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Exhibit 4.3
LOAN AGREEMENT
by and between
FINANCE AUTHORITY OF MAINE
and
PENOBSCOT ENERGY RECOVERY COMPANY,
LIMITED PARTNERSHIP
relating to the
$29,930,000
Finance Authority of Maine
Electric Rate Stabilization Revenue Refunding Bonds
Series 1998A (Penobscot Energy Recovery Company, LP)
and
$15,065,000
Finance Authority of Maine
Electric Rate Stabilization Revenue Refunding Bonds
Series 1998B (Penobscot Energy Recovery Company, LP)
Dated as of June 1, 1998
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 Definitions.................................................... 2
Section 1.2 Rules of Construction.......................................... 6
ARTICLE II
REPRESENTATIONS AND UNDERTAKINGS
Section 2.1 Representations by the Issuer.................................. 7
Section 2.2 Representations by the Borrower................................ 8
ARTICLE III
ELECTRIC RATE STABILIZATION PROJECT; ISSUANCE OF BONDS;
AUTHORIZED REPRESENTATIVES
Section 3.1 Agreement to Complete Electric Rate Stabilization Project...... 9
Section 3.2 Agreement to Issue Bonds; Application of Bond Proceeds......... 9
Section 3.3 Borrower Required to Fund Insufficiency........................ 10
Section 3.4 Authorized Representatives of the Borrower..................... 10
ARTICLE IV
EFFECTIVE DATE AND DURATION OF THIS AGREEMENT; REPAYMENT
PROVISIONS; AND UNCONDITIONAL OBLIGATION OF THE BORROWER
Section 4.1 Effective Date and Duration of this Agreement.................. 10
Section 4.2 Loan Clauses; Loan Note........................................ 10
Section 4.3 Additional Amounts Payable..................................... 12
Section 4.4 Optional Prepayments........................................... 12
(1)
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Section 4.5 Prepayment; Extraordinary and Special Optional Redemption...... 13
Section 4.6 Notice of Prepayment........................................... 13
ARTICLE V
SECURITY FOR PAYMENT
Section 5.1 Obligations of the Borrower Hereunder Unconditional............ 14
Section 5.2 Assignment of Rights Under Facility Agreements................. 14
Section 5.3 Collateral Assignment.......................................... 15
Section 5.4 Payment of Assigned Sums....................................... 15
Section 5.5 Exercise of Rights by Borrower................................. 15
Section 5.6 No Release or Assumption....................................... 16
Section 5.7 Security Clauses............................................... 16
Section 5.8 Pledge of Trust Estate......................................... 16
Section 5.9 Receipt by Trustee of Payments Under Facility Agreements and
Other Contracts; Enforcement and Amendment of Facility
Agreements................................................... 17
ARTICLE VI
SPECIAL COVENANTS
Section 6.1 No Warranty of Condition or Suitability by the Issuer.......... 17
Section 6.2 Operation and Maintenance of the Facility...................... 17
Section 6.3 Damage; Repair of Damage; Condemnation......................... 17
Section 6.4 [Reserved]..................................................... 18
Section 6.5 Issuer's Right of Inspection and Access........................ 18
Section 6.6 Conduct of Business............................................ 18
Section 6.7 Indemnification Covenants...................................... 18
Section 6.8 Assignment, Leasing and Selling................................ 20
Section 6.9 Environmental Covenants........................................ 20
Section 6.10 Default and Litigation Notification............................ 21
Section 6.11 Insurance...................................................... 21
Section 6.12 Additional Covenants and Agreements............................ 21
Section 6.13 No Liability of the Issuer..................................... 21
Section 6.14 Incorporation of Tax Regulatory Agreement; Determination of
Taxability..................................................... 22
Section 6.15 Maintenance of Facility Agreements............................. 22
(2)
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ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default Defined ..................................... 23
Section 7.2 Remedies on Default............................................ 25
Section 7.3 No Remedy Exclusive; Trustee and Noteholders Deemed Third
Party Beneficiaries.......................................... 26
Section 7.4 No Additional Waiver Implied By One Waiver..................... 26
ARTICLE VIII
SPECIAL PROVISIONS RELATING TO BOND INSURANCE
Section 8.1. Purpose of Article............................................. 26
Section 8.2. Special Provisions............................................. 26
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices........................................................ 27
Section 9.2 Filing......................................................... 29
Section 9.3 Binding Effect................................................. 29
Section 9.4 Severability................................................... 29
Section 9.5 Amendments, Changes and Modifications.......................... 29
Section 9.6 Execution of Counterparts...................................... 29
Section 9.7 Law Governing Construction of Agreement........................ 29
Section 9.8 Payments Due on Non-Business Days.............................. 30
Section 9.9 Limitation of Liability........................................ 30
EXHIBIT A ADDITIONAL COVENANTS OF BORROWER................................A-1
EXHIBIT B LOAN PRINCIPAL..................................................B-1
Form of Loan Note .............................................................1
(3)
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LOAN AGREEMENT
This Loan Agreement, dated as of June 1, 1998, is entered into by and
between the FINANCE AUTHORITY OF MAINE, a public body politic and corporate and
a duly created and validly existing agency of the State of Maine, and PENOBSCOT
ENERGY RECOVERY COMPANY, LIMITED PARTNERSHIP, a limited partnership organized
and existing under the laws of the State of Maine.
WHEREAS, the Act authorizes the Issuer to issue revenue obligation
securities to assist in financing eligible projects within the State and to
provide credit enhancement by establishing capital reserve funds to secure the
payment of principal and interest on such securities; and
WHEREAS, the Borrower proposes to refinance an eligible project
originally consisting of the acquisition and construction of the Facility (as
defined herein); and
WHEREAS, the Issuer has issued its revenue obligation securities
referred to as Electric Rate Stabilization Revenue Refunding Bonds Series 1998A
(Penobscot Energy Recovery Company, LP) and Electric Rate Stabilization Revenue
Refunding Bonds Series 1998B (Penobscot Energy Recovery Company, LP), which
Bonds are not a debt or liability of the Issuer, the State or any municipality
therein or any political subdivision thereof, or a pledge of the faith and
credit of the State or any political subdivision thereof, but are limited
obligations of the Issuer payable solely out of the Trust Estate; and
WHEREAS, the Issuer has issued a conditional financing commitment to
the Borrower, pursuant to which the Issuer agreed to use the Bond proceeds to
fund the Loan to the Borrower in the original principal amount of $44,995,000 to
refund in whole the $44,800,000 outstanding principal amount of Floating Rate
Demand Resource Recovery Revenue Bonds (Penobscot Energy Recovery Company
Project - Series 1986A) issued by the Town of Orrington, Maine and Floating Rate
Demand Resource Recovery Revenue Bonds (Penobscot Energy Recovery Company
Project - Series 1986B) issued by the Town of Orrington, Maine (the
"Refunding"), which has been approved by the Issuer; and
WHEREAS, the Issuer has issued the Bonds in the amount of $44,995,000
for the purpose of funding the Loan; and
WHEREAS, the Borrower has agreed to accept the Loan of a portion of the
proceeds of the Bonds and to make Additional Payments, as evidenced by the Loan
Note, under the terms and conditions set forth herein; and
WHEREAS, the Borrower acknowledges that the Issuer is providing
financing for the Refunding from the proceeds of the sale of the Bonds in
accordance with the purposes of the Act, that the accomplishment of these
purposes is dependent upon compliance of the Borrower with its covenants
contained in this Agreement, and that the Refunding is in furtherance of a
public purpose.
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W I T N E S S E T H:
IN CONSIDERATION of the respective representations and agreements
hereinafter contained, the parties hereto agree as follows (provided that in the
performance of the agreements of the Issuer herein contained, any obligation it
may hereby incur for the payment of money shall not create a pecuniary liability
or a charge against the general credit of the Issuer or the general credit or
taxing powers of the State or any municipality therein or political subdivision
thereof, but shall be payable solely out of the Trust Estate).
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section I.1 Definitions. All words and terms defined in the Indenture
shall have the same meanings in this Loan Agreement, unless otherwise
specifically defined herein. In addition, the following words and terms as used
in this Agreement, including the preambles hereto, shall have the following
meanings unless some other meaning is plainly intended:
"Act" means the Finance Authority of Maine Act: Title 10, Chapter 110,
Maine Revised Statutes, as amended.
"Additional Covenants" shall mean those covenants, warranties,
representations and agreements set forth in Exhibit A hereto.
"Additional Payments" means the amounts required to be paid by the
Borrower, other than Loan Payments, pursuant to the provisions of the Loan Note
and Sections 4.2 and 4.3 hereof.
"Administrative Expenses" shall have the meaning assigned to such term
in the Indenture.
"Agreement" or "Loan Agreement" means this Loan Agreement between the
Issuer and the Borrower, as the same may be amended or supplemented from time to
time.
"Authorized Representative" shall have the meaning assigned to such
term in the Indenture.
"Borrower" means Penobscot Energy Recovery Company, Limited
Partnership, a limited partnership organized and existing under the laws of the
State of Maine, its permitted successors and assigns, and any surviving,
resulting or transferee entity permitted under this Agreement.
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"Borrower Documents" means, collectively, all documents and agreements
executed and delivered by the Borrower as security for or in connection with the
issuance of the Bonds, including the Loan Note, this Agreement and the Support
Agreements.
"Capital Reserve Premium" means the fee, calculated annually and
payable quarterly by the Borrower to the Issuer, initially in an amount equal to
fifty basis points (.50%) of the outstanding Loan balance as of the date of
calculation as described below, which fee rate may be changed from time to time
by written agreement between the Issuer and the Borrower. The Capital Reserve
Premium shall be calculated as of July 1 of each year for the next four
quarterly payments, based on the Loan balance on such July 1 after giving effect
to any payment of principal made on such July 1, payable in advance in equal
quarterly installments on the immediately succeeding July 15, October 15,
January 15 and April 15; provided, however, that the first calculation period
for such fee shall commence on the Loan funding date and end on June 30, 1999,
calculated on the basis of the Loan then funded, and the first payment
installment of such fee shall be made on the Loan funding date for the period
commencing thereon and ending on October 14, 1998.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means all real and personal property, both tangible and
intangible, of the Borrower on which the Authority and the Trustee hold a
mortgage, security interest or pledge pursuant to the Mortgage. The Collateral
does not constitute collateral for the Loan, and the Authority's interest in the
Collateral constitutes a part of Unassigned Issuer's Rights.
"Electric Rate Stabilization Project" means the electric rate
stabilization project constituting the refunding of the outstanding Prior Bonds
which financed part of the cost of acquisition and construction of the Facility.
