, in any event, be provided no later than 30 days prior to such
change.
SECTION 5.10 INSURANCE. ▇▇▇▇▇ City will comply with the
provisions set forth on SCHEDULE 5.10 hereto.
SECTION 5.11 CREDIT SUPPORT. The Facility Lessee shall
establish and maintain at all times the Reserve Account, and shall maintain all
times on deposit therein such amounts as may from time to time constitute the
Reserve Requirement.
SECTION 5.12 INTELLECTUAL PROPERTY RIGHTS. The Facility Lessee
agrees to obtain and maintain all patents, licenses and other proprietary rights
and technology necessary in connection with the operation and maintenance of the
Facility except where the failure to so maintain such rights or technology could
not reasonably be expected to have a Material Adverse Effect.
SECTION 5.13 MAINTENANCE OF ACCOUNTS, USE OF PROJECT REVENUES.
(a) The Facility Lessee shall at all times maintain the
Accounts in accordance with the Security Deposit Agreement. The Facility Lessee
shall maintain all of its banking accounts with the Collateral Agent (or the
Collateral Agent's designee in the case of accounts that are not trust
accounts), except for the Distributions Account and the Operating Account.
35
(b) During any period prior to the expiration or termination
of the Facility Lease Term, the Facility Lessee (a) shall deposit any Revenues
received by it into the Revenue Account within fifteen (15) calendar days of the
receipt thereof, and shall apply all Revenues solely for the purposes and in the
order and manner provided in the Security Deposit Agreement, and (b) shall not
without the prior written consent of the Owner Participant and, so long as the
Lien of the Lease Indenture has not been terminated or discharged, the Lease
Indenture Trustee and the Security Agent, instruct any party who pays Revenues
to pay such Revenues other than directly to the Collateral Agent for deposit in
the Revenue Account. If, during any period prior to the expiration or
termination of the Facility Lease Term the Basic Lease Rent Service Coverage
Ratio shall be less than 1.2, the Facility Lessee shall promptly deliver
irrevocable notice in form and substance reasonably satisfactory to the Owner
Lessor to any third parties then obligated under any Project Document to make
payments to the Facility Lessee, notifying such Person to thenceforth make any
payments due under such Project Document directly to the Collateral Agent for
deposit in the Revenue Account.
SECTION 5.14 ANNUAL BUDGETS AND MAJOR MAINTENANCE PROJECTIONS.
(a) Not less than forty-five (45) days before the beginning
of each Fiscal Year of the Facility Lessee, the Facility Lessee shall, in
good faith, based upon reasonable assumptions and subject to SECTION 5.20(b)
and (c) (if applicable), adopt an Annual Operating Budget for the Facility
for the ensuing Fiscal Year covering all anticipated Revenues, Basic Lease
Rent, maintenance, repair and operation expenses (including reasonable
allowance for contingencies), Capital Expenditures, maintenance reserves, all
other anticipated O&M Costs and O&M Fees and proposed distributions for the
Facility for such period (for budgeting purposes, fuel costs shall be the
Facility Lessee's good faith estimate, considering prevailing spot fuel
prices and fixed prices reflected in coal supply contracts for the ensuing
year). Copies of the Annual Operating Budget for the Facility shall be
promptly furnished to the Owner Participant and, so long as the Lien of the
Lease Indenture shall not have been terminated or discharged, the Lease
Indenture Trustee and the Security Agent.
(b) If, as of the end of the third quarter of any Fiscal Year
of the Facility Lessee, the Basic Lease Rent Service Coverage Ratio shall equal
or be less than 1.4 to 1.0, but exceed 1.15 to 1.0, for the four Fiscal Quarters
then ending, (i) the Annual Operating Budget for the immediately succeeding
fiscal year shall not exceed one hundred ten percent (110%) of the Annual
Operating Budget for the fiscal year then ending, without the prior written
approval of the Owner Participant, (ii) the Facility Lessee will operate and
maintain the Facility, or cause the Facility to be operated and maintained,
within such Annual Operating Budget as so adopted by the Facility Lessee for
such ensuing fiscal year and (iii) such Annual Operating Budget may be amended
with the consent of the Owner Participant, which consent will not be
unreasonably withheld or delayed, to account for contingencies which were not
reasonably expected, and in such event the Facility Lessee shall operate and
maintain the Facility, or cause the Facility to be operated and maintained,
within such Annual Operating Budget as so amended; PROVIDED, that, in
determining the percentage increase over the Annual Operating Budget for the
Fiscal Year then ending, (i) any projected increase in fuel costs
36
and emissions allowance costs from those used in setting the Annual Operating
Budget for the fiscal year then ending and (ii) charges for Major Maintenance
approved in accordance with subclause (d) below, shall be disregarded for
purposes of such calculations.
(c) If, as of the end of the third quarter of any Fiscal Year
of the Facility Lessee, the Rent Service Coverage Ratio shall equal or be less
than 1.15 to 1.0 for the four Fiscal Quarters then ending, then (i) not less
than forty-five (45) days before the end of the then-current Fiscal Year of the
Facility Lessee, the Facility Lessee shall deliver a draft of the Annual
Operating Budget for the immediately succeeding Fiscal Year to the Owner
Participant for its review and approval (which approval shall not be
unreasonably withheld or delayed) and the Facility Lessee shall consult with
and, to the extent reasonably acceptable to the Facility Lessee, incorporate
suggestions of the Owner Participant into a final Annual Operating Budget for
such Fiscal Year, which shall be completed no less than fifteen (15) days in
advance of the beginning of each Fiscal Year, (ii) the Facility Lessee will
operate and maintain the Facility, or cause the Facility to be operated and
maintained, within such Annual Operating Budget as so adopted by the Facility
Lessee for such ensuing Fiscal Year and (iii) such Annual Operating Budget may
be amended with the consent of the Owner Participant, which consent will not be
unreasonably withheld or delayed, to account for contingencies which were not
reasonably expected, and in such event the Facility Lessee shall operate and
maintain the Facility, or cause the Facility to be operated and maintained,
within such Annual Operating Budget as so amended. In the event that, for any
reason, there is no approved Annual Operating Budget for the Facility for a
Fiscal Year by the beginning of such Fiscal Year, the Annual Operating Budget
for the Facility for the previous Fiscal Year shall continue in effect, with the
various line items (other than Capital Expenditures) on such Annual Operating
Budget being adjusted for inflation based upon the Consumer Price Index for All
Urban Consumers (CPI-U) published by the Bureau for Labor Statistics of the
United States Department of Labor with respect to the previous year.
(d) Prior to the Closing Date and thereafter not less than one
hundred eighty (180) days before the sixth anniversary of the Closing Date (and
every six years thereafter unless otherwise agreed between ▇▇▇▇▇ City and the
Owner Participant), the Facility Lessee shall adopt Major Maintenance
Projections for the Facility for the next full cycle of Major Maintenance
covering all anticipated Major Maintenance to be incurred during such period.
Copies of the draft Major Maintenance Projections for the Facility shall be
promptly furnished to the Owner Participant for its review and approval (which
approval shall not be unreasonably withheld or delayed) and the Facility Lessee
shall consult with and, to the extent reasonably acceptable to the Facility
Lessee, incorporate such parties' suggestions into a final Major Maintenance
Projections for the Facility for such cycle, which shall be completed no less
than fifteen (15) days in advance of the beginning of each such cycle.
37
SECTION 5.15 ACCOUNTS RECEIVABLE.
The Facility Lessee agrees to promptly ▇▇▇▇, and use
commercially reasonable efforts to diligently pursue collection of, all material
accounts receivable owing to it and all other material amounts that may from
time to time be owing to it for services rendered or goods sold.
SECTION 5.16 OBLIGATIONS. The Facility Lessee shall pay all of
its obligations, howsoever arising, as and when due and payable except such as
may be contested in good faith or as to which a bona fide dispute may exist;
PROVIDED, that adequate reserves consistent with GAAP requirements are
maintained for such contested or disputed obligations or the Facility Lessee
otherwise establishes and maintains adequate security arrangements for the
payment of such contested or disputed obligations which are reasonably
acceptable to the Owner Participant.
SECTION 5.17 BOOKS AND RECORDS, ACCESS. The Facility Lessee
shall maintain or cause to be maintained adequate books, accounts and records
with respect to the Facility Lessee, the Facility and the Facility Site and
prepare all financial statements required hereunder in accordance with GAAP and
in compliance with the regulations of any Governmental Authority having
jurisdiction thereof, and permit employees, agents and representatives of the
Owner Lessor, the Owner Participant, the Lease Indenture Trustee, the Bondholder
Trustee and the Lender, and such parties' independent consultants, at all
reasonable times during normal business hours and upon reasonable prior notice
and at no risk or (except during the existence of a Lease Default or Lease Event
of Default) expense to the Facility Lessee to inspect the Facility and the
Facility Site, to examine or audit all of the Facility Lessee's books, accounts
and records and make copies and memoranda thereof and, together with such
consultants, to observe the operation, maintenance and repair of the Facility;
PROVIDED, that (i) each such inspection shall be conducted so as to not
interfere with the operation or maintenance of the Facility or the Facility Site
and shall be subject to the Facility Lessee's safety, insurance and
confidentiality programs, and (ii) any such party making an inspection pursuant
to this SECTION 5.17 shall comply with the reasonable request of the Facility
Lessee to maintain the confidentiality of any information identified by the
Facility Lessee in writing to the recipient thereof as confidential and received
as a result of such inspection.
SECTION 5.18 SPECIAL PURPOSE COVENANTS. (a) So long as the
Facility Lease shall not have been terminated in accordance with its terms,
the Facility Lessee shall:
(i) maintain its own separate books and records and bank accounts, and at
all times hold itself out to the public as a legal entity separate from
the partners of the limited partnership of the Facility Lessee and any
other Person (such partners and any Person holding a beneficial
interest in any such partner, collectively, the "OWNERSHIP
INTERESTHOLDERS");
(ii) file its own tax returns, if any, as may be required under Applicable
Law, to the extent (a) not part of a consolidated or combined group
filing a consolidated return or returns or (b) not treated as a
division for tax purposes of another taxpayer, and pay any taxes so
required to be paid under Applicable Law;
(iii) maintain financial statements separate from those of any other Person
(except that the Facility Lessee may be included in the consolidated
financial statement of another Person where required by and in
accordance with GAAP);
(iv) pay its own liabilities only out of its own funds;
(v) hold title to assets it owns in its own name, and deposit all of its
funds in checking accounts, saving accounts, time deposits or
certificates of deposit in its own name or invest such funds in its own
name;
(vi) observe all limited partnership formalities under Applicable Law
necessary to maintain its identity as an entity separate and distinct
from the Ownership Interestholders and all of its other Affiliates;
(vii) not commingle its assets with assets of any other Person or make any
loans or advances to, or pledge its assets for the benefit of, any
other Person;
(viii) not guarantee (other than guarantees in connection with Permitted
Trading Activities or permitted pursuant to Section 6.8), become
obligated for, or hold itself or its credit out to be responsible
for, the debt, or obligations of any other Person or become involved
in the day to day management or act as the agent of any other
Person; and
(ix) not identify in writing its Ownership Interestholders or any of its
Affiliates as a division or part of it or itself as a division or part
of any of them (except for the inclusion of the Facility Lessee in
consolidated financial statements in accordance with and as required by
GAAP or for tax purposes).
(b) So long as the Facility Lease shall not have been
terminated in accordance with its terms, the Facility Lessee shall cause each
of ME Westside and Chestnut Ridge to comply with the provisions of SCHEDULE
5.18.
38
SECTION 5.19 WARRANTY OF TITLE TO FACILITY SITE.
(a) The Facility Lessee shall maintain good and valid fee,
leasehold title to, or easement or other surface rights in, the Facility Site
and the Easements, subject only to Permitted Encumbrances.
The Facility Lessee shall maintain good and valid title to all of its other
properties and assets (other than properties and assets disposed of in the
ordinary course of business including any sale, transfer or other disposition of
any obsolete, surplus or worn out equipment, parts, supplies or other materials
or assets to the extent permitted by the Operative Documents), subject only to
Permitted Encumbrances or to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect.
ARTICLE VI
NEGATIVE COVENANTS OF ▇▇▇▇▇ CITY
▇▇▇▇▇ City covenants and agrees that it will perform the
obligations set forth in this ARTICLE VI.
SECTION 6.1 LIMITATIONS ON MERGER, CONSOLIDATION OR SALE OF
SUBSTANTIALLY ALL ASSETS. Except as permitted by this SECTION 6.1(a) or SECTION
6.2, ▇▇▇▇▇ City will not (i) consolidate or merge with or into, any other Person
or (ii) sell, assign, convey, lease, transfer or otherwise dispose of all or
substantially all of its properties or assets to any Person or Persons in one or
a series of transactions, except that if, after giving effect thereto, no
Material Lease Default or Lease Event of Default shall have occurred and be
continuing:
(a) ▇▇▇▇▇ City may consolidate or merge with any other
Person or sell, assign, convey, lease, transfer or otherwise dispose of all
or substantially all of its properties or assets to any Person or Persons in
one or a series of transactions, PROVIDED that: (i) the transferee or the
entity resulting from such consolidation, surviving such merger or succeeding
to such properties or assets (A) shall be organized under the laws of the
United States, any state thereof or the District of Columbia and shall
expressly assume, pursuant to an agreement reasonably acceptable to the Owner
Participant and, so long as the Lessor Notes are outstanding and the Lien of
the Lease Indenture has not been discharged, the Lease Indenture Trustee and
the Security Agent, all of ▇▇▇▇▇ City's obligations under the Operative
Documents; (B) shall be a corporation, limited liability company or limited
partnership; (C) such other Person shall be substantially engaged in the
wholesale power generating business, experienced in coal-fired electricity
generation, and, together with its Affiliates, own and operate facilities
with not less than 5,000 MW of capacity; and (D) such consolidation, merger
or succession shall not subject the Owner Lessor or the Owner Participant to
regulation under PUHCA; (ii) ▇▇▇▇▇ City shall provide to the Lease Indenture
Trustee, the Owner Lessor and the Owner Participant a customary officers'
certificate and a customary legal opinion addressing certain matters in
connection therewith, including, without limitation, with respect to the
agreement referred to in clause (a)(i)(A) and (a)(i)(D) of this SECTION 6.1;
and (iii) if the entity with
39
whom ▇▇▇▇▇ City has consolidated or merged has any Indebtedness (after giving
effect to such consolidation or merger), ▇▇▇▇▇ City would have been permitted to
incur such Indebtedness pursuant to SECTION 6.7 at the time of such
consolidation or merger. Notwithstanding the foregoing, ▇▇▇▇▇ City shall not
consummate any such consolidation, merger or sale of all or substantially all of
its assets, unless after giving effect to such consolidation, merger or sale of
all or substantially all of its assets, the Fundco Bonds shall have a credit
rating of at least BBB- from S&P and Baa3 from ▇▇▇▇▇'▇ and, prior to the
consummation of any such transaction, ▇▇▇▇▇ City shall have provided an
Officer's Certificate to such effect or a copy of the letters from the Rating
Agencies confirming such ratings.
(b) Upon the consummation of such transaction described in
SECTION 6.1(a), the resulting, surviving or succeeding entity, if other than
the Facility Lessee, shall succeed to, and be substituted for, and may
exercise every right and power and shall perform every obligation of, the
Facility Lessee under this
Participation Agreement and each other Operative
Document to which the Facility Lessee was a party immediately prior to such
transaction, with the same effect as if such entity had been named herein and
therein. The Facility Lessee will pay the reasonable costs and expenses
(including reasonable attorneys' fees and expenses) of the Owner Participant,
the Owner Lessor, the Owner Manager, the OM Company, the Lease Indenture
Trustee, the Security Agent, the Lease Indenture Company and the Lender in
connection with any transaction contemplated by this SECTION 6.1.
SECTION 6.2 SALE OF ASSETS. ▇▇▇▇▇ City will not sell,
transfer, convey, lease or otherwise dispose of any assets other than Permitted
Asset Sales.
SECTION 6.3 LIENS. ▇▇▇▇▇ City will not (a) create, incur,
assume or otherwise cause or suffer to exist or become effective any Liens on
its properties or assets, except for Permitted Encumbrances, (b) permit the
validity or effectiveness of the Lien of the Lease Indenture to be impaired, or
permit the Lien of the Lease Indenture to be subordinated, terminated or
discharged or (c) permit the Lien of the Lease Indenture not to constitute a
valid first priority perfected security interest in the Indenture Estate, except
for Permitted Encumbrances.
SECTION 6.4 [INTENTIONALLY OMITTED]
SECTION 6.5 CERTAIN CONTRACTS AND AGREEMENTS. Without the
consent of the Owner Participant, ▇▇▇▇▇ City agrees that, except as expressly
required by the Operative Documents, it will not (a) enter into any Trading
Activities other than Permitted Trading Activities (b) enter into or become
bound by any contract or agreement providing for Trading Activities or the
purchase of services to be performed at, for or in connection with, the
Facility or any other contract or agreement relating to the Facility that has
a term that extends beyond the scheduled expiration date of the Facility
Lease or the scheduled expiration of any Renewal Lease Term then in effect or
irrevocably elected by ▇▇▇▇▇ City, unless, solely in the case of any such
contract or agreement contemplated by clause (b), such contract or agreement
may be terminated by ▇▇▇▇▇ City without material costs or obligation to any
Person prior to such expiration date or the scheduled expiration of such
Renewal Lease Term, as the case may be;
40
SECTION 6.6 LIMITATION ON TRANSACTIONS WITH AFFILIATES. ▇▇▇▇▇
City shall not enter into or amend any agreement or transaction with an
Affiliate other than agreements, transactions or amendments that are on terms no
more favorable to such Affiliate than those entered into with third parties on
an arm's-length basis, it being agreed that the following arrangements shall be
considered to be on an "arm's-length basis":
(a) agreements for cost reimbursement and/or other compensation
(PROVIDED, that such cost reimbursement or such other compensation, as
the case may be, shall be no greater than amounts that would have been
payable to a third party on an arm's-length basis);
(b) EMMT risk management arrangements whereby:
(i) EMMT arranges for, or purchases and sells on behalf of, or
provides any or all of the following services to Facility
Lessee, all in accordance with applicable risk management
committee guidelines: (A) fuel purchases and deliveries; (B)
forward power sales; (C) procurement or disposition of
emissions allowances and/or credits; (D) dispatch of (or
bidding of) the Facility into the applicable power pool(s);
(E) financial products such as options, derivatives, swaps
and/or contracts for differences for the purpose of hedging
all or a portion of Facility Lessee's various commodity
exposures;
(ii) Facility Lessee pays EMMT's actual out-of-pocket costs
for performing the above risk management services, including
EMMT's allocated overhead costs;
(iii) EMMT passes through to Facility Lessee all revenues
received in conjunction with the performance of the above risk
management services; and
(iv) EMMT is paid an annual incentive award for exceeding
mutually agreed financial goals for each year, with such
annual financial goals to be agreed to in writing by the
parties on an annual basis, and with such annual incentive
award, if any, to be subordinated in right of payment on terms
reasonably acceptable to the Owner Participant to payments of
all Rent; and
(c) Permitted Trading Activities with EMMT;
PROVIDED, that any such arrangement with an Affiliate shall be terminated
without penalty at such time as the applicable Affiliate ceases to be an
Affiliate or upon the exercise of remedies following the occurrence of a Lease
Event of Default; PROVIDED, FURTHER, that no Permitted Trading Activity shall be
terminated upon the exercise of remedies to the extent (but only to the extent)
that the Facility Lessee's Affiliate that is the counterparty to such Permitted
Trading Activity has, in reliance on such Permitted Trading Activity and prior
to the Owner Participant giving notice to ▇▇▇▇▇ City of the occurrence of a
41
Lease Event of Default (which notice shall not be given prior to the occurrence
of a Lease Event of Default or continue to be effective following the cure by
the Facility Lessee of such Lease Event of Default), entered into Trading
Activities with an unrelated third party pursuant to which such Affiliate has
agreed to sell to, or acquire from, such third party the commodity which such
Affiliate had contracted to acquire from, or sell to, the Facility Lessee
pursuant to such Permitted Trading Activity (or which such Affiliate, promptly
after entering into such Trading Activity with such unrelated third party,
contracts to acquire from, or sell to, the Facility Lessee pursuant to such
Trading Activity).
SECTION 6.7 LIMITATIONS ON INCURRENCE OF INDEBTEDNESS. The
Facility Lessee shall not, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "INCUR") any indebtedness other than
Subordinated Indebtedness to its Affiliates (PROVIDED that such Indebtedness
shall be subject to the terms of the Subordination Agreement) and Permitted
Indebtedness.
"PERMITTED INDEBTEDNESS" shall mean any of the following items of Indebtedness:
(a) Indebtedness represented by interest rate hedging
obligations incurred for the purpose of fixing a rate of interest on
floating rate Indebtedness of the Facility Lessee, so long as such
interest rate hedging obligations relate to Indebtedness otherwise
permitted to be incurred by the Facility Lessee hereunder not to exceed
$10 million at any time outstanding (with such amount to be escalated
annually in accordance with increases in the Consumer Price Index for
All Urban Consumers);
(b) Indebtedness incurred for working capital purposes only;
and
(c) Indebtedness in respect of letters of credit, surety bonds
or performance bonds issued in the ordinary course of the Facility
Lessee's business;
PROVIDED, HOWEVER, the aggregate of Permitted Indebtedness incurred pursuant to
subsections (a)-(c) of this SECTION 6.7 shall not exceed $50 million at any time
outstanding (with such amount to be escalated annually in accordance with
increases in the Consumer Price Index for All Urban Consumers) and PROVIDED,
FURTHER, that at no time shall the Facility Lessee incur additional Indebtedness
if a Lease Event of Default shall have occurred and be continuing.
For purposes of determining compliance with this Section, in the event
that an item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness described in clauses (a) through (h) above
as of the date of incurrence thereof, the Facility Lessee shall, in its sole
discretion, be entitled to classify or reclassify such item of Indebtedness in
any manner that complies with this SECTION 6.7. Accrual of interest, the
accretion of accreted value and the payment of interest in the form of
additional Indebtedness will not be deemed to be an incurrence of Indebtedness
for purposes of this SECTION 6.7.
42
SECTION 6.8 GUARANTEES AND CONTINGENT OBLIGATIONS. The
Facility Lessee will not create, incur, assume or suffer to exist any guarantee
or other contingent obligations except: (i) guarantees with respect to Permitted
Trading Activities, (ii) Indebtedness permitted pursuant to SECTION 6.7, (iii)
by reason of endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of the Facility Lessee's business,
(iv) indemnities in respect of unfiled mechanics' liens and other liens
permitted by clause (g) of the definition of "PERMITTED ENCUMBRANCES," (v)
contingent obligations set forth in, or incurred in connection with, or
indemnities set forth in, the Operative Documents, (vi) customary indemnities
provided by the Facility Lessee in connection with easements relating to the
Facility or the Facility Site, and (vii) customary indemnities in favor of the
title insurers providing the title policies covering the Facility Site or any
portion thereof or any easement or appurtenant right relating thereto in respect
of claims by the holder of mechanics' liens.
SECTION 6.9 LIMITATIONS ON PAYMENTS OF EQUITY PORTION OF
BASIC LEASE RENT. So long as the Lien of the Lease Indenture is in effect,
and the Lessor Notes have not been defeased pursuant to ARTICLE XI of the
Lease Indenture, ▇▇▇▇▇ City shall not make any payments in respect of the
Equity Portion of Basic Lease Rent (any "Equity Payment") unless each of the
following conditions is satisfied:
(a) The date of such Equity Payment shall be a Restricted
Payment Date (or within five days thereafter);
(b) at the time of and after giving effect to such Equity
Payment no Material Lease Default (other than a Rent Default Event) or Lease
Event of Default (other than an Rent Default Event) shall have occurred and
be continuing or would occur as a result of such Equity Payment (unless such
Lease Default or Lease Event of Default has been cured pursuant to SECTION
7.2 of the Lease Indenture);
(c) either:
(i) (A) the Senior Rent Service Coverage Ratio for the most
recently ended four Fiscal Quarters, taken as one accounting period, is
equal to or greater than 1.50 to 1.0 in the case of any such period
ending on or prior to December 31, 2001 or 1.70 to 1.0 in the case of
any period ending thereafter; and (B) the projected Senior Rent Service
Coverage Ratio for each four Fiscal Quarter period, taken as one
accounting period, during the next two such four-Fiscal-Quarter
periods, is equal to or greater than 1.50 to 1.0 in the case of any
such period ending on or prior to December 31, 2001 or 1.70 to 1.0 in
the case of any period ending thereafter; OR
(ii) if and only if, for the period comprising the eighteen
consecutive months prior to the date of determination, any amounts have
been on deposit in the Equity Account:
(A) (x) the Senior Rent Service Coverage
Ratio for the preceding four Fiscal Quarters, taken
as one accounting period, is equal to or greater than
1.30 to 1.00 and (y) the projected Senior
43
Rent Service Coverage Ratio for each four Fiscal
Quarter period, taken as one accounting period,
during the next two such four-Fiscal-Quarter periods,
is equal to or greater than 1.30 to 1.00; AND
(B) after giving effect to such transfer,
(x) the Modified Senior Rent Service Coverage Ratio
for the most recently ended four Fiscal Quarters,
taken as one accounting period, is equal to or
greater than 1.50 to 1.0 in the case of any such
period ending on or prior to December 31, 2001 or
1.70 to 1.0 in the case of any period ending
thereafter; and (y) the projected Modified Senior
Rent Service Coverage Ratio for each four Fiscal
Quarter period, taken as one accounting period,
during the next two such four-Fiscal-Quarter periods
is equal to or greater than 1.50 to 1.0 in the case
of any such period ending on or prior to December 31,
2001 or 1.70 to 1.0 in the case of any period ending
thereafter;
(d) the Debt Service Reserve Letter of Credit is in full force
and effect and the amount available for drawing thereunder is at least equal to
the Debt Service Reserve Amount; and
(e) the amount on deposit with the Collateral Agent in each of
the ▇▇▇▇▇ City Accounts is equal to or greater than the amount required to be on
deposit therein or is supported by a letter of credit in the requisite amount,
in each case in accordance with the Security Deposit Agreement.
