Exhibit 99.2
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
In re: :
: Chapter 11 Case
:
MIRANT CORPORATION, et al., : Case No. 03-46590 (DML)
-- ---
: Jointly Administered
Debtors. :
: HEARING DATE AND TIME:
: December 1, 2005 at 9:00 a.m. (CST)
NOTICE REGARDING TREATMENT OF MIRMA LEASES
IN CONNECTION WITH SECOND AMENDED JOINT
CHAPTER 11 PLAN OF REORGANIZATION
NOTICE IS HEREBY GIVEN THAT THE DEBTORS HAVE PROPOSED ALTERNATE CONSENSUAL
TREATMENT FOR THE MIRMA LEASES THAT THE DEBTORS BELIEVE IS MORE FAVORABLE TO THE
OWNER LESSORS AND THE PASS THROUGH CERTIFICATE HOLDERS THAN THE PROPOSED
CONSENSUAL TREATMENT CONTAINED SECTION 14.6(e) OF THE SECOND AMENDED JOINT
CHAPTER 11 PLAN OF REORGANIZATION FOR MIRANT CORPORATION AND ITS AFFILIATED
DEBTORS (THE "PLAN"). AT THE HEARING REGARDING CONFIRMATION OF THE PLAN, WHICH
WILL BE COMMENCED AT 9:00 A.M. CENTRAL STANDARD TIME ON DECEMBER 1, 2005, THE
BANKRUPTCY COURT, AS CONTEMPLATED BY SECTION 14.6 OF THE PLAN AND PAGES 193-196
OF THE RELATED DISCLOSURE STATEMENT, WILL CONSIDER APPROVING THE TERMS AND
CONDITIONS REGARDING THE ASSUMPTION OF THE MIRMA LEASES SET FORTH ON THE TERM
SHEET ATTACHED AS EXHIBIT "A" HERETO AND INCORPORATED HEREIN BY REFERENCE,
SUBJECT TO THE SATISFACTION OF
CERTAIN TERMS AND CONDITIONS SET FORTH IN THE TERM SHEET, INCLUDING, AMONG OTHER
THINGS, THAT THE MIRMA/OWNER LESSORS CONSENT TO SUCH TREATMENT AND THAT THE
LEASE INDENTURE TRUSTEE AND PASS THROUGH TRUSTEE NOT OBJECT TO SUCH TREATMENT.
THE BANKRUPTCY COURT WILL ENTERTAIN AN OBJECTION TO APPROVAL OF THE
PROVISIONS OF THIS TERM SHEET FROM A PASS THROUGH CERTIFICATE HOLDER IF SUCH
OBJECTION IS FILED BY 4:00 P.M. CENTRAL STANDARD TIME ON NOVEMBER 30, 2005.
THE BANKRUPTCY COURT WILL ALSO ENTERTAIN AN OBJECTION TO APPROVAL OF THE
PROVISIONS OF THIS TERM SHEET FROM A PASS THROUGH CERTIFICATE HOLDER IF SUCH
OBJECTION IS FILED AFTER NOVEMBER 30, 2005, BUT BEFORE 4:00 P.M. CENTRAL
STANDARD TIME ON DECEMBER 6, 2005, BUT ONLY IF THE DEBTORS FAIL TO ESTABLISH
THAT SUFFICIENT NOTICE OF THE CONSIDERATION OF THIS TERM SHEET AT THE
CONFIRMATION HEARING ON DECEMBER 1, 2005 HAD BEEN GIVEN TO SUCH PASS THROUGH
CERTIFICATE HOLDER.
THE PROPOSED TREATMENT OF THE MIRMA LEASES MAY BE REVISED AT ANY TIME PRIOR
TO THE ENTRY OF AN ORDER APPROVING SUCH TREATMENT WITHOUT FURTHER NOTICE.