"Environmental Cleanup Site" shall mean any location which is listed or
proposed for listing on the National Priorities List, on CERCLIS or on any
similar state list of sites requiring investigation or cleanup, or which is the
subject of any pending or threatened action, suit, proceeding or investigation
related to or arising from any alleged violation of any Environmental Law.
"Event of Default" means any of the events described as an Event of
Default in Section 7.1 hereof.
"Facility" means the 25.3 megawatt (gross) nameplate capacity
waste-to-energy electric generation facility located in Orrington, Maine, owned
and operated by the Borrower, including the site thereof, as more particularly
described in the Mortgage.
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"Facility Agreements" shall have the meaning assigned to such term by
the Indenture.
"Financing Documents" means the Loan Note and this Loan Agreement.
"Indebtedness" means, as to the Borrower, at a particular time, (a) all
indebtedness for borrowed money of, or guaranteed by, the Borrower, (b) all
indebtedness for borrowed money secured by any lien on any property owned by the
Borrower, even though the Borrower has not assumed or become liable for the
payment thereof, (c) obligations of the Borrower under leases which the Borrower
has or should have, in accordance with generally accepted accounting principles,
capitalized, (d) all obligations owed by the Borrower for all or any portion of
the deferred purchase price of property or services which the Borrower has or
should have, in accordance with generally accepted accounting principles,
capitalized, and (e) all obligations of the Borrower incurred in connection with
any letter of credit or bond insurance policy with respect to which the issuer
thereof has made any payment or disbursement.
"Indenture" means the Trust Indenture of even date herewith between the
Issuer and the Trustee pursuant to which the Bonds will be issued and all of the
Issuer's interest in this Agreement (except Unassigned Issuer's Rights and
except that with respect to Shared Rights, rights of enforcement may be
exercised by the Trustee either jointly or severally with the Issuer and rights
to consent to the modification thereof or to waive compliance therewith may be
exercised by the Trustee jointly with the Issuer but not severally) will be
assigned and pledged as security for the payment of principal of and interest on
the Bonds.
"Issuer" or "Authority" means the Finance Authority of Maine, a body
corporate and politic and a public instrumentality of the State, duly organized
and existing under the laws of the State, and any body, board, authority, agency
or other political subdivision or instrumentality of the State which shall
hereafter succeed to the powers, duties and functions thereof.
"Issuer Documents" means, collectively, those Financing Documents
executed by the Issuer.
"Loan" means the loan by the Issuer to the Borrower of the proceeds of
sale of the Bonds.
"Loan Note" means the promissory note of the Borrower to the Authority
dated the Closing Date, and any amendments, supplements, renewals or allonges
thereto or replacements thereof made in conformity with this Agreement and the
Indenture.
"Loan Payments" means the amounts required to be paid by the Borrower
in repayment of the Loan pursuant to the provisions of the Loan Note and Section
4.2 hereof.
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"Material Adverse Effect" shall mean a material adverse effect on the
business, operations, condition (financial or otherwise) or prospect of the
Borrower.
"Mortgage" means the Mortgage, Security Agreement and Financing
Statement, of even or contemporaneous date herewith, executed by the Borrower in
favor of the Issuer and the Trustee, and any substitute or replacement therefor
or any mortgage hereafter given to secure the Borrower's obligations to the
Issuer hereunder and to the Trustee.
"Permitted Encumbrances" means, as of any particular time: (i) the
Indenture; (ii) the Mortgage; (iii) this Agreement; and (iv) any other liens
permitted by this Agreement or the Mortgage.
"Person" means and includes any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization, or government or any agency or political subdivision thereof.
"Prior Bonds" means the Town of Orrington, Maine, Floating Rate Demand
Resource Recovery Revenue Bonds (Penobscot Energy Recovery Company Project
Series 1986A) and the Town of Orrington, Maine, Floating Rate Demand Resource
Recovery Revenue Bonds (Penobscot Energy Recovery Company Project - Series
1986B).
"Repayment Installment" means any amount that the Borrower is required
to pay directly to the Trustee pursuant to Section 4.2 of this Agreement as a
repayment of the Loan.
"Revenue Fund" means the special fund by that name created and
established by and pursuant to the Indenture.
"Revenues" shall have the meaning assigned to such term in the
Indenture.
"Shared Rights" means all of the rights of the Issuer to enforce and
consent to the modification of or waiver of compliance with the Loan Note, this
Agreement and the Mortgage.
"Support Agreements" shall have the meaning assigned to such term in
the Indenture.
"Trust Estate" shall have the meaning assigned to such term in the
Indenture.
"Unassigned Issuer's Rights" means all of the rights of the Issuer (a)
in, to and under the Mortgage and, pursuant thereto, the Collateral, including
the Facility, and the right to enforce, and consent to the modification of or
waiver of compliance with, the foregoing; (b) to enforce and
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consent to the modification of or waiver of compliance with, the conditions and
covenants of the Borrower referred to in Sections 6.7 and 6.12 hereof; (c) to
receive Additional Payments due and owing to the Issuer under the Loan Note and
Section 4.3 hereof; (e) under Sections 6.5 and 6.8 hereof; (f) to give or
withhold consent under Section 6.3 hereof; (g) to give or withhold consent to
amendments, changes, modifications, alterations and termination of this
Agreement under Section 9.5 hereof and in the definition of Capital Reserve
Premium contained in Section 1.1 hereof; and (f) to receive notices hereunder,
and in each such case any corresponding rights under the Loan Note. Unassigned
Issuer's Rights does not include any rights of the Trustee under the foregoing
Sections and provisions, including but not limited to its right to receive
Additional Payments under the Loan Note and Section 4.3(b) hereof, and under the
Mortgage.
Section I.2 Rules of Construction.
(a) Words of the masculine gender shall be deemed and construed to
include correlative words of the feminine and neuter genders. Unless the context
shall otherwise indicate, the words "Bond," "Bondholder," "owner" and "person"
shall include the plural as well as the singular number.
(b) The Table of Contents, captions, and headings in this Agreement are
for convenience only and in no way limit the scope or intent of any provision or
section of this Agreement.
(c) All references herein to particular articles or sections are
references to articles or sections of this Loan Agreement unless some other
reference is indicated.
(d) All references herein to the Act or any particular provision or
section thereof shall be deemed to refer to any successor, or successor
provision or section, thereof, as the case may be.
(e) Nothing contained in this Agreement or any of the Financing
Documents or otherwise shall be construed to cause the Borrower to become the
agent for the Issuer or the Trustee for any purpose whatsoever, nor shall the
Issuer or the Trustee be regarded as an agent for the Borrower unless
specifically so provided, or be responsible for any shortage, discrepancy,
damage, loss or destruction of any part of the Facility wherever located or for
whatever cause.
(f) All approvals, consents and acceptances required to be given or
made by any person or party hereunder shall be at the sole discretion of the
party whose approval, consent or acceptance is required, except as otherwise
provided herein.
(g) This Agreement shall be governed by and construed in accordance
with the applicable laws of the State.
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(h) If any portion of any provision of this Agreement shall be ruled
invalid by any court of competent jurisdiction, the invalidity or such portion
shall not affect the remainder of such provision or any of the remaining
provisions hereof.
(i) Any reference to any Person shall be deemed to include the heirs,
personal representatives, successors and assigns (of the Borrower, only to the
extent permitted hereunder, or otherwise permitted in writing by the Issuer) of
such Person, unless the context clearly indicates otherwise.
(j) Any reference to a period of days shall be deemed to mean a period
of calendar days, unless Business Days are specified.
(k) Any references herein or in the Financing Documents to any of the
Financing Documents, the Indenture or the Bonds shall be deemed to include any
amendments, modifications, supplements, replacements, substitutions, allonges,
appendices, attachments, exhibits and schedules thereto or therefor, now
existing or hereafter created.
ARTICLE II
REPRESENTATIONS AND UNDERTAKINGS
Section II.1 Representations by the Issuer. The Issuer makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) The Issuer is a public body politic and corporate and a duly
created and validly existing agency of the State and is authorized and empowered
by the provisions of the Act to enter into the transactions contemplated by the
Issuer Documents and the Bonds. The Electric Rate Stabilization Project
constitutes and will constitute an "eligible project" within the meaning of the
Act. By proper action by the Issuer, the Issuer has been duly authorized to
execute and deliver this Agreement and the Indenture, to issue and deliver the
Bonds and to use the proceeds thereof to provide funds for the Electric Rate
Stabilization Project.
(b) The Issuer has taken all action and has complied with all
provisions of law, including without limitation the Act, with respect to the
execution, delivery and performance of the Issuer Documents and the Bonds and
the due authorization of the consummation of the transactions contemplated
hereby and thereby, and the taking of any and all actions as may be required on
the part of the Issuer to carry out, give effect to and consummate such
transaction; and the Issuer Documents and the Bonds have been duly executed and
delivered by, and constitute the legal, valid,
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and binding agreements or obligations of, the Issuer, enforceable in accordance
with their respective terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights or the enforcement thereof and by general principles of equity.
(c) The execution and delivery of the Issuer Documents and the Bonds,
the consummation of the transactions contemplated hereby and thereby, and the
fulfillment of or compliance with the terms hereof and thereof do not and will
not conflict with or constitute on the part of the Issuer a violation of, breach
of, or default under any constitutional provision or statute or any agreement or
instrument to which the Issuer is a party or by which the Issuer is bound, or
any order, rule, regulation or ordinance of any court or governmental agency or
body having jurisdiction over the Issuer or any of its activities or property;
and all consents, approvals, authorizations and orders of governmental or
regulatory authorities, if any, which are required for the consummation of the
transactions contemplated in the Financing Documents and the Bonds have been
obtained.
(d) There is no action, suit, proceeding or investigation at law or in
equity before or by any court, public board or body pending or threatened
against or affecting the Issuer, or to the best knowledge of the Issuer, any
basis therefor, wherein an unfavorable decision, ruling or finding would
adversely affect the transactions contemplated hereby or by the Indenture, or
which, in any way, would adversely affect the validity of the Series 1998 Bonds,
the Indenture or the Financing Documents, or any agreement, or instrument to
which the Issuer is a party and which is used or contemplated for use in
consummation of the transactions contemplated hereby and by the Indenture.
Section II.2 Representatons by the Borrrower. The Borrower makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) The Borrower is a limited partnership duly organized and validly
existing under the laws of the State, is in good standing under the laws of the
State and has the power to enter into and perform the transactions contemplated
by the Borrower Documents.
(b) By proper partnership action, the Borrower has duly authorized the
execution and delivery of the Borrower Documents and the consummation of the
transactions contemplated hereby and thereby, and the taking of any and all
actions as may be required on the part of the Borrower to carry out, give effect
to and consummate such transactions; and the Borrower Documents have been duly
executed and delivered by, and constitute legal, valid, and binding agreements
of, the Borrower, enforceable in accordance with their respective terms, except
as enforcement may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting creditors' rights or the enforcement thereof and
by general principles of equity.