SECTION 6.10 LIMITATIONS ON RESTRICTED PAYMENTS. ▇▇▇▇▇ City
shall not make any Restricted Payment unless each of the following conditions is
satisfied:
(a) the date of such payment is a Restricted Payment Date (or
within five days thereafter);
(b) at the time of and after giving effect to such Restricted
Payment (i) no Lease Default or Lease Event of Default shall have occurred and
be continuing, (ii) no Rent Default Event (other than an Rent Default Event due
to a decrease in Revenue attributable to an Event of Force Majeure) shall have
occurred and be continuing for a period of nine (9) months prior to the date of
such Restricted Payment (whether or not cured subsequent to such nine-month
period but prior to such Restricted Payment Date) and (iii) not more than two
Rent Default Events have occurred on or prior to such Restricted Payment Date
(whether or not cured prior to such Restricted Payment Date);
(c) the Senior Rent Service Coverage Ratio for the most
recently ended four Fiscal Quarters, taken as one accounting period, is equal to
or greater than 1.50 to 1.0 in the case of any such period ending on or prior to
December 31, 2001 or 1.70 to 1.0 in the case of any period ending thereafter;
(d) the projected Senior Rent Service Coverage Ratio for each
four Fiscal Quarter period, taken as one accounting period, during the next two
such four-Fiscal-Quarter periods is equal to or greater than 1.50 to 1.0 in the
case of any such
44
period ending on or prior to December 31, 2001 or 1.70 to 1.0 in the case of any
period ending thereafter (in each case as calculated by the Owner Participant in
accordance with the procedure set forth on SCHEDULE [__]);
(e) the Debt Service Reserve Letter of Credit is in full force
and effect and the amount available for drawing thereunder is at least equal to
the Debt Service Reserve Amount;
(f) the amount on deposit with the Collateral Agent in each of
the ▇▇▇▇▇ City Accounts is equal to or greater than the amount required to be on
deposit therein or is supported by a letter of credit in the requisite amount,
in each case in accordance with the Security Deposit Agreement; and
(g) all Equity Payments required to have been made on or
before such Restricted Payment Date have been made.
SECTION 6.11 RESTRICTIONS ON CAPITAL EXPENDITURES. The
Facility Lessee shall not, without the prior written consent of the Owner
Participant and, so long as the Lien of the Lease Indenture shall not have
been terminated or discharged, the Lease Indenture Trustee and the Security
Agent, enter into any binding future commitment to make Capital Expenditures
other than any such commitment (a) which is a direct commitment of an
Affiliate of ▇▇▇▇▇ City on behalf of the Facility Lessee, (b) which is
supported by an irrevocable guarantee, endorsement or other contingent
agreement to purchase or furnish funds on the Facility Lessee's behalf by an
Affiliate of ▇▇▇▇▇ City, (c) for which the payment of which has been fully
reserved by the Facility Lessee or (d) which is otherwise to be funded with a
capital contribution to ▇▇▇▇▇ City. Notwithstanding the foregoing, if the
Facility Lessee is permitted to finance such Capital Expenditures in
accordance with SECTION 6.7 hereof, the restrictions of this SECTION 6.10
shall not apply.
SECTION 6.12 NO SUBSIDIARIES. The Facility Lessee shall not
create or suffer to exist any Subsidiaries of the Facility Lessee.
SECTION 6.13 PARTNERSHIPS. The Facility Lessee shall not
become a general or limited partner in any partnership or a joint venturer in
any joint venture.
SECTION 6.14 DISSOLUTION. The Facility Lessee shall not
liquidate or dissolve, except pursuant to transactions permitted under SECTION
5.2.
SECTION 6.15 AMENDMENT OF CONTRACTS, ETC. (a) The Facility
Lessee shall not without the prior written consent of the Owner Participant and,
so long as the Lien of the Lease Indenture shall not have been terminated or
discharged, the Lease Indenture Trustee and the Security Agent, cause, consent
to or permit, any amendment, modification, extension, termination, variance or
waiver of timely compliance with any terms or conditions of any Project Document
if such amendment, modification, extension, termination, variance or waiver
could be reasonably expected to result in a Material Adverse Effect.
45
(b) The Facility Lessee shall not permit to be revoked,
amended, supplemented or otherwise modified the ▇▇▇▇▇ City Partnership
Agreement without the prior written consent of the Owner Participant and, so
long as the Lien of the Lease Indenture has not been terminated or
discharged, the Lease Indenture Trustee and the Security Agent; PROVIDED
THAT, other than any such amendment, modification or supplement to Sections
[__] thereof, consent of the Owner Participant and, if applicable, the Lease
Indenture Trustee and the Security Agent, shall not be required for any such
amendment, modification or supplement required to reflect any (i) transfer of
ownership interest in the Facility Lessee or (ii) any merger, consolidation
or similar transaction with respect to the Facility Lessee, in each such
case, as expressly permitted pursuant to any Operative Document.
SECTION 6.16 FISCAL YEAR. The Facility Lessee shall not change
its Fiscal Year.
SECTION 6.17 USE OF FACILITY SITE. The Facility Lessee shall
not use, or permit to be used (except to the extent required pursuant to the
Project Documents in effect on the Closing Date), the Facility Site or the
Easements for any purpose other than for the development, operation and
maintenance of the Facility as contemplated by or otherwise permitted by the
Operative Documents, including [Article VIII] of the Facility Site Sublease. The
Facility Lessee shall use commercially reasonable efforts to achieve subdivision
of the Facility Site as soon as practicable after the Closing.
SECTION 6.18 ABANDONMENT OF FACILITY. The Facility Lessee
shall not voluntarily abandon the operation, maintenance or repair of the
Facility.
SECTION 6.19 ASSIGNMENT OF RIGHTS. The Facility Lessee shall
not assign any of its rights or obligations hereunder except as permitted by the
Operative Documents.
SECTION 6.20 REGULATIONS. The Facility Lessee shall not,
directly or indirectly, apply any part of the proceeds of the Purchase Price or
any other Revenues to the purchasing or carrying of any margin stock within the
meaning of Regulations T, U or X of the Federal Reserve Board, or any
regulations, interpretations or rulings thereunder.
SECTION 6.21 ACCOUNTS. The Lessee shall not establish,
maintain or make deposits in any deposit accounts other than as expressly
permitted by the Operative Documents.
SECTION 6.22 PUHCA. The Facility Lessee shall not take any
action or fail to take any action that would subject the Owner Lessor, the Owner
Participant or any Lender to regulation under PUHCA, PROVIDED that with respect
to circumstances or events outside of the control of the Facility Lessee, the
Facility Lessee shall not be deemed to have breached the covenant contained in
this SECTION 6.22 so long as the Facility Lessee is using commercially
reasonable efforts to maintain (or re-establish) such exemptions from regulation
under PUHCA.
SECTION 6.23 INVESTMENTS. The Facility Lessee shall not make
or permit to remain outstanding any advances, loans or extensions of credit to,
or purchase or own
46
any stock, bonds, notes, debentures or other securities of
any Person, except Permitted Investments and guarantees with respect to
Permitted Trading Activities.
SECTION 6.24 PERMITTED BUSINESS. The Facility Lessee shall not
engage in any business other than the business of the ownership or leasing, as
applicable, operation, maintenance and output marketing of the Facility and the
generation of income therefrom.
ARTICLE VII
COVENANTS OF THE COMPANY, THE OWNER MANAGER AND THE OWNER LESSOR
SECTION 7.1 COMPLIANCE WITH THE LESSOR LLC AGREEMENT. Each of
the Owner Lessor, the OM Company and the Owner Manager hereby severally
covenants and agrees severally and as to itself only that it will:
(a) comply with all of the terms of the Lessor LLC Agreement
applicable to it;
(b) not amend, supplement, or otherwise modify [SECTIONS ] of
the Lessor LLC Agreement without the prior written consent of ▇▇▇▇▇ City so long
as no Material Lease Default or Lease Event of Default has occurred and is
continuing or the Lease Indenture Trustee so long as the Lessor Notes are
outstanding; and
(c) not exercise its rights under Sections [_____] of the
Lease Indenture to optionally prepay the Lessor Notes without the prior written
consent of the Facility Lessee; PROVIDED, HOWEVER, that such prior written
consent shall not be required if a Lease Event of Default shall have occurred
and be continuing.
SECTION 7.2 OWNER LESSOR LIENS. The OM Company, the Owner
Manager 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
Lien, attributable to it and unrelated to the transactions contemplated hereby,
on the Lessor Estate arising as a result of (i) Claims against or any act or
omission of the Owner Lessor or the OM Company or the Owner Manager, or any
Affiliate thereof, that is not related to, or is in violation of, any Operative
Document or the transactions contemplated thereby or any breach of any covenant
or agreement of the Owner Lessor or the OM Company or the Owner Manager set
forth therein; (ii) Taxes against the Owner Lessor or the OM Company or the
Owner Manager, or any Affiliate thereof, for which it is not indemnified by the
Facility Lessee (or, in the case of the OM Company, the Owner Lessor) pursuant
to the Operative Documents; or (iii) Claims against or affecting the Owner
Lessor or the OM Company or the Owner Manager, or any Affiliate thereof, arising
out of the voluntary or involuntary transfer by the Owner Lessor or the OM
Company or the Owner Manager (other than transfers requested by the Facility
Lessee or required by the Operative Documents or during the continuance of a
Lease Event of Default) of any portion of the interest of the Owner Lessor in
the Facility ("OWNER LESSOR LIENS" and,
47
together with Owner Participant Liens, "LESSOR LIENS"). The OM Company, the
Owner Manager or the Owner Lessor will promptly notify ▇▇▇▇▇ City, the Owner
Participant and the Lease Indenture Trustee of the imposition of any Owner
Lessor Lien of which it has knowledge and shall promptly, at its own expense,
take such action as may be necessary to duly discharge such Owner Lessor Lien
attributable to it.
SECTION 7.3 AMENDMENTS TO OPERATIVE DOCUMENTS. The Owner
Manager and the OM 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 Manager 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 Lessor LLC Agreement, amendments to and modifications of which are
governed by SECTION 7.1 hereof) in any manner other than with respect to
administrative or ministerial matters or (c) except as provided in SECTION
12.2 hereof, take any action to prepay, redeem 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 ▇▇▇▇▇ City except as provided in SECTION 7.1(c) and,
in the case of clause (a) or (b), the Lease Indenture Trustee, the Security
Agent and the Lender as long as the Lessor Notes are outstanding.
SECTION 7.4 TRANSFER OF THE OWNER LESSOR'S INTEREST. Other
than as contemplated by the Operative Documents, each of the Owner Lessor and
the Owner Manager 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
Lessor Estate or the other Operative Documents without the consent of ▇▇▇▇▇
City and, so long as the Lessor Notes are outstanding, the Lease Indenture
Trustee and the Security Agent which consent may not be unreasonably
withheld. Nothing in this SECTION 7.4 shall limit the ability of the Owner
Manager or the Owner Participant to appoint a successor Owner Manager
pursuant to Section [__] of the Lessor LLC Agreement.
SECTION 7.5 OWNER LESSOR; LESSOR ESTATE. Each of the Owner
Manager 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 Lessor
Estate to the provisions of any applicable bankruptcy or insolvency law (as now
or hereafter in effect).
SECTION 7.6 LIMITATION ON INDEBTEDNESS AND ACTIONS. The
Owner Lessor covenants that it will not incur any indebtedness other than
Subordinated Indebtedness nor enter into any business or activity except as
required or expressly permitted or contemplated by any Operative Document.
SECTION 7.7 CHANGE OF LOCATION. The Owner Manager shall use
all reasonable efforts to give the Owner Participant, the Lease Indenture
Trustee and ▇▇▇▇▇ City a 30 days' written notice of any relocation of the Owner
Manager's chief executive office or the place where documents and records
relating to the Owner Manager or the
48
Lessor Estate are kept from the location set forth in [SECTION 3.2(h)] and of
any change in its name, but in any event the Owner Manager and the Owner Lessor
shall give such notice within 30 days after such relocation or name change.
SECTION 7.8 BANKRUPTCY OF OWNER LESSOR. Each of the OM
Company, the Owner Manager 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 Lease Indenture shall not have been discharged, the OM Company or the
Owner Lessor shall not take such action unless the Lease Indenture Trustee
and the Security Agent shall have given their prior written consent to such
action in their sole discretion).
SECTION 7.9 LIMITATION ON SUBSIDIARIES AND INVESTMENTS
The Owner Lessor shall not create or acquire any Subsidiary.
SECTION 7.10 LIMITATION ON TRANSACTIONS WITH AFFILIATES
The Owner Lessor shall not enter into any transaction or arrangement,
whether or not in the ordinary course of business, with any Affiliate, other
than (i) management, operating, marketing, trading or other similar services
agreements between and among the Owner Lessor and its Affiliates in existence on
the Closing Date and (ii) any transaction which is on terms that are no less
favorable to the Owner Lessor than those that would have been obtained in a
comparable arm's-length transaction by the Owner Lessor with an unrelated
Person.
SECTION 7.11 MAINTENANCE OF EXISTENCE
The Owner Lessor covenants that it will at all times (i) maintain
its existence in good standing under the laws of Delaware and (ii) maintain
and renew all of its respective rights, powers, privileges and franchises
except where the failure to do so could not reasonably be expected to result
in a Material Adverse Effect.
49
SECTION 7.12 COMPLIANCE WITH LAWS
The Owner Lessor covenants that it will comply with all applicable
laws, acts, rules, regulations, permits, orders and requirements of any
legislative, executive, administrative or judicial body relating to the Owner
Lessor except where (i) the failure to do so could not reasonably be expected
to have a Material Adverse Effect; (ii) the Owner Lessor is disputing in good
faith any such law, act, rule, regulation, permit, order or requirement and
(A) the Owner Lessor has established or accrued adequate cash reserves in
accordance with GAAP or provided other appropriate assurances against any
liabilities arising from such dispute and (B) the Owner Lessor's action to
dispute such law, act, rule, regulation, permit, order or requirement could
not reasonably be expected to have a Material Adverse Effect; or (iii) such
failure to do so results from a Lease Default or a Lease Event of Default.
ARTICLE VIII
COVENANTS OF THE OWNER PARTICIPANT
SECTION 8.1 RESTRICTIONS ON TRANSFER OF LESSOR MEMBERSHIP
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 Lessor Membership Interest without the
prior written consent of ▇▇▇▇▇ City and, so long as the Lien of the Lease
Indenture has not been terminated or discharged, without the prior written
consent of the Lease Indenture Trustee and the Security Agent; PROVIDED,
HOWEVER, that the Owner Participant may assign, convey or transfer all or any
part of its interest in the Lessor Membership 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 T hereto, if each of the following
conditions shall have been satisfied:
(i) ▇▇▇▇▇ City, the Owner Manager and, so long as the
Lessor Notes are outstanding, the Lease Indenture Trustee and the
Security Agent shall have received an opinion of counsel consistent
in scope to the opinions delivered on behalf of the Owner
Participant on the Closing Date, the form of which opinion of
counsel is 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 Lessor Membership Interest
will not require registration under the Securities Act;
50
(ii) the Transferee shall be a corporation, limited liability
company or partnership that is a "United States person" within the
meaning of Section 7701(a)(30) of the Code;
(iii) the Transferee or a guarantor of the obligations of such
Transferee under the Operative Documents meets the following criteria:
(1) the Consolidated Tangible Net Assets of such Transferee or such
guarantor shall be at least equal to $75 million calculated in
accordance with GAAP and (2) such Transferee agrees to be bound by the
terms of the Operative Documents pursuant to an Assumption and
Assignment Agreement substantially in the form of Exhibit T hereto;
(iv) so long as no Material Lease Default or Lease Event of
Default shall have occurred and be continuing, such Transferee shall
not be a Competitor of, or in material litigation with, ▇▇▇▇▇ City or
any Affiliate of ▇▇▇▇▇ City, without the express written consent of
▇▇▇▇▇ City which consent shall not be unreasonably withheld; and
(v) the transferring Owner Participant shall pay, without any
right of indemnification from ▇▇▇▇▇ City 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 ▇▇▇▇▇ City and any of its Affiliates, and (y) ▇▇▇▇▇
City and any of its Affiliates, so long as no Lease Default or Lease
Event of Default shall have occurred and be continuing.
(b) Notwithstanding any provision of SECTION 8.1(a) to the
contrary, (1) the restrictions set forth in SECTION 8.1(a) shall not inure to
the benefit of ▇▇▇▇▇ City if such transfer is in connection with the exercise of
remedies during a Lease Event of Default and (2) the restrictions set forth in
clause (iv) of SECTION 8.1(a) shall inure to the benefit of ▇▇▇▇▇ City only.
(c) The Pricing Assumptions (as set forth on SCHEDULE 8.1(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 Manager, the Lease Indenture Trustee and ▇▇▇▇▇ City a 10 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 satisfies the requirements of this
SECTION 8.1. If requested by the Owner Participant or the Lease Indenture
Trustee, ▇▇▇▇▇ City shall acknowledge qualifying transfers.
(e) Upon any such transfer in compliance with this SECTION
8.1, (i) such Transferee shall, to the extent of the Lessor Membership 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 and each other Operative Document to
51
which such Owner Participant is a party, and each reference in this Agreement,
the Assignment and Assumption Agreement and each other Operative Document to the
"Owner Participant" shall thereafter be deemed to include such Transferee, to
the extent of the Lessor Membership 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 8.2 OWNER PARTICIPANT LIENS. The Owner Participant
covenants that it will not directly or indirectly create, incur, assume or
suffer to exist any Lien on the Facility, Facility Site or the Facility Lease
arising as a result of (i) claims against or any act or omission of the Owner
Participant, or any Affiliate thereof, that is not related to, or is in
violation of, any Operative Document or the transactions contemplated thereby or
any breach of any covenant or agreement of the Owner Participant set forth
therein; (ii) taxes against the Owner Participant or any Affiliate thereof for
which it is not indemnified by ▇▇▇▇▇ City pursuant to the Operative Documents;
or (iii) claims against or affecting the Owner Participant, or any Affiliate
thereof, arising out of the voluntary or involuntary transfer by the Owner
Participant (other than transfers requested by ▇▇▇▇▇ City or required by the
Operative Documents or during the continuance of a Lease Event of Default) of
its interest in the Lessor Estate ("OWNER PARTICIPANT LIENS").
SECTION 8.3 AMENDMENTS OR REVOCATION OF LESSOR LLC
AGREEMENT. The Owner Participant covenants that it will not (a) amend,
supplement, or otherwise modify Sections [____] of the Lessor LLC Agreement
except for amendments required by the Operative Documents or by any
Requirement of Law or which are administrative or ministerial in nature
without the prior written consent of ▇▇▇▇▇ City 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 Lease Indenture Trustee and the Security
Agent, so long as the Lessor Notes are outstanding or (b) revoke, or
otherwise waive compliance with or terminate the Lessor LLC Agreement without
the prior written consent of ▇▇▇▇▇ City so long as no Material Lease Default
or Lease Event of Default has occurred and is continuing, and the Lessor LLC
Agreement so long as the Lien of the Lease Indenture has not been terminated
or discharged.
SECTION 8.4 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, without the prior written consent of
the Bondholder Trustee.
52
SECTION 8.5 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 8.6 APPOINTMENT OF SUCCESSOR OWNER MANAGER.
Notwithstanding any other provision of this Agreement, a successor Owner
Manager shall not be appointed by the Owner Participant without the consent
of ▇▇▇▇▇ City, so long as no Material Lease Default or Lease Event of Default
shall have occurred and be continuing, and, so long as Lessor Notes are
outstanding, the Lease Indenture Trustee and the Security Agent unless such
successor Owner Manager (a) meets the requirements of the Lessor LLC
Agreement, (b) has a combined capital and surplus of at least $150 million
and (c) ▇▇▇▇▇ City and, so long as the Lien of the Lease Indenture has not
been terminated or discharged, the Lease Indenture Trustee and the Security
Agent, 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 ▇▇▇▇▇ City or the Lease Indenture Trustee and the
Security Agent, as the case may be; PROVIDED, HOWEVER, that if
[Wilmington Company] resigns as Owner Manager, is terminated for cause, or
shall become incapable of acting or shall be adjudged bankrupt or insolvent
or a receiver of the Owner Manager or its properties shall be appointed or
any public officer shall take charge or control of the Owner Manager 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
▇▇▇▇▇ City.
SECTION 8.7 COOPERATION. The Owner Lessor agrees, and each
of the Owner Participant and the Owner Manager agree to cause the Owner
Lessor to, at the request of ▇▇▇▇▇ City and at the sole cost and expense of
▇▇▇▇▇ City on an After-Tax Basis, 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 ▇▇▇▇▇
City or any permitted assignee of ▇▇▇▇▇ City in the manner contemplated by
the Operative Documents, except to the extent the same involves any (i)
material risk of foreclosure, sale, forfeiture or loss of, or imposition of a
Lien (other than a Permitted Lien) on, the Facility, the Undivided Interest
or the Facility Site or the impairment of the use, operation or maintenance
of the Facility or the Facility Site in any material respect, (ii) risk of
criminal or material civil liability being incurred by the Owner Lessor, the
Owner Participant, or, so long as the Lien of the Lease Indenture has not
been terminated discharged, the Lease Indenture Trustee and the Security
Agent, or any of their respective Affiliates or (iii) material risk of any
material adverse effect on the interests of the Owner Lessor, the Owner
Participant, or, so long as the Lien of the Lease Indenture has not been
terminated or discharged, the Lease Indenture Trustee and the Security Agent,
or any of their respective Affiliates (including, without limitation,
subjecting any such Person to regulation as a public utility under any
applicable law). ▇▇▇▇▇ City shall pay on an After-Tax Basis all reasonable
costs and expenses (including, without limitation, the reasonable fees and
expenses of counsel) of the Owner Lessor and each other Person party to an
Operative Document incurred in
53
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 8.8, the
Owner Lessor, the Owner Participant and the Owner Manager 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.
ARTICLE IX
COVENANTS OF THE LEASE INDENTURE TRUSTEE AND SECURITY AGENT
SECTION 9.1 SECURITY INTEREST OF THE LEASE INDENTURE TRUSTEE.
The Lease Indenture Trustee will not directly or indirectly create, incur,
assume or suffer to exist any Lien on the Indenture Estate attributable to it
and arising out of events or conditions not related to its rights in the
Indenture Estate or the administration thereof, and will promptly notify the
Owner Participant, the Owner Lessor, the Owner Manager, the Security Agent and
▇▇▇▇▇ City 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 Indenture Trustee Lien.
SECTION 9.2 SECURITY INTEREST OF THE SECURITY AGENT. The
Security Agent will not directly or indirectly create, incur, assume or
suffer to exist any Lien on the Indenture Estate attributable to it and
arising out of events or conditions not related to its rights in the
Indenture Estate or the administration thereof, and will promptly notify the
Owner Participant, the Owner Lessor, the Owner Manager, the Lease Indenture
Trustee and ▇▇▇▇▇ City 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 Lien.
ARTICLE X
▇▇▇▇▇ CITY'S INDEMNIFICATIONS
SECTION 10.1 GENERAL INDEMNITY.