IN THE EVENT THE MIRMA/OWNER LESSORS, THE LEASE INDENTURE TRUSTEE OR THE
PASS THROUGH TRUSTEE OBJECT TO THE PROVISIONS OF THE TERM SHEET, THE PROVISIONS
OF THE TERM SHEET SHALL BE OF NO EFFECT AND SHALL NOT BE BINDING ON THE DEBTORS
IN ANY MANNER. IN SUCH CASE,
THE DEBTORS INTEND TO SEEK ASSUMPTION OF THE MIRMA LEASES ON THE TERMS AND
CONDITIONS SET FORTH SET FORTH IN SECTIONS 14.6(a) THROUGH (d) OF THE PLAN AND
DESCRIBED IN THE DISCLOSURE STATEMENT RELATED TO THE PLAN, WHICH TREATMENT THE
DEBTORS BELIEVE IS MATERIALLY LESS FAVORABLE TO THE MIRMA/OWNER LESSORS AND PASS
THROUGH CERTIFICATE HOLDERS THAN THOSE CONTAINED IN THE TERM SHEET.
DATED THIS 23RD DAY OF NOVEMBER, 2005.
HAYNES AND BOONE, LLP
901 Main Street, Suite 3100
Dallas, Texas 75202-3789
(214) 651-5000
By: /s/ Robin E. Phelan
-------------------------------
Robin E. Phelan
State Bar No. 15903000
Judith Elkin
State Bar No. 6522200
Ian Peck
State Bar No. 24013306
-and-
Thomas E Lauria
State Bar No. 11998025
Gerard Uzzi
WHITE & CASE LLP
Wachovia Financial Center
200 South Biscayne Boulevard
Miami, Florida 33131
(305) 371-2700
ATTORNEYS FOR THE DEBTORS
AND DEBTORS-IN-POSSESSION
CERTIFICATE OF SERVICE
The foregoing was electronically filed and served on those parties entitled
to receive electronic service on the 23rd day of November 2005. The undersigned
hereby certifies that he provided true and correct copies of the foregoing to
Bankruptcy Services, LLC and directed them to effect service upon the parties
listed below, all known Pass Through Certificate Holders and upon all persons on
the Limited Service List via e-mail, facsimile, overnight courier or other
appropriate means on the 25th day of November 2005:
Howard A. Borg
Assistant United States Attorney
State Bar No. 02667600
Burnett Plaza, Suite 1700
801 Cherry Street, Unit 4
Fort Worth, Texas 76102-6882
Telephone: 817-252-5200
Fax: 817-978-6351
/s/ Robin E. Phelan
------------------------------------------
EXHIBIT A
TERM SHEET FOR POTENTIAL MIRMA LEASE PLAN TREATMENT
DATED NOVEMBER 23, 2005
On September 30, 2005, after notice and hearing, the United States Bankruptcy
Court for the Northern District of Texas, Fort Worth Division, issued an order
pursuant to section 1125 of the Bankruptcy Code approving the Second Amended
Disclosure Statement (the "Disclosure Statement") relating to the Second Amended
Joint Chapter 11 Plan of Reorganization (the "Plan") of Mirant Corporation
("Mirant") and its affiliated debtors and debtors-in-possession (together with
Mirant, the "Debtors"). Capitalized terms used but not defined herein shall have
the meanings provided for in the Plan.
As a result of negotiations among the Debtors, the MIRMA Owner/Lessors and the
MIRMA Indenture Trustee, the Debtors have proposed an alternate treatment
("Proposed Treatment") for the MIRMA Leases that the Debtors believe is more
favorable to the MIRMA Owner/Lessors and the holders of the Pass-Through
Certificates (as defined in the Disclosure Statement) than the treatment
contained in Section 14.6 of the Plan.
INTERPRETATIONS;
ACKNOWLEDGEMENTS: The Debtors contend that certain contractual provisions
contained in the Operative Documents (as defined in the
MIRMA Leases) are subject to uncertain meaning or are
otherwise in dispute. To avoid the costs and uncertainty of
continued perpetuation of such situation, including in
regards to potential litigation regarding the appropriate
interpretation of such contractual provisions, it is
intended that the Bankruptcy Court will confirm, in
connection with the assumption of the MIRMA Leases, that the
interpretation and meaning of such provisions are as set
forth below.