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(c) The Borrower has, and hereafter will have, good and marketable fee
simple title to the Facility, subject only to Permitted Encumbrances.
(d) The execution and delivery of the Borrower Documents, the
consummation of the transactions contemplated hereby and thereby, and the
fulfillment of or compliance with the terms and conditions of the Borrower
Documents do not (i) conflict with or result in a breach of any of the terms,
conditions, or provisions of its partnership agreement or any agreement or
instrument to which the Borrower is now a party or by which it is bound, (ii)
constitute a default under any of the foregoing, (iii) except as contemplated
hereby or thereby, result in the creation or imposition of any lien, charge, or
encumbrance of any nature whatsoever upon any of the property or assets of the
Borrower under the terms of any instrument or agreement to which the Borrower is
now a party or by which it is bound, or (iv) violate any provision of law or any
regulation applicable to the Borrower or any applicable writ or decree of any
court or governmental authority having jurisdiction over the Borrower or any of
its activities or property.
(e) There is no action or proceeding pending or, to the knowledge of
the Borrower, threatened against the Borrower before any court, administrative
agency or arbitration board that may adversely affect the ability of the
Borrower to perform its obligations under the Financing Documents or the
Facility Agreements and all authorizations, consents and approvals of
governmental bodies or agencies required in connection with the execution and
delivery of the Financing Documents and the Facility Agreements and in
connection with the performance of the Borrower's obligations hereunder or
thereunder have been obtained.
(f) The Borrower consents to the references to it in the Preliminary
Official Statement dated June 9, 1998 and the Official Statement dated June 16,
1998 relating to the Bonds. With respect to the Borrower and the Facility, the
Preliminary Official Statement did not as of its date, and the Official
Statement did not as of its date and will not as of the date of delivery of the
Bonds to the initial purchasers thereof, contain (or incorporate by reference)
an untrue statement of a material fact or omit to state (or incorporate by
reference) a material fact necessary to make the statements therein (or
incorporated by reference), in light of the circumstances under which they were
made, not misleading.
(g) The Borrower is in compliance with all applicable Environmental
Laws except for matters which, individually or in the aggregate, could not have
a Material Adverse Effect.
(h) The Borrower has all Environmental Approvals necessary or desirable
for the ownership and operation of its properties, facilities, and businesses as
presently owned and operated except for matters which, individually or in the
aggregate, could not have a Material Adverse Effect.
(i) There is no Environmental Claim pending or, to the knowledge of the
Borrower after due inquiry, threatened, and there are no past or present acts,
omissions, events or
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circumstances that could form the basis of any Environmental Claim against the
Borrower except for matters which, individually or in the aggregate, could not
have a Material Adverse Effect.
(j) No facility or property now or previously owned, operated or leased
by the Borrower is an Environmental Cleanup Site.
ARTICLE III
ELECTRIC RATE STABILIZATION PROJECT; ISSUANCE OF BONDS;
AUTHORIZED REPRESENTATIVES
Section III.1 Agreement to Complete Electric Rate Stabilization
Project. The Borrower agrees that it will exercise due diligence to complete, or
cause to be completed, the Electric Rate Stabilization Project as promptly as
practicable after receipt by the Trustee of proceeds from the sale of the Bonds.
Section III.2 Agreement to Issue Bonds; Application of Bond Proceeds.
In order to provide the Borrower moneys necessary to effect the Electric Rate
Stabilization Project, the Issuer agrees that it will sell and cause the Bonds
to be delivered to the purchasers thereof in the aggregate principal amount of
$44,995,000 and will thereupon (i) deposit in the Debt Service Fund the premium,
if any, received on the sale of the Bonds, together with accrued interest on the
Bonds from June 15, 1998 to the date of delivery of the Bonds, and (ii) transfer
the balance of the proceeds received from said sale to the Prior Trustee (as
defined in the Indenture).
Section III.3 Borrower Required to Fund Insufficiency.. In the event
the Bond proceeds available for the costs of refunding the outstanding Prior
Bonds shall not be sufficient to pay such costs in full, the Borrower agrees to
pay, or cause to be paid, all that portion of the costs of refunding the
outstanding Prior Bonds as may be in excess of such Bond proceeds available
therefor. The Issuer does not make any warranty, either express or implied, that
such Bond proceeds will be sufficient to pay all the costs which have been or
will be incurred in connection with the refunding of the outstanding Prior
Bonds. The obligation of the Borrower to refund the outstanding Prior Bonds
shall survive any termination of this Agreement.
Section III.4 Authorized Representatives of the Borrower. The Borrower
shall designate, in the manner prescribed in Section 1.1 hereof, Authorized
Representatives. In the event that any person so designated and his alternate or
alternates, if any, should become unavailable or unable to take any action or
make any certificate provided for or required in this Agreement, successors
shall be appointed in the same manner.
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ARTICLE IV
EFFECTIVE DATE AND DURATION OF THIS AGREEMENT; REPAYMENT
PROVISIONS; AND UNCONDITIONAL OBLIGATION OF THE BORROWER
Section IV.1 Effective Date and Duration of this Agreement. This
Agreement and the covenants of the Borrower hereunder shall become effective
upon its delivery, and shall continue in full force and effect until the
principal of and interest on the Bonds, together with all Administrative
Expenses and all other sums to which the Issuer or the Trustee are entitled
hereunder or under the Indenture, shall have been fully paid (or provision for
such payment has been made in accordance with the provisions of the Indenture);
provided, however, that the Borrower's obligations under Section 4.3 (but only
to the extent such obligations have vested prior to termination), Section 6.7
and Section 6.14 hereof shall survive termination of this Agreement.
Section IV.2 Loan Clauses; Loan Note
(a) Subject to the conditions and in accordance with the terms and
provisions of this Agreement, the Issuer agrees to lend to the Borrower the
proceeds received from the sale of the Bonds (excluding any accrued interest
paid upon the original delivery thereof) in accordance with the Indenture and
with this Agreement.
(b) To evidence, secure and provide for the repayment of the Loan, and
to evidence, secure and provide for the payment of Additional Payments, the
Borrower hereby and concurrently herewith delivers to the Issuer its Loan Note
of like aggregate principal amount, maturity dates and interest rates as the
Bonds and providing for Loan Payments and Additional Payments thereunder. The
Borrower agrees to repay the Loan and pay the Additional Payments in accordance
with the terms of the Loan Note, this Agreement and all other Financing
Documents. The originally scheduled Loan principal payments are shown on Exhibit
B hereto.
(c) The Borrower acknowledges receipt of a copy of the Indenture. The
Borrower agrees to pay, or cause to be paid, as a Repayment Installment on the
Loan, an amount which, when added to other moneys available therefor in the Debt
Service Fund, will be sufficient to pay the principal of, premium, if any, and
interest on the Bonds due and payable on each Interest Payment Date and
Principal Payment Date, whether at maturity, upon mandatory sinking fund
redemption, upon optional or mandatory redemption prior to maturity, upon
declaration accelerating the maturity in accordance with the Indenture, or
otherwise. With respect to all payments due under this Agreement and the Loan
Note, time is of the essence. All payments on the Loan Note must be paid in
immediately available funds as and when due, to the Trustee for the account of
the Issuer, at the
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designated corporate trust office of the Trustee or at such other place in the
United States as the Trustee may direct in writing, by wire transfer, in the
amounts and at the times required by the Indenture with respect to the Bonds.
(d) Upon the occurrence of any Event of Default under the Indenture
because of which the principal of and accrued interest on the Bonds have been
accelerated under Section 7.02 thereof, written notice of which acceleration has
been given by the Trustee to the Issuer, the Issuer, or the Trustee on the
Issuer's behalf, may declare the principal amounts payable under this Section
for the remainder of the term of the Loan Agreement, and under the Loan Note,
and the interest accrued and unpaid thereon, to be immediately due and payable,
whereupon the same shall become immediately due and payable. In such event, the
Issuer and the Trustee shall have access to and may inspect, examine and make
copies of the Borrower's books and records and any and all of the Borrower's
accounts, data, and income and other tax returns, and may take whatever action
at law or in equity may appear necessary or desirable to collect such amounts
then due and thereafter to become due, or to enforce performance and observance
of any obligation, agreement or covenant of the Borrower under this Agreement
and the Loan Note.
(e) Upon payment in full of the Bonds (or provision for payment thereof
sufficient to cause all of the Outstanding Bonds to be deemed to have been paid
within the meaning of Section 9.02 of the Indenture) and all Administrative
Expenses and other fees, reimbursement payments and charges of the Trustee and
the Issuer provided herein, this Agreement shall terminate, provided, however,
that the Borrower's obligations under Sections 4.3 (but only to the extent such
obligations have vested prior to termination), 6.7 and 6.14 hereof shall survive
termination of this Agreement.
Section IV.3 Additional Amounts Payable
(a) The Borrower hereby further expressly agrees to pay to the Issuer
or the Trustee, as applicable, as and when the same shall become due, (i) the
fees, including without limitation the Capital Reserve Premium, and reasonable
expenses of the Issuer as provided in the Financing Documents, (ii) the
reasonable fees, charges and expenses of the Issuer and the Trustee in
connection with or arising out of or relating to the issuance and servicing of
the Bonds, the making, servicing, administration or collection of the Loan or
exercise of any rights or responsibilities under the Financing Documents, the
Indenture or the Bonds, including reasonable charges of counsel, (iii) the
reasonable fees and charges of the Trustee, any Co-Trustee, any Authenticating
Agent, any Paying Agent and the Registrar for services, including reasonable
charges of counsel, rendered by it directly or indirectly in connection with the
Loan or the Bonds, (iv) any amounts that may be required to be paid by the
Issuer or the Borrower pursuant to Article XIII of the Indenture, (v) any
amounts that may be required to be paid by the Borrower pursuant to Section 6.14
of this Agreement, and (vi) the fees and charges of the Rating Services.
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(b) The Borrower also agrees to pay all amounts payable by it under the
Financing Documents and the Mortgage, including without limitation Section 6.7
hereof, at the time, in the manner and to the party therein provided, without
delay, reduction or offset of any kind or for any reason.
(c) In the event the Borrower shall fail to make, or cause to be made,
any of the payments required hereby, the unpaid item or installment shall
continue as an obligation of the Borrower until such amount shall have been
fully paid, and the Borrower agrees to pay, or cause to be paid, the same with
interest thereon from the date of failure or, in the case of payments required
by Sections 4.3(a)(ii), (iii) and (iv) hereof, the date 30 days after the date
on which the Borrower is notified thereof, at the interest rate borne by the
Bonds until fully paid, except as may otherwise be provided by Article XIII of
the Indenture.
