EXHIBIT 10.71
EXECUTION COPY
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AMENDED AND RESTATED
PARTICIPATION AGREEMENT
among
BUZZARD POWER CORPORATION,
as Lessee
SCRUBGRASS GENERATING COMPANY, L.P.,
as Lessor
ENVIRONMENTAL POWER CORPORATION,
BANKERS TRUST COMPANY,
as Bond Trustee
BANKERS TRUST COMPANY,
as Disbursement Agent
CREDIT LYONNAIS,
acting through its New York Branch,
as Agent for the LOC Issuers and the Banks
Dated December 22, 1995
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION;
ORIGINAL PARTICIPATION AGREEMENT
SECTION 1.1. Definitions; Rules of Construction........................ 2
SECTION 1.2. Original Participation Agreement.......................... 3
ARTICLE II
AGREEMENT TO PARTICIPATE; EFFECTIVE DATE
SECTION 2.1. Agreement to Participate.................................. 3
SECTION 2.2. Time and Place of Closing................................. 4
ARTICLE III
CONDITIONS OF CLOSING
SECTION 3.1. Closing Conditions........................................ 4
ARTICLE IV
INTENTIONALLY OMITTED
ARTICLE V
INTENTIONALLY OMITTED
x ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1. Representations and Warranties of Lessor.................. 8
SECTION 6.2. Representations and Warranties of Lessee.................. 8
SECTION 6.3. Representations and Warranties of EPC..................... 13
PAGE
SECTION 6.4. Representations and Warranties of Bond Trustee............ 16
SECTION 6.5. Representations and Warranties of Disbursement Agent...... 17
ARTICLE VII
COVENANTS OF LESSOR
SECTION 7.1. Defend Title.............................................. 18
SECTION 7.2. Lessor QF Casualty........................................ 18
ARTICLE VIII
COVENANTS OF LESSEE
SECTION 8.1. Reporting Requirements.................................... 18
SECTION 8.2. Certificate; Other Information............................ 19
SECTION 8.3. Corporate Existence....................................... 20
SECTION 8.4. Notices................................................... 20
SECTION 8.5. Further Assurances, etc................................... 21
SECTION 8.6. Inspection of Property.................................... 22
SECTION 8.7. Conduct of Business....................................... 22
SECTION 8.8. Limitation on Debt........................................ 22
SECTION 8.9. Limitations on Liens...................................... 22
SECTION 8.10. Prohibition of Fundamental Changes........................ 23
SECTION 8.11. Prohibition on Disposition of Assets...................... 23
SECTION 8.12. Transactions with Affiliates and Others................... 23
SECTION 8.13. Defend Title.............................................. 23
SECTION 8.14. Plans..................................................... 23
SECTION 8.15. No Amendments or Assignments; Compliance.................. 23
SECTION 8.16. Payment of Taxes and Claims............................... 24
SECTION 8.17. Books and Records......................................... 24
SECTION 8.18. Maintenance of Adequate Fuel Supply....................... 24
SECTION 8.19. Additional Contracts...................................... 24
SECTION 8.20. Guarantees................................................ 24
SECTION 8.21. Abandonment............................................... 25
SECTION 8.22. Investments............................................... 25
SECTION 8.23. Change of Name; Office.................................... 25
SECTION 8.24. Restricted Payments....................................... 25
SECTION 8.25. Licenses and Governmental Approvals; Maintenance
of Properties............................................. 25
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PAGE
SECTION 8.26. No Subsidiaries........................................... 25
SECTION 8.27. ERISA Plan................................................ 25
SECTION 8.28. Environmental Matters..................................... 26
SECTION 8.29. No Contracts with Utilities............................... 26
SECTION 8.30. Compliance with Transaction Documents..................... 26
SECTION 8.31. Compliance with Laws...................................... 27
SECTION 8.32. Operations and Maintenance Agreement and Management
Services Agreement........................................ 27
SECTION 8.33. Qualifying Facility....................................... 27
SECTION 8.34. Covenants of the Lessee................................... 27
SECTION 8.35. Lessee Consent to Transaction Documents................... 27
ARTICLE IX
COVENANTS OF EPC
SECTION 9.1. Reporting Requirements; Audits............................ 28
SECTION 9.2. Corporate Existence....................................... 28
SECTION 9.3. Notices................................................... 29
SECTION 9.4. Further Assurances, etc................................... 29
SECTION 9.5. No Amendments or Assignments; Compliance.................. 29
SECTION 9.6. Separate Operation of Lessee.............................. 30
ARTICLE X
INDEMNITY
SECTION 10.1. Indemnity................................................. 31
SECTION 10.2. General Tax Indemnification............................... 34
SECTION 10.3. Manner of Indemnification................................. 41
ARTICLE XI
LEASE TERMINATION COVENANTS
SECTION 11.1. Lessee Agreement to Lease Termination..................... 41
SECTION 11.2. Lease Termination Covenants............................... 42
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TABLE OF CONTENTS
PAGE
ARTICLE XII
ASSIGNMENT
SECTION 12.1. Benefit of Agreement, Etc................................. 43
SECTION 12.2. Transfer of Interests of Lessor........................... 43
ARTICLE XIII
INTENTIONALLY OMITTED
ARTICLE XIV
LIMITATION ON RECOURSE
ARTICLE XV
MISCELLANEOUS
SECTION 15.1. Notices................................................... 44
SECTION 15.2. Governing Law............................................. 44
SECTION 15.3. Headings.................................................. 44
SECTION 15.4. Counterparts.............................................. 44
SECTION 15.5. Survival of Agreements.................................... 44
SECTION 15.6. Confidentiality........................................... 45
SECTION 15.7. Severability.............................................. 45
SECTION 15.8. Transaction Costs......................................... 45
SECTION 15.9. Lessor Obligations Not Limited by Amended and
Restated Lease............................................ 45
SECTION 15.10. Performance of Obligations to Bank Parties................ 46
SECTION 15.11. Intentionally Omitted..................................... 46
SECTION 15.12. Financial Statements...................................... 46
Schedule I Transaction Documents in Effect on Effective Date
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TABLE OF CONTENTS
PAGE
Schedule II INTENTIONALLY OMITTED
Schedule III Consents, Permits to be Obtained after Effective Date
Schedule IV Notice Provisions
Schedule V Lessee Disclosure Schedule
Schedule VI EPC Disclosure Schedule
EXHIBIT A Amended and Restated Lease
EXHIBIT B INTENTIONALLY OMITTED
EXHIBIT C Tax Indemnity Agreement
EXHIBIT D Amended and Restated Lessee Working Capital Loan Agreement
Appendix I Definitions
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AMENDED AND RESTATED PARTICIPATION AGREEMENT
This AMENDED AND RESTATED PARTICIPATION AGREEMENT (hereinafter referred
to as the "PARTICIPATION AGREEMENT" or "THIS AGREEMENT"), dated December 22,
1995, is entered into by and among:
(a) Buzzard Power Corporation, a Delaware corporation
("LESSEE"),
(b) Scrubgrass Generating Company, L.P., a Delaware limited
partnership ("LESSOR"),
(c) Environmental Power Corporation, a Delaware corporation
("EPC"),
(d) Bankers Trust Company ("BOND TRUSTEE"), not in its
individual capacity but solely as trustee under the Indenture,
(e) Bankers Trust Company ("DISBURSEMENT AGENT," in its
capacity as disbursement agent and not as representative of any entity
or person), and
(f) Credit Lyonnais, acting through its New York Branch
("CREDIT LYONNAIS"), as agent for the Bond LOC Issuer, the Contract LOC
Issuer and the Banks listed on Schedule I attached to the Amended and
Restated Reimbursement Agreement (as defined in Appendix I hereto)
(collectively, the "BANKS"), ("AGENT").
WHEREAS, Lessee, Lessor, EPC, Bond Trustee, Disbursement Agent,
National Westminster Bank Plc, acting through its New York Branch ("NatWest"),
as issuer of certain letters of credit under the Original Reimbursement
Agreement (as defined below) (NatWest in such capacity, the "ORIGINAL LOC
ISSUER") and NatWest as agent for the Original LOC Issuer and the Banks listed
on Schedule I to the Original Reimbursement Agreement (as defined below) (such
Banks, the "ORIGINAL BANKS") (NatWest in such capacity, the "ORIGINAL AGENT")
are parties to a Participation Agreement dated as of December 15, 1990, as
amended by Amendment Number One to Participation Agreement dated as of July 15,
1991, Amendment Number Two to Participation Agreement dated as of December 19,
1991, Amendment Number Three to Participation Agreement dated as of November 30,
1992, and Amendment Number Four to Participation Agreement dated as of June 17,
1994 (as so amended or otherwise modified and supplemented and as in effect
immediately before the amendment and restatement thereof contemplated hereby
becomes effective, the "ORIGINAL PARTICIPATION AGREEMENT") which sets forth
certain agreements and relationships between and among themselves relating to
the construction, financing, leasing, and operation of a coal and coal-waste
fired approximately 85 megawatt (net) small power production plant to be located
in Venango County, Pennsylvania, as more particularly described on Exhibit A to
the Lease (the "FACILITY"), and the real property on which it is located (the
"SITE");
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WHEREAS, the Lessor, the Original Banks, the Original LOC Issuer and
the Original Agent are parties to a Reimbursement and Loan Agreement dated as of
December 15, 1990 (as amended, supplemented and otherwise modified and in effect
to but excluding the date hereof, the "ORIGINAL REIMBURSEMENT AGREEMENT"), which
provides for, among other things, the making of loans to and the issuance of
letters of credit for the account of the Lessor, all to be secured by all of the
Lessor's right, title and interest in and to, INTER ALIA, the Project and all
Project Revenues (as each such term is defined in the Original Participation
Agreement) or other proceeds therefrom;
WHEREAS, NatWest has resigned as Agent under (and as defined in) the
Original Participation Agreement, the Original Reimbursement Agreement and
certain other documents entered into in connection therewith;
WHEREAS, the Original Banks have appointed Credit Lyonnais, acting
through its New York Branch, as successor Agent under (and as defined in) the
Original Participation Agreement, the Original Reimbursement Agreement and
certain other documents entered into in connection therewith (and the Lessor has
acknowledged and ratified such appointment);
WHEREAS, the Lessor, the Banks, the Original LOC Issuer and Credit
Lyonnais, as Agent, have entered into the Amended and Restated Reimbursement
Agreement (as defined in Appendix I hereto), providing for the amendment and
restatement of the Original Reimbursement Agreement;
WHEREAS, it is a condition precedent to the effectiveness of the
Amended and Restated Reimbursement Agreement that the parties hereto enter into
this Agreement; and
WHEREAS, the parties hereto desire to amend and restate the Original
Participation Agreement in certain respects as set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and agreements contained in this Agreement, the
parties to this Agreement agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION;
ORIGINAL PARTICIPATION AGREEMENT
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SECTION 1.1. DEFINITIONS; RULES OF CONSTRUCTION. Capitalized terms used
herein shall, unless the context otherwise requires or they are otherwise
defined herein, have the meanings set forth in Appendix I hereto. References in
this Agreement to articles, sections, paragraphs and clauses are to articles,
sections, paragraphs and clauses of this Agreement unless otherwise indicated.
All references herein to any agreement shall be to such agreement as properly
amended or modified to the date of reference. All references to a particular
entity shall include a reference to such entity's successors and permitted
assigns. Except as otherwise required by the context, such definitions shall be
equally applicable to the singular or plural forms of the terms defined. The
words "herein," "hereof" and "hereunder" shall refer to this Agreement as a
whole and not to any particular section or subsection of this Agreement.
SECTION 1.2. ORIGINAL PARTICIPATION AGREEMENT. Effective on the
Effective Date, the Original Participation Agreement shall automatically,
without any further notice, consent or other act, be amended and restated hereby
and to the extent this Participation Agreement restates the Original
Participation Agreement, the Original Participation Agreement is restated and to
the extent this Participation Agreement amends the Original Participation
Agreement, the Original Participation Agreement is amended.
ARTICLE II
AGREEMENT TO PARTICIPATE; EFFECTIVE DATE
SECTION 2.1. AGREEMENT TO PARTICIPATE. In reliance on the agreements,
representations, warranties and covenants contained in or made pursuant to this
Agreement and the other Transaction Documents, and subject to the terms and
conditions set forth in this Agreement, the parties hereto agree as follows:
(a) ON THE EFFECTIVE DATE. Subject to fulfillment,
satisfaction or waiver in accordance with the terms thereof, prior to
or on the Effective Date, of the conditions set forth in Section 3.1
hereof and in Section 8.01 of the Amended and Restated Reimbursement
Agreement, on the Effective Date:
(i) Lessor, Agent, NatWest and the Banks, severally
and not jointly, will enter into the Amended and Restated
Reimbursement Agreement;
(ii) Lessor, Agent, Lessee, Falcon, SPC, East Bay,
EPC and USGen will enter into the Omnibus Reaffirmation
Agreement;
(iii) Lessor and Lessee will enter into the Amended
and Restated Lease and the Memorandum of Amended and Restated
Lease;
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(iv) Each of Lessor, Lessee, Disbursement Agent and
Agent will enter into the Amended and Restated Disbursement
Agreement; and
(v) The Participants will enter into such other
agreements, certificates and other documents and take such
other actions as are necessary to institute the foregoing and
consummate the transactions contemplated thereby to be
consummated on the Effective Date.
SECTION 2.2. TIME AND PLACE OF CLOSING. The closing of the events
occurring on the Effective Date shall take place on the Effective Date, at the
offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx, 1440 New York Avenue, N.W.,
Washington, D.C., or at such other time and place as the parties to this
Agreement shall agree.
ARTICLE III
CONDITIONS OF CLOSING
SECTION 3.1. CLOSING CONDITIONS. The obligation of each of Agent, the
LOC Issuers and the Banks to enter into the Transaction Documents to which it is
a party on the Effective Date shall be subject to the fulfillment, satisfaction
or waiver, prior to or on the Effective Date and in accordance with the Amended
and Restated Reimbursement Agreement, of each condition set forth in Section
8.01 of the Amended and Restated Reimbursement Agreement. In addition, the
obligations of each Participant to enter into the Transaction Documents to which
it is a party on the Effective Date shall be subject to the fulfillment or
satisfaction of the following conditions precedent by each other Participant, or
the waiver of such conditions by each Participant receiving the benefit thereof:
(a) EXECUTION AND DELIVERY OF TRANSACTION DOCUMENTS; EXISTING
TRANSACTION DOCUMENTS. Each Participant shall have full power and
authority to execute and deliver the Transaction Documents to which it
is a party, to enter into the transactions contemplated thereby and to
perform its obligations thereunder. Those Transaction Documents in
effect on the Effective Date (as set forth on Schedule I hereto) shall
have been duly authorized, executed and delivered by the parties
thereto, shall be in form and substance satisfactory to each
Participant, and shall be in full force and effect and shall not have
been amended, modified or supplemented except as may have been agreed
to in writing by each of the parties thereto.
