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EXHIBIT 4.12.2
EXECUTION COPY
PARTICIPATION AGREEMENT
Dated as of December 19, 2000
among
TIVERTON POWER ASSOCIATES LIMITED PARTNERSHIP, as a Facility Lessee,
RUMFORD POWER ASSOCIATES LIMITED PARTNERSHIP, as a Facility Lessee,
PMCC CALPINE NEW ENGLAND INVESTMENT LLC, as Owner Lessor,
CALPINE CORPORATION, as Guarantor
PMCC CALPINE NEIM LLC, as Owner Participant,
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity, except
as expressly provided herein, but solely
as Indenture Trustee, and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, as Pass Through Trustee
CALPINE NEW ENGLAND PROJECT
================================================================================
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT........3
SECTION 2. PARTICIPATION; CLOSING DATE; TRANSACTION COSTS.....................3
Section 2.1. Agreements to Participate...................................3
Section 2.2. Closing Date; Procedure for Participation...................4
Section 2.3. Transaction Costs...........................................6
SECTION 3. REPRESENTATIONS AND WARRANTIES.....................................6
Section 3.1. Representations and Warranties of the Facility Lessees......6
Section 3.2. Representations and Warranties of the Owner Lessor.........16
Section 3.3. Intentionally Omitted......................................17
Section 3.4. Representations and Warranties of the Owner Participant....17
Section 3.5. Representations and Warranties of Indenture Trustee and
the Lease Indenture Company................................19
Section 3.6. Representations, Warranties and Covenants of Pass Through
Trustee and the Pass Through Company.......................21
SECTION 4. CLOSING CONDITIONS................................................23
Section 4.1. Completion of the Facility.................................23
Section 4.2. Operative Documents........................................23
Section 4.3. Certificates and the Lessor Notes..........................23
Section 4.4. Equity Investment..........................................23
Section 4.5. Organizational Documents...................................23
Section 4.6. Representations and Warranties.............................24
Section 4.7. Defaults, Events of Default, Events of Loss................24
Section 4.8. Intentionally Omitted......................................24
Section 4.9. Consents...................................................24
Section 4.10. Governmental Actions.......................................24
Section 4.11. Insurance..................................................24
Section 4.12. Ratings....................................................24
Section 4.13. Environmental Report.......................................24
Section 4.14. Surveys; Site Description..................................25
Section 4.15. Appraisal; Condition of the Facility.......................25
Section 4.16. Letter from the Appraiser..................................25
Section 4.17. Other Reports..............................................25
Section 4.18. Opinion with Respect to Certain Tax Aspects................25
Section 4.19. Opinions of Counsel........................................25
Section 4.20. Recordings and Filings.....................................26
Section 4.21. Intentionally Omitted......................................26
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TABLE OF CONTENTS (continued)
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Section 4.22. Taxes......................................................26
Section 4.23. No Changes in Applicable Law...............................26
Section 4.24. Registered Agent for the Facility Lessees and the Owner
Lessor.....................................................26
Section 4.25. Operating Lease Treatment..................................26
Section 4.26. Rent Adjustments...........................................27
Section 4.27. Title Insurance............................................27
Section 4.28. Intentionally Omitted......................................27
Section 4.29. Intentionally Omitted......................................27
Section 4.30. Intentionally Omitted......................................27
Section 4.31. Intentionally Omitted......................................27
Section 4.32. Letter as to Number of Offerees............................27
Section 4.33. Lien Search................................................27
Section 4.34. Intentionally Omitted......................................27
Section 4.35. Litigation.................................................27
Section 4.36. No Material Adverse Change.................................27
Section 4.37. Regulatory Approvals.......................................27
Section 4.38. Private Placement Number...................................28
Section 4.39. Credit Ratings.............................................28
Section 4.40. Proceedings and Documents..................................28
Section 4.41. Intentionally Omitted......................................28
Section 4.42. Payment of Fees and Expenses...............................28
Section 4.43. Qualifying Letter of Credit................................28
SECTION 5. COVENANTS OF FACILITY LESSEES AND GUARANTOR.......................28
Section 5.1. Maintenance of Existence...................................28
Section 5.2. Merger, Consolidation, Sale of Substantially All Assets....29
Section 5.3. Intentionally Omitted......................................29
Section 5.4. Intentionally Omitted......................................29
Section 5.5. Administrator Fees.........................................29
Section 5.6. Conduct of Business, Properties, Etc.......................30
Section 5.7. Obligations................................................30
Section 5.8. Books, Records, Access.....................................30
Section 5.9. Other Information..........................................30
Section 5.10. Warranty of Title to Facility Site.........................31
Section 5.11. ERISA......................................................31
Section 5.12. Certain Contracts and Agreements...........................31
Section 5.13. Certain Costs..............................................31
Section 5.14. Limitations on Liens.......................................32
Section 5.15. Investments................................................32
Section 5.16. Survey (Rumford)...........................................32
Section 5.17. Regulations................................................32
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TABLE OF CONTENTS (continued)
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Section 5.18. Partnerships...............................................32
Section 5.19. Dissolution................................................32
Section 5.20. Termination of Contracts, Etc..............................32
Section 5.21. Name and Location..........................................33
Section 5.22. Use of Facility Site.......................................33
Section 5.23. Abandonment of Facility....................................33
Section 5.24. Taxes, Other Government Charges and Utility Charges........33
Section 5.25. Compliance with Laws, Instruments, Etc.....................33
Section 5.26. PUHCA......................................................34
Section 5.27. Intentionally Omitted......................................34
Section 5.28. Intentionally Omitted......................................34
Section 5.29. Intentionally Omitted......................................34
Section 5.30. Intentionally Omitted......................................34
Section 5.31. Further Assurances.........................................34
Section 5.32. Intentionally Omitted......................................35
Section 5.33. Intentionally Omitted......................................35
Section 5.34. Intentionally Omitted......................................35
Section 5.35. Intentionally Omitted......................................35
Section 5.36. Intentionally Omitted......................................35
Section 5.37. No Subsidiaries............................................35
Section 5.38. Permitted Business.........................................35
Section 5.39. Intentionally Omitted......................................35
Section 5.40. Guaranty and Contingent Obligations........................35
Section 5.41. Assignment of Rights.......................................36
Section 5.42. Intentionally Omitted......................................36
Section 5.43. Intentionally Omitted......................................36
Section 5.44. Support Arrangements.......................................36
Section 5.45. Insurance..................................................36
Section 5.46. Qualifying Letter of Credit; Equity Collateral Account.....36
SECTION 6. COVENANTS OF THE OWNER LESSOR.....................................39
Section 6.1. Compliance with the LLC Agreement..........................39
Section 6.2. Owner Lessor's Liens.......................................39
Section 6.3. Amendments to Operative Documents..........................39
Section 6.4. Transfer of the Owner Lessor's Interest....................40
Section 6.5. Owner Lessor; Lessor Estate................................40
Section 6.6. Limitation on Indebtedness and Actions.....................40
Section 6.7. Change of Location.........................................40
SECTION 7. COVENANTS OF THE OWNER PARTICIPANT................................40
Section 7.1. Restrictions on Transfer of Member Interest................40
Section 7.2. Owner Participant's Liens..................................43
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TABLE OF CONTENTS (continued)
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Section 7.3. Amendments or Revocation of LLC Agreement..................43
Section 7.4. Bankruptcy Filings.........................................43
Section 7.5. Instructions...............................................43
Section 7.6. Intentionally Omitted......................................43
Section 7.7. Intentionally Omitted......................................43
Section 7.8. Right of First Refusal.....................................43
SECTION 8. COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEE...44
Section 8.1. Indenture Trustee's Liens..................................44
Section 8.2. Pass Through Trustee's Covenant Not to Transfer Lessor
Notes......................................................44
SECTION 9. INDEMNIFICATION...................................................44
Section 9.1. General Indemnity..........................................44
Section 9.2. General Tax Indemnity......................................51
SECTION 10. FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT........................60
SECTION 11. SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS........60
Section 11.1. Financing Improvements.....................................60
Section 11.2. Optional Refinancing of Lease Debt.........................62
Section 11.3. Cooperation................................................63
SECTION 12. CERTAIN ADJUSTMENTS TO PERIODIC RENT AND TERMINATION VALUE........63
SECTION 13. TRANSFER OF THE FACILITY LESSEE OWNERSHIP.........................64
Section 13.1. Transfer of the Facility Lessee Ownership..................64
SECTION 14. MISCELLANEOUS.....................................................66
Section 14.1. Consents; Cooperation......................................66
Section 14.2. Successor Owner Lessor.....................................66
Section 14.3. Bankruptcy of Lessor Estate................................66
Section 14.4. Waivers....................................................66
Section 14.5. Notices....................................................66
Section 14.6. Survival...................................................69
Section 14.7. Successors and Assigns.....................................70
Section 14.8. Business Day...............................................70
Section 14.9. Governing Law..............................................70
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TABLE OF CONTENTS (continued)
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Section 14.10. Severability...............................................70
Section 14.11. Counterparts...............................................70
Section 14.12. Headings and Table of Contents.............................70
Section 14.13. Limitation of Liability....................................71
Section 14.14. Consent to Jurisdiction; Waiver of Trial by Jury; Process
Agent......................................................72
Section 14.15. Further Assurances.........................................72
Section 14.16. Effectiveness..............................................73
Section 14.17. Measuring Life.............................................73
Section 14.18. No Partnership, Etc........................................73
Section 14.19. Entire Agreement...........................................73
Section 14.20. Public Utility Regulation..................................73
Section 14.21. Confidentiality of Information.............................74
Section 14.22. Reliance...................................................74
Section 14.23. Intentionally Omitted......................................75
Section 14.24. Amendments, Etc............................................75
Section 14.25. Credit for Certain Disbursements...........................75
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APPENDICES:
Appendix A Definitions and Rules of Interpretation
SCHEDULES:
Schedule 1-A Equity Investment
Schedule 1-B Indenture Trustee's Account
Schedule 1-C Owner Participant's Account
Schedule 2 Pricing Assumptions
Schedule 3.1(m) Environmental Matters - Hazardous Substances
Schedule 4.20 Recording and Filings
Schedule 5.45 Maintenance of Insurance
EXHIBITS:
Exhibit A-1 Description of Tiverton Facility
Exhibit A-2 Description of Rumford Facility
Exhibit B-1 Form of Tiverton Bill of Sale
Exhibit B-2 Form of Rumford Bill of Sale
Exhibit C-1 Form of Tiverton Facility Lease Agreement
Exhibit C-2 Form of Rumford Facility Lease Agreement
Exhibit D-1 Form of Tiverton Site Lease
Exhibit D-2 Form of Rumford Site Lease
Exhibit E-1 Form of Tiverton Site Sublease
Exhibit E-2 Form of Rumford Site Sublease
Exhibit F Form of Pass Through Trust Agreement
Exhibit G Form of OP Parent Guaranty
Exhibit H-1 Form of Calpine Guaranty (Tiverton)
Exhibit H-2 Form of Calpine Guaranty (Rumford)
Exhibit I Form of Collateral Trust Indenture
Exhibit J Form of OP Assignment and Assumption Agreement
Exhibit K List of Competitors
Exhibit L Required coverages for Qualifying Letters of Credit
& Equity Collateral Account
Exhibit M Form of Guarantor Assignment and Assumption Agreement
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PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT, dated as of December 19, 2000 (as
amended, supplemented or otherwise modified from time to time, in
accordance with the provisions hereof, this "Participation Agreement" or
this "Agreement"), among (i) TIVERTON POWER ASSOCIATES LIMITED
PARTNERSHIP, a limited partnership organized under the laws of the State
of Rhode Island (the "Tiverton Lessee"), (ii) RUMFORD POWER ASSOCIATES
LIMITED PARTNERSHIP, a limited partnership organized under the laws of
the State of Maine (the "Rumford Lessee") (the Rumford Lessee, together
with the Tiverton Lessee and each of their successors and permitted
assigns, collectively, the "Facility Lessees," or individually, as the
case may be, each a "Facility Lessee"), (iii) CALPINE CORPORATION, a
Delaware corporation, as Guarantor (together with its successors and
permitted assigns, the "Guarantor") under the Calpine Guaranty
(Tiverton) and the Calpine Guaranty (Rumford) (the Calpine Guaranty
(Rumford), together with the Calpine Guaranty (Tiverton), collectively,
the "Calpine Guaranties," or individually, as the case may be, each a
"Calpine Guaranty"), (iv) PMCC CALPINE NEW ENGLAND INVESTMENT LLC, a
Delaware limited liability company (the "Owner Lessor"), (v) PMCC
CALPINE NEIM LLC, a Delaware limited liability company (herein, together
with its successors and permitted assigns, called the "Owner
Participant"), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, a national banking association organized and
existing under the laws of the United States, not in its individual
capacity, except as expressly provided herein, but solely as trustee
under the Collateral Trust Indenture (herein in its capacity as trustee
under the Collateral Trust Indenture, together with its successors and
permitted assigns, called the "Indenture Trustee", and herein in its
individual capacity, together with its successors and permitted assigns,
called the "Lease Indenture Company"), and (vii) STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States,
not in its individual capacity, but solely as trustee under the Pass
Through Trust Agreement (herein in its capacity as trustee under the
Pass Through Trust Agreement, the "Pass Through Trustee").
WITNESSETH:
WHEREAS, (a) Tiverton Lessee, an indirect, wholly-owned subsidiary of
Calpine, will, as of the Closing Date, own a 265 MW gas-fired combined cycle
merchant power plant located in Tiverton, Rhode Island and more fully described
in Exhibit A-1 hereto ("Tiverton Facility") and (b) Rumford Lessee, an indirect,
wholly-owned subsidiary of Calpine, will, as of the Closing Date, own a 265 MW
gas-fired combined cycle merchant power plant located in Rumford, Maine and more
fully described in Exhibit A-2 hereto ("Rumford Facility") (each of the Tiverton
Facility and the Rumford Facility, a "Facility" and, collectively, the
"Facilities");
WHEREAS, (a) Tiverton Lessee desires to sell to the Owner Lessor the
Tiverton Facility pursuant
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to the Tiverton Bill of Sale, and to lease to the Owner Lessor the Tiverton Site
pursuant to the Tiverton Site Lease, and to lease the Tiverton Facility and
sublease the Tiverton Site from the Owner Lessor pursuant to the Tiverton
Facility Lease and the Tiverton Site Sublease, respectively and (b) Rumford
Lessee desires to sell to the Owner Lessor in the Rumford Facility pursuant to
the Rumford Bill of Sale, and to lease to the Owner Lessor the Rumford Site
pursuant to the Rumford Site Lease, and to lease the Rumford Facility and
sublease the Rumford Site from the Owner Lessor pursuant to the Rumford Facility
Lease and the Rumford Site Sublease, respectively (the Tiverton Site and the
Rumford Site, each a "Facility Site" and, collectively, the "Facility Sites" and
the Tiverton Bill of Sale and the Rumford Bill of Sale, each a "Bill of Sale"
and collectively, the "Bills of Sale");
WHEREAS, the Owner Participant desires to cause the Owner Lessor to
purchase the Facilities from the Facility Lessees pursuant to the Bills of Sale,
to lease the Facility Sites from the Facility Lessees pursuant to the Facility
Site Leases, and to lease the Facilities and to sublease the Facility Sites to
the Facility Lessees pursuant to the Facility Leases and the Facility Site
Subleases, respectively;
WHEREAS, the Owner Participant has entered into the LLC Agreement,
pursuant to which the Owner Participant has authorized the Owner Lessor to,
among other things and subject to the terms and conditions thereof and hereof,
issue the Lessor Notes and sell such Lessor Notes to the Pass Through Trust,
purchase the Facilities from the Facility Lessees pursuant to the Bills of Sale,
lease the Facility Sites from the Facility Lessees pursuant to the Facility Site
Leases, and lease the Facilities and sublease the Facility Sites to the Facility
Lessees pursuant to the Facility Leases and the Facility Site Subleases,
respectively;
WHEREAS, in order to provide a portion of the Purchase Price payable by
the Owner Lessor in respect of its acquisition of the Facilities pursuant to the
Bills of Sale, the Owner Participant is willing to make an investment in the
Owner Lessor in an amount equal to the Equity Investment, all in the manner and
subject to the conditions set forth herein;
WHEREAS, on the Closing Date, the Owner Lessor intends to sell to the
Pass Through Trust the Lessor Notes and to grant to the Indenture Trustee liens
and security interests in the Indenture Estate to secure its obligations
thereunder;
WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Pass Through Trustee has entered into the Pass
Through Trust Agreement, pursuant to which the Pass Through Trustee has been
directed to use the Proceeds to purchase the Lessor Notes from the Owner Lessor
on the Closing Date;
WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the Facility Lessees have entered into the Certificate
Purchase Agreement with the Initial Purchasers and the Pass Through Trust
pursuant to which the Initial Purchasers will purchase the Certificates on the
Closing Date from the Pass Through Trust;
WHEREAS, concurrently with the execution and delivery of this
Participation Agreement, the OP Guarantor has executed and delivered the OP
Parent Guaranty pursuant to which the OP Guarantor guarantees the payment and
performance obligations of the Owner Participant under the Operative Documents;
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WHEREAS, pursuant to the Calpine Guaranty (Tiverton) and the Calpine
Guaranty (Rumford), Calpine has guaranteed all of the respective obligations of
each Facility Lessee under the Participation Agreement and as of the Closing
Date shall guarantee all of the obligations of each Facility Lessee under the
other Operative Documents to which such Facility Lessee is a party; and
WHEREAS, the parties hereto desire to consummate the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS PARTICIPATION AGREEMENT
The capitalized terms used in this Participation Agreement, including
the foregoing recitals, and not otherwise defined herein shall have the
respective meanings specified in Appendix A hereto. The rules of interpretation
set forth in Appendix A shall apply to terms used in this Participation
Agreement and specifically defined herein.
SECTION 2. PARTICIPATION; CLOSING DATE; TRANSACTION COSTS
Section 2.1. Agreements to Participate. Subject to the terms and
conditions of this Agreement, and in reliance on the agreements, representations
and warranties made herein, the parties agree to participate in the transactions
described in this Section 2.1 on the Closing Date as follows:
(a) the Owner Participant agrees to provide funds in an amount
sufficient to (i) fund the Equity Investment and (ii) pay the Transaction Costs
which the Owner Lessor is responsible to pay pursuant to Section 2.3(a) hereof
(collectively, the "Owner Participant's Commitment");
(b) the Tiverton Lessee agrees to sell the Tiverton Facility to the
Owner Lessor on the terms and conditions set forth in the Tiverton Bill of Sale
and to lease the related Tiverton Site to the Owner Lessor on the terms and
conditions set forth in the Tiverton Site Lease; the Owner Lessor agrees to buy
the Tiverton Facility and to lease the Tiverton Site from the Tiverton Lessee,
and each agrees to execute and deliver the Tiverton Bill of Sale and the
Tiverton Site Lease;
(c) the Rumford Lessee agrees to sell the Rumford Facility to the Owner
Lessor on the terms and conditions set forth in the Rumford Bill of Sale and to
lease the related Rumford Site to the Owner Lessor on the terms and conditions
set forth in the Rumford Site Lease; the Owner Lessor agrees to buy the Rumford
Facility and to lease the Rumford Site from the Rumford Lessee, and each agrees
to execute and deliver the Rumford Bill of Sale and the Rumford Site Lease;
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(d) the Owner Lessor agrees to lease the Tiverton Facility and to
sublease the Tiverton Site to the Tiverton Lessee on the terms and conditions
set forth in the corresponding Tiverton Facility Lease and Tiverton Site Lease;
the Tiverton Lessee agrees to lease the Tiverton Facility and sublease the
corresponding Tiverton Site from the Owner Lessor, and each agrees to execute
and deliver the respective Tiverton Site Sublease and Tiverton Facility Lease;
(e) the Owner Lessor agrees to lease the Rumford Facility and to
sublease the Rumford Site to the Rumford Lessee on the terms and conditions set
forth in the corresponding Rumford Facility Lease and Rumford Site Lease; the
Rumford Lessee agrees to lease its Rumford Facility and sublease the
corresponding Rumford Site from the Owner Lessor, and each agrees to execute and
deliver the respective Rumford Site Sublease and Rumford Facility Lease;
(f) the Indenture Trustee agrees to act as the trustee under and enter
into the Collateral Trust Indenture pursuant to which the Lessor Notes will be
issued;
(g) the Pass Through Trustee agrees to use the Proceeds from the sale of
the Certificates by the Pass Through Trust to purchase the Lessor Notes from the
Owner Lessor;
(h) the Owner Lessor agrees to sell to the Pass Through Trust the Lessor
Notes and to grant to the Indenture Trustee, for the benefit of the Pass Through
Trustee, certain liens and security interests in the Indenture Estate to secure
its obligations thereunder;
(i) the Owner Lessor agrees to use the funds received from the Owner
Participant and the Pass Through Trust pursuant to clause (a)(i) and (g),
respectively, of this Section 2.1 on the Closing Date to pay the Purchase Price;
(j) the Owner Participant and the Facility Lessees agree to enter into
the Tax Indemnity Agreement; and
(k) the parties agree to enter into the agreements referred to above and
the other Operative Documents (other than the Operative Documents previously
entered into on the Effective Date), and to cause each Affiliate thereof that is
not a party hereto but is a party to an Operative Document to enter into such
Operative Document, as the case may be (in each case, if attached as an Exhibit
hereto, in substantially the form attached hereto).
Section 2.2. Closing Date; Procedure for Participation.
(a) Closing Date. The closing of the transactions contemplated hereby
(the "Closing") shall take place after 10:00 a.m., New York City time, on the
Scheduled Closing Date or such other date as the parties hereto shall mutually
agree (the "Closing Date"), at the offices of Latham & Watkins, 885 Third
Avenue, New York, New York 10022 or at such other place as the parties hereto
shall mutually agree.
(b) Procedures for Funding. Unless the Closing Date shall have been
postponed pursuant to Section 2.2(c), subject to the terms and conditions of
this Participation Agreement, the Owner Participant shall make the Owner
Participant's Commitment available not later than 10:00 a.m., New York City
time, on the Scheduled Closing Date, by transferring or delivering
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such amount, in funds immediately available on such Closing Date, to the Owner
Lessor in New York, New York.
(c) Postponement of the Closing. The Scheduled Closing Date may be
postponed from time to time for any reason if the Facility Lessees give the
Owner Participant, the Owner Lessor, the Indenture Trustee and the Pass Through
Trustee a facsimile or telephonic (confirmed in writing) notice of such
postponement and notice of the date to which the Closing has been postponed,
such notice of postponement to be received by each party no later than noon, New
York City time, on the Scheduled Closing Date. If, prior to receipt of a
postponement notice under this Section 2.2(c), the Owner Participant shall have
provided funds in accordance with Section 2.2(b), such funds shall be returned
to the Owner Participant, as soon as reasonably practicable but in no event
later than the Business Day following the date of such notice, unless the Owner
Participant shall have otherwise directed. All funds made available pursuant to
Section 2.2(b) will be held by the Owner Lessor in trust for the Owner
Participant and shall not be part of the Indenture Estate or the Lessor Estate,
shall be invested by the Owner Lessor in accordance with clause (d) below and
such funds shall remain the sole property of the Owner Participant unless and
until released by the Owner Participant and made available to the Owner Lessor
and applied to pay the Purchase Price or Transaction Costs or returned to the
Owner Participant, as provided in this Agreement.
(d) Investment of Funds. If, on the Scheduled Closing Date, the Owner
Participant has made the Owner Participant's Commitment available to the Owner
Lessor in accordance with Section 2.2(b), the Closing does not occur on such
date and the Owner Lessor is unable to return such funds to the Owner
Participant on such date, the Owner Lessor shall, subject to Section 2.2(c)
above, use reasonable efforts to invest such funds from time to time at the
written direction of Calpine, and at Calpine's sole expense and risk, in
Permitted Investments until such funds can be returned to the Owner Participant.
If, on the Scheduled Closing Date, the Owner Participant has made the Owner
Participant's Commitment available to the Owner Lessor in accordance with
Section 2.2(b), the Closing does not occur on such date and the Owner Lessor has
not returned such funds to the Owner Participant on or before 1:00 p.m., New
York City time, on such date, then Calpine shall reimburse the Owner Participant
for loss of the use of such funds at the Applicable Rate for each day, from and
including the day that such funds were made available to the Owner Lessor by the
Owner Participant to, but excluding the earlier of (i) the day that such funds
have been returned to the Owner Participant pursuant to Section 2.2(c) (funds
received by the Owner Participant after 1:00 p.m., New York City time, of any
day shall be deemed to be returned on the next succeeding Business Day) and (ii)
the Closing Date. Subject to payment for the account of the Owner Participant of
any reimbursement for loss of use of funds due to it at the Applicable Rate, any
net gain realized on the investment of such funds (including interest) shall be
paid to Calpine by the Owner Lessor on the earlier of (i) the date such funds
are returned to the Owner Participant pursuant to Section 2.2(c) and (ii) the
Closing Date. The Owner Lessor shall not be liable for any interest on or loss
resulting from such investments and, if such funds are made available to the
Owner Lessor and utilized to pay the Purchase Price or Transaction Costs on the
Closing Date, Calpine shall reimburse the Owner Lessor for any net loss realized
on the investment of such funds. If such funds are not so
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utilized, Calpine shall, in addition to its obligation to reimburse the Owner
Participant for loss of use as provided above, reimburse the Owner Participant
on the date such funds are returned to the Owner Participant for any net loss
realized on the investment of such funds. In order to obtain funds for payment
of the Purchase Price or Transaction Costs or to return funds made available to
the Owner Lessor by the Owner Participant, the Owner Lessor is authorized to
sell any investments or obligations purchased as aforesaid.
(e) Expiration of Commitments. The obligation of the Owner Participant
to make its Equity Investment shall expire at 11:59 p.m., New York City time, on
December 31, 2000. If the Closing Date has not occurred on or before December
31, 2000 the Transaction Parties shall have no obligation to consummate the
transactions contemplated under this Agreement and, except as provided in
Sections 2.3, 9.1 and 9.2, all obligations of the Transaction Parties shall
cease and terminate.
Section 2.3. Transaction Costs.
(a) If the transactions contemplated by this Agreement are consummated,
all Transaction Costs up to an amount equal to US$9,150,000.00, which shall be
substantiated or otherwise supported in reasonable detail (provided that legal
bills may be redacted to preserve attorney-client privilege), shall be paid
promptly after the Closing Date but in no event later than December 29, 2000 by
the Owner Lessor (with funds provided by the Owner Participant), assuming all
invoices have been approved by Calpine and received by the Owner Lessor by
December 26, 2000. All other Transaction Costs, fees, costs and expenses
incurred by the Facility Lessees, the Owner Lessor and the Owner Participant
shall be paid by Calpine. If the Overall Transaction is not consummated for any
reason (including as a result of the Facility Lessees' terminating this
Agreement pursuant to Section 12(a)), then Calpine shall bear all Transaction
Costs; provided, however, that Calpine shall not be obligated to pay Transaction
Costs incurred by the Owner Participant if the Overall Transaction is not
consummated on the basis of the provisions of this Agreement due to a failure of
the Owner Participant to satisfy any condition to the Closing required to be
satisfied by the Owner Participant.
(b) Following the Closing Date, the Facility Lessees will be responsible
for, and will pay as Supplemental Rent on an After-Tax Basis to the
Administrator, the annual administration fees, if any, and expenses (including
reasonable and documented fees and expenses of its outside counsel) of
Wilmington Trust Company (as Administrator pursuant to the LLC Administration
Agreements and in its individual capacity), the Indenture Trustee (as such and
in its individual capacity) and the Pass Through Trustee.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the Facility Lessees.