(d) The Additional Payments provided for herein and in the Loan Note
shall be made in immediately available funds as and when due directly to or for
the account of the entitled party. In the event a party entitled to payment
directs in writing that such payment be made to another party in the United
States, the Borrower shall make payments to such designee.
Section IV.4 Optional Prepayments. (a) At any time on or after July 1,
2008, the Borrower shall have, and is granted, the option to prepay all or any
portion of the amount payable under Section 4.2 hereof with respect to the
Bonds, by taking or causing the Issuer to take the actions required to redeem in
whole or in part the principal amount of the Bonds to be redeemed and to pay the
interest accrued thereon to the date of redemption pursuant to Section 2.04(a),
(b) or (c) of the Indenture.
(b) There is expressly reserved to the Borrower the right, and the
Borrower is authorized and permitted as provided in the Indenture, to prepay by
direct payment of Bonds or delivery of Bonds for cancellation all or any part of
the amounts payable under Section 4.2 hereof with respect to the Bonds, and the
Issuer agrees that the Trustee may accept such prepayments when the same are
tendered by the Borrower. All amounts so prepaid or Bonds delivered for
cancellation shall be credited to sinking fund installments, or the Borrower may
direct the Trustee to apply such payments to the redemption of Bonds, in
accordance with Section 2.04(a), (b) or (c) of the Indenture.
Section IV.5 Prepayment; Extraordinary and Special Optional Redemption.
There is expressly reserved to the Borrower the right to prepay all or a portion
of the amounts payable under Section 4.2 hereof with respect to Bonds to effect
a redemption of Bonds pursuant to Section 2.04(d) or (e)(1) or (2) of the
Indenture, which right shall be exercised by the Borrower (except with respect
to clause (v) of Section 2.04(e)(1), which shall be exercised by the Issuer) or
in the event any of the requirements specified in Section 6.3 hereof shall not
have been satisfied.
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Seciton IV.6 Notice of Prepayment. To exercise any prepayment option of
the Borrower pursuant to Section 4.4 or 4.5 of this Agreement, an Authorized
Representative of the Borrower shall give the Issuer and the Trustee a notice
designating the principal amount of the Bonds to be redeemed, and specifying the
date of redemption, which shall not be less than forty-five (45) days (unless
the Trustee accepts a shorter period of not less than 30 days) following the
date such notice is given.
The Borrower shall furnish any moneys (or amounts shall be available
for redemption under the Indenture) required by the Indenture to be deposited
with the Trustee or otherwise paid by the Issuer or Borrower in connection with
any prepayment pursuant to Section 4.4 or 4.5 hereof.
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ARTICLE V
SECURITY FOR PAYMENT
Section V.1 Obligations of the Borrower Hereunder Unconditional.
The obligations of the Borrower to make, or cause to be made, the
payments required herein and under the Loan Note and to perform and observe the
other agreements on its part contained herein and in the Financing Documents
shall be absolute and unconditional, irrespective of any defense or any rights
of set-off, recoupment, or counterclaim it might have against the Issuer or the
Trustee. The Borrower shall pay, or cause to be paid, all payments required
hereunder and under the Loan Note, free of any deductions and without
postponement, abatement, set-off or diminution; and until such time as the
principal of and interest on the Bonds and all other amounts due hereunder shall
have been fully paid, or provision for the payment thereof shall have been made
in accordance with the Indenture, the Borrower:
(i) shall not suspend or discontinue, or cause to be suspended
or discontinued, any such payments required hereby or under
the Financing Documents;
(ii) shall perform and observe all of its other agreements
contained in this Agreement and the Mortgage; and
(iii) shall not terminate this Agreement (other than as
provided herein)
for any cause, including, without limiting the generality of the foregoing, the
occurrence of any acts or circumstances that may constitute failure of
consideration; commercial frustration of purpose; any change in the tax or other
laws of the United States of America or of the State or any political
subdivision of either thereof; any failure of the Issuer to perform and observe
any agreement, whether express or implied, or any duty, liability, or obligation
arising out of or connected with this Agreement, the Financing Documents or
Indenture; or failure of the Facility to comply with any statute, rule, or
regulation now or hereafter made applicable thereto. Except to the extent
provided in this Section 5.1, nothing contained in this Section 5.1 shall be
construed to prevent or restrict the Borrower from asserting any rights it may
have against the Issuer, the Trustee or any other Person under the Financing
Documents or the Indenture or under any provisions of law.
Sction V.2 Assignment of Rights Under Facility Agreements. The Borrower
hereby assigns, transfers, conveys, grants a security interest in and sets over
unto the Issuer and the Trustee to secure the Borrower's obligations under this
Agreement, all of Borrower's estate, right, title and interest in, to and under
each Facility Agreement including, without limitation, the following:
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(i) all amounts payable to the Borrower under the Facility
Agreements;
(ii) all claims, rights, privileges and remedies on the part
of Borrower, whether arising under the Facility Agreements or by
statute or at law or in equity or otherwise, arising out of or in
connection with any failure by any party to any Facility Agreement
to make any payment under the Facility Agreements assigned
hereunder;
(iii) all amounts payable to the Borrower by any party to any
Facility Agreement as a result of the exercise of any such claim,
right, privilege or remedy; and
(iv) all rights of the Borrower to exercise (subject to the
provisions of Section 5.5 hereof relating to the giving of notice to
the Borrower) any election or option or to give or receive any
notice, consent, waiver or approval under or in respect of the
Facility Agreements, and the right (but not the obligation) to do
any and all other things the Borrower is entitled to do thereunder;
together with full power of authority, in the name of the Borrower or otherwise,
to enforce, collect, receive and receipt for any and all of the foregoing;
provided, however, that until the occurrence of an Event of Default hereunder,
the Borrower may exercise all its rights under the Facility Agreements except
(a) the right to receive any moneys due or to become due thereunder and (b) any
right thereunder that is inconsistent with the rights of the Trustee under any
provision of this Agreement or in violation of any of the Borrower's
representations, warranties, agreements or covenants set forth in this
Agreement.
Section V.3 Collateral Assignment. The assignment evidenced by Section
5.2 of this Agreement is intended to be a collateral assignment of all the
Borrower's interest in and to the Facility Agreements. So long as no Event of
Default shall have occurred and be continuing, the Issuer and the Trustee shall
not exercise any rights under Section 5.2 hereof other than as provided in said
Section 5.2.
Section V.4 Payment of Assigned Sums. The Borrower hereby presently,
unconditionally and irrevocably directs each other party to a Facility Agreement
to pay all moneys assigned pursuant to Section 5.2 to the Trustee for collection
and deposit into the Revenue Fund (as defined in the Indenture) unless otherwise
directed by the Issuer or the Trustee in writing in accordance with the
provisions of this Agreement.
Section V.5 Exercise of Rights by Borrower. Except as provided in the
proviso to Section 5.2 or in Section 5.6 hereof, the Issuer or the Trustee may
exercise any election or option or give any notice, consent, waiver or approval
under, or deliver any requisition for payment under, or
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take any other action in respect of, any of the Facility Agreements without any
approval of or action by the Borrower, but the Borrower shall nevertheless
execute and deliver any instrument requested by the Issuer or the Trustee to be
executed and delivered by the Borrower in connection with the exercise by the
Issuer or the Trustee of any such election or option or the giving by the Issuer
of any such notice, consent, waiver or approval or the taking by the Issuer or
Trustee of any such other action. So long as no Event of Default shall have
occurred and be continuing, the Issuer and the Trustee shall not exercise any
rights under this Section.
Section V.6 No Release or Assumption. Notwithstanding any contrary
provision herein or in any Facility Agreement, (i) the Borrower shall at all
times remain fully liable under the Facility Agreements to perform all the
Borrower's duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (ii) neither this Agreement nor any action or
inaction on the part of the Borrower, the Issuer or the Trustee shall release
the Borrower from any of its obligations under the Facility Agreements or
constitute an assumption of any such obligations by the Issuer or the Trustee,
(iii) neither the Issuer nor the Trustee shall have any obligation or liability
under the Facility Agreements or otherwise arising out of this Agreement, nor
shall the Issuer or the Trustee be obligated in any manner to perform any
obligation of the Borrower under or pursuant to the Facility Agreements and (iv)
no default or breach by or action or failure to act by the Borrower with respect
to the Facility Agreements shall adversely affect or limit the rights and
interests of the Issuer under this Agreement or, through this Agreement, under
the Facility Agreements.
Section V.7 Security Clauses
(a) The Issuer hereby notifies the Borrower and the Borrower
acknowledges that, among other things, Borrower's Loan Payments evidenced hereby
and by the Loan Note and all of the Issuer's right, title and interest under
this Agreement and the Loan Note (except Shared Rights, which with respect to
rights of enforcement may be exercised by the Issuer and the Trustee jointly or
severally, and with respect to rights of consent to the modification of or
waiver of compliance may be exercised by the Issuer and the Trustee jointly but
not severally, and Unassigned Issuer's Rights) are being concurrently with the
execution and delivery hereof assigned without recourse to the Trustee as
security for the Bonds as provided in the Indenture.
(b) The Borrower acknowledges that each of the Trustee and the Issuer
may (except with respect to Shared Rights, except that with respect thereto
rights of enforcement may be exercised by the Trustee either jointly or
severally with the Issuer, and rights to consent to the modification thereof or
to waive compliance therewith may be exercised by the Trustee jointly with the
Issuer but not severally, and Unassigned Issuer's Rights), exercise any and all
of their respective rights against the Borrower pursuant to or in connection
with this Agreement and the Loan Note, and the Borrower shall not question the
authority of any such party to exercise such rights.
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Section V.8 Pledge of Trust Estate. It is understood and agreed that
the Trust Estate shall be pledged and assigned to the Trustee for the benefit of
the Bondholders. The Borrower assents to such pledge and assignment and agrees
to execute and deliver to the Trustee any necessary financing statements under
the Uniform Commercial Code as in effect in the State of Maine.
Section V.9 Receipt by Trustee of Payments Under Facility Agreements
and Other Contracts; Enforcement and Amendment of Facility Agreements. The
Borrower shall direct each party to the Facility Agreements to transfer directly
to the Trustee and the Trustee shall receive and forthwith deposit in the
Revenue Fund all amounts payable to the Borrower pursuant to the Facility
Agreements. The Borrower shall immediately deliver any amounts delivered to it
by any party to any Facility Agreement to the Trustee. The Borrower shall
enforce or cause to be enforced the provisions of the Facility Agreements and
duly perform its covenants and agreements thereunder. A copy of each of the
Facility Agreements certified by an Authorized Representative of the Borrower
shall be filed with the Issuer and the Trustee, and a copy of any such
amendment, consent, waiver or other instrument certified by an Authorized
Representative of the Borrower shall be filed with the Issuer and the Trustee.