(b) NO MATERIAL CHANGE. Since the date of their most recent
balance sheets and financial statements, no material adverse change
shall have occurred in the status of the business, operations,
condition (financial or otherwise) or prospects of Lessor, Lessee, the
Bond Trustee and the Disbursement Agent.
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(c) NO CHANGE IN LAW; VIOLATION OF LAW. There shall have been
no change in any existing Law, nor any new Law proposed or promulgated,
the impact of which in either case would materially and adversely
affect the Project; and no Requirement of Law shall be in effect or
shall have occurred the effect of which is to prevent any party to this
Agreement or any other Transaction Document from fulfilling its
obligations hereunder or thereunder. The obligations of each
Participant to execute and deliver the Transaction Documents to which
it is a party, to enter into the transactions contemplated thereby and
to perform its obligations thereunder shall not violate or contravene
any Requirement of Law.
(d) NO LITIGATION. No action, proceeding or investigation
shall have been instituted or be threatened, nor shall any action
before any Governmental Authority have been instituted or be
threatened, nor shall any order, judgment or decree have been issued or
proposed to be issued by any Governmental Authority, each to set aside,
restrain, enjoin or prevent the consummation of this Agreement or the
transactions contemplated hereby or by the other Transaction Documents
or that would have a material adverse effect on the Project or on the
ability of any party to this Agreement or any of the other Transaction
Documents to perform its obligations hereunder and thereunder.
(e) CONSENTS AND APPROVALS. (i) All actions, consents,
waivers, exemptions, franchises, Governmental Approvals and rights (A)
that are both required to be taken, given or obtained, as the case may
be, by or from any Governmental Authority, and necessary to be taken,
given or obtained by the Effective Date or (B) that are in the opinion
of Lessor, the Bank Parties or Lessee, or the special counsel of any
such party, advisable in connection with the operation of the Project
and the lease of the Facility and the Site and that are or should be
capable of being taken, given or obtained as of the Effective Date,
shall have been duly taken, given or obtained, as the case may be,
shall be in full force and effect on the Effective Date, shall not be
subject to any pending proceedings or appeals (administrative, judicial
or otherwise) and either the time within which any appeal from any such
proceeding may be taken or review thereof may be obtained shall have
expired or no review thereof may be obtained or appeal therefrom taken,
and shall be adequate to authorize the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents and
the performance by each of the Participants of its obligations under
this Agreement and such of the other Transaction Documents to which it
is a party.
(ii) There shall not have occurred any event which would
adversely affect the anticipated delivery or issuance of, and when
needed, all filings, notices and registrations or other actions with
respect to any Government Authority necessary, required or appropriate
in connection with the execution, delivery and performance of this
Agreement or the other Transaction Documents or any transactions
contemplated herein or therein or in any other agreement entered into
in connection herewith or therewith, including without limitation all
environmental Governmental Approvals necessary or appropriate for the
Project; and no approval of any other Person that has not been obtained
shall be required to be obtained in connection with the Project as of
the Effective Date, whether in connection with an
5
agreement binding on any party to a Transaction Document or otherwise.
(f) REPRESENTATIONS AND WARRANTIES TRUE. Each of the
representations and warranties made in Article VI hereof by each of the
Participants shall be true and correct on the Effective Date as though
made on and as of the Effective Date.
(g) NO DEFAULT. There shall exist no Default or Event of
Default under any Transaction Document.
(h) OFFICERS' CERTIFICATES. Each of the Participants (other
than the Agent and the LOC Issuer) shall have delivered an Officer's
Certificate, to the effect that (i) the representations and warranties
of such party contained in this Agreement and in any other Transaction
Document are true and correct on and as of the Effective Date as though
made on and as of the Effective Date, (ii) each Transaction Document to
which it is a party entered into on the Effective Date has been duly
authorized, executed and delivered by it and (iii) each of the
obligations of such party to be performed by it on or prior to the
Effective Date pursuant to the terms of this Agreement has been duly
performed or waived by the other Participants.
(i) AUTHORIZATION BY PARTIES TO THIS AGREEMENT. All action
required to be taken by or on behalf of each Participant to authorize
the execution, delivery and performance of this Agreement and the other
Transaction Documents to which it is a party and the consummation of
the transactions contemplated hereby and thereby shall have been duly
and validly taken and each Participant (other than Agent, the LOC
Issuers and the Banks) shall have delivered certified copies of its
charter documents and by-laws, if any, and certified resolutions
authorizing the execution, delivery and performance of each of the
Transaction Documents to which it is a party, and certificates of the
incumbency and specimen signatures of the officers of such party
signing any such Transaction Documents, and any other certificates and
other evidence to such effect as the other parties to this Agreement
and their counsel may reasonably request shall have been delivered.
(j) AUTHORIZATION BY CERTAIN OTHER PARTIES. All action
required to be taken by or on behalf of any party to the Transaction
Documents (other than the Participants) to authorize the execution,
delivery and performance of the Transaction Documents to which it is a
party and the consummation of the transactions contemplated thereby
shall have been duly and validly taken and such certificates, opinions
and other evidence to such effect as each Participant and the special
counsel of each Participant may reasonably request shall have been
delivered.
(k) INSURANCE. All insurance required as of the Effective Date
by Section 10.04 of the Amended and Restated Reimbursement Agreement
shall be in effect, as demonstrated by evidence satisfactory to Lessor
and the Bank Parties; and there shall have been delivered to Lessor and
the Bank Parties copies of insurance certificates required as of
6
the Effective Date pursuant to Section 8.01(i) of the Amended and
Restated Reimbursement Agreement.
(l) OPINIONS. Opinions of the firm or legal counsel set forth
below in substantially the form and substance heretofore agreed upon by
the parties hereto and as to such other matters as may be requested by
Lessor, Agent, Bond Trustee, Disbursement Agent and Lessee shall have
been delivered to Lessor, the Banks, Agent, Disbursement Agent and Bond
Trustee:
(i) Hunton & Xxxxxxxx, special counsel to Lessee
and EPC;
(ii) Xxxxxxxx Ingersoll, P.C., special Pennsylvania
counsel to Lessor and Lessee;
(iii) Hunton & Xxxxxxxx, special counsel to Lessor;
(iv) Xxxxxxx, Delafield & Wood, special counsel to
Bond Trustee and Disbursement Agent;
(v) Xxxxxxx X. Xxxxxx, Esq., counsel to Pine; and
(vi) Xxxxxxx X. Xxxxx, Esq., counsel to Falcon and
SPC.
(m) ENGINEERING REPORTS. There shall have been delivered to
the Bank Parties and Lessor a report of the Independent Engineer,
satisfactory to the recipients and covering such matters as they may
request.
(n) SECURITY INTEREST. Each of the Security Documents then
required by the provisions of this Agreement, the Amended and Restated
Reimbursement Agreement or any Requirement of Law, to have been
executed and delivered shall have been duly filed, recorded and/or
registered in each jurisdiction as may be required or appropriate by
Law to establish, perfect, protect and preserve the rights, titles,
interests, remedies, powers, privileges, Liens and security interests
of the Bank Parties or Lessor thereunder or in respect thereof, and any
giving of notice (including filing financing statements under the
Uniform Commercial Code) or the taking of any other action to such end
(whether similar or dissimilar) required by law shall have been given
or taken, and the Bank Parties and Lessor shall have received evidence
satisfactory to them as to any such filing, recording, registration,
giving of notice and/or other action; no further acts shall be required
to perfect the Lien of the Security Documents on the Collateral; and
there shall have been delivered evidence satisfactory to the
Participants and their special counsel to the effect that they have
acquired the perfected security interests intended to be created
pursuant to the Security Documents.
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(o) TITLE POLICIES. The policies of title insurance insuring
the Project Mortgage shall have been endorsed as of the Effective Date
as described in Section 8.01(f) of the Amended and Restated
Reimbursement Agreement.
(p) FORMS OF DOCUMENTS; PROCEEDINGS. All agreements,
certificates, opinions and other instruments to be delivered under this
Agreement shall be in form and substance satisfactory, and all
proceedings taken in connection therewith and with this Agreement shall
be satisfactory, to the Participants and to the special counsel of each
Participant.
ARTICLE IV
INTENTIONALLY OMITTED
ARTICLE V
INTENTIONALLY OMITTED
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1. REPRESENTATIONS AND WARRANTIES OF LESSOR. Lessor makes the
representations and warranties of Article IX of the Amended and Restated
Reimbursement Agreement as if they were fully set forth herein.
SECTION 6.2. REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee
represents and warrants as follows:
(a) Lessee hereby represents and warrants as of the Effective
Date the following:
(i) ORGANIZATION AND GOOD STANDING. Lessee is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and is duly
qualified to do business and in good standing in each
jurisdiction in which the failure so to qualify would
adversely affect its business, properties or financial
condition. Lessee has all requisite corporate power and
authority to own, or hold under lease, and operate its
properties, to carry on its business as it is now conducted
and as contemplated by the Transaction Documents
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and to enter into and perform its obligations under this
Agreement and the other Transaction Documents to which it is
or will be a party.and every other document delivered in
connection herewith or therewith to which it is or will be a
party. There are no agreements, written or oral, between
Lessee and any person relating to or affecting the capital
stock of Lessee, except for the Buzzard Stock Pledge
Agreement.
(ii) DUE AUTHORIZATION; NO CONFLICTS. The execution,
delivery and performance by Lessee of this Agreement and the
other Transaction Documents and every other document delivered
in connection herewith or therewith to which it is or will be
a party have been duly and effectively authorized by all
necessary corporate action of Lessee. No other corporate
proceedings are necessary to authorize the execution and
delivery by Lessee of this Agreement or the other Transaction
Documents to which it is or will be a party or the
transactions contemplated herein or therein; and this
Agreement and each of the other Transaction Documents and
every other document delivered in connection herewith or
therewith, to which it is or will be a party is the valid and
binding obligation of Lessee, enforceable in accordance with
its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency or similar laws from time to
time in effect that affect creditors' rights generally or by
general principles of equity. Neither the execution and
delivery of this Agreement or any of the other Transaction
Documents to which Lessee is or will be a party nor the
consummation of the transactions contemplated hereby or
thereby nor compliance by Lessee with any of the provisions
hereof or thereof will (A) violate, or conflict with, or
result in a breach of any provisions of, or constitute a
default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or
result in the creation of any Lien upon any of the properties
or assets of Lessee under any of the terms, conditions or
provisions of, the Articles of Incorporation or By-Laws of
Lessee in effect on the Effective Date or any note, bond,
mortgage, indenture, deed of trust, license, agreement or
other instrument or obligation to which Lessee is a party at
the Effective Date, or by which Lessee or any of its
properties or assets may be bound or affected as of the
Effective Date, or (B) violate any order, writ, injunction,
decree, arbitral award, statute, rule or regulation applicable
at the Effective Date to Lessee or any of its properties or
assets.
(iii) NO CONSENT REQUIRED. (A) No Governmental
Approval and no filing, recording or registration with any
Governmental Authority is now, or under existing Law in the
future will be, required or necessary on Lessee's behalf to
authorize the execution and delivery of this Agreement or the
other Transaction Documents to which Lessee is or will be a
party or (except as listed on Schedule III) the taking of any
future action contemplated hereby or thereby or for the
legality, validity, binding effect or enforceability thereof,
except such thereof as have been duly
9
obtained and are in full force and effect and documented to
the satisfaction of the other parties hereto and listed on
Schedule III; and (B) Lessee has no reason to believe that any
Governmental Approval or recording, registration or filing
required to be obtained by Lessee that is necessary for the
taking of any future action contemplated hereby or by the
other Transaction Documents will not be obtained or completed
in due course no later than the date required for the taking
of such action to permit the operation of the Facility as
contemplated by the Transaction Documents and the Effective
Date Projections.
(iv) NO DEFAULT UNDER OTHER AGREEMENTS. Lessee is
not in default, and no condition exists that with notice or
lapse of time or both would constitute a default, under any
mortgage, deed of trust, indenture or other instrument or
agreement to which it is or will be a party or by which it or
any of its properties or assets may be bound, that might have
a material adverse effect on it or on any of the transactions
contemplated hereby or by the other Transaction Documents to
which it is or will be a party.
(v) LITIGATION. (A) There is no (x) litigation,
proceeding, labor dispute, arbitration or government
investigation pending or, so far as known to Lessee,
threatened with respect to or otherwise relating to Lessee or
the properties or assets of Lessee, or, to the best of the
knowledge of Lessee, the Project, the transactions
contemplated by this Agreement or personnel employed by Lessee
with reference to actions taken by it in connection with the
Project, in such capacities, or (y) valid basis known to
Lessee for any litigation of the type described in clause (x)
above, or any other litigation, proceeding or investigation or
valid basis therefor known to Lessee which if adversely
determined could, in any one case or in the aggregate, have a
material adverse effect on Lessee or the Project or the
properties or assets of Lessee; and (B) there are no decrees,
injunctions or orders of any court or government department or
agency or arbitral awards outstanding against Lessee or the
properties or assets of Lessee.
(vi) COMPLIANCE WITH LAW. (A) Lessee has complied in
all material respects with and is in all material respects in
compliance with all Requirements of Law; (B) Lessee has
received no written notice to the effect that, or otherwise
been advised in writing that, it is not in compliance with any
Requirement of Law or Governmental Approval; (C) Lessee has no
reason to believe that any currently existing circumstances
are likely to result in violations by Lessee of any such
Requirement of Law which could in any one case or in the
aggregate, have an adverse effect on the Project; and (D) to
the best of the knowledge of Lessee, there is not now pending
any proceeding, hearing or investigation with respect to the
adoption of amendments or modifications to any existing
Requirement of Law or Governmental Approval with respect to
such matters which, if adopted, would adversely affect Lessee
or the Project.
10
(vii) DISCLOSURE. The representations and warranties
of Lessee contained in the Transaction Documents to which it
is a party executed prior to the Effective Date, or in any
certificates and agreements furnished in connection with any
such Transaction Document were true and correct when made and
no such representation by Lessee in any such Transaction
Document contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the
statements contained therein not misleading. The
representations and warranties of Lessee contained in the
Transaction Documents executed on the Effective Date to which
it is a party, or in any certificates or agreements furnished
in connection with any such Transaction Document, are true and
correct and no such representation by Lessee contains any
untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained
therein not misleading. There is no fact peculiar to Lessee or
the Project and known to Lessee that materially adversely
affects or in the future may (so far as Lessee can now
reasonably foresee) materially adversely affect the business,
property or assets, or financial condition, of Lessee or the
Project that has not been set forth herein or therein.
(viii) TAX RETURNS. (A) Other than in respect of 1994
Federal and State income tax returns, Lessee has properly
filed or caused to be filed all Federal, state and other
income tax returns and reports and all other material tax
returns and reports that are required to have been filed and
has paid or caused to be paid all Taxes shown to be due or
payable on such returns or on any assessment received by it,
to the extent that such Taxes have become due and payable
(except to the extent being contested in good faith with due
diligence by appropriate proceedings and for the payment of
which reserves have been provided to the extent required under
GAAP); (B) there are no outstanding agreements or waivers
extending any statutory period of limitations applicable to
any Federal, state or other income tax return or other
material tax return of Lessee for any period; (C) Lessee is
not a party to any pending action or proceeding by any
Governmental Authority for the assessment of any Tax, and no
claim for assessment or collection of any Tax has been
asserted against it that has not been paid; and (D) there are
no tax Liens upon any property or assets of Lessee except for
property taxes not yet due.