Each of the Facility Lessees represent and warrant that (i) as of the Effective
Date, as set forth in clauses (a), (b) and (c) below and (ii) as of the Closing
Date, as set forth in each of the clauses of this Section 3.1:
(a) Due Incorporation, etc. Each Facility Lessee is a limited
partnership duly organized, validly existing, and in good standing under the
laws of the State of Rhode Island (in the case of the Tiverton Lessee) or Maine
(in the case of the Rumford Lessee), is duly licensed or qualified and in good
standing in each jurisdiction where the character of its properties or the
nature of its activities makes such qualification necessary, and has the power
and authority to (i)
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own or hold under lease the property it purports to own or hold under lease,
(ii) carry on its business as now being conducted and as presently proposed to
be conducted and (iii) take all actions as may be necessary to consummate the
transactions contemplated hereunder and under the other Operative Documents.
Each Facility Lessee is an indirect wholly-owned subsidiary of Calpine.
(b) Authorization; Enforceability, etc. This Agreement and each of the
other Operative Documents to which such Facility Lessee is or will be a party
have been, or when executed and delivered will be, duly authorized, executed and
delivered by all necessary action by such Facility Lessee and, assuming the due
authorization, execution and delivery by each other party thereto, this
Agreement constitutes and, when executed and delivered, the other Operative
Documents to which such Facility Lessee is or will be a party will constitute
the legal, valid and binding obligations of such Facility Lessee which is a
party hereto or thereto, enforceable against such Facility Lessee in accordance
with their respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity.
(c) Non-Contravention. The execution, delivery and performance by each
Facility Lessee of this Agreement and each of the other Operative Documents to
which it is or will be a party, the consummation by such Facility Lessee of the
transactions contemplated hereby and thereby, and compliance by such Facility
Lessee with the terms and provisions hereof and thereof, do not and will not (i)
contravene any Applicable Law binding on such Facility Lessee or its property,
or its organizational documents, (ii) constitute a default by such Facility
Lessee under, or result in the creation of any Lien upon the property of such
Facility Lessee (other than pursuant to any Operative Document) under any
indenture, mortgage or other material contract, agreement or instrument to which
such Facility Lessee is a party or by which such Facility Lessee or any of its
property is bound, (iii) contravene the Partnership Agreement of such Facility
Lessee or (iv) require the consent or approval of any Person which has not
already been obtained, in each case with respect to clauses (i), (ii) and (iv)
above, which would reasonably be expected to have a Material Adverse Effect.
(d) Government Actions. Such Facility Lessee has all Permits with, any
Governmental Entity or under any Applicable Law required (x) for the due
execution, delivery or performance by such Facility Lessee of this Agreement,
and the other Operative Documents to which such Facility Lessee is or will be a
party or (y) without regard to any other transactions or other actions of the
Owner Participant, the Owner Lessor or any Affiliate of any of them or any
assignee or transferee of any of the Owner Participant, the Owner Lessor (or any
Affiliate of any transferee or assignee) and assuming that none of the Owner
Participant, the Owner Lessor or any Affiliate of any of them or any assignee or
transferee of any of the Owner Participant (or any Affiliate of any such
transferee or assignee) is an "electric utility" or a "public utility" or a
"public utility holding company" or any similar entity subject to public utility
regulation under any Applicable Law immediately prior to the Closing, with
respect to the participation by the Owner Participant, the Owner Lessor in the
Overall Transaction, other than (i) any Permit where the failure to obtain or
maintain such Permit would not be reasonably likely to result in a Material
Adverse Effect, (ii) the FERC Orders, (iii) as may be required under Applicable
Law providing for the supervision or regulation of the Owner Participant, the
Owner Lessor or any Affiliate of any of them as a result of investing, lending
or other commercial activity in which
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the Owner Participant, the Owner Lessor or any Affiliate of any of them is or
may be engaged other than the transactions contemplated hereby or by any of the
other Operative Documents, (iv) as may be required under existing Applicable
Laws to be obtained, given, accomplished or renewed at any time, or from time to
time, in each case, after the Closing Date and which such Facility Lessee has no
reason to believe will not be timely obtained and the lack of which would not
reasonably be expected to have a Material Adverse Effect or involve any danger
of criminal or material civil liability being incurred by the Owner Participant,
the Owner Lessor, the Indenture Trustee or the Pass Through Trustee, (v) in
connection with any modification to or rebuilding or replacement of the
Facilities or any portion thereof that may occur in the future, (vi) as may be
required in connection with any refinancing of the applicable Lessor Note or the
Certificates or the issuance of applicable Additional Lessor Notes or Additional
Certificates, (vii) as may be required in consequence of any transfer of the
Member Interest or any transfer of ownership of the applicable Facility or the
Owner Lessor's Interest, or any part thereof by the Owner Lessor or the exercise
by any such party of dispossessory remedies under the Operative Documents or any
relinquishment of the use or operation of such Facility by such Facility Lessee,
(viii) appropriate filing and recording to perfect the Lien of the Collateral
Trust Indenture, if required, and the ownership and leasehold interests conveyed
pursuant to this Agreement, or (ix) as may be required under any Applicable Law
enacted or adopted after the date hereof.
(e) Litigation. There is no pending or, to the Actual Knowledge of such
Facility Lessee, threatened, action, suit, investigation or proceeding against
such Facility Lessee or any other Calpine Party before any Governmental Entity
which (i) questions the validity of the Tiverton Operative Documents or the
Rumford Operative Documents, as the case may be, or the ability of such Facility
Lessee or such other Calpine Party to perform its obligations under such
Operative Documents to which such Facility Lessee or such other Calpine Party is
or will be a party or (ii) if determined adversely to it, could reasonably be
expected to have a Material Adverse Effect or otherwise materially adversely
affect the Facility leased by such Facility Lessee.
(f) No Defaults. Neither such Facility Lessee nor any other Calpine
Party is in default, and no condition exists that with notice or lapse of time
or both would constitute a default, under any mortgage, indenture or other
contract, agreement or instrument to which such Facility Lessee or such other
Calpine Party is a party or by which such Facility Lessee or such other Calpine
Party or its property is bound in any such case where any such default,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
(g) Location of Chief Executive Office and Principal Place of Business,
etc. (1) (x) The chief executive office and principal place of business of the
Tiverton Lessee and the office where the Tiverton Lessee keeps its company
records concerning the Tiverton Facility, the Tiverton Site and the Tiverton
Operative Documents is located at: The Pilot House, 2nd Floor, Lewis Wharf,
Boston, Massachusetts 02110 and 50 West San Fernando Street, San Jose,
California 95113 and (y) the chief executive office and principal place of
business of the Rumford Lessee and the office where the Rumford Lessee keeps its
company records concerning the Rumford Facility, the Rumford Site and the
Rumford Operative Documents is located in the aforementioned addresses in Boston
and San Jose, respectively.
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(2) The Tiverton Facility is located on the Tiverton Site and the
Rumford Facility is located on the Rumford Site.
(3) The condition of such Facility Lessee's applicable Facility is
substantially identical to the condition it was in when inspected by the
Appraiser in connection with the Closing Appraisal.
(h) Title; Liens. (1) Each Facility Lessee has (i) good and valid title
to the respective Facility leased by such Facility Lessee, free and clear of all
Liens other than Permitted Closing Date Liens, and (ii) good and valid title to
its interests in its respective Facility Site and Easements free and clear of
all Liens other than Permitted Closing Date Liens.
(2) Upon execution and delivery of the Operative Documents and recording
or filing (as appropriate) of the instruments and documents referred to in Part
I of Schedule 4.20 in accordance with Section 4.20, (A) good and valid title to
the applicable Facility will be duly, validly and effectively conveyed and
transferred to the Owner Lessor free and clear of all Liens other than Permitted
Closing Date Liens, and (B) good and valid leasehold interest in the related
Facility Site will be duly, validly and effectively granted to the Owner Lessor
upon the terms and conditions in the corresponding Facility Site Lease, free and
clear of all Liens other than Permitted Closing Date Liens.
(3) When duly authorized, executed and delivered by each of the parties
thereto, the Collateral Trust Indenture will create a valid and, when the
filings and recordings to be made pursuant to Section 4.20 have been made, first
priority perfected Lien in favor of the Indenture Trustee in the Indenture
Estate and no filing, recording, registration or notice with, or payment of any
fees to, any federal or state Governmental Entity will be necessary to establish
or, except for such filings and recordings as will be made pursuant to Section
4.20, to perfect, or give record notice of, the Lien in favor of the Indenture
Trustee in the Indenture Estate to the extent such Lien may be perfected by
filings or recordings.
(4) None of the Permitted Encumbrances will, on and after the Closing,
interfere with the use, operation or possession of the Facilities (as
contemplated by the Operative Documents) or the use of or the exercise by the
Owner Lessor of its rights under the applicable Bills of Sale or the Facility
Site Leases with respect to the Facilities, the Facility Sites or the Easements,
in each case, which could reasonably be expected to have a Material Adverse
Effect.
(i) Regulation U, etc. No Calpine Party is engaged principally, or as
one of its principal activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (as defined in Regulations T, U
or X of the Federal Reserve Board), and no part of the proceeds of Lessor Notes
or the Equity Investment will be used by any Calpine Party, directly or
indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR 221), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve such Person in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220).
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(j) Holding Company Act. Such Facility Lessee is not an "electric
utility company," a "holding company", a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" within the meaning of the
Holding Company Act, and the execution, delivery and performance of the
Operative Documents to which such Facility Lessee is or will be a party will not
subject such Facility Lessee to such regulation under the Holding Company Act
and do not violate any provision of the Holding Company Act or any rule or
regulation thereunder.
(k) Investment Company Act. Such Facility Lessee is not an "investment
company" or a company controlled by an "investment company" within the meaning
of the Investment Company Act of 1940.
(l) Securities Act. Neither such Facility Lessee nor anyone authorized
by it has directly or indirectly offered or sold any interest in the Member
Interest, the Lessor Notes or the Certificates or any part thereof, or in any
similar security or lease, or in any security or lease the offering of which for
the purposes of the Securities Act would be deemed to be part of the same
offering as the offering of the Member Interest, the Lessor Notes or the
Certificates or any part thereof or solicited any offer to acquire any of the
same, in any such case, in violation of the registration requirements of Section
5 of the Securities Act.
(m) Environmental Matters. Except as set forth in Schedule 3.1(m):
(1) Such Facility Lessee has not received and does not have Actual
Knowledge of any written notice, letter, citation, order, warning, complaint,
inquiry, claim or demand from any Governmental Entity or any other Person that:
(i) there has been a Release, or there is a threat of Release, of Hazardous
Substances in, on, under or from the Facility leased by such Facility Lessee, or
the related Facility Site or any of the Easements relating to such Facility;
(ii) such Facility Lessee or any other Calpine Party is or is asserted to be
liable, in whole or in part, for the costs of cleaning up, remedying or
responding at any location (including any location at which any Hazardous
Substances have been generated, stored, treated or disposed by or on behalf of
such Facility Lessee or such other Calpine Party) to a Release or threatened
Release of any Hazardous Substance generated, used or stored at or Released in,
on, under or from the Facility leased by such Facility Lessee, or the related
Facility Site or any of the Easements relating to such Facility; (iii) either of
the Facilities or either of the Facility Sites is subject to a Lien in favor of
any Governmental Entity in response to a Release or threatened Release of
Hazardous Substances or (iv) either of the Facility Lessees, Facilities, or the
Facility Sites or any of the Easements is or is asserted to be in violation of
or not in compliance with any Environmental Law, in any case with respect to
clauses (ii), (iii) or (iv), which could reasonably be expected to have a
Material Adverse Effect;
(2) Such Facility Lessee and the other Calpine Parties are in
compliance with and have complied with all Environmental Laws, except to the
extent that failure to so comply could not reasonably be expected to have a
Material Adverse Effect; and
(3) To such Facility Lessee's Actual Knowledge, there is not and has
not been any Environmental Condition (A) at, on, under or from the Facility
leased by such Facility Lessee, or the related Facility Site or any of the
Easements relating to such Facility, or (B) at, on, under or
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from any other location resulting from or arising in connection with the
operation by any Person of such Facility leased by such Facility Lessee, or the
related Facility Site or any of the Easements relating to such Facility, that in
each case could reasonably be expected to have a Material Adverse Effect or
involve any danger of (i) foreclosure, sale, forfeiture or loss of, or
imposition of a material lien on, such Facility leased by such Facility Lessee,
or the related Facility Site or any of such Easements, (ii) the impairment of
the ownership, use, operation or, maintenance of such Facility, Facility Site or
any of the Easements relating to such Facility in any material respect, or (iii)
any criminal or material civil liability being incurred by the Owner
Participant, the Owner Lessor, the Indenture Trustee or the Pass Through
Trustee.
(4) All environmental permits necessary to own, operate, lease or
maintain the Facility leased by such Facility Lessee, the related Facility Site
and, to such Facility Lessees' Actual Knowledge, the Easements relating to such
Facility in accordance with the Operative Documents and Environmental Laws have
been obtained on behalf of the Owner Lessor or by the Lessee and they are final,
in proper form, and in full force and effect, with all appeal periods expired,
and such Facility Lessee is in compliance with the provisions of all such
permits, except where the failure to obtain, maintain the effectiveness of, or
comply with such permits would not reasonably be expected to have a Material
Adverse Effect or involve any danger of (i) foreclosure, sale, forfeiture or
loss of, or imposition of a material lien on, such Facility, Facility Site or
Easements, (ii) the impairment of the ownership (or leasehold or easement
interest in), use, operation or maintenance of such Facility, Facility Site or
Easements in any material respect, or (iii) any criminal or material civil
liability being incurred by the Owner Participant, the Owner Lessor, the
Indenture Trustee, the Pass Through Trustee or the Certificateholders.
(n) Operation and Use. Assuming each Facility will continue to be
operated substantially as operated as of the Closing Date, the rights and
interests to be possessed on the Closing Date by (i) the Tiverton Lessee with
respect to the Tiverton Facility, the Tiverton Site and the Tiverton Easements
and (ii) the Rumford Lessee with respect to the Rumford Facility, the Rumford
Site and the Rumford Easements, and based upon such Facility Lessee's reasonable
expectations and on Applicable Law in effect on and as of the Closing Date, the
rights and interests made available to the Owner Lessor pursuant to the
Operative Documents and the rights contemplated by the related Facility Lease to
be made available under such Operative Documents, permit on a commercially
practicable basis during the applicable Facility Lease Term and the period
following the expiration or termination of such Facility Lease Term, as
applicable, until the end of each Facility's useful life as set forth in the
Closing Appraisal, (i) the location, occupation, interconnection, maintenance
and repair of each Facility, (ii) the use, operation and possession of each
Facility, (iii) as of the Closing Date, the use, operation, possession,
maintenance, replacement, renewal and repair of all Improvements required to be
made to each Facility, (iv) adequate ingress to and egress from each Facility in
connection with the ownership, use, operation, possession, maintenance or repair
of each Facility and (v) the transmission of electricity from each Facility
substantially in the manner currently transmitted as of the Closing Date.
(o) Tax Returns. Such Facility Lessee and each other Calpine Party has
filed all federal, state and local income tax returns which are required to be
filed by it and has paid all Taxes shown to be due and payable on such returns
or pursuant to any assessment received by it (other than Taxes and assessments
the payment of which is being contested in good faith by such
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Person and with respect to which appropriate accounting reserves have to the
extent required by GAAP been set aside) and neither such Facility Lessee or any
other Calpine Party has any Actual Knowledge of any actual or proposed
assessment in connection therewith which, either in any case or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
(p) Jurisdiction. In accordance with Section 14.14 hereof, such
Facility Lessee has validly submitted to the jurisdiction of the Supreme Court
of the State of New York, New York County and the United States District Court
for the Southern District of New York.
(q) Applicable Law. Such Facility Lessee is in compliance with all
Applicable Law, including all applicable zoning, use and building codes, laws,
regulations and ordinances relating to the operations, maintenance, use, lease
or ownership of its applicable Facility, the related Facility Site and the
applicable Easements, except where the noncompliance would not reasonably be
expected to have a Material Adverse Effect or involve any danger of (i)
foreclosure, sale, forfeiture or loss of, or imposition of a material lien on,
such Facility, such Facility Site or any of such Easements, (ii) the impairment
of the ownership, use, operation or maintenance of such Facility or such
Facility Site in any material respect, or (iii) any criminal or material civil
liability being incurred by the Owner Participant, the Owner Lessor, the
Indenture Trustee or the Pass Through Trustee, including subjecting the Owner
Participant or the Owner Lessor to regulation as a public utility under
Applicable Law. None of the Calpine Parties is in default of any judgments,
orders or decrees of any Governmental Entity relating to such Facility, such
Facility Site or any of such Easements.
(r) ERISA. Assuming the accuracy of the representations of the other
parties hereto and the Certificateholders in the Certificates, the execution and
delivery of the Operative Documents and the issuance and sale of the Lessor
Notes under the Collateral Trust Indenture and the Certificates under the Pass
Through Trust Agreement will be exempt from, or will not involve any transaction
which is subject to, the prohibitions of either Section 406 of ERISA or Section
4975 of the Code and will not involve any transaction in connection with which a
penalty could be imposed under Section 502(i) of ERISA or a tax could be imposed
pursuant to Section 4975 of the Code.
(s) Insurance. All insurance required to be obtained pursuant to
Schedule 5.45 is in full force and effect.
(t) No Default; No Event of Loss. No Lease Default or Lease Event of
Default, exists or will exist upon execution and delivery of the Operative
Documents. No Event of Loss exists or will exist upon the execution and delivery
of the Operative Documents.
(u) Special Assessments. There is no action pending or, to such
Facility Lessee's Actual Knowledge, threatened by a Governmental Entity or other
Person to specially assess the applicable Facility or the applicable Facility
Site for any public improvements constructed or to be constructed which would
reasonably be expected to have a Material Adverse Effect.
(v) Utility Services. The Facilities and the Facility Sites have
available all services of public utilities necessary for use and operation of
the Facilities as currently being used and as contemplated by the applicable
Operative Documents, except where the failure to have any such
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services or public utilities available would not result in a material adverse
effect with respect to either of the Facilities.
(w) Eminent Domain. There is no action pending with respect to, or
threatened by a Governmental Entity or other Person to initiate, a Requisition
of any of such Facility, Facility Site or any of the Easements relating to such
Facility, which would reasonably be expected to have a Material Adverse Effect.
(x) Permitted Liens. There are no violations or proceedings or actions
pending or threatened, with respect to any easements, reciprocal easement
agreements, declarations, development agreements or recorded restrictions or
covenants relating, in the case of the Tiverton Lessee, to the Tiverton
Facility, the Tiverton Facility Site or any of the Tiverton Easements, and in
the case of the Rumford Lessee, to the Rumford Facility, the Rumford Facility
Site or any of the Rumford Easements, which would reasonably be expected to have
a Material Adverse Effect.
(y) Access; Egress. Access to and egress from the Facility leased by
such Facility Lease and the related Facility Site is available and provided by
public streets and/or private roads fully accessible by such Facility Lessee. To
such Facility Lessee's Actual Knowledge, there are no plans of any Governmental
Entity to change the highway or road system in the vicinity of its related
Facility or its related Facility Site, or to restrict or change access from any
such highway or road to such Facility or such Facility Site, in either case, in
any manner which would reasonably be expected to have a Material Adverse Effect.
(z) Notices. To such Facility Lessee's Actual Knowledge, (i) there are
no outstanding written notices from any Governmental Entity of any violation of,
or that its applicable Facility or Facility Site is not in compliance with, any
and all Applicable Laws relating to such Facility and such Facility Site or the
ownership, use, occupancy and operation thereof and (ii) there are no
outstanding written notices that any repairs or work or capital improvements are
required to be done at or with respect to such Facility or Facility Site by any
Governmental Entity or by any insurance company which currently issues any
insurance to such Facility Lessee or by any board of fire underwriters or other
body exercising similar functions, except, in either case with respect to (i) or
(ii) above, where such violation, noncompliance or repairs could not reasonably
be expected to have a Material Adverse Effect.
(aa) Business. Such Facility Lessee has not conducted any business
other than the acquisition, construction, development, ownership, operation,
maintenance, leasing and financing of such Facility Lessee's applicable Facility
and Facility Site and activities incidental thereto.
(bb) Intentionally Omitted.
(cc) Intellectual Property. To the Actual Knowledge of such Facility
Lessee, such Facility Lessee has the right to use all patents, trademarks,
service marks, trade names, copyrights, licenses and other rights which are
necessary for the operation of its business as presently conducted and to
transfer all such rights to the Owner Lessor subsequent to termination
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of the related Facility Lease, except to the extent failure to possess such
rights would not reasonably be likely to result in a Material Adverse Effect.
(dd) Land Not in Flood Zone. No portion of the Facility leased by such
Facility Lessee, or the Easements relating to such Facility or the Facility Site
relating to such Facility includes improved real property that is located in an
area that has been identified by the Director of the Federal Emergency
Management Agency as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968, as amended.
(ee) No Fraudulent Conveyances. Each Facility Lessee is consummating
the transactions contemplated hereby, including transfer of certain of its
assets and properties to the Owner Lessor, in good faith and without any intent
to defraud creditors of such Facility Lessee or subsequent purchasers. The
execution and delivery of the Operative Documents to which such Facility Lessee
is a party will not render such Facility Lessee insolvent under GAAP or leave
such Facility Lessee with assets whose present fair valuation of assets is less
than the present fair valuation of such Facility Lessee's debts. As used in this
Section 3.1(ee), "debts" includes any and all liabilities, whether matured or
unmatured, liquidated or unliquidated, absolute, fixed or contingent, and
whether or not such liabilities are required under GAAP to be shown on each
Facility Lessee's balance sheet. The execution and delivery of the Operative
Documents to which each Facility Lessee is a party will not leave it with
property remaining in its hands which would constitute unreasonably small assets
or capital, and each Facility Lessee has and, after giving effect to such
transactions will have, an adequate amount of assets and capital to engage in
its business now and in the future, based on the actual and anticipated needs
for capital of the businesses anticipated to be conducted by such Facility
Lessee, and based upon the other information described herein. After giving
effect to the transactions contemplated under the Operative Documents, each
Facility Lessee will be able to pay all of its debts and liabilities, including
unrecorded contingent liabilities, as they mature, each Facility Lessee will
have positive cash flow after paying all of its scheduled and anticipated debt
as it matures, and each Facility Lessee will realize sufficient monies from
current assets in the ordinary and usual course of business to pay recurring
current debt, short-term debt and long-term debt as such debts mature.
(ff) No Additional Fees. Except for the fees referred to in clause
(xviii) and (xix) of the definition of Transaction Costs, such Facility Lessee
has not paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of arranging the financing of the
transactions contemplated by the Operative Documents.
(gg) Status under Certain Statutes. Neither the Facility Lessees, the
Owner Participant, the Owner Lessor, the Indenture Trustee, the Pass Through
Trustee nor any Certificateholder solely as a result of execution, delivery and
performance of, and the consummation of the transactions contemplated by the
Operative Documents shall be or become (i) subject to regulation as a "public
utility company," "holding company," an "affiliate" of a "holding company" or a
"subsidiary company" of a "holding company" within the meaning of PUHCA or (ii)
a "public utility" (except that the Facility Lessees will each be a public
utility subject to the Federal Power Act with authority to sell wholesale
electricity at market-based rates and with waivers of regulations customarily
granted to a public utility that sells wholesale power
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at market-based rates), a "transmitting utility," or an "electric utility"
within the meaning of the Federal Power Act (iii) subject to state regulation of
rates, or (iv) organizational requirements for electric utilities.
(hh) Material Omission. Neither the Offering Circular (including any
preliminary offering circular approved by such Facility Lessee for distribution)
nor the written information furnished to the Owner Lessor, the Owner
Participant, the Indenture Trustee and the Pass Through Trustee by or on behalf
of such Facility Lessee or any of its Affiliates in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading; provided, that no representation or warranty is made with regard to
(i) any projections or other forward-looking statements provided by or on behalf
of the Facility Lessee, or (ii) the descriptions of the Operative Documents or
the tax consequences to beneficial owners of Certificates; provided, further,
each of the Transaction Parties acknowledge and agrees that (i) Calpine has
heretofore provided to the Appraiser, solely in order to assist the Appraiser in
connection with the preparation of the appraisal to be delivered by the
Appraiser to certain of the Transaction Parties at the Closing, certain (1)
general market information, (2) information about the Maine and Rhode Island
energy markets and (3) information passed along from other Persons and (ii) that
the Facility Lessee makes no representation or warranty whatsoever with respect
to the information described in clause (i) above except to the extent expressly
set forth in Section 4(b) of the Tax Indemnity Agreement.
(ii) Exempt Wholesale Generator. Each Facility Lessee is an "exempt
wholesale generator" under PUHCA. The Facility leased by such Facility Lessee is
interconnected with the high voltage network operated by ISO New England and has
access to transmission services and ancillary services sufficient to sell the
net generating capacity of such Facility at wholesale, and such Facility Lessee
has the authority to sell wholesale electric power from the net generating
capacity of such generating Facility at market-based rates.
(jj) FERC Orders. The Facility Lessees have duly filed with FERC the
filings referenced in Section 4.37 and, except with respect to the determination
by FERC of EWG status, received from FERC the orders referenced therein.
(kk) Fully Taxable. As of the Closing Date, each Person owning an
Ownership Interest (i) is fully taxable at the highest federal tax rate and (ii)
expects to be fully taxable at the highest federal tax rate throughout the Lease
Term; for the avoidance of doubt, this representation is not intended to be
construed as nor shall it be deemed to be a guaranty as to any such Person's
future taxation.
(ll) Commencement of Commercial Operations and Compliance. To the
knowledge of the Tiverton Lessee, the Tiverton Facility has commenced commercial
operations with at least 260 MW of capacity and complies in all material
respects with the other specifications set forth in the purchase and
construction contracts for such Facility, and to the knowledge of the Rumford
Lessee, the Rumford Facility has commenced commercial operations with at least
260 MW of capacity and complies in all material respects with the other
specifications set forth in the purchase and construction contracts for such
Facility, except as disclosed in the R.W. Beck
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Reports delivered to the Owner Participant, the Owner Lessor, and the Indenture
Trustee prior to the Closing Date.
Section 3.2. Representations and Warranties of the Owner Lessor. The
Owner Lessor represents and warrants that (i) as of the Effective Date, as set
forth in clauses (a), (b) and (c) below and (ii) as the Closing Date, as set
forth in each of the clauses of this Section 3.2:
(a) Due Organization. The Owner Lessor is a duly organized and validly
existing limited liability company under the laws of the State of Delaware of
which the Owner Participant is the sole member, and has the power and authority
to enter into and perform its obligations under this Agreement and each of the
other Operative Documents to which it is a party.
(b) Due Authorization, Enforceability; etc. (1) (i) This Agreement and
each of the other Operative Documents (other than the Lessor Notes) to which the
Owner Lessor is or will be a party has been or when executed and delivered will
be duly authorized, executed and delivered by the Owner Lessor, and (ii)
assuming the due authorization, execution and delivery of this Agreement by each
party hereto other than the Owner Lessor, this Agreement constitutes and when
executed and delivered each of the other Operative Documents (other than the
Lessor Notes) to which it is or will be a party will be the legal, valid and
binding obligations of the Owner Lessor, enforceable against the Owner Lessor in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity.