ARTICLE VI
SPECIAL COVENANTS
Section VI.1 No Warranty of Condition or Suitability by the Issuer. The
Issuer makes no warranty, either express or implied, as to the Electric Rate
Stabilization Project, or that the Electric Rate Stabilization Project is or
will be suitable for the Borrower's purposes or needs.
Section VI.2 No Warranty of Condition or Suitability by the Issuer. The
Borrower agrees that it will not operate or cause to be operated the Facility
contrary to, and will maintain or cause to be maintained the Facility at all
times hereafter, in all material respects, in accordance with, all applicable
provisions of the Facility Agreements, will maintain or cause to be maintained
all necessary licenses and permits for the operation of the Facility, and at its
own expense and shall defray all costs in connection therewith (including from
time to time all necessary repairs, renewals and replacements) so that the
Facility and all other facilities necessary or incidental thereto shall be kept
in good repair and in good operating condition.
Section VI.3 Damage; Repair of Damage; Condemnation. (a) In the event
of the occurrence of any damage or loss to the Facility, there shall be no
abatement or reduction in the payments required by Section 4.2 or 4.3 hereof to
be made by the Borrower. Any Insurance
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Proceeds payable by reason of such damage or loss shall be paid as set forth in
the Indenture and applied in the manner set forth herein and in the Mortgage.
(b) In the event that title to or the temporary use of the Facility, or
any part thereof, shall be taken in condemnation or by the exercise of the power
of eminent domain by any governmental body or by any person, firm or corporation
acting under governmental authority, there shall be no abatement or reduction in
the payments required under Section 4.2 or 4.3 hereof to be made by the
Borrower. Any condemnation proceeds payable by reason of such loss shall be paid
as set forth in the Indenture and applied in the manner set forth in the
Mortgage.
(c) If, pursuant to the provisions of the Mortgage, there shall be an
election to restore the Facility, the Borrower shall forthwith proceed with such
restoring and upon the completion thereof shall notify the Issuer and the
Trustee of such completion. Notwithstanding the foregoing, the Borrower shall
have no obligation to undertake any such restoration if it delivers to the
Trustee a certificate signed by an Authorized Representative to the effect that
the taking will not affect the ability of the Facility to generate Revenues
sufficient to pay principal of and premium, if any, and interest on the
Outstanding Bonds when due and all other indebtedness for money borrowed by the
Borrower and other Administrative Expenses and to pay costs of operating and
maintaining the Facility as and when due.
Section VI.4 [Reserved]
Section VI.5 Issuer's Right of Inspection and Access. The Issuer and
the Trustee and their duly authorized agents shall be permitted, at all
reasonable times and upon reasonable notice, to examine the books and records of
the Borrower with respect to the Facility or the Electric Rate Stabilization
Project, the Loan Note, the Borrower's business generally, and any records
maintained by the Issuer pertaining to the Borrower, the Facility or the
Electric Rate Stabilization Project, and the Borrower shall furnish the Issuer
and the Trustee with such information, statements and certificates as may
reasonably be required from time to time.
Section VI.6 Conduct of Business. The Borrower covenants and agrees
that so long as any Bonds are Outstanding it will remain qualified to do
business in all jurisdictions necessary in the operation of its business and
will not otherwise dispose of all or substantially all of its assets.
The Borrower further covenants that it will remain subject to service
of process in the State of Maine so long as any Bonds are Outstanding.
Section VI.7 Indemnification Covenants.
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(a) The Borrower agrees to protect, defend and hold harmless the
Trustee and the Issuer and their respective directors, agents, officers, members
and employees (each an "Indemnified Party") from and against any claim, demand,
suit, action, liability, loss, damage, fine, penalty or expense (including
out-of-pocket and incidental expenses and legal fees) or other proceeding
whatsoever by any Person, including any violation or breach of any Environmental
Law by the Borrower, or any Environmental Claim arising out of the management,
use, control, ownership or operation of the Facility (collectively, "Losses")
imposed on, incurred by or asserted against the Borrower, arising or purportedly
arising from or in connection with the Financing Documents, the Indenture, the
Bonds, or the transactions contemplated by or actions taken under any thereof,
or, with respect to the Trustee, for following any instructions or other
directions upon which the Trustee is authorized to rely pursuant to the terms of
the Indenture, the Bonds or the financing Documents, except for any bad faith,
willful misconduct, material misrepresentation or gross negligence on the part
of the Indemnified Party. The Borrower agrees to indemnify and hold the Trustee
and its directors, officers, agents and employees (collectively, the
"Indemnitees") harmless from and against any and all claims, liabilities,
losses, damages, fines, penalties, and expenses, including out-of-pocket and
incidental expenses and legal fees ("Losses") that may be imposed on, incurred
by, or asserted against, the Indemnitees or any of them for following any
instructions or other directions upon which the Trustee is authorized to rely
pursuant to the terms of the Indenture, the Bonds or the Financing Documents.
(b) The Borrower releases each Indemnified Party from, agrees that each
Indemnified Party shall not be liable for, and agrees to hold each Indemnified
Party harmless against any damages or reasonable expenses, including (subject to
subparagraph (d) of this Section) reasonable charges of counsel, incurred
because of any investigation, review or lawsuit commenced by any Person other
than the Borrower with respect to the Financing Documents, the Indenture, the
Bonds or the Facility, except for any bad faith, willful misconduct, material
misrepresentation or gross negligence on the part of the Indemnified Party.
(c) All covenants, stipulations, promises, agreements and obligations
of the Issuer contained herein shall be deemed to be the covenants,
stipulations, promises, agreements and obligations of the Issuer and not of any
member, officer or employee of the Issuer in his or her individual capacity, and
no recourse shall be had for the payment of the Loan or the Bonds or for any
claim based thereon or hereunder against any member, officer or employee of the
Issuer or the Trustee or any natural person executing the Bonds.
(d) In case any action shall be brought against one or more of the
Indemnified Parties based upon any of the above and in respect of which
indemnity may be sought against the Borrower, such Indemnified Party shall
notify the Borrower in writing, enclosing a copy of all papers served, but the
omission so to notify the Borrower of any such action shall not relieve it of
any liability which it may have to any Indemnified Party other than under this
Section 5.5. In case
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any such action shall be brought against any Indemnified Party and it shall
notify the Borrower of the commencement thereof, the Borrower shall be entitled
to participate in and, to the extent that it shall wish, to assume the defense
thereof with counsel reasonably satisfactory to such Indemnified Party, and
after notice from the Borrower to such Indemnified Party of the Borrower's
election so to assume the defense thereof the Borrower shall not be liable to
such Indemnified Party for any legal or other expenses, other than reasonable
costs of investigation, subsequently incurred by such Indemnified Party in
connection with the defense thereof. The Indemnified Party shall have the right
to employ its own counsel in any such action, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless (i) the
employment of counsel by such Indemnified Party has been authorized by the
Borrower, (ii) the Indemnified Party shall have reasonably concluded that there
is a conflict of interest between the Borrower and the Indemnified Party in the
defense of such action (in which case the Borrower shall not have the right to
direct the defense of such action on behalf of the Indemnified Party), or (iii)
the Borrower shall not in fact have employed counsel reasonably satisfactory to
the Indemnified Party to assume the defense of such action.
(e) In the event the Borrower fails to pay any amount or perform any
act under the Financing Documents, the Trustee or the Issuer may, but shall have
no obligation to, pay the amount or perform the act, in which event the
reasonable costs, disbursements, expenses and charges of counsel thereof,
together with interest thereon from the date the expense is paid or incurred at
the highest prime rate from time to time as published in The Wall Street
Journal, plus two per centum (2%), shall be an additional obligation hereunder
payable on demand.
(f) The obligations of the Borrower under this section shall survive
the termination of this Agreement. This section is not for the benefit of any
person not an Indemnified Party, and no waiver of the Maine Tort Claims Act or
other applicable law is intended.
Section VI.8 Assignment, Leasing and Selling.
(a) Unless the Capital Reserve Fund has been drawn upon, and the time
has expired for the restoration thereof, and the Capital Reserve Fund has not
been fully restored pursuant to Section 5.09 of the Indenture, without the prior
written consent of the Issuer, the Borrower may not assign its rights, interests
or obligations hereunder or under the Loan Note or sell the whole or any part of
the Facility or lease the whole or any part of the Facility necessary for the
operation of the Facility at its designed capacity.
(b) Without the prior written consent of the Issuer, the Borrower may
not assign or transfer this Agreement or any of its right, title or interest in
any of the Facility Agreements or any Financing Agreements.
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Section VI.9 Environmental Covenants. (a) The Borrower covenants that
(1) except in compliance with applicable environmental laws, it has not
discharged, dumped, installed, stored, used, treated, transported, disposed or
maintained, and shall neither discharge, dump, install, store, use, treat,
transport, dispose or maintain toxic, hazardous, or radioactive substances,
materials or wastes, including, without limitation, all of the following: (a)
asbestos in any form; (b) urea formaldehyde foam insulation; (c) transformers or
other equipment which contain dielectric fluid containing any level of
polychlorinated biphenyls or (d) any other chemical, material or substance which
is prohibited, limited, or regulated by any federal, state, county, regional,
local, or other governmental authority or which, if not so regulated, to the
knowledge of the Borrower poses a substantial hazard to health and safety (all
of which are referred to collectively herein as "Hazardous Substances"), and (2)
the Borrower is not the subject of any existing, pending or threatened
investigation or inquiry by, or of any remedial order or obligation issued by or
at the behest of, any governmental authority under any law, rule or regulation
pertaining to health or the environment except as described in the engineering
report required by paragraph 13 of the Loan Commitment from the Issuer to the
Borrower with respect to the Loan.
(b) The Borrower will comply with all applicable Environmental Laws.
(c) Promptly upon becoming aware of any Environmental Claim pending or
threatened against the Borrower, or any past or present acts, omissions, events
or circumstances that could form the basis of such Environmental Claim, which if
adversely resolved, individually or in the aggregate, could have a Material
Adverse Effect, the Borrower shall give the Trustee notice thereof, together
with a written statement of an Authorized Representative of the Borrower setting
forth the details thereof and any action with respect thereto taken or proposed
to be taken by the Borrower.
Section VI.10 Default and Litigation Notification. The Borrower shall
deliver to the Issuer and the Trustee, within one hundred five (105) days after
the close of each fiscal year of Borrower, a certificate signed by an Authorized
Representative to the effect that the Borrower is in compliance with the
provisions of the Financing Documents or specifying the nature of the
noncompliance and the steps the Borrower is taking to correct any noncompliance.
