EXEMPT FACILITIES LOAN AGREEMENT Between PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY and PPL ENERGY SUPPLY, LLC Dated as of December 1, 2007
Exhibit
10(y)
Between
PENNSYLVANIA
ECONOMIC DEVELOPMENT FINANCING AUTHORITY
and
PPL
ENERGY SUPPLY, LLC
Dated
as
of December 1, 2007
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I.
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Background,
Definitions, Representations and Findings.
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1
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Section
1.1
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Background
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1
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Section
1.2
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Definitions
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1
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Section
1.3
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Company
Representations
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4
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Section
1.4
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Authority
Findings and Representations
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6
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II.
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The
Project Facilities.
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7
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Section
2.1
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Acquisition
of Project Facilities
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7
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Section
2.2
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Additions
and Changes to Project Facilities
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7
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Section
2.3
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Issuance
of Bonds; Application of Proceeds
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8
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Section
2.4
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Disbursements
from Project Fund
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8
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Section
2.5
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Company
Required to Pay Costs in Event Project Fund Insufficient
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9
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Section
2.6
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Completion
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9
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Section
2.7
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Investment
and Use of Fund Moneys
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9
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Section
2.8
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Rebate
Fund
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9
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III.
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Loan
By Authority; Loan Payments; Other Payments
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9
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Section
3.1
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Loan
by Authority
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9
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Section
3.2
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Loan
Payments
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10
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Section
3.3
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Purchase
Payments
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10
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Section
3.4
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Additional
Payments
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10
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Section
3.5
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Obligations
Unconditional
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11
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Section
3.6
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Assignment
of Authority’s Rights
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11
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IV.
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Additional
Covenants Of Company
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11
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Section
4.1
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Maintenance
of Existence
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11
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Section
4.2
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Compliance
with Laws; Commencement and Continuation of Operations at Project
Facilities; No Sale, Removal or Demolition of Project
Facilities
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12
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Section
4.3
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Right
of Inspection
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13
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Section
4.4
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Lease
by Company
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13
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Section
4.5
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Financial
Statements; Books and Records
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13
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Section
4.6
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Taxes,
Other Governmental Charges and Utility Charges
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13
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Section
4.7
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Insurance
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14
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Section
4.8
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Damage
to or Condemnation of Project Facilities
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14
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Section
4.9
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Misuse
of Bond Proceeds; Litigation Notice
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14
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Section
4.10
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Indemnification
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14
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Section
4.11
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Tax
Covenants of Company and Authority
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16
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Section
4.12
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Further
Tax Covenants of Company
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16
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Section
4.13
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Nondiscrimination/Sexual
Harassment Clause
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18
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V.
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Redemption
of Bonds
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18
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Section
5.1
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Optional
Redemption
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18
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Section
5.2
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Mandatory
Redemption
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19
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Section
5.3
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Actions
by Authority
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19
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VI.
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Events
Of Default And Remedies
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19
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Section
6.1
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Events
of Default
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19
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Section
6.2
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Remedies
on Default.
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20
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Section
6.3
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Remedies
Not Exclusive
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21
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Section
6.4
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Payment
of Legal Fees and Expenses
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22
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Section
6.5
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No
Waiver
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22
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Section
6.6
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Notice
of Default
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22
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VII.
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Miscellaneous
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22
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Section
7.1
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Term
of Agreement
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22
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Section
7.2
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Notices
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22
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Section
7.3
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Limitation
of Liability; No Personal Liability
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23
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Section
7.4
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Binding
Effect
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24
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Section
7.5
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Amendments
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24
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Section
7.6
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Counterparts
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24
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Section
7.7
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Severability
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24
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Section
7.8
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Governing
Law
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24
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Section
7.9
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Assignment
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24
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Section
7.10
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Receipt
of Indenture
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25
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EXHIBIT
A – Description of Project Facilities
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A-1
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EXHIBIT
B – Form of Disbursement Request
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B-1
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EXHIBIT
C – Form of Exempt Facilities Note
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C-1
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EXHIBIT
D – Nondiscrimination /Sexual Harassment Clause
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D-1
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EXEMPT
FACILITIES LOAN AGREEMENT dated as of December 1, 2007 (the “Agreement”) between
PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY (the “Authority”) and PPL
ENERGY SUPPLY, LLC (together with permitted successors and assigns, the
“Company”).
I.
Background, Definitions, Representations and Findings.
Section
1.1
Background. Pursuant
to the Pennsylvania Economic Development Financing Law (Act No. 102, approved
August 23, 1967, P.L. 251, as amended) (the “Act”), the Montour County
Industrial Development Authority has authorized and approved the Project
Facilities (as defined herein) and the financing thereof by the Authority
through the issuance of the Authority’s Exempt Facilities Revenue Bonds, Series
2007 (PPL Energy Supply, LLC Project) in the original aggregate principal amount
of $80,570,000 (the “Bonds”) and the loan of the proceeds thereof to the Company
to finance a portion of the costs of the installation of certain “pollution
control facilities” (as defined in the Act) consisting of four limestone
forced-oxidation flue gas desulfurization systems (or sulfur dioxide scrubbers)
at (i) the Montour County Generating Station, Washingtonville, Montour County,
Pennsylvania, and (ii) the Xxxxxxx Island Generating System, York Haven, York
County, Pennsylvania (collectively, the “Plants”), such facilities as more fully
described in Exhibit A are herein called the “Project Facilities”.
The
Bonds
will be issued under a Trust Indenture dated as of the date hereof (the
“Indenture”) between the Authority and The Bank of New York Trust Company, N.A.,
as trustee (the “Trustee”). The Company and the Authority are
entering into this Agreement in order to provide for the issuance of the Bonds
and the loan of the proceeds of the Bonds to the Company.
The
obligation of the Company to repay the loan of the proceeds of the Bonds made
pursuant hereto will be evidenced by the Company’s Exempt Facilities Note
(Pennsylvania Economic Development Financing Authority) Series 2007 in the
principal amount of $80,570,000 (the “Note”) issued to the Trustee as the
assignee of the Authority under the Indenture. The Company has
elected to cause and is causing to be delivered to the Trustee an irrevocable
direct pay letter of credit (the “Letter of Credit”) issued by Wachovia Bank,
National Association (the “Bank”). Nothing herein shall require the
Company to maintain the Letter of Credit or any other Credit Facility (as
defined in the Indenture).
The
Authority and the Company intend that substantially all of the Project
Facilities constitute or will constitute “pollution control facilities” for
purposes of the Act and solid waste disposal facilities for the purposes of
the
Internal Revenue Code of 1986, as amended (the “Code”), so that interest on the
Bonds will not be included in gross income of the holders thereof for federal
income tax purposes under the Code (except for such holders who are “substantial
users” of the Project Facilities or “related persons” as provided in Section
147(a) of the Code).
Section
1.2
Definitions. Terms
used in this Agreement which are defined in the Indenture and are not otherwise
defined in this Agreement shall have the meanings set forth in the Indenture
unless the context or use clearly indicates another meaning or
intent. In addition to the terms defined in the recital clauses of
this Agreement, as used herein:
“Additional
Payments” means the amounts required to be paid by the Company pursuant to
Section 3.4.
“Agreement”
means this Exempt Facilities Loan Agreement, as amended or supplemented from
time to time.
“Authority’s
Fee” means an amount equal to 0.2% of the amount of the Loan.
“Authorized
Representative” means, (i) with respect to the Authority, each person at the
time designated to act on behalf of the Authority by written certificate
furnished to the Trustee containing the specimen signature of such person and
signed on behalf of the Authority by its Secretary or Assistant Secretary,
(ii)
with respect to the Company, each person at the time designated to act on behalf
of the Company by written certificate furnished to the Trustee containing the
specimen signature of such person and signed on behalf of the Company by its
President, any Vice President, its Treasurer, its Secretary, any Assistant
Treasurer or any Assistant Secretary and (iii) with respect to the Credit
Facility Issuer, each person at the time designated to act on behalf of the
Credit Facility Issuer by written certificate furnished to the Trustee
containing the specimen signature of such person and signed on behalf of the
Credit Facility Issuer by its President, Vice President, Manager, Treasurer,
Secretary, Assistant Treasurer or Assistant Secretary.
“Completion
Date” means the date that the Company certifies to the Trustee and the Authority
that the Project Facilities have been completed.
“Debt
Service” means, for any period or payable at any time, the principal of,
premium, if any, on and interest on the Bonds for that period or payable at
the
time whether due on an Interest Payment Date, at maturity or upon acceleration
or redemption.
“Issue
Date” means December 31, 2007.
“Loan”
means the loan by the Authority to the Company of the proceeds of the Bonds
pursuant to Section 3.1 in the original principal amount of
$80,570,000.
“Loan
Payments” means the amounts required to be paid by the Company in repayment of
the Loan pursuant to Section 3.2.
“Local
Entity” means the Montour County Industrial Development Authority.
“Misuse
of Bond Proceeds” means the implementation or operation of the Project
Facilities in a manner which would cause the Project Facilities to not be a
“project” as defined in the Act or the use of the proceeds of the Bonds for any
purpose materially different from the Project Facilities as described to and
approved by the Authority.
“Project
Approval” means the initial official action of the Local Entity declaring its
intent with respect to the financing of the Project Facilities. The
date of the Project Approval is December 19, 2007.
“Project
Costs” means costs of the Project Facilities permitted under the Act, including,
but not limited to, the following:
(a)
Costs incurred in connection with the acquisition, construction, installation,
equipment or improvement of the Project Facilities, including costs incurred
in
respect of the Project Facilities for preliminary planning and studies;
architectural, engineering, accounting, consulting, legal and other professional
fees and expenses; labor, services and materials;
(b)
Fees, charges and expenses incurred in connection with the authorization, sale,
issuance and delivery of the Bonds, including without limitation underwriting
discount, printing expense, title insurance, recording fees and the initial
and
first year annual fees and expenses of the Trustee, Authority, Local Entity
and
Remarketing Agent; provided that the amount of the proceeds of the Bonds used
to
finance such issuance costs (but excluding the Authority’s Fee) shall not exceed
2% of the aggregate face amount of the Bonds within the meaning of Section
147(g) of the Code;
(c)
Payment of interest on the Bonds or other interim indebtedness of the Company
incurred to pay Project Costs on an interim basis and fees and expenses of
the
Trustee and Remarketing Agent accruing prior to the Completion Date;
and
(d)
Any other costs, expenses, fees and charges properly chargeable to the cost
of
acquisition, construction, installation, equipment or improvement of the Project
Facilities.