(2) Upon the execution of the Lessor Notes by the Owner Lessor in
accordance with the Collateral Trust Indenture and delivery of such Lessor Notes
against payment therefor, the Lessor Notes will constitute legal, valid and
binding obligations of the Owner Lessor, enforceable against the Owner Lessor in
accordance with their terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity.
(c) Non-Contravention. The execution and delivery by the Owner Lessor
of this Agreement and the other Operative Documents to which it is or will be a
party, the consummation by the Owner Lessor of the transactions contemplated
hereby and thereby, and the compliance by the Owner Lessor with the terms and
provisions hereof and thereof, do not and will not contravene any Applicable Law
of the United States of America or the State of Delaware, or the LLC Agreement
or the Owner Lessor's other organizational documents or contravene the
provisions of, or constitute a default by the Owner Lessor under any indenture,
mortgage or other material contract, agreement or instrument to which the Owner
Lessor is a party or by which the Owner Lessor or its property is bound, or in
the creation of any Owner Lessor's Lien; provided, however, that no
representation is made with respect to the right, power or authority of the
Owner Lessor to act as operator of the Facilities following a Lease Event of
Default.
(d) Governmental Actions. Assuming the representations and warranties
of the Facility Lessees contained in paragraphs (j), (k), (l), (m), (q), (z),
(gg) and (ii) of Section 3.1 are true, no authorization or approval or other
action by, and no notice to or filing or registration with, any Governmental
Entity is required for the due execution, delivery or performance by the
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Owner Lessor, as the case may be, of the LLC Agreement, the Collateral Trust
Indenture, the Lessor Notes, this Agreement or the other Operative Documents to
which the Owner Lessor is or will be a party, other than any such authorization
or approval or other action or notice or filing as has been duly obtained, taken
or given.
(e) Litigation. There is no pending or, to the Actual Knowledge of the
Owner Lessor, threatened, action, suit, investigation or proceeding against the
Owner Lessor before any Governmental Entity which (i) questions the validity of
the Operative Documents or the ability of the Owner Lessor to perform its
obligations under the Operative Documents to which it is or will be a party or
(ii) if determined adversely to it, could reasonably be expected to materially
adversely affect the ability of the Owner Lessor to perform its obligations
under this Agreement or any other Operative Document to which it is or will be a
party or would materially adversely affect the Facilities, the Facility Sites or
any interest therein or part thereof or the Lien of the Indenture Trustee on the
Indenture Estate.
(f) Liens. The Owner Lessor's right, title and interest in and to the
Lessor Estate is free of all Owner Lessor's Liens.
(g) Location of Chief Executive Office; Principal Place of Business.
The chief executive office and principal place of business of the Owner Lessor
where the Owner Lessor will keep its corporate records concerning the
Facilities, the Facility Sites and the Operative Documents is located in
Stamford, Connecticut.
(h) Securities Act. Neither the Owner Lessor nor anyone authorized by
it has directly or indirectly offered or sold any interest in the Member
Interest, the Lessor Notes or the Certificates or any part thereof, or in any
similar security or lease, the offering of which for the purposes of the
Securities Act would be deemed to be part of the same offering as the offering
of the Member Interest, the Lessor Notes or the Certificates or any part thereof
or solicited any offer to acquire any of the same in violation of the
registration requirements of Section 5 of the Securities Act.
Section 3.3. Intentionally Omitted.
Section 3.4. Representations and Warranties of the Owner Participant.
The Owner Participant represents and warrants (i) as of the Effective Date, as
set forth in clauses (a), (b) and (c) below and (ii) as of the Closing Date, as
set forth in each of the clauses of this Section 3.4:
(a) Due Organization. The Owner Participant is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware and has the power and authority to enter into and perform
its obligations under this Agreement, the LLC Agreement and the Tax Indemnity
Agreement. The Owner Participant is an indirect wholly owned subsidiary of
Philip Morris Capital Corporation.
(b) Due Authorization, Enforceability; etc. This Agreement, the LLC
Agreement and the Tax Indemnity Agreement have been or when executed and
delivered will be duly authorized, executed and delivered by the Owner
Participant and assuming the due authorization, execution and delivery by each
other party thereto, this Agreement, the LLC Agreement, the Tax Indemnity
Agreement and any other Operative Document to which the Owner Participant is or
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will be a party constitute or when executed and delivered will constitute the
legal, valid and binding obligations of the Owner Participant, enforceable
against the Owner Participant in accordance with their respective terms, except
as the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors generally and
by general principles of equity.
(c) Non-Contravention. The execution and delivery by the Owner
Participant of this Agreement, the LLC Agreement, the Tax Indemnity Agreement
and any other Operative Document to which the Owner Participant is or will be a
party, the consummation by the Owner Participant of the transactions
contemplated hereby and thereby, and the compliance by the Owner Participant
with the terms and provisions hereof and thereof, do not and will not contravene
any Applicable Law binding on the Owner Participant, or its organizational
documents, or contravene the provisions of, or constitute a default under any
indenture, mortgage or other material contract, agreement or instrument to which
the Owner Participant is a party or by which the Owner Participant or its
property is bound or result in the creation of any Owner Participant's Lien
(other than any Lien created under any Operative Document) upon the Lessor
Estate, the Facility Sites or any interest therein or part thereof (it being
understood that no representation or warranty is being made as to (i) any
Applicable Laws relating to the particular nature of the Facilities or the
Facility Sites or (ii) other than its representations set forth in Section
3.4(g), ERISA or Section 4975 of the Code).
(d) Governmental Action. Assuming the representations and warranties of
the Facility Lessees contained in paragraphs (j), (k), (l), (m), (q), (z), (gg)
and (ii) of Section 3.1 are true, no authorization or approval or other action
by, and no notice to or filing or registration with, any Governmental Entity is
required for the due execution, delivery or performance by the Owner Participant
of this Agreement, the LLC Agreement, the Tax Indemnity Agreement or any other
Operative Document to which the Owner Participant is or will be a party, other
than any authorization or approval or other action or notice or filing as has
been duly obtained, taken or given (it being understood that no representation
or warranty is being made as to any Applicable Laws relating to the Facilities
or the Facility Sites).
(e) Litigation. There is no pending or, to the Actual Knowledge of the
Owner Participant, threatened, action, suit, investigation or proceeding against
the Owner Participant before any Governmental Entity which (i) questions the
validity of the Operative Documents or the ability of the Owner Participant to
perform its obligations under the Operative Documents to which it is or will be
a party or (ii) if determined adversely to it, could reasonably be expected to
materially adversely affect the ability of the Owner Participant to perform its
obligations under the LLC Agreement, this Agreement or any other Operative
Document to which it is or will be a party or would materially adversely affect
the Facilities, the Facility Sites or any interest therein or part thereof or
the Lien of the Indenture Trustee on the Indenture Estate.
(f) Liens. Each of the Lessor Estate, the Facility Sites, the
Easements and any interest therein or part thereof is free of any Owner
Participant's Liens.
(g) ERISA. No part of the funds to be used by the Owner Participant to
make its investment pursuant to this Agreement, directly or indirectly,
constitutes or is deemed to constitute assets (within the meaning of ERISA and
any applicable rules, regulations and court
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decisions thereunder) of any "employee benefit plan" (as defined in Section 3(3)
of ERISA) that is subject to ERISA, of any Transaction Party and ERISA Affiliate
thereof.
(h) Acquisition for Investment. The Owner Participant is purchasing the
Member Interest to be acquired by it for its own account with no present
intention of distributing such Member Interest or any part thereof in any manner
which would require registration under or would violate the Securities Act, but
without prejudice, however, to the right of the Owner Participant at all times
to sell or otherwise dispose of all or any part of such Member Interest under an
exemption from registration available under such Act.
(i) Securities Act. Neither the Owner Participant nor anyone authorized
by it has directly or indirectly offered or sold any interest in the Member
Interest, the Lessor Notes or the Certificates or any part thereof, or in any
similar security or lease, or in any security or lease the offering of which for
the purposes of the Securities Act would be deemed to be part of the same
offering as the offering of the Member Interest, the Lessor Notes or the
Certificates or any part thereof or solicited any offer to acquire any of the
same in violation of the registration requirements of Section 5 of the
Securities Act.
(j) Holding Company Act and Federal Power Act. Immediately prior to
executing this Agreement, the Owner Participant is not an "electric utility",
"electric utility company", "public utility", "public-utility company", "holding
company" or a "subsidiary company" or "affiliate" of any of the foregoing, under
the Federal Power Act or the Holding Company Act.
(k) Investment Company Act. The Owner Participant is not an "investment
company" or a company controlled by an "investment company" within the meaning
of the Investment Company Act of 1940.
Section 3.5. Representations and Warranties of Indenture Trustee and
the Lease Indenture Company. The Lease Indenture Company and the Indenture
Trustee hereby severally represent and warrant (i) as of the Effective Date, as
set forth in clauses (a), (b) and (c) below and (ii) as of the Closing Date, as
set forth in each of the clauses of this Section 3.5:
(a) Due Organization. The Lease Indenture Company is a national banking
association duly organized, validly existing and in good standing under the laws
of the United States, has the corporate power and authority, as Indenture
Trustee and/or in its individual capacity to the extent expressly provided
herein or in the Collateral Trust Indenture, to enter into and perform its
obligations under the Collateral Trust Indenture, this Agreement and each of the
other Operative Documents to which it is or will be a party.
(b) Due Authorization, Enforceability; etc. (1) (i) This Agreement has
been duly authorized, executed and delivered by the Indenture Trustee and the
Lease Indenture Company, and (ii) assuming the due authorization, execution and
delivery of this Agreement by each party hereto other than the Indenture Trustee
and the Lease Indenture Company, this Agreement constitutes a legal, valid and
binding obligation of the Lease Indenture Company and the Indenture Trustee,
enforceable against the Lease Indenture Company or the Indenture Trustee, as the
case may be, in accordance with its terms, except as the same may be limited by
applicable
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bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity.
(2) (i) Each of the other Operative Documents to which the Indenture
Trustee is or will be a party has been or when executed and delivered will be
duly authorized, executed and delivered by the Indenture Trustee, and (ii)
assuming the due authorization, execution and delivery of each of the other
Operative Documents by each party thereto other than the Indenture Trustee, each
of the other Operative Documents to which the Indenture Trustee is or will be a
party constitutes or when executed and delivered will be a legal, valid and
binding obligation of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity.
(c) Non-Contravention. The execution and delivery by the Lease
Indenture Company, in its individual capacity or as Indenture Trustee, as the
case may be, of this Agreement and the other Operative Documents to which it is
or will be a party, the consummation by the Lease Indenture Company, in its
individual capacity or as Indenture Trustee, as the case may be, of the
transactions contemplated hereby and thereby, and the compliance by the Lease
Indenture Company, in its individual capacity or as Indenture Trustee, as the
case may be, with the terms and provisions hereof and thereof, do not and will
not contravene any Applicable Law of the State of Connecticut or the United
States of America governing the Lease Indenture Company or the banking or trust
powers of the Lease Indenture Company, or its articles of association or
by-laws, or contravene the provisions of, or constitute a default by the Lease
Indenture Company under or pursuant to any indenture, mortgage or other material
contract, agreement or instrument to which the Lease Indenture Company is a
party or by which the Lease Indenture Company or its property is bound, or
result in the creation of any Lien attributable to the Lease Indenture Company
upon the Indenture Estate, the Facility Sites or any interest therein or any
part thereof (other than the Lien of the Collateral Trust Indenture), which
would materially adversely affect the ability of the Lease Indenture Company, in
its individual capacity or as Indenture Trustee, as the case may be, to perform
its obligations under this Agreement or the other Operative Documents to which
it is or will be a party or would materially adversely affect the Facilities,
the Facility Sites or any interest therein or part thereof or the security
interest of the Indenture Trustee in the Indenture Estate; provided, however,
that no representation or warranty is made with respect to the right, power or
authority of the Lease Indenture Company or the Indenture Trustee to act as
operator of the Facilities following a Lease Event of Default.
(d) Governmental Action. Assuming the representations and warranties of
the Facility Lessees contained in paragraphs (j), (k), (l), (m), (q), (z), (gg)
and (ii) of Section 3.1 are true, no authorization or approval or other action
by, and no notice to or filing or registration with, any Governmental Entity of
the State of Delaware or of the United State of America governing its banking or
trust powers is required for the due execution, delivery or performance by the
Lease Indenture Company or the Indenture Trustee, as the case may be, of this
Agreement or the other Operative Documents to which the Indenture Trustee is or
will be a party, other than any such authorization or approval or other action
or notice or filing as has been duly obtained, taken or given.
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(e) Litigation. There is no pending or, to the Actual Knowledge of the
Lease Indenture Company, threatened, action, suit, investigation or proceeding
against the Lease Indenture Company before any Governmental Entity which (i)
questions the validity of the Operative Documents or the ability of the Lease
Indenture Company or the Indenture Trustee to perform its obligations under the
Operative Documents to which it is or will be a party or (ii) if determined
adversely to it, could reasonably be expected to materially adversely affect the
ability of the Lease Indenture Company to perform its obligations under this
Agreement or any other Operative Document to which it is or will be a party or
could reasonably be expected to materially adversely affect the Facilities, the
Facility Sites or any interest therein or part thereof or the Lien of the
Indenture Trustee on the Indenture Estate.
Section 3.6. Representations, Warranties and Covenants of Pass Through
Trustee and the Pass Through Company.
The Pass Through Company and the Pass Through Trustee hereby severally
represent and warrant (i) as of the Effective Date, as set forth in clauses (a),
(b) and (c) below and (ii) as of the Closing Date, as set forth in each of the
clauses of this Section 3.6:
(a) Due Organization. The Pass Through Company is a national banking
association duly organized, validly existing and in good standing under the laws
of the United States, has the corporate power and authority, as Pass Through
Trustee and/or in its individual capacity to the extent expressly provided
herein or in the Pass Through Trust Agreements, to enter into and perform its
obligations under the Pass Through Trust Agreement, this Agreement and each of
the other Operative Documents to which it is or will be a party.
(b) Due Authorization, Enforceability; etc.
(i) (A) This Agreement has been duly authorized, executed and
delivered by the Pass Through Trustee and the Pass Through Company and (B)
assuming the due authorization, execution and delivery of this Agreement by each
party hereto other than each Pass Through Trustee and the Pass Through Company,
as the case may be, this Agreement constitutes a legal, valid and binding
obligation of the Pass Through Company and each Pass Through Trustee,
enforceable against the Pass Through Company or each Pass Through Trustee, as
the case may be, in accordance with its terms, except as the same may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, arrangement,
moratorium or other laws relating to or affecting the rights of creditors
generally and by general principles of equity.
(ii) (A) Each of the other Operative Documents to which the Pass
Through Company or such Pass Through Trustee is or will be a party has been or
when executed and delivered will be duly authorized, executed and delivered by
the Pass Through Company or such Pass Through Trustee, as the case may be, and
(B) assuming the due authorization, execution and delivery of each of the other
Operative Documents by each party thereto other than the Pass Through Company or
such Pass Through Trustee, as the case may be, each of the other Operative
Documents to which the Pass Through Company or such Pass Through Trustee is or
will be a party constitutes or when executed and delivered will constitute a
legal, valid and binding obligation of the Pass Through Company or such Pass
Through Trustee, enforceable
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against the Pass Through Company or such Pass Through Trustee, as the case may
be, in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, arrangement,
moratorium or other laws relating to or affecting the rights of creditors
generally and by general principles of equity.
(c) Non-Contravention. The execution and delivery by the Pass Through
Company, in its individual capacity or as Pass Through Trustee, as the case may
be, of this Agreement and the other Operative Documents to which it is or will
be a party, the consummation by the Pass Through Company, in its individual
capacity or as Pass Through Trustee, as the case may be, of the transactions
contemplated hereby and thereby, and the compliance by the Pass Through Company,
in its individual capacity or as Pass Through Trustee, as the case may be, with
the terms and provisions hereof and thereof, do not and will not contravene any
Applicable Law of the United States of America or the State of Connecticut
governing the Pass Through Company or the banking or trust powers of the Pass
Through Company, or its organizational documents or by-laws, or contravene the
provisions of, or constitute a default by the Pass Through Company under, or
result in the creation of any Lien attributable to the Pass Through Company upon
the Certificates or any indenture, mortgage or other material contract,
agreement or instrument to which the Pass Through Company is a party or by which
the Pass Through Company or its property is bound which would materially
adversely affect the ability of the Pass Through Company, in its individual
capacity or as Pass Through Trustee, as the case may be, to perform its
obligations under this Agreement or the other Operative Documents to which it is
a party or would materially adversely affect the Facilities, the Facility Sites
or any interest therein or part thereof or the security interest of any Pass
Through Trustee in the Indenture Estate; provided, however, that no
representation is made with respect to the right, power or authority of the Pass
Through Company or any Pass Through Trustee to act as operator of the Facilities
following a Lease Event of Default.
(d) Governmental Action. Assuming the representations and warranties of
the Facility Lessees contained in paragraphs (j), (k), (l), (m), (q), (z), (gg)
and (ii) of Section 3.1 are true, no authorization or approval or other action
by, and no notice to or filing or registration with, any Governmental Entity
governing its banking or trust powers is required for the due execution,
delivery or performance by the Pass Through Company or any Pass Through Trustee,
as the case may be, of this Agreement or the other Operative Documents to which
such Pass Through Trustee is or will be a party, other than any such
authorization or approval or other action or notice or filing as has been duly
obtained, taken or given.
(e) Litigation. There is no pending or, to the knowledge of the Pass
Through Company, threatened action, suit, investigation or proceeding against
the Pass Through Company either in its individual capacity or as Pass Through
Trustee, before any Governmental Entity which, if determined adversely to it,
would materially adversely affect the ability of the Pass Through Company, in
its individual capacity or as Pass Through Trustee, as the case may be, to
perform its obligations under this Agreement or the other Operative Documents to
which it is a party or would materially adversely affect the Facilities, the
Facility Sites or any interest therein or part thereof or the security interest
of any Pass Through Trustee in the Indenture Estate or which questions the
validity or enforceability of any Operative Document to which the Pass Through
Trustee or the Pass Through Company is a party.
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SECTION 4. CLOSING CONDITIONS
The obligations of the Owner Participant, the Owner Lessor, the Lease
Indenture Company, the Indenture Trustee, the Pass Through Company, the Pass
Through Trustee, the Guarantor and the Facility Lessees to consummate the
transactions contemplated hereby on the Closing Date shall be subject to the
following conditions, except that the obligations of any Person shall not be
subject to such Person's own performance or compliance, and each of the
Transaction Parties (other than the Certificateholders) shall provide such proof
of satisfaction of these conditions as any other Transaction Party shall
reasonably request.
Section 4.1. Completion of the Facility.
(a) the Tiverton Facility shall have commenced commercial operations
with at least 260 MW of capacity and shall comply in all material respects with
the other specifications set forth in the purchase and construction contracts
for such Facility, and the Rumford Facility shall have commenced commercial
operations with at least 260 MW of capacity and shall comply in all material
respects with the other specifications set forth in the purchase and
construction contracts for such Facility, except as disclosed in the R.W. Beck
Reports delivered to the Owner Participant, the Owner Lessor and the Indenture
Trustee prior to the Closing Date.
Section 4.2. Operative Documents. On or before the Closing Date, each
of the Operative Documents to be delivered at or before the Closing (as well as
any other agreements, certificates and other documents relating to the Overall
Transaction to be delivered at Closing (including, without limitation, the
Offering Circular)) shall have been duly authorized, executed and delivered by
the parties thereto (if attached as an Exhibit hereto, in substantially the form
attached as such Exhibit or if not so attached, in form and substance
satisfactory to each Transaction Party), shall each be in full force and effect,
and executed counterparts of each shall have been delivered to each of the
parties hereto (other than the Tax Indemnity Agreement, which shall only be
delivered to the parties thereto). Notwithstanding any of the foregoing, the
Calpine Guaranties, the OP Parent Guaranty and this Agreement shall be executed
on the Effective Date and shall, on the Closing Date, remain in full force and
effect.
Section 4.3. Certificates and the Lessor Notes. Each of the conditions
precedent contained in the Certificate Purchase Agreement shall have been
satisfied or waived by the Initial Purchasers and such Initial Purchasers shall
have purchased the Certificates pursuant to and in accordance with, the terms of
the Certificate Purchase Agreement and the Proceeds shall have been provided to
the Owner Lessor through the purchase by the Pass Through Trustee of the Lessor
Notes.
Section 4.4. Equity Investment. The Owner Participant shall have made
or caused to be made the Equity Investment available to the Owner Lessor at the
place and in the manner contemplated by Section 2.
Section 4.5. Organizational Documents. Each of the Transaction Parties
shall have received certified copies of the organizational documents of each of
the other parties hereto and resolutions of the board of directors of each such
other corporate party duly authorizing the transaction and such documents and
such evidence as each party may reasonably request in order to establish the
authority of each such other party to consummate the transactions contemplated
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by this Agreement, the taking of all corporate and other proceedings in
connection therewith and compliance with the conditions herein or therein set
forth and the incumbency of all officers signing any of the Operative Documents.
Each of the foregoing documents shall be reasonably satisfactory to each
recipient thereof.
Section 4.6. Representations and Warranties. The representations and
warranties of each party hereto set forth in Section 3 shall be true and correct
on and as of the Closing Date with the same effect as though made on and as of
the Closing Date.
Section 4.7. Defaults, Events of Default, Events of Loss. No Lease
Event of Default, Lease Indenture Event of Default or Event of Loss or event
that with the passage of time or giving of notice or both would constitute a
Lease Event of Default, Lease Indenture Event of Default or an Event of Loss
shall have occurred and be continuing.
Section 4.8. Intentionally Omitted.
Section 4.9. Consents. All permits, licenses, approvals and consents
(including management, credit and other internal approvals of the Transaction
Parties) necessary to consummate the Overall Transaction and to own and operate
the Facilities as currently operated shall have been duly obtained and shall be
in full force and effect and in the form and substance satisfactory to each of
the Transaction Parties.
Section 4.10. Governmental Actions. All actions, if any, required to
have been taken by any Governmental Entity on or prior to the Closing Date in
connection with the transactions contemplated by any Operative Document,
including, without limitation, the FERC Orders, shall have been taken and,
except with respect to the determination by FERC of EWG status, all Applicable
Permits required to be in effect on the Closing Date in connection with the
consummation of the transactions contemplated by the Operative Documents shall
have been issued and shall be in full force and effect; and all such Applicable
Permits shall be final, in full force and effect on the Closing Date and with
all appeal periods expired.
Section 4.11. Insurance. Insurance (including all related endorsements)
complying with the requirements of Schedule 5.45 shall be in full force and
effect and all premiums thereon shall be current. The Owner Participant and the
Manager shall have received a certificate or certificates (or binders, if
certificates are not then available) dated the Closing Date of Marsh USA, Inc.
or an independent insurance broker or carrier reasonably satisfactory to such
Persons stating that such insurance complies with the requirements of Schedule
5.45, is in full force and effect and all premiums then due and payable in
connection therewith have been paid.
Section 4.12. Ratings. The Certificates shall have been rated at least
Ba1 by Moody's and BB+ by S&P.
Section 4.13. Environmental Report. The Owner Participant and the
Manager shall have received copies of the Environmental Reports which shall be
in form and substance satisfactory to such parties (with a copy to the Indenture
Trustee). Each Facility Lessee shall use reasonable efforts to cause the
Environmental Consultant to deliver at the same time a reliance letter addressed
to the Owner Lessor, the Manager and the Owner Participant allowing them to rely
on such reports as if addressed to each of them.
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Section 4.14. Surveys; Site Description. With respect to the Tiverton
Facility, the Owner Participant shall have received a copy of the Survey
(Tiverton) in form and substance satisfactory to the Owner Participant. With
respect to the Rumford Facility, the Owner Participant shall have received a
"boundaries" drawing in form and substance reasonably satisfactory to the Owner
Participant and a certificate of an independent engineer certifying that the
Rumford Facility is located on the Rumford Facility Site.
Section 4.15. Appraisal; Condition of the Facility. The Owner
Participant shall have received the Closing Appraisal prepared by the Appraiser
addressed and delivered only to the Owner Participant and in form and substance
satisfactory to the Owner Participant, together with a letter of the Appraiser
certifying that its conclusions set forth in the Closing Appraisal are true and
correct as of the Closing Date.
Section 4.16. Letter from the Appraiser. The Owner Lessor shall have
received a satisfactory letter of the Appraiser setting forth the conclusions of
the Closing Appraisal as to the fair market value and useful life of each
Facility as of the Closing Date and the methodology of determination thereof.
Section 4.17. Other Reports. The Owner Participant shall have received
copies of the reports of the Engineering Consultant, the Insurance Consultant,
and the Power Market Consultant, each in form and substance reasonably
satisfactory to the Owner Participant.
Section 4.18. Opinion with Respect to Certain Tax Aspects. The Owner
Participant shall have received the opinion, dated the Closing Date, of Hunton &
Williams LLP addressed and delivered only to the Owner Participant as to certain
tax matters and in form and substance satisfactory to the Owner Participant.
Section 4.19. Opinions of Counsel. Each of the relevant Transaction
Parties shall have received an opinion or opinions, dated the Closing Date, of
(a) Ronald W. Fischer, Esq., in-house counsel to the Facility Lessees and
Guarantor, (b) Thelen Reid & Priest LLP, special counsel to the Facility Lessees
and Guarantor, (c) Steptoe & Johnson, special regulatory counsel to the Facility
Lessees, (d) Drummond Woodsom & MacMahon, Maine special counsel to the Facility
Lessees, (e) Hinckley, Allen & Snyder LLP, Rhode Island special counsel to the
Facility Lessees, (f) Doug Levene, Esq., in-house counsel to the Owner
Participant and the Owner Lessor, (g) Hunton & Williams, counsel to the Owner
Participant and to the Owner Lessor, (h) Verill & Dana, LLP, Maine counsel to
the Initial Purchasers, (i) Peabody & Arnold, Rhode Island counsel to the
Initial Purchasers, (j) Bingham Dana LLP, counsel to the Lease Indenture Company
and the Indenture Trustee and (k) Bingham Dana LLP, counsel to the Pass Though
Trustee and the Pass Through Company, (l) Dewey Ballantine LLP, special counsel
to CSFB, and (m) Roger Wiegley, Esq., counsel to CSFB, in each case in form and
substance reasonably satisfactory to each Transaction Party. Each such Person
expressly consents to the rendering by its counsel of the opinion referred to in
this Section 4.19 and acknowledges that such opinion shall be deemed to be
rendered at the request and upon the instructions of such Person, each of whom
has consulted with and has been advised by its counsel as to the consequences of
such request, instructions and consent. Furthermore, each such counsel shall, to
the extent requested, permit the Rating Agencies and the Initial Purchasers to
rely on their opinion as if such opinion were addressed to such parties.
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Section 4.20. Recordings and Filings. All filings and recordings listed
on Schedule 4.20 hereto shall have been duly made and all filing, recordation,
transfer and other fees payable in connection therewith shall have been paid;
and the filing of all precautionary financing statements under the Uniform
Commercial Code of Rhode Island, Maine and Delaware and any other documents as
may be reasonably requested by counsel to the Owner Participant, the Indenture
Trustee or the Pass Through Trustee to perfect (i) the right, title and interest
of the Owner Lessor in the Facilities and its leasehold interest in the Facility
Sites and Easements, or any part thereof or interest therein and (ii) and the
Lien of the Indenture Trustee on the Indenture Estate.
