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NEW YORK STATE ENERGY RESEARCH
AND DEVELOPMENT AUTHORITY
AND
LONG ISLAND LIGHTING COMPANY
PARTICIPATION AGREEMENT
Dated as of December 1, 1997
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- relating to -
Electric Facilities Revenue Bonds
(Long Island Lighting Company Project), 1997 Series A
1.
This PARTICIPATION AGREEMENT, dated as of December 1, 1997, between
NEW YORK STATE ENERGY RESEARCH AND DEVELOPMENT AUTHORITY, a body corporate and
politic, constituting a public benefit corporation, established and existing
under and by virtue of the laws of the State of New York (the "Authority"), and
LONG ISLAND LIGHTING COMPANY, a corporation duly organized and existing and
qualified to do business as a public utility under the laws of the State of New
York (the "Company"),
W I T N E S S E T H :
WHEREAS, pursuant to a special act of the Legislature of the State
of New York (Title 9 of Article 8 of the Public Authorities Law of New York, as
from time to time amended and supplemented, herein called the "Act"), the
Authority has been established, as a body corporate and politic, constituting a
public benefit corporation; and
WHEREAS, pursuant to the Act, the Authority is empowered to contract
with any power company to participate in the construction of facilities for the
furnishing of electricity to the extent required by the public interest in
development, health, recreation, safety, conservation of natural resources and
aesthetics; and
WHEREAS, pursuant to the Act, the Authority has also been empowered
to extend credit and make loans from bond and note proceeds to any person for
the construction, acquisition and installation of, or for the reimbursement to
any person for costs in connection with, any special energy project, including,
but not limited to, any land, works, system, building or other improvement, and
all real and personal properties of any nature or any interest in any of them
which are suitable for or related to the furnishing, generation or production of
energy; and
WHEREAS, the Authority is also authorized under the Act to borrow
money and issue its negotiable bonds and notes to provide sufficient moneys for
achieving its corporate purposes; and
WHEREAS, the Authority is also authorized under the Act to enter
into any contracts and to execute all instruments necessary or convenient for
the exercise of its corporate powers and the fulfillment of its corporate
purposes; and
WHEREAS, the Company is a public utility corporation doing business
in the State of New York and operates power plants in the State of New York; and
WHEREAS, the Company has requested that the Authority participate in
financing the acquisition, construction and installation of certain facilities
for the furnishing of electric energy within the Company's service area (such
facilities for the furnishing of electric energy being hereinafter referred to
as the "Project") and, as part of such participation, that the Authority issue
bonds pursuant to the Act to provide funds to finance the cost to the Company of
the Project and the expenses incurred in connection with the authorization,
issuance and sale of such bonds; and
WHEREAS, the Authority, pursuant to Resolution No. 903, adopted
December 17, 1997, has determined to issue its Electric Facilities Revenue Bonds
(Long Island Lighting Company Project), bearing the series designation set forth
on the first page of this Participation Agreement in an aggregate principal
amount of $24,880,000 (the "Bonds"), for the purpose of financing a portion of
such costs and expenses, all such Bonds to be issued under and secured by an
Indenture of Trust relating to the Bonds dated as of December 1, 1997, between
the Authority and The Chase Manhattan Bank, as Trustee (the "Indenture");
NOW, THEREFORE, for and in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, it is hereby agreed by
and between the parties as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; EFFECTIVE DATE
AND DURATION OF PARTICIPATION AGREEMENT
Section 1.01. DEFINITIONS. The terms used in this Participation Agreement
which are defined in Section 1.01 of the Indenture shall have the meanings,
respectively, herein, which such terms are given in said Section 1.01 of the
Indenture.
Section 1.02. RULES OF CONSTRUCTION. Unless the context clearly indicates
to the contrary, the following rules shall apply to the construction of the
Participation Agreement:
(a) Words importing the singular number shall include the plural
number and vice versa;
(b) All references herein to particular articles or sections are
references to articles or sections of the Participation Agreement;
(c) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of the Participation Agreement
nor shall they affect its meaning, construction or effect;
(d) The terms "hereby," "hereof," "hereto," "herein," "hereunder"
and any similar terms, as used in the Participation Agreement, refer to
the Participation Agreement in its entirety and not to the particular
article or section of the Participation Agreement in which they appear,
and the term "hereafter" means after, and the term "heretofore" means
before, the date of the Participation Agreement; and
(e) In the event that there is any conflict between the provisions
of the Participation Agreement and those of the Indenture, the provisions
of the Indenture shall govern the disposition of such conflict.
Section 1.03. EFFECTIVE DATE OF PARTICIPATION AGREEMENT; DURATION OF
PARTICIPATION AGREEMENT. This Participation Agreement shall become effective
upon its execution and delivery, and shall continue in full force and effect
until the principal of, and premium, if any, and interest on, the Company Note
and Bonds have been fully paid (or provision for their payment has been made in
accordance with the provisions of the Indenture) and all sums to which the
Authority or the Trustee are entitled hereunder have been fully paid.
ARTICLE II
REPRESENTATIONS
Section 2.01. REPRESENTATIONS AND WARRANTIES BY THE AUTHORITY. The
Authority represents and warrants as follows:
(a) The Authority is a body corporate and politic, constituting a
public benefit corporation, established and existing under the laws of the
State of New York;
(b) The Authority has full power and authority to execute and deliver
this Participation Agreement, the Indenture and the Tax Regulatory
Agreement and to consummate the transactions contemplated hereby and
thereby and to perform its obligations hereunder and thereunder;
(c) The Authority is not in default under any of the provisions of the
laws of the State of New York which would affect its existence or its
powers referred to in the preceding paragraph (b);
(d) The Authority has determined that its participation in the
financing of the Project, as contemplated by this Participation Agreement,
is in the public interest;
(e) The Authority has duly authorized the execution and delivery of
this Participation Agreement, the Indenture and the Tax Regulatory
Agreement and the execution and delivery of the other documents incidental
to this transaction, and all necessary authorizations therefor or in
connection with the performance by the Authority of its obligations
hereunder or thereunder have been obtained and are in full force and
effect; and
(f) The execution and delivery by the Authority of this Participation
Agreement, the Indenture and the Tax Regulatory Agreement and the
consummation of the transactions herein or therein contemplated will not
violate any indenture, mortgage, loan agreement or other contract or
instrument to which the Authority is a party or by which it is bound, or to
the best of the Authority's knowledge, any judgment, decree, order,
statute, rule or regulation applicable to the Authority.
Section 2.02. REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The
Company represents and warrants as follows:
(a) The Company is a corporation duly incorporated and in good
standing under the laws of the State of New York, is duly qualified and
authorized to engage in business as a public utility in the State of New
York, has power to enter into, execute and deliver this Participation
Agreement, the Tax Regulatory Agreement and the Company Note by proper
corporate action and has duly authorized the execution and delivery by it
of this Participation Agreement, the Tax Regulatory Agreement and the
Company Note;
(b) The execution and delivery by the Company of this Participation
Agreement, the Tax Regulatory Agreement and the Company Note and the
consummation of the transactions herein contemplated do not conflict with
or constitute a breach of or a default under the Company's Certificate of
Incorporation, By-Laws or any indenture, mortgage, loan agreement or other
contract or instrument to which the Company is a party or by which it is
bound, or to the best of the Company's knowledge, any judgment, decree,
order, statute, rule or regulation applicable to the Company;
(c) This Participation Agreement, the Tax Regulatory Agreement and the
Company Note constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their
respective terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or other laws, judicial
decisions or principles of equity relating to or affecting the enforcement
of creditors' rights or contractual obligations generally;
(d) The execution and delivery by the Company of this Participation
Agreement and the Company Note in the manner and for the purposes herein
set forth have been duly authorized by an order of the Public Service
Commission of the State of New York;
(e) No additional authorizations for or approvals of the execution and
delivery by the Company of this Participation Agreement, the Tax Regulatory
Agreement and the Company Note need be obtained by the Company or if any
such authorization or approval is necessary it has been obtained; and
(f) The representations of the Company set forth in the Tax Regulatory
Agreement are hereby incorporated by reference as though fully set forth
herein.
ARTICLE III
CONSTRUCTION OF THE PROJECT;
ISSUANCE OF BONDS
Section 3.01. CONSTRUCTION OF THE PROJECT. 1. The Company will
construct and complete or cause construction and completion of the Project with
reasonable dispatch and in accordance with the Company's construction plans
therefor. The Project shall belong to and be the property of the Company. In
order to effectuate the purposes of this Participation Agreement, the Company
will do or cause to be done all things requisite or proper for the construction
of the Project and the fulfillment of the obligations of the Company under this
Participation Agreement.