(a) CLAIMS INDEMNIFIED. Subject to the exclusions stated in
paragraph (b) below, ▇▇▇▇▇ City agrees to, on an After-Tax Basis, protect,
defend and hold harmless, and does hereby indemnify the Owner Lessor, the Owner
Participant, the Owner Manager, the OM Company, in its individual capacity, the
Security Agent, the Lender, the Bondholder Trustee and the Lease Indenture
Trustee and each of their respective successors, permitted assigns, agents,
employees, servants, directors, members, partners, officers and Affiliates (each
an "INDEMNITEE") against any and all liabilities, obligations, losses, damages,
penalties, actions, suits, costs, expenses and claims of any nature (whether or
not any of the transactions contemplated by the Operative Documents are
consummated) imposed on incurred or asserted against such Indemnitee arising out
of, in connection with, or relating to any of the following (collectively,
"CLAIMS"):
54
(i) the construction, financing, refinancing, acquisition,
operation, warranty, ownership, possession, maintenance, repair, lease,
condition, alteration, modification, restoration, refurbishing, return,
purchase, sale or other disposition, insuring, sublease, or other use
or nonuse of the Facility or the Facility Site, or any portion or
Component thereof or interest therein;
(ii) the conduct of the business or affairs of (x) ▇▇▇▇▇ City
or (y) any Affiliate of ▇▇▇▇▇ City but, in the case of any such
Affiliate, only at the Facility and Facility Site or in connection
therewith;
(iii) the manufacture, design, purchase, acceptance,
rejection, delivery or condition of, or improvement to, the Facility,
the Facility Site or any Component, or any portion of any thereof or
any interest therein;
(iv) the Facility Lease or any other Operative Documents in
respect of the Facility or the Facility Site, the execution or delivery
thereof, or the performance, enforcement, attempted enforcement or any
amendment, supplement or modification to, or any waiver (collectively,
"AMENDMENTS") of any terms thereof or thereto;
(v) any Environmental Claim or any Environmental Condition
resulting from the Facility, the Facility Site, or any Component (or
portion of any Component) thereof, including any such Environmental
Claim or Environmental Condition arising from or related to the
operation of the Facility or any Component thereof;
(vi) the reasonable costs and expenses of each Indemnitee in
connection with Amendments or supplements of or to the Operative
Documents (x) requested by ▇▇▇▇▇ City or required pursuant to the
provisions of any Operative Document, including under SECTION 12
hereof, or (y) as a result of a Lease Event of Default under the
Facility Lease that has occurred and is continuing;
(vii) the imposition of any Lien other than, with respect to a
particular Indemnitee, a Lien arising by or through such Indemnitee (or
its agents, employees, servants or affiliates) that is prohibited under
the terms of the Operative Documents;
(viii) any violation by, or liability relating to, ▇▇▇▇▇
City, any ▇▇▇▇▇ City Party, the Facility or the Facility Site 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
Facility Site, the Operative Documents or the interests of the Lease
Indenture Trustee, the Security Agent, the Owner Lessor or the Owner
Participant under the Operative Documents or the presence, use,
storage, transportation, treatment or manufacture of any hazardous
substance in, at, under or from the Facility or Facility Site;
55
(ix) the nonperformance or breach by ▇▇▇▇▇ City or any
Affiliate of any obligation contained in the Operative Documents or the
falsity or inaccuracy of any representation or warranty of ▇▇▇▇▇ City
or any Affiliate in the Operative Documents;
(x) the continuing fees (if any) and expenses of the Owner
Manager, Owner Lessor, Owner Participant, the Bondholder Trustee,
the Lender, the Security Agent and the Lease Indenture Trustee
(including the reasonable fees and expenses of counsel, accountants
and other professional persons) arising out of discharge of their
duties under or in connection with the Operative Documents;
(xi) the offer, issuance, sale or acquisition of the Lessor
Notes or any Additional Lessor Notes, or, in each case, any refinancing
thereof;
(xii) any regulatory approvals or licenses (or any renewals
thereof) including, without limitation, any obligations imposed by FERC
in connection with the Facility or Facility Site;
(xiii) any drawing under the Debt Service Reserve Letter of
Credit (and any applicable application or reimbursement agreement
with respect thereto) or replacement, renewal or re-issuance thereof
(including interest accruing thereon) under the Debt Service Reserve
Letter of Credit (and any applicable application or reimbursement
agreement with respect thereto); and
(xiv) any and all fees, including interest accruing
thereon, with respect to the Debt Service Reserve Letter of Credit
payable to such letter of credit issuer; provided, however, that in
no event shall the Facility Lessee be liable for Claims pursuant to
this clause (xiv) in an aggregate amount exceeding $[__].
(b) CLAIMS EXCLUDED. The general indemnity of ▇▇▇▇▇ City in
this SECTION 10.1 will be subject to exclusions for Claims to the extent (x)
attributable to, (y) arising as a result of, or (z) such Claims would not have
occurred but for, any of the following:
(i) acts, omissions or events occurring after the expiration
or early termination of the Facility Lease and, where required by the
Facility Lease, surrender to the Owner Lessor or its successor of the
Facility and its interest in the Facility Site Sublease in compliance
with the provisions of the Facility Lease or Facility Site Sublease, as
the case may be other than, in each such case referred to in this
clause (i), claims arising from or related to acts, omissions, events
or conditions occurring or existing prior to such expiration or early
termination, or arising pursuant to the Facility Lessee's obligations
set forth in SECTION 5.2(H) of the Facility Lease;
(ii) with respect to the relevant Indemnitee or a Related
Party, any offer, sale, assignment, transfer or other disposition
(voluntary or involuntary) by
56
or on behalf of (x) the Owner Participant of any of its interest in
the Owner Lessor, (y) the Owner Lessor of all or any of its interest
in the Facility or Facility Site or (z) the Lender, the Security
Agent or the Lease Indenture Trustee of any of its interests in the
Lessor Loans, 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) the gross negligence or willful misconduct of the
Indemnitee (or a Related Party of such Indemnitee) seeking
indemnification;
(iv) the noncompliance with the terms of the Operative
Documents by, or the breach of any agreement, covenant, representation
or warranty of, the Indemnitee (or a Related Party of such Indemnitee)
seeking indemnification unless attributable to ▇▇▇▇▇ City or breach by
another party of its obligations under an Operative Document;
(v) any obligation or liability expressly borne, assumed or to
be paid in any Operative Document by the Indemnitee (or a Related Party
of such Indemnitee) seeking indemnification;
(vi) with respect to the Indemnitee seeking indemnification,
any claim constituting or arising from a Lessor Lien attributable to
such Indemnitee or to a Related Party of such Indemnitee;
(vii) any Claim that is a Tax or is a cost of contesting a
Tax, whether or not ▇▇▇▇▇ City is required to indemnify therefor under
SECTION 10.2 below, except as required to make payments on an After-Tax
Basis;
(viii) any failure by the Owner Manager to distribute in
accordance with the Lessor LLC Agreement any amounts received and
distributable thereunder;
(ix) any Amendment not requested by ▇▇▇▇▇ City and not
required by any Operative Document (other than an Amendment existing as
a result of a Lease Event of Default that has occurred and is
continuing);
(x) any Claim that constitutes principal or interest on the
Lessor Notes; and
(xi) any Claims arising with respect to the Equity Letter of
Credit.
(c) CLAIMS PROCEDURE. Each Indemnitee shall promptly after
such Indemnitee shall have Actual Knowledge of any Claim notify ▇▇▇▇▇ City in
writing of any such Claim as to which indemnification is sought; PROVIDED, that
the failure to so notify ▇▇▇▇▇ City shall not reduce or affect ▇▇▇▇▇ City's
liability which it may have to such Indemnitee under this SECTION 10.1. Any
amount payable to any Indemnitee pursuant to this SECTION 10.1 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
57
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 ▇▇▇▇▇ City 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, ▇▇▇▇▇
City 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. ▇▇▇▇▇ City 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, ▇▇▇▇▇ City shall have the right in its sole discretion, to defend or
compromise any Claim for which indemnification is sought under this SECTION 10.1
which ▇▇▇▇▇ City acknowledges in writing to the applicable Indemnitee is subject
to indemnification hereunder; PROVIDED, that no such defense or compromise shall
involve any (i) material risk of foreclosure, sale, forfeiture or loss of, or
imposition of a Lien (other than a Permitted Lien) on the Facility, the
Undivided Interest or the Facility Site or the impairment of the use, operation
or maintenance of the Facility or the Facility Site in any material respect,
(ii) risk of criminal liability being incurred by the Owner Lessor, the Owner
Participant, or the Owner Manager or (so long as the Lessor Notes are
outstanding) the Lease Indenture Trustee and the Security Agent or any of their
respective Affiliates, or (iii) material risk of any material adverse effect on
the interests of the Owner Lessor, the Owner Participant, the Owner Manager or
(so long as the Lessor Notes are outstanding) the Lease Indenture Trustee and
the Security Agent or any of their respective Affiliates (including, without
limitation, subjecting any such Person to regulation as a public utility under
any applicable law); PROVIDED, FURTHER, that no Claim shall be compromised by
▇▇▇▇▇ City on a basis that admits any 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, ▇▇▇▇▇ City 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 ▇▇▇▇▇ City 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 ▇▇▇▇▇ City'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 ▇▇▇▇▇ City's expense with all
reasonable requests of ▇▇▇▇▇ City in connection therewith to minimize the cost
and expense to ▇▇▇▇▇ City of such compromise or defense (PROVIDED that such
Indemnitee shall not suffer any material economic, legal or regulatory
disadvantage as a result of such cooperation) and will provide ▇▇▇▇▇ City with
all information not within the control of ▇▇▇▇▇ City as is reasonably available
to such Indemnitee which ▇▇▇▇▇ City may reasonably request; PROVIDED, FURTHER,
HOWEVER, that such Indemnitee shall not, unless otherwise required by
Requirement of Law, be obligated to disclose to ▇▇▇▇▇ City or any other Person,
or permit ▇▇▇▇▇ City or any other Person to examine (i) any income tax returns
of the Owner Participant or the Owner Lessor or (ii) any confidential
58
information or pricing information not generally accessible by the public
possessed by the Owner Participant or the Owner Lessor (and, in the event that
any such information is made available, ▇▇▇▇▇ City 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 ▇▇▇▇▇ City, or the insurers under a policy of
insurance maintained by ▇▇▇▇▇ City, undertake the defense of such Indemnitee
with respect to a Claim (with counsel reasonably satisfactory to each 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 ▇▇▇▇▇ City or such insurers.
Notwithstanding the foregoing, an Indemnitee may participate at its own expense
in any judicial proceeding controlled by ▇▇▇▇▇ City pursuant to the preceding
provisions, but only to the extent that such party's participation does not in
the reasonable opinion of counsel to ▇▇▇▇▇ City interfere with such control;
PROVIDED, HOWEVER, that such party's participation does not constitute a waiver
of the indemnification provided in this SECTION 10.1; 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 ▇▇▇▇▇ City 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 ▇▇▇▇▇ City. So long as no Lease Event of
Default shall have occurred and be continuing, no Indemnitee shall enter into
any settlement or other compromise with respect to any Claim without the prior
written consent of ▇▇▇▇▇ City unless (i) the Indemnitee waives its rights to
indemnification hereunder or (ii) ▇▇▇▇▇ City 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 10.1(c) 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.
SECTION 10.2 GENERAL TAX INDEMNITY.
(a) INDEMNITY. Except as provided in paragraph (b), ▇▇▇▇▇ City
agrees to indemnify on an After-Tax Basis each of the Owner Participant, the OP
Guarantor, the Owner Lessor, the OM Company in its individual capacity, the
Owner Manager, the Lender, the Lease Indenture Trustee, the Lease Indenture
Company in its individual capacity, the Security Agent, their respective
successors, assigns, agents, employees, servants, directors and officers, 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
59
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,
rebuilding, transport, assembly, repossession, dismantling,
abandonment, retirement, decommissioning, storage, replacement, return,
purchase, sale or other disposition, insuring, sublease, or other use
or non-use of, imposition of any Lien (or occurrence of any liability
to refund or pay over any amount as a result of any Lien) on, 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 ▇▇▇▇▇ City, any
Affiliate thereof or any other operator at or in connection with the
Facility or 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 other Operative Document or any other documents
contemplated thereby, including 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 Rent,
Supplemental Lease Rent or any other amount payable under the Facility
Lease;
(vi) the conveyance of title to the Facility;
(vii) the existence or operation of any provision in the
Existing Debt or the Lessor Notes, including any payments with respect
thereto or any modification thereof;
(viii) any other amount paid or payable pursuant to the
Operative Documents; or
(ix) 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 by the United States federal government, or
Taxes imposed on, based on or measured by gross or net income or
receipts or capital or net worth (in each case, other than Taxes that
are or are in the nature of sales, use,
60
property, ad valorem, rental, stamp, transfer, excise, license, and
value added taxes or Taxes collected by withholding against payments
under the Lease Indenture or the Lessor Notes or Taxes arising out
of, or in connection with or related to the matters described);
(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, in the case of the
Lease Indenture Trustee, after the repayment of the Lessor Notes) and
not as a result of any act, event or omission occurring prior to or
simultaneous with such expiration, termination or surrender (or in the
case of the Noteholders, the Lease Indenture Trustee, the Lease
Indenture Company or any Related Party in respect of any thereof (each,
a "Lender Indemnitee"), such repayment), provided that this exclusion
shall not apply so long as a Lease Event of Default shall have occurred
and be continuing;
(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 (in each case, other than Taxes
that are or are in the nature of sales, use, property, ad valorem,
rental, stamp, transfer, excise, license, and value added taxes or
Taxes collected by withholding against payments under the Lease
Indenture or the Lessor Notes);
(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, except to the extent attributable to any acts
or omissions of the Facility Lessee or any sublessee, transferee or
assignee of the Facility Lessee;
(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 Lessor Membership Interest, (B) the Owner
Lessor of all or any of its interest in the Facility or the Facility
Site, or (C) the Security Agent of any interest in the Lessor
Notes or the Indenture Estate 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;
61
(vii) in the case of a Tax Indemnitee that is the Owner
Participant or a Related Party thereto, Taxes arising in connection
with Owner Participant Liens or in the case of a Tax Indemnitee that is
the Owner Lessor or a Related Party thereto, Taxes arising in
connection with Owner Lessor Liens;
(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 an assignment, transfer or
disposition during the continuance of a Material Lease Default or Lease
Event of Default;
(ix) Taxes that are properly included as a part of Transaction
Expenses;
(x) Taxes imposed on, based on, or measured by any
compensation that any Owner Manager, the Security Agent or the Lease
Indenture Trustee receives for its services;
(xi) [any U.S. federal income taxes, including] with respect
to the Owner Participant, U.S. federal income taxes for which ▇▇▇▇▇
City 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 a Lender Indemnitee, Taxes
resulting from the Owner Lessor not being treated as a grantor trust, a
nonentity or a pass-through or disregarded entity 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 under applicable law
or the Operative Documents to comply with such requirement and shall
have been given timely written notice of such requirement by or on
behalf of ▇▇▇▇▇ City;
(xiv) Taxes imposed on a Tax Indemnitee where the Tax
Indemnitee's breach of its contest obligations under SECTION 10.2(g)
effectively precludes ▇▇▇▇▇ City's ability to contest the Taxes;
(xv) Taxes imposed on any Tax Indemnitee resulting from an
amendment, modification, supplement or waiver to any Operative Document
which was not requested by ▇▇▇▇▇ City and as to which ▇▇▇▇▇ City is not
a party and the Tax Indemnitee (or, in the case of the Owner
Participant, the Owner 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
62
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 or requested
by ▇▇▇▇▇ City 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
resulting from any breach of any of the representations or warranties
of such Tax Indemnitee set forth in SECTION 3.4(g) hereof;
(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 (other than Taxes that are or are in the
nature of sales, use, property, ad valorem, rental, stamp, transfer,
excise, license and value added taxes or Taxes collected by withholding
against payments under the Lease Indenture or the Lessor Notes) 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 ▇▇▇▇▇ City has timely notified such Tax Indemnitee in writing
of the requirement to file, unless such failure is otherwise caused by
the failure of ▇▇▇▇▇ City 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
(xx) Taxes for as long as such Taxes are being contested
pursuant to the contest provisions contained in SECTION 10.2(g)
(subject to the Tax Indemnitee's right to obtain a Tax Advance pursuant
to SECTION 10.2(g)(iii)(5)).
(c) PAYMENT. Each payment required to be made by ▇▇▇▇▇ City to
a Tax Indemnitee pursuant to this SECTION 10.2 shall be paid either (i) when due
directly to the applicable taxing authority by ▇▇▇▇▇ City 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 ▇▇▇▇▇ City'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
63
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 ▇▇▇▇▇ City 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 ▇▇▇▇▇ City 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
▇▇▇▇▇ City has made a Tax Advance, the amount of ▇▇▇▇▇ City's obligation under
paragraph (a) above shall be determined as if such Tax Advance had not been
made. Any obligation of ▇▇▇▇▇ City under this SECTION 10.2 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. All payments required to be made by
▇▇▇▇▇ City pursuant to this SECTION 10.2 shall be made on an After-Tax Basis.
(d) INDEPENDENT EXAMINATION. Within 15 days after ▇▇▇▇▇ City
receives any computation from the Tax Indemnitee, ▇▇▇▇▇ City may request in
writing that an independent public accounting firm selected by the Tax
Indemnitee and reasonably acceptable to ▇▇▇▇▇ City review and determine on a
confidential basis the amount of any indemnity payment by ▇▇▇▇▇ City to the Tax
Indemnitee pursuant to this SECTION 10.2 or any payment by a Tax Indemnitee to
▇▇▇▇▇ City pursuant to paragraph (e) or (f) below. The Tax Indemnitee and ▇▇▇▇▇
City 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 ▇▇▇▇▇ City, as the case may be,
to maintain the confidentiality of such information, and PROVIDED FURTHER that
neither any Tax Indemnitee nor ▇▇▇▇▇ City shall be required to disclose any of
its tax returns or books that such Tax Indemnitee or ▇▇▇▇▇ City, as the case may
be, reasonably deems to be confidential in connection with such verification,
and the parties hereto agree that such Tax Indemnitee, or ▇▇▇▇▇ City, 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 ▇▇▇▇▇ City; 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
▇▇▇▇▇ City 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
64
SECTION 10.2 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 ▇▇▇▇▇ City under this SECTION 10.2, 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 10.2
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 ▇▇▇▇▇ City under paragraph (a) above and provided no
Material Lease Default or Lease Event of Default shall have occurred and be
continuing (in which event the payment provided under this SECTION 10.2(e) shall
be deferred until the Material Lease Default or Lease Event of Default has been
cured), such Tax Indemnitee shall pay to ▇▇▇▇▇ City 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 10.2 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
▇▇▇▇▇ City to make payment to such Tax Indemnitee pursuant to this SECTION 10.2.
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 ▇▇▇▇▇ City must indemnify the
Tax Indemnitee pursuant to this SECTION 10.2 without regard to paragraph (b)
hereof.
(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 ▇▇▇▇▇ City 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 ▇▇▇▇▇ City pursuant to this SECTION 10.2, the
Tax Indemnitee shall pay to ▇▇▇▇▇ City within 15 days of such receipt, or in the
case of an offset refund or credit, within 15 days of the applicable event (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 ▇▇▇▇▇ City (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 ▇▇▇▇▇ City a Material Lease
Default or Lease Event of Default shall have occurred and be continuing, such
amount shall not be payable until such Material Lease Default or Lease Event of
Default has been cured, and (B) the amount payable to ▇▇▇▇▇ City 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 ▇▇▇▇▇ City (and such excess
shall be carried forward and applied to reduce pro tanto any
65
subsequent obligations of ▇▇▇▇▇ City to make payments to such Tax Indemnitee
pursuant to this SECTION 10.2). 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 ▇▇▇▇▇ City must indemnify the Tax Indemnitee pursuant to this SECTION
10.2 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 ▇▇▇▇▇ City
pursuant to this SECTION 10.2, a Tax Indemnitee receives an amount representing
interest on such refund or credit, the Tax Indemnitee shall pay to ▇▇▇▇▇ City
within 15 days (1) the amount of such interest that shall be fairly attributable
to such Taxes paid, reimbursed or advanced by ▇▇▇▇▇ City 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 pursuant to this sentence (determined using the assumptions set
forth in the second sentence of the definition of After-Tax Basis).
(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 ▇▇▇▇▇ City may be required to indemnify against hereunder (a "TAX
CLAIM"), such Tax Indemnitee shall give ▇▇▇▇▇ City written
notice of such Tax Claim promptly after its receipt, and shall ▇▇▇▇▇▇▇
▇▇▇▇▇ City 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 ▇▇▇▇▇ City shall not relieve
▇▇▇▇▇ City of any obligation to indemnify the Tax Indemnitee hereunder
except to the extent such failure effectively precludes ▇▇▇▇▇ City from
contesting such Tax. The Tax Indemnitee shall not pay such Tax Claim
until at least 30 days after providing ▇▇▇▇▇ City 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 ▇▇▇▇▇ City of such requirement.
(ii) Control of Contest. Subject to subsection (g)(iii) below,
▇▇▇▇▇ City will be entitled to contest (acting through counsel selected
by ▇▇▇▇▇ City 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 ▇▇▇▇▇ City is not obligated to indemnify the Tax Indemnitee,
provided that if the Tax Indemnitee in its sole discretion determines
at any time that permitting ▇▇▇▇▇ City to conduct or continue to
conduct such contest could have an adverse business effect 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 ▇▇▇▇▇ City control such contest; provided that
in the case of any such contest pursuant to (i) or (ii) ▇▇▇▇▇ City
shall use all reasonable efforts to contest such Tax Claim in its own
name, and provided further that such contest shall be at ▇▇▇▇▇ City's
sole cost and expense with no after tax cost to the Tax Indemnitee.
▇▇▇▇▇ City shall consult in good faith with and keep reasonably
informed the Tax Indemnitee and its counsel and shall provide the Tax
Indemnitee with copies
66
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 ▇▇▇▇▇ City in its sole judgment.
In the case of all other Tax Claims, the Tax Indemnitee will contest
the Tax Claim at ▇▇▇▇▇ City's expense if ▇▇▇▇▇ City 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:
(A) the Tax Indemnitee will control the contest of such Tax
Claim, and all decisions with respect to such contest shall be made in its sole
judgment exercised in good faith (acting through counsel selected by the Tax
Indemnitee and reasonably satisfactory to ▇▇▇▇▇ City),
(B) at ▇▇▇▇▇ City'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,
(C) the Tax Indemnitee conducting such contest shall consult
with and keep reasonably informed ▇▇▇▇▇ City and its designated counsel with
respect to such Tax Claim and shall consider and consult in good faith with
▇▇▇▇▇ City 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.
(D) Notwithstanding paragraph (C), above, the Tax Indemnitee
shall not otherwise settle, compromise or abandon such contest without ▇▇▇▇▇
City'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 10.2, and ▇▇▇▇▇ City shall be required to pay
the applicable Taxes without contest, unless:
(A) within 30 days after notice by the Tax Indemnitee to ▇▇▇▇▇
City of such Tax Claim, ▇▇▇▇▇ City 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 ▇▇▇▇▇ City of such requirement, ▇▇▇▇▇ City shall request
such contest within a reasonable time period (taking into account the time
required to take action) after its receipt of notice within such shorter period,
and such Tax Indemnitee shall take no action for as long as it is legally able
to do so,
(B) no Lease Event of Default has occurred and is continuing,
(C) 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
67
any portion or Component thereof or any interest therein as a result of such Tax
Claim; PROVIDED that this clause (C) shall not apply if ▇▇▇▇▇ City shall have
posted and maintained a bond or otherwise provided security for ▇▇▇▇▇ City's
obligations under SECTION 10.2, in each case satisfactory to the Tax Indemnitee
as to coverage and credit, or the Tax is fully paid in either manner specified
in clause (E) below,
(D) there is no risk of imposition of any criminal liability
or penalties,
(E) if such contest involves payment of such Tax, ▇▇▇▇▇ City
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 ▇▇▇▇▇ City pursuant to SECTION 10.2(a) above
with respect to such Tax, and such Tax Indemnitee shall promptly pay to ▇▇▇▇▇
City 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 results from making any such payment (determined using the
assumptions set forth in the second sentence of the definition of After-Tax
Basis).
(F) ▇▇▇▇▇ City 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),
(G) the Tax Indemnitee has been provided at ▇▇▇▇▇ City's sole
expense with an opinion, reasonably acceptable to such Tax Indemnitee, of
independent tax counsel of recognized standing selected by ▇▇▇▇▇ City and
reasonably acceptable to the Tax Indemnitee to the effect that there is a
Reasonable Basis for contesting such Tax Claim; PROVIDED that if the subject
matter of the contest shall have previously been decided by a court of competent
jurisdiction pursuant to the contest provisions of this SECTION 10.2(g), such
opinion shall be that as a result of a change in law or fact, it is more likely
than not that the Tax Indemnitee will prevail,
(H) 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
▇▇▇▇▇ City.
(I) In the case of a judicial contest, ▇▇▇▇▇ City shall have
delivered to the Tax Indemnitee a written acknowledgment of its liability under
this SECTION 10.2 for such Taxes, PROVIDED, HOWEVER, that ▇▇▇▇▇ City 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 ▇▇▇▇▇ City has no liability under this SECTION 10.2 with
respect to such Tax, unless ▇▇▇▇▇ City's conduct of the contest has materially
prejudiced the Tax Indemnitee.
(iv) WAIVER OF INDEMNIFICATION. Notwithstanding anything to
the contrary contained in this SECTION 10.2, 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
68
may in its sole discretion settle or compromise any contest with
respect to such Tax Claim without ▇▇▇▇▇ City's consent if the Tax
Indemnitee:
(A) waives its right to any indemnity payment by ▇▇▇▇▇ City
pursuant to this SECTION 10.2 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
(B) promptly repays to ▇▇▇▇▇ City any Tax Advance and any
amount paid to such Tax Indemnitee under SECTION 10.2(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 10.2, ▇▇▇▇▇ City 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 (x) if
permitted by applicable law, prepare such report, statement or return
for filing by ▇▇▇▇▇ City 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, (y) 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, or (z) if ▇▇▇▇▇ City is not
permitted by law to file such report, statement or return or if such
return does not reflect only information in respect of the transactions
contemplated by the Operative Documents, provide the Tax Indemnitee
with the information in respect of the transactions contemplated by the
Operative Documents that is within ▇▇▇▇▇ City's control and is
necessary to file such report, statement or return.