Section 4.2.1 Intentionally Omitted.
Section 4.22. Taxes. All Taxes, if any, due and payable on or before
the Closing Date in connection with the execution, delivery, recording and
filing of this Agreement or any other Operative Document, or any document or
instrument contemplated thereby shall have been duly paid in full.
Section 4.23. No Changes in Applicable Law. No change shall have
occurred in Applicable Law or the interpretation thereof by any competent court
or other Governmental Entity that would make it illegal for the Owner
Participant, the Owner Lessor, the Indenture Trustee, the Pass Through Trustee
or either of the Facility Lessees, to participate in any of the transactions
contemplated by the Operative Documents or would materially adversely affect the
Facilities or the Facility Sites. On the Closing Date, each Certificateholder's
purchase of Lessor Notes shall (i) be permitted by the laws and regulations of
each jurisdiction to which such Certificateholder is subject, (ii) not violate
any Applicable Law (including Regulation U, T or X of the Board of Governors of
the Federal Reserve System) and (iii) not subject any Certificateholder to any
tax, penalty or liability under or pursuant to any Applicable Law, which
Applicable Law was not in effect on the date hereof. If requested by any
Certificateholder, such Certificateholder shall have received an Officer's
Certificate of the Owner Lessor, in form and substance satisfactory to such
Certificateholder, certifying as to such matters of fact as such
Certificateholder may reasonably specify to enable such Certificateholder to
determine whether such purchase is so permitted.
Section 4.24. Registered Agent for the Facility Lessees and the Owner
Lessor. National Registered Agents, Inc. shall have been appointed by the
Facility Lessees, and CT Corporation System shall have been appointed by the
Owner Lessor, each as registered agent for service of process in the State of
New York as provided in the Operative Documents and each of National Registered
Agents, Inc. and CT Corporation System shall have accepted such appointments.
Section 4.25. Operating Lease Treatment. As to each Facility Lessee,
the present value of Basic Rent payable during the Basic Lease Term under the
applicable Facility Lease (taking into account any rent adjustment through or
contemplated on the Closing Date), together with all rent payable under the
related Facility Site Lease and Facility Site Sublease, discounted at the
Discount Rate, shall satisfy the 90 percent test for operating lease
classification under FASB 13. Each Facility Lessee shall have received
confirmation from Arthur Andersen LLP that its applicable Facility Lease will be
treated as an operating lease under FASB 13 and FASB 98 for the purposes of
GAAP.
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Section 4.26. Rent Adjustments. As to each Facility Lessee, the
aggregate of all rent adjustments made on or before, or contemplated to be made
on, the Closing Date (other than adjustments to reflect a change in Transaction
Costs or the actual interest rates on the Certificates) shall not cause either
(i) the pre-tax net present value of Basic Rent discounted at 6% to increase by
more than 100 basis points or (ii) the total Basic Rent to increase by more than
2%.
Section 4.27. Title Insurance. Each of the Title Policies shall have
been delivered to the Owner Participant, the Owner Lessor, the Indenture
Trustee, as the case may be, with copies to the Pass Through Trustee.
Section 4.28. Intentionally Omitted.
Section 4.29. Intentionally Omitted.
Section 4.30. Intentionally Omitted.
Section 4.31. Intentionally Omitted.
Section 4.32. Letter as to Number of Offerees. (i) The Owner
Participant and the Certificateholders shall have received a certification from
the Facility Lessees as to the number of offerees by it of the Lessor Estate and
(ii) the Facility Lessees and the Initial Purchasers shall have received
certification from CSFB as to the number of offerees by it of the Lessor Estate
and the Certificates, respectively.
Section 4.33. Lien Search. The Owner Participant (with a copy to the
Indenture Trustee) shall have received Lien searches with respect to each
Facility Lessee and its partners in form and substance satisfactory to such
parties.
Section 4.34. Intentionally Omitted.
Section 4.35. Litigation. There shall be no actions, investigations,
suits or proceedings pending or threatened against any of the Facility Lessees
and/or the Calpine Parties or their properties before any court or Governmental
Entity which, individually or in the aggregate, would, if adversely determined,
be reasonably likely to have a Material Adverse Effect (including, but not
limited to, a Facility Lessee, the Owner Participant, the Owner Lessor or the
Certificateholders being subject to or not exempted from regulation as a "public
utility company" or a "holding company" under PUHCA or under state laws and
regulations respecting the rates or the financial and organizational regulation
of electric utilities), nor shall any order, judgment or decree have been issued
or proposed by any Governmental Entity at the time of the Closing Date, to set
aside, restrain, enjoin or prevent the consummation of the Operative Documents
or any of the Transactions contemplated by any of the Operative Documents.
Section 4.36. No Material Adverse Change. The annual reports,
information, documents and other reports referred to in Section 3.2(a) of each
of the Calpine Guaranties shall have been received by the Owner Participant, and
there shall have been no material adverse change in the financial condition,
business assets or operation of Calpine and its Consolidated Subsidiaries since
the date of such annual reports, information, documents and other reports.
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Section 4.37. Regulatory Approvals. Except with respect to the
determination by FERC of EWG status, the Owner Participant and the Pass Through
Trustee shall have received evidence of receipt of the FERC Orders.
Section 4.38. Private Placement Number. A private placement number
issued by S&P's CUSIP Service bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Certificates.
Section 4.39. Credit Ratings. The Certificates shall have been rated at
least Ba1 by Moody's and BB+ by S&P.
Section 4.40. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
reasonably satisfactory to the Facility Lessees, the Owner Participant and the
Initial Purchasers and their respective special counsel, and such parties and
their respective special counsel shall have received all such information and
counterpart originals or certified or other copies of such documents and
certificates as each such party or its special counsel may reasonably request in
connection with the matters contemplated hereby and by the other Operative
Documents.
Section 4.41. Intentionally Omitted.
Section 4.42. Payment of Fees and Expenses.
Without limiting the provisions of Section 2.3, all Transaction Costs
invoiced at least 3 Business Days prior to Closing to the Owner Participant with
a copy to the Facility Lessee shall be paid promptly after the Closing Date (but
no later than December 29, 2000).
Section 4.43. Qualifying Letter of Credit.
Calpine shall have caused the Initial Letter of Credit to be issued in
favor of the Owner Participant.
SECTION 5. COVENANTS OF FACILITY LESSEES AND GUARANTOR
The Facility Lessees and the Guarantor, to the extent provided below,
covenant as follows;
Section 5.1. Maintenance of Existence. Except as permitted by Section
5.2, each Facility Lessee, at its own cost and expense, will at all times do or
cause to be done all things necessary to preserve and keep in full force and
effect both its legal existence and its qualification to do business in any
state in which the conduct of its business or the ownership or leasing of assets
used in its business requires such qualification and where the failure to be so
qualified would reasonably be expected to have a Material Adverse Effect.
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Section 5.2. Merger, Consolidation, Sale of Substantially All Assets.
Each Facility Lessee covenants and agrees as follows:
(a) Neither Facility Lessee will consolidate or merge with or into any
other Person, or sell, assign, convey, lease, transfer or otherwise dispose of,
all or substantially all of its properties or assets to any Person or Persons in
one or a series of transactions, unless (i) immediately after giving effect to
any such transaction or transactions, either (A) Calpine would own, directly or
indirectly, at least a majority of the Ownership Interest of each succeeding or
surviving entity (as well as at least a majority of the Ownership Interest of
any Facility Lessee who does not engage in such transaction), the Calpine
Guaranties remain in full force and effect (without a transferee of Calpine's
obligations thereunder having succeeded thereto in accordance with Section
8.4(b) thereof) and Calpine shall have reaffirmed in writing its obligations
under the Calpine Guaranties and the other Operative Documents to which Calpine
is a party in a manner reasonably satisfactory to the Owner Participant and
Owner Lessor or (B) Calpine's obligations under the Calpine Guaranties have been
succeeded to in accordance with Section 8.4(b) of the Calpine Guaranties, the
transferee of Calpine shall own, directly or indirectly, at least a majority of
the Ownership Interest of each succeeding or surviving entity (as well as at
least a majority of the Ownership Interest of any Facility Lessee who does not
engage in such transaction) and the Calpine Guaranties shall remain in full
force and effect, (ii) immediately after giving effect to such transaction, the
requirements set forth in Section 13.1(b)(i) through (vi) of this Agreement
(with appropriate conforming changes to take into account the nature of the
transactions referred to hereunder) have been satisfied in connection with such
transfer, and (iii) each succeeding or surviving entity shall be organized under
the laws of the United States, any state thereof or the District of Columbia.
(b) Upon the consummation of such transaction described in Section
5.2(a), the resulting, surviving or succeeding entity, if other than the
applicable Facility Lessee, shall succeed to, and be substituted for, and may
exercise every right and power and shall perform every obligation of, such
Facility Lessee under this Participation Agreement and each other Operative
Document to which such Facility Lessee was a party immediately prior to such
transaction, with the same effect as if such entity had been named herein and
therein. The applicable Facility Lessee will pay the costs and expenses
(including reasonable attorneys' fees and expenses) of the Owner Participant,
the Owner Lessor, the Indenture Trustee, the Pass Through Trustee and the
Certificateholders in connection with any transaction contemplated by this
Section 5.2.
Section 5.3. Intentionally Omitted.
Section 5.4. Intentionally Omitted.
Section 5.5. Administrator Fees. Each Facility Lessee and Calpine shall
pay the fees, costs and expenses of the Administrator (including the reasonable
compensation and expenses of its counsel) arising out of the Owner Lessor's and
the Owner Participant's discharge of their duties under or in connection with
the Operative Documents, all pursuant to the LLC Administration Agreements, as
in effect on the Closing Date.
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Section 5.6. Conduct of Business, Properties, Etc. Except as otherwise
expressly permitted under this Agreement, each Facility Lessee shall (a) perform
and comply with all of its contractual obligations under the Operative Documents
to which it is a party and all other material agreements and contracts by which
it is bound, unless (other than in connection with the Operative Documents) such
noncompliance would not cause a Material Adverse Effect, and (b) engage only in
the business contemplated by the Operative Documents to which it is a party.
Section 5.7. Obligations. Each Facility Lessee shall pay all of its
obligations, howsoever arising, as and when due and payable except such as may
be contested in good faith or as to which a bona fide dispute may exist;
provided, that (i) adequate reserves consistent with GAAP requirements are
maintained for such contested or disputed obligations or (ii) such Facility
Lessee otherwise establishes and maintains adequate security arrangements for
the payment of such contested or disputed obligations which are reasonably
acceptable to the Owner Participant.
Section 5.8. Books, Records, Access. Each Facility Lessee shall
maintain or cause to be maintained adequate books, accounts and records with
respect to itself, its applicable Facility and Facility Site and prepare all
financial statements required hereunder in accordance with GAAP and in
compliance with the regulations of any Governmental Entity having jurisdiction
thereof, and permit employees, agents and representatives of the Owner Lessor,
the Owner Participant, and, so long as the Lien of the Collateral Trust
Indenture shall have not been terminated or discharged, the Indenture Trustee,
the Pass Through Trustee and the Certificateholders, and such parties'
independent consultants, at all reasonable times during normal business hours
and upon reasonable prior notice and at no risk or (except during the existence
of a Lease Default or Lease Event of Default) expense to such Facility Lessee to
inspect, such Facility and Facility Site, to examine or audit all of or any of
such Facility Lessee's books, accounts and records and make copies and memoranda
thereof and, together with such consultants, to observe the operation,
maintenance and repair of such Facility; provided, however, any such inspection
shall be conducted in accordance with Section 12 of the applicable Facility
Lease.
Section 5.9. Other Information. Each Facility Lessee shall furnish, or
shall cause to be furnished to, the Owner Lessor, the Owner Participant and, so
long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee and the Pass Through Trustee, and their
respective authorized representatives from time to time such information as such
party shall reasonably request concerning the Facilities and Facility Sites
including information concerning the condition, operation, maintenance and use
of the Facilities and Facility Sites and such other financial or operating
information as it shall reasonably request and which is routinely made available
to creditors of the applicable Facility Lessee, to the extent it possesses such
information; provided that, each Facility Lessee reserves the right not to
provide any information that is not otherwise publicly available to any
transferee Owner Participant (or its Owner Lessor) if it reasonably believes in
its good faith judgment that such transferee Owner Participant or any Affiliate
thereof is a competitor or is an Affiliate of a competitor of such Facility
Lessee or its Affiliates in the competitive power market, unless, before
receiving any such information, such transferee Owner Participant shall have put
in place (to the reasonable satisfaction of such Facility Lessee) appropriate
confidentiality arrangements.
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To the extent such information consists of information contained in records kept
by the Facility Lessees or any Affiliate, such information shall be furnished
without cost to the recipient.
Section 5.10. Warranty of Title to Facility Site.
(a) Each Facility Lessee shall maintain good and valid fee, title to,
or easement or other surface rights in, as applicable, its Facility Site and the
applicable Easements, subject only to Permitted Encumbrances. Each Facility
Lessee shall use its commercially reasonable efforts to remove all mechanic's
liens which constitute Permitted Encumbrances existing as of the Closing Date
within 2 (two) years after the Closing Date, provided that the failure to do so
shall not constitute, in whole or in part, the basis of any default under any
Operative Document.
(b) Each Facility Lessee shall maintain good and valid title to all of
its other properties and assets (other than properties and assets disposed of in
the ordinary course of business including any sale, transfer or other
disposition of any obsolete, surplus or worn out equipment, parts, supplies or
other materials or assets to the extent permitted by the Operative Documents),
subject only to Permitted Liens or to the extent that failure to do so would
have a Material Adverse Effect.
Section 5.11. ERISA. Neither Facility Lessee shall establish, maintain
or contribute to, any Plan. If any Plan is established, maintained or
contributed to by either Facility Lessee or any ERISA Affiliate, or if such
Facility Lessee or any ERISA Affiliate becomes obligated to contribute to any
Plan, (a) with respect to each such Plan, such Facility Lessee or such ERISA
Affiliate (i) shall have at all times fulfilled in all material respects their
obligations under the minimum funding standards of ERISA and the Code, (ii)
shall not allow any such Plan to have an Unfunded Current Liability, (iii)
shall, with respect to each Plan (and each related trust, if any) which is
intended to be qualified under Sections 401(a) and 501(a) of the Code, obtain a
determination letter from the Internal Revenue Service to the effect that such
Plan (and trust, if any) meets the requirements of Sections 401(a) and 501(a) of
the Code, and (iv) shall at all times be in compliance in all material respects
with applicable provisions of ERISA and the Code, and (b) within fifteen (15)
days after (i) the occurrence of any reportable event (as defined in Section
4043(c) of ERISA) with respect to any Plan, (ii) the complete or partial
withdrawal by such Facility Lessee or any ERISA Affiliate from any Multiemployer
Plan, (iii) to the extent such Facility Lessee or any ERISA Affiliate is
notified that any Multiemployer Plan has entered reorganization status, has
become insolvent, or has terminated (or any Multiemployer Plan notifies such
Facility Lessee or any ERISA Affiliate of its intent to terminate) under Section
4041A of ERISA, (iv) the institution of any action to terminate a Plan in a
distress termination under Section 4041(c) of ERISA, or (v) in the case of the
breach of any other covenant contained in this Section 5.11, such Facility
Lessee shall report such occurrence or breach to the Indenture Trustee, the Pass
Through Trustee, the Owner Lessor and the Owner Participant and furnish such
information as such Persons may reasonably request with respect thereto.
Section 5.12. Certain Contracts and Agreements. Without the consent of
the Owner Participant, each Facility Lessee agrees that, except as required by
the Operative Documents, it will not enter into or become bound by any contract
or agreement providing for the sale of energy produced from the Facilities, or
the purchase of services to be performed at, for or in connection with, the
Facilities or any other contract or agreement relating to the Facilities that
(i)
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has a term that extends beyond the Lease Term or the scheduled expiration of any
Renewal Lease Term then in effect or elected by such Facility Lessee, unless
such contract or agreement may be terminated by such Facility Lessee without
material costs or obligation prior to the Lease Term or the scheduled expiration
of such Renewal Lease Term, as the case may be or (ii) results in any lien,
encumbrance, restriction or agreement relating to a Facility which extends
beyond the expiration of the Lease Term for such Facility or which binds a
Facility or the owner of a Facility beyond the expiration of the Lease Term;
provided that nothing in this Section 5.12 shall prevent the Operator from
entering agreements to operate the Facilities in accordance with the Operative
Documents.
Section 5.13. Certain Costs. The Facility Lessees, jointly and
severally, agree to pay to the Owner Lessor as Supplemental Rent (i) overdue
interest with respect to the Lessor Notes issued under the Collateral Trust
Indenture if the same is due and payable because of the occurrence of a Lease
Indenture Event of Default which is attributable to a Lease Event of Default and
(ii) an amount equal to any Make-Whole Amount which has become due and payable
with respect to the Lessor Notes under the Collateral Trust Indenture.
Section 5.14. Limitations on Liens. Neither Facility Lessee shall,
directly or indirectly, create, assume or permit to exist any Lien, securing a
charge or obligation on the Facilities, the Facility Sites, the Easements or on
any of its other properties real or personal, whether now owned or hereafter
acquired, except Permitted Liens.
Section 5.15. Investments. The Facility Lessees shall not make or
permit to remain outstanding any advances, loans or extensions of credit to, or
purchase or own any stock, bonds, notes, debentures or other securities of any
Person, except Permitted Investments.
Section 5.16. Survey (Rumford). The Rumford Lessee shall use diligent
and commercially reasonable efforts to deliver a copy of the Survey (Rumford) as
soon as practicable, such survey to be an ALTA survey or other survey in form
and substance reasonably satisfactory to the Owner Participant, provided that
the failure to do so shall not constitute, in whole or in part, the basis of any
default under any Operative Document.
Section 5.17. Regulations. The Facility Lessees shall not, directly or
indirectly, apply the proceeds of the sale of Lessor Notes or any other revenues
to the purchasing or carrying of any margin stock within the meaning of
Regulations T, U or X of the Federal Reserve Board, or any regulations,
interpretations or rulings thereunder.
Section 5.18. Partnerships. The Facility Lessees shall not become a
general or limited partner in any partnership or a joint venturer in any joint
venture.
Section 5.19. Dissolution. The Facility Lessees shall not liquidate or
dissolve, except pursuant to transactions permitted under Section 5.2.
Section 5.20. Termination of Contracts, Etc. Each Facility Lessee shall
not without the prior written consent of the Owner Participant and, except as
otherwise provided in Section 8 of the Collateral Trust Indenture and so long as
the Lien of the Collateral Trust Indenture has not been terminated or
discharged, the Indenture Trustee, (a) cause or consent to or (b) permit, any
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amendment, modification, extension, termination, variance or waiver of timely
compliance with any terms or conditions of any Operative Document.
Section 5.21. Name and Location. Neither Facility Lessee shall change
its name or the location of its chief executive office or place of business
without notice to the Owner Lessor, the Indenture Trustee, the Pass Through
Trustee and the Owner Participant at least thirty (30) days prior to such
change.
Section 5.22. Use of Facility Site. Each Facility Lessee shall not use,
or permit to be used, its applicable Facility Site or the related Easements for
any purpose other than for the operation and maintenance of the applicable
Facility, except as otherwise required or permitted under the Operative
Documents.
Section 5.23. Abandonment of Facility. Neither Facility Lessee shall
voluntarily abandon the operation, maintenance or repair of its applicable
Facility, except as otherwise permitted by the Operative Documents.
Section 5.24. Taxes, Other Government Charges and Utility Charges. Each
Facility Lessee shall pay, or cause to be paid, as and when due and prior to
delinquency, all taxes, assessments and governmental charges of any kind that
may at any time be lawfully assessed or levied against or with respect to such
Facility Lessee, the related Facility or its leasehold interests in the related
Facility Site, all utility and other charges incurred in the operation,
maintenance, use, occupancy and upkeep of such Facility or such Facility Site,
and all assessments and charges lawfully made by any Governmental Entity for
public improvements that may be secured by a Lien on any part of such Facility;
provided, that each such Facility Lessee may contest in good faith any such
taxes, assessments and other charges and, in such event, may permit the taxes,
assessments or other charges so contested to remain unpaid during any period,
including appeals, when such Facility Lessee is in good faith contesting the
same, so long as (a) adequate reserves consistent with GAAP requirements (or
other security arrangements reasonably satisfactory to the Indenture Trustee and
the Owner Participant) are established and maintained in an amount sufficient to
pay any such taxes, assessments or other charges, accrued interest thereon and
potential penalties or other costs relating thereto, or other adequate provision
for the payment thereof shall have been made, and (b) any tax, assessment or
other charge determined to be due, together with any interest or penalties
thereon, is immediately paid after resolution of such contest.
Section 5.25. Compliance with Laws, Instruments, Etc. At its expense,
each Facility Lessee shall promptly (a) comply or cause compliance with all
Applicable Laws, including those relating to pollution control, environmental
protection, equal employment opportunity plans, Plans and employee safety, with
respect to each such Facility Lessee, the related Facility, Facility Site or
Easements, whether or not compliance therewith shall require structural changes
in such Facility or any part thereof or require major changes in operational
practices or interfere with the use and enjoyment of such Facility or any part
thereof, and (b) procure, maintain and comply, or cause to be procured,
maintained and complied with, all Applicable Permits, except (1) as may be
contested in accordance with Section 7 or 8 of the related Facility Lease and
(2) each Facility Lessee may, in good faith and by appropriate proceedings,
diligently contest the validity or application of any such Applicable Laws in
any reasonable manner which does not
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involve any danger of (i) foreclosure, sale, forfeiture or loss of, or
imposition of a material Lien on the related Facility, (ii) impair the use,
operation or maintenance of the Facility in any material respect, (iii) any
criminal liability being incurred by the Owner Participant, the Owner Lessor,
the Indenture Trustee, the Lease Indenture Company, the Pass Through Trustee,
the Pass Through Company or any Certificateholder, (iv) the Owner Participant,
the Owner Lessor, the Indenture Trustee, the Lease Indenture Company, the Pass
Through Trustee, the Pass Through Company or any Certificateholder being
subjected to any unindemnified civil liability or of the Owner Participant or
the Owner Lessor being subject to regulation as a public utility under
Applicable Law, or (v) any Material Adverse Effect.
Section 5.26. PUHCA. No Facility Lessee shall take any action or fail
to take any action within its control that would subject the Owner Lessor, the
Owner Participant, the Indenture Trustee or the Pass Through Trustee to
regulation under PUHCA.
Section 5.27. Intentionally Omitted.
Section 5.28. Intentionally Omitted.
Section 5.29. Intentionally Omitted.
Section 5.30. Intentionally Omitted.
Section 5.31. Further Assurances. Each Facility Lessee, at its own
cost, expense and liability, will cause to be promptly and duly taken, executed,
acknowledged and delivered all such further acts, documents and assurances as
may be necessary in order to carry out the intent and purposes of this
Participation Agreement and the other Operative Documents, and the transactions
contemplated hereby and thereby. The Facility Lessee, at its own cost, expense
and liability, will cause such financing statements and fixture filings (and
continuation statements with respect thereto) as may be necessary and such other
documents as the Owner Participant, the Owner Lessor and, so long as the Lien of
the Collateral Trust Indenture shall not have been terminated or discharged, the
Indenture Trustee and the Pass Through Trustee shall reasonably request to be
recorded or filed at such places and times in such manner, and will take all
such other actions or cause such actions to be taken, as may be necessary in
order to establish, preserve, protect and perfect the right, title and interest
of the Owner Lessor in and to the Facilities, the Facility Sites under the
Facility Site Leases, any Component or any portion of any thereof or any
interest therein and the first priority Lien intended to be created by the
Collateral Trust Indenture therein and with respect to the Equity Collateral
Account. Each Facility Lessee shall promptly from time to time furnish to the
Owner Participant, the Owner Lessor or, so long as the Lien of the Collateral
Trust Indenture shall not have been terminated or discharged, the Indenture
Trustee or the Pass Through Trustee such information with respect to the
Facilities or the Facility Sites or the transactions contemplated by the
Operative Documents to which the Facility Lessee is a party as may be required
to enable the Owner Participant, the Owner Lessor or, so long as the Lien of the
Collateral Trust Indenture shall not have been terminated or discharged, the
Indenture Trustee or the Pass Through Trustee, as the case may be, to timely
file with any Governmental Entity any reports and obtain any licenses or permits
required to be filed or obtained by the Owner Lessor under any Operative
Document, the Owner Participant as the owner of the Member Interest or the
Indenture Trustee. Each Facility Lessee will preserve,
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protect, defend and enforce, or cause to be preserved, protected, defended and
enforced, the rights of such Facility Lessee, the Owner Lessor and the Owner
Participant under each and every Operative Document to which it is a party
(including by assignment and assumption of the rights thereunder), including
using commercially reasonable efforts to prosecute suits to enforce any such
rights and, at the request of Indenture Trustee, so long as the Lien of the
Collateral Trust Indenture has not been discharged or terminated (and thereafter
at the request of the Owner Participant), permit the Indenture Trustee and the
Owner Participant, at their respective cost and expense, to participate in such
capacity as it may choose in any such suit, any defense thereof or in the
preparation therefor; provided, however, that upon the occurrence and during the
continuance of any Lease Event of Default, if the Indenture Trustee or the Owner
Participant request that certain actions be taken and such Facility Lessee fails
to take the requested action, or to cause the requested action to be taken
within (5) Business Days, the Indenture Trustee, so long as the Lien of the
Collateral Trust Indenture has not been discharged or terminated, and the Owner
Lessor may, at such Facility Lessee's reasonable expense, enforce, in its own
name, or such Facility Lessee's name, such rights of such Facility Lessee.
Section 5.32. Intentionally Omitted.
Section 5.33. Intentionally Omitted.
Section 5.34. Intentionally Omitted.
Section 5.35. Intentionally Omitted.
Section 5.36. Intentionally Omitted.
Section 5.37. No Subsidiaries. Neither Facility Lessee shall create or
suffer to exist any Subsidiaries of such Facility Lessee.
Section 5.38. Permitted Business. Neither Facility Lessee shall engage
in any business or activities other than the lease, operation, maintenance and
marketing and sale of the output, fuel or other products from, the Facility
leased by such Facility Lessee. Notwithstanding any of the foregoing, no
Facility Lessee may change the nature of its business.
Section 5.39. Intentionally Omitted.
Section 5.40. Guaranty and Contingent Obligations. Neither Facility
Lessee will create, incur, assume or suffer to exist any guaranty or other
contingent obligations except (i) by reason of endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of each such Facility Lessee's business, (ii) indemnities in respect of
unfiled mechanics' liens and other liens permitted by clause (d) of the
definition of "Permitted Liens", (iii) contingent obligations set forth in, or
incurred in connection with, or indemnities set forth in, the Operative
Documents, (iv) customary indemnities provided by each such Facility Lessee in
connection with easements relating to its applicable interest in the Facilities
or the Facility Sites, (v) customary indemnities in favor of the title insurers
providing the title policies covering the Facility Sites or any portion thereof
or any easement or appurtenant right relating thereto in respect of claims by
the holder of mechanics' liens, and (vi) the indemnities referred to in Section
9.1 and 9.2 of the Participation Agreement or pursuant to the Tax Indemnity
Agreement.
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Section 5.41. Assignment of Rights. Neither Facility Lessee shall
assign any of its rights or obligations except as permitted by the Operative
Documents.
Section 5.42. Intentionally Omitted.