2. Notwithstanding any other provision of this Participation
Agreement to the contrary, the Company shall not be required to complete the
construction of any component of the Project with respect to which funds have
not been disbursed from the Project Fund if in the Company's business judgment
it is not necessary or advisable to do so, provided that failure to complete the
construction of such component will not affect the character or intended purpose
of any other component of such Project and provided further that the estimated
Cost of Construction of the components of the Project yet to be completed (as
estimated by the Company at the time it determines not to complete any
component) is at least equal to the amount of moneys remaining in the Project
Fund.
Notwithstanding any other provision of this Participation Agreement
to the contrary, the Company shall not be required to complete the construction
of any component of the Project if in the Company's business judgment it is not
necessary or advisable to do so and the Company shall have delivered to the
Authority an opinion of Bond Counsel to the effect that failure to complete such
component of such Project will not adversely affect the qualification of any
other component of such Project for financing under the Act or the exclusion
from gross income for Federal income tax purposes of interest on the Bonds.
Section 3.02. SALE OF BONDS AND DEPOSIT OF PROCEEDS; LIABILITY UNDER
BONDS. 1. In order to provide funds for payment of a portion of the Cost of
Construction of the Project, the Authority, as soon as practicable after the
execution of this Participation Agreement will issue, sell and deliver the Bonds
to the initial purchasers thereof, all pursuant to and as provided in the
Purchase Contract for the Bonds among the Authority, the Company, X.X. Xxxxxx
Securities Inc., Xxxxxx Brothers Inc., Xxxxxxx Xxxxx & Co., and X.X. Xxxx &
Company and will deposit the proceeds of such sale of the Bonds with the
Trustee, as follows: (i) in the Bond Fund, a sum equal to the accrued interest,
if any, paid by the initial purchasers of the Bonds and (ii) in the Construction
Account of the Project Fund, the balance of the proceeds received from such
sale.
2. The Bonds shall not be general obligations of the Authority, and
shall not constitute an indebtedness of, or a charge against the general credit
of, the Authority or give rise to any pecuniary liability of the Authority. The
liability of the Authority under the Bonds shall be enforceable only to the
extent provided in the Indenture, and the Bonds shall be payable solely from the
Company Note Payments, funds drawn under the Letter of Credit and any other
funds held by the Trustee under the Indenture and available for such payment.
The Bonds shall not be a debt of the State of New York, and the State of New
York shall not be liable thereon.
Section 3.03. DISBURSEMENTS FROM PROJECT FUND AND REBATE FUND. 1.
The Authority has, in the Indenture, authorized and directed the Trustee to make
payments from the Project Fund, in accordance with and subject to the provisions
of Section 5.03 of the Indenture, to pay the Cost of Construction of the Project
upon receipt from time to time of requisitions signed by an Authorized Company
Representative, stating with respect to each payment to be made for the Project
the information required by Section 5.03 of the Indenture.
The Company will cause such requisitions to be submitted to the
Trustee as may be necessary to effect payments out of the Project Fund in
accordance with the provisions of the Indenture. Concurrently with the delivery
by the Company of each requisition to the Trustee, the Company will deliver to
the Authority a copy of such requisition and any attachments thereto. The
Authority and the Trustee may rely on the Company as to the completeness and
accuracy of all statements in such requisition, and the Company will indemnify
and save harmless the Authority and the Trustee from any liability incurred in
connection with any requisition so delivered and the payment of funds in
reliance thereon.
2. All moneys remaining in the Project Fund after the certificate
referred to in Section 5.05 of the Indenture is furnished shall, at the written
direction of an Authorized Company Representative, be applied in accordance with
Section 5.06 of the Indenture.
Section 3.04. REVISION OF CONSTRUCTION PLANS. The Company may revise
the construction plans for the Project at any time and from time to time;
provided, however, that no such revision shall be made prior to the Completion
Date with respect to such Project which would render the description of such
Project inaccurate in any material respect, except in accordance with the
following procedure:
(a) Prior to any such revision the Company shall deliver to the
Trustee and the Authority (1) a certificate of an Authorized Company
Representative, setting forth the text of the change in the description of
such Project which would be necessary to reflect accurately the proposed
revision in plans and specifications, and certifying that, notwithstanding
such revision, such Project will still be designed to serve the purposes
which would have been served by such Project in the absence of such
revision, and (2) an opinion of Bond Counsel that such revision of such
Project description and the expenditure of moneys from the Project Fund
under the provisions of the Indenture to pay the Cost of Construction of
such Project in accordance with the revised description of such Project
will not impair the exclusion of interest on any of the Bonds then
outstanding from gross income for Federal income tax purposes.
(b) Ten (10) days after the receipt by the Authority and the Trustee
of the certificate and opinion referred to in paragraph (a) above, such
Project description shall be deemed amended to include such revision for
all purposes of this Participation Agreement and the Indenture. Upon the
request of either party or the Trustee, the Authority and the Company
shall enter into an appropriate instrument reflecting such amendment.
Section 3.05. CERTIFICATION OF COMPLETION OF PROJECT. When the
Project has been completed (except for components that the Company has
determined not to complete in accordance with Section 3.01), the Company shall
promptly deliver to the Trustee and the Authority a certificate of an Authorized
Company Representative to the effect that, as of a specified date, the Project
has been completed (except as aforesaid). Such certificate shall specify the
components of the Project, if any, the completion of which has been excused
pursuant to Section 3.01. The certificate delivered pursuant to this Section
3.05 shall also contain an appropriate direction to the Trustee with respect to
any amount in the Project Fund which is to be retained or thereupon disposed of
as provided in Section 5.06 of the Indenture. The Trustee may rely as to the
accuracy and completeness of all statements in such certificate.
Notwithstanding the foregoing, such certificate shall be given and
may state that it is given without prejudice to any rights against third parties
which exist at the date thereof or which may subsequently come into being.
Section 3.06. PAYMENT OF COST OF CONSTRUCTION OF THE PROJECT IN
EVENT PROJECT FUND INADEQUATE. If the moneys in the Project Fund available
therefor shall not be sufficient to pay the Cost of Construction of the Project
in full (whether due to investment losses or otherwise), the Company shall,
subject to the provisions of Section 3.01, complete the Project and pay (whether
through financing or otherwise) all that portion of the Cost of Construction
thereof in excess of the moneys available therefor in the Project Fund. The
Authority does not make any warranty, either express or implied, that the moneys
which will be paid into the Project Fund will be sufficient to pay the Cost of
Construction of the Project. If the Company shall pay any portion of the Cost of
Construction of the Project pursuant to the provisions of this Section, except
to the extent it may submit requisitions pursuant to Section 5.03 of the
Indenture, it shall not be entitled to any reimbursement therefor from the
Authority, the Trustee or the owners of any of the Bonds, nor shall it be
entitled to any diminution in or postponement of the payments required to be
paid by the Company pursuant to this Participation Agreement or the Company
Note.
Section 3.07 NO INTEREST IN PROJECT CONFERRED. Neither the Authority
nor the Trustee shall be entitled to any interest in the Project by reason of
the advance of Bond proceeds pursuant to this Participation Agreement.
Section 3.08 OPERATION, MAINTENANCE AND REPAIR. The Authority and
the Company recognize that the Project will constitute integrated portions of
the electric energy and production facilities of the Company and that it is not
feasible to administer the Project separately from such facilities. The Company
shall operate the Project (with such changes, improvements or additions as the
Company may deem desirable) as part of such facilities for the joint useful life
of the Project and such facilities and shall maintain and repair the Project in
conformity with the Company's normal maintenance and repair programs for such
facilities provided that the Company shall have no obligation to operate,
maintain or repair any element or item of the Project the operation,
maintenance, or repair of which becomes uneconomic to the Company because of
damage or destruction or obsolescence (including physical, functional and
economic obsolescence), or change in government standards and regulations, or
the termination of the operation of the facilities to which the element or item
of the Project is an adjunct; and provided further that, in any event, the
Company is proceeding in good faith to maintain the availability of the Project
for use as an authorized project under the Act.
Section 3.09 INVESTMENT OF MONEYS IN FUNDS UNDER THE INDENTURE. Any
moneys held as a part of any fund created under the Indenture shall be invested
or reinvested by the Trustee as provided in Article VII of the Indenture. Any
such investment shall be consistent with the provisions of the Tax Regulatory
Agreement.