(ix) NO OTHER AGREEMENTS. Lessee is not a party to
any agreement or understanding, written or oral, that would
vary any of the terms and conditions of the Transaction
Documents, and, to the best of Lessee's knowledge, there are
no agreements or understandings that are relevant in any
material respect to the transactions contemplated by this
Agreement that have not been disclosed in writing to the other
parties hereto.
(x) NO PUBLIC OFFERING. Other than in respect of a
potential sale of all of the assets and stock of EPC, each of
its Affiliates, and the Lessee in connection with
11
a private stock or asset sale in 1994, neither Lessee, nor any
affiliate (within the meaning of the Securities Act) of
Lessee, nor any Person authorized to act on behalf of Lessee
has, directly or indirectly, offered any security relating to
Lessee or the Project or solicited any offers to buy any such
interest or otherwise negotiated with respect thereto with any
Person.
(xi) BROKERS' OR FINDERS' FEES. Except as disclosed
on Schedule V hereto, neither Lessee nor its Affiliates has
made any contract or had any dealings with or entered into,
nor will enter into, any agreement, arrangement or
understanding with any broker, leasing agent, finder or
similar Person with respect to this Agreement, any Transaction
Document or the transactions contemplated herein or therein
which will result in the obligation of Lessor, any Bank Party
or any other Participant to pay any finder's fee, brokerage
commission or similar payment in connection with the
transactions contemplated herein or therein.
(xii) COMPLIANCE WITH TRANSACTION DOCUMENTS, ETC. To
the best of Lessee's knowledge, except for amendments set
forth in the definitions of the respective documents set forth
in Appendix I, copies of which have been provided to Lessor
and Agent by Lessee or some other Person, the Transaction
Documents in effect on the Effective Date have not been
modified or amended as of the Effective Date and are in full
force and effect; to the best of Lessee's knowledge, there is
no default on the part of any party under any of such
documents; to the best of Lessee's knowledge no event that
would constitute a Default or Event of Default under the
Amended and Restated Reimbursement Agreement has occurred and
is continuing which default or event has not been cured or
been waived in accordance with the Amended and Restated
Reimbursement Agreement; as of the date hereof, Lessee has the
right, power, and ability to comply with all of the terms of
such documents to which it is a party and all conditions to
the continued effectiveness of such documents required to be
satisfied by it as of the date hereof have been satisfied.
(xiii) NO UTILITY OWNERSHIP OF LESSEE; NO INVESTMENT
COMPANY. Lessee has not performed any act or failed to perform
any act that would cause it to be deemed by any Governmental
Authority to be subject to finance, organizational or rate
regulation as an "electric utility", "electric corporation",
"electrical company", "public utility", "public utility
holding company", or similar entity under any Requirement of
Law, and no person controlled by such entity has any direct or
indirect ownership or equity interest in the Lessee or right
to acquire the same. The Lessee is not an "investment company"
or a company "controlled by" an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(xiv) ERISA. Neither Lessee nor any of its ERISA
Affiliates maintains or contributes to (or has any obligation
to contribute to) any Plan or has any liability
12
under Title IV of ERISA by reason of the termination of any
Plan or the withdrawal from any Multiemployer Plan. Lessee
does not maintain any Employee Benefit Plan.
SECTION 6.3. REPRESENTATIONS AND WARRANTIES OF EPC. EPC represents and
warrants as follows:
(a) ORGANIZATION AND GOOD STANDING. EPC is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and is duly qualified to do business and in good
standing in each jurisdiction in which the failure so to qualify would
adversely affect its business, properties or financial condition. EPC
has all requisite corporate power and authority to own, or hold under
lease, and operate its properties, to carry on its business as it is
now conducted and as contemplated by the Transaction Documents and to
enter into and perform its obligations under this Agreement and the
other Transaction Documents to which it is or will be a party and every
other document delivered in connection herewith or therewith to which
it is or will be a party. There are no agreements, written or oral,
between EPC and any person relating to or affecting the capital stock
of Lessee, except for the Buzzard Stock Pledge Agreement.
(b) DUE AUTHORIZATION; NO CONFLICTS. The execution, delivery
and performance by EPC of this Agreement and the other Transaction
Documents and every other document delivered in connection herewith or
therewith to which it is or will be a party have been duly and
effectively authorized by all necessary corporate action of EPC. No
other corporate proceedings are necessary to authorize the execution
and delivery by EPC of this Agreement or the other Transaction
Documents to which it is or will be a party or the transactions
contemplated herein or therein; and this Agreement and each of the
other Transaction Documents and every other document delivered in
connection herewith or therewith, to which it is or will be a party is
the valid and binding obligation of EPC, enforceable in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency or similar laws from time to time in effect that
affect creditors' rights generally or by general principles of equity.
Except as disclosed on Schedule VI hereto, neither the execution and
delivery of this Agreement or any of the other Transaction Documents to
which EPC is or will be a party nor the consummation of the
transactions contemplated hereby or thereby nor compliance by EPC with
any of the provisions hereof or thereof will (A) violate, or conflict
with, or result in a breach of any provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in the creation of
any Lien upon any of the properties or assets of EPC or the Project or
the transactions contemplated by the Transaction Documents under any of
the terms, conditions or provisions of, the Articles of Incorporation
or By-Laws of EPC in effect on the Effective Date or any note, bond,
mortgage, indenture, deed of trust, license, agreement or other
instrument or obligation to which EPC is a party at the Effective Date,
or by which EPC or any of its properties or assets or the Project or
the
13
transactions contemplated by the Transaction Documents may be bound or
affected as of the Effective Date, or (B) violate any order, writ,
injunction, decree, arbitral award, statute, rule or regulation
applicable at the Effective Date to EPC or any of its properties or
assets or to the Project or the transactions contemplated by the
Transaction Documents.
(c) NO CONSENT REQUIRED. (A) No Governmental Approval and no
filing, recording or registration with any Governmental Authority is
now, or under existing Law in the future will be, required or necessary
on EPC's behalf to authorize the execution and delivery of this
Agreement or the other Transaction Documents to which EPC is or will be
a party or (except as listed on Schedule III) the taking of any future
action contemplated hereby or thereby or for the legality, validity,
binding effect or enforceability thereof, except such thereof as have
been duly obtained and are in full force and effect and listed on
Schedule III; and (B) EPC has no reason to believe that any
Governmental Approval or recording, registration or filing required to
be obtained by EPC that is necessary for the taking of any future
action contemplated hereby or by the other Transaction Documents will
not be obtained or completed in due course no later than the date
required for the taking of such action to permit the operation of the
Facility as contemplated by the Transaction Documents and the Effective
Date Projections.
(d) NO DEFAULT UNDER OTHER AGREEMENTS. Except as disclosed on
Schedule VI hereto, EPC is not in default, and no condition exists that
with notice or lapse of time or both would constitute a default, under
any mortgage, deed of trust, indenture or other instrument or agreement
to which it is a party or by which it or any of its properties or
assets may be bound, that could have a material adverse effect on the
Project or on any of the transactions contemplated hereby or by the
other Transaction Documents to which it is a party; and EPC is not in
violation of any Requirements of Law that could have a material adverse
effect on the Project or on any of the transactions contemplated hereby
or under any of the other Transaction Documents to which it is a party.
(e) LITIGATION. (A) Except as disclosed on Schedule VI to this
Agreement, there is no (x) litigation, proceeding, labor dispute,
arbitration or government investigation pending or, so far as known to
EPC, threatened with respect to or otherwise relating to EPC or, to the
best of EPC's knowledge, the Project or the transactions contemplated
by this Agreement or the other Transaction Documents or personnel
employed by EPC with reference to actions taken by it in connection
with the Project, in such capacities, or (y) valid basis known to EPC
for any litigation of the type described in clause (x) above, or any
other litigation, proceeding or investigation or valid basis therefor
known to EPC which if adversely determined could, in any one case or in
the aggregate, have a material adverse effect on EPC or the Project;
and (B) there are no decrees, injunctions or orders of any court or
government department or agency or arbitral awards outstanding against
EPC relating to EPC or, to the best of EPC's knowledge, the Project or
the transactions contemplated by the Transaction Documents.
14
(f) COMPLIANCE WITH LAW. (A) EPC has complied in all material
respects with all Requirements of Law relating to the Project or the
transactions contemplated by the Transaction Documents, EPC has
received no written notice to the effect that, or otherwise been
advised in writing that, it is not in compliance with any Requirement
of Law or Governmental Approval relating to the Project or the
transactions contemplated by the Transaction Documents, and EPC has no
reason to believe that any currently existing circumstances are likely
to result in violations by EPC of any such Requirement of Law which
could in any one case or in the aggregate, have an adverse effect on
the obligations or performance of EPC under any Transaction Document or
the Project; and (B) to the best of the knowledge of EPC, there is not
now pending any proceeding, hearing or investigation with respect to
the adoption of amendments or modifications to any existing Requirement
of Law or Governmental Approval with respect to such matters which, if
adopted, would adversely affect the obligations or performance of EPC
under any Transaction Document or the Project.
(g) DISCLOSURE. The representations and warranties of EPC
contained in the Transaction Documents to which it is a party executed
prior to the Effective Date, or in any certificates or agreements
furnished in connection with any such Transaction Document were true
and correct when made and no such representation by EPC contained any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements contained therein not misleading. The
representations and warranties of EPC contained in the Transaction
Documents executed on the Effective Date to which it is a party, or in
any certificates or agreements furnished in connection with any such
Transaction Document, are true and correct and no such representation
by EPC contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained
therein not misleading. There is no fact peculiar to EPC or the Project
and known to EPC that materially adversely affects or in the future
could (so far as EPC can now reasonably foresee) materially adversely
affect the Project or the obligations or performance of EPC under the
Transaction Documents.
(h) NO OTHER AGREEMENTS. EPC is not a party to any agreement
or understanding, written or oral, that would vary any of the terms and
conditions of the Transaction Documents, and, to the best of EPC's
knowledge, there are no agreements or understandings that are relevant
in any material respect to the transactions contemplated by this
Agreement that have not been disclosed in writing to the other parties
hereto.
(i) BROKERS' OR FINDERS' FEES. Except as disclosed on Schedule
VI hereto, neither EPC nor its Affiliates has made any contract or had
any dealings with or entered into, nor will enter into, any agreement,
arrangement or understanding with any broker, leasing agent, finder or
similar Person with respect to this Agreement, any Transaction Document
or the transactions contemplated herein or therein which will result in
the obligation of Lessor, any Bank Party or any other Participant to
pay any finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated
15
herein or therein.
(j) COMPLIANCE WITH TRANSACTION DOCUMENTS, ETC. To the best of
EPC's knowledge, except for any amendments made in accordance with the
terms of this Agreement, the Transaction Documents to which it is a
party in effect on the Effective Date have not been modified or amended
as of the Effective Date and are in full force and effect; to the best
of EPC's knowledge, there is no default on the part of any party under
any of such documents; as of the date hereof, all conditions to the
continued effectiveness of such documents required to be satisfied by
EPC as of the date hereof have been satisfied.
(k) NO UTILITY OWNERSHIP OF EPC. EPC is not and will not be,
after giving effect to the transaction contemplated by this Agreement,
deemed by any Governmental Authority to be subject to finance,
organizational or rate regulation as an "electric utility", "electric
corporation", "electrical company", "public utility", "public utility
holding company" or similar entity under any Requirement of Law, and,
except as described on Schedule VI hereto, to the best knowledge of
EPC, no person controlled by such entity has any direct or indirect
ownership or equity interest in EPC or right to acquire the same.
(l) NO PUBLIC OFFERING. Other than in respect of a potential
sale of all of the assets and stock of EPC, each of its Affiliates, and
the Lessee in connection with a private stock or asset sale in 1994,
neither EPC, nor any affiliate (within the meaning of the Securities
Act) of EPC, nor any Person authorized to act on behalf of EPC has,
directly or indirectly, offered any security relating to the Lessee or
the Project or solicited any offers to buy any such interest or
otherwise negotiated with respect thereto with any Person.
(m) FINANCIAL STATEMENTS. EPC has delivered to Lessor and
Agent copies of the unaudited balance sheet and statements of income,
cash flow and changes in financial condition of EPC of and as of
September 30, 1995, certified by an Authorized Officer of EPC. Such
financial statements fairly represent the financial condition of EPC as
of and at such date.
(n) [INTENTIONALLY OMITTED.]
SECTION 6.4. REPRESENTATIONS AND WARRANTIES OF BOND TRUSTEE. Bond
Trustee represents and warrants as follows:
(a) ORGANIZATION AND GOOD STANDING. Bond Trustee is a trust
company duly organized, validly existing and in good standing under the
laws of the State of New York and is duly qualified to do business and
in good standing in each jurisdiction in which the failure so to
qualify would adversely affect its business, properties or financial
condition. Bond Trustee has all requisite corporate power and authority
to enter into and perform its obligations under this Agreement and the
other Transaction Documents to which it is a party and every other
document delivered in connection herewith or therewith to which it is
16
a party.
(b) DUE AUTHORIZATION; NO CONFLICTS. The execution, delivery
and performance by Bond Trustee of this Agreement and the Indenture and
every other document delivered in connection herewith or therewith to
which it is a party have been duly authorized by all necessary
corporate action of Bond Trustee. This Agreement and the Indenture and
every other document delivered in connection herewith or therewith, to
which it is a party is the valid and binding obligation of Bond
Trustee, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency or
similar laws from time to time in effect that affect creditors' rights
generally or by general principles of equity.
(c) NO CONSENT REQUIRED. To the best of its knowledge, no
Governmental Approval and no filing, registration or recording is now,
or under existing Law in the future will be, required or necessary on
its behalf to authorize the execution and delivery of this Agreement or
the Indenture or the taking of any future action contemplated hereby or
thereby or for the legality, validity, binding effect or enforceability
thereof.
SECTION 6.5. REPRESENTATIONS AND WARRANTIES OF DISBURSEMENT AGENT.
Disbursement Agent represents and warrants as follows:
(a) ORGANIZATION AND GOOD STANDING. Disbursement Agent is a
trust company duly organized, validly existing and in good standing
under the laws of the State of New York and is duly qualified to do
business and in good standing in each jurisdiction in which the failure
so to qualify would adversely affect its business, properties or
financial condition. Disbursement Agent has all requisite corporate
power and authority to enter into and perform its obligations under
this Agreement and the other Transaction Documents to which it is a
party and every other document delivered in connection herewith or
therewith to which it is a party.