“Purchase
Payments” means the amounts required to be paid by the Company pursuant to
Section 3.3.
“Rehabilitation
Expenditure” shall mean a “rehabilitation expenditure” as such term is defined
in Section 147(d)(3) of the Code, including, without limiting the generality
of
the foregoing, a capital expenditure incurred in connection with the
rehabilitation of a building or structure which is part of the Project
Facilities, if such expenditure is incurred by the Company, the seller of such
building to the Company (if incurred pursuant to the sales contract between
such
seller and the Company) or a successor to the Company; provided,
that:
(1)
if an integrated operation is contained in such building or structure before
its
acquisition by Company, expenditures incurred to rehabilitate existing equipment
or to replace existing equipment with equipment having substantially the same
function is treated as incurred in connection with the rehabilitation of such
building or structure; and
(2)
notwithstanding the foregoing, the term “Rehabilitation Expenditure” does not
include any expenditure:
(a)
with respect to which the method and period of depreciation is other than the
straight line method over a period determined under Section 168(c) or (g) of
the
Code, unless the alternative depreciation system of Section 168(g) of the Code
applies to such expenditure by reason of Section 168(g)(1)(B) or (C) of the
Code;
(b)
for the cost of acquiring any building or interest therein;
(c)
attributable to enlargement of an existing building;
(d)
attributable to the rehabilitation of a certified historic structure or a
building in a registered historic district, unless either the rehabilitation
is
a certified rehabilitation or, with respect to a building other than a certified
historic structure, the Secretary of the Interior has certified to the Secretary
of the Treasury that the building is not of historic significance to the
district (all terms used in this paragraph (d) have the meanings assigned in
Section 47(c)(2)(B) of the Code);
(e)
allocable to the portion of such building which is, or may reasonably be
expected to be, tax-exempt use property within the meaning of Section 168(h)
of
the Code; or
(f)
by a lessee of such building.
“Related
Person” shall have the meaning set forth in Section 144(a)(3) of the Code and
shall include (to the extent there provided) any parent, subsidiary, affiliated
corporation or unincorporated enterprise, majority shareholder and commonly
owned entity.
“Remarketing
Agreement” means the Remarketing Agreement between the Company and the
Remarketing Agent relating to the Bonds, as the same may be amended,
supplemented or replaced from time to time.
“Resolutions”
means the resolutions of the Authority approving and authorizing the Bonds,
the
Indenture and this Agreement.
“Unassigned
Authority’s Rights” means all of the rights of the Authority to receive
Additional Payments under Section 3.4, to be held harmless and indemnified
under
Section 4.10, to be reimbursed for attorney’s fees and expenses under Section
6.4, to exercise remedies under Section 6.2 and to give or withhold consent
to
or approval of amendments, modifications, termination or assignment of this
Agreement, or sale, transfer, assignment, lease (or assignment of lease) or
other disposal of the Project Facilities, or other matters requiring consent
or
approval under Sections 2.2, 4.1, 4.2, 4.4, 7.5 and 7.9.
Section
1.3 Company
Representations. The Company represents as of the date hereof
that:
(a)
It
is a
limited liability company duly formed and validly existing under the laws of
the
State of Delaware, is duly qualified to do business in the Commonwealth of
Pennsylvania, and has requisite power and legal right to enter into this
Agreement and perform its obligations hereunder. The making and
performance of this Agreement on the part of the Company have been duly
authorized by all necessary corporate action.
(b)
The
Project Facilities will xxxxx, reduce, remediate or aid in the prevention,
control, collection, treatment, disposal or monitoring of solid waste and other
pollutants and will facilitate compliance with the environmental requirements
of
federal, state or local agencies exercising jurisdiction thereover.
(c)
Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will conflict in any material respect with
or
constitute a material violation or breach of, or a material default under,
the
Company’s certificate of formation or Limited Liability Company Agreement, or
any indenture or other material agreement or instrument to which the Company
is
a party or by which it or any of its property is bound.
(d)
This Agreement
and the Note have been duly authorized, executed and delivered by the Company
and are valid instruments legally binding upon the Company (except as may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting the enforcement of creditors’ rights
generally, by general equitable proceedings (whether considered in a proceeding
in equity or at law) and by an implied covenant of good faith, fair dealing
and
reasonableness).
(e)
The
Company is not a Disqualified Contractor.
(f)
The
Project Facilities will promote the public purposes of the Act and will not
cause, directly or indirectly, the removal, either in whole or in part, of
a
plant, facility or establishment from one area of the Commonwealth of
Pennsylvania to another. The Project Facilities are located within
the boundaries of the county, city, town, borough or township which organized
the Local Entity (or within the boundaries of the county in which such city,
town, borough or township is located or in which such Local Entity is certified
by the Pennsylvania Industrial Development Authority to act as an industrial
development agency as defined in the Act).
(g)
The
Company or the Affiliates have acquired or will acquire all permits and licenses
including, without limitation, all required environmental permits or approvals,
and has satisfied or will satisfy in all material respects other requirements
necessary, for the acquisition, construction, installation and/or operation
of
the Project Facilities. The Project Facilities are a project within
the meaning of the Act and will be operated as such.
(h)
The
Company presently intends to use or operate or cause to be used
or
operated the Project Facilities in a manner consistent with the Act until the
date on which the Bonds have been fully paid and knows of no reason why the
Project Facilities will not be so used or operated.
(i)
The
information furnished by the Company and used by the Authority in preparing
the
arbitrage certificate pursuant to Section 148 of the Code and information
statement pursuant to Section 149(e) of the Code is accurate and complete as
of
the Issue Date.
(j)
The
proceeds of the Bonds will not exceed the Project Costs.
(k)
The
costs
of issuance financed with proceeds of the Bonds, including any underwriting
discount on the sale of the Bonds, will not exceed 2% of the proceeds of the
Bonds.
(l) No
costs
of the Project Facilities to be financed with the proceeds of the Bonds, except
for certain preliminary costs such as architectural, engineering, surveying,
soil testing and similar costs incurred before the start of construction of
the
Project Facilities, have been paid by or on behalf of the Company,
the Affiliates or any Related Person more than 60 days prior to April 15,
2005.
Section
1.4
Authority Findings
and
Representations. The Authority hereby confirms its findings
and represents that:
(a)
The
Authority is a public body corporate and politic established in the Commonwealth
of Pennsylvania pursuant to the laws of the Commonwealth of Pennsylvania
(including the Act). Under the Act, the Authority has the power to
enter into the Indenture, the Purchase Agreement and this Agreement and to carry
out its obligations thereunder and to issue the Bonds to finance the Project
Facilities.
(b)
By
adoption of the Resolutions at one or more duly convened meetings of the
Authority at which a quorum was present and acting throughout, the Authority
has
duly authorized the execution and delivery of the Indenture, the Purchase
Agreement and this Agreement and performance of its obligations thereunder
and
the issuance of the Bonds. Simultaneously with the execution and
delivery of this Agreement, the Authority has duly executed and delivered the
Indenture and issued and sold the Bonds.
(c)
Based
on
representations and information furnished to the Authority by or on behalf
of
the Company and the Local Entity, the Authority has found that the Company
is
qualified to be a beneficiary of financing provided by the Authority pursuant
to
the Act.
(d)
Based
on
representations and information furnished to the Authority by or on behalf
of
the Company, the Authority has found that the Project Facilities (i) will
promote the public purposes of the Act, (ii) are located within the boundaries
of the Commonwealth of Pennsylvania and within the boundaries of the county,
city, town, borough or township which organized the Local Entity (or within
the
boundaries of the county in which such city, town, borough or township is
located or in which such Local Entity is certified by The Pennsylvania
Industrial Development Authority to act as an industrial development agency
as
defined in the Act), and (iii) will constitute a project within the meaning
of
the Act.
(e)
The
Authority has filed a Preliminary Allocation Request (“PAR”) for purposes of
receiving an allocation of the tax-exempt bond authority of the Commonwealth
of
Pennsylvania and has received approval of the PAR from the Pennsylvania
Department of Community and Economic Development (the “Department”), certifying
approval of such allocation for the Project Facilities as required by
Section 146 of the Code. The Authority will simultaneously with
the issuance of the Bonds deliver a Final Allocation Request to the Department
to obtain a final confirmation of such allocation.
(f)
The
Project Facilities have been approved (1) by the Local Entity, as required
by
the Act, (2) by the Pennsylvania Secretary of Community and Economic
Development, as required by the Act, (3) by the Governor or Lieutenant Governor
of the Commonwealth of Pennsylvania as the “applicable elected representative”,
as that term is defined under the Code, after a public hearing held upon
reasonable notice, as required by the Code, and (4) by the Authority by adoption
of the Resolutions, as required by the Act.
II.
The Project Facilities.
Section
2.1
Acquisition of Project
Facilities. The Company (which for purposes of this provision
and all other provisions of this Agreement pertaining to the Company’s ownership
and operation of the Project Facilities shall include the Company’s direct or
indirect subsidiaries that own and operate the Project Facilities) (a) has
acquired, constructed, installed and equipped, or will acquire construct,
install and equip, the Project Facilities substantially in all material respects
in accordance with the description thereof in Exhibit A attached hereto and
applicable law, (b) has procured or caused to be procured or will procure or
cause to be procured all permits and licenses necessary for the prosecution
of
any and all work on the Project Facilities, and (c) has paid or will pay when
due all costs and expenses incurred in connection with such acquisition,
construction, installation, equipping and improvement from funds made available
therefor in accordance with this Agreement or otherwise. It is
understood that the Company (or one or more of such subsidiaries) owns or leases
the Project Facilities and that any contracts made by the Company (or any such
subsidiary, as the case may be) with respect thereto and any work to be done
by
the Company (or any such subsidiary) on the Project Facilities are made or
done
by the Company (or any such subsidiary) on its own behalf and not as agent
or
contractor for the Authority.