Exhibit One sets forth the interpretations to specified
provisions of the Operative Documents. Exhibit Two (which
will be submitted to the Bankruptcy Court in connection with
approval of the terms hereof) sets forth the Fixed Charge
Coverage Ratio calculations as of June 30, 2005,
incorporating the interpretations set forth in Exhibit One.
Conforming clarification to Exhibit GG to the Participation
Agreement (and elsewhere as appropriate) will be ordered to
be made to the extent appropriate to give effect to Exhibit
One and the other terms of this Agreement.
CONSENT
DECREE: The Owner Lessors shall not oppose a Consent Decree that is
consistent with the definition thereof set forth below:
For purposes hereof, the "Consent Decree" shall mean an
agreement or settlement with the DOJ, the EPA, and the
environmental agencies of the respective states of Virginia
and Maryland with respect to NOx emissions, either in the
form of a consent decree or otherwise, the terms of which
shall include (i) representations that MIRMA wholly owns
Mirant Chalk Point LLC, and the real estate on which the
Morgantown and Dickerson facilities are located, and
occupies and operates the Morgantown and Dickerson
facilities pursuant to facility lease agreements, dated
December 19, 2000, with a consortium of owner/lessors; (ii)
with respect to the Morgantown and Dickerson leased
facilities, NOx emissions rate and NOx tonnage limits and
other terms and conditions that affect the operation or
ownership of the leased facilities that are no more
restrictive than those contained in the Consent Decree dated
September 24, 2004; (iii) combined NOx emissions limitations
for the MIRMA facilities permitting the operation of such
facilities consistent with the historical operations after
taking into account planned and other commercially
reasonable capital expenditures and the installation of two
SCRs at Morgantown on or before May 1, 2007 and May 1, 2008,
respectively, with equipment specifications and warranties
as previously disclosed to the Owner Lessors; (iv) that, in
the event of a separation from the other MIRMA facilities,
the Morgantown and Dickerson leased facilities together or
individually shall have NOx emissions limitations permitting
the operation of such facilities at commercially desirable
outputs after taking into account market conditions, planned
and other commercially reasonable capital expenditures and,
in the event of an individual separation, Morgantown, for
the period covered by the current NOx emissions allocations,
would not be required to purchase NOx emissions credits in
excess of the NOx emissions allocations for such facility
existing on the date hereof, and (v) in the event of a
separation from the other MIRMA facilities, the loss of the
ability of the operator of the Morgantown and/or Dickerson
facilities to claim emissions credits shall only apply to
NOx.
RESTRICTION
ON ADDITIONAL
LESSOR NOTES: Section 12.1(a)(viii) of the Participation Agreement(s)
shall be amended to add a requirement for any Supplemental
Financing (as defined in the Participation Agreement) that,
in addition to the other requirements of Section 12.1, such
will be permitted only if, (i) after giving effect to such
Supplemental Financing, either (x) the Facility Lessee (as
defined in the Participation Agreements) shall have, at such
time, a credit rating of at least BBB- from S&P and Baa3
from Moody's or (y) the Fixed Charge Coverage Ratio (as
defined in the Participation Agreements) shall be at least
2.5 to 1 historically (4 quarters) and prospectively (two
four quarter
2
periods) and (ii) the MIRMA/Owner Lessors consent (in their
sole and absolute discretion) to any Supplemental Financing.
SHARED FACILITIES
AGREEMENTS: Obligations under the Shared Facilities Agreement (as
defined in the Participation Agreements) shall be (in
addition to existing rights) secured by a lien and easement
on the assets subject to the Shared Facilities Agreement.
Such lien and easement shall be subject in all respects to
an easement, reciprocal shared facilities agreement and
springing lien each granted in favor of MIRMA providing
MIRMA with all use, rights and benefits of the subject
assets that exist on the date hereof in the event remedies
are exercised with respect to such newly created lien. The
liens and easement granted pursuant to this provision shall
be at no cost to MIRMA; provided that MIRMA shall seek a
waiver of any and all recording and similar taxes pursuant
to section 1146(c) of the Bankruptcy Code.