(i) Each of the Tax Indemnitee or ▇▇▇▇▇ City, as the case may
be, will timely provide the other, at ▇▇▇▇▇ City'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. ▇▇▇▇▇
City will hold each Tax Indemnitee harmless on an After-Tax Basis from and
against all liabilities arising out of any insufficiency or inaccuracy of any
report, statement or return if such insufficiency or inaccuracy results from the
insufficiency or inaccuracy of any information supplied by
69
▇▇▇▇▇ City pursuant to this paragraph (h) in preparing and filing such report,
statement or return.
(j) Non-Parties. If a Tax Indemnitee is not a party to this
Agreement, ▇▇▇▇▇ City may require such Tax Indemnitee to agree in writing, in a
form reasonably acceptable to ▇▇▇▇▇ City, to the terms of this SECTION 10 (to
the extent applicable to such Tax Indemnitee) prior to making any payment to
such Tax Indemnitee under this Section.
ARTICLE XI
▇▇▇▇▇ CITY'S RIGHT OF QUIET ENJOYMENT
Each party to this Agreement acknowledges notice of, and
consents in all respects to, the terms of the Facility Lease and the Facility
Site 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 ▇▇▇▇▇ City's rights under the Facility
Lease and the Facility Site Sublease, including the quiet enjoyment of the use,
operation or possession of the Undivided Interest and the Ground Interest.
ARTICLE XII
SUPPLEMENTAL FINANCING OF IMPROVEMENTS; OPTIONAL REFINANCINGS
SECTION 12.1 FINANCING IMPROVEMENTS.
(a) Upon the written request of ▇▇▇▇▇ City 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 Lease Indenture Trustee
agree to cooperate with ▇▇▇▇▇ City to (i) issue Additional Lessor Notes to
finance such Improvement, which Additional Lessor Notes shall rank PARI PASSU
with the Lessor Notes then outstanding; (ii) execute and deliver one or more
supplements to the Lease Indenture for the purpose of subjecting any such
Improvements to the Security Interest; and (iii) execute and deliver an
amendment to the Facility Lease to reflect the adjustments required by subclause
(iii) below; PROVIDED HOWEVER, that (x) 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 and absolute discretion, but ▇▇▇▇▇ City shall have
no obligation to accept such Additional Equity Investment; and (y) the
conditions set forth below and in [Section 2.13] of the Lease Indenture shall
have been satisfied. The obligation to finance such Improvements through the
issuance of Additional Lessor Notes under [Section 2.13] of the Lease Indenture
(any financing of Improvements through the issuance of such Additional Lessor
Notes under the Lease Indenture being called a "SUPPLEMENTAL FINANCING") is
subject to the following conditions:
70
(i) there shall be no more than one such financing in any
calendar year; provided, that there shall be no such limitation with
respect to Required Improvements;
(ii) the Additional Lessor Notes (x) shall have a final
maturity date no later than two (2) years prior to the last day of the
Basic Lease Term; (y) will be fully repaid out of additional Basic
Lease Rent as adjusted pursuant to the Facility Lease; and (z) shall be
subject to such terms and conditions as are customary for indebtedness
issued in connection with leveraged lease financings;
(iii) 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 be made to protect the
Owner Participant's Net Economic Return; provided, however, that there
shall be no changes to the amortization schedule or interest amounts
and payment dates on the Initial Lessor Notes;
(iv) ▇▇▇▇▇ City shall have paid, on an After-Tax Basis, all
reasonable 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 Manager, the Security Agent
and the Lease Indenture Trustee, in each case to the extent incurred
in connection with such Supplemental Financing;
(v) no Material Lease Default or Lease Event of Default shall
have occurred and be continuing unless the Improvements to be made with
the proceeds of Additional Lessor Notes shall cure such Material Lease
Default or Lease Event of Default, and such Improvements shall be made
in compliance with the Operative Documents;
(vi) such financing is for an amount not less than $5 million,
nor greater than 100% of the costs of the Improvements being financed;
provided that the aggregate principal amount of the Additional
Lessor Notes shall not exceed the Owner Lessor's percentage of
$300,000,000;
(vii) the Owner Participant shall have received (x) an opinion
reasonably satisfactory to it from Owner Participant's Counsel to the
effect that such financing should not result in any incremental risk of
material adverse federal income tax consequences to the Owner
Participant, and (y) an indemnity against such risk in form and
substance reasonably satisfactory to the Owner Participant from or
guaranteed by an entity that meets the Minimum Credit Rating (or, if
the Minimum Credit Rating requirement is not met, the Owner Participant
shall have received credit support in respect of such indemnity
reasonably satisfactory to the Owner Participant); provided that if the
opinion referred to in clause (x) shall be that such financing "will"
not result in any incremental risk of material adverse federal income
tax consequences to the Owner Participant, then
71
the Minimum Credit Rating requirement shall not be required with
respect to the indemnity set forth in clause (y);
(viii) ▇▇▇▇▇ City shall have made or delivered such
representations, warranties, covenants, opinions or certificates as the
Owner Participant may reasonably request;
(ix) the Owner Participant shall not suffer any material
adverse accounting effect under GAAP as a result of such financing; and
(x) the projected Basic Lease Rent Service Coverage Ratio
shall be at least [ ] and the average Basic Lease Rent Service Coverage
Ratio shall be at least [ ], calculated at the time of issuance of such
Additional Lessor Notes, and calculated in accordance with MAPS and the
then Base Case assumptions.
Notwithstanding the provisions of paragraph (a) of this
SECTION 12.1, with respect to the financing of Improvements through the Facility
Lease, ▇▇▇▇▇ City shall, subject to SECTION 6.7 hereof, at all times have the
right to fund Improvements to the Facility other than through the Facility
Lease.
SECTION 12.2 OPTIONAL REFINANCING OF LESSOR LOAN. ▇▇▇▇▇ City
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 that the Owner Lessor refund or refinance all but not
less than all of the Lessor Notes outstanding through the issuance of New Lessor
Notes either in the public or private market to any Person that is not ▇▇▇▇▇
City or any Affiliate of ▇▇▇▇▇ City; PROVIDED that any refinancing under this
SECTION 12.2 shall also be subject to satisfaction of the following additional
conditions (and the Lender agrees not to consent to any such refinancing except
on the terms and conditions set forth below):
(a) the New Lessor Notes can be issued and sold upon terms and
conditions substantially the same terms as those then existing, or on such
modified terms and conditions which shall be reasonably acceptable to the Owner
Participant, and in an amount adequate (but not in excess of an amount
necessary) to accomplish such refunding or refinancing, PROVIDED that such
proceeds are used to repay the holders of the existing indebtedness
simultaneously with the issuance of the New Lessor Notes;
(b) the Owner Participant shall have received (i) an opinion
reasonably satisfactory to it from Owner Participant's Counsel to the effect
that the refinancing should not result in any incremental risk of material
adverse federal income tax consequences to the Owner Participant, and (ii) an
indemnity against such risk in form and in substance reasonably satisfactory to
the Owner Participant from or guaranteed by an entity that meets the Minimum
Credit Rating (or, if the Minimum Credit Rating is not met, the Owner
Participant shall have received credit support in respect of such indemnity
reasonably satisfactory to the Owner Participant); PROVIDED that if the opinion
referred to in clause (i) shall be that the refinancing "will" not result in any
incremental risk of material adverse federal income tax consequences to the
Owner Participant, then
72
the Minimum Credit Rating requirement shall not be required with respect to the
indemnity set forth in clause (ii);
(c) the refinancing, taken as a whole, shall not result in any
other material adverse effect on the Owner Lessor or the Owner Participant;
(d) all documentation in connection with such refinancing
shall be reasonably satisfactory to the Owner Lessor, the Owner Participant, and
the conditions set forth therein shall be met;
(e) 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, the Owner Participant,
the Lender, the Security Agent and the Lease Indenture Trustee and such
authorizations, approvals and consents shall be in full force and effect on the
closing date of such refinancing;
(f) the New Lessor Notes shall have the same principal amount
and maturity date as the Lessor Notes issued on the Closing Date and will be
fully repaid out of Basic Lease Rent during the Basic Lease Term;
(g) there shall be no change to the amortization schedule or
the payment dates for principal and interest payments (including increases in
payments of Debt Service) from the amortization schedule and payment dates with
respect to the Initial Lessor Notes;
(h) on the closing date of such refinancing, each of the
Facility Lessee, the Owner Lessor, the Lender, the Security Agent and the Lease
Indenture Trustee 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, the Lender, the
Security Agent and the Lease Indenture Trustee;
(i) each of the Owner Lessor, the Owner Participant, the
Lender, the Security Agent and the Lease Indenture Trustee shall have received
an opinion of counsel for ▇▇▇▇▇ City on such matters as they may reasonably
request and in form and substance reasonably satisfactory to such Persons;
(j) ▇▇▇▇▇ City 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 the Facility Lessee pursuant to [SECTION 2.13] of the
Lease Indenture;
(k) each of the Owner Lessor, the Owner Participant, the
Lender, the Security Agent and the Lease Indenture Trustee have received from
the Facility Lessee an Officer's Certificate dated the date of the issuance of
the New Lessor Notes stating that all conditions precedent to the issuance of
such New Lessor Notes have been satisfied or waived;
73
(l) the consummation of such refinancing shall not violate any
Requirement of Law;
(m) no Material Lease Default or Lease Event of Default shall
have occurred and be continuing;
(n) the Owner Participant shall suffer no adverse accounting
effects under GAAP;
(o) ▇▇▇▇▇ City shall have made or delivered representations,
warranties, covenants and certificates, of no greater scope than required on the
Closing Date except to the extent necessitated by differences between the
existing documentation and the terms and conditions of the proposed refinancing,
as the Owner Participant may reasonably request;
(p) the Owner Participant shall receive a fee equal to the
Owner Lessor's percentage of $100,000 for each refinancing after the first such
refinancing; and
(q) such refinanced Lessor Notes shall be subject to such
terms and conditions as are customary for indebtedness issued in connection with
leveraged lease transactions.
SECTION 12.3 OWNER LESSOR'S RIGHT TO REDEEM LESSOR NOTES. The
Owner Lessor may, at its option, (a) with the consent of ▇▇▇▇▇ City, redeem (i)
any Initial Lessor Note, in whole or in part, in accordance with the provisions
of [SECTION 2.11(d)] of the Lease Indenture or (ii) any Subsequent Lessor Note,
in whole or in part, in accordance with the provisions of [SECTION 2.11(e)] of
the Lease Indenture, and (b) without the consent of ▇▇▇▇▇ City, redeem any
Lessor Notes in accordance with Section 7.1(c) hereof.
74
SECTION 12.4 COOPERATION. The Owner Participant will cooperate
with and reasonably assist ▇▇▇▇▇ City 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 12 shall limit ▇▇▇▇▇ City's right to request a
refinancing in accordance with SECTION 12.2, above. In connection with any such
refinancing, the parties shall comply with the rent adjustment provisions set
forth in [SECTION 3] of the Facility Lease.
ARTICLE XIII
[Intentionally deleted]
ARTICLE XIV
RIGHT OF FIRST REFUSAL; RIGHT OF FIRST OFFER
SECTION 14.1 RIGHT OF FIRST OFFER. In the event (i) the Owner
Participant desires to directly or indirectly sell, lease, convey or otherwise
transfer some or all of its Lessor Membership Interest (other than to an
Affiliate of the Owner Participant or while a Lease Event of Default is
continuing) or (ii) the Owner Lessor desires (or the Owner Participant desires
to cause Owner Lessor) directly or indirectly to sell, lease, convey or
otherwise transfer some or all of the Owner Lessor's Interest, in each case
prior to the expiration of the Facility Lease Term then, if and only if as a
result of such proposed sale or sales less than 50.1% of (i) the ownership
interests of the Owner Lessor and each Other Owner Lessor (together, the "TOTAL
OWNER LESSOR INTERESTS") or (ii) the Owner Lessor's Interest and the Other Owner
Lessor's Interests (together, the "TOTAL FACILITY OWNERSHIP INTERESTS") would be
held by GECC or Persons who are Affiliates of GECC, then the Owner Participant
or the Owner Lessor, as the case may be, must first offer to sell such Lessor
Membership Interest or such Owner Lessor's Interest, as the case may be, to
▇▇▇▇▇ City on the terms and conditions set forth in this SECTION 14.1. Such
offer shall be made to the Facility Lessee in the form of a proposed term sheet,
which proposed term sheet shall include an outline of the price and of all of
the material terms, conditions and provisions upon which the Owner Participant
or the Owner Lessor, as the case may be, would be willing to transfer such
Lessor Membership Interest or such Owner Lessor's Interest, as the case may be,
or any part thereof. ▇▇▇▇▇ City will thereafter have the right within a period
of thirty (30) days from and after the receipt by the Facility Lessee of such
proposed term sheet to notify the Owner Participant or Owner Lessor, as the case
may be, of its irrevocable intent to exercise its right to purchase all, but not
less than all, of the Lessor Membership Interests or Owner Lessor's Interest
being offered 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 or Owner Lessor, as the case may be, shall
sell, the Lessor Membership Interest or the Owner Lessor's Interest, as the case
may be, on the same terms and conditions as the offer giving rise to such right
(except that the Owner Participant shall not be required to make any
representations to the Facility Lessee with respect to matters regarding the
Facility (even
75
though such representations are being made to a potential third party purchaser)
other than a warranty as to the absence of Owner Participant Liens). If the
Facility Lessee does not give such notice to the Owner Participant or Owner
Lessor, as the case may be, within the thirty (30) day period or does not
purchase the Lessor Membership Interest or the Owner Lessor's Interest, as the
case may be, within 60 days of such notice, the Owner Participant or Owner
Lessor, as the case may be, will be free to so sell, lease, convey or otherwise
transfer such Lessor Membership Interest or such Owner Lessor's Interest, as the
case may be, 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 or Owner Lessor, as the case may be, than the terms and conditions
set forth in the proposed term sheet. 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 or Owner Lessor, the Owner Participant or Owner Lessor, as the
case may be, must again comply with the notice and acceptance provisions of this
SECTION 14.1. It is understood and agreed among the parties hereto that the
transaction contemplated by this SECTION 14.1 shall not effect a merger of the
Facility Lessee's leasehold interest in the Facility and its ownership or
subleasehold interest in the Facility Site with the Owner Lessor's Interest.
Notwithstanding the foregoing, if, concurrently with the Owner Participant's
offer to sell its Lessor Membership Interest or the Owner Lessor's offer to sell
its Owner Lessor's Interest pursuant to this Section 14.1, it or one of its
Affiliates offers to sell any interest in an Other Owner Lessor who has entered
into any Other Facility
Participation Agreement, then the Facility Lessee shall
exercise its purchase rights under this Section 14.1 only if, concurrently
therewith, it exercises its purchase rights under Section 14.1 of each such
Other Facility
Participation Agreement.
SECTION 14.2 RIGHT OF FIRST REFUSAL. In the event (i) the
Owner Participant desires to sell, lease, convey or otherwise transfer some or
all of its Lessor Membership Interest or (ii) the Owner Lessor desires to (or
the Owner Participant desires to cause Owner Lessor to) sell, lease, convey or
otherwise transfer some or all of Owner Lessor's Interest, in either case on, or
at any time within two years after, the expiration or termination of the
Facility Lease (other than pursuant to [SECTIONS 13, 14 and 17] of the Facility
Lease) to any Person other than an Affiliate of the Owner Participant, the
Facility Lessee or an Affiliate thereof, then, if and only if, as a result of
such proposed sale, less than 50.1% of the Total Owner Lessor Interests or the
Total Facility Ownership Interests would be held by GECC or Persons who are
Affiliates of GECC, the Facility Lessee shall have the right, unless such sale
is during the continuance of a Lease Event of Default, to purchase or acquire
all, but not less than all, of such interest on the terms and conditions set
forth in the bid that the Owner Participant or the Owner Lessor, as the case may
be, intends to accept; PROVIDED, that the Owner Participant's or the Owner
Lessor's right to transfer its Lessor Membership Interest or its Owner Lessor
Interest during the Facility Lease Term pursuant to SECTION 8.1 shall not be
impaired by the provisions of this SECTION 14.2 (but shall be subject to the
provisions of SECTION 14.1). The Owner Participant or the Owner Lessor, as the
case may be, shall give the Facility Lessee prompt written notice of all BONA
FIDE offers that it intends to accept that have been received from
76
any other Person to purchase or acquire the Owner Lessor's Interest or Lessor
Membership Interest or any part of either during such two-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 have the right within a period of thirty (30)
days from and after the receipt by the Facility Lessee of such notice to notify
the Owner Participant or the Owner Lessor, as the case may be, of its
irrevocable exercise its right 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 or Owner Lessor shall
sell, all but not less than all of the Lessor Membership Interest or the Owner
Lessor Interest on the same terms and conditions (except that neither the Owner
Participant nor the Owner Lessor shall be required to make any representations
to the Facility Lessee with respect to matters regarding the Facility other than
the warranty as to the absence of the Owner Participant's Liens (even though
such representations are being offered to a potential third party purchaser)) as
the offer giving rise to such right. If the Facility Lessee does not give such
notice to the Owner Participant or the Owner Lessor within the thirty (30) day
period or does not purchase the Lessor Membership Interest or Owner Lessor
Interest within sixty (60) days of such notice, the Owner Participant or the
Owner Lessor shall be free to proceed substantially under the terms and
conditions as set forth in its notice to the Facility Lessee, unless the
Facility Lessee's failure to purchase the Lessor Membership Interest or Owner
Lessor Interest within sixty (60) days is attributable to acts or omissions of
the Owner Participant or Owner Lessor. In the event that the terms or conditions
are revised to be less favorable, taken as a whole, other than in immaterial
respects to the Owner Participant or Owner Lessor, 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 or the Owner Lessor as the
case may be must again comply with the notice and acceptance provisions of this
SECTION 14.2. In connection with the Facility Lessee's exercise of the right of
first refusal pursuant to this SECTION 14.2 with respect to the Owner Lessor's
Interest, the Ground Interest shall be conveyed to the Facility Lessee subject
to the Lien of the Lease Indenture. It is understood and agreed among the
parties hereto that the transactions contemplated by this SECTION 14.2 shall not
effect a merger of the Facility Lessee's leasehold interest in the Facility and
its ownership or subleasehold interest in the Facility Site with the Owner
Lessor's Interest. Notwithstanding the foregoing, if, concurrently with the
Owner Participant's proposal to sell its Lessor Membership Interest or the Owner
Lessor's proposal to sell its Owner Lessor's Interest pursuant to this Section
14.2, it or one of its Affiliates proposal to sell any interest in any Other
Owner Lessor who has entered into any Other Facility Participation Agreement,
then the Facility Lessee shall exercise its purchase rights under this Section
14.2 only if, concurrently therewith, it exercises its purchase rights under
Section 14.2 of each such Other Facility Participation Agreement.
77
ARTICLE XV
SPECIAL LESSEE TRANSFER
In the case of a Regulatory Event of Loss or Burdensome Buyout
Event under the Facility Lease, the Owner Participant (for purposes of this
ARTICLE XV, the "SELLING PARTY") shall have the right, but shall be under no
obligation, to sell the Lessor Membership Interest, in which event the Facility
Lease (and the Lessor Notes) shall remain in place (a "SPECIAL LESSEE
Transfer"). At the request of the Selling Party, the Facility Lessee will, as
nonexclusive agent for such Selling Party, use commercially reasonable efforts
to obtain cash bids from unaffiliated third parties for the sale of the Lessor
Membership Interest. Upon not less than 30 days' written notice to the Selling
Party, the Facility Lessee may, but shall be under no obligation to, make an
offer to purchase the Lessor Membership Interest and shall have a right of first
refusal with respect to any offer received from an unaffiliated third party
(which may be exercised any time prior to the Termination Date), in connection
with such sale. Only BONA FIDE bids, whether from the Facility Lessee or a third
party, to purchase the Lessor Membership Interest for cash on the applicable
Termination Date on an "as is, where is" basis without any representation, other
than by the Owner Participant as to the absence of Owner Participant Liens,
shall be qualifying cash bids ("QUALIFYING SPECIAL LESSEE TRANSFER BIDS") and
all the proceeds of any such Qualifying Special Lessee Transfer Bid shall be for
the account of the Selling Party. If a Qualifying Special Lessee Transfer Bid is
received and the Selling Party accepts such bid in writing, the Facility Lessee
shall pay the Selling Party on the Termination Date (i) the Special Lessee
Transfer Amount determined as of such Termination Date, less the cash actually
received by such Selling Party in connection with such Qualifying Special Lessee
Transfer Bid (or, if the amount of such cash actually received by such Selling
Party from such Qualifying Special Lessee Transfer Bid is equal to or greater
than the Special Lessee Transfer Amount, zero) PLUS (ii) any other payment due
and unpaid, or accrued and unpaid, under any Operative Document (other than
Basic Lease Rent or Renewal Rent payable on or after such Termination Date) (the
"ADDITIONAL TRANSFER AMOUNTS"). If a Qualifying Special Lessee Transfer Bid is
rejected in writing by the applicable Selling Party and such Selling Party has
not elected to retain the Lessor Membership Interest, the Facility Lessee shall
pay such Selling Party on the applicable Termination Date (x) the Special Lessee
Transfer Amount determined as of such Termination Date, less the amount of such
rejected Qualifying Special Lessee Transfer Bid (or, if the amount of such
rejected Qualifying Special Lessee Transfer Bid is equal to or greater than such
Special Lessee Transfer Amount, zero) PLUS (y) all Additional Transfer Amounts.
If no Qualifying Special Lessee Transfer Bid is offered and the applicable
Selling Party has not elected to retain the Lessor Membership Interest, the
Facility Lessee shall pay such Selling Party on the applicable Termination Date
(A) the Special Lessee Transfer Amount determined as of such Termination Date
PLUS (B) all Additional Transfer Amounts. If the applicable Selling Party elects
in writing to retain the Lessor Membership Interest, the Facility Lessee shall
pay such Selling Party on the applicable Termination Date all Additional
Transfer Amounts (but shall have no obligation to pay the Special Lessee
Transfer Amount).
Concurrently with the payment of all sums required to be paid
pursuant to this ARTICLE XV (or on such later date of transfer of the Lessor
Membership Interest 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
78
(including in SECTIONS 10.1 and 10.2 and in 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) unless the Selling
Party has elected in writing to retain the Lessor Membership Interest, the
Selling Party will transfer (by an appropriate instrument of transfer in form
and substance reasonably satisfactory to the Selling Party and prepared and
recorded at the Facility Lessee's expense) the Lessor Membership Interest to the
Facility Lessee (or its designee) or to the third party making the accepted
Qualifying Special Lessee Transfer Bid referred to in the previous paragraph;
PROVIDED, HOWEVER, that if, in the case of a proposed transfer to the Facility
Lessee, 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 Lessor Membership Interest to the Facility Lessee
until such Lien is discharged. The Selling Party shall make any transfer under
this ARTICLE XV on an "as is," "where is" basis, without warranty other than as
to the absence of Owner Participant Liens on the Lessor Membership Interest. It
is understood and agreed among the parties hereto that the transactions
contemplated by this ARTICLE XV shall not effect a merger of the Facility
Lessee's leasehold interest in the Facility and its ownership or subleasehold
interest in the Facility Site with the Owner Lessor's Interest. The Facility
Lessee will pay, on an After-Tax Basis, all reasonable costs and expenses of the
Lease Financing Parties (including reasonable documented attorneys' fees and
disbursements) in connection with any transfer pursuant to this ARTICLE XV.
Subsequent to such transfer, the Facility Lessee and the Owner Lessor may,
without the consent of the Lease Indenture Trustee, waive the Regulatory Event
of Loss or Burdensome Buyout Event that gave rise to the right to purchase the
Lessor Membership Interest, as the case may be, and the Facility Lease shall
continue in full force and effect in accordance with its terms.
ARTICLE XVI
COMMON FACILITIES
The Owner Participant acknowledges that, during the term of
the Facility Lease, EME may, so long as no Material Lease Default or Lease Event
of Default has occurred and is then continuing, seek to develop, either directly
or indirectly through a subsidiary (other than ▇▇▇▇▇ City; EME or such
subsidiary is hereinafter referred to as the "ADDITIONAL PLANTS OPERATOR"),
additional electric generation units on the Facility Site ("ADDITIONAL PLANTS"),
including but not limited to the development of both an approximately 730 MW
gas-fired plant and an approximately 600 MW coal-fired plant to be located at
the Facility Site.