Section
2.2
Additions and Changes
to Project Facilities. Subject to the provisions of Sections
4.11 and 4.12, the Company may, at its option and at its own cost and expense,
at any time and from time to time, revise the description of the Project
Facilities in Exhibit A attached hereto and/or make such additions,
deletions and changes to the Project Facilities as it, in its discretion, may
deem to be desirable for its uses and purposes, provided that (i) any such
additions and changes shall, when made, constitute part of the Project
Facilities for purposes of this Agreement, (ii) the Company shall supplement
the
information contained in Exhibit A attached hereto by filing with the Authority
and the Trustee such supplemental information as is necessary to reflect such
additions, deletions and changes so that the Authority and the Trustee will
be
reasonably able to ascertain the nature and cost of the facilities included
in
the Project Facilities and covered by this Agreement, (iii) such additions,
deletions and changes will not result in a Misuse of Bond Proceeds, and (iv)
if
an addition, deletion or change is substantial in relation to the Project
Facilities, the Company shall have first obtained and filed with the Authority
and the Trustee an opinion of Bond Counsel to the effect that such addition,
deletion or change is authorized or permitted under the Act and will not
adversely affect the exclusion from gross income of interest on the Bonds under
the Code. In any case, the Company shall obtain the Authority’s
approval of any addition to the Project Facilities or any material changes
to
the proposed facilities or other material changes not generally described or
contemplated in Exhibit A attached hereto on the date of delivery of this
Agreement, which approval shall not be unreasonably withheld, and the Company
shall delete any facilities from the Project Facilities if such deletion is
necessary to avoid a Misuse of Bond Proceeds or to maintain the exclusion from
gross income of interest on the Bonds under the Code.
Section
2.3
Issuance of Bonds;
Application of Proceeds. To provide funds to make the Loan for
purposes of paying Project Costs, the Authority will issue the Bonds in the
aggregate principal amount of $80,570,000. The Bonds will be issued pursuant
to
the Indenture and will bear interest, mature and be subject to redemption all
as
set forth therein. The Company hereby approves the terms and
conditions of the Indenture and the Bonds, and the terms and conditions under
which the Bonds will be issued, sold and delivered.
The
proceeds from the sale of the Bonds (including any underwriting discount) shall
be loaned to the Company pursuant to Section 3.1, and such proceeds (net of
any
underwriting discount) shall be paid over to the Trustee for deposit in the
Project Fund (other than any accrued interest which shall be deposited in the
Bond Fund) as provided in the Indenture. Pending disbursement
pursuant to Section 2.4, the proceeds of the Bonds so deposited in the Project
Fund, together with any investment earnings thereon, shall constitute a part
of
the Trust Estate and shall be subject to the lien of the Indenture pursuant
to
the granting clauses therein as security for the obligations described in such
granting clauses, and to such end the Company hereby grants to the Trustee
as
security for such obligations a security interest in all of the Company’s right,
title and interest in and to the Project Fund.
Section
2.4
Disbursements from
Project Fund. Subject to the provisions below, disbursements
from the Project Fund shall be made to reimburse or pay the Company, an
Affiliate or any Person designated by the Company, for Project
Costs. The Company agrees that the sums so disbursed from the Project
Fund will be used only for the payment of Project Costs, and will not be used
for any other purpose.
Subject
to Section 6.03 of the Indenture, any disbursements from the Project Fund for
the payment of the Project Costs shall be made by the Trustee only upon the
written order of an Authorized Representative of the Company delivered to the
Trustee with a copy to the Credit Facility Issuer. Subject to Section
6.03 of the Indenture, each such written order shall be substantially in the
form of the disbursement request attached hereto as Exhibit B and shall be
consecutively numbered and accompanied by a statement in reasonable detail
listing the Project Costs to be paid to any contractors, materialmen or
suppliers or incurred by the Company for which it is to be
reimbursed. Any disbursement for any item which is inconsistent with
the information statement filed by the Authority in connection with the issuance
of the Bonds as required by Section 149(e) of the Code, shall be accompanied
by
an opinion of a Bond Counsel to the effect that such disbursement will not
result in the interest on the Bonds becoming included in the gross income of
the
holders thereof for federal income tax purposes. In case any contract
provides for the retention by the Company of a portion of the contract price,
there shall be paid from the Project Fund only the net amount remaining after
deduction of any such portion, and only when that retained amount is due and
payable, may it be paid from the Project Fund.
Section
2.5
Company Required
to
Pay Costs in Event Project Fund Insufficient. If moneys in the
Project Fund are not sufficient to reimburse the Company for all Project Costs,
the Company will not be entitled to any reimbursement for excess expense from
the Authority, the Trustee or any Bondholder; nor shall the Company be entitled
to any abatement, diminution or postponement of the Loan Payments.
Section
2.6
Completion. When
the Company certifies to the Trustee and the Authority that the Project
Facilities have been completed, any amount then remaining in the Project Fund
shall be applied by the Trustee in accordance with the provisions of the
Indenture.
Section
2.7
Investment and Use
of
Fund Moneys. At the written request of an Authorized
Representative of the Company, any moneys held as part of the Bond Fund (except
moneys representing principal of, or premium, if any, or interest on, any Bonds
which are deemed paid under Section 16.01 of the Indenture) or the Project
Fund
shall be invested or reinvested by the Trustee as provided in Section 8.02
of
the Indenture. The Authority and the Company each hereby covenants
that it will restrict that investment and reinvestment and the use of the
proceeds of the Bonds in such manner and to such extent, if any, as may be
necessary, after taking into account reasonable expectations at the time of
delivery of and payment for the Bonds, so that the Bonds will not constitute
arbitrage bonds under Section 148 of the Code.
Any
Authorized Representative of the Authority having responsibility for issuing
the
Bonds is authorized and directed, alone or in conjunction with an Authorized
Representative of the Company and/or any other officer, partner, employee or
agent of or consultant to the Authority or the Company, to give an appropriate
certificate of the Authority pursuant to Section 148 of the Code, for inclusion
in the transcript of proceedings for the issuance of the Bonds, setting forth
the reasonable expectations of the Authority regarding the amount and use of
the
proceeds of the Bonds and the facts, estimates and circumstances on which those
expectations are based, all as of the Issue Date. The Company shall
provide the Authority with, and the Authority’s certificate may be based on, a
certificate of the Authorized Representative of the Company or other appropriate
officer, partner, employee or agent of or consultant to the Company setting
forth the reasonable expectations of the Company on the Issue Date regarding
the
amount and use of the proceeds of the Bonds and the facts, estimates and
circumstances on which they are based.
Section
2.8
Rebate
Fund. The Company agrees to make such payments to the Trustee
as are required of the Company under Section 6.05 of the
Indenture. The obligation of the Company to make such payments shall
remain in effect and be binding upon the Company notwithstanding the release
and
discharge of the Indenture.
III.
Loan By Authority; Loan Payments; Other Payments
Section
3.1
Loan by
Authority. Upon the terms and conditions of this Agreement,
the Authority will make the Loan to the Company on the Issue Date in a principal
amount equal to the aggregate principal amount of the Bonds. The Loan
shall be deemed fully advanced upon deposit of the proceeds of the Bonds (net
of
any underwriting discount) in the Bond Fund and the Project Fund pursuant to
Section 2.3.
Section
3.2
Loan Payments.
(a)
In consideration of the issuance, sale and delivery of the Bonds by the
Authority, the Company hereby agrees to pay to the Trustee for the account
of
the Authority Loan Payments in such amounts and manner so as to enable the
Trustee to make payment of the principal of, and premium, if any, and accrued
interest on the Bonds as the same shall become due and payable whether at stated
maturity or by acceleration, redemption or otherwise in accordance with the
terms of the Indenture; provided, however, that the obligation of the Company
to
make any Loan Payment hereunder shall be reduced by the amount of any reduction
under the Indenture of the amount of the corresponding payment required to
be
made by the Authority of the principal of or premium, if any, or interest on
the
Bonds. Pursuant to the Indenture, the Authority directs the Trustee to apply
such Loan Payments in the manner provided in the Indenture. Whenever payment
or
provision for payment has been made in respect of the principal of, or premium,
if any, and interest on all of the Bonds, the Loan Payments shall be deemed
paid
in full.
(b)
The obligation of the Company to make the Loan Payments directly to the Trustee,
as the assignee of the Authority under the Indenture, shall be evidenced by
the
Company’s Note substantially in the form of Exhibit C hereto, which shall be
delivered concurrently with the delivery by the Authority of the
Bonds.
(c)
Notwithstanding the foregoing, while any Credit Facility is in effect with
respect to the Bonds, the Company’s obligation to make Loan Payments hereunder
in respect of the principal of, and premium, if any, and accrued interest on
the
Bonds shall be deemed to have been satisfied to the extent that moneys shall
have been paid by a Credit Facility Issuer to the Trustee for such payment
in
respect of the Bonds, which amounts may be reimbursed by the Company directly
to
such Credit Facility Issuer, and no Event of Default shall occur hereunder
by
reason of any failure of the Company to make any such Loan Payment to the
Trustee under subsection (a) above unless the Trustee is notified by the Credit
Facility Issuer of the Company’s failure to have reimbursed the Credit Facility
Issuer in accordance with the terms of the Credit Facility.
Section
3.3
Purchase
Payments. To the extent that moneys on deposit in the
Remarketing Proceeds Account of the Purchase Fund established under the
Indenture are insufficient to pay the full purchase price of Bonds payable
pursuant to Section 5.03 of the Indenture on the applicable Purchase Date,
the
Company shall promptly pay to the Trustee as Purchase Payments for deposit
in
the Company Fund established under Section 5.07 of the Indenture amounts
sufficient to cover such shortfalls in sufficient time to enable the Trustee
to
deliver to the Tender Agent the purchase price of Bonds payable pursuant to
Section 5.03 of the Indenture; provided, however, that the obligation of the
Company to make any Purchase Payment hereunder shall be deemed to have been
satisfied to the extent that moneys shall have been paid by a Credit Facility
Issuer to the Trustee for such payment in respect of the Bonds.