Section 3.10 AGREEMENT NOT TO EXERCISE OPTION TO CONVERT TO FIXED
RATE ABSENT SPECIFIED RATING. The Company agrees not to direct that a Fixed Rate
become effective pursuant to Section 2.04(b) of the Indenture unless the Company
shall have delivered to the Authority evidence satisfactory to the Authority
that upon conversion to a Fixed Rate the Bonds are expected to be rated in at
least the third highest rating category of Xxxxx'x or S&P (currently "A" in the
case of Xxxxx'x and "A" in the case of S&P).
Section 3.11 SECURITIES DEPOSITORY. The Company acknowledges that
the Authority and the Trustee, at the request of the Company, have arranged for
the initial deposit of the Bonds with The Depository Trust Company ("DTC") which
will act as Securities Depository in order to effectuate a book-entry-only
system and that this system may be discontinued or, if discontinued,
reinstituted (with DTC or another Securities Depository) in accordance with the
Indenture. The Company agrees to take all actions necessary, and to refrain from
taking actions contrary to the effectuation of a book-entry-only system
established pursuant to the Indenture and any arrangements among the Authority,
the Trustee and any Securities Depository. The Authority shall not enter into
any written agreements with a Securities Depository without receipt and
acceptance of such agreements by the Company.
ARTICLE IV
COMPANY NOTE AND PAYMENTS; LETTER OF CREDIT
Section 4.01 EXECUTION AND DELIVERY OF COMPANY NOTE TO TRUSTEE. 1.
Concurrently with the authentication by the Trustee and delivery by the
Authority of the Bonds and in order to evidence the obligation of the Company to
the Authority to repay the advance of the proceeds of the Bonds, the Authority
hereby directs the Company, and the Company hereby agrees, to execute and
deliver to the Trustee its Company Note and to duly and punctually pay the
principal of, premium, if any, and interest on, the Company Note at the place,
the times and in the manner provided therein. The Company Note shall be
substantially in the form attached hereto as EXHIBIT C.
2. The obligation of the Company to make any payment of principal
of, and premium, if any, and interest on, the Company Note shall be deemed
satisfied and discharged to the extent of the corresponding payment made by the
Bank under the Letter of Credit.
Section 4.02 REDEMPTION OF BONDS. Whenever Bonds are redeemable in
whole or in part, the Authority will redeem the same at the written direction of
an Authorized Company Representative given in accordance with Section 8.01 of
the Indenture.
Section 4.03 OBLIGATION FOR PAYMENT ABSOLUTE; DEFICIENCIES. The
Company agrees that its obligation to make the Company Note Payments and
payments under Section 4.11 at the times and in the amounts provided in the
Company Note and this Participation Agreement shall be absolute, irrevocable and
unconditional and shall not be subject to any defense (other than payment) or
any right of set-off, counterclaim or recoupment for any reason, including,
without limitation, the unenforceability (because of judicial decision or
otherwise) or the impossibility of performance of the Company Note obligations,
or any breach by the Authority of any obligation to the Company, whether under
this Participation Agreement or otherwise, or inaccuracy of any representation
by the Authority to the Company under this Participation Agreement or in any
other instrument, or any indebtedness or liability at any time owing to the
Company by the Authority, or any failure to complete the Project, or the
destruction by fire or other casualty of the Project or any portion thereof, or
the taking of title thereto or the use thereof by the exercise of the power of
eminent domain. If for any reason Company Note Payments, together with other
moneys held by the Trustee and then available for such purpose (including moneys
paid by the Bank under the Letter of Credit), would not be sufficient to make
the corresponding payments of principal of, and premium, if any, and interest
on, the Bonds when such payments are due, the Company will pay the amounts
required from time to time to make up any such deficiency. If for any reason
payments under Section 4.11, together with other moneys held by the Trustee and
the Tender Agent and then available for such purpose (including moneys paid by
the Bank under the Letter of Credit), would not be sufficient to make the
corresponding payments of the purchase price of the Bonds when such payments are
due, the Company will pay the amounts required from time to time to make up any
such deficiency.
Section 4.04 ADMINISTRATION FEES; EXPENSES, ETC. In order to defray
a portion of the expenses incurred by the Authority in conducting and
administering its programs for the acquisition and construction of facilities
for the furnishing of electricity, special energy projects and the development
of advanced technologies, the Company shall pay to the Authority an initial
Administration Fee in the amount of $62,200 on the date of the delivery of the
Bonds to the initial purchasers thereof and an annual Administration Fee in the
amount of $3,250 on December 1 of each year commencing December 1, 1998, until
the Bonds are no longer outstanding. In addition, the Company shall pay to the
State of New York with respect to the Bonds a bond issuance charge in the amount
of $87,080 on the date of authentication and delivery of the Bonds to the
initial purchasers.
In addition to such Administration Fees, the Company will pay or
reimburse the Authority upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Authority (including printing
costs and the reasonable fees, expenses and disbursements of its counsel and
bond counsel) in connection with the Participation Agreement, the Indenture, the
Tax Regulatory Agreement or any transaction or event contemplated by the
Participation Agreement, the Tax Regulatory Agreement or the Indenture.
Section 4.05 COMPENSATION OF TRUSTEE, PAYING AGENT, REMARKETING
AGENTS, INDEXING AGENT AND TENDER AGENT. The Company agrees:
(1) to pay to the Trustee from time to time upon its request
reasonable compensation for all services rendered by it in any capacity
under the Indenture (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as so otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred by it in any capacity under the Indenture (including the
reasonable compensation and the expenses and disbursements of its agents
and counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith;
(3) to pay to the Paying Agent from time to time upon its request,
reasonable compensation for all services rendered by it as Paying Agent
under the Indenture and reimburse it for its reasonable expenses incurred
under the Indenture (including reasonable compensation and expenses and
disbursements of its agents and counsel), except any such expense as may be
attributable to its negligence or bad faith; and
(4) to pay to the Remarketing Agents, the Tender Agent and the
Indexing Agent their reasonable fees and expenses as and when the same
become due, except any such expense as may be attributable to such person's
negligence or bad faith.
Section 4.06 PROJECT NOT SECURITY FOR BONDS. It is expressly
recognized by the parties hereto that neither the Project nor any other property
of the Company will constitute any part of the security for the Bonds.
Section 4.07 PAYMENT OF TAXES AND ASSESSMENTS; NO LIENS OR CHARGES.
The Company will (a) pay, when the same shall become due, all taxes and
assessments, including income, profits, property or excise taxes, if any, or
other municipal or governmental charges, imposed, levied or assessed by the
Federal, state or any municipal government upon the Authority, the Tender Agent
or the Trustee in respect of any payments (other than payments made pursuant to
Sections 4.04 and 4.05) made or to be made pursuant to this Participation
Agreement or the Company Note and (b) pay or cause to be discharged, within
sixty (60) days after the same shall accrue, any lien or charge upon any such
payment made or to be made under this Participation Agreement, PROVIDED that the
Company shall not be required to pay any such tax or assessment so long as (i)
the Company at its expense contests, by appropriate legal proceedings conducted
in good faith and with due diligence, the amount, validity or application of any
such tax, assessment or charge, (ii) such proceedings shall have the effect of
suspending the collection thereof from the Authority, the Trustee and the Tender
Agent, and (iii) the Company shall indemnify and hold the Authority, the Trustee
and the Tender Agent harmless from any losses, costs, charges, expenses
(including reasonable attorneys' fees and disbursements), judgments and
liabilities arising in respect of such tax, assessment or charge and the
nonpayment thereof.