(b) DUE AUTHORIZATION; NO CONFLICTS. The execution, delivery
and performance by Disbursement Agent of this Agreement and the
Disbursement Agreement and every other document delivered in connection
herewith or therewith to which it is a party have been duly authorized
by all necessary corporate action of Disbursement Agent. This Agreement
and the Disbursement Agreement and every other document delivered in
connection herewith or therewith, to which it is a party is the valid
and binding obligation of Disbursement Agent, enforceable in accordance
with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency or similar laws from time to time in
effect that affect creditors' rights generally or by general principles
of equity.
(c) NO CONSENT REQUIRED. To the best of its knowledge, no
Governmental Approval and no filing, registration or recording is now,
or under existing law in the future will be, required or necessary on
its behalf to authorize the execution and delivery of this
17
Agreement or the Disbursement Agreement or the taking of any future
action contemplated hereby or thereby or for the legality, validity,
binding effect or enforceability thereof.
ARTICLE VII
COVENANTS OF LESSOR
SECTION 7.1. DEFEND TITLE. Lessor will at all times at its own cost and
expense warrant and defend its title to the Project and the Easements against
the claims and demands of all Persons whomsoever, and will not create or suffer
to exist any Lien against the Project and the Easements, except Permitted Liens.
SECTION 7.2. LESSOR QF CASUALTY. If a change in the direct or indirect
ownership or activities of Lessor after the Effective Date could result in a
termination of or could adversely affect the Qualifying Facility status of the
Facility (a "LESSOR QF CASUALTY"), Lessor shall, or shall cause the Partner
whose activities have caused such Lessor QF Casualty to, as the case may be,
immediately at its own expense (a) take such action as may be required to
restore the Qualifying Facility status of the Facility, (b) in the case of a
Partner, sell all or part of its interest to a third party, or (c) take such
other action as may be necessary to prevent Lessee, Lessor, any Bank Party, or
any other Partner of Lessor, as the case may be, from being materially adversely
affected as a result of the cessation of the Qualifying Facility status. Lessor
shall indemnify Lessee, any Bank Party, and any other Partner of Lessor for
added costs, expenses and losses incurred by reason of such Lessor QF Casualty.
ARTICLE VIII
COVENANTS OF LESSEE
SECTION 8.1. REPORTING REQUIREMENTS. Lessee shall furnish to Lessor and
Agent:
(a) as soon as practicable and in any event within 60 days
after the end of the first, second and third quarterly accounting
periods of each fiscal year of Lessee (commencing with the quarter
ending September 30, 1995), an unaudited balance sheet of Lessee as of
the last day of such quarterly period and the related unaudited
statements of income, cash flow, and changes in financial position of
Lessee for such quarterly period and (in the case of second and third
quarterly periods) for the portion of the fiscal year ending with the
last day of such quarterly period, setting forth in each case (without
related footnotes) in comparative form corresponding unaudited figures
from the preceding fiscal year, commencing in fiscal year 1994, all in
reasonable detail and satisfactory in scope to Lessor and the Agent and
accompanied by a written statement of an Authorized Officer of Lessee
to the effect that such financial statements fairly represent Lessee's
financial
18
condition and results of operations;
(b) as soon as practicable and in any event within 120 days
after the end of each fiscal year of Lessee (commencing with the fiscal
year ended December 31, 1995), a balance sheet of Lessee as of the end
of such year and the related statements of income, cash flow, and
changes in financial position of Lessee, for such year, which financial
statements shall include an accounting of revenues (if any) received
under the Power Purchase Agreement and other income received during
such year setting forth in each case in comparative form corresponding
figures from the preceding fiscal year, in each case accompanied by an
audit report (with the accompanying management letter) thereon of a
firm of independent public accountants reasonably satisfactory to
Lessor and Agent;
(c) simultaneously with the filing thereof with the Internal
Revenue Service, a copy of Lessee's Federal income tax return;
(d) during the Lease Term, all written communications
amending, modifying or affecting any Governmental Approvals then
required to be in effect, certified as a true copy thereof by a duly
authorized representative of Lessee; and
(e) from time to time, with reasonable promptness, such
further information regarding the business, affairs and financial
condition of Lessee, as Lessor or Agent may reasonably request.
SECTION 8.2. CERTIFICATE; OTHER INFORMATION. Lessee shall furnish or
cause to be furnished to Lessor and Agent the following:
(a) concurrently with the delivery of the audited financial
statements referred to in Section 8.1 with respect to periods after the
Effective Date, a certificate of the independent public accountants
that certified such financial statements stating that in making the
examination necessary for the audit thereof no knowledge was obtained
of any Default or Event of Default under the Amended and Restated
Lease, except as specified in such certificate;
(b) concurrently with the delivery of the unaudited financial
statements referred to in Section 8.1 with respect to periods after the
Effective Date, an Officer's Certificate of Lessee stating that Lessee
during the period covered by such financial statements has observed and
performed in all material respects all of its covenants and other
agreements and satisfied in all material respects every condition
contained in the Amended and Restated Lease and this Agreement and the
other Transaction Documents to be observed, performed or satisfied by
it, and that Lessee has obtained no knowledge of any Default or Event
of Default by Lessee under any Transaction Document at any time during
such period or on the date of such certificate, or, if such has
occurred, specifying the nature and status thereof, the period of
existence thereof and what action Lessee has taken or proposes to take
to
19
remedy such Default or Event of Default by Lessee under any Transaction
Document;
(c) promptly upon receipt thereof, copies of the following
notices, reports or certificates delivered pursuant to the Transaction
Documents:
(i) with respect to periods after the Effective
Date, all communications delivered to or by Lessee under any
of the Principal Project Agreements, except for communications
of a nature or category, if any, as to which non-delivery has
been approved in writing by Lessor or Agent, as the case may
be;
(ii) with respect to periods after the Effective
Date, all material communications made pursuant to the Power
Purchase Agreement; and
(iii) with respect to periods after the Effective
Date, notice of any material claim by either party to the
Power Purchase Agreement against the other;
(d) promptly upon receipt thereof, a copy of each report
delivered to Lessee by the independent public accountants that certify
Lessee's financial statements in connection with any annual or interim
audit of its books;
(e) promptly, such additional financial and other information
with respect to Lessee or the Facility or the Site as Lessor or Agent,
as the case may be, may from time to time reasonably request; and
(f) as soon as practicable and in any event within 45 days
after the end of each month, operating statements for such month, which
operating statements shall include information as the Agent may
reasonably request.
SECTION 8.3. CORPORATE EXISTENCE. Lessee covenants that, so long as it
has any obligation under any Transaction Document other than under this Section
8.3, it will at all times cause to be done all things necessary to maintain,
preserve and renew its existence as a corporation organized under the laws of a
state of the United States of America.
SECTION 8.4. NOTICES. Lessee shall promptly upon obtaining knowledge of
any of the following occurrences, deliver to Lessor and Agent, in sufficient
quantities for each of the Banks, notice in writing of the following:
(a) notice of any Default or Event of Default under the
Amended and Restated Lease or any Transaction Document, specifically
stating that a Default or an Event of Default, as the case may be, has
occurred and describing such Default or Event of Default;
(b) the occurrence of any Event of Eminent Domain, a
certificate of Lessee setting forth the details thereof and the action
which Lessee is taking or proposes to take
20
with respect thereto;
(c) the occurrence of any casualty, damage or loss to or in
respect of the Project in an amount greater than $10,000, notice
thereof, together with copies of any document relating thereto
(including copies of any claim) in possession or control of Lessee or
any agent of Lessee;
(d) any litigation or proceeding affecting Lessee, the Site or
the Facility involving claims of $10,000 or more or relating to any
injunction or similar action against any material aspect of the
Project;
(e) the cancellation of any insurance required to be
maintained pursuant to Article VI of the Amended and Restated Lease;
(f) the assertion of any Default or Event of Default under any
Principal Project Agreement or the occurrence of an Event of Loss;
(g) any change in the business, operations, property,
prospects or financial or other conditions of any Principal Project
Participant which could materially adversely affect the Project or such
Principal Project Participant's ability to perform its obligations, if
any, under any Principal Project Agreement to which it is a party and
of an actual change of law, rule or regulation which has or would have
a Material Adverse Effect;
(h) promptly upon the giving or receipt thereof by Lessee, a
copy of each written notice or demand given by or received by Lessee
under this Agreement, the Amended and Restated Lease or any other
Transaction Document;
(i) any assertion by any Governmental Authority or other
Person that the Site, the Project or any portion thereof or the
operation thereof does not comply in a material respect with a
Requirement of Law or Governmental Approval; and
(j) an event or circumstance that with the passage of time of
the giving of notice would result in a loss of the Qualifying Facility
status of the Facility.
SECTION 8.5. FURTHER ASSURANCES, ETC. Lessee shall take or cause to be
taken all action required to maintain and preserve the Lien of the Lessee
Security Agreement. Lessee will promptly and duly cause to be taken, executed,
acknowledged or delivered all such further acts, conveyances, documents and
assurances (including, without limitation, any financing statements,
continuation statements or similar filings) as any party hereto or to the
Transaction Documents may from time to time reasonably request in order more
effectively to carry out the intent and purposes of this Agreement and the
Transaction Documents and the transactions contemplated hereby or thereby.
SECTION 8.6. INSPECTION OF PROPERTY. Lessee shall permit or cause to be
permitted any
21
Person designated in writing by Lessor or any Bank Party as a Person acting on
its behalf to visit and inspect the Facility, including the Operating Logs,
Maintenance Records, and Regulatory Records at such Person's expense and after
reasonable notice, and to discuss the affairs, finances and accounts of Lessee
with the officers and employees of the manager of the Facility or Lessee, as the
case may be, and their officers and employees, and to discuss the reports of the
accountants of Lessee with such accountants (PROVIDED, HOWEVER, that a
representative of Lessee shall have the right to be present at such
discussions), all at such reasonable times and as often as Lessor or any Bank
Party may reasonably request. During the Lease Term, Lessee will also permit or
cause to be permitted any Independent Engineer to visit and inspect the
Facility, at the expense of the Bank Parties and after reasonable notice, at
such reasonable times and as often as Agent may reasonably request. In the event
an Independent Engineer certifies that, in its professional opinion, there are
substantial defects in the Facility, upon receipt of a copy of such
certification giving the details of such substantial defects, Lessee shall
either give or cause to be given to Lessor and Agent a reasonably detailed
written explanation of the reasons why each such defect does not require
correction or shall correct or cause to be corrected each such defect within a
reasonable time.
SECTION 8.7. CONDUCT OF BUSINESS. Lessee shall at all times engage
solely in the business of leasing the Site and the Facility, as the same may be
modified from time to time as permitted by the Transaction Documents. Lessee
will do or cause to be done all things necessary and desirable to (i) promptly
and diligently enforce its rights under the O&M Agreement and each other
Transaction Document in which it has rights, by assignment or otherwise, and
(ii) comply in all respects with all Requirements of Law and Governmental
Approvals applicable to it.
SECTION 8.8. LIMITATION ON DEBT. Lessee shall not at any time incur or
in any manner become liable with respect to or permit to remain outstanding any
Debt, except (a) unsecured current liabilities (not the result of borrowing)
incurred in the ordinary course of business of Lessee for current purposes, not
represented by any note or other evidence of Debt to the extent not in excess of
$100,000 at any one time outstanding, (b) Debt of the Lessee arising under the
Amended and Restated Lease, (c) Debt incurred pursuant to the Amended and
Restated Lessee Working Capital Loan Agreement, (d) Debt that may be incurred on
or after the Effective Date by the Lessee pursuant to the Agreement, dated
November 30, 1992, among the Lessor, the Lessee, the Agent and U.S. Generating
Company, and (e) Debt incurred in connection with the Settlement Agreement.
SECTION 8.9. LIMITATIONS ON LIENS. Lessee shall not create or suffer to
exist or permit any Lien upon or with respect to any of its properties except
liens of the type described in clauses (iii), (iv) and (vii) of the definition
of Permitted Liens, and Lessee shall not create or suffer to exist or permit any
Lien upon or with respect to any of the Collateral except Permitted Liens and
Lessor Liens.
SECTION 8.10. PROHIBITION OF FUNDAMENTAL CHANGES. Lessee will not: (i)
enter into any transaction of merger or consolidation, (ii) change its form of
organization, (iii) liquidate or dissolve itself (or suffer any liquidation or
dissolution), or (iv) change its business from that of leasing an electric
generating facility which is a Qualifying Facility.
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SECTION 8.11. PROHIBITION ON DISPOSITION OF ASSETS. Lessee shall not
sell, lease (as lessor), transfer or otherwise dispose of any of the Collateral
except as permitted by Article V of the Amended and Restated Lease or sell,
lease (as lessor), transfer or otherwise dispose of any of its assets except as
permitted by Section 10.02 of the Amended and Restated Lease.
SECTION 8.12. TRANSACTIONS WITH AFFILIATES AND OTHERS. Notwithstanding
any other provision of this Agreement, Lessee shall not (i) directly or
indirectly, purchase, acquire, exchange or lease any property from, or sell,
transfer or lease any property to, or borrow any money from, or enter into any
management or similar fee agreement with, any Affiliate or any officer, director
or employee of Lessee, or (ii) enter into any other transaction or arrangement
or make any payment to or otherwise deal with, in the ordinary course of
business or otherwise, any Affiliate of Lessee except, in the cases of both
clauses (i) and (ii) of this Section 8.12, transactions contemplated by the
Transaction Documents.
SECTION 8.13. DEFEND TITLE. Lessee shall at all times during the Lease
Term, at its own cost and expense warrant and defend its leasehold title to the
Facility and the Site and its easement rights to the Easements against the
claims and demands of all Persons whomsoever, except with respect to Permitted
Liens and Lessor Liens.
SECTION 8.14. PLANS. Lessee shall cause to be maintained at all times
at the Facility an accurate and complete set of operation and maintenance
manuals, vendor manuals and an accurate and complete set of "as built" drawings
for the Facility and an "as built" survey of the Facility Site, as and when
required by the Transaction Documents, which shall be amended and supplemented
from time to time to reflect on a current basis all improvements, additions and
modifications to the Facility, and a copy of the Operator's daily logs for not
less than the prior three years of operation.
SECTION 8.15. NO AMENDMENTS OR ASSIGNMENTS; COMPLIANCE. Lessee shall
not amend, modify, waive compliance with or accept a waiver of compliance with
any provision of, terminate, assign any rights under, or consent to the
assignment by any other Person of any right such Person may have under, or agree
to, or permit or exercise any right in respect of any amendment, modification,
termination or waiver of compliance with any provision of, or any such
assignment of any rights under, any Transaction Document to which it is a party
(other than as required by the terms of such Transaction Document) without the
prior written consent of Lessor and Agent and the parties hereto agree that no
such amendment, modification, waiver, termination, assignment or agreement shall
be binding or effective without such consent, PROVIDED, however, that in any
event, unless an Event of Default has occurred and is continuing under the
Amended and Restated Reimbursement Agreement, Lessee shall have the right to the
exclusion of Agent, to (a) amend, modify, terminate, and give any waivers or
consents under, or otherwise exercise any and all rights with respect to the
Amended and Restated Lessee Working Capital Loan Agreement and the Tax Indemnity
Agreement, and (b) amend the Amended and Restated Lease to make adjustments to
Basic Rent (Equity) as contemplated by Section 3.04 thereof.