Section
3.4
Additional
Payments. The Company shall pay as Additional Payments
hereunder: (a) to the Authority, the Authority’s Fee on the Issue
Date and any and all costs and expenses (including reasonable legal fees and
expenses) incurred or to be paid by the Authority in connection with the
issuance and delivery of the Bonds or otherwise related to actions taken by
the
Authority under this Agreement or the Indenture or any amendment thereof,
supplement thereto or consent or waiver thereunder, including without limitation
any annual charge made by a rating agency to maintain a rating on the Bonds;
(b)
to the Local Entity, the Local Entity’s fee on the Issue Date and any and all
costs and expenses incurred or to be paid by the Local Entity in connection
with
the Project Facilities; and (c) to the Trustee, the Tender Agent, the Bond
Registrar, the Paying Agent and their agents, their reasonable fees, charges
and
expenses for acting as such under the Indenture. The obligations of
the Company under clause (c) shall survive the termination of this Agreement
and
the Indenture, payment or defeasance of the Bonds and the removal or resignation
of the Trustee, the Tender Agent, the Bond Registrar or the Paying Agent in
accordance with the Indenture for any reason.
Section
3.5
Obligations
Unconditional. The obligations of the Company to make Loan
Payments, Purchase Payments and Additional Payments
shall be absolute and unconditional, and the Company shall make such payments
without abatement, diminution or deduction regardless of any cause or
circumstances whatsoever including without limitation any defense, set-off,
recoupment or counterclaim which the Company may have or assert against the
Authority, the Trustee, the Remarketing Agent or any other Person, whether
express or implied, or any duty, liability or obligation arising out of or
connected with this Agreement, it being the intention of the parties that the
payments required of the Company hereunder will be paid in full when due without
any delay or diminution whatsoever. Loan Payments and Purchase
Payments required
to be paid by or on behalf of the Company hereunder shall be received by the
Authority or the Trustee as net sums and the Company agrees to pay or cause
to
be paid all charges against or which might diminish such net sums.
Section
3.6
Assignment of
Authority’s Rights. To secure the payment of the Debt Service,
the Authority shall pledge and assign to the Trustee all the Authority’s rights
in, to and under this Agreement (except for the Unassigned Authority’s Rights),
the Revenues and the other property comprising the Trust Estate. The
Company consents to such pledge and assignment and agrees to make or cause
to be
made Loan Payments and Purchase Payments directly to the Trustee without defense
or set-off by reason of any dispute between the Company and the
Trustee. Whenever the Company is required to obtain the consent of
the Authority hereunder, the Company shall also obtain the consent of the
Trustee; provided that, except as otherwise expressly stipulated herein or
in
the Indenture, the Company shall not be required to obtain the Trustee’s consent
with respect to the Unassigned Authority’s Rights.
IV.
Additional Covenants Of Company
Section
4.1
Maintenance of
Existence. So long as the Bonds are Outstanding, the Company
will maintain its existence and its qualification to do business in
Pennsylvania, except that it may (with the consent of the Authority, which
consent shall not be unreasonably withheld) dissolve or otherwise dispose of
all
or substantially all of its assets and may consolidate with or merge into any
other entity or permit one or more entities to consolidate or merge into it
so
long as (i) the surviving, resulting or transferee entity, if other than the
Company, assumes in writing all of the obligations of the Company hereunder
and
under the Note and is an entity organized under the laws of one of the states
of
the United States of America, is duly qualified to do business in Pennsylvania
and is not a Disqualified Contractor, (ii) immediately thereafter neither the
Company nor its successor will be in default under the Agreement or the Note
and
(iii) the provisions of Section 7.9 are satisfied.
Section
4.2
Compliance with Laws; Commencement and Continuation of Operations at Project
Facilities; No Sale, Removal or Demolition of Project Facilities; Maintenance
of
Employment.
(a)
The
Company (or a subsidiary of the Company) will acquire, construct and install
the
Project Facilities and will operate and maintain or cause to be operated and
maintained the Project Facilities in such manner as to comply with the Act
and
to comply in all material respects with all applicable requirements of federal,
state and local laws and the regulations, rules and orders of any federal,
state
or local agency, board, commission or court having jurisdiction over the Project
Facilities or the operation thereof, including without limitation applicable
zoning, planning, building and environmental laws, regulations, rules and
orders; provided that the Company shall be deemed in compliance with this
Section so long as it is contesting in good faith any such requirement by
appropriate legal proceedings.
(b)
The
Company shall not cause, permit or suffer to exist a Misuse of Bond
Proceeds.
(c)
The
Company (or a subsidiary of the Company or a lessee permitted by Section 4.4
or
successor permitted by Section 4.1) shall complete the Project Facilities
(except for immaterial items) and commence operation of the Project Facilities
within three (3) years from the Issue Date and operate or cause to be operated
the Plants throughout the term of this Agreement.
(d) The
Company shall not permit the Project Facilities or any material portion thereof
to be sold, transferred or otherwise disposed of (other than as permitted by
Section 4.1 and Section 4.4), or undertake or permit the demolition or
removal of the Project Facilities or any material portion thereof, without
the
prior written consent of the Authority; provided that the Company (or a
subsidiary of the Company) shall be permitted (i) to sell, transfer, assign
or
otherwise dispose of or remove all or any portion of the Project Facilities
which are obsolete, retired or replaced in the ordinary course of business;
and
(ii) to demolish or remove a portion of the Project Facilities, in each case
if
the Company shall have first obtained an opinion of Bond Counsel to the effect
that such demolition or removal is authorized or permitted under the Act and
will not adversely affect the exclusion from gross income of interest on the
Bonds for federal income tax purposes.
(e)
The
Company shall not assign its interest under this Agreement in violation of
Section 7.9.
(f)
The
Company shall maintain at least 50% of the employment at the Project stated
in
the Local Entity’s application to the Authority on behalf of the Company
pursuant to which the Bonds were issued.
Section
4.3
Right of
Inspection. Subject to reasonable security and safety
regulations and upon reasonable advance, written notice, the Authority and
the
Trustee, and their respective agents, shall have the right during normal
business hours to inspect the Project Facilities.
Section
4.4
Lease by
Company. The Company (or a subsidiary of the Company) may,
subject to the provisions of Sections 4.11 and 4.12, lease the Project
Facilities, in whole or in part, to one or more Persons, provided
that:
(a)
No
such
lease shall relieve the Company from its obligations under this Agreement,
the
Indenture, or the Remarketing Agreement;
(b)
In
connection with any such lease the Company (or a subsidiary of the Company)
shall retain such rights and interests as will permit it to comply with its
obligations under this Agreement, the Indenture, and the Remarketing
Agreement;
(c)
No
such
lease shall impair materially the accomplishment of the purposes of the Act
to
be accomplished by operation of the Project Facilities as herein
provided;
(d)
Any
such
lease shall require the lessee to operate the Project Facilities as a “project”
under the Act as long as the Bonds are Outstanding;
(e)
In
the
case of a lease to a new lessee or an assignment of an existing lease to a
new
lessee of substantially all of the Project Facilities, (i) such new lessee
shall not be a Disqualified Contractor and (ii) unless the new lessee is an
affiliate of the Company, such new lessee shall have been approved by the
Authority (such approval not to be unreasonably withheld); and
(f)
Any
lessees under any such leases, including any leases in force on the date of
issuance of the Bonds, shall be subject to the applicable terms and conditions
of Section 4.12.
Section
4.5
Financial Statements;
Books and Records. The Company shall prepare or have prepared
financial statements in accordance with generally accepted accounting principles
and shall keep true and proper books of records and accounts in which full
and
correct entries are made of all its business transactions. Copies of
such financial statements shall be provided to the Authority and the Trustee
promptly upon request.
Section
4.6
Taxes, Other
Governmental Charges and Utility Charges. The Company shall
pay, or cause to be paid before the same become delinquent, all taxes,
assessments, whether general or special, and governmental charges of any kind
whatsoever that may at any time be lawfully assessed or levied against or with
respect to the Project Facilities, including any equipment or related property
installed or brought by the Company therein or thereon, and all utility and
other charges incurred in the operation, maintenance, use, occupancy and upkeep
of the Project Facilities; provided that with respect to special assessments
or
other governmental charges that lawfully may be paid in installments over a
period of years, the Company shall be obligated to pay only such installments
as
are required to be paid during the term hereof. The Company may, at
its expense, in good faith contest any such taxes, assessments and other charges
and, in the event of any such contest, may permit the taxes, assessments or
other charges so contested to remain unpaid during the period of such contest
and any appeal therefrom. The Company shall also comply in all
material respects at its own cost and expense with all notices received from
public authorities with respect to the Project Facilities, subject to the
Company’s right to contest such notices in good faith.
Section
4.7
Insurance. The
Company shall at its own cost and expense obtain or cause to be obtained
insurance policies against such risks, and in such amounts, as are customarily
insured against by entities owning facilities of like size and type to the
Project Facilities, paying, as the same become due and payable, all premiums
in
respect thereof; provided that the Company may self-insure in such amounts
and
against such risks as the Company shall deem reasonable and
prudent. All proceeds of such insurance shall be for the account of
the Company.
Section
4.8
Damage to or
Condemnation of Project Facilities. In the event of damage,
destruction or condemnation of part or all of the Project Facilities or the
Plant such that the Company has the right to call the Bonds for extraordinary
optional redemption pursuant to Section 9.01(a)(iv) of the Indenture, the
Company shall be obligated to either: (i) restore the Project
Facilities or the Plants, as the case may be, to the extent necessary to ensure
the continued character of the Project Facilities as solid waste disposal
facilities, or (ii) if permitted by the terms of the Bonds, direct the Authority
to call the Bonds for redemption as set forth in Section 9.01(a)(iv) of the
Indenture. Damage to, destruction of or condemnation of all or a
portion of the Project Facilities shall not terminate this Agreement or cause
any abatement of or reduction in the payments to be made by the Company under
this Agreement.
Section
4.9
Misuse of Bond
Proceeds; Litigation Notice. The Company shall give the
Authority, the Trustee and the Remarketing Agent prompt written notice of any
Misuse of Bond Proceeds or action, suit or proceeding pending or threatened
against it at law or in equity, or before any governmental instrumentality
or
agency, which, if adversely determined, would materially impair the right of
the
Company to carry on the business which is contemplated in connection with the
Project Facilities or would materially and adversely affect its business,
operations, properties, assets or condition.