Section 4.08 INDEMNIFICATION OF AUTHORITY, TRUSTEE, TENDER AGENT,
PAYING AGENT, REMARKETING AGENTS AND INDEXING AGENT. Any obligation of the
Authority created by or arising out of this Participation Agreement shall be a
limited obligation of the Authority, payable solely from the Company Note
Payments, any payments by the Company under Section 4.11, funds drawn under the
Letter of Credit and any other funds held by the Trustee under the Indenture and
available for such payment, and shall not constitute an indebtedness of or a
charge against the general credit of the Authority and shall not constitute or
give rise to any pecuniary liability of the Authority; nevertheless, if the
Authority shall incur any such pecuniary liability, then in such event the
Company shall indemnify and hold the Authority harmless by reason thereof. The
Company releases the Authority, the Trustee, the Paying Agent, the Remarketing
Agents, the Tender Agent and the Indexing Agent from, agrees that the Authority,
the Trustee, the Remarketing Agents, the Tender Agent, the Paying Agent and the
Indexing Agent shall not be liable for, and agrees to indemnify and hold the
Authority, the Trustee, the Paying Agent, the Remarketing Agents, the Tender
Agent and the Indexing Agent harmless from, any liability for any loss or damage
to property or any injury to or death of any person that may be occasioned by
any cause whatsoever arising out of the construction or operation of the Project
or the financing thereof. The Company agrees to indemnify and hold the
Authority, its members, officers and employees, the Trustee, the Tender Agent,
the Remarketing Agents, the Paying Agent and the Indexing Agent harmless from
any losses, costs, charges, expenses (including reasonable attorneys' fees and
disbursements), judgments and liabilities incurred by it or them, as the case
may be, in connection with any claims made, any action, suit or proceeding
instituted or threatened, in connection with the transactions contemplated by
this Participation Agreement or the Indenture so long as, in the case of the
Authority, its members, officers and employees, it or they, as the case may be,
have acted in good faith to carry out the transactions contemplated by this
Participation Agreement, the Remarketing Agreement or the Indenture and, except,
in the case of the Trustee, the Tender Agent, the Paying Agent and the Indexing
Agent, the Trustee's, the Tender Agent's, the Paying Agent's and the Indexing
Agent's willful misconduct or negligence.
Section 4.09 COMPANY TO PAY ATTORNEYS' FEES AND DISBURSEMENTS. If
the Company shall default under any of the provisions of this Participation
Agreement and the Authority or the Trustee or both of them shall employ
attorneys or incur other expenses for the collection of payments due under this
Participation Agreement or for the enforcement of performance or observance of
any obligation or agreement on the part of the Company contained in this
Participation Agreement, the Company will on demand therefor reimburse the
reasonable fees of such attorneys and such other reasonable disbursements so
incurred.
Section 4.10 NO ABATEMENT OF ADMINISTRATION FEES AND OTHER CHARGES.
It is understood and agreed that so long as any Bonds are outstanding under the
Indenture, Administration Fees and other charges payable to the Authority
pursuant to this Participation Agreement shall continue to be payable at the
times and in the amounts herein specified, whether or not the Project, or any
portion thereof, shall have been destroyed by fire or other casualty, or title
thereto or the use thereof shall have been taken by the exercise of the power of
eminent domain, and that there shall be no abatement of any such Administration
Fees and other charges by reason thereof.
Section 4.11. PAYMENT TO TENDER AGENT. The Company shall pay, or
cause to be paid, to the Tender Agent amounts equal to the amounts to be paid
pursuant to Section 2.05 of the Indenture in respect of Bonds tendered for
purchase or deemed to be so tendered pursuant to the terms of Section 2.05 of
the Indenture, such amounts to be paid by the Company to the Tender Agent on the
dates such payments pursuant to Section 2.05 of the Indenture are to be made;
PROVIDED, however, that the obligation of the Company to make any such payment
shall be reduced by the amount of any moneys available for such payment under
clauses (i) through (iii) of Section 2.05(h) of the Indenture and PROVIDED,
further, that the obligation of the Company to make any such payment shall be
deemed satisfied and discharged to the extent of the corresponding payment made
by the Bank under the Letter of Credit.
Section 4.12. THE LETTER OF CREDIT. At all times on or prior to the
Fixed Rate Conversion Date except during any period when all the Bonds then
outstanding are held by or for the account of the Company, a Letter of Credit
meeting the requirements of this Section 4.12 shall be in effect and, in the
event that an Alternate Credit Facility is to replace an expiring Letter of
Credit, the requirements of Section 6.07 of the Indenture will be fulfilled. A
Letter of Credit shall be an obligation of a bank or banks, insurance company or
companies, other financial institution or institutions, or any combination of
the foregoing, entitling the Trustee to draw up to (a) an amount equal to the
principal amount of the Bonds then outstanding to pay (i) the principal of the
Bonds when due, or (ii) the portion of the Purchase Price of Bonds corresponding
to principal, plus (b) an amount equal to 210 days' accrued interest on the
Bonds then outstanding computed at the maximum rate specified in such Letter of
Credit, which shall in no event exceed fifteen percent (15%), on the basis of a
360-day year. A Letter of Credit shall expire on the earliest occurrence of (1)
its stated expiration date, which shall be no earlier than one (1) day after the
next succeeding Optional Tender Date or Purchase Date not less than six months
from its effective date, (2) when all available amounts have been drawn, (3) the
second business day following the effective date of the Fixed Rate Conversion
Date, (4) on the effective date of any Alternate Credit Facility that replaces
the then effective Letter of Credit, (5) the earliest date on which no Bonds are
outstanding and (6) twelve (12) days after the Trustee receives notice from the
Bank that it is terminating the Letter of Credit and directing the Trustee to
cause a mandatory tender and purchase of or to accelerate the Bonds. A Letter of
Credit shall provide that when there is a drawing to pay interest on scheduled
payment dates, if the Trustee does not receive from the Bank by the close of
business on a day specified therein, which shall not be later than the tenth
(10th) day following such a drawing in respect of interest, notice by telephone
confirmed in writing (or by other means acceptable to the Trustee and the
Authority) that the amount available to be drawn has not been reinstated by the
amount of the drawing for interest (except on principal of a Bond being paid or
purchased and cancelled), the amount available to be drawn will automatically be
reinstated by the amount of the drawing on such specified day.
ARTICLE V
SPECIAL COVENANTS
Section 5.01. NO WARRANTY AS TO SUITABILITY OF PROJECT. The
Authority makes no warranty, either express or implied, with respect to actual
or designed capacity of the Project, as to the suitability of the Project for
the purposes specified in this Participation Agreement, as to the condition of
the Project, or as to the suitability of the Project for the Company's purposes
or needs.
Section 5.02. AUTHORITY'S RIGHTS TO INSPECT PROJECT AND PLANS AND
SPECIFICATIONS. The Authority shall have the right at all reasonable times to
examine and inspect the Project and, to the extent reasonably available, the
plans and specifications therefor and such other information and records
relating to the Project as may be reasonably necessary to establish the
qualification of the Project for financing under the Act and compliance with
this Participation Agreement.
Section 5.03. COMPANY CONSENT TO AMENDMENT OF INDENTURE. The
Authority shall not enter into any indenture supplemental to or amendatory of
the Indenture without the prior consent of the Company as evidenced by a
certificate in writing signed by an Authorized Company Representative.
Section 5.04. TAX COVENANT. Notwithstanding any other provision
hereof, the Company covenants and agrees that it will not take or authorize or
permit any action to be taken with respect to the Project, or the proceeds of
Bonds, including any amounts treated as proceeds of the Bonds for any purpose of
Section 103 of the Code, which will result in the loss of the exclusion of
interest on the Bonds from gross income for Federal income tax purposes under
Section 103 of the Code (except for any Bond during any period while any such
Bond is held by a person referred to in Section 147(a) of the Code). This
provision shall control in case of conflict or ambiguity with any other
provision of this Participation Agreement. In furtherance of such covenant and
agreement, the Authority and the Company have entered into the Tax Regulatory
Agreement and the Company hereby agrees to comply with the provisions thereof
insofar as the Tax Regulatory Agreement relates to the Bonds.
Section 5.05. COMPANY AGREES TO PERFORM OBLIGATIONS IMPOSED BY
INDENTURE. The Company agrees to perform such obligations as may be required of
it by the provisions of the Indenture.
Section 5.06. MAINTENANCE OF OFFICE OR AGENCY OF COMPANY. The
Company will at all times keep in Hicksville, New York, or another location in
the State of New York an office or agency where notices and demands with respect
to the Company Note and this Participation Agreement may be served, and will,
from time to time, give written notice to the Trustee and the Authority of the
location of such office or agency; and, in case the Company shall fail so to do,
notices may be served and demands may be made at the principal office of the
Trustee.
Section 5.07. FURTHER ASSURANCES. The Company will make, execute,
acknowledge and deliver, or cause to be made, executed, acknowledged and
delivered, to the Trustee any and all such further acts, instruments or
assurances as may be reasonably required for effectuating the intention of this
Participation Agreement and the Company Note.
Section 5.08. PAYMENT OF TAXES AND OTHER CHARGES. The Company will
promptly pay and discharge, or cause to be paid and discharged, as the same
become due and payable, any and all taxes, rates, levies, assessments, and
governmental liens, claims and other charges at any time lawfully imposed or
accruing upon or against the Company or upon or against its properties or any
part thereof, or upon the income derived therefrom or from the operations of the
Company, provided that the Company shall not be required to pay or discharge, or
cause to be paid or discharged, any such obligation, tax, rate, levy,
assessment, lien, claim or other charge so long as in good faith and by
appropriate legal proceedings the validity thereof shall be contested.