23
SECTION 8.16. PAYMENT OF TAXES AND CLAIMS. Lessee shall before
delinquency pay and discharge or cause to be paid and discharged all taxes,
assessments and governmental charges or levies lawfully imposed upon it or upon
its income or profits or upon any of the Collateral and all lawful claims or
obligations that, if unpaid, would become a Lien upon the Collateral, real or
personal, or upon any part thereof; PROVIDED that Lessee shall not be required
to pay or cause to be paid any such tax, assessment, charge, levy, claim or
obligation if (a) the applicability, validity or amount thereof shall currently
be diligently contested in good faith by appropriate proceedings timely
instituted and diligently pursued, (b) Lessee sets aside on its books adequate
reserves with respect to the contested items in accordance with GAAP, (c) during
the period of such contest, the enforcement of any contested item is effectively
stayed and (d) in the sole determination of each of Lessor and Agent, the
non-payment of such contested item will not result in a material risk of loss to
the Project and will not affect Lessee's ability to fulfill its obligations
under the Amended and Restated Lease, this Agreement, the Lessee Security
Agreement or any other Transaction Document to which it is a party. Lessee shall
promptly pay or cause to be paid any valid, final judgment enforcing any such
tax, assessment, charge, levy or claim and cause the same to be satisfied of
record unless such judgment is then being appealed and enforcement thereof is
stayed pending appeal.
SECTION 8.17. BOOKS AND RECORDS. Lessee shall, at all times keep or
cause to be kept proper books and records of all of its business and financial
affairs and all of the business and financial affairs of the Project in
accordance with GAAP. Lessee shall keep its books and records at the address set
forth for it in the Notice Provisions unless it has given notice of any such
change in accordance with the terms of Section 8.23 hereof.
SECTION 8.18. MAINTENANCE OF ADEQUATE FUEL SUPPLY. Lessee shall at all
times maintain a supply of Fuel and limestone adequate for the operation of the
Facility for a period from the Effective Date to the scheduled maturity date of
the Bonds.
SECTION 8.19. ADDITIONAL CONTRACTS. Lessee shall not enter into any
agreements of any nature, except Additional Contracts, without the prior written
consent of Lessor. In the event that Lessee proposes to enter into any
Additional Contract, prior to the execution of such Additional Contract, Lessee
shall (a) use its best efforts to enable Lessor to become a party to such
Additional Contract in lieu of Lessee, at the option of Lessor, and (b) use its
best efforts to cause the party or parties to such Additional Contract (other
than Lessee) to simultaneously enter into a consent and agreement with respect
to such Additional Contract similar in form and substance to the Consents.
SECTION 8.20. GUARANTEES. Except as contemplated by the Transaction
Documents, Lessee shall not agree, contingently or otherwise, to purchase or
repurchase the Debt of, or assume, Guaranty (directly or indirectly or by
instrument having the effect of assuring another's payment or performance of any
obligation or capability of so doing, or otherwise), endorse or otherwise become
or remain liable, directly or indirectly, in connection with the obligations,
stock or dividends of any Person except by endorsement of negotiable instruments
for deposit or collection
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in the ordinary course of business.
SECTION 8.21. ABANDONMENT. Lessee shall not permit any Abandonment or
otherwise cease to diligently pursue the operation of the Project or materially
and voluntarily reduce the operation of the Project (except to the extent
required by customary maintenance procedures).
SECTION 8.22. INVESTMENTS. Lessee shall not make any investments
(whether by purchase of stock, bonds, notes or other Securities, loan, advance
or otherwise) other than Permitted Investments.
SECTION 8.23. CHANGE OF NAME; OFFICE. Lessee shall not change its name
or the location of its chief executive office or commence doing business under
any other name or at any other office except on 30 days' prior written notice to
Lessor and Agent.
SECTION 8.24. RESTRICTED PAYMENTS. Lessee shall not declare or pay any
dividends on, or make any other distribution or payment on account of, or
redeem, retire, purchase or otherwise acquire, directly or indirectly, any
shares of any class of stock of Lessee, whether now or hereafter outstanding, or
make any other distribution in respect thereof, either directly or indirectly,
whether in cash, property or in obligations of Lessee; PROVIDED, HOWEVER, that
Lessee may make such distributions from funds made available to Lessee pursuant
to item SEVENTEENTH of Section 5.02(a)(Y) of the Disbursement Agreement.
SECTION 8.25. LICENSES AND GOVERNMENTAL APPROVALS; MAINTENANCE OF
PROPERTIES. Without limiting its express obligations contained elsewhere herein,
Lessee shall at all times preserve and keep in force and effect all rights,
franchises, licenses and permits necessary or material to the conduct of its
business, the operation of the Project or the maintenance of its existence and
will maintain and keep its property and the Collateral in good repair, working
order and condition (except for normal wear and tear), and from time to time
during the Lease Term, as specified in Articles IV and V of the Amended and
Restated Lease, make all needful and proper repairs, renewals and replacements
so that the leasing, operation and maintenance of the Facility and the Site and
any other business material to Lessee carried on in connection therewith may be
properly and advantageously conducted at all times.
SECTION 8.26. NO SUBSIDIARIES. Lessee shall not acquire or create any
Subsidiary.
SECTION 8.27. ERISA PLAN. Lessee shall comply in all respects with the
applicable provisions of ERISA and the regulations and interpretations
thereunder. Neither Lessee nor any of its ERISA Affiliates shall maintain or
have any obligation to contribute to any Plan or shall have any liability under
Title IV or ERISA by reason of the termination of any Plan or the withdrawal
from any Multiemployer Plan.
SECTION 8.28. ENVIRONMENTAL MATTERS. (a) Lessee shall comply with all
25
Environmental Laws applicable to ownership, operation or use of the Site or the
Project, and shall cause the Operator and all tenants and other persons
occupying the Site or the Project to comply with all such Environmental Laws,
shall immediately pay or cause to be paid all costs and expenses incurred in
such compliance, and shall keep or cause to be kept the Site and the Project
free and clear of any Liens imposed pursuant to such Environmental Laws. Lessee
shall not generate, use, treat, store, release, transfer, discharge or dispose
of, or permit the generation, use, treatment, storage, release, transfer,
discharge or disposal of Hazardous Materials on the Site or the Project, or
transport or permit the transportation of Hazardous Materials to or from the
Site or the Project except in compliance with all applicable Environmental Laws.
(b) Agent and Lessor shall each have the right but not the obligation
to participate in, as a party if it so elects, any legal proceeding or action
initiated in connection with any Environmental Notice. Without the prior written
consent of the Majority Banks, Lessee shall not enter into any settlement,
consent or compromise with respect to any Environmental Notice that might impair
the value of the Collateral; PROVIDED, HOWEVER, that such prior consent shall
not be necessary for Lessee to take any removal or remedial action if ordered by
a court of competent jurisdiction or if the presence of Hazardous Materials at
the Site or the Project poses an immediate significant threat to the health,
safety or welfare of any individual or otherwise requires an immediate removal
or remedial response.
(c) During the Lease Term, Lessee shall conduct, or cause to be
conducted, any investigation, study, sampling and testing, and undertake any
cleanup, removal, remedial or other action necessary to remove and clean up all
Hazardous Materials from the Site of the Facility in accordance with the
requirements of all applicable Environmental Laws and in accordance with orders
and directives of all Governmental Authorities.
SECTION 8.29. NO CONTRACTS WITH UTILITIES. Except for the Transaction
Documents, Lessee shall not enter into any contract or arrangement in which any
Utility is a party or has a material interest, except for contracts or
arrangements in the ordinary course of business of such Utility under standard
tariffs or negotiated rates approved or on file with and allowed to go into
effect by a regulatory authority having jurisdiction, unless Lessee (i) delivers
to Lessor in connection therewith an opinion of counsel acceptable to Lessor to
the effect that entering into such contract or arrangement will not adversely
affect the status of the Facility as a Qualifying Facility; and (ii) obtains the
written consent of Lessor in connection therewith. For the purposes of this
Section, "Utility" shall mean an "electric utility" or an "electric utility
holding company," as such terms are used in PURPA and the regulations thereunder
(18 CFR Part 292).
SECTION 8.30. COMPLIANCE WITH TRANSACTION DOCUMENTS. Subject to Section
8.32, Lessee shall comply with and cause the Operator to comply with the terms
of all Transaction Documents as necessary for the operation of the Facility in
accordance with the standards set forth therein, and shall pursue and enforce
its rights under, and will not waive compliance with or forbear or delay in
exercising its rights under any of the Principal Project Agreements.
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SECTION 8.31. COMPLIANCE WITH LAWS. Lessee shall not use or operate (or
permit to be used or operated) the Facility, the Site or the Easements in
violation of any Requirements of Law or in violation of any certificate,
license, Governmental Approval or registration relating to the Facility or the
Site. Lessee shall do or cause to be done all things necessary to obtain and to
maintain in full force and effect all Government Approvals that are necessary
from time to time (i) to conduct its business as currently conducted and as
proposed to be conducted, (ii) to produce and sell electric energy, (iii) for
the leasing, operation, management and use of the Facility as a Qualifying
Facility, and (iv) to perform its obligations under the Transaction Documents.
SECTION 8.32. OPERATIONS AND MAINTENANCE AGREEMENT AND MANAGEMENT
SERVICES AGREEMENT. (a) Lessee shall maintain the O&M Agreement in full force
and effect and shall not terminate or replace the Operator under the O&M
Agreement without the prior written consent of Lessor and Agent.
(b) Lessee shall maintain the Project Management Agreement in full
force and effect and shall not terminate or replace the Project Manager under
the Project Management Agreement without the prior written consent of Lessor and
Agent.
SECTION 8.33. QUALIFYING FACILITY. Lessee shall not engage in any
activities or, to the extent within its control, permit any actions or omissions
that would cause the Project to fail to meet the criteria for a Qualifying
Facility.
SECTION 8.34. COVENANTS OF THE LESSEE. The covenants and agreements of
or with respect to the Lessee under this Article VIII shall remain in full force
and effect until the Lease Termination Date.
SECTION 8.35. LESSEE CONSENT TO TRANSACTION DOCUMENTS. Lessee hereby
acknowledges and consents to all the terms and provisions of the Transaction
Documents, it being understood that such consent shall not be construed to
require its consent to any future supplement to, or amendment, waiver, or
modification of the terms of any such Transaction Documents.
ARTICLE IX
COVENANTS OF EPC
During any period during which Lessee or EPC has any obligation under
any Transaction Document EPC covenants as follows:
SECTION 9.1. REPORTING REQUIREMENTS; AUDITS. (a) EPC shall furnish to
Lessor and Agent:
(i) as soon as practicable and in any event within 60 days
after the end of the
27
first, second and third quarterly accounting periods of each fiscal
year of EPC (commencing with the quarter ending September 30, 1995), an
unaudited balance sheet of EPC as of the last day of such quarterly
period and the related unaudited statements of income, cash flow, and
changes in financial position of EPC for such quarterly period and (in
the case of second and third quarterly periods) for the portion of the
fiscal year ending with the last day of such quarterly period, setting
forth in each case (without related footnotes) in comparative form
corresponding unaudited figures from the preceding fiscal year,
commencing in fiscal year 1994;
(ii) as soon as practicable and in any event within 120 days
after the end of each fiscal year of EPC (commencing with the fiscal
year ended December 31, 1995), a balance sheet of EPC as of the end of
such year and the related statements of income, cash flow, and changes
in financial position of EPC for such year, in each case accompanied by
an audit report (with the accompanying management letter) thereon of a
firm of independent public accountants reasonably satisfactory to
Lessee, Lessor and Agent;
(iii) within five (5) days after the filing thereof a copy of
all filings by EPC required by any Requirement of Law, including
securities laws; and
(iv) from time to time, with reasonable promptness, such
further information regarding the business, affairs and financial
condition of EPC, as Lessor or Agent may reasonably request.
(b) EPC shall allow Lessor and Agent, or either of them, to cause an
audit to be made of the books and financial records of EPC, at Lessor's or the
Agent's expense, by auditors designated by such Persons and reasonably
acceptable to EPC; and EPC shall, upon the request of Lessor and Agent, or
either of them, cause its own accountants to conduct such an audit, at EPC's
expense.
SECTION 9.2. CORPORATE EXISTENCE. EPC covenants that, so long as it has
any obligation under any Transaction Document other than under this Section 9.2,
it will (a) not commence a voluntary case under the Federal Bankruptcy Code,
file a petition seeking to take advantage of any law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or readjustment of debts
or otherwise apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or all or
a substantial part of its property, (b) not merge, reorganize or consolidate
into or with any other entity, unless the surviving entity (i) assumes all of
the obligations and liabilities and agrees to perform all of the duties of EPC
under each of the Transaction Documents to which EPC is a party, and (ii) if
such surviving entity holds any stock of Lessee, deliver to Lessor and Agent an
opinion of counsel, in form and substance and from counsel satisfactory to
Lessor and Agent, to the effect that such merger, reorganization or
consolidation will not have any adverse effect on the status of the Facility as
a Qualifying Facility, and (c) not voluntarily liquidate or dissolve, merge,
reorganize or consolidate, or otherwise change its corporate structure in such a
way as to change or impair its corporate existence, or take any action toward
such end, except in accordance with clause (b) above.
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SECTION 9.3. NOTICES. EPC shall promptly upon obtaining knowledge of
any of the following occurrences, deliver to Lessor and Agent notice in writing
of the following:
(a) notice of any Default or Event of Default under any
Transaction Document, specifically stating that a Default or an Event
of Default, as the case may be, has occurred and describing such
Default or Event of Default;
(b) any litigation or proceeding affecting EPC, or relating to
any injunction or similar action against any material aspect of the
Project.
(c) the assertion of any Default or Event of Default under any
Principal Project Agreement or the occurrence of an Event of Loss;
(d) any assertion by any Governmental Authority or other
Person that EPC, in connection with the consummation or performance of
any Transaction Document to which it is a party, the Site, the Project
or any portion thereof or the operation thereof does not comply in a
material respect with a Requirement of Law or Governmental Approval;
and
(e) an event or circumstance relating to Lessee or EPC that
with the passage of time of the giving of notice would result in a loss
of the Qualifying Facility status of the Facility.
SECTION 9.4. FURTHER ASSURANCES, ETC. EPC will promptly and duly cause
to be taken, executed, acknowledged or delivered all such further acts,
conveyances, documents and assurances (including, without limitation, any
financing statements, continuation statements or similar filings) as any party
hereto or to the Transaction Documents to which EPC is a party may from time to
time reasonably request in order more effectively to carry out the intent and
purposes of this Agreement and the Transaction Documents to which EPC is a party
and the transactions contemplated hereby or thereby.