Section
4.10
Indemnification. The
Company will indemnify and hold harmless the Authority and each member,
director, officer, employee, attorney and agent of the Authority for and against
any and all claims, losses, damages or liabilities (including the costs and
expenses of defending against any such claims) to which the Authority or any
member, director, officer, employee or agent of the Authority may become
subject, insofar as such losses, claims, damages or liabilities (or actions
in
respect thereof) arise directly or indirectly out of (a) any loss or damage
to
property or injury to or death of or loss by any person that may be occasioned
by any cause whatsoever pertaining to the construction, maintenance, operation
and use of the Project Facilities; (b) any breach or default on the part of
the
Company in the performance of any covenant or agreement of the Company under
this Agreement or the Note or any related document, or arising from any act
or
failure to act by the Company or any of its agents, contractors, servants,
employees or licensees; (c) the authorization, issuance and sale of the Bonds,
or the provision of any information or certification furnished in connection
therewith concerning the Bonds, the Project Facilities or the Company
(including, without limitation, any information furnished by the Company for
inclusion in any certification made by the Authority or for inclusion in, or
as
a basis for preparation of, the information statements furnished by the
Authority and any information or certification obtained from the Company) to
assure the exclusion of the interest on the Bonds from the gross income of
the
holders thereof for federal income tax purposes; (d) the Company’s failure to
comply with any requirements of this Agreement pertaining to compliance with
the
Code to assure such exclusion of the interest or the provisions set forth in
Sections 4.11 and 4.12; (e) any failure by the Company to comply with the
provisions of the Act; and (f) any claim, action or proceeding brought with
respect to any matter set forth in clause (a), (b), (c), (d) or (e)
above.
The
Company will indemnify and hold the Trustee and its directors, officers, agents
and employees (collectively, the “Indemnitees”) harmless from and against any
and all claims, liabilities, losses, damages, fines, penalties and expenses,
including out-of-pocket expenses, incidental expenses, reasonable legal fees
and
expenses, and the reasonable costs and expenses of defending against any such
claim (“Losses”) that may be imposed on, incurred by or asserted against, the
Indemnitees or any of them for following any instruction or other direction
upon
which the Trustee is authorized to rely pursuant to the terms of this Agreement,
the Bonds, the Note or the Indenture. In addition to and not in
limitation of the immediately preceding sentence, the Company also agrees to
indemnify and hold the Indemnitees and each of them harmless from and against
any and all Losses that may be imposed on, incurred by or asserted against
the
Indemnitees or any of them in connection with or arising out of the Trustee’s
performance under this Agreement, the Bonds or the Indenture or the
administration thereof, or in collecting under the Note, except in any case
as a
result of the gross negligence, willful misconduct or bad faith of the
Trustee.
In
case
any action or proceeding is brought against the Authority or the Trustee in
respect of which indemnity may be sought hereunder, the party seeking indemnity
promptly shall give notice of that action or proceeding brought against it
to
the Company, and the Company upon receipt of that notice shall have the
obligation and the right to assume the defense of the action or proceeding;
provided that failure of a party to give that notice shall not relieve the
Company from any of its obligations under this Section unless (and then only
to
the extent) that failure prejudices the defense of the action or proceeding
by
the Company. At its own expense, an indemnified party may employ
separate counsel and participate in the defense. The Authority or the
Trustee, as the case may be, will cooperate with the Company, at the Company’s
expense, with respect to its assumption of the defense of any such action or
proceeding, and will take such reasonable actions as are requested of it by
the
Company, at the Company’s expense, in connection therewith. The
Company shall not be liable for any settlement made without its consent, which
shall not be unreasonably withheld. The Company shall not approve any
settlement involving the Trustee without the Trustee’s prior written consent,
which shall not be unreasonably withheld.
The
indemnification set forth above is intended to and shall (i) include the
indemnification of all affected directors, officers, agents and employees of
the
Authority and the
Trustee, respectively, and (ii) be enforceable by the Authority and the Trustee,
respectively, to the full extent permitted by law.
The
provisions of this Section 4.10 shall survive the termination of this Agreement
and the Indenture, payment or defeasance of the Bonds and the removal or
resignation of the Trustee in accordance with the Indenture for any
reason.
Section
4.11
Tax Covenants of
Company and Authority. The Company covenants and represents
that it will at all times do and perform all acts and things necessary or
desirable and within its reasonable control in order to assure that interest
paid on the Bonds shall not be includable in the gross income of any holder
thereof for federal income tax purposes, unless such holder is a “substantial
user” of the Project Facilities or a “related person” of such a user within the
meaning of Section 147(a) of the Code. The Company also covenants and
represents that it shall not take or omit to take, or permit to be taken on
its
behalf, any actions which, if taken or omitted, would adversely affect the
excludability from the gross income of the holder of interest paid on the Bonds
for federal income tax purposes. The Authority and the Company
mutually covenant for the benefit of the Bondholders that they will not use
the
proceeds of the Bonds, any moneys derived, directly or indirectly, from the
use
or investment thereof or any other moneys on deposit in any fund or account
maintained in respect of the Bonds (whether such moneys were derived from the
proceeds of the sale of the Bonds or from other sources) in a manner which
would
cause the Bonds to be treated as “arbitrage bonds” within the meaning of Section
148 of the Code.
Section
4.12
Further Tax Covenants
of Company. The Company further represents and covenants as
follows:
(a)
Action
to Maintain
Tax-Exempt Status. The Company will take such actions as shall
be necessary or desirable, from time to time and within its reasonable control,
to cause all of the representations and warranties in this Section to remain
true and correct during such periods as shall be necessary to maintain the
exclusion of interest paid on the Bonds from the gross income of the holders
thereof for federal income tax purposes (other than a holder who is a
“substantial user” of the Project Facilities or a “related person” as those
terms are used in Section 147(a) of the Code), pursuant to the requirements
of
the Code.
(b)
Operation
as Solid Waste
Disposal Facilities. As long as the Company (or its lessee or
transferee) is required to operate or cause to be operated the Project
Facilities under Section 4.2, the Company (or its lessee or transferee) shall
operate or cause to be operated the Project Facilities as “solid waste disposal
facilities” within the meaning of Section 142(a)(6) of the Code.
(c)
Ninety-five
Percent Capital
Costs Test. The Company will spend not less than 95% of the
net proceeds of the Bonds for capital costs of land or property of a character
subject to allowance for depreciation under Section 167 of the Code and
constituting “solid waste disposal facilities” for purposes of Section 142(a)(6)
of the Code.
(d)
Land
Acquisition
Limitation. The Company will not use, directly or indirectly,
25% or more of the net proceeds of the Bonds for the acquisition of land or
an
interest therein.
(e)
Existing
Facility and
Rehabilitation Limitations. The Company will not use any
proceeds of the Bonds to acquire any property of which the Company would not
be
the first user, except as permitted by the next sentence. If any
proceeds of the Bonds are used to acquire (i) an existing building, (ii) an
existing building and equipment thereof, (iii) an existing structure (other
than
a building), or (iv) an existing structure and equipment thereof, then the
Company will, within two years of the later of the Issue Date or the date the
Company acquires such building or structure, incur Rehabilitation Expenditures
in an amount at least equal to (x) 15% of the portion of the cost of acquiring
all existing buildings and equipment thereof which is financed with net proceeds
of the Bonds, plus (y) 100% of the portion of the cost of acquiring all existing
structures (other than a building) and equipment thereof which is financed
with
net proceeds of the Bonds.
(f)
Limitation
on Financing
Certain Facilities. The Company will not use more than 25% of
the net proceeds of the Bonds to provide any portion of the Project Facilities
the primary purpose of which is to provide retail food or beverage services
(exclusive of grocery stores), automobile sales or services, or the provision
of
recreation or entertainment.
(g)
Prohibition
on Financing
Certain Facilities. The Company will not use any portion of
the proceeds of the Bonds to provide any portion of the Project Facilities
to be
used for a private or commercial golf course, country club, massage parlor,
tennis club, skating facility (including roller skating, skateboard and ice
skating), racquet sports facility (including any handball or racquetball court),
hot tub facility, suntan facility or racetrack. The Company will not
use any proceeds of the Bonds to provide any airplane, any sky box or other
private luxury box, any health club facility, any facility primarily used for
gambling, or any store the principal business of which is the sale of alcoholic
beverages for consumption off premises.
(h)
Lease
or Transfer of Project
Facilities. In connection with any lease or transfer by the
Company of the Project Facilities financed with Bond proceeds, the Company
will
require that the lessee or transferee and all Related Persons with respect
to
such lessee or transferee will not violate the covenants set forth in this
Section 4.12.
(i)
Bond
Maturity
Limitation. The average maturity of the Bonds, as determined
pursuant to Section 147(b) of the Code, will not exceed 120% of the average
reasonably expected economic life of the property financed with the proceeds
of
the Bonds, disregarding land.
(j)
Nonpurpose
Investments. After the expiration of any applicable temporary
period under Section 148(c) of the Code, not more than the lesser of 5% of
the
proceeds of the Bonds or $100,000 (in addition to the amounts allowed under
Sections 148(c) and (d) of the Code and subject to the yield adjustment
provisions of Treasury Regulations §1.148-5(c)) of the proceeds of the
Bonds will be invested in higher yielding investments.
At
no
time will any funds constituting gross proceeds of the Bonds be used to acquire
investments at other than fair market value within the meaning of the applicable
Treasury Regulations pertaining to, or in any other fashion as would constitute
failure of compliance with, Section 148 of the Code. Investments or
deposits in certificates of deposit or pursuant to guaranteed investment
contracts shall not be made without compliance, at or prior to such investment
or deposit, with the requirements of Treasury Regulations Section
1.148-5(d)(6)(ii) and (iii), respectively, or with any successor provisions
thereto.
The
terms
“proceeds”, “gross proceeds”, and “higher yielding investments” have the
meanings assigned to them for purposes of Section 148 of the Code.
(k)
Notice. The
Company shall provide a written statement signed by its Authorized
Representative to the Authority and the Trustee reasonably promptly upon the
Company’s becoming aware of a violation of any of the covenants set forth in
this Section 4.12, setting forth in detail the facts, nature and scope of such
violation.