Upon becoming aware of any condition or event which constitutes, or with the
giving of notice or the passage of time would constitute, an Event of Default
under this Agreement, or an Event of Default (as defined in the Indenture) under
the Indenture, the Borrower promptly shall deliver to the Issuer and the Trustee
a notice stating the existence and nature thereof and specifying the corrective
steps the Borrower is taking with respect thereto. The Borrower shall promptly
notify the Issuer and Trustee of the commencement of any litigation,
administrative, enforcement or other proceeding by or against it, or the threat
thereof, in which an unfavorable outcome could materially adversely affect the
operation of the Borrower's business or compliance with the Financing Documents.
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Section VI.11 Insurance. The Borrower shall maintain an insurance
policy against liability appropriate for Borrower's business (including
environmental insurance to the extent available on reasonable terms) and
adequate workers' compensation coverage, in each case with customary deductible
and self insurance provisions selected by the Borrower.
Section VI.12 Additional covenants and Agreements. The Borrower hereby
agrees to those Additional Covenants and other matters set forth in Exhibit A
hereto.
Section VI.13 No Liability of the Issuer. Any obligation of the Issuer
created by or arising out of this Agreement, including the Bonds and the
Financing Documents, is not a general obligation of the Issuer or payable in any
manner from revenues raised by taxation or from the general funds and accounts
of the Authority, but shall be payable solely out of Revenues and the other
moneys pledged under the Indenture. In making the agreements, provisions, and
covenants set forth in the Indenture and this Agreement, the Issuer has not
obligated itself except with respect to the Electric Rate Stabilization Project
or the Facility and the application of the Revenues and the other moneys pledged
under the Indenture. All covenants, stipulations, promises, agreements, and
obligations of the Issuer contained herein shall be deemed to be covenants,
stipulations, promises, agreements, and obligations of the Issuer and not of any
member, officer, agent, or employee thereof in his or her individual capacity.
No recourse shall be had for the payment of the principal of or of the interest
on the Bonds, for the performance of any obligation hereunder, or for any claim
based thereon or hereunder against any such member, officer, agent or employee
or against any natural person executing the Bonds. No such member, officer,
agent, employee, or natural person is or shall become personally liable for any
such payment, performance, or other claim, and in no event shall any monetary or
deficiency judgment be sought or secured against any such member, officer,
agent, employee, or other natural person for any such payment, performance or
other claim.
Section VI.14 Incorporation of Tax Regulatory Agreement; Determination
of Taxability. (a) The representations, warranties, covenants and statements of
expectation of the Borrower set forth in the Tax Regulatory Agreement are by
this reference incorporated in this Agreement as though fully set forth herein.
(b) If there shall occur a Determination of Taxability, and the Issuer
exercises its option to require the redemption in whole of the Bonds, the Issuer
shall provide to the Borrower written notice of its exercise of the option to
redeem the Bonds, which notice shall specify a Redemption Date not later than
ninety (90) days from the date of such notice, and the Borrower shall pay not
later than thirty (30) days prior to the Redemption Date to the Trustee an
amount sufficient, together with all other amounts held by the Trustee and
available under the Indenture for such purpose, to redeem all Bonds then
Outstanding, in accordance with Section 2.04(e) of the Indenture.
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(c) The obligation of the Borrower to make the payments provided for in
this Section shall be absolute and unconditional, and the failure of the Issuer
or the Trustee to execute or deliver or cause to be delivered any documents or
to take any action required under this Agreement or otherwise shall not relieve
the Borrower of its obligations under this Section. Notwithstanding any other
provision of this Agreement or the Indenture, the Borrower's obligations under
this Section shall survive the termination of this Agreement and the Indenture.
(d) Notwithstanding the provisions of paragraph (b) above if, in the
opinion of Bond Counsel (as defined in the Indenture), redemption of less than
all of the Bonds will preserve the tax-exempt status of interest on the
remaining Bonds, then only such amount need be redeemed, the particular Bonds to
be redeemed to be selected by lot by the Trustee or otherwise as required by the
Indenture or as specified in such final Determination of Taxability or opinion.
Section VI.15 Maintenance of Facility Agreements. The Borrower shall
maintain such Facility Agreements in effect as shall be sufficient, together
with other Revenues, to permit (i) the operation of the Facility to be carried
out as contemplated hereby and by the Indenture and (ii) the payment of the
amounts required to be paid by the Borrower hereunder and under the Facility
Agreements, the Financing Documents and the Indenture.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section VII.1 Events of Default Defined.
(a) The following shall be "Events of Default" hereunder, and the terms
"Events of Default" or "Default" shall mean, whenever they are used in this
Agreement, any one or more of the following events:
(i) failure by the Borrower to pay, or cause to be paid, any
Loan Payments under Section 4.2 hereof, at the times specified
herein;
(ii) failure by the Borrower to observe and perform any
covenant, condition or agreement on its part to be observed or
performed (other than as referred to in Section 7.1(a)(i)
hereof) for a period of thirty (30) days after written notice,
specifying such failure, requesting that it be remedied, and
stating that it is a notice of default, has been given to the
Borrower by the Trustee (except in the case of Unassigned
Issuer's Rights) or by the Issuer, unless the Trustee (except
in the case of Unassigned Issuer's Rights) shall agree in
writing to an extension of such time prior
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to its expiration (or, in the case of Unassigned Issuer's
Rights, the Issuer shall agree in writing to an extension of
such time prior to its expiration, or to a modification or
waiver of any covenant, condition or agreement in or referred
to in this Agreement constituting a part of Unassigned
Issuer's Rights); provided, however, if said failure be such
that it cannot be corrected within the applicable period, it
shall not constitute an Event of Default if corrective action
is instituted by the Borrower within the applicable period and
diligently pursued until the failure is corrected, but only,
with respect to covenants, conditions and agreements not
included in Unassigned Issuer's Rights, if such failure is
corrected within ninety (90) days after the written notice of
default related thereto unless the Trustee shall agree in
writing to an extension of such time prior to its expiration;
and/or
(iii) the Borrower makes an assignment for the benefit of
creditors, files a petition in bankruptcy, is adjudicated
insolvent or bankrupt, petitions or applies to any tribunal
for any receiver of or any trustee for itself or any
substantial part of its property under any bankruptcy,
insolvency, reorganization, arrangement, or readjustment of
debt law or statute or similar law or statute of any
jurisdiction, whether now or hereafter in effect; or commences
any proceeding relating to the Borrower, under any bankruptcy,
insolvency, reorganization, arrangement, or readjustment of
debt law or statute or similar law or statute of any
jurisdiction, whether now or hereafter in effect; or there is
commenced against the Borrower any such proceeding which
remains undismissed for a period of sixty (60) days; or the
Borrower indicates its consent to, approval of, or
acquiescence in any such proceeding or the appointment of any
such receiver of or trustee for the Borrower or any
substantial part of its property; or the Borrower suffers any
such receivership or trusteeship to continue undischarged or
unstayed for a period of sixty (60) days; and/or
(iv) there shall occur an "Event of Default" specified in
Section 7.01(a) or (b) of the Indenture; and/or
(v) any representation or warranty made by the Borrower in
this Agreement, or any material representation or warranty
made by the Borrower in any instrument, other agreement,
statement or certificate furnished by or on behalf of the
Borrower to the Issuer or the Trustee in connection with this
Agreement or the purchase of the Bonds including, without
limitation, the Tax Regulatory Agreement, proves untrue in any
material respect as of the date of the issuance or making
thereof; provided, however, if any of the facts upon which the
representations and warranties of the Borrower are based are
capable of correction or cure to conform to any such
representation or warranty, there shall be no Event of Default
until passage of a period of thirty (30) days after written
notice, specifying such failure and requesting
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that it be remedied, given to the Borrower by the Trustee or
the Holders of twenty-five percent (25%) in aggregate
principal amount of the Bonds then Outstanding; and/or
(vi) the Borrower has failed to provide funds in the amount
and by the time specified by the Issuer in a notice electing
to exercise the option to redeem the Bonds provided by the
Issuer to the Borrower pursuant to Section 6.14(b) hereof.
The declaration of an Event of Default under clause (iii) of subsection
(a) above, and the exercise of remedies upon any such declaration, shall be
subject to any applicable limitations of federal bankruptcy law affecting or
precluding that declaration or exercise during the pendency of or immediately
following any bankruptcy, liquidation or reorganization proceedings.
(b) Paragraph (ii) of the foregoing Section 7.1(a) is subject to the
following limitations: if by reason of force majeure the Borrower is unable in
whole or in part to carry out the agreements on its part herein contained, other
than the obligations on the part of the Borrower contained in Sections 4.2, 4.3
and 6.7 hereof, the Borrower shall not be deemed in default during the
continuance of such inability. The term "force majeure" as used herein shall
mean, without limitation, the following: Acts of God; strikes, lockouts, or
other industrial disturbances; acts of public enemies; orders of any kind of
governmental authority or any of their departments, agencies or officials, or
any civil or military authority; insurrections; riots; landslides; earthquakes;
fires; storms; droughts; floods; explosions; breakage; malfunction or accident
to facilities, machinery, transmission pipes, or canals; or any other cause or
event not reasonably within the control of the Borrower. The Borrower agrees,
however, to remedy with all reasonable dispatch the cause or causes preventing
the Borrower from carrying out this Agreement to the extent that such remedy is
reasonably within the ability of the Borrower; provided that the settlement of
strikes, lockouts, and other industrial disturbances shall be left entirely
within the discretion of the Borrower, and the Borrower shall not be required to
make settlement of strikes, lockouts and other industrial disturbances by
acceding to the demands of the opposing party or parties.
Section VII.2 Remedies on Default.
(a) Whenever any Event of Default referred to in Section 7.1 hereof
shall have happened and be continuing, the Issuer or the Trustee may take any
one or more of the following remedial steps (except that the Trustee shall have
no right to enforce Unassigned Issuer's Rights):
(i) The Issuer or the Trustee may declare an amount equal to
the unpaid principal amount of the Loan and the interest
accrued thereon to the date of such declaration to be
immediately due and payable, whereupon the same shall become
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immediately due and payable, and which amount the Borrower
hereby agrees to pay or cause to be paid; and/or
(ii) The Issuer or the Trustee may take whatever action at law
or in equity may appear necessary or desirable to collect the
payments and other amounts then due and thereafter to become
due or to enforce performance and observance of any
obligation, agreement, or covenant of the Borrower under this
Agreement or the Facility Agreements.
Notwithstanding the foregoing, if any such Event of Default relates solely to an
Event of Default caused by a default under Section 6.14 hereof, the Issuer or
the Trustee may take only the remedial steps set forth in clause (ii) above and
not those in clause (i) above.