At such time as EME determines the specifications for the
Additional Plants, ▇▇▇▇▇ City will prepare a written presentation, including
site maps, to be made to the Owner Participant, setting forth the terms and
conditions on which it plans to develop the Additional Plants and the physical
specifications for operation of the Additional Plants (the "DEVELOPMENT
PRESENTATION"). The Owner Participant shall be entitled to receive any
additional information it reasonably requests to determine that neither the
construction and operation of, and activities related to, the Additional Plants,
constructed
79
and operated in accordance with the Development Presentation, nor the Additional
Plants Operator are likely to (w) interfere in any material way with the
capacity, availability, reliability, performance or operation of the Facility,
(x) materially increase O&M Costs for the Facility, (y) diminish the current
value, residual value, utility or remaining economic useful life of the Facility
by more than a DE MINIMIS amount (as measured immediately prior to such
construction, assuming the Facility is, at such time, in the condition required
by the terms of the Facility Lease) or cause the Facility to become
"limited-use" property within the meaning of Rev. Proc. 2001-28, 2001-19 IRB
1156 or Rev. Proc. 2001-29, 2001-19 IRB 1160, or (z) otherwise cause ▇▇▇▇▇ City
to incur any material cost, expense, claim or liability (collectively, "MATERIAL
IMPAIRMENT"). The Owner Participant may engage such engineering, environmental
or other consultants as are reasonably necessary to assist it in making such
determination. In the event the Owner Participant reasonably concludes that
there is a reasonable likelihood of a Material Impairment, the Owner Participant
shall promptly give ▇▇▇▇▇ City notice of such conclusion in reasonable detail.
If such notice is given, the Owner Participant shall cooperate with ▇▇▇▇▇ City
in developing modifications, if any, to the Development Presentation which avoid
the reasonable likelihood of any Material Impairment (including, if appropriate,
(i) modifying shared facilities at ▇▇▇▇▇ City's cost (not payable out of
Revenues) for increasing capacity to avoid any Material Impairment or (ii)
imposing charges to be paid out of Additional Plant revenues to the Owner Lessor
to pay for increased Facility operating costs or to compensate for any Material
Impairment). ▇▇▇▇▇ City may revise the Development Presentation to incorporate
the Owner Participant's modifications (the "REVISED DEVELOPMENT PRESENTATION";
the Development Presentation, if not objected to by the Owner Participant and
the Revised Development Presentation, if applicable, are hereinafter referred to
as the "ACTUAL DEVELOPMENT PLAN") and thereafter EME may develop the Additional
Plants in accordance with the Revised Development Presentation and in a manner
which avoids Material Impairment.
To the extent that the development of the Additional Plants
begins prior to the completion of the contemplated subdivision of the
Facility Site, Owner Participant agrees that it will direct the Owner Lessor
to enter into an agreement with ▇▇▇▇▇ City amending the Ground Lease to
permit the Additional Plant Operator to use such portion of the Facility Site
for the Additional Plants as is provided in the Actual Development Plan.
The Owner Participant further agrees that, on the terms and
conditions set forth in the Actual Development Plan, it will direct the Owner
Lessor to grant to the Additional Plants Operator, easements across the Facility
Site which are reasonably required for access to the Additional Plants, fuel
supply (including gas pipelines) for the Additional Plants, and electric
transmission lines to and from the Additional Plants as set forth in the Actual
Development Plan. The Owner Participant further agrees that, on the terms and
conditions set forth in the Actual Development Plan, the Additional Plants may
share use of: control room facilities; switchyards; fuel handling and processing
facilities; all water systems including intake, storage, conditioning and
discharge facilities; air systems; auxiliary steam systems; ash handling and
disposal systems; bulk chemical and gas storage systems; and other equipment or
systems which may support both the Facility and the Additional Plants (to the
extent shared, the "COMMON FACILITIES") and shall enter
80
into such agreements as are necessary to evidence such shared use; PROVIDED that
any arrangement for sharing the Common Facilities shall provide that in all
events in which, in the reasonable discretion of the Owner Participant, the
Common Facilities have insufficient capacity to service the operations of both
the Facility (to the extent necessary to maximize its Revenues) and the
Additional Plants, the Facility shall have first call and right to use the
Common Facilities to the exclusion of Additional Plants Operator and the
Additional Plants, until such time as its requirements are met. Notwithstanding
the proviso to the preceding sentence, to the extent that the Common Facilities
have been improved as contemplated by the Actual Development Plan to increase
capacity of such Common Facilities, the Facility's first call and right to use
the Common Facilities will be limited to the pre-improvement capacity of such
Common Facilities.
The Owner Participant acknowledges that EME may seek to obtain
financing of the Additional Plants and agrees to direct the Owner Lessor to
issue consents and other documents reasonably required for such financing,
including, but not limited to, releases of any security interests in separate
turbines, generators and other equipment which are solely part of the Additional
Plants and consents permitting the Additional Plants to grant security interests
in the Additional Plants' interest in Common Facilities used by the Additional
Plants, to the extent contemplated by the Actual Development Plan.
Whether or not the transactions contemplated by a Development
Presentation or Revised Development Presentation are consummated, ▇▇▇▇▇ City
agrees to pay or reimburse, on an After-Tax Basis (from equity capital
contributions only), any costs or expenses (including reasonable legal fees and
expenses) incurred by the Owner Lessor or the Owner Participant in connection
with the transactions contemplated by this ARTICLE XVI, including, without
limitation, the reasonable fees and expenses of counsel and any consultant
engaged by Owner Participant.
The cost and expense of planning, developing, financing,
constructing and operating the Additional Plants (and all claims and liabilities
related thereto) shall be borne by EME or the Additional Plants Operator. In no
event shall any such material cost, expense, claim or liability be incurred by
▇▇▇▇▇ City, except as set forth in the preceding paragraph.
ARTICLE XVII
MISCELLANEOUS
SECTION 17.1 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 17.2 SUCCESSOR OWNER MANAGER. The parties hereto agree
that the transfer or assignment pursuant to the terms of the Lessor LLC
Agreement by the
81
Owner Manager to a successor Owner Manager, will not violate the terms of any
Operative Document.
SECTION 17.3 BANKRUPTCY OF LESSOR ESTATE. If (i) all or any
part of the Lessor 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 Security Agent or Lease
Indenture Trustee actually receives any Excess Amount, as defined below,
which reflects any payment by the Owner Participant on account of clause (ii)
above, the Lease Indenture Trustee or the Security Agent, as the case may be,
shall promptly refund to the Owner Participant such Excess Amount. For
purposes of this SECTION 17.3, "EXCESS AMOUNT" means the amount by which such
payment exceeds the amount which would have been received by the Lease
Indenture Trustee or the Security Agent, as the case may be if the Owner
Participant had not become subject to the recourse liability referred to in
clause (ii) above. Nothing contained in this SECTION 17.3 shall prevent the
Lease Indenture Trustee or the Security Agent 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 17.4 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.
SECTION 17.5 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 ▇▇▇▇▇ City:
82
If to the Owner Lessor, the Owner Manager or the OM Company:
If to the Owner Participant:
If to the Lease Indenture Trustee:
with a copy to:
If to the Lender:
If to the Bondholder Trustee:
If to the Security Agent:
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, ▇▇▇▇▇ City, without
duplication, shall (unless otherwise directed by the applicable Rating Agency)
provide to each Rating
83
Agency a copy of any information, report or notice it gives to the Lease
Indenture Trustee hereunder or any other Operative Documents.
SECTION 17.6 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 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 ▇▇▇▇▇ City under SECTIONS 10.1 and 10.2 of this Agreement
shall, subject to SECTIONS 10.1(b) and 10.2(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 OM Company, the Owner Manager, the Bondholder Trustee, the Security
Agent and the Lease Indenture Trustee, to and under this Agreement and other
Operative Documents.
SECTION 17.7 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
Lessor Membership Interest permitted under SECTION 8.1 and under ARTICLE XV.
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 17.8 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 17.9 SEVERABILITY. If any provision hereof shall be
invalid, illegal or unenforceable under any Requirement of Law, the validity,
legality and enforceability of the remaining provisions hereof shall not be
affected or impaired thereby.
SECTION 17.10 COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
84
SECTION 17.11 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 and shall not be construed to affect the meaning or
construction of any of the provisions hereof.
SECTION 17.12 LIMITATION OF LIABILITY.
(a) None of the Owner Participant, the Owner Lessor, the Owner
Manager, the OM Company, the Lender, the Bondholder Trustee, the Security Agent,
the Lease Indenture Trustee or the Lease Indenture Company shall have any
obligation or duty to ▇▇▇▇▇ City or to others with respect to the transactions
contemplated hereby, except those obligations or duties expressly set forth in
this Agreement and the other Operative Documents to which such Person is a
party, and neither the Owner Lessor, the Owner Participant, the Owner Manager,
the OM Company, the Bondholder Trustee, the Security Agent, the Lender or the
Lease Indenture Trustee 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 ▇▇▇▇▇ City, for any action or inaction
on the part of the Owner Lessor or the Owner Manager 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 OM Company is executing the Operative Documents to
which it is a party solely as manager under the Organic Documents of Owner
Lessor and not in its individual capacity, except as expressly provided herein
or therein, and in no case whatsoever shall the OM 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 Manager
hereunder or under any other Operative Document, as to all of which the other
parties hereto agree to look solely to the Lessor Estate; PROVIDED, HOWEVER,
that the OM 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) Each of the Lease Indenture Trustee, the Security Agent
and the Bondholder Trustee is entering into the Operative Documents to which
it is a party solely as Lease Indenture Trustee or Security Agent under the
Lease Indenture or Bondholder Trustee under the Fundco Indenture, as the case
may be, and not in its individual capacity, except as expressly provided
herein or therein, and in no case whatsoever shall the Lease Indenture
Trustee, the Security Agent or the Bondholder Trustee 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
85
look solely to the Lessor Estate and the Indenture Estate; PROVIDED, HOWEVER,
that such party 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.
(d) The right of the Lease Indenture Trustee, the Security
Agent or the Bondholder Trustee, as the case may be, 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 neither the Lease Indenture Trustee, the Lease
Indenture Company, the Security Agent, the Bondholder Trustee nor the
Bondholder Trustee Company shall 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 Lease Indenture Trustee, the Security Agent or the Bondholder Trustee, as
the case may be, may in its own judgment (but shall not, except as otherwise
provided in the Lease Indenture or Fundco Indenture, as the case may be, or
as otherwise required by a Requirement of Law, have any obligation to)
request in writing the approval of the Lender.
(e) The Owner Participant will give ▇▇▇▇▇ City at least
fifteen (15) days' prior notice of any proposed amendment or supplement to
the Organic Documents of Owner Lessor (other than amendments solely effecting
a transfer of the Owner Participant's interest in the Lessor Estate or with
respect to administrative matters) and deliver true, complete and fully
executed copies to ▇▇▇▇▇ City of any amendment or supplement to the Lessor
LLC Agreement. No amendment or supplement to the Lessor LLC Agreement that
would materially adversely affect the interests of the Lease Indenture
Trustee or the Security Agent shall become effective without the prior
written consent of the Lease Indenture Trustee and the Security Agent.
SECTION 17.13 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
86
this Agreement, the other Operative Documents, or the subject matter hereof or
thereof may not be enforced in or by such court.
(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, ▇▇▇▇▇
City designates, appoints and empowers CT Corporation System as its authorized
agent to receive for and on its 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 ▇▇▇▇▇ City shall remain outstanding
hereunder or under any of the other Operative Documents. ▇▇▇▇▇ City 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 ▇▇▇▇▇ City shall remain outstanding hereunder
or under any of the Operative Documents.
SECTION 17.14 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 17.15 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 17.16 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: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇ or (ii) the period provided under the
Uniform Statutory Rule Against
87
Perpetuities or (b) the specific applicable period of time expressed in this
Agreement, whichever of (a) and (b) is shorter.
SECTION 17.17 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 17.18 [INTENTIONALLY DELETED].
SECTION 17.19 CONFIDENTIALITY. Each party recognizes that, in
connection with this Agreement, it may become privy to nonpublic information
regarding the financial condition, operations and prospects of the other parties
hereto. Each party agrees to keep all nonpublic information regarding each other
party strictly confidential, and to use all such information solely in order to
effectuate or monitor the purpose of this Agreement and the other Operative
Documents; PROVIDED that each party may provide confidential information to its
employees, agents and Affiliates who have a need to know such information in
order to effectuate or monitor the transaction; PROVIDED, FURTHER, that such
information is identified as confidential nonpublic information. In the event
that any of the parties to this Agreement or any of the employees, agents or
Affiliates of such parties are requested pursuant to, or required by, applicable
law, regulation or legal process to disclose any of the nonpublic information,
such party will promptly notify any affected party prior to any such disclosure
so that such party may seek a protective order or other appropriate remedy or,
in such party's sole discretion, waive compliance with the terms of this SECTION
17.19. In the event that no such protective order or other remedy is obtained,
or that such party waives compliance with the terms of this SECTION 17.19, the
party required to disclose such nonpublic information or its employees, agents
or Affiliates will furnish only that portion of the nonpublic information that
it is advised by counsel is legally required and will exercise all reasonable
efforts to obtain reliable assurance that confidential treatment will be
accorded the nonpublic information.
SECTION 17.20 TERMINATION. In the event that the Closing Date
fails to occur on or before the Cut-Off Date, this Participation Agreement shall
terminate and ▇▇▇▇▇ City shall cease to have any liability hereunder, except for
obligations surviving pursuant to the express terms hereof.
SECTION 17.21 ENTIRE AGREEMENT. This Agreement, together with
the other applicable Transaction Documents, constitutes the entire agreement of
the parties hereto and thereto with respect to the subject matter hereof and
thereof and supersedes all oral and all prior written agreements and
understandings with respect to such subject matter.
88
SECTION 17.22 SUBORDINATION OF CLAIMS. Notwithstanding any
provision to the contrary contained in this Participation Agreement, the
Facility Lease or any other Operative Document, claims against ▇▇▇▇▇ City for
the equity component of Termination Value shall be subordinated to the payment
of Basic Lease Rent available to service the Lessor Notes on the terms and
conditions set forth in the Lease Subordination Agreement.
89
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date hereof by their respective
officers thereunto duly authorized.
[OWNER LESSOR]
By: [OWNER MANAGER],
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Manager
By:
------------------------------------
Name:
Title:
[OWNER MANAGER],
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Manager
By:
------------------------------------
Name:
Title:
[GENERAL ELECTRIC CAPITAL CORPORATION]
[FULL SERVICE LEASING CORP.]
By:
By:
------------------------------------
Name:
Title:
90
EME HOMER CITY GENERATION L.P.
By:
------------------------------------
Name:
Title:
▇▇▇▇▇ CITY FUNDING LLC
By:
------------------------------------
Name:
Title:
[LEASE INDENTURE TRUSTEE]
By:
------------------------------------
Name:
Title:
THE BANK OF NEW YORK (AS
SUCCESSOR TO THE UNITED STATES
TRUST COMPANY OF NEW YORK)
By:
------------------------------------
Name:
Title:
[SECURITY AGENT]
By:
------------------------------------
Name:
Title:
91
SCHEDULE 5.10
INSURANCE
(a) INSURANCE COVERAGE. Without limiting any of the other
liabilities of the Facility Lessee under this Agreement, the Facility Lessee
shall at all times, carry and maintain, at its expense, such insurance as is
customarily maintained by owners and operators of electric generating facilities
similar to the Facility and in all events shall carry and maintain at least the
minimum insurance coverage set forth in this SCHEDULE 5.10. All such insurance
shall be placed with brokers and insurers of recognized responsibility, with
such insurers having an A.M. Best rating of A:X or better, or with such other
insurers reasonably acceptable to the Owner Lessor, and be in such form, with
terms, conditions, limits and deductibles as shall be acceptable to the Owner
Lessor.
(i) ALL RISK PROPERTY INSURANCE. The Facility Lessee shall
maintain all risk property insurance covering against physical loss or
damage to the Facility, including but not limited to fire and extended
coverage, collapse, flood, earth movement and comprehensive boiler and
machinery coverage (including electrical malfunction and mechanical
breakdown). Such insurance shall not contain an exclusion for resultant
damage caused by faulty workmanship, design or materials. Coverage
shall be written in the greater of the then current Termination
Value or the full replacement cost value in an amount acceptable to
the Owner Lessor and shall contain an agreed amount endorsement waiving
any coinsurance penalty and shall include expediting expense coverage
in an amount not less than $1,000,000. Deductibles shall not exceed
$2,000,000.
(ii) BUSINESS INTERRUPTION. As an extension of the property
insurance described in subsection (a)(i) or as a separate policy, the
Facility Lessee shall maintain business interruption insurance in an
amount equal to eighteen (18) months continuing expenses, debt service
and net profits of the Facility. This insurance shall include coverage
for contingent business interruption arising from loss or damage to
property and equipment of suppliers and customers of the Facility. Such
insurance shall also cover service interruption and extra expense each
in an amount not less than $1,000,000. Deductibles shall not exceed
sixty (60) days.
(iii) COMMERCIAL OR COMPREHENSIVE GENERAL LIABILITY. The
Facility Lessee shall maintain third-party liability insurance with a
limit of not less than $1,000,000. Such coverage shall include, but not
be limited to, premises/operations, explosion, collapse, underground
hazards, sudden and accidental pollution, contractual liability,
independent contractors, products/completed operations, property damage
and personal injury liability. Such insurance shall not contain
exclusions for punitive or exemplary damages where insurable under law.
(iv) WORKERS' COMPENSATION/EMPLOYER'S LIABILITY. The Facility
Lessee shall maintain Workers' Compensation insurance in accordance
with statutory provisions covering accidental injury, illness or death
of an employee of the Facility Lessee while at work or in the scope of
his employment with the Facility Lessee and Employer's Liability in an
amount not less than $1,000,000. Such coverage shall not contain any
occupational disease exclusions.
(v) AUTOMOBILE LIABILITY. The Facility Lessee shall maintain
Automobile Liability insurance covering owned (if any), non-owned,
leased, hired or borrowed vehicles against bodily injury or property
damage. Such coverage shall have a limit of not less than $1,000,000.
(vi) EXCESS/UMBRELLA LIABILITY. The Facility Lessee shall
maintain Excess/Umbrella Liability insurance providing coverage limits
in excess of the primary limits applying under policies described in
subsections (a)(iii), (a)(iv), and (a)(v) The limit of such
excess/umbrella coverage shall not be less than $50,000,000. Such
insurance shall not contain exclusions for punitive or exemplary
damages.
(b) ENDORSEMENTS. The Facility Lessee shall cause the
insurance maintained in accordance with this section to be endorsed as follows:
(i) the Facility Lessee shall be the named insured and the
Owner Lessor and the Owner Participant shall be loss payers with
respect to policies described in subsections (a)(i) and (a)(ii). The
Facility Lessee shall be the named insured and the Owner Lessor and
the Owner Participant shall be loss payers with respect to policies
described in subsections (a)(iii), (a)(iv), (a)(v) and (a)(vi). The
Owner Lessor shall be the sole loss payee with regard to any claim
payments made under subsections (a)(i) and (a)(ii). It shall be
understood that any obligation imposed upon the Facility Lessee,
including but not limited to the obligation to pay premiums, shall
be the sole obligation of the Facility Lessee and not that of the
Owner Lessor and the Owner Participant;
(ii) with respect to policies described in subsections (a)(i)
and (a)(ii), the interests of the Owner Lessor and the Owner
Participant shall not be invalidated by any action or inaction of the
Facility Lessee, or any other person, and shall insure the Owner Lessor
and the Owner Participant regardless of any breach or violation by the
Facility Lessee, or any other person, of any warranties, declarations
or conditions of such policies;
(iii) inasmuch as the liability policies are written to cover
more than one insured, all terms conditions, insuring agreements and
endorsements, with the exception of the limits of liability, shall
operate in the same manner as if there were a separate policy covering
each insured;
(iv) the insurers thereunder shall waive all rights of
subrogation against the Owner Lessor and the Owner Participant, any
right of setoff or counterclaim and any other right to deduction,
whether by attachment or otherwise;
(v) such insurance shall be primary without right of
contribution of any other insurance carried by or on behalf of the
Owner Lessor and the Owner Participant with respect to its interest as
such in the Facility; and
(vi) if such insurance is canceled for any reason whatsoever,
including for nonpayment of premium, or any changes are initiated by
the Facility Lessee or insurer which affect the interest of the Owner
Lessor and the Owner Participant, such cancellation or change shall not
be effective as to the Owner Lessor and the Owner Participant until
thirty (30) days, except ten (10) days for non-payment of premiums,
after receipt by the Owner Lessor of written notice sent by registered
mail from such insurer.
(c) CERTIFICATIONS. At [the Closing Date], and at each policy
renewal, but not less than annually, Facility Lessee shall provide to Owner
Lessor and Owner Participant approved certification from each insurer or by an
authorized representative of each insurer. Such certification shall identify the
underwriters, the type of insurance, the limits, deductibles, and term thereof
and shall specifically list the special provisions delineated for such insurance
in subsection (b) above. Upon request, the Facility Lessee shall furnish Owner
Lessor with copies of all insurance policies, binders, and cover notes or other
evidence of such insurance.
(d) INSURANCE REPORT. Concurrently with the furnishing of all
certificates referred to in this section Facility Lessee shall furnish the Owner
Lessor and Owner Participant with an opinion from an independent insurance
broker, acceptable to the Owner Lessor, stating that all premiums then due have
been paid and that, in the opinion of such broker, the insurance then maintained
by the Facility Lessee is in compliance with this section. Furthermore, upon its
first knowledge, such broker shall advise Owner Lessor promptly in writing of
any default in the payment of any premiums or any other act or omission, on the
part of any person, which might invalidate or render unenforceable, in whole or
in part, any insurance provided by the Facility Lessee hereunder.
(e) ARBITRATION.
(i) if any insurance required to be maintained by the Facility
Lessee pursuant to this SCHEDULE 5.10 (including the limits or
deductibles or any other terms under policies for such insurance)
ceases to be available on a commercially reasonable basis at the time
of renewal, the Facility Lessee shall provide written notice to Owner
Lessor accompanied by a letter from the Facility Lessee's insurance
broker stating that such insurance is unavailable on a commercially
reasonable basis. Such notice shall be given not less than thirty (30)
days prior to the scheduled date for renewal of any such policy. Upon
receipt of such notice by
the Owner Lessor, Owner Lessor and the Facility Lessee shall
immediately enter into in good faith negotiations in order to obtain an
alternative to such insurance; and,
(ii) in the event that the Owner Lessor and the Facility
Lessee cannot reach a resolution acceptable to both parties within five
(5) days, the Owner Lessor shall make arrangements for the formation of
an insurance panel consisting of the Facility Lessee's insurance
advisor (or broker), the Owner Lessor's insurance advisor (or broker)
and an independent insurance expert from an internationally recognized
insurance brokerage firm, chosen by the Owner Lessor and reasonably
acceptable to the Facility Lessee. Such independent expert shall
conduct a separate review of the relevant insurance requirements of
this SCHEDULE 5.10, and the market for such insurance at the time,
giving due consideration to the representations of both insurance
advisors, and upon conclusion of such review shall issue a written
report stating whether such insurance is available or unavailable on a
commercially reasonable basis; and,
(iii) if the insurance expert concludes that such insurance is
not available on a commercially reasonable basis, the insurance expert
shall provide a written recommendation not less than fifteen (15) days
before the date for renewal of such insurance which shall be conclusive
and binding on both the Facility Lessee and the Owner Lessor. For each
insurance policy required to be renewed but not available on a
commercially reasonable basis, the Owner Lessor shall issue a waiver to
the Facility Lessee for a period of one (1) year upon the insurance
expert certifying that the relevant insurance is not available on a
commercially reasonable basis and the Facility Lessee having
implemented the recommendation of the insurance expert; and,
(iv) all fees, costs and expenses associated with the
insurance panel (including the review by the insurance expert) shall be
for the sole account of the Facility Lessee.
(f) FAILURE TO MAINTAIN INSURANCE. In the event the
Facility Lessee fails to maintain the full insurance coverage required by
this SCHEDULE 5.10, the Owner Lessor, upon 30 days' prior notice (unless the
aforementioned insurance would lapse within such period, in which event
notice should be given as soon as reasonably possible) to the Facility Lessee
of any such failure, may (but shall not be obligated to) take out the
required policies of insurance and pay the premiums on the same. All amounts
so advanced by the Owner Lessor shall become an additional obligation of the
Facility Lessee to the Owner Lessor, and the Facility Lessee shall forthwith
pay such amounts to the Owner Lessor, together with interest thereon at the
Overdue Rate from the date so advanced.
(g) GENERAL. The Owner Lessor shall be entitled, upon
reasonable advance notice, to review the Facility Lessee's (or other appropriate
party's) books and records regarding all insurance policies carried and
maintained with respect to the Facility and the Facility Lessee's obligations
under this SCHEDULE 5.10. Upon request, the
Facility Lessee shall furnish the Owner Lessor with copies of all insurance
policies, binders, and cover notes or other evidence of such insurance.
Notwithstanding anything to the contrary herein, no provision of this SCHEDULE
5.10 or any provision of this Agreement shall impose on the Owner Lessor any
duty or obligation to verify the existence or adequacy of the insurance coverage
maintained by the Facility Lessee, nor shall the Owner Lessor be responsible for
any representations or warranties made by or on behalf of the Facility Lessee to
any insurance broker, company or underwriter.