(l)
Arbitrage
Rebate. As required by Section 2.8, the Company will pay to or
for the account of the Authority all amounts needed to comply with the
requirements of Section 148 of the Code, concerning arbitrage bonds, including
Section 148(f), which requires generally a rebate payment to the United States
of America of arbitrage profit from investment of the proceeds of the Bonds
in
obligations other than tax-exempt obligations. The obligation of the
Company to make such payments is unconditional and is not limited to funds
representing the proceeds of the Bonds or income from the investment thereof
or
any other particular source.
Section
4.13
Nondiscrimination/Sexual
Harassment
Clause. The Company hereby accepts and agrees to be bound by
the standard Nondiscrimination/Sexual Harassment Clause set forth in Exhibit
D
attached hereto. For purposes of such Nondiscrimination/Sexual
Harassment Clause, the parties hereto understand that (i) this Agreement is
the
“contract” and (ii) there is no subcontractor for the performance of the
Company’s obligations under this Agreement.
V.
Redemption of Bonds
Section
5.1
Optional
Redemption. At any time and from time to time, the Company may
deliver or cause to be delivered Loan Payments to the Trustee in addition to
the
scheduled Loan Payments required to be made under Section 3.2 and direct the
Trustee to use the Loan Payments so delivered for the purpose of calling Bonds
for optional or extraordinary optional redemption in accordance with the
applicable provisions of the Indenture and redeeming such Bonds at the
redemption price stated in the Indenture. Such Loan Payments shall be held
and
applied as provided in Section 6.02 of the Indenture and delivery thereof shall
not operate to xxxxx or postpone Loan Payments otherwise becoming due or to
alter or suspend any other obligations of the Company under this
Agreement. Whenever the Bonds are subject to optional redemption
pursuant to the Indenture, the Authority will, but only upon direction of the
Company, direct the Trustee to call the same for redemption as provided in
the
Indenture.
Section
5.2
Mandatory
Redemption. The Company shall deliver or cause to be delivered
to the Trustee the moneys needed to redeem the Bonds in accordance with the
mandatory redemption provisions set forth in the Bonds and the
Indenture. Whenever the Bonds are subject to mandatory redemption
pursuant to the Indenture, the Company will cooperate with the Authority and
the
Trustee in effecting such redemption.
Section
5.3
Actions by
Authority. At the request of the Company or the Trustee, the
Authority shall take all steps required of it under the applicable provisions
of
the Indenture or the Bonds to effect the redemption of all or a portion of
the
Bonds pursuant to this Article.
VI.
Events Of Default And Remedies
Section
6.1
Events of
Default. Each of the following shall be an Event of
Default:
(a)
Failure
by the Company to make or cause to be made any Loan Payment or Purchase
Payment which shall
have resulted in an Event of Default described in clause (a), (b) or (d) of
Section 11.01 of the Indenture;
(b)
Failure
by the Company to observe and perform any covenant, condition or agreement
on
its part to be observed or performed under this Agreement or the Note (other
than payment obligations on the Note) for a period of sixty (60) days after
written notice, specifying such failure and requesting that it be remedied,
given to the Company by the Trustee; provided, that if such failure is of such
nature that it can be corrected (as agreed to by the Trustee) but not within
such period, the same shall not constitute an Event of Default so long as the
Company institutes prompt corrective action and is diligently pursuing the
same
and provided further, that if the Company is unable to institute corrective
action or to pursue the same because of circumstances beyond its control, the
same shall not constitute an Event of Default until such circumstances no longer
exist and then only after the Company has had an opportunity to remedy the
same
as provided above;
(c)
The
Company shall (i) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian or the like of itself or of its property,
or
(ii) admit in writing its inability to pay its debts generally as they become
due, or (iii) make a general assignment for the benefit of creditors, or (iv)
be
adjudicated a bankrupt or insolvent, or (v) commence a voluntary case under
the
United States Bankruptcy Code, or file a voluntary petition or answer seeking
reorganization, an arrangement with creditors or an order for relief, or seeking
to take advantage of any insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy, reorganization,
or
insolvency proceeding, or corporate action shall be taken by it for the purpose
of effecting any of the foregoing, or (vi) have instituted against it,
without the application, approval or consent of the Company, a proceeding in
any
court of competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of the
Company an order for relief or an adjudication in bankruptcy, reorganization,
dissolution, winding up, liquidation, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a trustee, receiver,
liquidator or custodian or the like of the Company or of all or any substantial
part of their assets, or other like relief in respect thereof under any
bankruptcy or insolvency law, and the same shall (A) result in the entry of
an order for relief or any such adjudication or appointment or (B) remain
unvacated, undismissed and undischarged for a period of 90 days;
(d)
Any
representation or warranty made by the Company herein or any statement in any
report, certificate, financial statement or other instrument furnished in
connection with this Agreement or with the purchase of the Bonds shall at any
time prove to have been false or misleading in any material respect when made
or
given; and
(e)
For
any
reason the Bonds are declared due and payable by acceleration in accordance
with
Section 11.02 of the Indenture and such acceleration shall not have been
annulled.
The
declaration of an Event of Default under paragraph (e) above, and the exercise
of remedies upon any such declaration, shall be subject to any applicable
limitations of federal bankruptcy law affecting or precluding that declaration
or exercise during the pendency of or immediately following any bankruptcy,
liquidation or reorganization proceedings.
Section
6.2
Remedies on
Default.
(a)
Whenever
an Event of Default shall have happened and be subsisting uncured, any one
or
more of the following remedial steps may be taken:
(1)
If acceleration of the principal amount of the Bonds has been declared pursuant
to Section 11.02 of the Indenture, the Trustee, by notice in writing to the
Company, shall declare all Loan Payments and amounts due on the Note to be
immediately due and payable, whereupon the same shall become immediately due
and
payable; and
(2)
The Authority or the Trustee may pursue any and all remedies now or hereafter
existing at law or in equity to collect all amounts then due and thereafter
to
become due under this Agreement or to enforce the performance and observance
of
any other obligation or agreement of the Company under this Agreement and the
Note.
(b)
The
Company covenants that, in case it shall fail to pay or cause to be paid any
Loan Payments or Purchase Payments as and when the same shall become due and
payable whether at maturity or by acceleration or otherwise, then, upon demand
of the Trustee, the Company will pay to the Trustee the whole amount that then
shall have become due and payable hereunder; and, in addition thereto, such
further amounts as shall be sufficient to cover the reasonable costs and
expenses of collection, including a reasonable compensation to the Trustee,
its
agents and counsel, and any expenses or liabilities incurred by the Authority
or
the Trustee, including counsel fees and expenses. In case the Company
shall fail forthwith to pay such amounts upon such demand, the Trustee shall
be
entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid.
(c)
In
case
there shall be pending proceedings for the bankruptcy or reorganization of
the
Company under the federal bankruptcy laws or any other applicable law, or in
case a receiver or trustee shall have been appointed for the benefit of the
creditors or the property of the Company, the Trustee shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove
a
claim or claims for the whole amount due hereunder, including interest owing
and
unpaid in respect thereof, and, in case of any judicial proceedings, to file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee allowed in such judicial
proceedings relative to the Company, its creditors or its property, and to
collect and receive any moneys or other property payable or deliverable on
any
such claims, and to distribute the same after the deduction of its charges
and
expenses. Any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized to make such payments to the Authority
or
the Trustee, and to pay to the Authority or the Trustee any amount due it for
compensation and expenses, including counsel fees and expenses incurred by
it up
to the date of such distribution.
(d) Notwithstanding
the foregoing, the Trustee shall not be obligated to take any step which in
its
opinion will or might cause it to expend money or otherwise incur liability
unless and until a satisfactory indemnity bond has been furnished to the Trustee
at no cost or expense to the Trustee. Any amounts collected as Loan
Payments or applicable to Loan Payments and any other amounts which would be
applicable to payment of Debt Service collected pursuant to action taken under
this Section shall, after the deduction of the Trustee’s charges and expenses,
be paid into the Bond Fund and applied in accordance with the provisions of
the
Indenture or, if the Outstanding Bonds have been paid and discharged in
accordance with the provisions of the Indenture, shall be paid as provided
in
Section 6.02(e) of the Indenture for transfers of remaining amounts in the
Bond
Fund.
(e)
The
provisions of this Section are subject to the further limitation that the
annulment by the Trustee of its declaration pursuant to Section 11.02 of the
Indenture that all of the Bonds are immediately due and payable also shall
constitute an annulment of any corresponding declaration made pursuant to
Subsection 6.2(a)(1); provided that no such waiver or rescission shall extend
to
or affect any subsequent or other default or impair any right consequent
thereon.
Section
6.3
Remedies Not
Exclusive. No remedy conferred upon or reserved to the
Authority or the Trustee by this Agreement is intended to be exclusive of any
other available remedy or remedies, including without limitation the remedies
provided in the Act, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy given under this Agreement, or now
or
hereafter existing at law or in equity. No delay or omission to
exercise any right or power accruing upon any default shall impair that right
or
power or shall be construed to be a waiver thereof, but any such right and
power
may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Authority or the Trustee to
exercise any remedy reserved to it in this Article, it shall not be necessary
to
give any notice, other than any notice required by law or for which express
provision is made herein.
Section
6.4
Payment of Legal
Fees
and Expenses. If an Event of Default should occur and the
Authority, the Credit Facility Issuer or the Trustee should incur expenses,
including reasonable attorneys’ fees and expenses, in connection with the
enforcement of this Agreement, the Indenture, the Note or the collection of
sums
due hereunder or thereunder, the Company shall reimburse the Authority, the
Credit Facility Issuer and the Trustee, as applicable, for the expenses so
incurred, upon demand.
Section
6.5
No
Waiver. No failure by the Authority or the Trustee to insist
upon the strict performance by the Company of any provision hereof or of the
Note shall constitute a waiver of their right to strict performance and no
express waiver shall be deemed to apply to any other existing or subsequent
right to remedy the failure by the Company to observe or comply with any
provision hereof. No failure by the Company to observe and perform
any of the covenants set forth in Section 4.2 hereof shall be waived by the
Trustee without the written consent of the Authority.
Section
6.6
Notice of
Default. The Company shall immediately notify the Trustee and
the Authority in writing if it becomes aware of the occurrence of any Event
of
Default hereunder or of any fact, condition or event which, with the giving
of
notice or passage of time or both, would become an Event of
Default.