SECTION 9.5. NO AMENDMENTS OR ASSIGNMENTS; COMPLIANCE. EPC shall not
amend, modify, waive compliance with or accept a waiver of compliance with any
provision of, terminate, assign any rights under, or consent to the assignment
by any other Person of any right such Person may have under, or agree to, or
permit or exercise any right in respect of any amendment, modification,
termination or waiver of compliance with any provision of, or any such
assignment of any rights under, any Transaction Document to which it is a party
(other than as required by the terms of such Transaction Document) without the
prior written consent of Lessor and Agent and the parties hereto agree that no
such amendment, modification, waiver, termination, assignment or agreement shall
be binding or effective without such consent, PROVIDED, however, EPC may,
without the consent of any other person, contractually assign its right to
receive any or all dividends distributed from time to time by Lessee to EPC in
accordance with Section 8.24 hereof.
29
SECTION 9.6. SEPARATE OPERATION OF LESSEE. EPC at all times when it is
the record or beneficial owner of a majority of the capital stock of Lessee,
shall at all times until the Obligations shall have been discharged in full,
cause the business of EPC to be conducted separately and independently from the
business of Lessee. In furtherance of such obligation, but without limiting its
generality, EPC shall:
(a) cause (i) either the chief executive officer or chief
financial officer of Lessee to be a person who is not an officer of EPC
and (ii) the board of directors of Lessee to be not identical with the
officers or directors of EPC;
(b) maintain its principal executive office and any other
offices physically separate and apart from any office of the Lessee;
(c) maintain its books, records and accounts separate and
apart from the books, records and accounts of Lessee;
(d) maintain its funds and other assets separate and apart
from the funds and assets of the Lessee, without commingling of any
kind;
(e) not enter into any agreement, contract, arrangement or
understanding of any kind with Lessee or any officer or director of
Lessee, other than in an arm's-length transaction as between unrelated
parties;
(f) maintain the separate and distinct corporate existence of
Lessee;
(g) not consolidate the operations of Lessee for any purpose,
including financial reporting, or refer to Lessee in any internal or
external communication as a division or other unit of EPC or otherwise
indicate that the assets, rights or obligations of Lessee under any
Transaction Document, in respect of the Project or otherwise are
assets, rights or obligations of EPC; PROVIDED, that EPC may
consolidate the preparation of tax returns and the payment of taxes
with that of Lessee and any other subsidiary of EPC;
(h) observe all corporate formalities as a shareholder of
Lessee, including the holding of annual meetings to elect the directors
of Lessee and maintenance of minutes;
(i) not, as the shareholder of Lessee, vote the capital stock
of Lessee in favor of any resolutions approving the commencement of any
proceeding which would constitute an Event of Default under Section
13.01 of the Amended and Restated Lease; and
(j) disclose all material facts relating to the formation and
capitalization of Lessee in appropriate public announcements as
required by any Requirement of Law, which disclosure shall include the
statement that certain assets have been transferred to Lessee and will
not be available to meet the claims of the creditors of EPC.
30
ARTICLE X
INDEMNITY
31
SECTION 10.1. INDEMNITY.
32
(a) CLAIMS. Except to the extent provided in Section 10.1(b),
from and after the Lease Commencement Date, Lessee hereby indemnifies
each Indemnitee against, and agrees to protect, save and keep harmless
each such Indemnitee from and against, on an After-Tax Basis, any and
all liabilities, obligations, losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses, disbursements, causes of
action and other legal proceedings of whatsoever nature, including
legal fees and expenses, of whatsoever kind and nature (any of the
foregoing being called a "CLAIM") imposed on, incurred by or asserted
against such Indemnitee (whether because of an act or omission by such
Indemnitee or otherwise (including without limitation negligence of any
Indemnitee), whether or not also indemnified against by any other
Person under any other document, whether or not the transactions
contemplated hereby are consummated, whether or not the Amended and
Restated Lease has terminated or expired, and whether or not based on
strict liability or otherwise) in any way relating to or arising out of
(i) the Project and any other property relating to the transactions
contemplated by the Transaction Documents or any portion thereof or
interest therein or the imposition of any Lien other than Lessor Liens
(or incurrence of any liability to refund or pay over any amount as a
result of the Lien) on all or any part thereof or any interest in any
thereof (including, without limitation, any claim or penalty arising
from (A) violations of Laws or actions in tort, (B) latent or other
defects, whether or not discoverable by such Indemnitee, Lessee or any
other Person, (C) loss of or damage to any property or the environment,
(D) contaminants, Hazardous Materials or other waste, (E) death of or
injury to any Person, or (F) any claim for patent, trademark or
copyright infringement), (ii) the construction, requisition,
acquisition, acceptance, rejection, delivery, non-delivery, transport,
assembly, possession, repossession, control, condition, dismantling,
return, abandonment, installation, storage, replacement, manufacture,
subleasing, modification, transfer of title, rebuilding, rental,
importation, exportation, acquisition, purchase, sale, financing,
refinancing, leasing, ownership, maintenance, repair, redelivery,
alteration, insuring, control, use, operation or disposition of all or
any part of the Project and any other property relating to the
transactions contemplated by the Transaction Documents or any portion
thereof or interest therein, (iii) the Transaction Documents or the
issuance of the Senior Debt or any other document executed and
delivered in connection with the consummation or confirmation of the
transactions contemplated by the Transaction Documents or any
Indemnitee's interest in any of the foregoing, or the execution,
amendment, supplement, issuance or delivery of any of the foregoing, or
(A) the enforcement by any Indemnitee of any of its rights thereunder
or any transaction contemplated thereby, (B) payments made pursuant to
any of the foregoing, (C) any action or inaction by Lessee or Lessor in
connection with any thereof or (D) the sale of electricity or steam or
other products from the Project, (iv) the Collateral or the respective
property, or the income or other proceeds received with respect to the
property, held by Agent under the Security Documents and Disbursement
Agent under the Disbursement Agreement, (v) the enforcement of any
agreement, restriction or legal requirement affecting the Project and
any other property relating to the transactions contemplated by the
Transaction Documents or any portion thereof or interest therein, (vi)
any right of any Bank Party to receive payment from Lessor as
indemnification under the Amended and Restated Xxxxxxxxxxxxx
00
Xxxxxxxxx, (xxx) any claim for any finder's fee, brokerage commission
or similar compensation in connection with the transactions
contemplated by the Transaction Documents, or (viii) otherwise with
respect to or in connection with the transactions contemplated by the
Transaction Documents, whether similar or dissimilar to any of the
foregoing.
(b) EXCLUSIONS FROM GENERAL INDEMNITY. The provisions of
Section 10.1(a) and the indemnities contained therein shall not extend
to any Claim with respect to any particular Indemnitee:
(i) to the extent that such Claim arises from acts,
omissions or events which occur after the date on which all
obligations of Lessee (including those under Section 8.01 of
the Amended and Restated Lease) shall have terminated; or
(ii) to the extent that such Claim arises from the
willful misconduct or gross negligence of such Indemnitee,
other than the gross negligence or willful misconduct imputed
to such Indemnitee (A) as a result of its ownership of or
other interest in the Project and any other property relating
to the transactions contemplated by the Transaction Documents
or any portion thereof or interest therein or (B) as a result
of Lessee's acting on behalf of such Indemnitee; or
(iii) which is a Tax, it being understood that
Section 10.2 and the Tax Indemnity Agreement exclusively
provide for the Lessee's liability with respect to Taxes; or
(iv) with respect to Lessor or any Partner, as the
case may be, to the extent that such Claim arises out of a
Lessor QF Casualty or a voluntary offer or sale of its
interest in the Project by Lessor or such Partner to any
Person other than Lessee; or
(v) with respect to Lessor or any Partner or
affiliate of either thereof to the extent that such Claim
arises from the incorrectness of any representation or
warranty of such Person contained in or made pursuant to this
Agreement or any of the other Transaction Documents; or
(vi) with respect to Lessor or any Partner or
affiliate of either thereof to the extent that such Claim
arises from the failure of such Person to perform or observe
any covenant, agreement or condition on its part required to
be performed or observed in this Agreement or any other
Transaction Document (except to the extent such failure was
caused by a failure by Lessee or any affiliate thereof to
perform its obligations under any Transaction Documents, but
excluding from this exception any nonwillful failure by Lessee
to cause compliance by another Person with any terms of
any.Transaction Document where such compliance has been
delegated or assigned to such other Person); or
34
(vii) notwithstanding the terms of the last sentence
of Section 8.01(c) of the Amended and Restated Lease, and only
in the event that EPC owns all of the voting common stock of
Lessee, with respect to Lessor, any Partner or any affiliate
thereof to the extent that such Claim results from any matters
whatsoever as to which such Person caused such Claim or knew
of the existence of or factual basis for such Claim; except
that this exclusion from Lessee's indemnification obligations
shall not apply with respect to any Claim arising under
clauses (a)(i)(B), (C) and (D) above to the extent such Claim
was known to Lessee and not disclosed to Lessor or any
Partner.
(c) NO GUARANTY. Nothing act forth in this Section 10.1 shall
constitute a guaranty by Lessee that the Facility will have any
particular useful life or residual value at the end of the Lease Term.
(d) NOTICE AND ACTIONS. If any Indemnitee or Lessee shall have
knowledge of any Claim hereby indemnified against, such Indemnitee or
Lessee, as the case may be, shall give prompt written notice thereof in
reasonable detail describing such Claim to Lessee or such Indemnitee,
as the case may be, but (i) neither a failure by Lessee so to notify an
Indemnitee nor a failure by an Indemnitee so to notify Lessee shall
relieve Lessee from any liability which it may have to such Indemnitee,
and (ii) nothing contained in this sentence shall be construed to limit
the right of Lessee to pursue any claim it may have against such
Indemnitee in a court of law or otherwise. Lessee may, at its expense,
resist and defend any action, suit or proceeding in respect of which
Lessee would be required to indemnify hereunder, or cause the same to
be resisted and defended, by counsel for the insurer of the liability
or by counsel designated by Lessee and reasonably approved by such
Indemnitee. In the event Lessee assumes the defense of any such action,
any Indemnitee shall have the right to employ separate counsel in such
action and participate therein, and the fees and expenses of such
counsel shall be at the expense of such Indemnitee except that such
fees and expenses shall be for the account of Lessee if (x) the
employment of such counsel has been specifically authorized by Lessee,
or (y) the named parties to such action (including any impleaded
parties) include both such Indemnitee and Lessee and representation of
such Indemnitee and Lessee by the same counsel would be inappropriate
under applicable standards of professional conduct due to actual or
potential conflicting interests between them. Lessee shall not be
liable for any settlement of any such action effected without its
consent (which consent shall not be unreasonably withheld), but if such
action is settled with the consent of Lessee or if there is a final
judgment against the Indemnitee in any such action, Lessee agrees to
indemnify and hold harmless any Indemnitee from and against any loss or
liability by reason of such settlement or judgment hereby indemnified
against. Notwithstanding any of the foregoing to the contrary, Lessee
shall not be entitled to assume responsibility for and control of any
such judicial or administrative proceedings (1) while a Default or
Event of Default under any Transaction Document shall have occurred and
be continuing, (2) if such proceedings will involve a material danger
of the sale, forfeiture or
35
loss of, or the creation of any material Lien (other than a Permitted
Lien) on, the Project or any other property relating to the
transactions contemplated by the Transaction Documents or any portion
thereof or interest therein, or (3) if such proceedings will involve
the potential imposition of criminal liability on any Indemnitee. Upon
the payment in full of any indemnities pursuant to this Section 10.1 by
Lessee, it shall be subrogated to any right of the Indemnitee in
respect of the matter against which indemnity shall have been given.
Nothing under this Section 10.1 shall give any right to any Person
other than Lessee and the Indemnitees, including any right of
subrogation.
SECTION 10.2. GENERAL TAX INDEMNIFICATION. (a) Except as provided in
Section 10.2(c), and subject to the Lessee's contest rights under Section
10.2(f), from and after the Lease Commencement Date, Lessee agrees to pay and
assume liability for, and to indemnify, protect, defend, save and keep harmless
each Indemnitee, on an After-Tax Basis, from and against any and all fees
(including, without limitation, license, filing, recording, documentation and
registration fees), taxes, impositions, levies, assessments, impositions, duties
or other charges or withholdings of any nature whatsoever (together with any
related interest, penalties, fines or additions to tax), including, without
limitation, rental, income, sales, use, transfer, leasing, property, value
added, ad valorem, excise (including, without limitation, any excise Taxes
imposed by section 4975 of the Code), receipts, stamp, withholding, franchise or
license taxes, imposed on or with respect to or asserted against any Indemnitee,
the Lessee, the Project or any component or Part thereof or any other property
relating to the transactions contemplated by the Transaction Documents, the
Senior Debt, the Collateral or any portion of any of the foregoing or any
Indemnitee's interest in any of the foregoing, by any Federal, state or local
taxing authority in the United States (including any territory or possession of
the United States) or any foreign country or political subdivision thereof or
any international authority, upon or with respect to (i) the Project and any
other property relating to the transactions contemplated by the Transaction
Documents or any portion thereof or interest therein, (ii) the construction,
requisition, acquisition, acceptance, rejection, delivery, non-delivery,
transport, assembly, possession, repossession, control, condition, dismantling,
return, abandonment, installation, storage, replacement, manufacture,
subleasing, modification, transfer of title, rebuilding, rental, importation,
exportation, acquisition, purchase, sale, financing, refinancing, leasing,
ownership, maintenance, repair, redelivery, alteration, insuring, control, use,
or operation of all or any part of the Project and any other property relating
to the transactions contemplated by the Transaction Documents or any portion
thereof or interest therein, (iii) the rental payments (including, without
limitation, all Basic Rent, Supplemental Rent, and Additional Rent), receipts or
earnings arising from the Project and any other property relating to the
transactions contemplated by the Transaction Documents or any portion thereof or
interest therein.or payable pursuant to the Amended and Restated Lease, or any
other payment or right to receive payment pursuant to the Transaction Documents
(including, without limitation, any payment of principal, interest, discount or
premium on or with respect to the Senior Debt), (iv) the Transaction Documents
or the issuance of the Senior Debt or any other document executed and delivered
in connection with the consummation or confirmation of the transactions
contemplated by the Transaction Documents or any Indemnitee's interest in any of
the foregoing, or the execution, amendment, supplement, issuance or delivery of
any of the foregoing, (v) the Collateral or the property, or the income or
36
other proceeds received with respect to the property, held by Agent under the
Security Documents or by Disbursement Agent under the Disbursement Agreement,
(vi) any taxes on any Bank Parties required to be paid by Lessor under the
Amended and Restated Reimbursement Agreement, or (vii) otherwise with respect to
or in connection with the transactions contemplated by the Transaction Documents
(all the foregoing being herein collectively called "TAXES" or, separately, a
"TAX").