SCHEDULE 5.18 TO THE
PARTICIPATION AGREEMENT
So long as the Facility Lease shall not have been terminated
in accordance with its terms, each of ME Westside and Chestnut Ridge
shall:
(a) at all times have at least one Independent Director on its Board;
(b) not, without the affirmative vote of 100% of its Board (including
an affirmative vote of each Independent Director) make any of the following
decisions with respect to the Facility Lessee:
(i) cause the Facility Lessee to issue, incur, assume,
suffer to exist or guarantee the payment of
Indebtedness except as permitted pursuant to the
Operative Documents;
(ii) except as permitted pursuant to the Operative
Documents, directly or indirectly, in one or in a
series of related transactions, cause the Facility
Lessee to enter into any mergers, consolidation or
amalgamation, or liquidate, windup or dissolve the
Facility Lessee (or suffer any liquidation or
dissolution), or sell, convey, transfer, lease,
exchange or otherwise dispose all, or substantially
all, of the assets of the Facility Lessee, to any
Person;
(iii) admit, appoint or cause the admittance or appointment
of any Person as a new, additional or replacement (a)
partner of the limited partnership of the Facility or
(b) any Person holding a beneficial interest in any
such partner, except as expressly permitted pursuant
to the Operative Documents;
(iv) cause the Facility Lessee to make an assignment for
the benefit of creditors;
(v) cause the Facility Lessee to commence any proceeding
under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law
or statute of any jurisdiction, whether now or
hereinafter in effect, or consent or acquiesce to the
entry of an order for relief, or in the filing of any
such petition, application, proceeding or appointment
of or taking possession by the custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other
similar official) of the Facility Lessee or any
substantial part of the Facility Lessee's property;
(vi) admit the Facility Lessee's inability to pay its
debts generally as they become due; or
(vii) authorize any of the foregoing to be done or taken on
behalf of the Facility Lessee.
APPENDIX A
TO PARTICIPATION
AGREEMENT
DEFINITIONS
APPENDIX A - DEFINITIONS
GENERAL PROVISIONS
In this Appendix A and each Operative Document (as hereinafter
defined), unless, otherwise provided herein or therein:
i. 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;
ii. 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;
iii. words importing the singular include the plural and
vice versa;
iv. words importing a gender include any gender;
v. 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;
vi. 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;
vii. a definition of or reference to any document,
schedule, exhibit, instrument or agreement includes
an amendment or supplement to,
or restatement, replacement, modification or novation
of, any such document, schedule, exhibit, instrument
or agreement unless otherwise specified in such
definition or in the context in which such reference
is used;
viii. 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;
ix. 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;
x. a reference to any Person (as hereinafter defined)
includes such Person's successors and permitted
assigns, whether by way of merger or otherwise;
xi. any reference to "days" shall mean calendar days
unless "Business Days" (as hereinafter defined) are
expressly specified;
xii. 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
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;
xiii. 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
xiv. 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.
2
DEFINED TERMS
"ACCEPTABLE CREDIT PROVIDER" means a U.S. or U.S. branch of a foreign bank or
trust company that (i) has a combined capital and surplus of at least $1 billion
whose long term unsecured debt is rated A2 or higher by ▇▇▇▇▇'▇ or A or higher
by S&P and (ii) is exempt from SEC registration under Section 3(a)(2) of the
Securities Act.
"ACCOUNTS" shall mean, all accounts established pursuant to SECTION [ ] of the
Amended Security Deposit Agreement.
"ACTUAL DEVELOPMENT PLAN" shall have the meaning specified in ARTICLE XVI of the
Participation Agreement.
"ACTUAL KNOWLEDGE" shall mean, with respect to any Person, actual knowledge of,
or receipt of written notice by, an officer (or other employee whose
responsibilities include the administration of the Overall Transaction or
operational oversight of the Facility) of such Person; PROVIDED, HOWEVER, that
in the case of the Owner Manager or the OM Company, "Actual Knowledge" shall
mean the actual knowledge of an officer in the [ ] of the OM Company.
"ADDITIONAL AMOUNT" shall have the meaning specified in SECTION 3.4(b) of the
Facility Lease.
"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 12.1 of
the Participation Agreement.
"ADDITIONAL LESSOR NOTES" shall have the meaning specified in SECTION 2.13(a) of
the Lease Indenture.
"ADDITIONAL PLANT" have the meaning specified in ARTICLE XVI of the
Participation Agreement.
"ADDITIONAL PLANT OPERATOR" shall have the meaning specified in ARTICLE XVI of
the Participation Agreement.
"ADDITIONAL TRANSFER AMOUNTS" shall have the meaning specified in SECTION XV of
the Participation Agreement.
"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 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 ownership of voting securities, by contract
or otherwise, and the words "controlling" and "control" shall have correlative
meanings; PROVIDED, HOWEVER, that under no circumstances shall the OM
3
Company be considered to be an Affiliate of any of the Owner Lessor, the Owner
Manager or the Owner Participant, nor shall any of the Owner Lessor, the Owner
Manager or the Owner Participant be considered to be an Affiliate of the OM
Company and that neither the Owner Lessor nor the Owner Manager shall be treated
as an Affiliate of the Owner Participant except that the Owner Lessor will be
treated as an Affiliate of the Owner Participant to the extent that the Owner
Lessor acts on the express written direction or with the express written consent
of the Owner Participant.
"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 actual 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 actual tax benefits realized or to be realized shall be determined
on the assumptions that (a) the recipient is subject to (i) U.S. Federal income
taxes at the highest marginal rate then applicable to corporations for the
relevant period or periods, and (ii) state and local income taxes at the highest
marginal rates then applicable to corporations for the relevant period or
periods, and (b) all related tax benefits are utilized (i) with regard to U.S.
Federal income taxes, at the highest marginal rates then applicable to
corporations for the relevant period or periods, and (ii) with regard to state
and local income taxes, at the highest marginal rate then applicable to
corporations for the relevant period or periods.
"ALLOCATED RENT" shall have the meaning specified in SECTION 3.2(b) the Facility
Lease.
"AMENDED AND RESTATED GUARANTEE AND COLLATERAL AGREEMENT" shall mean that
amended and restated guarantee and collateral agreement between ▇▇▇▇▇ City and
the Collateral Agent on behalf of the Owner Lessors, dated as of [_____ __],
2001.
"AMENDED ▇▇▇▇▇ CITY SUBORDINATION AGREEMENT" shall mean that agreement between
▇▇▇▇▇ City, Edison Mission Finance Co., ▇▇▇▇▇ City Property Holdings, Inc.,
Mission Energy Westside, Inc. and Chestnut Ridge Company, dated as of [_____]
__], 2001.
"AMENDED SECURITY DEPOSIT AGREEMENT" shall mean that amended and restated
security deposit agreement between ▇▇▇▇▇ City and the Collateral Agent on
behalf of the Owner Lessors, dated as of [_____ __], 2001.
"ANNUAL OPERATING BUDGET" shall mean, with respect to any Fiscal Year of the
Facility Lessee, an annual operating budget for the Facility provided by the
Facility Lessee (and approved by the Owner Participant and the Lender in
accordance with SECTION 5.17 of the Participation Agreement) setting forth all
reasonably anticipated Revenues, payments of Basic Lease Rent, O&M Costs,
allowances for reserves, and other customary information.
4
"APPLICABLE MEMBER INTEREST" shall have the meaning specified in SECTION XV of
the Participation Agreement.
"APPLICABLE PERMIT" shall mean any Permit, including any zoning, environmental
protection, pollution, sanitation, FERC, safety, siting or building Permit, (a)
that is necessary at any given time in light of the stage of development,
construction or operation of the Facility or Facility Site to acquire, operate,
maintain, repair, own or use the Facility or Facility Site as contemplated by
the Transaction Documents, to sell electricity therefrom, to enter into any
Transaction Document or to consummate any transaction contemplated thereby, or
(b) that is necessary so that none of the Owner Lessor, the Owner Participant,
the Lease Indenture Trustee, the Lender nor the Bondholder Trustee nor any
Affiliate of any of them may be deemed by any Governmental Authority to be
subject to regulation under PUHCA or under any other Applicable Law relating to
electric utilities, generators, wholesalers or retailers, in each case as a
result of the operation of the Facility or the sale of electricity therefrom.
"APPLICABLE RATE" shall mean (a) in respect of any amount due under any Lessor
Note or any amount of Basic Lease Rent attributable to the principal and
interest on any Lessor Note, the per annum fixed rate of interest then borne by
the relevant Lessor Note and (b) in respect of any other amount due under the
Operative Documents, the greater of (i) 10% per annum and (ii) 110% of the
semi-annual applicable federal rate (in each case, computed on the basis of a
360-day year of twelve 30-day months).
"APPRAISAL PROCEDURE" shall mean (except with respect to the Closing) Appraisal
and any appraisal to determine Fair Market Sales Value or Fair Market Rental
Value during any period when a Lease Event of Default shall have occurred and be
continuing), 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 and appointing a mutually acceptable
Independent Appraiser within 15 days. 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 fifteen (15) days of such initial consultation, 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 within [ ] days 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 within [ ] days. In such case,
the average of the determinations of the three Independent Appraisers shall be
conclusive and binding on the Owner Participant and the
5
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. Any
appraisal determined in accordance with the foregoing must be delivered within
thirty (30) days after the date on which the last of the appraisers is appointed
pursuant to the process set above.
"APPRAISER" shall mean Deloitte & Touche LLP Valuation Group.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and assumption
agreement in form and substance substantially in the form of Exhibit [ ] to the
Participation Agreement.
"AUTHORIZED OFFICER" shall mean, with respect to any Person, (a) 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 (b) any resolution of the board of
directors or managers (or managing members) of such Person to perform the
equivalent functions thereof, whose responsibilities include the administration
of the Overall Transaction.
"BANKRUPTCY CODE" shall mean the United States Bankruptcy Code of 1978, as
amended from time to time, 11 U.S.C. ss. 101 ET SEQ.
"BASE CASE" shall mean [__________].
"BASIC LEASE COMMENCEMENT DATE" shall have the meaning specified in SECTION 3.1
of the Facility Lease.
"BASIC LEASE RENT" shall have the meaning specified in SECTION 3.2(a) of the
Facility Lease.
"BASIC LEASE RENT SERVICE COVERAGE RATIO" shall mean for any period, without
duplication, a ratio the numerator of which is Net Cash Flow for such period,
and the denominator of which is Basic Lease Rent payable during such period;
PROVIDED, HOWEVER, that any calculations of the Basic Lease Rent Service
Coverage Ratio with respect to the most recently ended Fiscal Quarter shall with
respect to the most recent month, be based on estimated results only.
"BASIC LEASE TERM" shall have the meaning specified in SECTION 3.1 of the
Facility Lease.
"▇▇▇▇ OF SALE" shall mean the ▇▇▇▇ of Sale, dated as of [______ __], 2001,
executed by ▇▇▇▇▇ City in favor of the Owner Lessor, pursuant to which the Owner
Lessor acquired the Undivided Interest from the Facility Lessee as the same may
from time to time be amended, restated, supplemented or otherwise modified in
accordance with the terms thereof.
6
"BONDHOLDER TRUSTEE" shall mean The Bank of New York, as successor to United
States Trust Company of New York as trustee under the Fundco Indenture.
"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(a)
of the Facility Lease.
"BURDENSOME TERMINATION NOTICE" shall have the meaning specified in SECTION 13.1
of the Facility Lease.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a day on
which commercial banking institutions are authorized or required by law,
regulation or executive order to be closed in New York, New York or the city and
the state in which the [ ] Office of the Lease Indenture Trustee or the Owner
Manager is located.
"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 (other than
expenditures with respect to Major Maintenance) which are capitalized in
accordance with GAAP.
"CASUALTY ACCOUNT" shall have the meaning set forth for such term in SECTION
[2.2(a)] of the Amended Security Deposit Agreement.
"CERCLIS" shall mean the Comprehensive Environmental Response, Compensation and
Liability Information System list.
"CHESTNUT RIDGE" shall mean Chestnut Ridge Energy Company, a California
corporation.
"CLAIM" shall mean any liability (including 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 set forth in SECTION 2.2(a) of the
Participation Agreement.
"CLOSING DATE APPRAISAL" shall mean the appraisal, dated the Closing Date,
addressed to the Owner Participant prepared by the Appraiser with respect to the
Facility.
"CLOSING DATE" shall have the meaning set forth in SECTION 2.2(a) of the
Participation Agreement.
7
"CLOSING PROJECTIONS" shall mean [_____________].
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time to
time, and is in effect on the relevant date.
"COLLATERAL AGENT" shall mean [_________________].
"COMMISSION" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"COMPETITOR" shall mean, with respect to the Facility Lessee or any of its
Affiliates, as entity (or an Affiliate thereof) that is significantly involved
as a seller, trader, wholesale purchaser or marketer of capacity or energy in
the coal fired generation market in the United States, provided that, for the
purposes of this definition, the following entities shall not be considered
"Competitors": (a) financial institutions involved in the energy markets solely
by reason of trading futures and other similar instruments and (b) entities
listed on SCHEDULE [__] to the Participation Agreement, which may, from time to
time but not more often than once a year, be modified by the Owner Participant,
and shall contain a list of up to six entities and shall be reasonably
satisfactory to ▇▇▇▇▇ City and such approval shall not be unreasonably withheld,
provided however, that this approval right shall not inure to the benefit of
▇▇▇▇▇ City in connection with any transfer by the Owner Participant or the Owner
Lessor during a Lease Event of Default.
"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 TANGIBLE NET ASSETS" shall mean, with respect to any Person, as of
the date of any determination thereof, the total amount of all assets of such
Person and its Subsidiaries (determined on a consolidated basis which must be in
accordance with GAAP), less the sum of (a) the consolidated liabilities of such
Person and its Subsidiaries (determined on a consolidated basis which must be in
accordance with GAAP) and (b) assets properly classified as intangible assets in
accordance with GAAP.
"CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS (CPI-U)" shall mean the consumer
price index for all urban consumers as published by the United States Department
of Labor, Bureau of Labor Statistics.
"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 ▇▇▇▇▇ City, are treated as a single employer under Section 414(b)
or 414(c) of the Code or Section 4001 of ERISA.
"CUT-OFF DATE" shall mean December 7, 2001.
"DATE OF RETURN" shall have the meaning specified in SECTION 5.1 of the Facility
Lease.
8
"DEBT SERVICE" shall mean the principal, interest, fees, costs, expenses,
indemnities and any other amounts, in each case payable in respect of the Lessor
Notes.
"DEBT SERVICE COVERAGE RATIO" shall mean for any period, without duplication, a
ratio the numerator of which is Net Cash Flow for such period, and the
denominator of which is the Debt Service payable during such period; PROVIDED,
HOWEVER, that any calculations of the Debt Service Coverage Ratio with respect
to the most recently ended Fiscal Quarter shall, with respect to the most recent
month, be based on estimated results only.
"DEBT SERVICE RESERVE AMOUNT" shall mean the principal, interest, fees, costs,
expenses, indemnities, and any other amounts in each case payable in respect of
the Lessor Notes on the next [payment date].
"DEBT SERVICE RESERVE LETTER OF CREDIT" shall mean that letter of credit
maintained by the Owner Lessor in favor of the Lease Indenture Trustee for the
benefit of the holders of the Lessor Notes.
"DEPOSITARY" shall mean Bank of America NT&SA.
"DESIGNATED REPRESENTATIVE AGREEMENT" shall mean the Designated
Representative Agreement or [Alternate Designated Representative Agreement,
as the case may be], entered into among the Owner Lessors and ▇▇▇▇▇ City.
"DEVELOPMENT PRESENTATION" shall have the meaning specified in ARTICLE XVI of
the Participation Agreement.
"DISCOUNT RATE" shall mean 11.5% per annum assuming semi-annual compounding.
"DUFF & ▇▇▇▇▇▇" shall mean Duff & ▇▇▇▇▇▇ Credit Rating Co., and its successors
and assigns.
"EASEMENTS" shall mean the easements appurtenant, easements in gross, license
agreements and other rights running in favor of the Facility Lessee and/or
appurtenant to the Facility Site, including without limitation those certain
easements and licenses created by and described in the Facility Site Sublease.
"EDISON MISSION FINANCE CO." shall mean Edison Mission Finance Co., Inc., a
California corporation.
"EDISON MISSION HOLDINGS CO." shall mean Edison Mission Holdings Co., Inc., a
California corporation.
"EMEFS" shall mean Edison Mission Energy Fuel Services, Inc., a California
corporation.
"EME" shall mean Edison Mission Energy, a California corporation.
"EME PARTY" shall mean EME or any of its Subsidiaries.
"EMMT" shall mean Edison Mission Marketing & Trading, a California corporation.
9
"ENERGY SALES AGREEMENT" shall mean that certain energy sales agreement dated as
of March 18, 1999 between EMMT, as buyer, and the Facility Lessee, as seller.
"ENGINEERING CONSULTANT" shall mean Stone and ▇▇▇▇▇▇▇ Management Consultants,
Inc. or another nationally recognized independent engineering and consulting
firm which, as Engineering Consultant, will independently review the technical
aspects of the project, analyze the contractual structure and create financial
projections for the benefit of the Lease Financing Parties.
"ENGINEERING CONSULTANT'S REPORT" shall mean the report of the Engineering
Consultant, dated [____], 2001.
"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,
citation, warning, complaint, investigation, 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 and regardless of the merit of
such Liability, any and all Liabilities for (a) 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, (b) 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 (c) 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 (a) require assessment,
investigation, abatement, correction, clean-up, mitigation, removal, remediation
or any other response action, (b) 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
Environmental Law, (c) create or constitute a public or private nuisance or
trespass, (d) constitute a violation of or non-compliance with any Environmental
Law or (e) 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 [_____] or such other Person as may from
time to time be selected as environmental consultant by the Facility Lessee with
the consent of the Owner Participant and, so long as the Lessor Notes are
outstanding, the Lease Indenture Trustee, such consent not to be unreasonably
withheld.
"ENVIRONMENTAL CONSULTANT'S REPORT" shall mean [___].
10
"ENVIRONMENTAL COSTS" shall mean capital expenditure for major modifications and
repairs of the Facility required under Environmental Laws or by Prudent Industry
Practice if related to environmental matters.
"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.
"EQUITY INVESTMENT" shall mean the Owner Lessor's Percentage of $[____] as set
forth on SCHEDULE [ ].
"EQUITY PAYMENT" shall have the meaning set forth in SECTION 6.9 of the
Participation Agreement.
"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.
"EVENT OF FORCE MAJEURE" shall mean the occurrence of an event beyond the
control of the Person claiming the benefit of such Event of Force Majeure, due
to fire, flood, explosion, action of the elements, acts of God, accidents,
strikes, lockouts or other labor trouble, insurrections, riots, or other civil
disturbances, war, enemy action, or acts, demands or requirements of any
Governmental Authority, or other causes of like nature, in each case, which (or
the effect of which) such Person could not reasonably be expected to avoid.
"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
11
(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 (a) no such contest may be conducted without
the Owner Participant's consent while a Material Lease Default or Lease Event of
Default, as applicable, shall have occurred and be continuing and (b) no such
contest shall extend beyond the earlier of (x) the date which is six months
after the loss of such title, or (y) the date which is 48 months prior to the
end of the Basic Lease Term or any Renewal Lease Term then in effect or
irrevocably 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 irrevocably 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, the Owner Participant or the Owner Lessor shall become subject
to any rate of return regulation by any Governmental Authority, or the Owner
Participant, or the Owner Lessor shall become subject to any public utility
regulation of any Governmental Authority 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 Overall
Transaction but, in any event, not if the Owner Participant or the Owner Lessor
shall have become subject thereto as the 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, 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 to perform
routine, administrative or ministerial actions the performance of which would
not subject the Owner Participant 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 (or any of
their respective Affiliates) as a result of such cooperation or the taking of
such reasonable measures ("REGULATORY EVENT OF LOSS").
(v) destruction, damage, loss or theft to the Facility other than as
covered in clause (i) above and failure to deliver the Reinvestment Notice
within 45 days of receipt of the settlement of or payment of $50,000,000 or
more in respect of such destruction, damage, loss or theft.
12
"EVENT OF LOSS PAYMENT" shall have the meaning specified in SECTION 10.2(a) of
the Facility Lease.
"EWG STATUS" shall mean an entity which is an "exempt wholesale generator" as
defined in Section 32(a)(1) of PUHCA.
"EXCEPTED PAYMENTS" shall mean and include (a)(i) any indemnity (whether or not
constituting Supplemental Lease Rent and whether or not a Lease Event of Default
exists) payable to either the Owner Manager or the Owner Participant or to their
respective Indemnitees and successors and permitted assigns (other than the
Lease Indenture Trustee) pursuant to SECTION 10 of the Participation Agreement
or SECTION [ ] of the Lessor LLC Agreement and any payments under the Tax
Indemnity Agreement (PROVIDED, that Excepted Payments shall not include any
Basic Lease Rent) or (ii) any amount payable to the Owner Lessor or the Owner
Participant to reimburse any such Person for its costs and expenses in
exercising its rights or complying with its obligations under the Operative
Documents, (b)(i) 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 (ii) 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, (c) any amount
payable to the Owner Participant as the purchase price of the Owner
Participant's right and interest in the Lessor Membership Interest, (d) any
amounts payable to the Owner Participant upon exercise by the Facility Lessee
(or its designee) of the rights pursuant to SECTION XV of the Participation
Agreement, (e) all other fees expressly payable to the Owner Participant, the
Owner Lessor, the Owner Manager or the Trust Company under the Operative
Documents, (f) 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
(a) through (e) above, (g) any right to take any action for the enforcement of
any of the above provisions and (h) any amounts payable to the Owner Participant
pursuant to the Title Proceeds Assignment.
"EXCESS AMOUNT" shall have the meaning specified in SECTION 17.3 of the
Participation Agreement.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall have the meaning specified in
SECTION 2(a) of the Registration Rights Agreement.
"EXEMPT WHOLESALE GENERATOR" OR "EWG" shall mean an entity which is an "exempt
wholesale generator" as defined in Section 32(a)(1) of PUHCA.
13
"EXISTING DEBT" shall mean those obligations of Edison Mission Holdings Co.
pursuant to the Indenture.
"EXISTING TRUSTEE" shall mean United States Trust Company of New York.
"EXTENDED MARKETING PERIOD" shall have the meaning set forth in SECTION 10.2(b)
of the Facility Lease.
"FACILITY" shall mean the ▇▇▇▇▇ City Assets.
"FACILITY DEED" shall mean the special warranty deed, dated as of [_____], 2001,
between ▇▇▇▇▇ City and the Owner Lessor pursuant to which ▇▇▇▇▇ City transferred
the Undivided Interest to the Owner Lessor.
"FACILITY LEASE" shall mean the Facility Lease Agreement, dated as of [_____],
2001, between the Owner Lessor and the Facility Lessee.
"FACILITY LEASE TERM" shall have the meaning specified in SECTION 3.1 of the
Facility Lease.
"FACILITY LESSEE" shall mean ▇▇▇▇▇ City, as lessee of the Undivided Interest
under the Facility Lease.
"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 of the Facility
Site Lease.
"FACILITY SITE LEASE" shall mean the Facility Site Lease and Easement Agreement,
dated as of [_____], 2001, between ▇▇▇▇▇ City as Ground Lessor and the Owner
Lessor as Ground Lessee.
"FACILITY SITE SUBLEASE" shall mean the Facility Site Sublease Agreement, dated
as of [_____], 2001, between the Owner Lessor as Ground Sublessor and ▇▇▇▇▇ City
as Ground Sublessee.
"FACILITY SUBLESSEE" shall mean any 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 (a) the
conditions contained in SECTIONS 7 AND 8 of the Facility Lease shall have been
complied with in all
14
respects, (b) 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, (c) the Undivided Interest 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 Indenture Trustee Liens), (d) taking into
account the remaining term of the Facility Site Lease, and (e) 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 Indenture Trustee 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. In case of any appraisal obtained
in connection with the First Renewal Term or the Second Renewal Term, the
appraisal shall be conducted using the same methodology as used in the Closing
Appraisal.
"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 U.S.C.ss.ss.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 (a) the order issued by the FERC on [___________],
in Docket No. EG01-[___], unconditionally determining that ▇▇▇▇▇ City is an
"exempt wholesale generator" under the Holding Company Act, and (b) the orders
issued by the FERC on [______________], in Docket No. EG01-[____],
unconditionally determining that the Owner Lessor and the Other Owner Lessors
are "exempt wholesale generators" under the Holding Company Act.
"FERC ORDERS" shall mean, collectively, the FERC EWG Orders, the FERC Section
201 Order, the FERC Section 203 Order and the FERC Section 205 Orders.
"FERC SECTION 201 ORDER" shall mean the order issued by the FERC on
[__________], in Docket No. EL01-[____] disclaiming jurisdiction under Section
201 of the Federal
15
Power Act over the Owner Lessor and the Other Owner Lessors and the Owner
Participant and the Other Owner Participants.
"FERC SECTION 203 ORDER" shall mean the order issued by the FERC on
[______________], in Docket No. EC01-[____], granting approval under Section 203
of the Federal Power Act for the transfer of the facilities for financing
purposes to the Owner Lessor and the Other Owner Lessors and the lease of the
facilities by the Owner Lessor and the Other Owner Lessors to ▇▇▇▇▇ City.
"FERC SECTION 205 ORDERS" shall mean (a) the order issued by the FERC on
[______________], in Docket No. ER-[____], granting approval under Section 205
of the Federal Power Act for ▇▇▇▇▇ City 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 ▇▇▇▇▇ City, and
(b) the order issued by the FERC on [_____________], in Docket No. ER-[____],
accepting for filing the Interconnection Agreement.
"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.