(b) Any amounts collected pursuant to action taken under this Section
shall be paid into the Debt Service Fund or the Capital Reserve Fund, as
required by the Indenture, and applied in accordance with the provisions of the
Indenture or, if all of the Bonds and other amounts due hereunder have been
fully paid (or provision for payment thereof has been made in accordance with
the provisions of the Indenture), to the Borrower (except, to the extent of any
payments by the State into the Capital Reserve Fund pursuant to the Act and
Section 5.09 of the Indenture not otherwise reimbursed, to the Issuer).
(c) Except to the extent of any such collection, no action taken
pursuant to this Section shall relieve the Borrower from such of the Borrower's
obligations pursuant to Sections 4.2, 4.3 and 6.7 hereof which shall survive any
such action, and the Issuer or the Trustee may take whatever action at law or in
equity as may appear necessary and desirable to collect all amounts then due and
thereafter to become due and/or to enforce the performance and observance of any
obligation, agreement or covenant of the Borrower hereunder (except that the
Trustee shall have no right to enforce Unassigned Issuer's Rights).
Section VII.3 No Remedy Exclusive; Trustee and Noteholders Deemed Third
Party Beneficiaries. No remedy herein conferred upon or reserved to the Issuer
is intended to be exclusive of any other available remedy or remedies, but each
and every such remedy shall be cumulative and shall be in addition to every
other remedy given under this Agreement or now or hereafter existing at law or
in equity or by statute. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be expedient. In order to entitle the
Issuer or the Trustee to exercise any remedy reserved to it in this Article, it
shall not be necessary to give any notice, other than such notice as may be
herein expressly required. Subject to any applicable restriction on enforcement
contained in the Indenture, such rights and remedies as are given the Issuer
hereunder shall also extend to the Trustee, and the
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Trustee and the Bondholders shall be deemed third party beneficiaries of all
covenants and agreements herein contained, whether described as rights of the
Trustee or Holders or as rights of the Issuer, except in the case of the
Bondholders as to the rights of the Trustee for its own account, and except in
each and every such case Unassigned Issuer's Rights.
Section VII.4 No Additional Waiver Implied By One Waiver. In the event
any agreement contained in this Agreement should be breached by either party and
thereafter waived by the other party or the Trustee, such waiver shall be
limited to the particular breach so waived and shall not be deemed to waive any
other breach hereunder.
ARTICLE VIII
SPECIAL PROVISIONS RELATING TO BOND INSURANCE
Section VIII.1. Purpose of Article. The Bond Insurer (as defined in the
Indenture) has made a commitment to issue a Bond Insurance Policy (as defined in
the Indenture) that guarantees the scheduled payment of principal of and
interest on the Bonds when due. In order to comply with the conditions precedent
to the issuance of the Bond Insurance Policy, the following provisions of this
Article are adopted and shall be binding upon the Authority and the Borrower.
The provisions of this Article shall govern notwithstanding anything to the
contrary set forth elsewhere in this Agreement.
Section VIII.2. Special Provisions.
1. The Bond Insurer shall be deemed to be a third party
beneficiary hereof, except of Unassigned Issuer's Rights and rights of the
Trustee or any Co-Trustee, Authenticating Agent or Paying Agent for its own
account.
2. The Borrower shall pay as Additional Payments all amounts
required to be paid by the Authority to the Bond Insurer under the Indenture.
3. The Bond Insurer shall be provided by the Borrower with the
following information:
(i) annual audited financial statements of the Borrower within
105 days after the end of its fiscal year and the annual budget within
30 days after the approval thereof;
(ii) upon delivery of the annual audited financial statements
of the Borrower, a certificate of Authorized Representatives of the
Borrower stating that, to the best of such
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individual's knowledge following reasonable inquiry, no Event of
Default has occurred, or if an Event of Default has occurred,
specifying the nature thereof and, if the Borrower has a right to cure
pursuant to this Agreement, stating in reasonable detail the steps, if
any, being taken by the Borrower to cure such Event of Default;
(iii) notice of any failure of the Borrower to make any
payment when due under this Agreement within one Business Day of such
failure;
(iv) a full original or certified transcript of all
proceedings relating to the execution of any amendment of or supplement
to the Financing Documents;
(v) copies of all reports, certificates and notices required
to be delivered by the Borrower pursuant to this Agreement; and
(vi) such additional information as the Bond Insurer from time
to time may reasonably request.
4. The Borrower shall give any direction necessary to permit
compliance with Section 13.02(p) of the Indenture.
ARTICLE IX
MISCELLANEOUS
Section IX.1 Notices.
(a) All notices, certificates, or other communications hereunder shall
be sufficiently given and shall be deemed given when (i) mailed by first class
mail or by overnight courier, (ii) faxed and immediately confirmed by first
class mail, or (iii) delivered, postage prepaid, or by overnight courier
addressed as follows:
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34
(i) If to the Issuer:
If by mail, to:
Finance Authority of ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(Attention: General Counsel)
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
or
If by overnight courier, to:
Finance Authority of Maine
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(Attention: General Counsel)
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to the Borrower, to:
Penobscot Energy Recovery Company,
Limited Partnership
▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(iii) If to the Trustee, to:
The Chase Manhattan Bank
c/o Chase National Corporate
Services, Inc.
Corporate Trust Group
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
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35
(b) Duplicate copies of each notice, certificate, or other
communication given hereunder by the Issuer, the Trustee or the Borrower to any
of the others, shall also be given to all of the others, except that in the case
of notices relating solely to Unassigned Issuer's Rights, no notice need be sent
to the Trustee.
(c) The Issuer, the Borrower and the Trustee may, by notice given to
all parties hereto, designate any further or different addresses to which
subsequent notices, certificates, or other communications shall be sent.
Section IX.2 Filing.
(a) The Borrower will execute such financing statements with respect to
the pledge of the Trust Estate effected by the Indenture to be filed by the
Trustee.
(b) The parties agree that all necessary continuation statements shall
be filed by the Trustee, at the expense of the Borrower, within the time
prescribed by the Uniform Commercial Code - Secured Transactions of the State,
except that the Issuer shall file all necessary continuation statements, at the
expense of the Borrower, with respect to this Agreement, within such time.
Section IX.3 Binding Effect. This Agreement shall inure to the benefit
of and shall be binding upon the Issuer, its successors and assigns, the
Borrower, and the permitted successors and assigns of the Borrower.
Section IX.4 Severability. In the event any provision of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other provision
hereof.
Section IX.5 Amendments, Changes and Modifications.
(a) This Agreement may not be amended, changed, modified, altered, or
terminated without in each instance the prior written consent of both parties
hereto and (except in the case of Unassigned Issuer's Rights) the Trustee.
(b) No obligation is imposed on the Issuer by this Section to enter
into any amendment, and no amendment is permitted hereunder which would result
in the breach of the Issuer's agreements in the Indenture.
Section IX.6 Execution of Counterparts. This agreement may be executed
in several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
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Section IX.7 Law Governing Construction of Agreement. This Agreement
shall be deemed to be a contract made under the laws of the State and for all
purposes shall be governed by and construed in accordance with the laws of the
State applicable to contracts made and to be performed entirely within the
State.
Section IX.8 Payments Due on Non-Business Days. If any payment of
moneys hereunder is due on a date other than a Business Day (the "due date"),
that payment need not be made on the due date, but may be made on the next
succeeding Business Day with the same force and effect as if that payment were
made on the due date, and in such case no interest shall accrue for the period
from such due date.
Section IX.9 Limitation of Liability. Notwithstanding any other
provision of this Agreement, there shall be no recourse against any general or
limited partner of the Borrower, or any of their respective affiliates,
stockholders, partners, officers, directors, employees or agents, for any
liability to the Issuer or the holders of the Loan Note or the obligations
arising in connection with any breach or default under this Agreement except to
the extent the same is enforced against and limited to the Borrower or the
Collateral, and the Issuer and its assignees, including the Trustee, shall look
solely to the Borrower and the Collateral in enforcing rights and obligations
under and in connection with this Agreement, the Mortgage, the Loan Note, the
Indenture, or any other Borrower Documents or pledge of the Collateral. The
limitations on recourse set forth in this Section shall survive the termination
of this Agreement and the full payment and performance of the obligations of
Borrower hereunder and under the Mortgage, the Loan Note, the Indenture and the
other Borrower Documents.
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IN WITNESS WHEREOF, the FINANCE AUTHORITY OF MAINE has executed this
Agreement by causing these presents to be signed in its name and behalf by its
Chief Executive Officer and Penobscot Energy Recovery Company, Limited
Partnership has executed this Agreement by causing these presents to be signed
in its name and behalf by its duly authorized general partners, all being done
as of the day and year first hereinabove written.
FINANCE AUTHORITY OF MAINE
[SEAL] By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
PENOBSCOT ENERGY RECOVERY COMPANY,
LIMITED PARTNERSHIP
By PERC Management Company Limited Partnership,
a general partner
By PERC, Inc., its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Its Senior Vice President
By Energy National, Inc.
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Its Secretary
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EXHIBIT A
ADDITIONAL COVENANTS OF BORROWER
1. The existing general partners of the Borrower may not sell, assign,
transfer or otherwise encumber their general partnership interest in the
Borrower without the prior written consent of the Authority, which consent
shall not be unreasonably withheld or delayed; provided, however, that no
consent of the Authority shall be required with respect to (a) a transfer
from one general partner to its affiliate, or to another general partner
or its affiliate, or to an entity controlled by any or all of such general
partners and affiliates, or (b) a transfer to the MRC or the
municipalities for which the MRC acts as agent, in accordance with the
Waste Disposal Agreements, or (c) the grant of a security interest in or
lien on the partnership interests in the Borrower by the holder of such
partnership interest to secure loan facilities extended to it or an
affiliate.
2. The Borrower shall promptly notify the Authority of the occurrence of any
litigation (including litigation concerning affiliates or subsidiaries)
which may materially impact the Borrower. "Material" includes, but is not
limited to, any claim or action with a demand of $1,000,000 or greater.
Such notice shall be in writing and shall describe the matter and the
steps taken and then expected to be taken by the Borrower (or its
affiliates or subsidiaries) affected with respect thereto. A prompt copy
of any filing with the Securities and Exchange Commission shall constitute
adequate notification for purposes of this paragraph.
3. The Borrower shall furnish the Issuer with copies of its annual budget for
operations and maintenance (the "Operating Budget") for each Fiscal Year,
as adopted, by November 15 of each year, and shall furnish the Issuer with
copies of any amendment thereto promptly after the adoption thereof. In
the event the Borrower requests any requisition from the Operating Account
under the Indenture which will make the aggregate amount requested in any
Fiscal Year in excess of 110% of the amount of the originally adopted
Operating Budget, the Issuer may, at the expense of the Borrower, retain
the services of a consultant to provide a report on the Borrower and its
operations, management and such other matters as the Chief Executive
Officer of the Issuer deems pertinent.