Section 5.43. Intentionally Omitted.
Section 5.44. Support Arrangements.
(a) Intentionally Omitted
(b) Each Facility Lessee agrees that, to the extent that the rights
described in Section 3.1(n) which have already been made available to the Owner
Lessor prior to the expiration or termination of the related Facility Lease
Term, and any rights assigned pursuant to the last sentence of this Section
5.44(b), are insufficient to permit on a commercially practicable basis during
the period following the expiration or termination of such Facility Lease Term,
until the end of the applicable Facility's useful life as set forth in the
Closing Appraisal, (i) the location, occupation, interconnection (including with
respect to electricity, steam, gas and water), maintenance and repair of such
Facility, (ii) the use, operation and possession of such Facility, (iii) the
use, operation, possession, maintenance, replacement, renewal and repair of all
Improvements then required to be made to such Facility, (iv) adequate ingress to
and egress from such Facility in connection with the ownership, use, maintenance
or operation of such Facility, (v) adequate transmission of electricity from
such Facility to enable such Person to deliver the net electrical and steam
output of such Facility on a commercially reasonable basis and (vi) the
ownership by the Owner Lessor (or any successor) of such Facility, such Facility
Lessee will cause Calpine to provide, and Calpine will provide, the Owner Lessor
with any additional services relating to the ownership and operation of the
applicable Facility substantially in the same manner as operated as of the
Closing Date (to the extent Calpine or any Affiliate thereof then owns or
controls the physical assets and/or contractual rights necessary to provide such
services (or can enter into contracts on a commercially reasonable basis for
such ownership, control or other rights) and remains in the business of
providing such services) necessary to permit the Owner Lessor to use such
Facility as described in (i) through (vi) above. Such arrangements will provide
for fair market value compensation to Calpine (payable periodically on no more
frequently than a monthly and no less frequently than on a quarterly basis) and
will terminate upon the expiration or termination of the related Facility Site
Lease, or earlier at the option of the Owner Lessor. Each Facility Lessee shall
also, subject to obtaining any required third party consents, assign to the
Owner Lessor upon termination of the applicable Facility Lease any support or
similar agreements to the extent relating to the Facility it has with third
parties.
Section 5.45. Insurance. The Facility Lessee shall comply with the
covenants set forth in Schedule 5.45.
Section 5.46. Qualifying Letter of Credit; Equity Collateral Account.
(a) The Guarantor shall cause the Initial Letter of Credit to be issued
on the Closing Date for the benefit of the Owner Participant and shall maintain
for the benefit of the Owner
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Participant a Qualifying Letter of Credit (I) prior to January 1, 2011 or at all
times when the outstanding aggregate principal amount of either the Tiverton
Notes or the Rumford Notes is $50,000,000 or greater, if the Guarantor's
long-term unsecured indebtedness is not rated at least A- by S&P and A3 by
Moody's (and the Guarantor is not on credit watch with either such agency), and
(II) after January 1, 2011 and at all times so long as the aggregate principal
amount of each of (A) the Tiverton Notes or (B) the Rumford Notes is less than
$50,000,000 but the aggregate principal amount of the Tiverton Notes and Rumford
Notes is greater than $5.2 million, if such ratings are not at least BBB- by S&P
and Baa3 by Moody's, respectively (and the Guarantor is not on credit watch with
either credit agency). Each Qualifying Letter of Credit shall (i) be issued in
favor of the Owner Participant by a Qualifying Letter of Credit Bank, (ii) have
a drawing amount, as of the date of original issuance and thereafter, equal to
the applicable amounts of L/C Termination Value set forth in Exhibit L hereto
for the date set forth in such Exhibit L, as adjusted pursuant to Section
5.46(j), and (iii) have a stated expiration date not earlier than 364 days after
the date of issuance of such Qualifying Letter of Credit. The Guarantor shall
not be required to maintain the Qualifying Letter of Credit after the aggregate
principal amount of the Tiverton Notes and the Rumford Notes has been reduced to
$5.2 million or less. The Qualifying Letter of Credit shall secure the
Guarantor's obligation under the respective Calpine Guaranties to pay the Equity
Portion of Termination Value as set forth in Sections 2.1(a) and 2.1(b) of each
Calpine Guaranty.
(b) If the Guarantor or the issuer of any Qualifying Letter of Credit
elects to terminate any Qualifying Letter of Credit (other than the Initial
Qualifying Letter of Credit) prior to the maturity date thereof, the Guarantor
and such issuer shall notify the Owner Participant and the Owner Lessor of its
intent to terminate the Qualifying Letter of Credit not less than 120 days prior
to the proposed termination date and the Guarantor shall replace such Qualifying
Letter of Credit on or before a date that is not less than 45 days prior to the
proposed termination date with a replacement Qualifying Letter of Credit.
(c) If at any time subsequent to the issuance of a Qualifying Letter of
Credit, the issuer of such Qualifying Letter of Credit ceases to be a Qualifying
Letter of Credit Bank, the Guarantor shall, within 30 days of receiving Actual
Knowledge of such issuer failing to be a Qualifying Letter of Credit Bank,
replace such previously Qualifying Letter of Credit with a replacement
Qualifying Letter of Credit issued by a Qualifying Letter of Credit Bank.
(d) The Guarantor shall replace any Qualifying Letter of Credit that is
scheduled to expire with a replacement Qualifying Letter of Credit no later than
30 days prior to the scheduled expiration date of any such Qualifying Letter of
Credit. The Guarantor will promptly forward to the Owner Participant any notice
of non-renewal or scheduled termination of a Qualifying Letter of Credit that it
receives from the issuer.
(e) The Guarantor shall be permitted, from time to time, to replace any
Qualifying Letter of Credit with a replacement Qualifying Letter of Credit
(other than the Initial Qualifying Letter of Credit) as long as there shall be
no interruption in the coverage provided by the Qualifying Letter of Credit in
consequences of such optional replacement and so long as such replacement occurs
at least 30 days before any expiration of the Qualifying Letter of Credit being
replaced.
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(f) As provided in the Qualifying Letter of Credit, in the event that
the Qualifying Letter of Credit is not replaced as provided in paragraphs (b),
(c) or (d) above, the Owner Participant shall be entitled to draw the full
amount thereof and cause the proceeds of such drawing to be deposited into the
Equity Collateral Account. Any such drawing or deposit shall not relieve the
Guarantor from its obligations under paragraphs (a), (b), (c) and (d) above to
maintain a Qualifying Letter of Credit, unless the Guarantor is unable to
discharge such obligations using its commercial efforts, but the failure to
maintain a Qualifying Letter of Credit shall not constitute, in whole or in
part, the basis of any Lease Default or Lease Event of Default under any
Operative Document. The Guarantor shall ensure at all times that the amounts on
deposit in the Equity Collateral Account from time to time are at least equal to
the applicable L/C Termination Values set forth in Exhibit L hereto for each
date set forth in such Exhibit L, as adjusted pursuant to Section 5.46(j) hereof
and subject to Section 5.46(k) hereof, provided that the failure to do so shall
not constitute, in whole or in part, the basis of any Lease Default or Lease
Event of Default under any Operative Document, and except to the extent
expressly provided in Section 16(e) of each Facility Lease. If the Guarantor,
subsequent to the Equity Collateral Account deposit described above (and prior
to application of such proceeds to the account of the Owner Participant as set
forth in paragraph (g) below) establishes a new Qualifying Letter of Credit and
is otherwise in compliance with its obligations under paragraphs (a), (b), (c)
and (d) above, the Owner Lessor shall forthwith return by wire transfer of
immediately available funds, the amounts held in the Equity Collateral Account
to the Guarantor.
(g) The Equity Collateral Account shall be a segregated pledged
account, the documentation of which will be in form and substance satisfactory
to the Owner Participant, subject to a first priority security interest in favor
of the Owner Participant, and maintained by the Owner Participant to secure the
Guarantor's obligation under the Calpine Guaranties to pay the Equity Portion of
Termination Value as set forth in Section 2.1 of both such Calpine Guaranties.
The Owner Lessor shall be entitled (1) to retain control over the amounts on
deposit therein, and (2) to foreclose upon the funds therein upon the occurrence
and during the continuance of a Drawing Event. The Owner Participant shall
direct the Owner Lessor to, and the Owner Lessor shall, forthwith pay over, by
wire transfer of immediately available funds, to the Guarantor, any balance of
amounts remaining in the Equity Collateral Account after the Equity Portion of
Termination Value as specified in Section 2.1(b) of each Calpine Guaranty,
together with other amounts then due and payable to the Owner Participant and
Owner Lessor by the Facility Lessees or the Guarantor under the Operative
Documents, have been paid.
(h) Costs and Expenses. The Guarantor shall pay the reasonable and
documented costs and expenses incurred by the Owner Participant in connection
with the actions referred to in this Section 5.46, except costs and expenses
attributable to a transfer by the Owner Participant of its rights in the Member
Interest pursuant to Section 7.1 of the Participation Agreement.
(i) Gross Ups For Withholding Taxes. (i) If at any time the issuer of
any Qualifying Letter of Credit shall not be a United States person (within the
meaning of Section 7701 of the Code) and any deduction or withholding of tax is
required by Applicable Law (in effect at the time of issuance of the Qualifying
Letter of Credit) to be made in respect of any drawing or payment thereunder,
then Guarantor shall cause the Qualifying Letter of Credit to provide that the
amount to be paid thereunder shall be increased by the amount of such deduction
or
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withholding such that the amount received by the Owner Participant is not less
than the amount it would have received in the absence of the application of any
such deduction or withholding.
(ii) In the event that there occurs a change in Applicable Law
subsequent to the date any Qualifying Letter of Credit is issued such that
deduction or withholding of tax is applicable to any payment under any such
Qualifying Letter of Credit, the Guarantor shall (within 30 days after a
Responsible Officer has Actual Knowledge of such change) furnish to the
applicable Owner Participant an additional Qualifying Letter of Credit in an
available amount equal in aggregate to the amount of withholding tax that
would be required to be deducted or withheld on any given date in connection
with a payment under the Qualifying Letter of Credit on such date.
(j) Adjustment to L/C Termination Value. Any time an adjustment is made
to Termination Value pursuant to Section 3.4 of either of the Tiverton Facility
Lease or the Rumford Facility Lease, appropriate adjustments shall be made to
the L/C Termination Values set forth in such Facility Lease.
(k) In the event of a failure by the Guarantor to comply with its
obligation under Sections 5.46(f) or (g) within 10 Business Days after receipt
of written notice of non-compliance from the Owner Participant, the Owner
Participant shall be entitled to deliver a notice of ECA Shortfall Event
referred to in Section 16(e) of each Facility Lease.
SECTION 6. COVENANTS OF THE OWNER LESSOR
Section 6.1. Compliance with the LLC Agreement. The Owner Lessor hereby
covenants and agrees that it will:
(a) comply with all of the terms of the LLC Agreement applicable to it;
and
(b) not amend, supplement, or otherwise modify Section 10 of the LLC
Agreement without the prior written consent of the applicable Facility Lessee so
long as no Significant Lease Default or Lease Event of Default has occurred and
is continuing and the Indenture Trustee so long as the Lien of the Collateral
Trust Indenture has not been terminated or discharged.
Section 6.2. Owner Lessor's Liens. The Owner Lessor covenants that it
will not directly or indirectly create, incur, assume or suffer to exist any
Owner Lessor's Lien attributable to it and will promptly notify the applicable
Facility Lessee, the Owner Participant and the Indenture Trustee of the
imposition of any such Lien of which it has Actual Knowledge and shall promptly,
at its own expense, take such action as may be necessary to duly discharge such
Owner Lessor's Lien attributable to it.
Section 6.3. Amendments to Operative Documents. The Owner Lessor
covenants that it will not unless such action is expressly permitted by the
Operative Documents (a) through its own action terminate any Operative Document
to which it is a party, (b) amend, supplement, waive or modify (or consent to
any such amendment, supplement, waiver or modification) such Operative Documents
in any manner or (c) except as provided in Section 11 hereof or Section
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2.10 of the Collateral Trust Indenture, take any action to prepay or refund the
Lessor Notes or amend any of the payment terms of the Lessor Notes without, in
each case, the prior written consent of the applicable Facility Lessee so long
as no Significant Lease Default or Lease Event of Default shall have occurred
and be continuing and, in the case of clause (a) or (b), the Indenture Trustee
so long as the Lien of the Collateral Trust Indenture has not been terminated or
discharged.
Section 6.4. Transfer of the Owner Lessor's Interest. Other than as
permitted by the Operative Documents, the Owner Lessor covenants that it will
not assign, pledge, sell, lease, convey or otherwise transfer any of its then
existing right, title or interest in and to the Owner Lessor's Interest, the
Lessor Estate or the other Operative Documents.
Section 6.5. Owner Lessor; Lessor Estate. The Owner Lessor covenants
that it will not voluntarily take any action to subject the Owner Lessor or the
Lessor Estate to the provisions of any applicable bankruptcy, insolvency or
similar law (as now or hereafter in effect).
Section 6.6. Limitation on Indebtedness and Actions. The Owner Lessor
covenants that it will not incur any indebtedness nor enter into any business or
activity except as required or expressly permitted by any Operative Document.
Section 6.7. Change of Location. The Owner Lessor shall provide the
Owner Participant, the Indenture Trustee, the Certificateholders, the Pass
Through Trustee and the Facility Lessees 30 days' written notice of any
relocation of the Owner Lessor's chief executive office or the place where
documents and records relating to the Owner Lessor or the Lessor Estate are kept
from the location set forth in Section 3.2(g) and of any change in its name.
SECTION 7. COVENANTS OF THE OWNER PARTICIPANT
Section 7.1. Restrictions on Transfer of Member Interest.
(a) The Owner Participant covenants and agrees that it shall not during
the Facility Lease Term assign, convey or transfer any of its right, title or
interest in the Member Interest without the prior written consent of the
Facility Lessees and, so long as the Lien of the Collateral Trust Indenture has
not been terminated or discharged, without the prior written consent of the
Indenture Trustee; provided, however, that the Owner Participant may, without
such consent, assign to CSFB, on a contingent basis, the rights of the Owner
Participant to receive certain revenues and assets deriving from or attributable
to the Owner Participant's ownership of the Member Interest, pursuant to the
CSFB-OP Letter Agreement as in effect on the Closing Date, a copy of which has
been delivered to the Facility Lessees and the Indenture Trustee, and provided,
further, that the Owner Participant may, subject to Section 7.8, assign, convey
or transfer all or any part of its interest in the Member Interest without such
consent to a Person (the "Transferee") which shall assume the duties and
obligations of the Owner Participant under the Operative Documents with respect
to the interest being transferred pursuant to an OP Assignment and Assumption
Agreement substantially in the form of Exhibit J hereto, if each of the
following conditions shall have been satisfied on or prior to such transfer:
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(i) The Facility Lessees, the Indenture Trustee and the Pass
Through Trustee shall have received an opinion(s) of counsel (including an
opinion with respect to a guaranty pursuant to clause (iii) of this Section 7.1,
if applicable), which opinion(s) and counsel are reasonably satisfactory to the
Facility Lessees and consistent in scope to the opinions delivered on behalf of
the Owner Participant at the Closing, including that all regulatory approvals
required in connection with such transfer or necessary to assume the Owner
Participant's obligations under the Operative Documents shall have been
obtained;;
(ii) the Transferee shall be a "United States person" within the
meaning of Section 7701(a)(30) of the Code;
(iii) the Transferee shall be either (A) an Affiliate of the
transferor Owner Participant which does not otherwise qualify under clause (B)
below (but in any event, such Affiliate shall not be a Competitor of Calpine);
provided that all of the payment and performance obligations of the Transferee
with respect to the interest being transferred under the Operative Documents
shall be guaranteed by the transferor Owner Participant, or a Person then
providing a guaranty of the transferor Owner Participant's obligations
hereunder, pursuant to an OP Parent Guaranty or (B) a Person which meets, or the
payment and performance obligations of which with respect to the interest being
transferred under the Operative Documents are guaranteed (pursuant to a OP
Parent Guaranty) by a Person (the transferor Owner Participant or such other
guarantor, the "Transferee Guarantor") which meets, the following criteria: (1)
the tangible net worth of the Transferee or Transferee Guarantor, is at least
equal to $75 million calculated in accordance with GAAP; and (2) unless waived
in writing by the Facility Lessees prior to such transfer, such Transferee is
not a Competitor of Calpine; and
(iv) upon consummation of such transfer, there shall not be more
than four (4) Owner Participants for the Overall Transaction; provided that any
related Owner Participants that shall have the same decision maker and vote
their interest together as a single vote shall count as one for purposes of this
clause (iv).
Notwithstanding the foregoing, the restrictions set forth in Section
7.1 shall not inure to the benefit of the Facility Lessee if such transfer
occurs during the continuance of a Significant Lease Default or Lease Event of
Default.
(b) For purposes of determining whether a Transferee is a "Competitor"
of Calpine, Calpine shall provide to the transferor Owner Participant on or
prior to the Closing Date a list of entities which Calpine reasonably believes
in its good faith judgment are competitors of Calpine or any of its Affiliates,
in the business in which Calpine or any of its Affiliates is engaged as of the
Closing Date, which list shall be attached to the Participation Agreement as
Exhibit K. Any such Person on such list shall be deemed to be a "Competitor" for
purposes of Section 7.1(a). The initial list of Competitors may be modified or
supplemented (in a manner consistent with the first sentence of this clause
(b)), from time to time, but no later than five Business Days after the Facility
Lessees receives each notice from the Owner Participant of its intent to
transfer its interest and, in addition, no more than once in any calendar year
plus each time the Facility Lessees receives such notice of transfer from the
Owner Participant, and such list as modified shall govern for the purposes of
this Section 7.1(b).
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(c) No Facility Lessee shall be responsible for any adverse tax
consequence to the Owner Lessor or the Owner Participant resulting from any
transfer pursuant to this Section 7.1 and the Pricing Assumptions shall not be
changed as a result of any such transfer.
(d) The Owner Participant shall give the Owner Lessor, the Indenture
Trustee and the Facility Lessees 10 Business Days' prior written notice of such
transfer, specifying the name and address of any proposed Transferee and such
additional information as shall be necessary to determine whether the proposed
transfer satisfies the requirements of this Section 7.1. If requested by the
Owner Participant or the Indenture Trustee, the Facility Lessees will
acknowledge qualifying transfers. All reasonable fees, expenses and charges of
the Indenture Trustee, the Pass Through Trustee, any Qualifying Letter of Credit
Bank (if it should impose fees, expenses and charges), and the Facility Lessees
(including reasonable attorneys' fees and expenses in connection with any such
transfer or proposed transfer), including any of the foregoing relating to any
amendments to the Operative Documents required in connection therewith, shall be
paid by the Owner Lessor, without any right of indemnification from the Facility
Lessees or any other Person; provided, however, that the Owner Participant shall
have no obligation to pay fees, expenses or charges of the Facility Lessees as a
result of any transfer while a Significant Lease Default or a Lease Event of
Default is continuing, in which case the Facility Lessees shall be obligated to
pay such costs.
(e) Upon any such transfer in compliance with this Section 7.1, (i)
such Transferee shall (x) be deemed the "Owner Participant" for all purposes,
and (y) enjoy the rights and privileges and perform the obligations of the Owner
Participant hereunder and under each of the OP Assignment and Assumption
Agreement, the Calpine Guaranties and each other Operative Document to which
such Owner Participant is a party, and each reference in this Agreement, the
Calpine Guaranties and each other Operative Document to the "Owner Participant"
shall thereafter be deemed to include such Transferee for all purposes and (ii)
the transferor Owner Participant and the OP Guarantor, if any, of such
transferor Owner Participant's obligations shall be released from all
obligations hereunder and under each other Operative Document to which such
transferor or OP Guarantor is a party or by which such transferor Owner
Participant or OP Guarantor is bound to the extent such obligations are
expressly assumed by a Transferee meeting the requirements of this Section 7.1;
provided, however, that in no event shall any such transfer waive or release the
transferor or its OP Guarantor from any liability accruing or existing in
respect of any period occurring on or prior to or occurring simultaneously with
such transfer.
(f) The transfer restrictions set forth in Section 7.1 (other than the
requirement that the Owner Participant and the Transferee enter into an OP
Assignment and Assumption Agreement) shall also apply to any transfer of the
equity ownership interests of an Owner Participant which has as its sole (or
substantially equivalent to sole) business activity its participation in the
transactions contemplated by the Operative Documents. In the case of such a
transfer of equity ownership interests which satisfies such restrictions of this
Section 7.1, the Owner Participant's obligations under the Operative Documents
shall continue, but the Owner Participant shall, except in the case of a
transfer to a transferee described in clause (a)(iii)(A) above, procure a new OP
Parent Guaranty from a guarantor meeting the requirements of clause (a)(iii)(B)
above.
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Section 7.2. Owner Participant's Liens. The Owner Participant covenants
that it will not directly or indirectly create, incur, assume or suffer to exist
any Owner Participant's Lien and the Owner Participant shall promptly notify the
Facility Lessees and the Indenture Trustee of the imposition or existence of any
such Lien of which the Owner Participant has Actual Knowledge and shall
promptly, at its own expense, take such action as may be necessary to duly
discharge such Owner Participant's Lien.
Section 7.3. Amendments or Revocation of LLC Agreement. Notwithstanding
anything to the contrary contained in the LLC Agreement, the Owner Participant
covenants that it will not (a) amend, supplement, or otherwise modify Section 10
of the LLC Agreement without the prior written consent of the Facility Lessees
so long as no Significant Lease Default or Lease Event of Default has occurred
and is continuing, and without the prior written consent of the Indenture
Trustee so long as the Lien of the Collateral Trust Indenture has not been
terminated or discharged, or (b) revoke, or otherwise waive compliance with or
terminate the LLC Agreement without the prior written consent of the Facility
Lessees so long as no Significant Lease Default or Lease Event of Default has
occurred and is continuing, and the Indenture Trustee so long as the Lien of the
Collateral Trust Indenture has not been terminated or discharged.
Section 7.4. Bankruptcy Filings. The Owner Participant agrees that it
will not file a petition, or join in the filing of a petition, seeking
reorganization, arrangement, adjustment or composition of, or in respect of, the
Owner Lessor under the Bankruptcy Code, or any other applicable federal or state
law or the law of the District of Columbia.
Section 7.5. Instructions. The Owner Participant agrees that it will
not instruct the Owner Lessor to take any action prohibited by this Agreement or
any other Operative Document.
Section 7.6. Intentionally Omitted.
Section 7.7. Intentionally Omitted.
Section 7.8. Right of First Refusal. In the event the Owner Participant
desires to sell, lease, convey or otherwise transfer its Member Interest or
cause the Owner Lessor to sell all or substantially all of the Owner Lessor's
Interest at any time during the three (3) year period commencing on the
termination or expiration of the Facility Lease (except in the event that a
Lease Event of Default shall have existed at such time of termination or
expiration), any such sale or other transfer shall be subject to each Facility
Lessee's right of first refusal on the terms and conditions set forth in this
Section 7.8. The Owner Participant shall give the Facility Lessees prompt
written notice of all bona fide offers that have been received from any other
Person to purchase or acquire its interest of the Owner Lessor's Interest or the
Member Interest of the Owner Participant, and which offers it wishes to accept,
together with a full and complete statement of the price and all of the terms,
conditions and provisions contained in such offers. The Facility Lessees shall
thereafter have the right within a period of 45 days from and after the receipt
by them of such notice (the "Notice Period") to notify the Owner Participant of
its intent to exercise its right of first refusal; provided however, if both
Facility Lessees exercise their right of first refusal hereunder, then the
Facility Lessees shall collectively purchase or acquire 100% of the interest to
be conveyed in the Owner Lessor's Interest or the Member Interest of the Owner
Participant, as the case may be. If a Facility Lessee elects to exercise the
right provided in the
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preceding sentence, it will within 60 days of such notice (the "Agreement
Period") execute a contract on the same terms and conditions as the offer giving
rise to such right. If neither of the Facility Lessees give such notice to the
Owner Participant within the 45 day period or execute such a contract within 60
days of such notice, the Owner Participant will be free to proceed under the
terms and conditions set forth in its notice to the Facility Lessees, unless the
failure to execute the contract within 60 days is attributable to acts or
omissions of the Owner Participant. In the event that such terms are revised in
any way that changes the agreement for sale, lease, conveyance or transfer such
that the terms of the sale are less favorable to the Owner Participant (it being
understood and agreed that any reduction in the price or a change in the terms
of payment thereof in a manner beneficial to the potential purchaser shall be
deemed to be less favorable to the Owner Participant), the Owner Participant
shall again comply with the notice and right of first refusal provisions of this
Section prior to entering into such revised agreement; provided that, for such
revised offer, the Notice Period shall be 10 Business Days from the date of such
new notice, and the Agreement Period shall not exceed 45 days from the date of
the Facility Lessees' notice accepting such new terms.
SECTION 8. COVENANTS OF THE INDENTURE TRUSTEE AND THE PASS THROUGH TRUSTEE
Section 8.1. Indenture Trustee's Liens. Neither the Lease Indenture
Company, nor the Indenture Trustee will directly or indirectly create, incur,
assume or suffer to exist any Indenture Trustee's Lien attributable to it and
arising out of events or conditions not related to its rights in the Indenture
Estate or the administration thereof, and will promptly notify the Owner
Participant, the Owner Lessor and the Facility Lessees of the imposition of any
such Lien of which it has Actual Knowledge and shall promptly (and in any event
within 30 days of obtaining Actual Knowledge of such Lien), at its own expense,
take such action as may be necessary to duly discharge such Indenture Trustee's
Lien.
Section 8.2. Pass Through Trustee's Covenant Not to Transfer Lessor
Notes.
Section 8.2. The Pass Through Trustee agrees that it will not transfer
any Lessor Note (or any part thereof) to any entity (except to a successor Pass
Through Trustee appointed pursuant to the terms of the Pass through Trust
Agreement) until it receives from such entity a certification which makes a
representation and warranty as of the date of such transfer that no part of the
funds to be used by it for the purchase and holding of such Lessor Note (or any
part thereof) constitutes assets of any Plan or that such purchase and holding
will be covered by a prohibited transaction class exemption issued by the U.S.
Department of Labor.
SECTION 9. INDEMNIFICATION
Section 9.1. General Indemnity.