Section 5.09. MAINTENANCE OF PROPERTIES. The Company will at all
times make or cause to be made such expenditures for repairs, maintenance and
renewals, or otherwise, as shall be necessary to maintain its properties in good
repair, working order and condition as an operating system or systems to the
extent necessary to meet the Company's obligations under the Public Service Law
of the State of New York and the Participation Agreement; provided, however,
that nothing herein contained shall be construed to prevent the Company from
ceasing to operate any of its plants or any other property, if, in the judgment
of the Company, it is advisable not to operate the same and the operation
thereof shall not be essential to the maintenance and continued operation of the
rest of the operating system or systems, and the security under the Indenture
afforded by the Company Note will not be substantially impaired by the
termination of such operation. It is understood that the Company has agreed
pursuant to a settlement with the State of New York, approved by the Company's
shareholders on June 28, 1989, not to operate the Shoreham Nuclear Power
Station.
Section 5.10. INSURANCE. The Company will keep or cause to be kept
such parts of its properties as, in the opinion of an Authorized Company
Representative (as defined in the Indenture and who shall be a licensed
professional engineer), are of an insurable nature, insured against loss or
damage by fire or other casualties, the risk of which is customarily insured
against by companies similarly situated and operating like properties, to the
extent that property of similar character is customarily insured against by such
companies, either (a) by reputable insurers or (b) in whole or in part in the
form of reserves or of one or more insurance funds created by the Company,
whether alone or with other corporations, provided that the plan of each such
insurance fund shall have been or shall be approved by the Board of Directors of
the Company.
Section 5.11. PROPER BOOKS OF RECORD AND ACCOUNT. The Company will
at all times keep or cause to be kept proper books of record and account, in
which full, true and correct entry will be made of all dealings, business and
affairs of the Company, including proper and complete entries to capital or
property accounts covering property worn out, obsolete, abandoned or sold, all
in accordance with the requirements of any system of accounting or keeping
accounts or the rules, regulations or orders prescribed by a regulatory
commission with jurisdiction over the rates of the Company giving rise to at
least fifty-one percent (51%) of the Company's gross revenues, or if there are
no such requirements or rules, regulations or orders, then in compliance with
generally accepted accounting principles.
Section 5.12. CERTIFICATES AS TO DEFAULTS. The Company shall file
with the Trustee, on or before April 30 of each year, a certificate signed by an
Authorized Company Representative (as defined in the Indenture) stating that, to
the best of his knowledge, information and belief, the Company has kept,
observed, performed and fulfilled each and every one of its covenants and
obligations contained in this Participation Agreement and in the Company Note
and, to the best of his knowledge, information and belief, there does not exist
at the date of such certificate any default by the Company under this
Participation Agreement or any event of default hereunder or other event which,
with notice or the lapse of time specified in Section 6.01, or both, would
become an event of default or, if any such default or event of default or other
event shall so exist, specifying the same and the nature and status thereof.
Section 5.13. COMPANY NOT TO PERMIT HINDRANCE OR DELAY OF PAYMENT OF
COMPANY NOTE. The Company will not voluntarily do, suffer or permit any act or
thing intended to hinder or delay the payment of the indebtedness evidenced by
the Company Note.
Section 5.14. CORPORATE EXISTENCE, CONSOLIDATION, MERGER OR SALE OF
ASSETS. The Company will maintain its corporate existence, will not consolidate
with or permit itself to be merged into any other corporation or corporations,
or sell, transfer or otherwise dispose of all or substantially all of its
properties and assets, except in the manner and upon the terms and conditions
set forth in this Section 5.14.
Nothing contained in this Participation Agreement shall prevent (and
this Participation Agreement shall be construed as permitting and authorizing)
any lawful consolidation or merger of the Company with or into any other
corporation or corporations lawfully authorized to acquire and operate the
properties of the Company, or a series of consolidations or mergers, in which
the Company or its successor or successors shall be a party, or any sale of all
or substantially all the properties of the Company as an entirety to a
corporation lawfully authorized to acquire and operate the same; provided that
except as provided by Section 5.17 hereof, upon any consolidation, merger or
sale, the corporation formed by such consolidation, or into which such merger
may be made, or making such purchase shall execute and deliver to the Trustee an
instrument, in form satisfactory to the Trustee, whereby such corporation shall
effectually assume the due and punctual payment of the principal of, and
premium, if any, and interest on, the Company Note according to its tenor and
the due and punctual performance and observance of all covenants and agreements
to be performed by the Company pursuant to this Participation Agreement, the Tax
Regulatory Agreement and the Company Note.
Every such successor corporation shall possess, and may exercise,
from time to time, each and every right and power hereunder of the Company, in
its name or otherwise; and any act, proceeding, resolution or certificate by any
of the terms of this Participation Agreement, the Tax Regulatory Agreement and
the Company Note required or provided to be done, taken and performed or made,
executed or verified by any board or officer of the Company shall and may be
done, taken and performed or made, executed or verified with like force and
effect by the corresponding board or officer of any such successor corporation.
If consolidation, merger or sale or other transfer is made as
permitted by this Section, the provisions of this Section shall continue in full
force and effect and no further
consolidation, merger or sale or other transfer shall be made except in
compliance with the provisions of this Section.
Section 5.15. FINANCIAL STATEMENTS OF COMPANY. The Company agrees to
furnish the Trustee with a copy of its annual report to stockholders for each
year, beginning with the year 1997, on or before March 31 of the subsequent year
or as soon thereafter as it is reasonably available. The Company further agrees
to furnish to the Trustee, and to any owner of the Bonds if requested in writing
by such owner, all financial statements which it sends to its shareholders
generally.
Section 5.16. COMPLIANCE WITH LAWS. The Company agrees to comply in
all material respects with all applicable laws, rules and regulations and orders
of any governmental authority, non-compliance with which would adversely affect
the Company's ability to perform its obligations hereunder or under the Tax
Regulatory Agreement or the Company Note, except laws, rules, regulations or
orders being contested in good faith or laws, rules, regulations or orders for
which the Company has applied for variances or exceptions.
Section 5.17 TRANSFER OF PROJECT AND PARTICIPATION AGREEMENT TO
AFFILIATE. The parties acknowledge that the Company has filed an application
with the Federal Energy Regulatory Commission seeking, among other things,
approval of the transfer of the Company's electric transmission and distribution
system to the Long Island Power Authority ("LIPA") in connection with LIPA's
acquisition of the stock of the Company. The Company currently plans, in
connection with such transfer, to transfer its non-nuclear electric generation
assets (with the exception of power supply contracts), its gas assets and
certain other assets and liabilities to affiliates of the Holding Company formed
in connection with the transactions contemplated between the Company, KeySpan
Energy Corporation and the Long Island Power Authority. The entity acquiring
such non-nuclear electric generation assets is hereinafter referred to as the
"Generation Affiliate".
If, as part of such transfer of non-nuclear electric generation
assets, the Project is transferred to the Generation Affiliate, then the
Generation Affiliate shall assume the obligations of the Company pursuant to
this Participation Agreement, the Company Note, the Tax Regulatory Agreement and
all other obligations of the Company relating to the Bonds. On or after such
time of transfer, the Company, upon satisfaction of the conditions set forth in
the final sentence of this paragraph, shall be released from any further
obligations pursuant to this Participation Agreement, the Company Note, the Tax
Regulatory Agreement and the Bonds. Upon transfer of non-nuclear electric
generation assets to the Generation Affiliate, the Generation Affiliate shall:
1) execute and deliver to the Trustee and the Authority an instrument,
in form satisfactory to the Trustee and the Authority, whereby the
Generation Affiliate shall effectually assume the due and punctual
payment of the principal of, and premium, if any, and interest on, the
Company Note according to its tenor and the due and punctual
performance and observance of all covenants and agreements to be
performed by the Company pursuant to this Participation Agreement, the
Tax Regulatory Agreement and the Company Note,
2) provide for the delivery to the Authority and the Trustee of an
opinion of Bond Counsel to the effect that such assumption by the
Generation Affiliate and such release of the Company will not
adversely affect the exclusion of interest on the Bonds from gross
income for federal income tax purposes,
3) deliver to the Authority and the Trustee an opinion of counsel to
the Generation Affiliate to the effect that the assumption of the
performance and observance of all covenants and agreements set forth
in 1) above have been duly and validly authorized, executed and
delivered by the Generation Affiliate and that the Participation
Agreement, Company Note and Tax Regulatory Agreement constitute valid
and binding agreements of the Generation Affiliate and are enforceable
against the Generation Affiliate in accordance with their terms and
4) deliver such other documents, instruments and certificates as the
Authority the Trustee may reasonably require in connection with the
transfer of the Project and the assumption by the Generation Affiliate
of the obligations of the Company pursuant to this Participation
Agreement, the Company Note, the Tax RegulAgreement and all other
obligations of the Company relating to the Bonds
Thereafter, the Generation Affiliate shall constitute the "Company"
for all purposes of this Participation Agreement the Company Note, the Tax
Regulatory Agreement and the Bonds and shall possess, and may exercise, from
time to time, each and every right and power hereunder of the Company, in its
name or otherwise; and any act, proceeding, resolution or certificate by any of
the terms of this Participation Agreement, and Tax Regulatory Agreement and the
Company Note required or provided to be done, taken and performed or made,
executed or verified by any board or officer of the Company shall and may be
done, taken and performed or made, executed or verified with like force and
effect by the corresponding board or officer of the Generation Affiliate or any
body or individual performing a similar function.