"FIRST RENEWAL OPTION" shall have the meaning specified in SECTION 15.2 of the
Facility Lease.
"FIRST RENEWAL TERM" shall have the meaning specified in SECTION 15.1 of the
Facility Lease.
"FMV RENEWAL LEASE TERM" shall have the meaning specified in SECTION 15.2 of the
Facility Lease.
"FUEL AND MARKET CONSULTANT" shall mean PA Consulting.
"FUEL SUPPLY AGREEMENT" shall mean that certain fuel supply agreement dated as
of March 18, 1999 between EMEFS and the Facility Lessee.
"FUNDCO" shall mean ▇▇▇▇▇ City Funding, LLC, a Delaware limited liability
company.
"FUNDCO BONDHOLDER" or "FUNDCO BONDHOLDERS" shall mean any Person who from time
to time holds the Fundco Bonds.
"FUNDCO BONDS" shall mean the bonds issued by ▇▇▇▇▇ City Funding LLC pursuant to
the Fundco Indenture.
"FUNDCO INDENTURE" shall mean that Amended and Restated Indenture of Trust,
Mortgage and Security Agreement dated [ ], 2001 between Fundco and the
Bondholder Trustee for $300,000,000 8.137% senior secured bonds due 2019 and
$530,000,000 8.374% senior secured bonds due 2026.
16
"GAAP" shall mean generally accepted accounting principles in the United States
of America as in effect from time to time, consistently applied.
"GOVERNMENTAL APPROVAL" shall mean any authorization, consent, approval,
license, permit, order, certificate, waiver, variance, filing or registration of
or with or issued by any Governmental Authority, and shall include those citing,
environmental and operating permits and licenses (including the Applicable
Permits) that are required for the use and operation of the Facility and the
Facility Site.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government or any political
subdivision thereof, any state, province 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 ▇▇▇▇▇ City as lessor of the Ground Interest under the
Facility Site Lease.
"GROUND SUBLESSEE" shall mean ▇▇▇▇▇ City 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.
"HAZARDOUS MATERIAL" shall mean:
(a) any "hazardous substance," as defined by any Environmental Law;
(b) any "hazardous waste," as defined by any Environmental Law;
(c) any petroleum product (including crude oil or any fraction
thereof); or
(d) 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.
"HOLDING COMPANY ACT" or "PUHCA" shall mean the Public Utility Holding Company
Act of 1935, as amended.
"▇▇▇▇▇ CITY" shall have the meaning specified in the Participation Agreement
recitals.
17
"▇▇▇▇▇ CITY ASSETS" shall have the meaning assigned thereto in the Participation
Agreement recitals.
"▇▇▇▇▇ CITY CREDIT FACILITIES" shall mean those credit facilities outstanding
prior to the Closing date pursuant to the [describe credit agreements]
"▇▇▇▇▇ CITY PARTIES" shall mean Edison Mission Holdings Co., Edison Mission
Finance Co., Chestnut Ridge Energy Company, Mission Energy Westside, Inc., and
▇▇▇▇▇ City Property Holdings, Inc.
"▇▇▇▇▇ CITY PARTNERSHIP AGREEMENT" shall mean that certain Amended and
Restated Agreement of Limited Partnership of EME Homer City Generation L.P.
dated as of ______ [ ], 2001.
"▇▇▇▇▇ CITY PROPERTY HOLDINGS, INC." shall mean ▇▇▇▇▇ City Property Holdings,
Inc., a California corporation.
"▇▇▇▇▇ CITY SUBORDINATION AGREEMENT" shall mean that agreement between ▇▇▇▇▇
City, Edison Mission Finance Co., ▇▇▇▇▇ City Property Holdings, Inc., ME
Westside and Chestnut Ridge dated as of [ ], 1999.
"IMPROVEMENT" shall mean a modification, alteration, addition or improvement to
the Facility.
"INDEBTEDNESS" of any Person shall mean (a) all indebtedness of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) all obligations of such
Person to pay the deferred purchase price of property or services (other than
trade payables and accrued liabilities arising in the ordinary course of
business), (d) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Lease Obligations of such Person (including payments of
Termination Value and any other amounts owed pursuant to the Operative
Documents), (f) all obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities securing Indebtedness, (g)
all unconditional obligations of such Person to purchase, redeem, retire,
defease or otherwise acquire for value any capital stock or other equity
interests of such Person or any warrants, rights or options to acquire such
capital stock or other equity interests, (h) all obligations under "swaps",
"caps", "floors", "collars", or other interest rate hedging contracts or similar
arrangements, (i) all Indebtedness of any other Person of the type referred to
in clauses (a) through (i) guaranteed by such Person or for which such Person
shall otherwise (including pursuant to any keepwell, makewell or similar
arrangement) become directly or indirectly liable, and (j) all Indebtedness of
the type referred to in clauses (a) through (i) above secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise
by) any Lien or security interest on property (including accounts and contract
rights) owned by the Person whose Indebtedness is being measured, even though
such Person has not assumed or become liable for the payment of such
Indebtedness, the amount of such obligation being deemed
18
to be the lesser of the net book value of such property or the amount of the
obligation so secured.
"INDEMNITEE" shall have the meaning specified in SECTION 10.1(a) of the
Participation Agreement.
"INDENTURE" means that certain Indenture of Trust, Mortgage and Security
Agreement dated as of May 27, 1999 between Edison Mission Holdings Co. and the
Bondholder Trustee for $300,000,000 8.137% senior secured bonds due 2019 and
$530,000,000 8.374% senior secured bonds due 2026.
"INDENTURE ESTATE" shall have the meaning specified in the Granting Clause of
the Lease Indenture.
"INDENTURE LESSOR ESTATE" shall have the meaning specified in the Granting
Clause of the Lease Indenture.
"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 LESSOR NOTES" shall have the meaning specified in SECTION 2.2 of the
Lease Indenture.
"INITIAL PURCHASER" shall mean Fundco.
"INSURANCE CONSULTANT" shall mean ▇▇▇▇▇.
"INSURANCE CONSULTANT'S REPORT" shall mean the report prepared by the Insurance
Consultant dated the Closing Date.
"INTERCONNECTION AGREEMENT" shall mean that agreement between New York State
Electric and Gas Corporation, Pennsylvania Electric Company and Mission Energy
Westside, Inc., dated as of August 1, 1998.
"INVESTMENT COMPANY ACT" shall mean the Investment Company Act of 1940, as
amended.
"INVESTMENT GRADE" shall mean, with respect to any Person, that (a) such Person
has outstanding unsecured indebtedness rated at least BBB- by S&P or Baa3 by
Moody's, or if it has no such rated unsecured indebtedness, has an equivalent
counterparty rating from S&P or Moody's or (b) if such Person has neither
unsecured indebtedness rated by S&P or ▇▇▇▇▇'▇ or a counterpart rating by S&P or
▇▇▇▇▇'▇, such Person is rated to be Investment Grade pursuant to the internal
credit scoring procedures adopted from time to time by EME's applicable risk
management committee (provided, that such procedures
19
shall be consistent with the internal credit scoring procedures established from
time to time by EME's applicable risk management committee and applicable to
other North American generating assets owned or controlled by EME or any
subsidiary thereof); provided, that in applying the foregoing standards, in the
case of obligations of any Person that are supported by guarantees, letters of
credit or other credit support meeting the requirements established from time to
time by EME's applicable risk management committee (provided, that such
standards are consistent with the credit support requirements established from
time to time by EME's applicable risk management committee and applicable to
other North American generating assets owned or controlled by EME or any
subsidiary thereof), the foregoing standards shall be applied to the issuer of
such guarantee, letter of credit or other credit support.
"LEASE DEBT" shall mean the debt evidenced by the Lessor Notes.
"LEASE DEFAULT" shall mean any event or occurrence, which, with the passage of
time or the giving of notice or both, would become a Lease Event of Default.
"LEASE EVENT OF DEFAULT" shall have the meaning specified in SECTION 16 of the
Facility Lease.
"LEASE FINANCING PARTY" shall mean, individually or collectively, as the context
shall require, all or any of the parties to the Operative Documents.
"LEASE INDENTURE" shall mean the Indenture of Trust, Mortgage and Security
Agreement dated as of [__________] 2001, between the Owner Lessor and the Lease
Indenture Trustee.
"LEASE INDENTURE COMPANY" shall mean [Lease Indenture Trustee], in its
individual capacity under the Operative Documents.
"LEASE INDENTURE EVENT OF DEFAULT" shall have the meaning specified in SECTION
[ ] of the Lease Indenture.
"LEASE INDENTURE TRUSTEE" shall mean [____________________].
"LEASE INDENTURE TRUSTEE'S ACCOUNT" shall have the meaning specified in SECTION
[ ] of the Lease Indenture.
"LEASE SUBORDINATION AGREEMENT" shall mean that agreement between the Owner
Lessor, the Owner Participant and the Lease Indenture Trustee, dated as of [ ],
2001.
"LENDER" shall have the meaning set forth in the preamble to the Participation
Agreement.
"LESSEE SECTION 467 INTEREST" shall have the meaning specified in SECTION 3.2(d)
of the Facility Lease.
20
"LESSEE SECTION 467 LOAN BALANCE" shall have the meaning specified in SECTION
3.2(d) of the Facility Lease.
"LESSOR ESTATE" shall mean all the estate, right, title and interest of the
Owner Lessor in, to and under the Undivided Interest, the Ground Interest, the
Operative Documents, and the Ownership and Operation Agreement, including all
funds advanced to the Owner Lessor by the Owner Participant, all installments
and other payments of Basic Lease Rent, Renewal Rent, Supplemental Lease Rent,
Stipulated Loss Value, Termination Value, condemnation awards, purchase price,
sale proceeds, insurance proceeds and all other proceeds, rights and interests
of any kind for or with respect to the Lessor Estate, right, title and interest
of the Owner Lessor in, to and under the Undivided Interest, the Ground
Interest, the Operative Documents, and any of the foregoing.
"LESSOR LIEN" shall have the meaning set forth in SECTION 7.2 of the
Participation Agreement.
"LESSOR LLC AGREEMENT" shall mean the Limited Liability Company Agreement,
effective as of [________], 2001, between the Owner Lessor, the Owner
Participant and [________], pursuant to which the Owner Lessor will be governed.
"LESSOR LOANS" shall mean the loans evidenced by the Lessor Notes.
"LESSOR MEMBERSHIP INTEREST" shall mean the membership interest of the Owner
Participant in the Owner Lessor.
"LESSOR NOTES" shall mean any Initial Lessor Notes, Additional Lessor Notes or
New Lessor Notes issued pursuant to the Lease Indenture.
"LESSOR SECTION 467 INTEREST" shall have the meaning specified in SECTION 3.2(d)
of the Facility Lease.
"LESSOR SECTION 467 LOAN BALANCE" shall have the meaning specified in SECTION
3.2(d) of the Facility Lease.
"LIEN" shall mean any security interest, security deed, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise), lease, title retention arrangement, charge against or interest in
property, in each case of any kind, to secure payment of a debt or performance
of an obligation.
"MAJOR MAINTENANCE" shall mean (a) Environmental Costs and (b) scheduled major
overhauls and major repairs of the Facility required to be performed in
accordance with Prudent Industry Practice and which are capitalized in
accordance with GAAP.
"MAJOR MAINTENANCE PROJECTIONS" shall mean, with respect to any Fiscal Year of
the Facility Lessee, projections provided by the Facility Lessee (and approved
by the Owner Participant and the Lender in accordance with SECTION 5.14 of the
Participation Agreement) with respect to Major Maintenance anticipated to be
incurred over the next full cycle of Major Maintenance for the Facility setting
forth, in reasonable detail, the
21
amounts, timing and type of all reasonably anticipated Major Maintenance
reasonably anticipated by the Facility Lessee costs to be incurred during such
period, and including a proposed Major Maintenance Base Reserve, and other
customary information as reasonably agreed among the Facility Lessee, the Owner
Participant and the Lender.
"MATERIAL ADVERSE EFFECT" shall mean any event, development or circumstance that
has had or could reasonably be expected to have a material adverse effect on (a)
the business, assets, results of operations or financial condition of ▇▇▇▇▇
City, (b) the ability of ▇▇▇▇▇ City to perform or comply with its obligations
under any of the Operative Documents or (c) the validity or enforceability of
any of the Operative Documents, the Liens granted thereunder or the material
rights and remedies of the parties thereto, and (d) with respect to the Owner
Participant's interest in the Facility, the residual value or remaining useful
life of the Facility.
"MATERIAL LEASE DEFAULT" shall mean any event which, with notice or lapse of
time or both notice and lapse of time, would become a Lease Event of Default
described in clause (a), (b), (g) or (h) of the definition thereof set forth in
SECTION 16 of the Facility Lease.
"MATERIAL PROJECT AGREEMENTS" shall mean the Energy Sales Agreement, the NOX
Agreement, the Fuel Supply Agreement and the ▇▇▇▇▇ City Partnership Agreement.
"MAXIMUM FORESEEABLE LOSS" shall mean the estimated largest loss which can be
expected to occur to the Facility under normal circumstances and normal plant
conditions, as adjusted pursuant to SECTION 11.3(e) of the Facility Lease.
"MEMBER INTEREST" shall mean the membership interest of the OP Member in the
Owner Participant.
"MEMORANDUM OF THE FACILITY SITE LEASE" shall mean the Memorandum of the
Facility Site Lease and Easement Agreement, dated as of [_____], 2001, between
the Ground Lessor and the Ground Lessee and filed with the [_____].
"MEMORANDUM OF THE FACILITY SITE SUBLEASE" shall mean the Memorandum of the
Facility Site Sublease Agreement, dated as of [_____], 2001, between the Ground
Sublessor and the Ground Sublessee and filed with the [_____].
"ME WESTSIDE" shall mean Mission Energy Westside, Inc., a California
corporation.
"MINIMUM CREDIT RATING" shall mean a credit rating of at least BBB- from S&P and
at least Baa3 from Moody's.
"MODIFIED SENIOR RENT SERVICE COVERAGE RATIO" shall mean for any period, without
duplication, a ratio the numerator of which is Net Cash Flow for such period
PLUS amounts on deposit in the Equity Account for such period, and the
denominator of which is the Senior Rent payable during such period; PROVIDED,
HOWEVER, that any calculations of the Modified Senior Rent Service Coverage
Ratio with respect to the most recently ended Fiscal Quarter shall with respect
to the most recent month, be based on estimated results only.
22
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investors Service, Inc., a division of ▇▇▇▇▇'▇
Corporation, and its successors and assigns.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as such term is defined
in Section 4001(a)(3) of ERISA.
"NATIONAL FLOOD INSURANCE ACT" shall mean the National Flood Insurance Act of
1968, as amended.
"NATIONAL PRIORITIES LIST" shall have the meaning specified in 40 C.F.R. Section
300.5.
"NET CASH FLOW" shall mean, for any period, (a) all Revenues for such period,
minus (b) the sum of (i) all amounts paid by or on behalf of ▇▇▇▇▇ City during
such period in respect of fuel, administration, operation, maintenance, repairs
and overhead, but excluding all capital expenditures which are funded with
Permitted Indebtedness or equity contributions, plus (ii) all taxes paid by
▇▇▇▇▇ City during such period, plus (iii) all fees paid by ▇▇▇▇▇ City relating
to the financing activities during such period.
"NEW LESSOR NOTES" shall have the meaning specified in the preamble of the Lease
Indenture.
"NEW YORK STATE ELECTRIC AND GAS CORPORATION" shall mean New York State Electric
and Gas Corporation, a New York corporation.
"NON-SEVERABLE IMPROVEMENTS" shall mean any Improvement to the Facility that is
not a Severable Improvement.
"NOTEHOLDERS" shall mean each of the holders of the Lessor Notes, and each of
such holder's successors and permitted assigns.
"NOX AGREEMENT" shall mean that certain NOx Allowance Sales Agreement dated as
of March 18, 1999 between Edison Mission Financial Marketing and Trading Co., as
buyer, ("EMFMT") and the Facility Lessee, as seller.
"OBSOLESCENCE TERMINATION DATE" shall have the meaning specified in SECTION 14.1
of the Facility Lease.
"OFFER" shall have the meaning specified in SECTION 17.1(e) of the Facility
Lease.
"OFFER PRICE" shall have the meaning specified in SECTION 17.1(e) of the
Facility Lease.
"OFFERING CIRCULAR" shall mean that certain $830,000,000 Edison Mission Holdings
Co. offering circular for the issuance of 8.13% Senior Secured Bonds due 2019
and 8.734% Senior Secured Bonds due 2026 dated as May 21, 1999.
"OFFICER'S CERTIFICATE" shall mean with respect to any Person, a certificate
signed by any Authorized Officer of such Person.
23
"OL SUBORDINATION AGREEMENT" means that agreement between the Owner Lessor,
Owner Participant and Lease Indenture Trustee dated as of [___] 2001.
"OM COMPANY" shall mean [Owner Manager] in its individual capacity.
"O&M ACCOUNT" shall mean an account of the Facility Lessee with a banking
institution in the United States that the Facility Lessee may designate from
time to time by written notice to the Depositary, established for holding funds
for the payment of O&M Costs.
"O&M COSTS" shall mean all actual cash maintenance and operation costs excluding
costs of fuel, emissions allowances and/or credits, Capital Expenditures and
Major Maintenance) incurred and paid, or if appropriate, to be incurred and
paid, for the Facility in any particular calendar or fiscal year or period to
which said term is applicable, including payments with respect to Permitted
Trading Activities, additives or chemicals and transportation costs, taxes,
insurance, consumables, payments for emissions allowances and/or credits,
payments under the Facility Site Sublease and other real property agreements
pursuant to which the Facility Lessee has rights in the Facility Site, payments
pursuant to the agreements for the management, operation or maintenance of the
Facility reasonable legal fees and expenses paid by the Facility Lessee in
connection with the management, maintenance or operation of the Facility, fees
paid in connection with obtaining, transferring, maintaining or amending any
Applicable Permits and reasonable general and administrative expenses, but
exclusive in all cases of noncash charges, including depreciation or
obsolescence charges or reserves therefor, amortization of intangibles or other
bookkeeping entries of a similar nature. For the avoidance of doubt, no amount
which may become due and owing by the Facility Lessee to EMMT under the Energy
Sales Agreement shall be deemed to be an O&M Cost unless such amount is directly
related to an amount owed by EMMT to an unrelated third party.
"OPERATIVE DOCUMENTS" shall mean the Participation Agreement, the Facility
Deed, the Facility Lease, the Facility Site Lease, the Memorandum of the
Facility Site Lease, the Facility Site Sublease, the Memorandum of the
Facility Site Sublease, the Lease Indenture, the Lessor LLC Agreement, the
Tax Indemnity Agreement, the Assignment and Assumption Agreement, the ▇▇▇▇ of
Sale, the Ownership and Operation Agreement, the OL Subordination Agreement,
the Lease Subordination Agreement, the ▇▇▇▇▇ City Subordination Agreement,
the Pledge and Collateral Agreement, the Amended and Restated Guarantee and
Collateral Agreement, the Amended Security Deposit Agreement, the Designated
Account Representative Agreement, any Qualifying Credit Support, any Debt
Service Reserve Letter of Credit (and any related application or
reimbursement agreement), the Fundco Indenture and, when executed and
delivered, any OP Guarantee or any agreement with respect to Support
Arrangements.
"OP GUARANTOR" means any Person that guarantees obligations of the Owner
Participant or the Transferee pursuant to Section 8(a)(iii) of the
Participation Agreement.
"OP GUARANTEE" shall mean that certain Guarantee Agreement that may be
entered into between the OP Guarantor and the Owner Participant whereby the
OP Guarantor guarantees certain payment obligations of the Owner Participant
under the Operative Documents.
"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 certificate of incorporation, its by-laws and all shareholder agreements,
voting trusts and
24
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; 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; and with respect to any Person that is a business trust, its
certificate of business trust and its trust 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 FACILITY LEASES" shall mean the other Facility Lease Agreements, dated as
of [______ __], 2001, by and between ▇▇▇▇▇ City and the Other Owner Lessors
relating to the Other ▇▇▇▇▇ City Lease Transactions, pursuant to which ▇▇▇▇▇
City 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, dated as
of [______ __], 2001, by and between ▇▇▇▇▇ City and the Other Owner Lessors,
pursuant to which ▇▇▇▇▇ City will lease the Other Ground Interests to the Other
Owner Lessors.
"OTHER FACILITY SITE SUBLEASES" shall mean the other Facility Site Subleases,
dated as of [______ __], 2001, by and between the Other Owner Lessors and ▇▇▇▇▇
City, pursuant to which the Other Owner Lessors will sublease the Other Ground
Interests to ▇▇▇▇▇ City.
"OTHER FACILITY PARTICIPATION AGREEMENTS" shall mean those participation
agreements dated the date hereof among the Facility Lessee and each of [ ], [ ],
and [ ].
"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 ▇▇▇▇▇ CITY 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 of the Other
Undivided Interests to ▇▇▇▇▇ City and the simultaneous sublease of the Other
Ground Interests to ▇▇▇▇▇ City on substantially the same terms and conditions as
under, and dated the same date as, the Overall Transaction.
"OTHER ▇▇▇▇▇ CITY OPERATIVE DOCUMENTS" shall mean the "Operative Documents"
with respect to each of the Other ▇▇▇▇▇ City Lease Transactions.
"OTHER LEVERAGED LEASE LIABILITIES" shall mean the basic rent, supplemental
rent, termination value or any other amount, liability or obligation that ▇▇▇▇▇
City is obligated to pay under the Other Facility Leases or the operative
documents for the Other ▇▇▇▇▇ City Lease Transactions.
25
"OTHER OWNER LESSORS" shall mean each Person holding the Other Undivided
Interests pursuant to the Other Facility Leases.
"OTHER OWNER PARTICIPANTS" shall mean each Person acting as an owner participant
pursuant to the Other Participation Agreements.
"OTHER UNDIVIDED INTERESTS" shall mean the undivided ownership interests in the
Facility not conveyed to the Owner Lessor under the Facility Deed.
"OVERALL TRANSACTION" shall mean the transactions contemplated by the Operative
Documents.
"OVERDUE RATE" shall mean the Applicable Rate plus 1% per annum.
"OWNER LESSOR" shall mean ▇▇▇▇▇ City OL[1], LCC, a Delaware LLC.
"OWNER LESSOR LIEN" shall have the meaning specified in SECTION 7.2 of the
Participation Agreement.
"OWNER LESSOR'S INTEREST" shall mean the Owner Lessor's right, title and
interest in and to (a) the Undivided Interest and (b) the Ground Interest under
the Facility Site Lease.
"OWNER LESSOR'S PERCENTAGE" shall mean the percentage set forth on Schedule [ ]
of the Facility Lease opposite the name of the Owner Lessor.
"OWNER LESSOR'S RENT ACCOUNT" shall have the meaning specified in SECTION 3.5 of
the Facility Lease.
"OWNER MANAGER" shall have the meaning specified in the preamble to the
Participation Agreement.
"OWNER PARTICIPANT" shall mean [General Electric Capital Corporation][Full]
Service Lease Corp.], a Delaware corporation.
"OWNER PARTICIPANT LIEN" shall mean any Lien on the Lessor Estate or any part
thereof arising as a result of (a) 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, (b)
Taxes against the Owner Participant or any Affiliate thereof that are not
indemnified against by ▇▇▇▇▇ City pursuant to the Operative Documents or (c)
Claims against or affecting the Owner Participant or any Affiliate thereof
arising out of the voluntary or involuntary transfer by the Owner Participant
(except as contemplated or permitted by the Operative Documents) of any portion
of the interest of the Owner Participant in the Lessor Membership Interest.
"OWNER PARTICIPANT'S COMMITMENT" shall have the meaning set forth in SECTION
2.1(a) of the Participation Agreement.
26
"OWNER PARTICIPANT'S COUNSEL" shall mean [_____________].
"OWNER PARTICIPANT'S NET ECONOMIC RETURN" with respect to the Owner
Participant's Commitment shall mean the Owner Participant's anticipated (a) net
after-tax yield, calculated according to the multiple investment sinking fund
method of analysis (as described in SFAS 13) and (b) aggregate after-tax cash
flow.
"OWNERSHIP AND OPERATION AGREEMENT" shall mean the Ownership and Operation
Agreement, dated as of [_____], 2001, among the Owner Lessor and each other
Owner Lessor.
"OWNERSHIP INTEREST" shall mean the Partnership Interests of the Facility
Lessee.
"OWNERSHIP INTERESTHOLDERS" shall have the meaning set forth in Section
5.18(a)(i) of the Participation Agreement.
"PA CONSULTING" shall mean [PA Consulting].
"PARTICIPATION AGREEMENT" shall mean that certain Participation Agreement dated
as of [_________, 2001] among ▇▇▇▇▇ City, the Owner Lessor, the Owner
Participant, the Owner Manager, the Indenture Trustee, Fundco and the Bondholder
Trustee.
"PBGC" shall mean Pension Benefit Guaranty Corporation and any entity succeeding
to any or all of its functions under ERISA.
"PENNSYLVANIA ELECTRIC COMPANY" shall mean Pennsylvania Electric Company, a
Pennsylvania corporation.
"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.
"PERMIT" shall mean any action, approval, certificate, consent, waiver,
exemption, variance, franchise, order, permit, authorization, right or license
of or from, and any filing with a Governmental Authority.