VII.
Miscellaneous
Section
7.1
Term of
Agreement. This Agreement shall be and remain in full force
and effect from the Issue Date until such time as all of the Bonds shall have
been fully paid (or provision made for such payment) pursuant to the Indenture,
the Indenture shall have been released pursuant to Section 16.01 thereof,
and all other sums payable by the Company under this Agreement shall have been
paid, except for obligations of the Company under Section 3.4(c) and
Section 4.10, which shall survive any termination of this
Agreement.
Section
7.2
Notices. All
notices, certificates, requests or other communications hereunder shall be
in
writing and shall be deemed to be sufficiently given when mailed by registered
or certified mail, postage prepaid, sent by telecopier or nationally recognized
overnight courier or delivered in person and addressed or sent as
follows:
|
If
to the Company:
|
PPL
Energy Supply, LLC
Xxx
Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
Telecopier
No. 000-000-0000
Attention: Xxxxxxx
X. Xxxxxxxx
|
|
with
a copy to
|
|
|
Telecopier
No.
Attention:
|
|
|
If
to the Authority:
|
Pennsylvania
Economic Development Financing Authority
Pa.
Department of Community and Economic Development
Commonwealth
Keystone Building
000
Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx,
XX 00000
Telecopier
No. 000-000-0000
|
|
If
to the Trustee:
|
The
Bank of New York Trust Company, N.A.
0000
Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx,
XX 00000
Telecopier
No.
Attention: Global
Corporate Trust
|
|
If
to the Remarketing Agent:
|
Xxxxxxx,
Sachs & Co.
00
Xxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Telecopier
No.
Attention:
|
The
Company, the Authority, the Trustee and the Remarketing Agent, by notice given
hereunder to the Persons listed above, may designate any further or different
addresses or telecopier numbers to which subsequent notices, certificates,
requests or other communications shall be sent.
Section
7.3
Limitation of
Liability; No Personal Liability. In the exercise of the
powers of the Authority or the Trustee hereunder or under the Indenture,
including without limitation the application of moneys and the investment of
funds, neither the Authority or the Trustee nor their members, directors,
officers, employees or agents shall be accountable to the Company for any action
taken or omitted by any of them in good faith and with the belief that it is
authorized or within the discretion or rights or powers
conferred. The Authority, the Trustee and their members, directors,
officers, employees and agents shall be protected in acting upon any paper
or
document believed to be genuine, and any of them may conclusively rely upon
the
advice of counsel and may (but need not) require further evidence of any fact
or
matter before taking any action. In the event of any default by the
Authority hereunder, the liability of the Authority to the Company shall be
enforceable only out of the Authority’s interest under this Agreement and there
shall be no other recourse for damages by the Company against the Authority,
its
members, directors, officers, attorneys, agents and employees, or any of the
property now or hereafter owned by it or them. All covenants,
obligations and agreements of the Authority contained in this Agreement or
the
Indenture shall be effective to the extent authorized and permitted by
applicable law. No such covenant, obligation or agreement shall be
deemed to be a covenant, obligation or agreement of any present or future
member, director, officer, agent or employee of the Authority, and no official
executing the Bonds shall be liable personally on the Bonds or be subject to
any
personal liability or accountability by reason of the issuance thereof or by
reason of the covenants, obligations or agreements of the Authority contained
in
this Agreement or the Indenture.
Section
7.4
Binding
Effect. This Agreement shall inure to the benefit of and shall
be binding in accordance with its terms upon the Authority, the Company and
their respective successors and assigns; provided that this Agreement may not
be
assigned by the Company (except in connection with a sale or transfer of assets
pursuant to Section 4.1 or in compliance with Section 7.9) and may not be
assigned by the Authority except to the Trustee pursuant to the Indenture or
by
the Trustee to a successor Trustee, or as otherwise may be necessary to enforce
or secure payment of Debt Service. This Agreement may be enforced
only by the parties, their assignees and others who may, by law, stand in their
respective places.
Section
7.5
Amendments. Except
as otherwise expressly provided in this Agreement or the Indenture, subsequent
to the issuance of the Bonds and unless and until all conditions provided for
in
the Indenture for release of the Indenture are met, this Agreement may not
be
effectively amended, modified or terminated except by an instrument in writing
signed by the Company and the Authority, consented to by the Trustee, and in
accordance with the provisions of Article XV of the Indenture as
applicable.
Section
7.6
Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall
be
regarded as an original and all of which shall constitute one and the same
instrument.
Section
7.7
Severability. If
any provision of this Agreement is determined by a court to be invalid or
unenforceable, such determination shall not affect any other provision hereof,
each of which shall be construed and enforced as if the invalid or unenforceable
portion were not contained herein. Such invalidity or
unenforceability shall not affect any valid and enforceable application thereof,
and each such provision shall be deemed to be effective, operative and entered
into in the manner and to the full extent permitted by applicable
law.
Section
7.8
Governing
Law. This Agreement shall be deemed to be a contract made
under the laws of the Commonwealth of Pennsylvania and for all purposes shall
be
governed by and construed in accordance with the laws of the Commonwealth of
Pennsylvania.
Section
7.9
Assignment. Except
as otherwise
provided in this Section 7.9, the Company shall not assign this Agreement or
any
interest of the Company herein, either in whole or in part, without the prior
written consent of the Trustee, which consent shall be given if the following
conditions are fulfilled: (i) the assignee assumes in writing all of
the obligations of the Company hereunder; (ii) the assignee provides the Trustee
with an opinion of Counsel satisfactory to the Trustee to the effect that
neither the validity nor the enforceability of this Agreement shall be adversely
affected by such assignment; (iii) the Project Facilities shall continue in
the
opinion of Bond Counsel to be a “project” as such term is defined in the Act
after such assignment; (iv) such assignment shall not, in the opinion of Bond
Counsel, have an adverse effect on the exclusion from gross income for federal
income tax purposes of interest on the Bonds; (v) the assignee shall not be
a
Disqualified Contractor and shall provide a written certification to such effect
to the Trustee and the Authority; and (vi) if the assignee is other than an
Affiliate of the Company, consent by the Authority, which consent shall not
be
unreasonably withheld. Subject to the foregoing, the terms
“Authority,” “Company,” “Trustee” and “Remarketing Agent” shall, where the
context requires, include the respective successors and assigns of such
persons.
Section
7.10
Receipt of
Indenture. The Company hereby acknowledges that it has
received an executed copy of the Indenture and is familiar with its provisions,
and agrees that it is subject to and bound by the terms thereof (including
the
terms thereof relating to obligations of the Company) and it will take all
such
actions as are required or contemplated of it under the Indenture to preserve
and protect the rights of the Trustee and of the Bondholders thereunder and
that
it will not take any action which would cause a default or Event of Default
thereunder.
[Signatures
appear on following page]
IN
WITNESS WHEREOF, the Authority and the Company, intending to be legally bound,
have caused this Agreement to be duly executed in their respective names, all
as
of the date first above written.
|
[SEAL]
|
PENNSYLVANIA
ECONOMIC
DEVELOPMENT
FINANCING
AUTHORITY
|
|
Attest /s/
Xxxxx
Xxxxxxxx
(Assistant)
Secretary
|
By /s/
Xxxxxxx X.
Xxxxxx
Xxxxxxx
X. Xxxxxx
Executive
Director
|
|
PPL
ENERGY SUPPLY, LLC
|
|
|
By /s/
Xxxxx X.
Xxxx
Name: Xxxxx
X. Xxxx
Title: Vice
President and Treasure
|
EXHIBIT
A
DESCRIPTION
OF PROJECT
FACILITIES
The
Project Facilities consist
generally of those portions of the Company’s wet limestone flue gas
desulfurization (or “FGD”) systems currently being installed at the Montour
Plant and the Xxxxxxx Island Plant. The Montour Plant consists of two
coal-fired electric generating units each rated at 745 megawatt electric
(“MW(e)”) gross and 755 MW(e) gross maximum continuous load. The
Xxxxxxx Island Plant consists of three coal-fired electric generating units;
Unit 1 is rated at 363.3MW(e); Xxxx 0 is rated at 405 MW(e); and Unit 3 is
rated
at 790.4 MW(e). Specifically, the Company will install (i) one FGD
unit at each of Units 1 and 2 at the Montour Plant, and (ii) one FGD unit at
Unit 3 and one FGD unit for Units 1 and 2 at the Xxxxxxx Island
Plant. The FGD systems are designed to remove over 97% of the sulfur
dioxide (SO2)
in
the exhaust, or flue gas, created by the burning of coal at the Plants
through a series of processes that will involve, among other things, the
injection of a limestone and water mixture into the flue gas to ultimately
form
calcium sulfate, or gypsum, as a byproduct.
EXHIBIT
B
FORM
OF
DISBURSEMENT REQUEST
STATEMENT
NO. _________ REQUESTING DISBURSEMENT OF FUNDS FROM PROJECT FUND PURSUANT TO
SECTION 2.4 OF THE EXEMPT FACILITIES LOAN AGREEMENT DATED AS OF DECEMBER 1,
2007
(“LOAN AGREEMENT”) BETWEEN PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY
(“AUTHORITY”) AND PPL ENERGY SUPPLY, LLC (“COMPANY”).
The
terms
used herein shall have the meanings specified for such terms in or pursuant
to
the Loan Agreement. Pursuant to Section 2.4 of the Loan Agreement,
the undersigned Authorized Representative of the Company hereby requests and
authorizes the Trustee to pay to the Company or to the Person(s) listed on
the
Disbursement Schedule attached hereto out of the moneys deposited in the Project
Fund the aggregate
sum of $___________ to reimburse the Company or to pay such Person(s), as
indicated in the Disbursement Schedule, for the items of Project Cost listed
in
the Disbursement Schedule. Such Payee(s) may be (i) the Company in
the case of work done by Company personnel and in the case of reimbursement
for
payments previously made by the Company for Project Costs (other than payments
made by way of set-off of mutual claims between the Company and the payee),
(ii)
the Trustee in the case of a requisition for payment of interest on the Bonds
during acquisition, construction, installation, equipment and improvement of
the
Project Facilities and (iii) any other Person designated by the Company for
Project Costs incurred by such Person associated with the issuance of the
Bonds. All such payments shall be made by check or wire transfer in
accordance with payment instructions contained in the Disbursement Schedule
and
the Trustee shall have no duty or obligation to authenticate such payment
instructions or the authorization thereof.