ARTICLE VI
DEFAULTS BY COMPANY; REMEDIES
Section 6.01. EVENTS OF DEFAULT; ACCELERATION. In case one or more
of the following events of default shall have occurred and be continuing:
(a) failure by the Company to pay when due any amount required to be
paid under this Participation Agreement or the Company Note, which failure
causes a default in the payment when due of the interest on any of the Bonds and
continuance of such default for five (5) days; or
(b) failure by the Company to pay when due any amount required to be
paid under this Participation Agreement or the Company Note, which failure
causes a default in the payment when due of the principal of, or premium, if
any, on any of the Bonds; or
(c) failure by the Company to pay when due any amount required to be
paid under Section 4.11, which failure causes a default in the payment when due
of any amount payable pursuant to Section 2.05 of the Indenture and continuance
of such default for five (5) days; or
(d) failure on the part of the Company to duly observe or perform
any other of the covenants or agreements on the part of the Company contained in
this Participation Agreement (other than failure to pay amounts required to be
paid under Sections 4.04, 4.05, 4.08, 4.09 or 4.10) or in the Company Note for a
period of ninety (90) days after the date on which written notice of such
failure, requiring the Company to remedy the same, shall have been given to the
Company by the Authority or the Trustee; or
(e) an Act of Bankruptcy relating to the Company; or
(f) the occurrence and continuance of an "event of default" as
defined in the Company Indenture;
then, and in any such event, the Trustee, may, and upon the written
request of the owners of at least twenty-five percent (25%) in
aggregate principal amount of the Bonds then outstanding shall, by
notice in writing to the Company and provided that the default has not
theretofore been cured, declare the Company Note to be due and payable
immediately, and upon any such declaration the same shall become and
shall be immediately due and payable, anything contained in this
Participation Agreement or in the Company Note to the contrary
notwithstanding. Any amounts collected by the Trustee pursuant to
action taken under this Section 6.01 shall be applied in accordance
with the Indenture. In addition, if at any time the principal of the
Bonds shall have been declared to be due and payable by acceleration
pursuant to the terms of the Indenture, the Company Note shall
thereupon become and be immediately due and payable, subject to such
declaration with respect to the Bonds being annulled pursuant to
Section 10.01 of the Indenture.
The right or obligation of the Trustee to make any such declaration
as aforesaid, however, is subject to the condition that if, at any time after
declaration, but before all the Bonds shall have matured by their terms, the
principal of, premium, if any, and interest on, the Company Note which shall
have become due and payable otherwise than by such declaration, and all other
sums payable hereunder, except the principal of, and interest on, the Company
Note which shall have become due and payable by such declaration, shall have
been paid or provision satisfactory to the Trustee shall have been made for such
payment, and the reasonable expenses of the Trustee and of the owners of the
Bonds shall have been paid, including reasonable attorneys' fees paid or
incurred, and all defaults hereunder and under the Bonds or under the Indenture,
except as to the payment of principal and interest due and payable solely by
reason of such declaration, shall be made good or be secured to the satisfaction
of the Trustee or provision deemed by the Trustee to be adequate shall be made
therefor, then and in every such case the owners of a majority in aggregate
principal amount of the Bonds then outstanding, by written notice to the
Authority and to the Trustee, may rescind such declaration and annul such
default in its entirety, or, if the Trustee shall have acted in the absence of a
written request of the owners of at least twenty-five percent (25%) in aggregate
principal amount of the outstanding Bonds, and if there shall not have been
theretofore delivered to the Trustee written direction to the contrary by the
owners of at least twenty-five percent (25%) in aggregate principal amount of
the outstanding Bonds, then any such declaration shall IPSO FACTO be deemed to
be rescinded and any such default and its consequences shall IPSO FACTO be
deemed to be annulled, but no such rescission and annulment shall extend to or
affect any subsequent default or impair or exhaust any right or power consequent
thereon.
In case the Trustee shall have proceeded to enforce any right under
this Participation Agreement or the Company Note 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, the Authority
and the Trustee shall be restored respectively to their former positions and
rights hereunder, and all rights, remedies and powers of the Company, the
Authority and the Trustee shall continue as though no such proceedings had been
taken.
Section 6.02. CERTAIN EVENTS OF DEFAULT; AUTHORITY OR TRUSTEE MAY
TAKE CERTAIN ACTIONS. In case the Company shall have failed to comply with its
obligations under Article III or under Sections 4.04, 4.08, 4.09, 4.10 or 5.16,
which event shall have continued for a period of ninety (90) days after the date
on which written notice of such failure, requiring the Company to remedy the
same, shall have been given to the Company by the Authority or the Trustee, the
Authority or the Trustee may take whatever action at law or in equity as may
appear necessary or desirable to enforce performance or observance of any
obligations or agreements of the Company under said Article or Sections. In case
the Company shall have failed to comply with its obligations under Section 4.05,
which event shall have continued for a period of ninety (90) days after the date
on which written notice of such failure, requiring the Company to remedy the
same, shall have been given to the Company by the Trustee, the Trustee may take
whatever action at law or in equity as may appear necessary or desirable to the
Trustee to enforce performance or observance of any obligations or agreements of
the Company under said section.
Section 6.03. JUDICIAL PROCEEDINGS BY TRUSTEE. Upon the occurrence
and continuance of an event of default (as defined in Section 6.01) the Trustee
may, and upon the written request of the owners of at least twenty-five percent
(25%) in aggregate principal amount of the Bonds then outstanding and receipt by
the Trustee of indemnity satisfactory to it shall, institute any actions or
proceedings at law or in equity for the collection of any amounts then due and
unpaid on the Company Note, and may prosecute any such action or proceeding to
judgment or final decree, and may collect in the manner provided by law the
moneys adjudged or decreed to be payable.
ARTICLE VII
MISCELLANEOUS
Section 7.01. DISPOSITION OF AMOUNTS AFTER PAYMENT OF BONDS. Any
amounts determined by the Trustee to be remaining in the funds created under the
Indenture after payment in full, or provision for payment in full, of principal
of, and premium, if any, and interest on, all of the Bonds, in accordance with
the provisions of the Indenture, and payment of all the fees, charges and
expenses of the Authority, the Trustee, the Tender Agent, the Indexing Agent,
the Remarketing Agents and the Paying Agent in accordance with the Indenture and
this Participation Agreement and any amounts required to be paid to the United
States of America pursuant to the Tax Regulatory Agreement, shall be paid to the
Bank; provided, however, that on or after the Fixed Rate Conversion Date and
solely with respect to moneys not resulting from a draw on the Letter of Credit
and not constituting remarketing proceeds, such amounts that would be payable to
the Bank pursuant to this Section 7.01 shall be paid to the Company if the Bank
has been paid in full under the Reimbursement Agreement.
Section 7.02. NOTICES. All notices, certificates, requests or other
communications between the Authority, the Company and the Trustee required to be
given under this Participation Agreement or under the Indenture (except as
otherwise provided therein) shall be sufficiently given and shall be deemed
given when delivered or mailed by first class mail, postage prepaid, addressed
as follows if to the Authority, at Corporate Plaza West, 000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxx, Xxx Xxxx 00000, Attention: President; if to the Company, at
000 Xxxx Xxx Xxxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxx 00000, Attention: Vice President
and Treasurer; and if to the Trustee, at 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 Attention: Corporate Trustee Administration Department and
if to the Tender Agent, Remarketing Agents or the Indexing Agent to the
addresses set forth for such persons in Section 16.05 of the Indenture. A
duplicate copy of each notice, certificate, request or other communication given
hereunder to the Authority, the Company or the Trustee shall also be given to
the others. The Company, the Authority and the Trustee may, by notice given
hereunder, designate any further or different addresses to which subsequent
notices, certificates, requests or other communications shall be sent.