"PERMITTED ASSET SALES" shall mean:
(a) Sales of inventory (including, but not limited to, fuel), products,
emissions allowances and/or credits or obsolete items and other similar
dispositions and sales of energy, capacity, and ancillary services in the
ordinary course of business;
(b) Restricted Payments (in each case made in cash or Cash Equivalent
Investments) permitted under SECTION 6.10 of the Participation Agreement;
27
(c) any transaction permitted under SECTION 6.1 of the Participation
Agreement;
(d) any assignment of ▇▇▇▇▇ City's leasehold interest in the Facility
permitted under SECTION [ ] of the Facility Lease or any sublease permitted
under SECTION 19.1 of the Facility Lease.
"PERMITTED ENCUMBRANCES" shall mean (a) the interests of ▇▇▇▇▇ City, the Owner
Participant, the Owner Lessor, the Owner Manager and the Lease Indenture Trustee
under any of the Operative Documents; (b) all Owner Lessor Liens, Owner
Participant Liens and the Security Interest; (c) Liens for Taxes, water, sewage,
license, permit or inspection fees either not yet due and payable or being
contested in good faith by appropriate proceedings (and in respect of which
adequate cash reserves have been set aside) so long as such proceedings could
not reasonably be expected to result in a Material Adverse Effect; (d) the
reversionary interests of ▇▇▇▇▇ City in the Facility Site;[(e) the interests of
▇▇▇▇▇ City and the Owner Lessor in the Ownership and Operation Agreement;] (f)
Liens created or expressly permitted by any of the Operative Documents for the
sole purpose of paying all amounts due and owing under the Operative Documents;
(g) 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 30 days or being contested in good
faith by appropriate proceedings (and in respect of which adequate cash reserves
have been set aside) so long as such proceedings do not involve a material risk
of the sale, forfeiture or loss of the Facility; (h) Liens arising solely by
order of a court or tribunal or other Governmental Authority (or by any
agreement of similar effect) so long as such Lien is being contested in good
faith and is appropriately bonded or reserved against and any appropriate legal
proceedings that may have been initiated for review of such order have not been
finally terminated or the period within which such proceeding may be initiated
has not expired; (i) applicable zoning and building regulations and ordinances
from time to time in effect which do not affect the use or operation of the
Facility except to an insignificant extent; (j) the interest of a sublessee in
the Undivided Interest or the Facility under a permitted sublease; (k) Liens,
easements, encumbrances, restrictions, defects or irregularity of title that in
the aggregate are not substantial in amount and do not materially detract from
the value of the Undivided Interest, the Facility or the Facility Site and do
not materially impair the use of the Facility or the Facility Site in the
ordinary course of business; and (l) all matters shown as exceptions on SCHEDULE
[__] to each of the Title Policies as in effect on the Closing Date.
"PERMITTED INDEBTEDNESS" shall have the meaning specified in Section 6.7 of
the Participation Agreement.
"PERMITTED INVESTMENTS" shall mean (a) obligations issued or guaranteed as to
principal and interest (including money market securities) by (i) the United
States of America or (ii) and agency thereof for which its obligations are
backed by the full faith and credit of the United States of America, and
certificates evidencing ownership of the right to the payment of the principal
of and interest on such obligations, provided that such obligations are held in
the custody of an Acceptable Credit Provider in a special account separate from
the general assets of such custodian (b) certificates of deposit or other
interest-bearing obligations of the Collateral Agent, and Acceptable Credit
Provider or other bank with long-term unsecured debt rated either "AAA" by S&P
or "Aaa" by
28
Moody's, or "A" or higher by S&P and "A2" or higher by Moody's; and (c)
commercial paper, money market securities and other corporate debt securities
rated, on the date of purchase, "A-1" by S&P or "P-1" by Moody's or higher for
securities with original maturities of less than one year and "AAA" by S&P and
"A2" or higher by Moody's, for securities with original maturities of one year
or greater and maturing not more than one year from the date of acquisition
thereof.
"PERMITTED TRADING ACTIVITIES" shall mean Trading Activities that, in each case,
conform with the trading guidelines established from time to time by EME's
applicable risk management committee; provided, that such guidelines shall be
consistent with the risk management guidelines established from time to time by
EME's applicable risk management committee and applicable to other similarly
situated North American generating assets owned or controlled by EME or any
subsidiary thereof. Notwithstanding the foregoing, (a) no Trading Activity shall
constitute a "Permitted Trading Activity" if it is a speculative Trading
Activity, (b) all Permitted Trading Activities shall be conducted with Persons
who are rated Investment Grade (provided that the restriction set forth in this
clause (b) shall not apply to physical purchases of fuel (and related
transportation and other ancillary fuel services) intended for consumption at
the facility), and (c) no Permitted Trading Activity shall have a term exceeding
one year unless the pro forma financial results of such Permitted Trading
Activity, when taken together with the pro forma financial results of all other
Permitted Trading Activities to which the Facility Lessee is then a party,
produce (i) a pro forma minimum Basic Rent Service Coverage Ratio at all times
during the term of such Permitted Trading Activity that is at least [__] to 1.0
and (ii) a pro forma average Basic Rent Service Coverage Ratio for the term of
such Permitted Trading Activity that is at least [__] to 1.0 (provided that the
restriction set forth in this clause (c) shall not apply to physical purchases
of fuel (and related transportation and other ancillary fuel services) intended
for consumption at the Facility).
"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 (a) 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 (b) evaluates whether the subject property is in substantial
compliance with applicable Environmental Laws.
"PHASE II ENVIRONMENTAL SURVEY" shall mean a study that includes sampling and
analysis of soil, groundwater and/or other environmental media, conducted
pursuant to good customary and commercial practice, that evaluates potential
Environmental Conditions determined in a Phase I Environmental Survey to exist
at the property that is the subject of the study.
29
"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 AND COLLATERAL AGREEMENT" shall mean that pledge and collateral
agreement between Edison Mission Holdings Co. and the Collateral Agent, dated as
of December __, 2001.
"PLEDGED ACCOUNTS" shall mean the Revenue Account, the Senior Rent Payment
Account, the Recovery Event Proceeds Account and the Equity Account.
"POWER MARKET CONSULTANT" means PHB ▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc. or another nationally
recognized power market consulting firm which, as Power Market Consultant, will
perform a market study of certain markets relating to the Facilities and develop
independent electricity price forecasts for the benefit of the Owner
Participant.
"PRICING ASSUMPTIONS" shall mean the "Pricing Assumptions" attached as SCHEDULE
8.1(C) to the Participation Agreement.
"PROJECT DOCUMENTS" shall mean (a) the Material Project Documents, the Energy
Sales Agreement, guarantees by the Facility Lessee of Permitted Trading
Activities, the real property documents under which the Facility Lessee has an
interest in the Facility Site and the Easements, the ▇▇▇▇▇ City Partnership
Agreement, the Project Management Agreement, the Interconnection Agreement, and
(b) any other material agreement, if and when entered into, between the Facility
Lessee and any Affiliate of the Facility Lessee or between the Facility Lessee
and any third party relating to the ownership, use, operation or maintenance of
the Facility.
"PROPORTIONAL RENT" shall have the meaning specified in SECTION 3.2(c) of the
Facility Lease.
"PRUDENT INDUSTRY PRACTICE" shall mean, at a particular time, (a) any of the
practices, methods and acts engaged in or approved by a significant portion of
the competitive coal fired electric generating industry operating in the eastern
United States at such time, or (b) with respect to any matter to which clause
(a) does not apply, any of the practices, methods and acts which, in the
exercise of reasonable judgment in light of the facts known 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,
30
manufacturers' warranties and the requirements of any Governmental Authority of
competent jurisdiction.
"PUHCA" -- see "Holding Company Act."
"PURCHASE PRICE" shall mean the Owner Lessor's Percentage of $[_______].
"QUALIFYING CASH BIDS" shall have the meaning specified in SECTION 13.2 of the
Facility Lease.
["QUALIFYING CREDIT SUPPORT" shall mean an irrevocable, unconditional,
uncollateralized, standby letter of credit or surety bond substantially in the
form of EXHIBIT [_ __], to the Participation Agreement, issued in favor of the
Owner Lessor by a Qualifying Credit Support Issuer (and, so long as the Lessor
Notes are outstanding and the Lien of the Lease Indenture shall not have been
discharged, assigned to the Lease Indenture Trustee) securing the Facility
Lessee's obligation to pay scheduled Rent under the Facility Lease; provided
that, in the case of a surety bond, each of S&P and ▇▇▇▇▇'▇ shall shave
confirmed its then current rating on the [Fundco Bonds] prior to the Facility
Lessee's first use of a surety bond as Qualifying Credit Support]
"QUALIFYING CREDIT SUPPORT ISSUER" shall mean any bank or other financial
institution having a long term unsecured debt rating of at least [A] or higher
from S&P and [A2] or higher from ▇▇▇▇▇'▇. A Qualifying Credit Support Issuer
shall cease to be a Qualifying Credit Support Issuer if such entity shall at any
time be rated below the applicable ratings set forth in the immediately
preceding sentence.
"QUALIFYING SPECIAL LESSEE TRANSFER BIDS" shall have the meaning set forth in
ARTICLE XV of the Participation Agreement.
"RATING AGENCIES" shall mean S&P and ▇▇▇▇▇'▇.
"REASONABLE BASIS" shall have the meaning specified in Section
6662(d)(2)(B)(ii)(II) of the Code (or such other level of confidence required by
the Code at that time to avoid the imposition of penalties).
"REBUILD CONDITIONS" shall have the meaning set forth in Section 10.4 of the
Facility Lease.
"RECOVERY EVENT PROCEEDS" shall have the meaning set forth in Section __ of
the Amended Security Deposit Agreement.
"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."
"REINVESTMENT NOTICE" shall mean a notice executed an Authorized Officer to
the Owner Participant, the Collateral Agent, the Lease Indenture Trustee and
the Bondholder Trustee relating to an Event of Loss (a) setting forth in
reasonable detail the nature of the proposed restoration or replacement
relating to such Event of Loss and the estimated cost and time to complete
31
such restoration or replacement and (b) stating that (i) no Material Lease
Default or Lease Event of Default has occurred and is continuing, (ii) such
restoration or replacement is technologically and economically feasible,
(iii) the net cash proceeds of such Event of Loss, together with other
resources available to the Facility Lessee, are sufficient to pay the
estimated cost of completing such restoration or replacement and (iv) the
Facility Lessee has sufficient resources (through business interruption
insurance or otherwise) to pay all principal, interest and other fixed
charges projected to become due and payable with respect to Basic Lease Rent
(or Renewal Rent) prior to the completion of such restoration or replacement;
PROVIDED, HOWEVER, that with respect to the receipt of proceeds of
$50,000,000 or more on account of an Event of Loss described in clauses (i),
(ii), (iii) and (v) of the definition of Event of Loss, the independent
engineer shall have certified as to the reasonableness, in light of Prudent
Industry Practice, of the Facility Lessee's repair and replacement plans as
set forth in the Reinvestment Notice related to such Event of Loss.
"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 none of the
OM Company, the Owner Manager or the Owner Lessor shall be treated as Related
Parties to each other and none of the OM Company, the Owner Lessor or the Owner
Manager shall be treated as a Related Party to the Owner Participant, except
that, for purposes of SECTION 10 of the Participation Agreement, the Owner
Lessor shall be treated as a Related Party to the Owner Participant to the
extent that the Owner Lessor acts at the express written direction or with the
express written consent of the Owner Participant.
"RENEWAL LEASE TERM" shall mean the First Renewal Lease Term, the Second Renewal
Lease Term or any FMV Renewal Lease Term.
"RENEWAL OPTION" shall mean the First Renewal Option, the Second Renewal Option,
or either of them, as the context may require.
"RENEWAL RENT" shall mean the scheduled Rent payable on each Rent Payment Date
during any First Renewal Lease Term, Second Renewal Lease Term or FMV Renewal
Lease Term, in each case as determined in accordance with SECTION 15.3 of the
Facility Lease.
"RENT" shall mean Basic Lease Rent, Renewal Rent, if any, and Supplemental Lease
Rent.
"RENT DEFAULT EVENT" shall mean the failure to make any payment of the Equity
Portion of Basic Lease Rent, when due, and such failure shall continue
unremedied for five (5) Business Days.
"RENT PAYMENT DATE" shall mean the 1st day of April and the 1st day of
October of each year during the Facility Lease Term and any date on which
Senior Rent of the type specified in clause(b) of the definition thereof is
payable.
32
"RENT PAYMENT PERIOD" shall mean each of the periods set forth on Schedule 1-2
to the Facility Lease.
"RENT SERVICE RESERVE REQUIREMENT" shall mean [__________].
"REPLACEMENT COMPONENT" shall have the meaning specified in SECTION 7.2 of the
Facility Lease.
"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.
"REQUIREMENT OF LAW" shall mean, as to any Person, the Organic Documents of such
Person, and any law (including any Environmental Law), treaty, rule, regulation,
judgment, decree, injunction, writ and order of any court, arbitration board of
governmental authority and rule, regulation, order, ordinance, license and
permit of any 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 (c) of the definition
of "Event of Loss."
"RESERVE ACCOUNT" shall mean an account of the Facility Lessee maintained with
the Depositary as described in SECTION 5.11 of the Participation Agreement into
which the Reserve Requirement shall be deposited, held and distributed as set
forth in the Amended Security Deposit Agreement.
"RESERVE REQUIREMENT" shall mean, as of the date of determination (a) that
amount in Dollars set forth on SCHEDULE [_] to the Participation Agreement
corresponding to the date of such determination or (b) Qualifying Credit Support
equal to such amount.
["RESERVOIR SITE EASEMENT" shall mean [______________________].]
"RESTRICTED PAYMENTS" shall mean the making of any of the following: (a)
distributions in respect of the equity interests in the Facility Lessee (in
cash, property, securities or obligations other than additional equity interests
of the same type), (b) any other payments or distributions on account of
payments of interest, the setting apart of money for a sinking or other
analogous fund for, or the purchase, redemption, retirement or other acquisition
of any portion of any equity interest in the Facility Lessee or of any warrants,
options or other rights to acquire any such equity interest (or to make any
payments to any Person, such as "phantom stock" payments, where the amount
thereof is calculated with reference to fair market or equity value of the
Facility Lessee), or (c) any payment on or with respect to, or purchase,
redemption, defeasance or other acquisition or retirement for value of any
Subordinated Indebtedness.
33
"RESTRICTED PAYMENT DATE" shall mean January 1st, April 1st, July 1st, and
October 1st of each year, or, if such day is not a Business Day, the next
succeeding Business Day.
"RETAINED ▇▇▇▇▇ CITY LAND EASEMENTS" shall mean [________________].
"RETURN CONDITIONS" shall have the meaning specified in SECTION 5.2 of the
Facility Lease.
"REVENUE ACCOUNT" shall mean the account of the Facility Lessee maintained with
the Depositary into which all Project Revenues will be deposited, held and
distributed as set forth in the Amended Security Deposit Agreement.
"REVENUE PROCEDURES" shall mean any revenue procedure issued by the Department
of Treasury.
"REVENUE RULINGS" shall mean any revenue ruling issued by the Department of
Treasury.
"REVENUES" shall mean, for any period, all income and receipts received by
Facility Lessee during such period including any income and receipts derived
from the operation of the Facility, including proceeds of any Permitted Asset
Sales, any business interruption insurance, income derived from the sale or use
of energy transmitted or distributed by the Facility, together with any receipts
derived from Permitted Trading Activities or incidental to the operation of the
Facility, all as determined in conformity with cash accounting principles, the
investment income on amounts in the Accounts, proceeds of any insurance,
condemnation or litigation or arbitration awards relating to the Facility, and
all other revenues of the Facility Lessee, however generated, but not including
Excepted Payments or Recovery Event Proceeds.
"REVISED DEVELOPMENT PRESENTATION" shall have the meaning specified in ARTICLE
XVI of the Participation Agreement.
"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 [7], 2001 and any date set for
Closing in a notice of postponement pursuant to SECTION 2.2 of the Participation
Agreement.
"SEC NO ACTION LETTER" shall have the meaning set forth for such term in SECTION
3.1(d) of the Participation Agreement.
"SECOND RENEWAL LEASE TERM" shall have the meaning specified in SECTION 15.1 of
the Facility Lease.
"SECOND RENEWAL OPTION" shall have the meaning specified in SECTION 15.2 of the
Facility Lease.
34
"SECOND RENEWAL TERM"" shall have the meaning set forth in SECTION 15.1(b) of
the Facility Lease.
"SECTION 467 LOAN" shall have the meaning specified in SECTION 3.2(d) 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.
"SECURITY AGENT" shall mean _____________________.
"SECURITY DOCUMENTS" shall mean the Amended and Restated Guarantee and
Collateral Agreement, the Pledge and Collateral Agreement, the Amended
Security Deposit Agreement, the Lease Subordination Agreement, the OL
Subordination Agreement, the Lease Indenture and the Fundco Indenture.
"SECURITY INTEREST" shall mean the security interest granted by the Owner Lessor
to the Lease Indenture Trustee for the benefit of the holders of the Lessor
Notes in the Indenture Estate pursuant to the Lease Indenture and in connection
with the issuance of the Lessor Notes.
"SENIOR RENT" shall mean the amounts constituting (a) Component B of Basic
Lease Rent as set forth on SCHEDULE 1.1 to the Facility Lease, (b) any
Termination Value, or other amounts payable upon a termination of the
Facility Lease or otherwise payable as a result of Section 3.4 of the
Facility Lease and (c) fees, expenses and indemnities payable with respect to
the Debt Service Reserve Letter of Credit.
"SENIOR RENT SERVICE COVERAGE RATIO" shall mean for any period, without
duplication, a ratio the numerator of which is Net Cash Flow for such period,
and the denominator of which is the Senior Rent payable during such period;
PROVIDED, HOWEVER, that any calculations of the Senior Rent Service Coverage
Ratio with respect to the most recently ended Fiscal Quarter shall, with respect
to the most recent month, be based on estimated results only.
"SEVERABLE IMPROVEMENT" shall mean any Improvement that is readily removable
without causing material damage to the Facility.
"SELLING PARTY" shall have the meaning specified in ARTICLE XV of the
Participation Agreement.
"SFAS 13" shall mean Statement of Financial Accounting Standards (SFAS) No. 13,
as amended and interpreted from time to time.
"SITE LEASE TERM" shall have the meaning specified in SECTION 2.3(c) of the
Facility Site Lease.
"SITE SUBLEASE TERM" shall have the meaning specified in SECTION 2.3 of the
Facility Site Sublease.
35
"SPECIAL LESSEE TRANSFER" shall have the meaning specified in ARTICLE XV of the
Participation Agreement.
"SPECIAL LESSEE TRANSFER AMOUNT" shall mean [_____________________].
"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.
"SUBORDINATED INDEBTEDNESS" shall mean [__________________].
"SUBSEQUENT LESSOR NOTE" shall have the meaning specified in SECTION [ ] of the
Lease Indenture.
"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.
"SUPPLEMENTAL FINANCING" shall have the meaning specified in SECTION 12.1(a) of
the Participation Agreement.
"SUPPLEMENTAL LEASE RENT" shall mean any and all amounts, liabilities and
obligations (other than Basic Lease Rent or Renewal Rent) which ▇▇▇▇▇ City
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 Termination Value, Transaction Expenses, and any premium due
on the Lessor Notes.
"SUPPORT ARRANGEMENTS" shall have the meaning specified in SECTION 5.2(g) of the
Facility Lease.
"SUPPORT SERVICES" shall mean, from and after expiration or termination of the
Facility Lease, certain mutually agreed services and rights necessary for the
Owner Lessor (or any of its successors or permitted assigns) to be able to
operate the Facility and sell power therefrom in a manner consistent with
Lessee's operation thereof during the Facility Lease Term (assuming such
operation was in accordance with the terms of the Facility Lease), including (a)
any services that may become necessary as a result of the inability for whatever
reason, of the Owner Lessor to hold any relevant permit (b) transmission rights
and access rights available to the Lessee during the Facility Site Lease and (c)
intellectual property rights obtained and maintained in accordance with SECTION
5.13 of the Participation Agreement.
36
"SURVEY" shall mean the ALTA/ACSM Land Title Survey, FFCA Number [__________]
prepared by Hampton Technical Associates, Inc. for [EME Homer City Generation
L.P.], dated [________], 2000, including revisions thereto.
"TAX" or "TAXES" shall mean all fees (including, license, documentation and
registration fees), taxes (including, income, receipts, 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 ADVANCE" shall have the meaning set forth in Section 10.2(g)(iii)E of
the Participation Agreement.
"TAX ASSUMPTIONS" shall have the meaning specified in SECTION 1 of the Tax
Indemnity Agreement.
"TAX BENEFIT" shall have the meaning set forth in Section 10.2(e) of the
Participation Agreement.
"TAX CLAIM" shall have the meaning set forth in Section 10.2(g)(i) of the
Participation Agreement.
"TAX EVENT" shall have the meaning [____________________].
"TAX INDEMNITEE" shall have the meaning specified in SECTION [__] of the
Participation Agreement.
"TAX INDEMNITY AGREEMENT" shall mean the Tax Indemnity Agreement, dated as of
[_____], 2001 between the Owner Participant and ▇▇▇▇▇ City.
"TAX LAW CHANGE" shall have the meaning specified in SECTION [__] 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 [__] of the Facility
Lease, which dates shall be the same days on which Basic Lease Rent and Renewal
Rent, if any, are payable under the Facility Lease.
"TERMINATION VALUE" shall mean, for any Termination Date, the Termination Values
set forth under the column titled "Termination Value" on SCHEDULE 2 of the
Facility Lease for such Termination Date.
"TERMINATION VALUE PAYMENT DATE" shall have the meaning set forth in SECTION
10.2(a) of the Facility Lease.
"TITLE POLICIES" shall mean the following title policies issued by Chicago Title
Insurance Company:
37
(a) that certain Leasehold Owner's Policy No. [__________], issued to
the Owner Lessor and each Other Owner Lessor dated [________], 2001, to be
redated to the date of recording of the Memorandum of Facility Site Lease,
insuring the Owner Lessor's and each Other Owner Lessor's (i) applicable
percentage undivided leasehold interest in the Facility Site as lessee under the
Facility Site Lease and (ii) applicable percentage undivided fee interest in the
Facility Site and
(b) that certain Leasehold Loan Policy No. [______] to [__________], as
Lease Indenture Trustee, dated [_________], 2001, to be redated the date of the
recording of the Memorandum of the Facility Site Lease, insuring the Lease
Indenture Trustee's security interest in the Owner Lessor's and each Other Owner
Lessor's (i) leasehold interest in the Facility Site Lease and (ii) fee interest
in the Facility.
"TRADING ACTIVITIES" shall mean (a) the daily or forward purchase and/or sale,
or other acquisition or disposition, of wholesale electric energy, capacity,
transmission rights, emissions allowances and/or credits, weather derivatives
and/or related commodities, either physical or financial, (b) the daily or
forward purchase and/or sale, or other acquisition or disposition, of fuel,
mineral rights and/or related commodities, including swaps, options and
swaptions, either physical or financial, (c) electric energy-related tolling
transactions, as seller of tolling services, or (d) other similar electric
industry activities consistent with industry activities conducted by similarly
situated industry participants in the ordinary course of their business from
time to time, in each case consistent with risk management activities approved
by the risk management committee of EME.
"TRANSACTION DOCUMENTS" shall mean, collectively, the Operative Documents and
the Project Documents.
"TRANSACTION EXPENSES" 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 Appraisal, the cost of title insurance,
if obtained, filing and recording fees and taxes set forth on SCHEDULE 2.3 to
the Participation Agreement, the fees and expenses of the Engineering
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 but including the
reasonable out-of-pocket expenses of the Owner Participant's Advisor) and
approved in advance by ▇▇▇▇▇ City, which approval may not be unreasonably
withheld;
(b) the reasonable legal fees, expenses and disbursements of each of
the Owner Participant, the Owner Lessor and the Owner Manager and their
respective counsel;
(c) [the reasonable legal fees, expenses and disbursements of the
Lease Indenture Trustee and its respective counsel;]
38
(d) at ▇▇▇▇▇ City's option, all or a portion of ▇▇▇▇▇ City's legal fees
and reasonable out-of-pocket cost and expenses related thereto;
(e) [the fees of the Rating Agencies in connection with rating [▇▇▇▇▇
City and the Lease Debt][the Existing Debt]; and]
(f) other reasonable, documented out-of-pocket expenses of the Owner
Lessor, Owner Participant and the Lease Indenture Trustee, including costs of
title insurance and fees and expenses, if any, related to delivery of any
non-consolidation opinions.]
"TRANSFEREE" shall have the meaning specified in SECTION 8.1(a) of the
Participation Agreement.
"TREASURY REGULATIONS" shall mean regulations, including temporary regulations,
promulgated under the Code.
"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 INDEBTEDNESS" shall mean the bonds described on SCHEDULE 7.9 of the
Participation Agreement.
"VERIFIER" shall have the meaning specified in SECTION 3.4(e) of the Facility
Lease.
"WELFARE PLAN" shall mean a "welfare plan," as such term is defined in SECTION
3(1) of ERISA.
39