CONTRIBUTION OF
MIRANT POTOMAC
RIVER AND MIRANT
PEAKER: Mirant Corporation shall cause Mirant Peaker and Mirant
Potomac River to become wholly owned subsidiaries of Mirant
Chalk Point instead of MIRMA as part of the Plan. It is
expected that Mirant Peaker will merge into Mirant Chalk
Point. Without limiting MIRMA's rights under the Operative
Documents, MIRMA agrees to continue to observe all corporate
formalities and take other appropriate action(s) to preserve
the separate legal identities of it and its subsidiaries,
including Mirant Potomac River.
CONTRIBUTION OF
MAI SERIES A
PREFERRED SHARES: The MAI Series A Preferred Shares to be issued by MAI -- to
provide credit support for the installation of control
technology relating to SO2 emissions -- and related put
rights will be issued to MIRMA directly in connection with
the consummation of the Plan. The terms of the MAI Series A
Preferred Shares shall be consistent with the description
thereof included in the Disclosure Statement.
GENERAL
AND TAX
INDEMNITIES: The respective general and tax indemnities provided to the
MIRMA/Owner Lessors and their affiliates shall be amended
(to the extent necessary) to indemnify them in connection
with any of the interpretations to the lease documentation
contemplated hereby other than for those claims relating to
the allocation of rent or the
3
treatment of or the application of rent payments to the
Lessor Notes (as defined in the Participation Agreements).
Without limiting the foregoing, such amendment would not
expand or reduce the scope of the existing indemnities;
provided, however, that the indemnities solely as relate to
the interpretations to the MIRMA Leases documentation
contemplated hereby shall be based upon the law existing as
at the date hereof.
SETTLEMENT FEE: MIRMA agrees, subject to Bankruptcy Court approval as being
reasonable and appropriate, to pay directly, to each of (i)
the Lease Indenture Trustee for the collective benefit of
the Pass Through Trust Certificate Holders provided that the
Lease Indenture Trustee or the Pass Through Trustee do not
oppose implementation of the treatment of the MIRMA
transaction as set forth herein or confirmation of the Plan
as modified hereby, and (ii) collectively the MIRMA/Owner
Lessors an amount equal to up to $6.5 million for the
MIRMA/Owner Lessors and up to $6.5 million to the Lease
Indenture Trustee.
RESTORATION
PAYMENTS: The MIRMA/Owner Lessors contend that the post-petition
application of payment to the Lessor Notes of rent payments
made by MIRMA under the MIRMA Leases has resulted in damages
to them, including but not limited to, delays in receiving
scheduled equity payments and/or the loss of other
consideration due pursuant to the terms of the MIRMA Leases.
To remedy this situation, MIRMA agrees, as part of the cure
provided for the assumption of the MIRMA Leases and subject
to Bankruptcy Court approval as being reasonable and
appropriate, to pay to the MIRMA/Owner Lessors an amount not
to exceed (provided that the MIRMA Leases are assumed on or
before December 30, 2005) $4.9 million (the "Restoration
Payment"), subject to the MIRMA/Owner Lessors providing
adequate support. To the extent that the Leases are not
assumed on or before December 30, 2005, the Restoration
Payment may require adjustment.
REIMBURSEMENT OF
FEES AND
EXPENSES: MIRMA agrees, as part of its cure obligations in connection
with the assumption of the MIRMA Leases and subject to
Bankruptcy Court approval as being reasonable and
appropriate, to pay, as Supplemental Lease Rent (as defined
in the Participation Agreement), all reasonable and
documented legal and consulting fees and related expenses
incurred by the MIRMA/Owner Lessors and, provided that the
Lease Indenture Trustee and the Pass Through Trustee do not
oppose implementation of the treatment of the MIRMA
transaction as set forth herein or confirmation of the
4
Plan as modified hereby, the Lease Indenture Trustee and the
Pass Through Trustee, in connection with the bankruptcy
cases. As of October 31, 2005, such amounts for the
MIRMA/Owner Lessors and the Pass Through Trust Certificate
Holders are estimated to be approximately $10 million and
$11 million, respectively.