(a) Claims Indemnified. Subject to the exclusions stated in paragraph
(b) below, the Facility Lessees, jointly and severally, agree to indemnify,
protect, defend and hold harmless, and do hereby indemnify the Owner
Participant, the Owner Lessor, the Administrator (but only in connection with
the performance of its duties under the LLC Administration Agreements), the
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Lease Indenture Company in its individual capacity, the Indenture Trustee, each
Certificateholder, the Pass Through Company in its individual capacity, the Pass
Through Trustee, and their respective Affiliates, successors, assigns, agents,
directors, officers and employees (each an "Indemnitee") against any and all
Claims (whether or not any of the transactions contemplated by the Operative
Documents are consummated) imposed on, incurred or suffered by or asserted
against any Indemnitee in any way relating to or resulting from or arising out
of or attributable to:
(i) the construction, financing, refinancing, acquisition,
operation, rebuilding, warranty, ownership, possession, maintenance, repair,
lease, condition, alteration, modification, restoration, refurbishing, return,
purchase, sale or other disposition, insuring, sublease, or other use or non-use
of the Facilities, the Facility Sites, the Easements or any Component or any
portion of any thereof or any interest therein;
(ii) the conduct of the business or affairs of any applicable
Facility Lessee or Calpine and any other business or affairs conducted at the
Facilities, the Easements or the Facility Sites;
(iii) the manufacture, design, purchase, acceptance, rejection,
delivery or condition of, or improvement to, the Facilities, the Facility Sites,
the Easements or any Component, or any portion of any thereof or any interest
therein;
(iv) the Facility Leases, the Facility Site Leases, the Facility
Site Subleases, or any other Operative Document, the execution or delivery
thereof or the performance, enforcement, attempted enforcement or amendment of
any terms thereof, or the transactions contemplated thereby or resulting
therefrom;
(v) any Environmental Condition at, related to or caused by the
Facilities, the Easements or the Facility Sites or any Component, or any portion
thereof, including, for the avoidance of doubt, any such Environmental Condition
existing prior to the Closing Date;
(vi) the offer, issuance, sale, acquisition or delivery of the
Lessor Notes, the Certificates, any Additional Lessor Notes, any Additional
Certificates or any refinancing thereof;
(vii) the reasonable costs and expenses of the Transaction
Parties in connection with amendments or supplements to the Operative Documents
requested by an applicable Facility Lessee, or resulting from the actions of an
applicable Facility Lessee or in connection with any Lease Default or Lease
Event of Default;
(viii) the imposition of any Lien other than with respect to a
particular Indemnitee (or a Related Party), an Owner Lessor's Lien, an Owner
Participant's Lien or Indenture Trustee's Lien attributable to such Indemnitee;
(ix) any violation by, or liability relating to, any Facility
Lessee or any other Calpine Party of, or under, any Applicable Law, whether now
or hereafter in effect (including Environmental Laws), or any action of any
Governmental Entity or other Person taken with respect to the Facilities, the
Facility Sites, the Operative Documents or the interests of the Owner
Participant, the Owner Lessor, the Indenture Trustee or the Pass Through
Trustee, or under the
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Operative Documents or the presence, use, storage, release, threatened release,
transportation, arrangement for transportation, treatment, arrangement for
treatment, manufacture, disposal or arrangement for disposal of any Hazardous
Substance in, at, under or from the Facilities, the Easements or the Facility
Sites, including, for the avoidance of doubt, any of the foregoing existing or
occurring prior to the Closing Date;
(x) the non-performance or breach by any Person of any obligation
contained in this Agreement or any other Operative Document or the falsity or
inaccuracy of any representation, warranty or obligation of any Person contained
in this Agreement or any other Operative Document;
(xi) the continuing fees (if any) and expenses of the Owner Lessor
and the Administrator pursuant to the LLC Administration Agreements (including
the reasonable compensation and expenses of their respective counsel) arising
out of the Owner Lessor's discharge of its duties under or in connection with
the Operative Documents (other than the Facility Leases and the Facility Site
Leases);
(xii) the continuing fees (if any) and expenses of the Lease
Indenture Company, the Indenture Trustee, the Pass Through Company, the Pass
Through Trustee, (including the reasonable compensation and expenses of their
respective counsel, accountants and other professional persons) arising out of
the discharge of their respective duties as provided in the Operative Documents;
or
(xiii) any Applicable Permits including any obligations imposed by
FERC in connection with the Facilities or the Facility Sites.
(b) Claims Excluded. Any Claim, to the extent relating to or resulting
from or arising out of or attributable to any of the following, is excluded from
the Facility Lessees' obligations to indemnify, defend, protect and hold
harmless any Indemnitee under this Section 9.1:
(i) (A) acts, omissions or events with respect to a particular
Facility first occurring after the later of (x) expiration or early termination
of a related Facility Lease and, where required by such Facility Lease,
surrender to the Owner Lessor or its successor of the relevant Facility Lessee's
interest in the related Facility in compliance with the provisions of such
Facility Lease and (y) if the Owner Lessor exercises its option set forth in
Article VI of the related Facility Site Lease, the performance by the applicable
Facility Lessee of all obligations required to be performed by it thereunder, or
(B), if the Closing Date does not occur, acts, omission or events occurring
after the date set forth in Section 2.2(e);
(ii) with respect to a particular Indemnitee and Related Parties,
any offer, sale, assignment, transfer or other disposition (voluntary or
involuntary) by or on behalf of (A) in the case of the Owner Participant, the
Owner Participant of its Member Interest or with respect to any Related Party,
its direct or indirect interest in the Owner Participant, (B) in the case of the
Owner Lessor, and if such action is taken at the written direction of the Owner
Participant, the Owner Participant, and Related Parties, the Owner Lessor of all
or any of the Owner Lessor's Interest, (C) the Indenture Trustee of all or any
of its interest in the Lessor Notes, unless, in any such case referred to in
this paragraph (ii), such transfer is required by the terms of the Operative
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Documents or occurs during the continuance of a Lease Event of Default;
(provided that this paragraph (ii) shall not serve to cap the indemnity to be
received by a transferee Indemnitee for a Claim (other than a Claim relating
solely to or arising solely out of any offer, transfer, sale, assignment or
other disposition of any such rights or interests) based on what the relevant
transferor Indemnitee would have received had no such transfer occurred);
(iii) with respect to any Indemnitee, any Claim attributable to (i)
the gross negligence or willful misconduct of such Indemnitee or a Related Party
except to the extent such gross negligence or willful misconduct is attributable
to any breach by the Facility Lessees (or any of them) or any other Calpine
Party of any covenant, representation or warranty contained in any Operative
Document or (ii) any violation of Applicable Law by any such Person except to
the extent attributable to a violation of Applicable Law by the Facility Lessees
(or either of them) or any other Calpine Party or to any breach by the Facility
Lessees (or any of them) or such other Calpine Party of any covenant,
representation or warranty contained in any Operative Document;
(iv) as to any Indemnitee, any Claim to the extent attributable to
the noncompliance of such Indemnitee or a Related Party, with any of the terms
of, or any misrepresentation or breach of warranty by such Indemnitee or Related
Party contained in any Operative Document made by such Indemnitee or Related
Party or any breach by such Indemnitee or a Related Party of any covenant
contained in any Operative Document or any breach by such Indemnitee or a
Related Party of any covenant contained in any Operative Document made by such
Indemnitee or Related Party except to the extent attributable to any breach by a
Facility Lessee or any other Calpine Party of any covenant, representation or
warranty contained in any Operative Document;
(v) any Claim constituting or arising from an Owner Lessor's Lien;
(vi) with respect to the Indenture Trustee and the Lease Indenture
Company, any Claim constituting or arising from a Indenture Trustee's Lien;
(vii) with respect to the Owner Participant, any claim constituting
or arising from an Owner Participant's Lien;
(viii) any Claim that is a Tax, or is a cost of contesting a Tax
whether or not the relevant Facility Lessee is required to indemnify therefor
pursuant to Section 9.2 hereof or under the Tax Indemnity Agreement;
(ix) any failure on the part of the Administrator to distribute in
accordance with the LLC Agreement or the LLC Administration Agreements any
amounts received by it under the Operative Documents and distributable by it
thereunder;
(x) a Claim arising out of a Indenture Default or Lease Indenture
Event of Default that is not also (or attributable to) a Lease Default or Lease
Event of Default;
(xi) with respect to a particular Indemnitee and Related Party, any
obligation or liability expressly assumed in any Operative Document by the
Indemnitee seeking indemnification;
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(xii) any Claim that constitutes scheduled principal and/or
interest on the Lessor Notes, Additional Lessor Notes, or the corresponding
payments under the Certificates or any Additional Certificates; and
(xiii) any Claim relating to the payment of any amount which
constitutes Transaction Costs which the Owner Participant is obligated to pay
pursuant to Section 2.3(a) hereof or any other amount to the extent such
Indemnitee or a Related Party has expressly agreed in any Operative Document to
pay such amount without express right of reimbursement;
provided that the terms "omission," "gross negligence" and "willful misconduct,"
when applied with respect to the Owner Lessor, the Owner Participant, the
Indenture Trustee, the Pass Through Trustee or any Affiliate of any thereof,
shall not include any liability imputed as a matter of law to such Indemnitee
solely by reason of any such entity's interest in the Facilities or the Facility
Sites or such Indemnitee's failure to act in respect of matters which are or
were the obligation of the Facility Lessees under this Agreement or any other
Operative Document. Nothing herein shall be deemed to constitute a guaranty of
any useful life or any present or future residual value of the Facilities or a
guaranty that any amount of any Secured Indebtedness will be paid.
(c) Insured Claims. Subject to the provisions of paragraph (e) of this
Section 9.1, in the case of any Claim indemnified by the Facility Lessees
hereunder which is covered by a policy of insurance maintained by the Facility
Lessees, each Indemnitee agrees, unless it and each other Indemnitee shall waive
its rights to indemnification (for itself and each Related Party thereto) in a
manner reasonably acceptable to the Facility Lessees, to cooperate, at the sole
cost and expense of the Facility Lessees, with insurers in exercise of their
rights to investigate, defend or compromise such Claim.
(d) After-Tax Basis. The Facility Lessees agree that any payment or
indemnity pursuant to this Section 9.1 in respect of any Claim shall be made on
an After-Tax Basis to the Indemnitees.
(e) Claims Procedure. Each Indemnitee shall promptly after such
Indemnitee shall have Actual Knowledge thereof notify the Facility Lessees of
any Claim as to which indemnification is sought; provided, that the failure so
to notify the Facility Lessees shall not reduce or affect the Facility Lessees'
liability which it may have to such Indemnitee under this Section 9.1, and no
payment hereunder by the Facility Lessees to an Indemnitee shall be deemed to
constitute a waiver or release of any right or remedy that the Facility Lessee
may have against any such Indemnitee for actual damages resulting directly from
the failure or delay of such Indemnitee to give the Facility Lessees such
notice. Subject to the foregoing, any amount payable to any Indemnitee pursuant
to this Section 9.1 shall be paid within thirty (30) days after receipt of such
written demand therefor from such Indemnitee, accompanied by a certificate of
such Indemnitee stating in reasonable detail the basis for the indemnification
thereby sought and (if such Indemnitee is not a party hereto) an agreement to be
bound by the terms hereof as if such Indemnitee were such a party. The foregoing
shall not, however, constitute an obligation to disclose confidential
information of any kind without the execution of an appropriate confidentiality
agreement. Promptly after the Facility Lessees receive notification of such
Claim accompanied by a written statement describing in reasonable detail the
Claims which are the
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subject of and basis for such indemnity and the computation of the amount so
payable, the Facility Lessees shall, without affecting its obligations
hereunder, notify such Indemnitee whether it intends to pay, object to,
compromise or defend any matter involving the asserted liability of such
Indemnitee. The Facility Lessees shall have the right to investigate and so long
as no Significant Lease Default or Lease Event of Default shall have occurred
and be continuing, the Facility Lessees shall have the right in its sole
discretion, to defend or compromise any Claim for which indemnification is
sought under this Section 9.1 which the Facility Lessees acknowledge is subject
to indemnification hereunder; provided that no such defense or compromise shall
involve any danger of (i) foreclosure, sale, forfeiture or loss of, or
imposition of a Lien on any part of the Facilities, the Facility Sites, the
Lessor Estate or the Indenture Estate or the impairment of the Facilities in any
material respect or (ii) any criminal liability being incurred or any material
adverse effect on such Indemnitee; provided, further, that no Claim shall be
compromised by the Facility Lessees on a basis that admits any criminal
violation or gross negligence or willful misconduct on the part of such
Indemnitee without the express written consent of such Indemnitee; and provided,
further, that to the extent that other Claims unrelated to the transactions
contemplated by the Operative Documents are part of the same proceeding
involving such Claim, the Facility Lessees may assume responsibility for the
contest or compromise of such Claim only if the same may be and is severed from
such other Claims (and each Indemnitee agrees to use reasonable efforts to
obtain such a severance). In the event that in the course of the investigation
or defense of a claim, the Facility Lessees shall in good faith reasonably
determine that it is not liable for indemnification with respect thereto under
this Section 9.1, it may give notice to the applicable Indemnitee of such fact;
and, in such case, any acknowledgment, theretofore made by the Facility Lessees
of liability with respect to such claim under this Section 9.1 shall be deemed
revoked, and the Facility Lessees may thereupon cease to defend such claim;
provided that (i) the Facility Lessees shall have given the Indemnitee
reasonable prior notice of its intention to renounce such acknowledgment, (ii)
the Facility Lessees' conduct regarding the defense of such claim or any
decision to withdraw from such defense shall not prejudice or have prejudiced
the Indemnitee's ability to contest such claim (taking into account, among other
things, the timing of the Facility Lessees' withdrawal and the theory or
theories upon which the Facility Lessees shall have based its defense), and
(iii) the Facility Lessees shall have given such Indemnitee all materials,
documents and records relating to its defense of such claim as such Indemnitee
shall have reasonably requested in connection with the assumption by such
Indemnitee of the defense of such claim at the cost and expense of such Facility
Lessee. In the event that the Facility Lessees shall cease to defend any claim
pursuant to the preceding sentence, the Facility Lessees shall indemnify each
Indemnitee, without regard to any exclusion that might otherwise apply
hereunder, to the extent that the actions of the Facility Lessees in defending
such claim or the manner or time of the Facility Lessees' election to withdraw
from the defense of such claim shall have caused such Indemnitee to incur any
loss, cost, liability or expense which such Indemnitee would not have incurred
had the Facility Lessees not ceased to defend such claim in such manner or such
time. If the Facility Lessees elect, subject to the foregoing, to compromise or
defend any such asserted liability, it may do so at its own expense and by
counsel selected by it. Upon the Facility Lessees' election to compromise or
defend such asserted liability and prompt notification to such Indemnitee of its
intent to do so, such Indemnitee shall cooperate at the Facility Lessees'
expense with all reasonable requests of the Facility Lessees in connection
therewith and will provide the Facility Lessee with all information not within
the control of the Facility Lessees as is reasonably
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available to such Indemnitee which the Facility Lessees may reasonably request;
provided, however, that such Indemnitee shall not, unless otherwise required by
Applicable Law, be obligated to disclose to the Facility Lessees or any other
Person, or permit the Facility Lessees or any other Person to examine (i) any
income tax returns of the Owner Participant or (ii) any confidential information
or pricing information not generally accessible by the public possessed by the
Owner Participant (and, in the event that any such information is made
available, the Facility Lessees shall treat such information as confidential and
shall take all actions reasonably requested by such Indemnitee for purposes of
obtaining a stipulation from all parties to the related proceeding providing for
the confidential treatment of such information from all such parties). Where the
Facility Lessees, or the insurers under a policy of insurance maintained by the
Facility Lessees, undertake the defense of such Indemnitee with respect to a
Claim (with counsel reasonably satisfactory to such Indemnitee and without
reservation of rights against such Indemnitee), no additional legal fees or
expenses of such Indemnitee in connection with the defense of such Claim shall
be indemnified hereunder unless such fees or expenses were incurred at the
request of the Facility Lessees or such insurers. Notwithstanding the foregoing,
an Indemnitee may participate at its own expense in any judicial proceeding
controlled by the Facility Lessees pursuant to the preceding provisions, but
only to the extent that such party's participation does not in the reasonable
opinion of counsel to the Facility Lessees interfere with such control or
defense of such claim; provided, however, that such party's participation does
not constitute a waiver of the indemnification provided in this Section 9.1;
provided, further, that if and to the extent that (i) such Indemnitee is advised
by counsel that an actual or potential conflict of interest exists where it is
advisable for such Indemnitee to be represented by separate counsel or (ii)
there is a risk that such Indemnitee may be subject to criminal liability and
such Indemnitee informs the Facility Lessees that such Indemnitee desires to be
represented by separate counsel, such Indemnitee shall have the right to control
its own defense of such Claim and the reasonable fees and expenses of such
defense (including, without limitation, the reasonable fees and expenses of such
separate counsel) shall be borne by the Facility Lessees. So long as no Lease
Event of Default described in clause (a), (b), (g) or (h) of Section 16 of a
Facility Lease shall have occurred and be continuing, no Indemnitee shall enter
into any settlement or other compromise with respect to any Claim without the
prior written consent of the Facility Lessees unless (i) the Indemnitee waives
its rights to indemnification hereunder or (ii) the Facility Lessees have not
acknowledged their indemnity obligation with respect thereto and there is a
significant risk that a default judgment will be entered against such
Indemnitee. Nothing contained in this Section 9.1(e) shall be deemed to require
an Indemnitee to contest any Claim or to assume responsibility for or control of
any judicial proceeding with respect thereto.
(f) Subrogation. To the extent that a Claim indemnified by the Facility
Lessees under this Section 9.1 is in fact paid in full by the Facility Lessees
or an insurer under an insurance policy maintained by the Facility Lessees, the
Facility Lessees (so long as no Lease Event of Default shall have occurred and
be continuing) or such insurer shall be subrogated to the rights and remedies of
the Indemnitee on whose behalf such Claim was paid to the extent of such payment
(other than rights of such Indemnitee under insurance policies maintained at its
own expense) with respect to the transaction or event giving rise to such Claim.
Should an Indemnitee receive any refund, in whole or in part, with respect to
any Claim paid by the Facility Lessees hereunder, it shall promptly pay over to
the Facility Lessees the lesser of (i) the amount refunded reduced by the amount
of any Tax incurred by reason of the receipt or accrual of such refund and
increased by the amount of any Tax (but not in excess of the amount of such
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reduction) saved as a result of such payment or (ii) the amount the Facility
Lessees or any of their insurers has paid in respect of such Claim; provided
that, so long as a Significant Lease Default or Lease Event of Default shall
have occurred and is continuing such amount may be held by the Owner Lessor as
security for the Facility Lessees' obligations under the Facility Leases and the
other Operative Documents.
(g) Minimize Claims. The Owner Participant, the Owner Lessor, and each
of the other Transaction Parties will use their respective reasonable and
diligent efforts to minimize Claims indemnifiable by the Facility Lessees under
this Section 9.1, including by complying with reasonable requests by the
Facility Lessees to do or to refrain from doing any act if such compliance is,
in the good faith opinion of the Owner Participant, the Owner Lessor, or such
other Transaction Party, as the case may be, of a purely ministerial nature or
otherwise has no unindemnified adverse impact on the Owner Participant, the
Owner Lessor, or such Transaction Party, as the case may be, or any Affiliate of
any thereof or on the business or operations of any of the foregoing.
Section 9.2. General Tax Indemnity.
(a) Indemnity. Except as provided in paragraph (b), the Facility Lessees
jointly and severally agree to indemnify each of the Owner Participant, the
Owner Lessor, the Lease Indenture Company in its individual capacity, the
Indenture Trustee, the Pass Through Company in its individual capacity, the Pass
Through Trustee, each Certificateholder and their respective successors and
assigns, the past and present partners or members of or holders of the ownership
interests in, as the case may be, the Owner Participant (each of the foregoing,
together with any Affiliate thereof, a "Tax Indemnitee") for, to hold each Tax
Indemnitee harmless from and to defend each Tax Indemnitee against all Taxes
that are imposed upon or with respect to or borne by or asserted against any Tax
Indemnitee, the Facilities, the Easements, the Facility Sites, or any portion or
Component thereof or any interest therein, or upon any Operative Document or
interest therein, or in any way arising out of, in connection with or relating
to, any of the following:
(i) the construction, financing, refinancing, acquisition,
operation, warranty, ownership, possession, maintenance, repair, lease,
condition, alteration, modification, restoration, refurbishing, rebuilding,
return, transport, assembly, repossession, servicing, dismantling, abandonment,
retirement, decommissioning, preparation, installation, storage, replacement,
purchase, sale or other disposition, insuring, sublease, or other use or non-use
of, the imposition of any lien (or incurrence of any liability to refund or pay
over any amount as a result of any lien) on, the Facilities, the Facility Sites,
the Easements or any portion or Component thereof or any interest therein;
(ii) the Facilities, the Facility Sites, the Easements, any portion
thereof or Component or interest therein, the applicability of the Facility
Leases to the Facilities, or the conduct of the business or affairs of the
Facility Lessees or Calpine, the Facilities or the Facility Sites;
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(iii) the manufacture, design, purchase, acceptance, rejection,
delivery, non-delivery, redelivery or condition of, or improvement to, the
Facilities, the Easements, the Facility Sites or any portion or Component
thereof, or any interest therein;
(iv) the Facility Leases, or any other Operative Document, the
execution or delivery thereof, any other documents contemplated thereby or the
performance, enforcement or amendment of any terms thereof;
(v) the payment or receipt of Periodic Rent, Basic Rent and
Supplemental Rent or any other payment, receipt or earning under the Facility
Leases or the Facility Site Subleases or arising from the Facilities, the
Facility Sites, the Easements, or any portion or Component thereof or any
interest therein;
(vi) any other amount paid or payable pursuant to the Operative
Documents;
(vii) the conveyance of title to the Facilities; or
(viii) otherwise relating to the transactions contemplated by the
Operative Documents.
Notwithstanding anything herein to the contrary and without regard to
paragraph (b) hereof, the Facility Lessees will indemnify the Owner Participant
and the Owner Lessor on an After-Tax Basis for any Taxes collected by way of
withholding (and any interest, penalties or additions to tax associated
therewith) (or for the failure to withhold taxes) imposed on the Lessor Notes or
the Additional Lessor Notes or any other payments to each Certificateholder or
the Indenture Trustee (each a "Certificateholder Indemnitee"), including any
penalties, interest, or additions to tax applicable in connection therewith;
provided, however, that if the Facility Lessees are required, for any reason, to
indemnify the Owner Participant or the Owner Lessor with respect to any failure
to withhold such tax, and the withholding tax would otherwise be an Excluded Tax
under Section 9.2(b) without regard to the first sentence of this paragraph,
then the Certificateholder Indemnitee with respect to which such withholding was
not made will pay the amount of tax not withheld to the relevant taxing
authority if such taxes remain unpaid or will reimburse the Facility Lessees for
the amount of tax not withheld, but paid to such taxing authority, on demand,
plus interest at (a) the Lease Debt Rate during the period commencing on the
date the Facility Lessees shall have made the indemnity payment to such taxing
authority and ending the earlier of the date of repayment by such Tax Indemnitee
and five Business Days after the date the Facility Lessees demand reimbursement
thereof pursuant to this sentence, and (b) the Overdue Rate for the period
thereafter to the date the Facility Lessees actually receive such payment.
(b) Excluded Taxes. The indemnity provided for in paragraph (a) above
shall not extend to any of the following Taxes (the "Excluded Taxes"):
(i) Taxes imposed by the United States federal government or any
state or local government, any political subdivision of any of the foregoing,
imposed on, based on or measured by gross or net income, receipts, capital gain,
capital or net worth, or conduct of business (other than, in each case, Taxes
that are in the nature of sales, use, rental, license, value added (to the
extent value added taxes are not imposed in clear and direct substitution for
income
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taxes), property or similar taxes ("Income Taxes")), including any such Taxes
collected by way of withholding, minimum or alternative minimum taxes, and
franchise taxes; provided that this exclusion (i) shall not affect any express
requirement that payments be made on an "after-tax" basis nor shall it apply to
Taxes that would have been imposed on a Certificateholder Indemnitee had the
transactions contemplated by the Operative Documents been the sole connection
between the jurisdiction imposing such Taxes and the Certificateholder
Indemnitee with respect to which such Taxes were imposed;
(ii) Taxes imposed on a Tax Indemnitee other than a
Certificateholder Indemnitee that are attributable to any act, event or omission
by such Tax Indemnitee that occurs after expiration or other termination of the
Facility Leases and surrender of the Facilities to the Owner Lessor or its
successors (or in the case of a Certificateholder Indemnitee, Taxes imposed for
any period after the repayment of the Lease Debt) in accordance with the
Facility Leases, (in contrast to an act, event or omission occurring prior to or
simultaneous with such expiration, termination or surrender (or, in the case of
a Certificateholder Indemnitee, such repayment)), provided that this exclusion
shall not apply so long as a Lease Event of Default shall have occurred and be
continuing;
(iii) Taxes imposed on a Tax Indemnitee that are attributable to the
gross negligence or willful misconduct of such Tax Indemnitee, unless such
negligence or misconduct is imputed to such Tax Indemnitee solely as a result of
its participation in the transactions contemplated by the Operative Documents
and not as a result of any action or inaction by such Tax Indemnitee;
(iv) Taxes imposed on a Tax Indemnitee arising from a breach by such
Tax Indemnitee of any of its representations, warranties or covenants under any
Operative Document except to the extent attributable to any breach by the
Facility Lessees or any other Calpine Party of any covenant, representation or
warranty contained in any Operative Document;
(v) Taxes (A)(x) arising out of, or caused by any voluntary direct
or indirect assignment, sale, transfer or other voluntary disposition or (y) an
involuntary direct or indirect transfer or disposition resulting from a
bankruptcy or similar proceeding for relief of debtors in which such Tax
Indemnitee is a debtor or a foreclosure by a creditor of such Tax Indemnitee, in
the case of either (x) or (y),(1) by the Owner Participant of all or part of its
Member Interest, (2) by the Owner Lessor of all or part of its interest in the
Facilities or the Facility Sites, or (3) by the Indenture Trustee of any
interest in the Lease Debt or the Indenture Estate, or (4) in the case of the
Owner Lessor or the Owner Participant of any direct or indirect interest in the
Owner Lessor or the Owner Participant, in each case to the extent imposed
directly by reason of any transfer described in this clause (v)(A), or (B)
imposed after any such transfer to the extent that, under law in effect on the
date of the transfer such Taxes exceed the amount of Taxes that would be
indemnified hereunder had there been no such assignment, sale, transfer or other
voluntary disposition, unless such transfer or disposition occurs during the
continuance of a Lease Event of Default or is otherwise pursuant to the Facility
Lessees' exercise of their rights under the Operative Documents;
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(vi) Taxes imposed on a Tax Indemnitee that would not have been
imposed but for the creation or existence of any Owner Lessor's Lien or Owner
Participant's Lien attributable to such Tax Indemnitee;
(vii) Taxes that are included as a part of the cost of the
Facilities;
(viii) Intentionally Omitted.
(ix) With respect to the Owner Participant, Taxes for which the
Facility Lessees are obligated to indemnify the Owner Participant under the Tax
Indemnity Agreement (or which are expressly excluded from indemnification
thereunder);
(x) Taxes that are imposed on a Tax Indemnitee (other than a
Certificateholder Indemnitee) resulting from the Owner Lessor not being treated
as a grantor trust or other conduit entity for federal, state or local income
tax purposes, but only to the extent such Taxes exceed Taxes indemnified
hereunder that otherwise would have been imposed and are otherwise
indemnifiable;
(xi) Taxes imposed on a Tax Indemnitee that are attributable to the
failure of such Tax Indemnitee to comply with certification, information,
documentation, reporting or other similar requirements concerning the
nationality, residence, identity or connection with the jurisdiction imposing
such Taxes; provided that the foregoing exclusion shall only apply if such
compliance is required by statute or regulation of the jurisdiction imposing
such Taxes as a precondition to relief or exemption from or reduction in such
Taxes, such Tax Indemnitee is eligible to comply with such requirement, the
Facility Lessees shall have given such Tax Indemnitee timely written notice of
such requirement and the Tax Indemnitee shall have determined in good faith that
compliance with any such requirement shall not result in any identified
non-immaterial adverse effect to its interests or to those of its Affiliates;
(xii) Taxes consisting of interest, penalties, additions to tax or
fines resulting from a failure of such Tax Indemnitee to properly and timely
file returns as required by a taxing authority unless such failure is
attributable to the Facility Lessees not providing information that it is
expressly required to provide under the Operative Documents;
(xiii) Taxes imposed on any Tax Indemnitee resulting from an
amendment, modification, supplement to or waiver of any provision of, any
Operative Document which amendment, modification, supplement or waiver was not
requested by or consented to by the Facility Lessees, and as to which the
Facility Lessees are not a party and the Tax Indemnitee (or, in the case of the
Owner Participant, the Owner Lessor if acting at the express direction of the
Owner Participant or any Related Party) is a party, unless such amendment,
modification, supplement or waiver (A) was required by applicable law or the
Operative Documents, (B) may be necessary or appropriate to, and is in
conformity with, any amendment to any Operative Document requested by the
Facility Lessee in writing, or (C) was consented to by a Calpine Party;
(xiv) Taxes imposed as a result of, or in connection with, any
"prohibited transaction," within the meaning of Section 4975 of the Code,
Section 406 of ERISA or any comparable laws of any Governmental Entity, engaged
in by any Tax Indemnitee (which for this
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purpose shall include any ERISA Affiliate thereof) resulting from the breach by
such Tax Indemnitee of any of its representations or warranties contained in
Section 3.4(g) or Section 8.2 of the Participation Agreement;
(xv) Taxes to the extent such Taxes would not have been imposed on a
Tax Indemnitee if such Tax Indemnitee or any related Tax Indemnitee were a
United States Person; and
(xvi) Taxes imposed that would not have been imposed on a Tax
Indemnitee but for the activities in the taxing jurisdiction of such Tax
Indemnitee or any Affiliate thereof unrelated to the transactions contemplated
by the Operative Documents.