(b) In addition to the foregoing and without limitation thereto, except
as provided in Section 10.2(c) and subject to the Lessee's contest rights under
Section 10.2(f), Lessee hereby agrees to pay and assume liability for, and to
protect, defend, save and keep harmless each Indemnitee, on an After-Tax Basis,
from and against:
(i) Any ad valorem or other Pennsylvania real property Taxes
attributable to a reassessment including, without limitation, any
reassessment resulting from (x) any event that occurs on the Lease
Commencement Date (including, without limitation, the change in the
ownership of the interests in the Partnership that takes place on the
Lease Commencement Date and (y) a failure to complete construction of
the Facility before any date which would result in a reassessment;
(ii) Pennsylvania sales, transfer, use or rental taxes (and
any related withholdings, interest, penalties, fines or additions to
tax) imposed under existing Law upon Lessor or on or with respect to
its acquisition of the Facility or the Site or with respect to the
acquisition of the Facility or the lease thereof to Lessee; and
(iii) Excise tax liability arising under Section 4975 of the
Code as a consequence of the initial purchase of Senior Debt or lending
of funds on the Closing Date or the Effective Date with the general
account assets of an insurance company being deemed to be Plan Assets
giving rise to a "prohibited transaction."
(c) The provisions of Subsections (a) or (b) of this Section 10.2 shall
not apply to, and Lessee shall not have any liability to any Indemnitee under
Subsections (a) or (b) with respect to:
(i) Taxes to the extent on, based on, with respect to, or
measured by, gross income (which are in lieu of net income taxes), net
income (except to the extent necessary to make any payment required to
be made on an After-Tax Basis) or in the nature of capital stock Taxes,
franchise, net worth, or conduct of business Taxes, or the
environmental Tax set forth in Section 59A of the Code (other than
Taxes in the nature of sales, use, rental or transfer or similar
Taxes).
(ii) Taxes that are minimum Taxes or Taxes on any item of tax
preference.
(iii) Taxes imposed on or with respect to an Indemnitee that
result from (A) any voluntary transfer by such Indemnitee of any
interest in the Project or the Partnership or any portion of any of the
foregoing or any interest arising out of the Transaction Documents or
37
the Senior Debt unless such transfer shall have occurred in connection
with, or as a result of an Event of Default under any Transaction
Document, (B) any involuntary transfer of any of the foregoing
interests in connection with any bankruptcy or other proceeding for the
relief of debtors in which such Indemnitee is the debtor or any
foreclosure by a creditor of such Indemnitee with respect to any
obligation unrelated to the Project or (C) any transfer of any interest
in such Indemnitee (other than any transfer of any interest in such
Indemnitee while an Event of Default has occurred).
(iv) Taxes imposed on an Indemnitee, to the extent such Taxes
result solely and directly from the willful misconduct or gross
negligence of such Indemnitee.
(v) Taxes to the extent imposed on any Indemnitee as a
direct result of the willful failure of such Indemnitee, or any entity
related or affiliated with such Indemnitee, to file timely and properly
any return or any form, certificate or other document which would have
entitled such Indemnitee to an exemption from, or reduction in, a tax
indemnified against under this Section 10.2, or other tax benefit with
respect to such Tax to the extent such benefit, had it been available,
would have been taken into account in determining any indemnity payable
under this Section 10.2; PROVIDED, HOWEVER, that this Section
10.2(c)(v) shall not apply unless (A) Lessee shall timely have
requested in writing that the Indemnitee take the specific action which
forms the basis for potential exculpation of the Lessee hereunder and
(B) the Indemnitee shall have determined in good faith that the action
so requested by Lessee is not improper, which determination shall be
made on a timely basis.
(vi) Except as otherwise provided in the Amended and Restated
Reimbursement Agreement with respect to Lessor indemnification
obligations to the Bank Parties which indemnification obligations
Lessee agrees to pay to Lessor as Supplemental Rent (Senior Debt),
Taxes to the extent imposed on gross or net income of a Participant
other than the Bank Parties by way of withholding on gross income under
Sections 871, 881, 1441 or 1442 of the Code.
(vii) Any Tax imposed on the Bond Trustee or an affiliate with
respect thereto measured by or with respect to, any trustee fees or
expenses for services rendered in its capacity as trustee under the
Indenture.
(viii) Any Tax to the extent that such Tax arises from acts,
omissions or events which occur after the date on which all obligations
of Lessee (including those under Section 8.01 of the Amended and
Restated Lease) shall have terminated.
(ix) Any Taxes that would not have been imposed but for the
inaccuracy or breach of any representation, warranty or covenant by the
Indemnitee; PROVIDED, that this subclause shall not apply to any
Indemnitee that is a Bank Party.
38
(x) Any Taxes that have been actually paid by virtue of
being included in Transaction Costs or in the Purchase Price.
(xi) Any Tax to the extent such Tax is actually utilized by
the Indemnitee or an affiliate with respect thereto as a credit against
Taxes not indemnified under this Section 10.2 and otherwise payable by
such Indemnitee or an Affiliate thereof.
(xii) Any Taxes imposed on or with respect to an indemnitee or
an Affiliate thereof to the extent of the excess of such Taxes over the
amount of such Taxes that would have been imposed (or, if less, that
would have been subject to indemnification under this Section 10.2) had
there not been a transfer by a predecessor in interest of such
Indemnitee or Affiliate of any interest in the Partnership, the
Project, the Site, or any part thereof or any interest arising under
any Transaction Document or the Senior Debt or any interest in any
Indemnitee or any Affiliate; PROVIDED, HOWEVER, that this exclusion
(xii) shall not apply to any transfer by Falcon that is required by any
Requirement of Law or Governmental Approval to preserve the Facility's
status as a Qualifying Facility, or to any other transfers by any
Person occurring on or prior to the Lease Commencement Date.
Notwithstanding anything herein to the contrary, none of the
foregoing exceptions shall apply with respect to any Tax imposed under
or pursuant to section 4975 of the Code.
(d) If any report, return or statement is required to be filed with
respect to any Tax imposed on an Indemnitee that is subject to indemnification
under this Section 10.2, Lessee shall timely prepare and (if legally permitted
to do so) file the same (except for any such report, return or statement which
such Indemnitee has notified Lessee that such Indemnitee intends to prepare and
file). If requested by Lessee in writing, such Indemnitee shall (subject to
reimbursement of such Indemnitee's out-of-pocket expenses) furnish Lessee with
such information reasonably necessary to prepare and file such returns as is
within such Indemnitee's control and not within the control of Lessee. Lessee
shall, if permitted by law, timely file such report, return or statement and
send a copy of such report, return or statement to such Indemnitee. If Lessee is
not so permitted to file such report, return or statement, Lessee shall timely
notify such Indemnitee of such requirement and prepare and deliver such report,
return or statement to such Indemnitee for filing by such Indemnitee and within
a reasonable time prior to the time such report, return or statement is to be
filed Lessee shall, to the extent permitted by law, cause all xxxxxxxx of such
Taxes to be made to such Indemnitee in care of Lessee, make payment thereof and,
from time to time on written request of such Indemnitee, furnish written
evidence of such payment.
(e) Any Tax indemnified hereunder shall be paid by Lessee directly when
due to the applicable taxing jurisdiction if direct payment is permitted or to
an Indemnitee as provided in the succeeding sentence. Except as otherwise
provided in this Section 10.2, all amounts payable to an Indemnitee hereunder
(including any amount payable to an Indemnitee to hold it harmless on an
After-Tax Basis for the payment of any Tax by such Indemnitee or by Lessee on
behalf of such Indemnitee) shall be paid no later than the later to occur of (i)
10 days after such Indemnitee's
39
demand therefor (which demand shall set forth in reasonable detail the
computation of the amount payable) or (ii) the date the Tax to which such amount
payable hereunder relates is due or is to be paid, in immediately available
funds. Lessee shall furnish promptly upon written request such data as any
Indemnitee may reasonably request of the Lessee to enable such Indemnitee to
comply with the requirements of any taxing jurisdiction arising out of such
Indemnitee's participation in the transactions contemplated by this Agreement.
Each Indemnitee shall promptly forward to the Lessee any notice, xxxx or advice
received by it concerning any Tax for which it seeks indemnification hereunder.
If Lessee shall pay any amount directly to the appropriate taxing authority,
within a reasonable period of time after the date of each payment by Lessee of
any Tax which is indemnifiable hereunder, Lessee shall furnish to such
Indemnitee the original or a certified copy of a receipt for Lessee's payment of
such Tax or such other evidence of payment of such Tax as is reasonably
acceptable to such Indemnitee.
(f) CONTEST; REFUNDS. In the event a taxing jurisdiction makes a claim
with respect to any Tax or if any proceeding shall be commenced against any
Indemnitee (including a written notice of such proceeding) for any Tax for which
Lessee may have an indemnity obligation under this Section 10.2 (a "TAX CLAIM"),
Lessee may contest such Tax Claim as set forth herein. In the event any
Indemnitee receives written notice of a Tax Claim which may be indemnified under
this Section 10.2 or if any proceeding shall be commenced against any Indemnitee
(including a written notice of such proceeding) for any Tax, as to which the
Lessee may have an indemnity obligation pursuant to Section 10.2, or if the
Indemnitee shall determine that any Tax as to which the Lessee may have an
indemnity obligation pursuant to Section 10.2 hereof may be payable, such
Indemnitee (i) shall promptly notify Lessee thereof in writing (PROVIDED,
HOWEVER, that the failure to give such notice shall not relieve Lessee of its
obligations hereunder), and (ii) shall not take any action with respect to such
claim or Tax without the consent of the Lessee for 30 days after the receipt of
such notice by the Lessee; PROVIDED, HOWEVER, that, if such Indemnitee shall be
required by law or regulation to take action prior to the end of such 30-day
period, such Indemnitee shall, in such notice to the Lessee, so inform the
Lessee, and such Indemnitee shall not take any action with respect to such claim
or Tax without the consent of the Lessee before the date such Indemnitee shall
be required to take any such action. So long as title to or interest in the
Project or any part thereof is not subjected to a material risk of loss or
forfeiture or the imposition of a Lien on the Project or Lessee provides a bond
or makes other provisions reasonably satisfactory to each Indemnitee to protect
its interest and there is no risk of the imposition of civil or criminal
penalties, Lessee may at its own expense defend against, and contest in its name
(if permitted by law) the imposition of, or request such Indemnitee to contest
the imposition of, any Tax Claim by (i) resisting payment thereof, if Lessee in
its reasonable discretion shall determine such course of action to be
appropriate, (ii) not paying the same except under protest, if protest is
necessary and proper, or (iii) if payment shall be made, using reasonable
efforts to obtain a refund thereof in appropriate administrative and judicial
proceedings, subject to the preconditions that (A) no Event of Default under the
Amended and Restated Lease has occurred and is continuing, (B) the proposed tax
deficiencies relating to such Tax Claim for the year in question and when
aggregated with all other taxable years affected thereby are at least $50,000,
(C) Lessee shall have acknowledged its liability to such Indemnitee for an
indemnity payment as a result of such Tax Claim if such Indemnitee shall
40
not prevail in the contest (PROVIDED, HOWEVER, that such acknowledgment shall
not preclude the Lessee from raising a defense to liability under this Agreement
if a court of competent jurisdiction has rendered a decision articulating the
cause of such Tax, and the cause is not one for which the Lessee is responsible
to pay any indemnity under this Agreement) and (D) such Indemnitee has been
provided with an opinion of independent tax counsel selected by Lessee and
reasonably acceptable to the Indemnitee (the cost of which shall be borne by
Lessee) to the effect that a reasonable basis in law or in fact (or in the case
of an appeal from a lower court decision, a more likely than not probability of
success) exists that such Indemnitee will prevail in such contest (or appeal).
Notwithstanding the foregoing, Lessee may not elect to assume responsibility for
contesting a Tax Claim (or if made, such election shall no longer be binding) if
an Indemnitee makes a good faith determination that the control of the contest
by Lessee would materially adversely affect its dealings with the taxing
authorities proposing the Tax Claim, or would otherwise adversely affect the
outcome of such contest and so notifies Lessee of such determination. Further,
in no event shall Lessee be permitted to contest the imposition of any tax for
which Lessor would be obligated to indemnify a Bank Party pursuant to the
Amended and Restated Reimbursement Agreement. In the event of such a
determination and notification, a contest under this Section 10.2(f) shall be
conducted by such Person and in such form as the Indemnitee shall determine in
its sole discretion, after considering in good faith any views offered by Lessee
with respect thereto.
In no event shall any Indemnitee be required or Lessee permitted to
contest the imposition of any Tax for which Lessee may be obligated to indemnify
pursuant to this Section 10.2 unless (i) Lessee shall have agreed to pay and
shall pay to such Indemnitee on demand on an After-Tax Basis all reasonable
costs and expenses that such Indemnitee incurs in connection with contesting
such Tax Claim (including without limitation, all costs, expenses, reasonable
legal and accounting fees and disbursements) and (ii) if such contest shall be
conducted in a manner requiring the payment of the Tax Claim, Lessee shall have
advanced the amount thereof to such Indemnitee on an interest-free basis and
with no additional net after-tax cost to such Indemnitee (and such Indemnitee
shall pay to the Lessee any net realized tax benefits due to any imputed
interest deduction (net of imputed income) arising from such interest-free
advance from the Lessee plus the tax benefit from making any such payment). If
the Indemnitee is at any time required to include in income the amount of any
such advanced amount or any amount with respect thereto, Lessee shall at that
time pay to the Indemnitee the amount by which the Indemnitee's federal, state
and local income tax liability is increased on account of such inclusion and the
payment with respect thereto.
Notwithstanding anything contained in this Section 10.2 to the
contrary, in no event shall any Indemnitee be required or Lessee permitted to
contest any Tax Claim if the subject matter thereof shall be of a continuing
nature and shall have previously been decided unfavorably pursuant to the
contest provisions of this Section 10.2 unless there shall have been a change in
the Law (which, for the purposes of this paragraph, shall mean amendments to
statutes or administrative regulations, administrative rulings and court
decisions), and such Indemnitee shall have received an opinion of independent
tax counsel selected by Lessee and reasonably acceptable to the Indemnitee
setting forth the facts and legal analysis on which it is based and furnished at
Lessee's sole expense,
41
to the effect that as a result of such change in the law it is more likely than
not that the position to be taken by such Indemnitee in the contest of such Tax
Claim will prevail. In no event shall an Indemnitee be required to appeal any
adverse decision of a court of competent jurisdiction beyond the first level of
appeals.
Notwithstanding the foregoing provisions of this Section 10.2, an
Indemnitee, in its sole discretion (by written notice to Lessee) may
unconditionally waive its rights to the indemnities set forth in this Section
10.2 with respect to any Tax Claim, and refrain (and direct Lessee to refrain)
from contesting such Tax Claim, in which event Lessee shall not have any
liability to the Indemnitee hereunder with respect to such Tax Claim, it being
understood that any such waiver shall be without prejudice to the rights of the
Indemnitee with respect to any other Tax Claim.