TREATMENT OF
PAYMENTS: All amounts paid by MIRMA with respect to Settlement Fees,
Reimbursement of Fees or the Restoration Payment shall not
be construed as Fixed Charges (as defined in the
Participation Agreements) and shall not be considered as
part of the definition of the Fixed Charge Coverage Ratio.
ADDITIONAL
INFORMATION
& REPORTING
REQUIREMENTS: In addition to the financial information required to be
delivered by MIRMA under the terms of Section 5.1 of the
Participation Agreements, on a quarterly basis MIRMA shall
provide the MIRMA/Owner Lessors with operating information
specified in Exhibit Three. During the continuance of a
Lease Indenture Event of Default (as defined in the
Participation Agreements), MIRMA shall provide such
operating information to the Lease Indenture Trustee
concurrently with delivery to the MIRMA/Owner Lessors
(subject to appropriate confidentiality).
EXISTING TERMS
REMAIN
UNCHANGED: Except as otherwise set forth herein and as described in
Exhibit One attached hereto, upon assumption of the MIRMA
Leases, all existing terms and conditions of the Operative
Documents shall remain unchanged and enforceable and the
existing provisions of Section 14.6 of the Plan shall be
null and void.
CURES: Subject to satisfaction of the conditions set forth in this
Agreement and as otherwise set forth on a Cure Exhibit (to
which MIRMA reserves all rights), which must be provided by
the Owner Lessors, the Pass Through Trustee or Lease
Indenture Trustee no later than November 29, 2005, no other
breach or default requiring cure or any other condition
exists to the assumption of any of the Leases pursuant to
section 365 of the Bankruptcy Code under any of the
Operative Documents.
PTC RATING: MIRMA will use commercially reasonable efforts to seek to
have the Certificates rated by S&P and Moody's and shall
thereafter use commercially reasonable efforts to seek to
maintain such rating by
5
S&P and Moody's at all times by taking appropriate measures,
including paying the annual fees owed to such rating
agencies.
ADDITIONAL CREDIT
SUPPORT: Standby Letters of Credit pursuant to Section 5.13 of the
Participation Agreements shall be maintained pursuant to
such Section 5.13, and at any time the Certificates are
rated below investment grade by either S&P or Moody's, such
Standby Letters of Credit shall be increased to an amount of
at least $75 million and shall be maintained at least at
that level.
IMPLEMENTATION: Implementation of the terms hereof (together with cure of
defaults as set forth herein) shall constitute a settlement
of all disputes between MIRMA and each of the MIRMA/Owner
Lessors, the Pass Through Trustee and the Lease Indenture
Trustee to the extent that each does not object to such
implementation.
Implementation of the terms hereof is subject to (i) the
consent of the Owner Lessors, and (ii) an order of the
Bankruptcy Court ordering and approving the terms hereof and
the substantial consummation of a plan of reorganization for
MIRMA that is materially consistent with the Plan as
modified hereby. In the event that Bankruptcy Court approval
is not obtained and the Plan is not substantially
consummated, the provisions hereof shall be null and void
and the parties shall be returned to their prior positions.
In the event that the Lease Indenture Trustee or Pass
Through Trustee objects to any provision hereof, MIRMA
reserves the right to seek to implement the terms hereof
pursuant to MIRMA's plan of reorganization as set forth in
the Plan and Disclosure Statement.