(c) Payment. Notwithstanding anything to the contrary herein and without
regard to paragraph (b) hereof, any payment by the Facility Lessees pursuant to
this Section 9.2 shall be increased by amounts necessary to ensure that all such
payments are made on an After-Tax Basis. Each payment required to be made by the
Facility Lessees to a Tax Indemnitee pursuant to this Section 9.2 shall be paid
either (i) when due directly to the applicable taxing authority by the Facility
Lessees if they are permitted to do so, or (ii) where direct payment is not
permitted, and with respect to gross up amounts, in immediately available funds
to such Tax Indemnitee by the later of (A) 10 days following the Facility
Lessees' receipt of the Tax Indemnitee's written demand for the payment pursuant
to clause (g)(i) below (which demand shall be accompanied by a written statement
of the Tax Indemnitee describing in reasonable detail the Taxes for which the
Tax Indemnitee is demanding payment and the computation of such Taxes), (B)
subject to paragraph (g) below, in the case of amounts which are being contested
pursuant to such paragraph (g), at the time and in accordance with a final
determination of such contest or (C) in the case of any indemnity demand for
which the Facility Lessees have requested review and determination pursuant to
paragraph (d) below, the completion of such review and determination; provided,
however, in no event later than the date which is one Business Day prior to the
date on which such Taxes are required to be paid to the applicable taxing
authority. Any amount payable to the Facility Lessees pursuant to paragraph (e)
or (f) below shall be paid promptly after the Tax Indemnitee realizes a Tax
Benefit giving rise to a payment under paragraph (e) or receives a refund or
credit giving rise to a payment under paragraph (f), as the case may be, and
shall be accompanied by a statement of the Tax Indemnitee computing in
reasonable detail the amount of such payment. Upon the final determination of
any contest pursuant to paragraph (g) below in respect of any Taxes for which
the Facility Lessees have made a Tax Advance, the amount of the Facility
Lessees' obligation under paragraph (a) above shall be determined as if such Tax
Advance had not been made. Any obligation of the Facility Lessees under this
Section 9.2 and the Tax Indemnitee's obligation to repay the Tax Advance will be
satisfied first by set off against each other, and any difference owing by
either party will be paid within 10 days of such final determination.
(d) Independent Examination. Within 10 days after the Facility Lessees
receives any computation from the Tax Indemnitee, the Facility Lessees may
request in writing that an independent public accounting firm selected by the
Tax Indemnitee and reasonably acceptable to the Facility Lessees review and
determine on a confidential basis the amount of any indemnity payment by the
Facility Lessees to the Tax Indemnitee pursuant to this Section 9.2 or any
payment by a Tax Indemnitee to the Facility Lessees pursuant to paragraph (e) or
(f) below. The
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Tax Indemnitee shall cooperate with such accounting firm and supply it with all
information reasonably necessary for the accounting firm to conduct such review
and determination (but not tax returns and books); provided that such accounting
firm shall agree in writing in a manner reasonably satisfactory to the Tax
Indemnitee to maintain the confidentiality of such information. The parties
hereto agree that the independent public accounting firm's sole responsibility
shall be to verify the computation of any payment pursuant to this Section 9.2
and that matters of interpretation of this Participation Agreement or any other
Operative Document are not within the scope of the independent accountant's
responsibility. The fees and disbursements of such accounting firm will be paid
by the Facility Lessees; provided that such fees and disbursements will be paid
by the Tax Indemnitee if the verification results in an adjustment in the
Facility Lessees' favor of 5 percent or more of the indemnity payment or
payments computed by the Tax Indemnitee.
(e) Tax Benefit. If, as the result of any Taxes paid or indemnified
against by the Facility Lessees under this Section 9.2, the aggregate Taxes
actually paid by the Tax Indemnitee for any taxable year and not subject to
indemnification pursuant to this Section 9.2 are less (whether by reason of a
deduction, credit, allocation or apportionment of income or otherwise) than the
amount of such Taxes that otherwise would have been payable by such Tax
Indemnitee (a "Tax Benefit"), then to the extent such Tax Benefit was not taken
into account in determining the amount of indemnification payable by the
Facility Lessees under paragraph (a) or (c) above and provided no Significant
Lease Default or Lease Event of Default shall have occurred and be continuing
(in which event the payment provided under this Section 9.2(e) shall be deferred
until the Significant Lease Default or Lease Event of Default has been cured),
such Tax Indemnitee shall pay to the Facility Lessees the lesser of (A) (y) the
amount of such Tax Benefit, plus (z) an amount equal to any United States
federal, state or local income tax benefit resulting to the Tax Indemnitee from
the payment under clause (y) above and this clause (z) (determined using the
same assumptions as set forth in the second sentence under the definition of
After-Tax Basis) and (B) the amount of the indemnity paid pursuant to this
Section 9.2 giving rise to such Tax Benefit; provided, however, that any excess
of (A) over (B) shall be carried forward and reduce the Facility Lessees'
obligations to make subsequent payments to such Tax Indemnitee pursuant to this
Section 9.2. If it is subsequently determined that the Tax Indemnitee was not
entitled to such Tax Benefit, the portion of such Tax Benefit that is required
to be repaid or recaptured will be treated as Taxes for which the Facility
Lessees must indemnify the Tax Indemnitee pursuant to this Section 9.2 without
regard to paragraph (b) hereof.
Notwithstanding anything to the contrary herein, each Certificateholder
Indemnitee shall determine the allocation of any tax benefits, savings, credit,
deduction or allocation in its sole good faith discretion and each position to
be taken on its tax return shall be in its sole control and it shall not be
required to disclose any tax return or related documentation to any Person.
(f) Refund. If a Tax Indemnitee obtains a refund or credit of all or
part of any Taxes paid, reimbursed or advanced by the Facility Lessees pursuant
to this Section 9.2, the Tax Indemnitee promptly shall pay to the Facility
Lessees (x) the amount of such refund or credit (net of any Tax payable by the
Tax Indemnitee as a result of the receipt or accrual of such refund or credit)
plus (y) an amount equal to any United States federal, state or local income tax
benefit realized by such Tax Indemnitee by reason of such payment to the
Facility Lessees (determined using the same assumptions as set forth in the
second sentence under the definition of After-Tax
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Basis); provided that (A) if at the time such payment is due to the Facility
Lessees a Significant Lease Default or Lease Event of Default shall have
occurred and be continuing, such amount shall not be payable until such
Significant Lease Default or Lease Event of Default has been cured, and (B) the
amount payable to the Facility Lessees pursuant to this sentence shall not
exceed the amount of the indemnity payment in respect of such refunded or
credited Taxes that was made by the Facility Lessees. Any excess of (x) and (y)
over (B) in this Section 9.2(f) shall be carried forward and reduce the Facility
Lessees' obligations to make subsequent payments to such Tax Indemnitee pursuant
to this Section 9.2. If it is subsequently determined that the Tax Indemnitee
was not entitled to such refund or credit, the portion of such refund or credit
that is required to be repaid or recaptured will be treated as Taxes for which
the Facility Lessees must indemnify the Tax Indemnitee pursuant to this Section
9.2 without regard to paragraph (b) hereof. If, in connection with a refund or
credit of all or part of any Taxes paid, reimbursed or advanced by the Facility
Lessees pursuant to this Section 9.2, a Tax Indemnitee receives an amount
representing interest on such refund or credit, the Tax Indemnitee promptly
shall pay to the Facility Lessees (1) the amount of such interest that shall be
fairly attributable to such Taxes paid, reimbursed or advanced by the Facility
Lessees prior to the receipt of such refund or credit (net of Taxes payable in
respect of the receipt or accrual of such interest) and (2) any Tax savings
resulting from payments made by the Tax Indemnitee under (1) and (2).
(g) Contest.
(i) Notice of Contest. If a written claim for payment is made by any
taxing authority against a Tax Indemnitee for any Taxes with respect to which
the Facility Lessees may be liable for indemnity hereunder (a "Tax Claim"), such
Tax Indemnitee shall give the Facility Lessees written notice of such Tax Claim
promptly after its receipt, and shall furnish the Facility Lessees with copies
of such Tax Claim and all other writings received from the taxing authority to
the extent relating to such claim; provided that failure to so notify the
Facility Lessees shall not relieve the Facility Lessees of any obligation to
indemnify the Tax Indemnitee hereunder except to the extent that such failure
effectively precludes the ability to conduct a contest hereunder (and without
limiting any damage claim or remedy the Facility Lessees may otherwise have for
such failure).
(ii) Control of Contest. Subject to subsection (g)(iii) below, the
Facility Lessee will be entitled to contest (acting through counsel selected by
the Facility Lessees and reasonably satisfactory to the Tax Indemnitee), and
control the contest of, any Tax Claim if (A) such Tax Claim may be pursued in
the name of the Facility Lessees and may be segregated procedurally from tax
claims for which the Facility Lessees are not obligated to indemnify the Tax
Indemnitee or (B) the Tax Indemnitee requests that the Facility Lessees control
such contest. In the case of all other Tax Claims, the Tax Indemnitee will
contest the Tax Claim if the Facility Lessees shall request that the Tax be
contested (subject to subsection (g)(iii) below), and the following rules shall
apply with respect to such contest:
(1) the Tax Indemnitee will control the contest of such Tax
Claim (acting through counsel selected by the Tax Indemnitee and reasonably
satisfactory to the Facility Lessees) at the Facility Lessees' expense,
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(2) the decisions regarding what actions to be taken shall be
made by the Tax Indemnitee in its sole judgment, and
(3) the Tax Indemnitee shall not otherwise settle, compromise
or abandon such contest without the Facility Lessees' prior written consent
except as provided in paragraph (g)(iv) below.
In either case, the party conducting such contest shall consult in good
faith with the other party and its designated counsel with respect to such Tax
Claim and shall provide the other party with copies of any reports or claims (or
extracts therefrom) issued by the relevant auditing agents or taxing authority
relating to such Tax Claim.
(iii) Conditions of Contest. Notwithstanding the foregoing, no
contest with respect to a Tax Claim will be required or permitted pursuant to
this Section 9.2, and the Facility Lessees shall be required to pay the
applicable Taxes without contest, unless:
(1) within 30 days after written notice by the Tax Indemnitee
to the Facility Lessees of such Tax Claim (or such shorter period, to be
specified by the Tax Indemnitee in such notice, as required for taking action
with respect to such Tax Claim), the Facility Lessees shall request in writing
to the Tax Indemnitee that such Tax Claim be contested,
(2) no Significant Lease Default or Lease Event of Default has
occurred and is continuing, unless the Facility Lessees have provided security
for the indemnity payment and the expenses of contest in a manner reasonably
acceptable to the Tax Indemnitee, both as to coverage and credit,
(3) there is no risk of sale, forfeiture or loss of, or the
creation of any Lien on any Facilities, the Facility Sites, or any portion or
Component thereof or any interest therein as a result of such Tax Claim;
provided that this clause (3) shall not apply if the Facility Lessees post
security satisfactory to the Tax Indemnitee, both as to coverage and credit, in
its sole discretion,
(4) there is no risk of imposition of any criminal penalties or
liabilities,
(5) if such contest involves payment of such Tax, the Facility
Lessees will advance such amount necessary to pay the Tax to the Tax Indemnitee
or its Affiliates on an interest-free basis and with no after-tax cost to such
Tax Indemnitee (a "Tax Advance"),
(6) The Facility Lessees agree to pay (and pays on demand) and
with no after-tax cost to such Tax Indemnitee or its Affiliates all reasonable
costs, losses and expenses incurred by the Tax Indemnitee in connection with the
contest of such claim (including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements and penalties, interest and
additions to tax),
(7) the Tax Indemnitee has been provided at the Facility
Lessees' sole expense with an opinion, reasonably acceptable to such Tax
Indemnitee, of independent tax counsel selected by the Tax Indemnitee and
reasonably acceptable to the Facility Lessees to the effect that there is a
Reasonable Basis for contesting such Tax Claim,
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(8) in the case of a judicial appeal, the appeal is not to the
U.S. Supreme Court,
(9) if such contest is controlled by the Facility Lessees,
prior to commencement of a judicial action with respect to the contest, the
Facility Lessees shall have admitted in writing its liability to pay an
indemnity pursuant to this Section 9.2 with respect to such Tax, which admission
shall be binding on the Facility Lessees unless and to the extent such contest
is determined in a manner that conclusively demonstrates that the Facility
Lessees are not so liable,
(10) if the amount of Taxes at issue is in excess of $20,000,
and
(11) if the subject matter of such claim shall be of a
continuing or recurring nature and shall have previously been decided pursuant
to this paragraph (g), there shall have been a change in law after such
previously decided claim and such Tax Indemnitee receives, at the Facility
Lessees' sole cost, an opinion of counsel selected by such Tax Indemnitee and
reasonably acceptable to the Facility Lessees to the effect that such change is
favorable to the position asserted in the previous contest.
(iv) Waiver of Indemnification. Notwithstanding anything to the
contrary contained in this Section 9.2, the Tax Indemnitee at any time may elect
to decline to take any action or any further action with respect to (and the
Facility Lessees shall not be permitted to contest) a Tax Claim and may in its
sole discretion settle or compromise any contest with respect to such Tax Claim
without the Facility Lessees' consent if the Tax Indemnitee:
(1) waives its right to any indemnity payment by the Facility
Lessees pursuant to this Section 9.2 in respect of such Tax Claim (and any other
claim for Taxes with respect to any other taxable year the contest of which is
effectively precluded by the Tax Indemnitee's declination to take action with
respect to the Tax Claim), and
(2) promptly repays to the Facility Lessees any Tax Advance and
any amount paid to such Tax Indemnitee under Section 9.2(a) above in respect of
such Taxes, but not any costs or expenses with respect to any such contest.
Except as provided in the preceding sentence, any such waiver shall be
without prejudice to the rights of the Tax Indemnitee with respect to any other
Tax Claim.
(h) Reports.
(i) If any report, statement or return is required to be filed by
a Tax Indemnitee with respect to any Tax that is subject to indemnification
under this Section 9.2, the Facility Lessees will (1) notify the Tax Indemnitee
in writing of such requirement not later than 30 days prior to the date such
report, statement or return is required to be filed (determined without regard
to extensions) and (2) either (y) unless directed by the Tax Indemnitee
otherwise, if permitted by applicable law, prepare such report, statement or
return for filing by the Facility Lessees in such manner as will show the
ownership of the Facilities by the Owner Lessor for United States federal, state
and local income tax purposes (if applicable), send a copy of such report,
statement or return to the Tax Indemnitee and timely file such report, statement
or return
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with the appropriate taxing authority, or (z) in all other cases, prepare and
furnish to such Tax Indemnitee not later than 30 days prior to the date such
report, statement or return is required to be filed (determined without regard
to extensions) a proposed form of such report, statement or return for filing by
the Tax Indemnitee; provided that the only consequence for failure to file after
compliance by the Facility Lessees with the requirements hereof shall be a loss
of indemnification from the Facility Lessees in respect of any Tax to the extent
resulting from such failure.
(ii) Each of the Tax Indemnitee and the Facility Lessees, as the
case may be, will timely provide the other, at the Facility Lessees' expense,
with all information in its possession that the other party may reasonably
require and request to satisfy its tax filing obligations.
(i) Non-Parties. If a Tax Indemnitee is not a party to this Agreement,
the Facility Lessees may require such Tax Indemnitee to agree in writing, in a
form reasonably acceptable to the Facility Lessees, to the terms of this Section
9.2 prior to making any payment to such Tax Indemnitee under this Section.
Subject to the preceding sentence, the Facility Lessees' obligations under this
Section 9.2 shall inure to the benefit of each and every Tax Indemnitee without
regard to whether such Tax Indemnitee is a party to this Agreement.
SECTION 10. FACILITY LESSEE'S RIGHT OF QUIET ENJOYMENT
Each party to this Agreement acknowledges notice of, and consents in all
respects to, the terms of the Facility Leases and the Facility Site Subleases
and expressly, severally and as to its own actions only, agrees that, so long as
no Lease Event of Default has occurred and is continuing, it shall not take or
cause to be taken any action or direct that any action be taken, which is
contrary to or inconsistent with any Facility Lessee's rights under its Facility
Lease and Facility Site Sublease, including the right to possession, use and
quiet enjoyment of such Facility, Easements and Facility Site.
SECTION 11. SUPPLEMENTAL FINANCING IMPROVEMENTS; OPTIONAL REFINANCINGS
Section 11.1. Financing Improvements. Upon the request of a Facility
Lessee delivered at least 90 days prior to financing a portion of the cost of
any Improvement, the Owner Lessor and the Indenture Trustee agree to cooperate
with such Facility Lessee to (a) issue Additional Lessor Notes under the
Collateral Trust Indenture to finance such Improvement which will rank pari
passu with the applicable Lessor Notes and/or any applicable Additional Lessor
Notes then outstanding; (b) execute and deliver one or more supplements to the
Collateral Trust Indenture for purpose of subjecting the Owner Lessor's interest
in any such Improvements to the Liens thereof, and (c) execute and deliver an
amendment to the applicable Facility Lease to reflect the adjustments required
by clause (iv) below; provided, however, that (x) the Owner Participant shall
have been given the opportunity, but shall have no obligation, to provide all or
part of the funds required to finance any such Improvement by making an
Additional Equity Investment in such amount, if any, as it may determine in its
sole and absolute discretion, but such Facility Lessee shall have no obligation
to accept such Additional Equity Investment; and (y) the
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conditions set forth below and in Section 2.12 of the Collateral Trust Indenture
shall have been satisfied. The obligation to finance such Improvements through
the issuance of Additional Lessor Notes under Section 2.12 of the Collateral
Trust Indenture (any financing of Improvements through the issuance of such
Additional Lessor Notes under the Collateral Trust Indenture being called a
"Supplemental Financing") is subject to the following additional conditions:
(i) there shall be no more than one such financing in any calendar
year;
(ii) the applicable Additional Lessor Notes (A) shall have a final
maturity no later than the final maturity of the Lessor Notes issued on the
Closing Date and (B) will be fully repaid out of additional Basic Rent, as
adjusted pursuant to the applicable Facility Lease, during the Facility Lease
Term;
(iii) the applicable Additional Lessor Notes shall have an average
life to maturity equal to the average life to maturity of the Lessor Notes
issued on the Closing Date;
(iv) appropriate adjustments to Basic Rent and Termination Value
(determined without regard to any tax benefits associated with such
Improvements, unless the Owner Participant is making an Additional Equity
Investment) shall be made to protect the Owner Participant's Net Economic
Return;
(v) the applicable Facility Lessee shall have paid, on an After-Tax
Basis, all reasonable costs and expenses of the Transaction Parties, including
the reasonable fees and expenses of counsel to the Owner Participant, the Owner
Lessor, the Indenture Trustee, the Lease Indenture Company, the Pass Through
Company and the Pass Through Trustee, in each case to the extent incurred in
connection with any financing or refinancing pursuant to this Section 11 whether
or not the financing is consummated;
(vi) no Significant Lease Default or Lease Event of Default shall
have occurred and be continuing unless the Improvements to be constructed with
the proceeds of the applicable Additional Lessor Notes shall cure such
Significant Lease Default or Lease Event of Default and such Improvements shall
be made in compliance with the Operative Documents;
(vii) such Additional Lessor Notes represent an aggregate amount not
less than $20 million, nor greater than 100% of the costs of the Improvements
being financed; provided that the aggregate balance of the Notes for such
Facility never exceeds 80% of the fair market value (which fair market value
shall be determined by an appraiser selected by the Facility Lessees and
reasonably acceptable to the Owner Participant) of such Facility taking into
account the fair market value of such Improvements;
(viii) the Owner Participant shall have received a favorable opinion
of its tax counsel satisfactory to such Owner Participant to the effect that
such financing creates no incremental tax risk not indemnified to the Owner
Participant's satisfaction (including additional indebtedness incurred to
finance the Improvements not constituting "qualified nonrecourse indebtedness"
within the meaning of Treasury Regulations Section 1-861-10T(b));
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(ix) the Owner Participant shall suffer no adverse accounting
effects under GAAP as a result of such financing;
(x) the Facility Lessees shall have made or delivered such
representations, warranties, covenants, opinions or certificates as the Owner
Participant, the Indenture Trustee may reasonably request;
(xi) the applicable Facility Lessee or the Guarantor shall have, at
such time, a credit rating of at least investment grade from S&P and Moody's;
(xii) the applicable Facility Lessee shall pay to (a) the Owner
Participant a fee of $100,000 and (b) the Pass Through Trustee for the benefit
of the Certificateholders, to be shared by such Certificateholders on a pro rata
basis, a fee of $100,000 for each such financing, in each case other than the
first financing; and
(xiii) Calpine shall have affirmed to the Transaction Parties that
the Calpine Guaranties cover the additional indebtedness contemplated by this
Section 11.1.
Notwithstanding the prior provision dealing with the financing of
Improvements through the Facility Leases, the Facility Lessees shall at all
times have the right to fund Improvements to the Facilities other than through
the Facility Leases; provided that Required Improvements and non-Severable
Improvements may only be financed other than through the Facility Leases on an
unsecured basis. Notwithstanding any of the foregoing of this Section 11.1,
except for Required Improvements and Improvements relating to pollution control,
no Improvement shall materially decrease the value, residual value, utility or
remaining useful life of such Facility immediately prior to such Improvement or
cause such Facility to become limited-use property.
Section 11.2. Optional Refinancing of Lease Debt. Each Facility Lessee
shall have the right, exercisable at any time on no more than three occasions,
to request the Owner Lessor (and the Owner Lessor shall reasonably consider and
not unreasonably withhold its consent), to refund or refinance the Lease Debt
(and all Certificates then outstanding), in whole but not in part, through the
issuance of Additional Lessor Notes; provided that all conditions to the
issuance of such Additional Lessor Notes contained in Section 2.12 of the
Collateral Trust Indenture shall have been satisfied and all applicable
Make-Whole Amounts shall have been paid. Any refinancing under this Section 11.2
shall also be subject to satisfaction of the following additional conditions:
(i) the Owner Lessor shall be able to issue and sell such debt in an
amount adequate to accomplish such refunding or refinancing;
(ii) such Additional Lessor Notes shall have a final maturity no
later than the final maturity date of the Lessor Notes issued on the Closing
Date and will be fully repaid out of Basic Rent during the Facility Lease Term;
(iii) appropriate adjustments to Basic Rent and Termination Value
shall be made to protect the Owner Participant's Net Economic Return; provided
that no adjustments shall be made to the amortization schedule;
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(iv) no Significant Lease Default or Lease Event of Default shall
have occurred and be continuing;
(v) the Owner Participant shall suffer no adverse accounting effects
under GAAP;
(vi) such Facility Lessee shall have made or delivered such
representations, warranties, covenants, opinions and certificates as the Owner
Participant may reasonably request, which representations, warranties, covenants
and agreements shall be of no greater scope than those provided by such Facility
Lessee under the Operative Documents to which it is a party (except to the
extent necessitated by differences between existing Operative Documents and the
terms and conditions of the proposed refinancing);
(vii) all documentation in connection with such refinancing shall be
reasonably satisfactory to the Owner Lessor and the Owner Participant;
(viii) the Owner Participant shall receive a consent fee of $100,000
in the aggregate for each refinancing after the first such refinancing;
(ix) the Lease Debt as financed constitutes qualified nonrecourse
indebtedness within the meaning of Treasury Regulations Section 1-861-10T(b) and
the Owner Participant shall have received an opinion satisfactory to it to such
effect; and
(x) the Owner Participant shall receive an opinion satisfactory to
it that the refinancing (as opposed to the right to request such refinancing)
shall not result in any incremental tax risk not indemnified to the Owner
Participant's satisfaction.
Calpine shall have affirmed in writing to the Transaction Parties that
the Calpine Guaranties cover the additional indebtedness contemplated by this
Section 11.1.
Section 11.3. Cooperation. The Owner Participant will cooperate with and
assist the Facility Lessees in connection with any refinancing and/or assumption
of the Lease Debt, so long as such refinancing and/or assumption of the Lease
Debt is in accordance with the terms of the Operative Documents. The Owner
Participant will execute such agreements and documents as may be necessary with
respect to any such refinancing and will instruct the Owner Lessor to act
accordingly.
SECTION 12. CERTAIN ADJUSTMENTS TO PERIODIC RENT AND TERMINATION VALUE
(a) Prior to or on the Closing Date, Periodic Rent and Termination Value
shall be adjusted, either upward or downward, in accordance with the Facility
Leases:
(i) at the request of a Facility Lessee, to re-optimize the Lease
Debt; provided such re-optimization shall not adversely affect the Owner Lessor
or the Owner Participant;
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(ii) at the request of a Facility Lessee or the Owner Participant,
to reflect any changes in the Pricing Assumptions, including, without
limitation, (x) the initial interest rate on any of the applicable Lessor Notes
which is different from the applicable interest rate set forth in the Pricing
Assumptions, (y) an increase in the Transaction Costs from the amount assumed in
the Pricing Assumptions, unless the Facility Lessees have elected to pay such
increase, and (z) a Closing Date other than the Scheduled Closing Date; and
(iii) at the request of a Facility Lessee or the Owner Participant
to reflect any enactment, promulgation, release or adoption of, amendment to or
change in the Code, Treasury Regulations, Revenue Rulings or Revenue Procedures
("Tax Law Change") enacted prior to the Closing;
provided that if any adjustment required by this paragraph (a) would result in
(i) a Facility Lease not qualifying as an operating lease for a Facility Lessee
under FASB 13 or FASB 98, or (ii) the aggregate of all rent adjustments made on
or before, or contemplated to be made on, the Closing Date (other than
adjustments to reflect a change in Transaction Costs or the actual interest rate
of the Certificates) shall cause either (x) the after-tax net present value of
Basic Rent discounted at 6% to increase by more than 100 basis points or (y) the
total Basic Rent to increase by more than 2%, then in either such case, the
Facility Lessees shall not be obligated to close the Overall Transaction.