Upon receipt by an Indemnitee of a repayment or refund of all or any
part of any Tax indemnified against hereunder which Lessee has paid or for which
Lessee shall have reimbursed any Indemnitee pursuant to this Section 10.2
(provided, however, that any repayment or refund that an Indemnitee would have
received but for a counterclaim or other claim with respect to any Tax not
indemnifiable by the Lessee hereunder (a "deemed refund" or "deemed receipt")
shall be treated as received by such Indemnitee pursuant to this sentence), such
Indemnitee shall pay to Lessee as promptly as practicable (but in no event more
than 10 days) after the receipt thereof, the amount of such repayment or refund
(including any deemed refund or deemed receipt) plus any interest received by
such Indemnitee on such amounts net of Taxes thereon plus the amount of any tax
savings realized by such Indemnitee as a result of the payment made to Lessee;
PROVIDED, HOWEVER, that an Indemnitee shall not be obligated to make any such
payment to the extent the amount of such payment would exceed the amount of all
payments of Taxes which Lessee shall have previously made directly to or for the
benefit of such Indemnitee or for which Lessee shall have previously reimbursed
such Indemnitee pursuant to this Section 10.2, less the amount of all prior
payments by such Indemnitee to Lessee pursuant to this Section 10.2 and less any
unreimbursed expenses incurred by such Indemnitee in obtaining such repayment or
refund. Any Taxes that are imposed on any Indemnitee as a result of a
disallowance or reduction of any refund or repayment of Taxes referred to in the
preceding sentence as to which such Indemnitee previously had made a payment to
Lessee required hereby shall be treated as Taxes for which Lessee is obligated
to indemnify such Indemnitee pursuant to the provisions of this Section 10.2.
(g) Any amount payable to Lessee pursuant to the terms of this Section
10.2 shall not be paid to Lessee if at the time of such payment an Event of
Default shall have occurred and be continuing under the Amended and Restated
Lease. At such time as there shall not be continuing any such Event of Default,
such amount shall be paid to Lessee to the extent not previously applied against
Lessee's obligations hereunder, without interest.
SECTION 10.3. MANNER OF INDEMNIFICATION. Upon Lessee becoming liable to
any Indemnitee under this Article X, Lessee shall promptly submit or cause to be
submitted to Lessor and while the Senior Debt is outstanding, Agent, a
certificate providing a sufficient basis for Agent
42
or Lessor to prepare a Disbursement Certificate or other certificate pursuant to
the Amended and Restated Disbursement Agreement or the Amended and Restated
Reimbursement Agreement, as appropriate, to be submitted to Agent or the
Disbursement Agent, as appropriate.
ARTICLE XI
LEASE TERMINATION COVENANTS
SECTION 11.1. LESSEE AGREEMENT TO LEASE TERMINATION. Lessee hereby
acknowledges and agrees, for the benefit of each party hereto, that (a) upon the
occurrence of any Default under the Amended and Restated Lease which is an EPC
Group Default, Lessor may, at its option which may be exercised in its sole
discretion upon the consent of the Majority Banks under the Amended and Restated
Reimbursement Agreement, or (b) at any time, upon the concurrence of Lessee,
EPC, if it then holds the common stock of Lessee, and the Majority Banks, may
terminate the Amended and Restated Lease and, concurrently therewith, assume all
of Lessee's obligations thereunder or replace Lessee as "lessee" under the
Amended and Restated Lease with any Person chosen by Lessor. Upon election by
Lessor to so terminate Lessee's rights in and to the Amended and Restated Lease,
Lessee shall cooperate with Lessor to effect an orderly transfer to Lessor or
any successor Lessee of any assets relating to the Project of which Lessee has
possession or in which Lessee has any rights.
SECTION 11.2. LEASE TERMINATION COVENANTS. Agent, Bond Trustee and the
other parties hereto hereby acknowledge and agree that Lessor, upon agreement
with Lessee or otherwise, may terminate the Amended and Restated Lease, or
consent to the termination of the Amended and Restated Lease in accordance with
the terms of the Transaction Documents; PROVIDED that, prior to such
termination, no Event of Default under the Loan Documents shall exist and after
giving effect to the transactions contemplated by this Section, no Default or
Event of Default under the Loan Documents shall exist, and, provided further
that:
(a) Prior to or contemporaneously with the effective date of
such termination:
(i) Lessor shall, if necessary, have completed such
actions which shall, in the reasonable judgment of Agent and
Bond Trustee, be necessary or advisable, such that each of the
contracts, arrangements or other rights transferred to Lessee
pursuant to the Amended and Restated Lease (the "ASSIGNED
RIGHTS") shall become the property of Lessor or a replacement
lessee subject to no Lien other than Permitted Liens;
(ii) Lessor shall (a) have completed such actions
which shall, in the reasonable judgment of Agent and Bond
Trustee be necessary or advisable, such that Lessor or a
replacement lessee shall own, free and clear of any Liens
other than the Permitted Liens, the collateral subject to the
Lessee Security Agreement (the
43
"LESSEE COLLATERAL") or (b) make such alternative arrangements
as shall be satisfactory to Agent and Bond Trustee;
(iii) There shall have been entered into such other
amendments of and modifications to the Transaction Documents
or such additional documents or instruments as shall be
necessary or advisable in the reasonable judgment of Agent to
grant to the Bank Parties or a trustee on behalf of the Bank
Parties, as the case may be, such security interests and other
rights which shall be on a basis consistent with the interests
and rights of the Bank Parties in the Security Documents;
(iv) Lessor shall have delivered to Agent and Bond
Trustee an opinion of counsel in form and substance reasonably
satisfactory to Agent and Bond Trustee, addressed to Bond
Trustee and all Bank Parties, to the effect that, after giving
effect to such termination and all other actions taken in
connection therewith (including, without limitation, the
arrangements contemplated by this Section 11.2), (1) the
Facility continues to qualify and be certified as a Qualifying
Facility exempt from regulation under certain federal and
state Laws pursuant to PURPA and such certification shall
continue to be in full force and effect, (2) the Lien of the
Security Documents on the Collateral remains perfected and the
priority thereof has not been impaired, (3) all Governmental
Approvals and agreements necessary for operation of the
Project are and will be in full force and effect, and (4) such
other matters as the Bank Parties may request.
(b) On or prior to the date of termination of the Amended and
Restated Lease, Lessor and Agent shall have entered into such
supplemental security arrangements as will be effective to create, in
favor of Agent or a trustee for the benefit of the Bank Parties legal,
valid and enforceable mortgage Liens on or security interests in and to
the Assigned Rights and Lessee Collateral and such liens and security
interests shall constitute perfected Liens on and perfected security
interests in such Assigned Rights and Lessee Collateral prior and
superior to all other Liens other than Permitted Liens (the
"SUPPLEMENTAL SECURITY ARRANGEMENTS") and Lessor shall have delivered
to each of the Bank Parties, an opinion of counsel in form and
substance satisfactory to Agent with respect to the creation,
perfection and priority of such Liens and such other matters as the
Bank Parties may request.
ARTICLE XII
ASSIGNMENT
SECTION 12.1. BENEFIT OF AGREEMENT, ETC. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns.
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SECTION 12.2. TRANSFER OF INTERESTS OF LESSOR. A General Partner may
not, so long as any Senior Debt remains outstanding, make any transfer or
assignment of all or any portion of its general partnership interest in Lessor
and corresponding rights or obligations under the Transaction Documents, except
in a Permitted Transfer. A General Partner may, following the payment in full
and discharge of all Senior Debt, transfer or assign all or any portion of its
general partnership interest in Lessor and corresponding rights or obligations
under the Principal Project Agreements then in effect, subject to the terms and
conditions of the Partnership Agreement. Subject to the terms of the Partnership
Agreement, each Limited Partner may transfer all or any portion of its
Partnership Interest at any time.
ARTICLE XIII
INTENTIONALLY OMITTED
ARTICLE XIV
LIMITATION ON RECOURSE
Anything herein to the contrary notwithstanding, the obligations of
Lessor hereunder and under the other Transaction Documents, are special
obligations of Lessor and do not constitute a debt or obligation of (and no
recourse shall be had with respect thereto against) any Partner or Affiliate of
Lessor, or any shareholder, partner, officer or director of any such Partner or
any such Affiliate; no action shall be brought against any Partner or any
Affiliate thereof or any shareholder, partner, officer or director of any
thereof as such, and any judicial proceedings any Participant may institute
against Lessor shall be limited to seeking the preservation, enforcement,
foreclosure or other sale or disposition of the Liens and security interest now
or at any time hereafter securing the repayment of the Loans and performances by
Lessor of its other covenants and obligations hereunder and under the
Transaction Documents; no judgment for any deficiency upon the obligations of
Lessor under the Transaction Documents shall be obtainable by any Participant
against Lessor or any Partner or Affiliate of Lessor or any shareholder,
partner, officer or director of any thereof; PROVIDED that nothing in this
Article XIV shall be construed to limit in any respect the validity and
enforceability against any Partner of its obligations under the Security
Documents to which it is a party as an obligor (and not merely as a signatory
for another Person) or any of the rights of any Participant against Lessee or
EPC under any other Transaction Document.
ARTICLE XV
MISCELLANEOUS
45
SECTION 15.1. NOTICES. Any notices and other communications required or
permitted under the terms and provisions of this Agreement shall be sufficient
if delivered in accordance with the Notice Provisions set forth in Schedule IV
hereto.
SECTION 15.2. GOVERNING LAW. This Agreement shall in all respects be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 15.3. HEADINGS. The Table of Contents and headings in this
Agreement are strictly for the purpose of convenience and general reference only
and shall not affect the meaning or interpretation of any of the provisions of
this Agreement.
SECTION 15.4. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and each of which when so executed and delivered shall be
deemed an original for all purposes but all of which together shall constitute
but one and the same instrument.
SECTION 15.5. SURVIVAL OF AGREEMENTS. Subject to any provisions of the
Transaction Documents which impose limitations as to liability solely between
Lessor, Lessee and EPC (without regard to the rights of the Agent, the LOC
Issuers and the Banks which remain unaffected by any such limitations), the
representations, warranties and agreements (including indemnities) of the
parties to this Agreement and the parties' obligations under this Agreement
shall survive the execution and delivery of this Agreement and the expiration or
rescission of any of the Transaction Documents and shall be and continue in full
force and effect notwithstanding any investigations made by or on behalf of any
of the parties hereto.
SECTION 15.6. CONFIDENTIALITY. Each party to this Agreement agrees
that, except as may be required by Law, and except for disclosure to the other
parties to the Transaction Documents, it will not make any public announcement
with respect to, and will use its best efforts in accordance with its customary
business practices not otherwise to disclose the participation of any Partner
(other than itself) in the Facility or publicly disclose the existence or terms
of this Agreement unless such announcement or disclosure has been previously
consented to in writing by the Lessor, which consent may be withheld in its
discretion.
SECTION 15.7. SEVERABILITY. If any clause, provision, paragraph or
section of this Agreement shall be held illegal or invalid by any court, the
invalidity of such clause, provision, paragraph or section shall not affect any
of the remaining clauses, provisions, paragraphs or sections of this Agreement,
and this Agreement shall be construed and enforced as if such illegal or invalid
clause, provision, paragraph or section had not been contained in this
Agreement. If any agreement or obligation contained in this Agreement shall be
held to be in violation of Law, then such agreement or obligation shall be
deemed to be the agreement or obligation of the party thereto to the full extent
permitted by Law.
SECTION 15.8. TRANSACTION COSTS. Lessor shall pay or cause to be paid
all of the
46
reasonable out-of-pocket costs, expenses and ongoing costs and expenses incurred
by Disbursement Agent, the Banks, the LOC Issuers and the Agent in connection
with the consummation of the transactions contemplated by this Agreement and in
accordance with Section 15.01 of the Amended and Restated Reimbursement
Agreement. Lessor shall also pay or cause to be paid by Lessee all of the
reasonable out-of-pocket costs, expenses and ongoing costs and expenses of the
following incurred in connection with the consummation of the transactions
contemplated by this Agreement:
(a) Hunton & Xxxxxxxx, special counsel to Lessor,
(b) Xxxxxxxx Ingersoll, P.C., special local Pennsylvania
counsel to Lessor and Lessee,
(c) Bond Trustee,
(d) Xxxxxxx, Xxxxxxxxx & Xxxx, counsel to Disbursement
Agent and Bond Trustee, and
(e) Hunton & Xxxxxxxx, special counsel to Lessee and EPC.
All costs incurred by any other party in connection with the consummation of the
transactions contemplated by this Agreement shall be borne by such party or as
otherwise provided in any agreement entered into in connection herewith.
SECTION 15.9. LESSOR OBLIGATIONS NOT LIMITED BY AMENDED AND RESTATED
LEASE. No provision in the Amended and Restated Lease or any other Transaction
Document pertaining to a limitation or disclaimer of any obligations,
representations or responsibilities of Lessor solely as between Lessor and
Lessee shall in any way limit or affect any obligations or responsibilities
Lessor may incur with respect to other persons hereunder or under any other
Transaction Documents.
SECTION 15.10. PERFORMANCE OF OBLIGATIONS TO BANK PARTIES. To the
extent that provisions of this Agreement purport to alter, modify or otherwise
affect any provisions of the Amended and Restated Reimbursement Agreement, such
provisions of this Agreement (other than Article XIV) shall be of no effect to
the extent they adversely affect the Bank Parties, and as to any such
provisions, the terms of the Amended and Restated Reimbursement Agreement shall
control in all respects. The provisions of this Agreement which require, or
permit action by, the consent, approval or authorization of, the furnishing of
any document, paper or information to, or the performance of any other
obligation to any of the Bank Parties, shall not be effective, and the Sections
hereof containing such provisions shall be read as though there were no such
requirements or permissions, after all the Obligations and all amounts due under
the Security Documents shall have been paid in full in accordance with their
terms and the Lien of the Security Documents shall have terminated in accordance
with the terms thereof.
47
SECTION 15.11. INTENTIONALLY OMITTED.
SECTION 15.12. FINANCIAL STATEMENTS. All financial statements and
reports to be delivered under this Agreement shall be made or prepared in
accordance with GAAP (including principles of consolidation where appropriate
but excluding footnote disclosure or interim financial statements) and on a
consistent basis.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
48
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be executed by their duly authorized officers and attested on the date first
above written.
LESSOR: SCRUBGRASS GENERATING COMPANY, L.P., a
Delaware limited partnership
By: /s/
----------------------------------
Name:
Title:
AGENT: CREDIT LYONNAIS, acting through its New York
Branch as Agent,
By: /s/
----------------------------------
Name:
Title:
By: /s/
----------------------------------
Name:
Title:
LESSEE: BUZZARD POWER CORPORATION, a Delaware
corporation
By: /s/
----------------------------------
Name:
Title:
DISBURSEMENT
AGENT: BANKERS TRUST COMPANY
By: /s/
----------------------------------
Name:
Title:
[AMENDED AND RESTATED PARTICIPATION AGREEMENT]
49
BOND TRUSTEE: BANKERS TRUST COMPANY
By: /s/
----------------------------------
Name:
Title:
EPC: ENVIRONMENTAL POWER CORPORATION
By: /s/
----------------------------------
Name:
Title:
[AMENDED AND RESTATED PARTICIPATION AGREEMENT]
50