In
connection with the foregoing request and authorization, the undersigned hereby
certifies that:
(a)
Each
item
for which disbursement is requested hereunder is due, is an item of incurred
Project Cost properly reimbursable or payable out of the Project Fund in accordance with
the
terms and conditions of the Loan Agreement, and none of those items has formed
the basis for any disbursement heretofore made from the Project
Fund.
(b)
Each
such
item is or was necessary or appropriate in connection with the acquisition,
construction, installation, equipment and/or improvement of the Project
Facilities.
(c)
Each
such
item is as described in the information statement filed by the Authority in
connection with the issuance of the Bonds (as defined in the Loan Agreement),
as
required by Section 149(e) of the Code; provided that if any such item is not
as
described in that information statement, attached hereto is an opinion of Bond
Counsel that such disbursement will not result in the interest on the Bonds
becoming included in the gross income of the holders thereof for federal income
tax purposes.
(d)
The
reimbursement or payment of the Project Costs requisitioned hereby will comply
with the restrictions contained in Sections 2.4, 4.11 and 4.12 of the Loan
Agreement.
(e)
This
statement and all exhibits hereto, including the Disbursement Schedule, shall
constitute full warrant, protection and authority to the Trustee for its actions
taken pursuant hereto.
Dated:
________________
PPL
ENERGY SUPPLY, LLC
By
_________________________________
Authorized
Representative
DISBURSEMENT
SCHEDULE
TO
STATEMENT NO. ___________ REQUESTING AND AUTHORIZING DISBURSEMENT OF FUNDS
FROM
PROJECT FUND PURSUANT TO SECTION 2.4 OF THE EXEMPT FACILITIES LOAN AGREEMENT
DATED AS OF DECEMBER 1, 2007 BETWEEN PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING
AUTHORITY AND PPL ENERGY SUPPLY, LLC.
|
PAYEE
|
PURPOSE
|
AMOUNT
|
EXHIBIT
C
PPL
ENERGY SUPPLY, LLC
EXEMPT
FACILITIES NOTE
(PENNSYLVANIA
ECONOMIC DEVELOPMENT FINANCING AUTHORITY)
SERIES
2007
This
Note
is issued pursuant to an Exempt Facilities Loan Agreement dated as of December
1, 2007 (the “Agreement”) by and between the Pennsylvania Economic Development
Financing Authority (the “Authority”) and the Company (as hereinafter defined)
relating to the financing of certain facilities (the “Project Facilities) at the
(i) Montour Generating Station, Washingtonville, Montour County, Pennsylvania;
and (ii) Xxxxxxx Island Generating Station, York Haven, York County,
Pennsylvania (collectively, the “Plants”). Each capitalized term not otherwise
defined herein shall have the meaning given to such term in the
Agreement.
PPL
Energy Supply, LLC (the “Company”), a Delaware limited liability company, for
value received, unconditionally promises to pay to The Bank of New York Trust
Company, N.A., as Trustee (including its successors in such capacity, the
“Trustee”) under the Trust Indenture dated as of December 1, 2007 (as the same
may be amended and supplemented from time to time, the “Indenture”) between the
Trustee and the Authority, the principal sum of EIGHTY MILLION FIVE HUNDRED
SEVENTY THOUSAND DOLLARS ($80,570,000) on December 1, 2037, and to pay (i)
interest thereon from the date hereof until the payment of such principal sum
has been made or provided for at a rate or rates at all times equal to the
interest rate or rates from time to time borne by the Authority’s Exempt
Facilities Revenue Bonds, Series 2007 (PPL Energy Supply, LLC Project) (the
“Bonds”) and payable on each date that interest is payable on the Bonds, and
(ii) to the extent provided by law, on overdue interest at the rate or rates
borne by the Bonds; provided, however, that the obligation of the Company to
make any payment hereunder (a) shall be reduced by the amount of any reduction
under the Indenture of the amount of the corresponding payment required to
be
made by the Authority of the principal of or premium or interest on the Bonds
and (b) shall be deemed to have been satisfied to the extent that moneys shall
have been paid by a Credit Facility Issuer to the Trustee for such payment
in
respect of the Bonds.
If
the
Bonds become subject to redemption as provided therein and in the Indenture,
the
Company shall, as provided in the Agreement, on or before the proposed
redemption date for the Bonds, pay to the Trustee the whole or appropriate
portion of the unpaid principal amount of this Note with interest accrued to
the
proposed redemption date, together with such premium as is necessary to pay
the
corresponding premium, if any, on the Bonds. Such amount shall be
paid by the Company to the Trustee on the date specified in a notice from the
Trustee.
If,
for
any reason, the amounts specified above are not sufficient to make corresponding
payments of principal of, premium, if any, and interest on, all of the Bonds,
when such payments are due, the Company shall pay as additional amounts due
hereunder, the amounts required from time to time to make up any such
deficiency. Whenever payment or provision for payment has been made
in respect of the principal or redemption price of, and interest on, all of
the
Bonds in accordance with the Indenture, this Note shall be deemed paid in full
and shall be canceled and returned to the Company.
All
payments of principal, redemption price and interest shall be made to the
Trustee at its corporate trust office designated pursuant to the Indenture,
in
such coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private
debts. All payments shall be made in funds which will be available no
later than 10:00 a.m. on the applicable due date, and shall be in the full
amount required hereunder unless the Trustee notifies the Company that it is
entitled to a credit under the Agreement or the Indenture.
The
obligations of the Company to make the payments required hereunder shall be
absolute and unconditional without defense or setoff by reason of any cause
or
circumstance whatsoever, including without limitation, any acts or circumstances
that may constitute failure of consideration, destruction of or damage to the
Project Facilities or the Plants, commercial frustration of purpose, or failure
of the Authority to perform and observe any agreement, whether express or
implied, or any duty, liability or obligation arising out of or connected with
the Agreement, it being the intention of the Company and the Authority that
the
payments hereunder will be paid in full when and as due without any delay or
diminution whatsoever.
In
case
one or more of the Events of Default specified in Section 6.1 of the Agreement
shall have occurred and be continuing, then and in each and every such case,
the
Trustee, by notice in writing to the Company, may declare the unpaid balance
of
this Note to be due and payable immediately, if concurrently with or prior
to
such notice the unpaid principal amount of the Bonds has been declared to be
due
and payable, and upon any such declaration the same shall become and shall
be
immediately due and payable, anything in this Note or in the Agreement to the
contrary notwithstanding. Notwithstanding the foregoing, if after any
declaration of acceleration hereunder there is an annulment of any declaration
of acceleration with respect to the Bonds, such annulment shall also
automatically constitute an annulment of any corresponding declaration under
this Note and a waiver and rescission of the consequences of such
declaration.
In
case
the Trustee shall have proceeded to enforce its rights under this Note or the
Agreement and such proceedings shall have been discontinued or abandoned for
any
reason or shall have been determined adversely to the Trustee, then and in
every
such case the Company and the Trustee shall be restored to their respective
positions and rights hereunder, and all rights, remedies and powers of the
Company and the Trustee shall continue as though no such proceeding had been
taken, subject to any such adverse determination.
In
case
the Company shall fail forthwith to pay all amounts due hereunder and under
the
Agreement upon such demand, the Trustee shall be entitled and empowered to
institute any action or proceeding at law or in equity for the collection of
the
sums so due and unpaid, and may prosecute any such action or proceeding to
judgment or final decree, and may enforce any such judgment or final decree
against the Company and collect, in the manner provided by law out of the
property of the Company, the moneys adjudged or decreed to be
payable.
This
Note
shall be governed by and interpreted under the laws of the Commonwealth of
Pennsylvania.
IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed and
delivered.
|
Dated: as
of December 1, 2007
|
PPL
ENERGY SUPPLY, LLC
|
|
By:
________________________________
Name:
Title:
|
EXHIBIT
D
NONDISCRIMINATION/SEXUAL
HARASSMENT CLAUSE
During
the term of this contract, the Company agrees as to itself and each tenant
of
the Project Facilities controlling, controlled by or under common control with
the Company (each of the Company and each such tenant, a “Contractor”) as
follows:
1.
In the hiring of any employee(s) for the manufacture of supplies, performance
of
work, or any other activity required under the contract or any subcontract,
the
Contractor, subcontractor, or any person acting on behalf of the Contractor
or
subcontractor shall not, by reason of gender, race, creed, or color,
discriminate against any citizen of this Commonwealth who is qualified and
available to perform the work to which the employment relates.
2.
Neither the Contractor nor any subcontractor nor any person on their behalf
shall in any manner discriminate against or intimidate any employee involved
in
the manufacture of supplies, the performance of work, or any other activity
required under the contract on account of gender, race, creed, or
color.
3.
Contractors and subcontractors shall establish and maintain a written sexual
harassment policy and shall inform their employees of the policy. The policy
must contain a notice that sexual harassment will not be tolerated and employees
who practice it will be disciplined.
4.
Contractors shall not discriminate by reason of gender, race, creed, or color
against any subcontractor or supplier who is qualified to perform the work
to
which the contracts relates.
5.
The Contractor and each subcontractor shall furnish all necessary employment
documents and records to and permit access to their books, records, and accounts
by the contracting agency and the Bureau of Contract Administration and Business
Development, for purposes of investigation, to ascertain compliance with
provisions of this Nondiscrimination/Sexual Harassment Clause. If the Contractor
or any subcontractor does not possess documents or records reflecting the
necessary information requested, the Contractor or subcontractor shall furnish
such information on reporting forms supplied by the contracting agency or the
Bureau of Contract Administration and Business Development.
6.
The Contractor shall include the provisions of this Nondiscrimination/Sexual
Harassment Clause in every subcontract so that such provisions will be binding
upon each subcontractor.
7.
The Commonwealth may cancel or terminate the contract, and all money due or
to
become due under the contract may be forfeited for a violation of the terms
and
conditions of this Nondiscrimination/Sexual Harassment Clause. In addition,
the
agency may proceed with debarment or suspension and may place the Contractor
in
the Contractor Responsibility File.