4. The Borrower shall provide the Issuer with quarterly unaudited financial
statements, without footnotes or year end adjustments but otherwise in
accordance with generally accepted accounting principles, within
forty-five days after the end of each quarter.
5. The Borrower shall provide the Issuer with a copy of its annual audited
financial statements within 105 days after the close of its Fiscal Year.
6. The Borrower shall observe and comply in all material respects with all
applicable laws, regulations, ordinances, rules, and orders (including
without limitation those relating to
A-1
39
zoning, land use, environmental protection, air, water and land pollution,
wetlands, health, equal opportunity, minimum wages, worker's compensation
and employment practices) of any federal, state, municipal or other
governmental authority except during any period during which the Borrower
at its expense and in its name shall be in good faith contesting its
obligations to comply therewith.
7. The Borrower shall not create, incur, assume or permit to exist any
mortgage, lien, charge, security interest or other encumbrance on any
property or asset of the Borrower, except Permitted Encumbrances (as
defined in the Mortgage).
8. The Borrower shall apply the Loan proceeds only as described in Section
3.2 of this Agreement.
9. The Borrower shall promptly notify the Issuer of any material adverse
change in the Borrower's business operations or financial condition.
10. The Borrower shall pay all costs and expenses incurred by the Issuer in
connection with the issuance of the Bonds and servicing of the Loan and
the Bonds, to the extent not paid from other sources. Such costs and
expenses shall include but shall not be limited to costs and expenses of
employees of the Issuer including in-house counsel in processing servicing
requests during the term of the Loan.
11. The Borrower shall not incur additional Indebtedness in excess of
$15,000,000 unless (a) such Indebtedness is refunding Indebtedness which
does not increase the Borrower's aggregate level of Indebtedness, or (b)
the issuance of such Indebtedness does not reduce the Debt Service
Coverage (as defined below) below the lesser of (i) the Debt Service
Coverage prior to the issuance of new debt or (ii) 1.3x, or (c) such
additional Indebtedness is required by a change in law occurring after the
Loan closing or is required to comply with an order or decision of any
governmental agency or authority with authority to issue or make and
enforce the same, or (d) the Chief Executive Officer of the Issuer
consents in writing thereto.
For the purpose of this covenant, Debt Service Coverage means: earnings
before income taxes + interest for the previous 12 months + depreciation
for the previous 12 months + amortization for the previous 12 months (less
or plus extraordinary1 income or losses) divided by: interest for the
previous 12 months + principal payments for the previous 12 months + the
projected 12 months of principal and interest for all Indebtedness.
12. The Borrower shall immediately assign to the Trustee all payments and
revenues the Borrower is entitled to receive under any agreement for the
sale of power, energy, steam, waste disposal services or other output
capacity for services of the Facility or the receipt of waste by the
Facility.
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40
EXHIBIT B
LOAN PRINCIPAL
Note
Principal
Payment Date Repayments
------------ ----------
07/01/99 $1,325,000
07/01/00 1,475,000
07/01/01 1,535,000
07/01/02 1,600,000
07/01/03 1,670,000
07/01/04 1,735,000
07/01/05 1,820,000
07/01/06 1,910,000
07/01/07 2,005,000
07/01/08 2,110,000
07/01/09 2,205,000
07/01/10 2,315,000
07/01/11 2,430,000
07/01/12 2,555,000
07/01/13 2,680,000
07/01/14 2,825,000
07/01/15 2,965,000
07/01/16 3,120,000
07/01/17 3,275,000
07/01/18 3,440,000
Total $44,995,000
B-1
41
PROMISSORY NOTE
No. 1 $44,995,000
Penobscot Energy Recovery Company, Limited Partnership, a limited
partnership duly organized and existing under the laws of the State of Maine
(the "Borrower"), for value received, promises to pay to the order of Finance
Authority of Maine (the "Authority") the principal sum of $44,995,000 and to pay
(i) interest on the unpaid principal balance thereof from the date hereof until
fully and finally paid at the interest rates borne by the Bonds (as defined
below) from time to time and as further described in the Agreement (as defined
below), and (ii) those additional payments referred to in Section 4.3(b) of the
Agreement.
This promissory note has been executed and delivered by the Borrower
pursuant to a certain Loan Agreement (the "Agreement"), dated as of June 1,
1998, between the Authority and the Borrower. Terms used but not defined herein
shall have the meanings ascribed to such terms in the Agreement.
This promissory note is issued to evidence the obligation of the
Borrower under the Agreement to repay the Loan made by the Authority from the
proceeds of the sale of its Electric Rate Stabilization Revenue Refunding Bonds,
Series 1998A (Penobscot Energy Recovery Company, LP) and its Electric Rate
Stabilization Revenue Refunding Bonds, Series 1998B (Penobscot Energy Recovery
Company, LP) (together, the "Bonds"), together with interest thereon and all
other amounts, fees, penalties, adjustments, expenses, counsel fees and other
payments of any kind required to be paid by the Borrower under the Agreement.
The Agreement further provides for the payment of interest on this promissory
note at other rates in certain circumstances.
The Financing Documents (as defined in the Indenture), including the
Agreement and this promissory note, have been assigned to The Chase Manhattan
Bank (the "Trustee") acting pursuant to a Trust Indenture dated as of June 1,
1998 (the "Indenture") between the Authority and the Trustee, except with
respect to the Unassigned Issuer's Rights, which are not so assigned. Such
assignment is made as security for the payment of the Bonds.
As provided in the Agreement and subject to the provisions thereof,
payments hereon are to be made at the principal office of the Trustee, or at
such other place in the United States as the Trustee may direct in writing, by
wire transfer, in the amounts and at the times required by the Indenture with
respect to the Bonds. Loan payments hereon shall be paid, or caused to be paid,
by the Borrower in an amount which, when added to the other moneys available
therefor in the Debt Service Fund, will be sufficient to pay the principal of
and interest on the Bonds due and payable on each Interest Payment Date and
Principal Payment Date, whether at maturity or upon
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declaration accelerating the maturity, upon mandatory sinking fund redemption in
accordance with the Indenture, or otherwise.
With respect to payments due hereunder, time is of the essence. All
payments must be in immediately available funds as and when due.
The Borrower shall make payments on this promissory note on the dates
and in the amounts specified herein and in the Agreement and in addition shall
make such other payments as are required to be made by the Borrower pursuant to
the Agreement and the Indenture. This promissory note is subject to prepayment
to the extent the Loan is prepaid pursuant to the Agreement.
In the event the Borrower shall fail to make, or cause to be made, any
of the payments required hereby or by the Agreement, the unpaid item or
installment shall continue as an obligation of the Borrower until such amount
shall have been fully paid, and the Borrower agrees to pay, or cause to be paid,
the same with interest thereon from the date of failure or, in the case of
payments required by Sections 4.3(a)(ii), (iii) and (v) of the Agreement, the
date 30 days after the date on which the Borrower is notified thereof, at the
interest rate borne by the Bonds until fully paid, except as otherwise may be
provided by Article XIII of the Indenture.(1)
All payments hereunder shall be payable in lawful money of the United
States of America and shall be made to the Authority, the Trustee, or the Note
Insurer, as provided in the Agreement. Loan payments shall be deposited in the
Revenue Fund created by the Indenture. Except as otherwise provided in the
Indenture, such Loan payments shall be used by the Trustee to pay the principal
of and interest on the Bonds when due.
The obligation of the Borrower to make the payments required hereunder
and to perform and observe the other agreements on its part contained herein
shall be absolute and unconditional, irrespective of any defense or any rights
of set-off, recoupment or counterclaim which the Borrower may have against the
Authority or the Trustee. The Borrower shall pay, or cause to be paid,
absolutely net all payments required hereunder and under the Agreement, free of
any deductions and without postponement, abatement or diminution, but subject to
applicable provisions of the Indenture. Except to the extent provided in this
paragraph, nothing contained in this paragraph shall be construed to prevent or
restrict the Borrower from asserting any rights it may have against the
Authority, the Trustee or any other Person under the Financing Documents or the
Indenture or under any provisions of law.
Whenever an Event of Default under Section 7.01(a), (d), (e) or (f) of
the Indenture shall have occurred and, as a result thereof, the principal of the
Bonds then outstanding, and interest accrued thereon, shall have been declared
to be immediately due and payable pursuant to Section 7.03 of the Indenture, the
unpaid principal amount of and accrued interest on this promissory note
----------
(1) Re: Bond Insurance.
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shall also be due and payable on the date on which the principal of and interest
on the Bonds shall have been declared due and payable; provided that the
annulment of a declaration of acceleration with respect to the Bonds shall also
constitute an annulment of any corresponding declaration with respect to this
promissory note.
The Borrower further waives diligence, demand, presentment for payment,
notice of nonpayment, protest and notice of protest, and notice of any renewals
or extension of this promissory note. Any delay on the part of the Authority or
the Trustee in exercising any right hereunder shall not operate as a waiver of
any such right, and any waiver granted with respect to one default shall not
operate as a waiver in the event of any subsequent default.
Notwithstanding any other provisions of this promissory note, there
shall be no recourse against any general or limited partner of the Borrower, or
any of their respective affiliates, stockholders, partners, officers, directors,
employees or agents, for any liability to the Authority or the holders of this
promissory note or the obligations arising in connection with any breach or
default under this promissory note except to the extent the same is enforced
against and limited to the Borrower or the Collateral, and the Authority shall
look solely to the Borrower and the Collateral in enforcing rights and
obligations under and in connection with this promissory note and the Loan
Agreement, the Mortgage, the Indenture, or any other Borrower Documents, or
pledge of the Collateral. The limitations on recourse set forth in this
paragraph shall survive the termination of this promissory note and the full
payment and performance of the obligations of the Borrower hereunder and under
the Loan Agreement, the Indenture, the Mortgage and the other Borrower
Documents.
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IN WITNESS WHEREOF, Penobscot Energy Recovery Company, Limited
Partnership has caused this promissory note to be executed in its corporate name
and intends for it to have the same effect as if sealed with Penobscot Energy
Recovery Company, Limited Partnership's corporate seal by its duly authorized
officer this June 15, 1998.
PENOBSCOT ENERGY RECOVERY COMPANY,
LIMITED PARTNERSHIP
By PERC Management Company Limited Partnership,
a general partner
By PERC, Inc., its general partner
By________________________________
Its
By Energy National, Inc.
its general partner
By_________________________________
Its
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AUTHORITY ENDORSEMENT
Pay to the order of The Chase Manhattan Bank, as Trustee, except with
respect to the Unassigned Issuer's Rights, without recourse.
FINANCE AUTHORITY OF MAINE
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
--------
(1) Extraordinary is defined as a nonrecurring occurrence that must be explained
by note on the financial statements or in a filing. Earnings are adjusted by
adding or subtracting the extraordinary occurrence.
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