Section 7.03. SUCCESSORS AND ASSIGNS. This Participation Agreement
shall inure to the benefit of and shall be binding upon the Authority, the
Company, the Trustee, the Bank and their respective successors and assigns.
Section 7.04. REFERENCES TO THE BANK. After establishment of a Fixed
Rate for the Bonds and upon receipt by the Trustee of notice from the Bank that
all amounts payable to the Bank with respect to draws under the Letter of Credit
have been received, all references in this Participation Agreement to the Bank
shall be ineffective.
Section 7.05. AMENDMENT OF PARTICIPATION AGREEMENT. This
Participation Agreement may not be amended except by an instrument in writing
signed by the parties and, if such amendment occurs after the issuance of the
Bonds, upon compliance with the provisions of Sections 4.01 and 4.02 of the
Indenture.
Section 7.06. ASSIGNMENT BY AUTHORITY. The Authority shall assign
its rights under and interest in this Participation Agreement (except the rights
and interest of the Authority under Article III and Sections 4.04, 4.08, 4.09,
4.10 and 5.16 and insofar as the obligations of the Company under Section 4.07
relate to taxes and assessments imposed upon the Authority and not the Trustee,
Section 4.07 thereof), subject to the provisions of this Participation Agreement
relating to the amendment thereof, to the Trustee pursuant to the Indenture, as
security for payment of the principal of, and premium, if any, and interest on,
the Bonds. In addition, the Trustee shall have the same power as the Authority
to enforce from time to time the rights of the Authority set forth in Article
III and Section 5.16, subject to the provisions of this Participation Agreement
relating to the amendment hereof. Except as provided in this Section 7.06, the
Authority will not sell, assign, transfer, convey or otherwise dispose of its
interest in this Participation Agreement during the term of this Participation
Agreement.
Section 7.07. PARTICIPATION AGREEMENT SUPERSEDES ANY PRIOR
AGREEMENTS. This Participation Agreement supersedes any other prior agreements
or understandings, written or oral, between the parties with respect to the
transactions contemplated hereby.
Section 7.08. COUNTERPARTS. This Participation Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall be an original, but such counterparts shall together constitute
but one and the same Participation Agreement.
Section 7.09. SEVERABILITY. If any clause, provision or section of
this Participation Agreement is held illegal, invalid or unenforceable by any
court or administrative body, such Participation Agreement shall be construed
and enforced as if such illegal or invalid or unenforceable clause, provision or
section had not been contained in this Participation Agreement. In case any
agreement or obligation contained in this Participation Agreement shall be held
to be in violation of law, then such agreement or obligation shall be deemed to
be the agreement or obligation of the Authority or the Company, as the case may
be, to the full extent permitted by law.
SECTION 7.10. NEW YORK LAW TO GOVERN. THE LAW OF THE STATE OF NEW
YORK SHALL GOVERN THE CONSTRUCTION OF THIS PARTICIPATION AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be duly executed as of the day and year first written
above.
NEW YORK STATE ENERGY
RESEARCH AND DEVELOPMENT
AUTHORITY
By /s/ F. Xxxxxxx Xxxxxxxxx, Xx.
--------------------------------
(SEAL) President
ATTEST:
/s/ Xxxxxx X. Xxxx
------------------
Vice President and Secretary
LONG ISLAND LIGHTING COMPANY
By /s/ Xxxxxxxx X. Xxxxxxx
--------------------------
(SEAL) Vice President and Treasurer
ATTEST:
/s/ Xxxxxxx X. XxXxxxxxx
------------------------
Of Counsel
EXHIBIT A
(To Participation Agreement dated as
of December 1, 1997, between New York
State Energy Research and Development
Authority and Long Island Lighting Company)
DESCRIPTION OF ELECTRIC FACILITIES
The Project will consist of the following facilities which are to be
acquired, constructed and installed by the Company (as such term is defined in
the Participation Agreement):
1. Production Facilities;
2. Certain Common Facilities.
All such facilities are as further described in the Tax Regulatory
Agreement between the Authority and the Company dated the date of the initial
delivery of the Bonds.
The Project shall also include (i) such instrumentation, controls,
structures and all other facilities, equipment, devices and the like necessary
to support the facilities herein described, (ii) such necessary land
improvements, and (iii) subject to Section 3.04 of the Participation Agreement,
such additional or substituted facilities for the furnishing of electric energy
which, because of changes in technology, environmental standard, cost or the
like, the Company determines shall be added or substituted for said facilities.
A-1
EXHIBIT B
(To Participation Agreement dated as
of December 1, 1997, between New York
State Energy Research and Development
Authority and Long Island Lighting Company)
DESCRIPTION OF OTHER FACILITIES
Any portion of the Electric Facilities described in Exhibit A as
shall have been placed in service more than one year prior to the date of the
original issuance and delivery of the Bonds.
B-1
EXHIBIT C
(To Participation Agreement dated as of
December 1, 1997, between New York
State Energy Research and Development
Authority and Long Island Lighting Company)
LONG ISLAND LIGHTING COMPANY
$24,880,000
PROMISSORY NOTE
FOR
ELECTRIC FACILITIES REVENUE BONDS
(LONG ISLAND LIGHTING COMPANY PROJECT), 1997 SERIES A
Long Island Lighting Company (the "Company"), a New York
corporation, for value received, hereby promises to pay, on or before the dates
set forth below, the amounts set forth below, to The Chase Manhattan Bank, New
York, New York, as trustee or its successor or successors as trustee (the
"Trustee") under the Indenture of Trust relating to the above-referenced Bonds
dated as of December 1, 1997, between the New York State Energy Research and
Development Authority (the "Authority"), a body corporate and politic,
constituting a public benefit corporation, established and existing under and by
virtue of the laws of the State of New York, and the Trustee. Such Indenture of
Trust, as it may be amended or supplemented from time to time, is herein called
the "Indenture." Unless otherwise defined herein, the terms used in this
promissory note (the "Company Note") which are defined in Section 1.01 of the
Indenture shall have the meanings, respectively, herein which such terms are
given in said Section 1.01 of the Indenture.
This Company Note is issued pursuant to the Participation Agreement
in order to evidence the obligation of the Company to the Authority to repay the
advance of the proceeds of the Bonds. In accordance with the Participation
Agreement, the Authority has authorized and directed the Company to issue this
Company Note payable to the order of the Trustee as security for the payment of
principal of, premium, if any, and interest on, the Bonds. The rights and
interest of the Authority under the Participation Agreement (except the rights
and interest of the Authority under Article III and Sections 4.04, 4.08, 4.09
and 4.10 and 5.16 thereof and insofar as the obligations of the Company under
Section 4.07 relate to taxes and assessments imposed upon the Authority and not
the Trustee, Section 4.07 thereof), subject to the provisions of the
Participation Agreement relating to the amendment thereof, have been assigned to
the Trustee pursuant to the Indenture. In addition, the Authority has granted
the Trustee the same power as the Authority to enforce from time to time the
rights of the Authority set forth in said Article III and Section 5.16, subject
to the provisions of the Participation Agreement relating to the amendment
thereof. All of the terms, conditions and provisions of the Participation
Agreement are, by this reference thereto, incorporated herein as part of this
Company Note.
This Company Note shall be payable as to principal, premium, if any, and
interest as follows:
(a) On or before each Interest Payment Date, commencing
__________________, a sum which together with other moneys then available
for such purpose in the Bond Fund will enable the Trustee to pay the
interest on the Bonds coming due on such date;
(b) On or before any redemption date for the Bonds (other than a
redemption date pursuant to Section 8.05 of the Indenture), a sum which
together with other moneys then available for such purpose in the Bond
Fund will enable the Trustee to pay the principal of, premium, if any, and
interest on the Bonds which are to be redeemed on such date; and
(c) On or before _______________, a sum which together with other moneys
then available for such purpose in the Bond Fund will enable the Trustee
to pay the outstanding principal amount of the Bonds;
provided that, if the Bonds are redeemed pursuant to Section 8.05 of the
Indenture, the amounts that would otherwise have been payable on this Company
Note if not for such redemption, shall continue to be payable at the times and
in the amounts set forth above as if such redemption had not occurred; and
provided further that if the Bonds are redeemed pursuant to Section 8.05 of the
Indenture the Company shall have the right at any time thereafter to prepay this
Company Note by paying the amount due on this Company Note at the time of such
prepayment together with unpaid interest accrued thereon to the date of such
prepayment.