(b) After the Closing Date, Periodic Rent and Termination Value, as well
as the coverage under the Qualifying Letter of Credit, shall be adjusted at the
request of a Facility Lessee or the Owner Participant in accordance with the
terms of the related Facility Lease to which it is a party.
(c) Any adjustment pursuant to this Section 12 shall be calculated (A)
to preserve the Owner Participant's Net Economic Return through the Basic Lease
Term and (B) to the extent consistent with (A) above, to maintain operating
lease treatment for each Facility Lessee; provided, however, that to the extent
consistent with preserving the Owner Participant's Net Economic Return, all
adjustments shall at the option of the Facility Lessees be calculated to (x)
minimize the average annual Periodic Rent over the Basic Lease Term for the
Facility Lessees' GAAP accounting purposes and/or (y) minimize the present value
to each Facility Lessee of Periodic Rent; and provided, further, that no such
adjustment shall require the Owner Participant to record a loss as of the date
such adjustment is made. Adjustments will be computed by the Owner Participant
based upon the Pricing Assumptions and the Tax Assumptions originally used to
calculate the Basic Rent and Termination Value. Adjustments made pursuant to
this Section 12 shall be subject to verification as provided in Section 3.4 of
each Facility Lease.
SECTION 13. TRANSFER OF THE FACILITY LESSEE OWNERSHIP
Section 13.1. Transfer of the Facility Lessee Ownership.
(a) Each Facility Lessee covenants and agrees that it shall not during
the Facility Lease Term assign any Facility Lease or any other Operative
Document, or any interest therein, without the prior written consent of the
Owner Lessor, the Owner Participant and, so long as the Lien of the Collateral
Trust Indenture has not been terminated or discharged, the Indenture
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Trustee and the Pass Through Trustee. Notwithstanding the foregoing, upon
satisfaction of the conditions in paragraph (b) below, either Facility Lessee
may assign its respective Facility Lease or any other Operative Document to
which it is a party, or any interest therein to any Person, without the consent
of the Owner Lessor, the Owner Participant, the Indenture Trustee or any other
Transaction Party.
(b) Assignment under Section 13(a) above by either Facility Lessee or by
both Facility Lessees shall be permitted if (A) after giving effect to such
assignment or assignments, either (x) Calpine owns, directly or indirectly, at
least a majority of the Ownership Interest of each assignee (as well as at least
a majority of the Ownership Interest of any non-assigning Facility Lessee), the
Calpine Guaranties remain in full force and effect (without a transferee of
Calpine's obligations thereunder having succeeded thereto in accordance with
Section 8.4(b) thereof), and Calpine shall have reaffirmed in writing its
obligations under the Calpine Guaranties or (y) Calpine's obligations under the
Calpine Guaranties have been succeeded to in accordance with Section 8.4(b)
thereof, the transferee of Calpine shall own, directly or indirectly, at least a
majority of the Ownership Interest of each assignee (as well as at least a
majority of the Ownership Interest of any non-assigning Facility Lessee) and the
Calpine Guaranties shall remain in full force and effect and (B) satisfaction of
the following conditions:
(i) the transferee shall assume all the obligations of the
applicable Facility Lessee under the Operative Documents pursuant to an
assignment and assumption agreement in form and substance satisfactory to the
Owner Participant;
(ii) the Owner Participant, the Owner Lessor and, so long as the
Lien of the Collateral Trust Indenture shall not have been terminated or
discharged, the Indenture Trustee and the Pass Through Trustee shall have
received an Opinion of Counsel as to such assignment and assumption agreement
and the satisfaction of the requirements and conditions set forth in this
Section 13.1(b) (except for clauses (iii) and (vi) hereof;
(iii) no Significant Lease Default or Lease Event of Default shall
have occurred and be continuing at the time of or immediately following such
transfer;
(iv) the transfer shall not subject either of the Facility Lessees,
the Owner Participant, the Owner Lessor, the Indenture Trustee, the Pass Through
Trustee or any Certificateholder to regulation under PUHCA or state laws and
regulations regarding the rate and financial or organizational regulation of
electric utilities in the affected party's reasonable opinion, nor result in a
Regulatory Event of Loss;
(v) the transferee shall be organized under the laws of the United
States, any state thereof or the District of Columbia; and
(vi) the applicable Facility Lessee shall have paid, at no after-tax
cost to such parties, all reasonable documented out-of-pocket expenses
(including reasonable attorneys' fees and expenses) of the Owner Lessor, the
Administrator, the Owner Participant, the Indenture Trustee, the Lease Indenture
Company and the Pass Through Trustee in connection with such assignment.
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SECTION 14. MISCELLANEOUS
Section 14.1. Consents; Cooperation. The Owner Participant covenants and
agrees that it shall not unreasonably withhold its consent to any consent
requested of the Owner Lessor under the terms of the Operative Documents that by
its terms is not to be unreasonably withheld by the Owner Lessor.
Section 14.2 Successor Owner Lessor. The parties hereto agree that the
transfer or assignment pursuant to the terms of the LLC Agreement by the Owner
Lessor to a successor Owner Lessor, will not violate the terms of any Operative
Document.
Section 14.3. Bankruptcy of Lessor Estate. If (i) all or any part of the
Lessor Estate becomes the property of a debtor subject to the reorganization
provisions of Title 11 of the United States Code, as amended from time to time,
(ii) pursuant to such reorganization provisions the Owner Participant is
required, by reason of the Owner Participant being held to have recourse
liability to the debtor or the trustee of the debtor directly or indirectly, to
make payment on account of any amount payable as principal or interest on the
Lessor Notes, and (iii) the Indenture Trustee actually receives any Excess
Amount, as defined below, which reflects any payment by the Owner Participant on
account of clause (ii) above, the Indenture Trustee upon written request of the
Owner Participant shall promptly refund to the Owner Participant such Excess
Amount (and, to the extent so refunded, such amount owing under the Lessor Notes
shall be reinstated). For purposes of this Section 14.3, "Excess Amount" means
the amount by which such payment exceeds the amount which would have been
received by the Indenture Trustee if the Owner Participant had not become
subject to the recourse liability referred to in clause (ii) above, as stated in
the Owner Participant's written request to the Indenture Trustee. Nothing
contained in this Section 14.3 shall prevent the Indenture Trustee from
enforcing any personal recourse obligations (and retaining the proceeds thereof)
of the Owner Participant as contemplated by this Participation Agreement (other
than referred to in clause (ii)).
Section 14.4. Waivers. No term, covenant, agreement or condition of this
Agreement may be terminated, amended or compliance therewith waived (either
generally or in a particular instance, retroactively or prospectively) except by
an instrument or instruments in writing executed by each party hereto.
Section 14.5. Notices. Unless otherwise expressly specified or permitted
by the terms hereof, all communications and notices provided for herein shall be
in writing or by a telecommunications device capable of creating a written
record, and any such notice shall become effective (a) upon personal delivery
thereof, including, without limitation, by overnight mail or courier service,
(b) in the case of notice by United States mail, certified or registered,
postage prepaid, return receipt requested, upon receipt thereof, or (c) in the
case of notice by such a telecommunications device, upon transmission thereof;
provided such transmission is promptly confirmed by either of the methods set
forth in clauses (a) or (b) above, in each case addressed to each party hereto
at its address set forth below or, in the case of any such party hereto, at such
other address as such party may from time to time designate by written notice to
the other parties hereto:
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If to the Tiverton Lessee:
Tiverton Power Associates Limited Partnership
The Pilot House, 2nd Floor
Lewis Wharf
Boston, MA 02110
Attention: Asset Manager
Telephone: (617) 723-7200
Facsimile: (617) 723-7635
with a copy to:
Calpine Corporation
50 West San Fernando Street, 5th Floor
San Jose, California 95113
Attention: Asset Manager and General Counsel,
Telephone: (408) 995-5115
Facsimile: (408) 995-0505
If to the Rumford Lessee:
Rumford Power Associates Limited Partnership
The Pilot House, 2nd Floor
Lewis Wharf
Boston, MA 02110
Attention: Asset Manager
Telephone: (617).723-7200
Facsimile: (617) 723-7635
with a copy to:
Calpine Corporation
50 West San Fernando Street, 5th Floor
San Jose, California 95113
Attention: Asset Manager and General Counsel,
Telephone: (408) 995-5115
Facsimile: (408) 995-0505
If to the Guarantor:
Calpine Corporation
50 West San Fernando Street, 5th Floor
San Jose, California 95113
Attention: Asset Manager and General Counsel,
Telephone: (408) 995-5115
Facsimile: (408) 995-0505
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If to the Owner Lessor:
PMCC Calpine New England Investment LLC
c/o Philip Morris Capital Corporation
225 High Ridge, Suite 300
Stamford, CT 06905
Telephone: (914) 335-8170
Facsimile: (914) 335-8287
Attention: Vice President - Leasing
with a copy to:
Philip Morris Capital Corporation
225 High Ridge, Suite 300
Stamford, CT 06905
Telephone: (914) 335-8347
Facsimile: (914) 335-8256
Attention: General Counsel
If to the Owner Participant:
PMCC Calpine NEIM LLC
c/o Philip Morris Capital Corporation
225 High Ridge, Suite 300
Stamford, CT 06905
Telephone: (914) 335-8170
Facsimile: (914) 335-8287
Attention: Vice President - Leasing
with a copy to:
Philip Morris Capital Corporation
225 High Ridge, Suite 300
Stamford, CT 06905
Telephone: (914) 335-8347
Facsimile: (914) 335-8256
Attention: General Counsel
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If to the Indenture Trustee:
State Street Bank and Trust Company of Connecticut, National
Association
225 Asylum Street, Goodwin Square
Hartford, CT 06103
Telephone No.: (860) 244-1822
Facsimile No.: (860) 244-1889
Attn: Corporate Trust Department
copy to:
State Street Bank and Trust Company of California, National
Association
633 West 5th Street, 12th floor
Los Angeles, California 90071
Telephone No.: (213) 362-7373
Facsimile No.: (213) 362-7357
Attention: Corporate Trust Department
If to the Pass Through Trustee:
State Street Bank and Trust Company of Connecticut, National
Association
225 Asylum Street, Goodwin Square
Hartford, CT 06103
Telephone No.: (860) 244-1822
Facsimile No.: (860) 244-1889
Attn: Corporate Trust Department
copy to:
State Street Bank and Trust Company of California, National
Association
633 West 5th Street, 12th floor
Los Angeles, California 90071
Telephone No.: (213) 362-7373
Facsimile No.: (213) 362-7357
Attention: Corporate Trust Department
A copy of all notices provided for herein shall be sent by the party giving such
notice to each of the other parties hereto. In addition, the Facility Lessees
shall (unless otherwise directed by the applicable Rating Agency) provide to
each Rating Agency a copy of any information, report or notice it gives to the
Indenture Trustee hereunder or any other Operative Documents.
Section 14.6. Survival. All warranties, representations, indemnities and
covenants made by any party hereto, herein or in any certificate or other
instrument delivered by any such party or on behalf of any such party under this
Agreement shall be considered to have been relied upon by each other party
hereto and shall survive the consummation of the transactions contemplated
hereby and in the other Operative Documents regardless of any investigation made
by any such party or on behalf of any such party. In addition, the
indemnifications by the Facility Lessees
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under Sections 9.1 and 9.2 of this Agreement, subject to Sections 9.1(b) and
9.2(b), respectively, the Facility Site Leases and the Calpine Guaranties, shall
expressly survive the expiration or early termination (in either case, for
whatever reason) of the Facility Lease or the transfer or other disposition of
the respective interests of the Owner Participant, the Owner Lessor, the
Administrator, the Lease Indenture Company, the Indenture Trustee, the Pass
Through Trustee and the Certificateholders in, to and under this Agreement, the
Bills of Sale and the other Operative Documents. Except as expressly provided
above or in Section 22.3 of the Facility Leases, the Tax Indemnity Agreement or
as otherwise expressly provided in the Operative Documents, the representations,
warranties, covenants and agreements of the Transaction Parties under the
Operative Documents shall terminate and be of no further force and effect
effective upon the expiration or earlier termination of the Facility Leases.
Section 14.7. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of, and shall be enforceable by, the parties
hereto and their respective successors and assigns as permitted by and in
accordance with the terms hereof, including each successive holder of the Member
Interest of the Owner Participant permitted under Section 7.1 and each
successive transferee or transferees of Lessor Notes permitted under Section 2.8
of the Collateral Trust Indenture. Except as expressly provided herein or in the
other Operative Documents, no party hereto may assign its interests herein
without the prior written consent of the other parties hereto.
Section 14.8. Business Day. Notwithstanding anything herein or in any
other Operative Document to the contrary, if the date on which any payment is to
be made pursuant to this Agreement or any other Operative Document is not a
Business Day, the payment otherwise payable on such date shall be payable on the
next succeeding Business Day with the same force and effect as if made on such
scheduled date and (provided such payment is made on such succeeding Business
Day) no interest shall accrue on the amount of such payment from and after such
scheduled date to the time of such payment on such next succeeding Business Day.
Section 14.9. Governing Law. This Agreement has been delivered in the
State of New York and shall be in all respects governed by and construed in
accordance with the laws of the State of New York including all matters of
construction, validity and performance without giving effect to the conflicts of
laws provisions thereof except New York General Obligations Law Section 5-1401.
Section 14.10. Severability. If any provision hereof shall be invalid,
illegal or unenforceable under Applicable Law, the validity, legality and
enforceability of the remaining provisions hereof shall not be affected or
impaired thereby.
Section 14.11. Counterparts This Agreement may be executed in any number
of counterparts, each executed counterpart constituting an original but all
together only one agreement.
Section 14.12. Headings and Table of Contents The headings of the
sections of this Agreement and the Table of Contents are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.
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Section 14.13. Limitation of Liability
(a) None of the Owner Participant, the Owner Lessor, the Indenture
Trustee, the Lease Indenture Company, the Pass Through Trustee, the Pass Through
Trustee Company or the Certificateholders shall have any obligation or duty to
the Facility Lessees or to others with respect to the transactions contemplated
hereby, except those obligations or duties expressly set forth in this Agreement
and the other Operative Documents to which such Person is a party, and none of
the Owner Participant, the Owner Lessor, the Indenture Trustee, the Lease
Indenture Company, the Pass Through Trustee, the Pass Through Company or the
Certificateholders shall be liable for performance by any other party hereto of
such other party's obligations or duties hereunder. Without limitation of the
generality of the foregoing, under no circumstances whatsoever shall the Owner
Participant be liable to the Facility Lessees for any action or inaction on the
part of the Owner Lessor in connection with the transactions contemplated
herein, whether or not such action or inaction is caused by willful misconduct
or gross negligence of the Owner Lessor, unless such action or inaction is at
the written direction of the Owner Participant.
(b) Neither Facility Lessee or any other Calpine Party shall have any
obligation or duty to the Owner Participant, the Owner Lessor, the Indenture
Trustee, the Lease Indenture Company, the Pass Through Trustee, the Pass Through
Company, the Certificateholders or to others with respect to the transactions
contemplated hereby, except those obligations or duties expressly set forth in
this Agreement and the other Operative Documents, and neither of the Facility
Lessee or any other Calpine Party (except Calpine to the extent set forth in the
Calpine Guaranties) shall be liable for performance by any other party hereto of
such other party's obligations or duties hereunder.
(c) The Lease Indenture Company and the Pass Through Company are
entering into the Operative Documents to which it is a party solely as trustees
under the Collateral Trust Indenture and the Pass Through Trust Agreement,
respectively, and not in their individual capacities, except as expressly
provided herein or therein, and in no case whatsoever shall the Lease Indenture
Company and the Pass Through Company be personally liable for, or for any loss
in respect of, any of the statements, representations, warranties, agreements or
obligations of the Owner Lessor hereunder or under any other Operative Document,
as to all of which the other parties hereto agree to look solely to the
Indenture Estate and the Lessor Estate, respectively; provided, however, that
the Lease Indenture Company and the Pass Through Trust Company shall be liable
hereunder for their own negligence or willful misconduct or for a breach of
their representations, warranties and covenants made in their individual
capacity under any Operative Document.
(d) The right of the Indenture Trustee or the Pass Through Trustee to
perform any discretionary act enumerated herein or in any other Operative
Document (including, without limitation, the right to consent to any action
which requires their consent and the right to waive any provision of, or consent
to any change or amendment to, any of the Operative Documents) shall not be
construed as a duty, and neither the Indenture Trustee nor the Pass Through
Trustee shall be liable or answerable for other than its negligence or willful
misconduct in the performance of such acts. In connection with any such
discretionary acts, the Indenture Trustee may in its sole discretion (but shall
not, except as otherwise provided herein or in the Collateral Trust Indenture or
as otherwise required by Applicable Law, have any obligation to) request the
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approval or instruction of the Pass Through Trustee as the holder of the Lessor
Notes, and the Pass Through Trustee may in its sole discretion (but shall not,
except as otherwise provided in the Operative Documents or as otherwise required
by Applicable Law, have any obligation to) request the approval of the
Certificateholders.
(e) The Owner Participant will give the Facility Lessees at least 15
days' prior notice of any proposed amendment or supplement to the LLC Agreement
(other than an amendment solely effecting a transfer of the Owner Participant's
interest in the Lessor Estate) and deliver true, complete and fully executed
copies to the Facility Lessees of any amendment or supplement to the LLC
Agreement. No amendment or supplement to the LLC Agreement that would reasonably
be expected to materially adversely affect the interests of the Facility Lessees
or the Indenture Trustee shall become effective without the written consent of
the Indenture Trustee and the Facility Lessees.
Section 14.14. Consent to Jurisdiction; Waiver of Trial by Jury; Process
Agent.
(a) Each of the parties hereto (i) hereby irrevocably submits to the
nonexclusive jurisdiction of the Supreme Court of the State of New York, New
York County (without prejudice to the right of any party to remove to the United
States District Court for the Southern District of New York) and to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York for the purposes of any suit, action or other proceeding
arising out of this Agreement, the other Operative Documents, or the subject
matter hereof or thereof or any of the transactions contemplated hereby or
thereby brought by any of the parties hereto or their successors or assigns;
(ii) hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York State court, or in such
federal court; and (iii) to the extent permitted by Applicable Law, hereby
irrevocably waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding any claim that it is not
personally subject to the jurisdiction of the above-named courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that this Agreement, the other
Operative Documents, or the subject matter hereof or thereof may not be enforced
in or by such court.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY, IN ANY
SUCH SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, THE OTHER
OPERATIVE DOCUMENTS, OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT BY ANY OF THE PARTIES HERETO
OR THEIR SUCCESSORS OR ASSIGNS.
(c) By the execution and delivery of this Agreement, the Facility
Lessees designate, appoint and empower National Registered Agents, Inc., 440
Ninth Avenue, 5th Floor, New York, New York 10001, and the Owner Lessor
designates, appoints and empowers CT Corporation System, with an office at 111
Eighth Avenue, New York, New York 10011, as its authorized agent to receive for
and on its behalf service of any summons, complaint or other legal process in
any such action, suit or proceeding in the State of New York for so long as any
obligation of the Facility Lessees or the Owner Lessor, as applicable, shall
remain outstanding
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hereunder or under any of the other Operative Documents. Each Facility Lessee
shall grant an irrevocable power of attorney to CT Corporation System, in
respect of such appointment and shall maintain such power of attorney in full
force and effect for so long as any obligation of such Facility Lessee shall
remain outstanding hereunder or under any of the Operative Documents.
Section 14.15. Further Assurances Each party hereto will promptly and
duly execute and deliver such further documents to make such further assurances
for and take such further action reasonably requested by any party to whom such
first party is obligated, all as may be reasonably necessary to carry out more
effectively the intent and purpose of this Participation Agreement and the other
Operative Documents.
Section 14.16. Effectiveness. The Participation Agreement has been dated
as of the date first above written for convenience only. This Participation
Agreement shall be effective on the date of execution and delivery by each of
the parties hereto.
Section 14.17. Measuring Life. If and to the extent that any of the
options, rights and privileges granted under this Agreement, would, in the
absence of the limitation imposed by this sentence, be invalid or unenforceable
as being in violation of the rule against perpetuities or any other rule or law
relating to the vesting of interests in property or the suspension of the power
of alienation of property, then it is agreed that notwithstanding any other
provision of this Agreement, such options, rights and privileges, subject to the
respective conditions hereof governing the exercise of such options, rights and
privileges, will be exercisable only during (a) the longer of (i) a period which
will end twenty-one (21) years after the death of the last survivor of the
descendants living on the date of the execution of this Agreement of the
following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush and
William J. Clinton or (ii) the period provided under the Uniform Statutory Rule
Against Perpetuities or (b) the specific applicable period of time expressed in
this Agreement, whichever of (a) and (b) is shorter.
Section 14.17. No Partnership, Etc. The parties hereto intend that
nothing contained in this Participation Agreement or any other Operative
Document shall be deemed or construed to create a partnership, joint venture or
other co-ownership arrangement by and among any of them.
Section 14.18. Entire Agreement. This Agreement, together with the other
applicable Operative Documents, constitutes the entire agreement of the parties
hereto and thereto with respect to the subject matter hereof and thereof and
supersedes all oral and all prior written agreements and understandings with
respect to such subject matter; provided that, notwithstanding the foregoing,
the obligations of Calpine with respect to fees, expenses and indemnifications
set forth in the letter agreement, dated October 16, 2000 between Calpine and
CSFB shall not be superceded hereby and shall remain in full force and effect.
Section 14.19. Public Utility Regulation The Facility Lessees, the Owner
Lessor and the Owner Participant agree to cooperate and to take reasonable
measures to alleviate the source or consequence of any regulation constituting a
Regulatory Event of Loss, at the cost and expense
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of the Facility Lessees, so long as there shall be no adverse consequences to
the Owner Lessor or the Owner Participant as the result of such cooperation or
taking of reasonable measures.
Section 14.21. Confidentiality of Information. Each of the parties
hereto agrees that any information (x) contained herein or in the other
Operative Documents (including any terms, conditions, agreements, financial
projections, and other financial and operating information contained herein or
therein, and the terms of any insurance policies required or otherwise
maintained pursuant hereto), (y) disclosed or to be disclosed by one such party
to another such party (for purposes of this Section 14.21, each of the parties
to this Agreement being referred to herein as a "Receiving Party") in connection
with this Agreement or any other Operative Document, or (z) otherwise received
in connection with this Agreement or any other Operative Document (or the
transactions contemplated thereby) and designated by the disclosing party in
writing as confidential, shall, in each case, be kept confidential by the
Receiving Party and shall not be used otherwise than in connection with the
business of the Parties contemplated hereunder except:
(a) to the extent such information is generally available to the public
prior to the Receiving Party's receipt thereof, or which becomes public after
such receipt, but through no violation by such Receiving Party of this Section
14.21;
(b) as may be required by Applicable Law or, upon prompt prior written
notice to the affected party, by judicial process;
(c) as may be independently developed by the Receiving Party other than
in connection with the transactions contemplated hereby with respect to the
Facilities or the Facility Sites;
(d) as may be disclosed to counsel, auditors or accountants to the
Receiving Party, or to the National Association of Insurance Commissioners;
(e) to the extent used in connection with any litigation to which the
Receiving Party is a party, provided that the other parties hereto shall have
been given prompt prior written notice (to the extent permitted by law) of such
proposed disclosure;
(f) as may be disclosed to any transferee or proposed transferee of the
Receiving Party; provided, however, that, prior to any such disclosure, any such
transferee or proposed transferee, as the case may be, shall have agreed in
writing to be bound by the terms of this Section 14.20; or
(g) as may be necessary or desirable in connection with the enforcement
of remedies by any party to any of the Operative Documents.
The foregoing obligation as to confidentiality and non-use shall survive
the termination of this Agreement for a period of five years.
Section 14.22. Reliance. Calpine and the Facility Lessees agree that the
Transaction Parties may rely on the Environmental Reports.
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Section 14.23. Intentionally Omitted
Section 14.24. Amendments, Etc. No Operative Document nor any of the
terms thereof (including the terms of this Section 14.24) may be terminated,
amended, supplemented, waived or modified, except by an instrument in writing
(a) signed in the case of a waiver, by the party against which enforcement of
such waiver is sought, and no such waiver shall become effective unless signed
copies thereof shall have been delivered to each such party or (b) in the case
of termination, amendments, supplements or modifications, consented to by all
parties hereto; provided, however, that the consent of the Facility Lessees is
not required in the case of amendments to any Operative Document to which the
Facility Lessees are not a party and which would not increase or accelerate the
Facility Lessees' or the Guarantor's obligations under any of the Operative
Documents nor impair the Facility Lessees' or the Guarantor's rights under any
of the Operative Documents; provided further, that the consent of the Facility
Lessees, the Indenture Trustee or the Pass Through Trustee shall not be required
(but the consent of the Guarantor shall be so required) for the amendment,
termination, replacement, supplement, waiver or modification of any Qualifying
Letter of Credit. Notwithstanding the foregoing, Section 5.6 of the Collateral
Trust Indenture shall not be amended without the Guarantor's consent.
Section 14.25. Credit for Certain Disbursements. Notwithstanding any
other provision of this Agreement or any provision of any other Operative
Document, any payment to the Owner Participant under a Qualified Letter of
Credit (exclusive of any deposit into the Equity Collateral Account) or from the
Equity Collateral Account shall reduce, dollar-for-dollar, the obligation of the
Guarantor under the Calpine Guaranty (Tiverton), on the one hand, and the
Guarantor under the Calpine Guaranty (Rumford), on the other hand, the aggregate
amount of such reductions to be allocated between the respective amounts of the
Equity Portion of Termination Value applicable, on the date of such reduction,
to the Calpine Guaranty (Tiverton) and to the Calpine Guaranty (Rumford),
respectively. Upon the reduction referred to in the prior sentence becoming
effective, comparable and parallel reductions will automatically be made in the
Termination Values specified in the Facility Leases.
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IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed and delivered by their respective officers thereunto
duly authorized.
TIVERTON POWER ASSOCIATES LIMITED PARTNERSHIP,
a Rhode Island limited partnership
By: Calpine Tiverton, Inc.,
a Delaware corporation
its general partner
By: /s/ ERIC PRYOR
--------------------------------
Name:
Title:
Date:
RUMFORD POWER ASSOCIATES LIMITED PARTNERSHIP,
a Maine limited partnership
By: Calpine Rumford, Inc.,
a Delaware corporation
its general partner
By: /s/ ERIC PRYOR
--------------------------------
Name:
Title:
Date:
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PMCC CALPINE NEW ENGLAND INVESTMENT LLC, a Delaware
limited liability company
By: PMCC Calpine NEIM LLC, a Delaware limited liability
company, its managing member
By: General Foods Credit Corporation, a Delaware
corporation, its managing member
Name:
Title:
Date:
By: /s/ ILLEGIBLE
---------------------------------
Name:
Title:
Date:
PMCC CALPINE NEIM LLC
By: General Foods Credit Corporation, its managing
member
By: /s/ ILLEGIBLE
---------------------------------
Name:
Title:
Date:
77
85
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
not in its individual capacity, except to
the extent expressly provided herein, but
solely as Indenture Trustee under the
Collateral Trust Indenture
By: /s/ MARK HENSON
---------------------------------
Name: Mark Henson
Title: Assistant Vice President
Date:
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
not in its individual capacity, except to
the extent expressly provided herein, but
solely as Pass Through Trustee under the
Pass Through Trust Agreement
By: /s/ MARK HENSON
---------------------------------
Name: Mark Henson
Title: Assistant Vice President
Date:
78
86
CALPINE CORPORATION
By: /s/ ERIC PRYOR
----------------------------
Name:
Title:
Date:
79