The obligation of the Company to make any payment of principal of,
and premium, if any, and interest on, this Company Note shall be deemed
satisfied and discharged to the extent of the corresponding payment made by the
Bank under the Letter of Credit.
All payments of principal of, and premium, if any, and interest on,
this Company Note shall be made in immediately available funds to the Trustee at
its corporate trust office, 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Corporate Trust Administration Department, Wire Transfer
Number: 9102758100, or to such different address or wire transfer number as the
Trustee may from time to time designate, on or before
each date on which such principal, premium, if any, or interest is due 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.
The Company has agreed in the Participation Agreement that if for
any reason Company Note Payments, together with other moneys held by the Trustee
and then available for such purpose (including moneys paid by the Bank under the
Letter of Credit), would not be sufficient to make the corresponding payments of
principal of, and premium, if any, and interest on, the Bonds when such payments
are due, the Company will pay the amounts required from time to time to make up
any such deficiency.
In the event that payment has been made in respect of the principal
of and premium, if any, and interest on, all of the Bonds, or provision therefor
has been made in accordance with Article XIV of the Indenture, then this Company
Note shall be deemed paid in full and shall be cancelled and returned to the
Company; provided that this Company Note shall not be deemed paid in full if the
Bonds are redeemed pursuant to Section 8.05 of the Indenture.
No reference herein to the Participation Agreement shall impair the
obligation of the Company to pay the principal of and premium, if any, and
interest on this Company Note at the time and place and in the amounts herein
prescribed, which obligation is absolute, irrevocable and unconditional and is
not subject to any defense (other than payment) or any right of set-off,
counterclaim or recoupment for any reason, including, without limitation, any
breach by the Authority of any obligation to the Company, whether under the
Participation Agreement or otherwise, or inaccuracy of any representation by the
Authority to the Company under the Participation Agreement, or any indebtedness
or liability at any time owing to the Company by the Authority or any failure to
complete the Project or the destruction by fire or other casualty of the Project
or any portion thereof, or the taking of title thereto or the use thereof by the
exercise of the power of eminent domain.
In case of an event of default (as defined in Section 6.01 of the
Participation Agreement), the principal of and interest to the date of payment
of this Company Note may be declared immediately due and payable as provided in
the Participation Agreement. In addition, if at any time the principal of the
Bonds shall have been declared to be due and payable by acceleration pursuant to
the terms of the Indenture, this Company Note shall thereupon become and be
immediately due and payable, subject to such declaration with respect to the
Bonds being annulled pursuant to Section 10.01 of the Indenture.
This Company Note may not be amended except by an instrument in
writing signed by the Company, by the Authority and by the Trustee, on behalf of
the owners of the Bonds, in the manner and subject to the conditions provided in
Section 4.03 of the Indenture.
This Company Note may not be transferred by the Trustee except to
effect an assignment to a successor Trustee under the Indenture or pursuant to
Section 8.05 of the Indenture.
THIS COMPANY NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK.
Presentment, demand, protest and notice of dishonor are hereby
expressly waived.
IN WITNESS WHEREOF, the Company has caused this Company Note to be
duly executed and delivered as of December 30, 1997.
LONG ISLAND LIGHTING COMPANY
By: /s/ Xxxxxxxx X. Xxxxxxx
---------------------------
Vice President and Treasurer
(SEAL)
ATTEST:
/s/ Xxxxxxx X. XxXxxxxxx
------------------------
Of Counsel
C-1
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; EFFECTIVE DATE
AND DURATION OF PARTICIPATION AGREEMENT
Section 1.01. Definitions................................................ 3
Section 1.02. Rules of Construction...................................... 3
Section 1.03. Effective Date of
Participation Agreement;
Duration of Participation Agreement...................... 3
ARTICLE II
REPRESENTATIONS
Section 2.01. Representations and
Warranties by the
Authority.................................................. 4
Section 2.02. Representations and
Warranties by the
Company.................................................... 4
ARTICLE III
CONSTRUCTION OF THE PROJECT;
ISSUANCE OF BONDS
Section 3.01. Construction of the
Project.................................................... 6
Section 3.02. Sale of Bonds and Deposit
of Proceeds; Liability
Under Bonds.............................................. 6
Section 3.03. Disbursements from
Project Fund and Rebate
Fund..................................................... 7
Section 3.04. Revision of Construction
Plans...................................................... 7
Section 3.05. Certification of
Completion of Project...................................... 8
Section 3.06. Payment of Cost of
Construction of the
Project in
Event Project Fund Inadequate............................ 8
Section 3.07. No Interest in Project
Conferred.................................................. 9
Section 3.08. Operation, Maintenance
and Repair................................................. 9
Section 3.09. Investment of Moneys in
Funds Under the
Indenture................................................ 9
Section 3.10. Agreement not to Exercise
Option to Convert to
Fixed Rate Absent Specified Rating....................... 9
Section 3.11. Securities Depository...................................... 9
ARTICLE IV
COMPANY NOTE AND PAYMENTS; LETTER OF CREDIT
Section 4.01. Execution and Delivery of
Company Note to
Trustee.................................................. 10
Section 4.02. Redemption of Bonds........................................ 10
Section 4.03. Obligation for Payment
Absolute; Deficiencies..................................... 10
Section 4.04. Administration Fees;
Expenses, Etc.............................................. 11
Section 4.05. Compensation of Trustee,
Paying Agent,
Remarketing Agents, Indexing Agent and Tender
Agent...................................................................... 11
Section 4.06. Project Not Security for
Bonds...................................................... 12
Section 4.07. Payment of Taxes and
Assessments; No Liens or
Charges.................................................. 12
Section 4.08. Indemnification of
Authority, Trustee,
Tender
Agent, Paying Agent, Remarketing Agents and
Indexing Agent............................................................. 12
Section 4.09. Company to Pay Attorneys'
Fees and
Disbursements............................................ 13
Section 4.10. No Abatement of
Administration Fees and
Other
Charges.................................................. 13
Section 4.11. Payment to Tender Agent.................................... 13
Section 4.12. The Letter of Credit....................................... 13
ARTICLE V
SPECIAL COVENANTS
Section 5.01. No Warranty as to
Suitability of Project..................................... 15
Section 5.02. Authority's Rights to
Inspect Project and Plans
and Specifications....................................... 15
Section 5.03. Company Consent to
Amendment of Indenture..................................... 15
Section 5.04. Tax Covenant............................................... 15
Section 5.05. Company Agrees to Perform
Obligations Imposed
by Indenture............................................. 15
Section 5.06. Maintenance of Office or
Agency of Company.......................................... 15
Section 5.07. Further Assurances......................................... 16
Section 5.08. Payment of Taxes and
Other Charges.............................................. 16
Section 5.09. Maintenance of
Properties................................................. 16
Section 5.10. Insurance.................................................. 16
Section 5.11. Proper Books of Record
and Account................................................ 17
Section 5.12. Certificates as to
Defaults................................................... 17
Section 5.13. Company Not to Permit
Hindrance or Delay of
Payment of Company Note.................................. 17
Section 5.14. Corporate Existence,
Consolidation, Merger or
Sale of Assets........................................... 17
Section 5.15. Financial Statements of
Company.................................................... 18
Section 5.16. Compliance with Laws....................................... 18
Section 5.17. Transfer of Project and Participation
Agreement to Affiliate......................................................18
ARTICLE VI
DEFAULTS BY COMPANY; REMEDIES
Section 6.01. Events of Default;
Acceleration............................................... 21
Section 6.02. Certain Events of
Default; Authority or Trustee
May Take Certain Actions................................. 22
Section 6.03. Judicial Proceedings by
Trustee.................................................... 23
ARTICLE VII
MISCELLANEOUS
Section 7.01. Disposition of Amounts
After Payment of Bonds..................................... 24
Section 7.02. Notices.................................................... 24
Section 7.03. Successors and Assigns..................................... 24
Section 7.04. References to the Bank..................................... 24
Section 7.05. Amendment of
Participation Agreement.................................... 25
Section 7.06. Assignment by Authority.................................... 25
Section 7.07. Participation Agreement
Supersedes Any Prior
Agreements............................................... 25
Section 7.08. Counterparts............................................... 25
Section 7.09. Severability............................................... 25
SECTION 7.10. NEW YORK LAW TO GOVERN..................................... 26
EXHIBIT A..................................................................A-1
EXHIBIT B..................................................................B-1
EXHIBIT C..................................................................C-1
(i)