The Bankruptcy Court will hear the matters contained in this
term sheet in connection with the assumption of the MIRMA
Leases as contemplated by the Plan at the confirmation
hearing on December 1, 2005. It is anticipated that the
Bankruptcy Court will enter the confirmation order on
December 7, 2005 and will order that the 10 day stay of the
confirmation order provided by Rule 3020(e) of the
Bankruptcy Rules will expire at 4:00 p.m. Central Standard
Time on December 8, 2005. The Bankruptcy Court will
entertain an objection to approval of the provisions of this
term sheet from a Pass Through Certificate Holder if such
objection is filed by 4:00 p.m. Central Standard Time on
November 30, 2005. The Bankruptcy Court will also entertain
an objection to approval of the provisions of this term
sheet from a Pass Through Certificate Holder if such
objection is filed after November 30, 2005, but
6
before 4:00 p.m. Central Standard Time on December 6, 2005,
if the Debtors fail to establish that sufficient notice of
the consideration of this term sheet at the confirmation
hearing on December 1, 2005 had been given to such Pass
Through Certificate Holder.
The Confirmation Order as it relates to the MIRMA Leases and
order approving the terms hereof shall be mutually agreeable
to the parties consenting to the terms hereof and shall
contain such findings of fact and conclusions of law as may
be reasonably necessary to implement the terms hereof,
including an order finding that (i) notice was sufficient,
(ii) that existing section 365(b)(2)(A) ipso facto defaults
are unenforceable, (iii) all other defaults have been cured,
and (iv) that the interpretations set forth on Exhibit One
are correct constructions of the Operative Documents.
MISCELLANEOUS: Subject to the implementation of this Agreement, the
MIRMA/Owner Lessors, Owner Participants, the Lease Indenture
Trustee and the Pass Through Trustee, to the extent each
does not object to the implementation of the terms hereof,
shall be added to the parties receiving exculpation under
Section 17.4 of the Plan.
7
EXHIBIT ONE
A. INTERPRETATIONS TO SPECIFIED PROVISIONS OF THE PARTICIPATION AGREEMENTS
Notwithstanding anything in the Operative Documents to the contrary, the
following interpretations shall govern:
(i) As used in clause (ii) of the definition of "Cash Flow Available for
Fixed Charges" in Appendix A to each of the Participation Agreements,
"Capital Expenditures financed with ... Restricted Payments" means any
and all Capital Expenditures made or projected to be made, as the case
may be, if at the time of such Capital Expenditures or projected
Capital Expenditures, as the case may be, MIRMA is permitted to make
Restricted Payments pursuant to Section 6.8 of each Participation
Agreement, after giving effect hereto. MIRMA agrees to limit the
financings of Capital Expenditures with Restricted Payments to Capital
Expenditures made with respect to any Facility set forth in any
Participation Agreement and then only with respect to the
determination of the Fixed Charge Coverage Ratio for the purposes of
applying Section 6.8 of the Participation Agreements.
(ii) For the avoidance of doubt, Capital Expenditures made or projected to
be made, as the case may be, with capital contributions funded
pursuant to the MAI Series A Preferred Shares, or any similar
mechanisms, where the capital contribution obligation is fixed,
payable in cash, irrevocable and owed by a party that is reasonably
and in good faith projected to have funds available to repay such
obligations shall be considered "Capital Expenditures financed with...
contributions to the equity of the Facility Lessee or its
Subsidiaries," as used in clause (ii) of the definition of "Cash Flow
Available for Fixed Charges" in Appendix A to each Participation
Agreement. Mirant and its affiliates, as applicable, shall covenant
not to amend or take any action to intentionally avoid making any
payment required to be made in respect of the MAI Series A Preferred
Shares or related put right (or any similar mechanism).
(iii) For the purposes of determining "Cash Flow Available for Fixed
Charges", Consolidated EBITDA, generated and retained at MIRMA in cash
during the pendency of the chapter 11 case and used to pay Capital
Expenditures, may be treated by MIRMA as specifically reserved in cash
during the period such Consolidated EBITDA was generated, and such
Capital Expenditures may be treated as being made during such period.
MIRMA agrees to limit this interpretation solely for the purposes of
applying Section 6.8 of the Participation Agreements. For the purposes
of calculating "Cash Flow Available for Fixed Charges", the amount of
Consolidated EBITDA retained by MIRMA and reserved to pay Capital
Expenditures is set forth in Exhibit Two.
(iv) As used in the definition of "Consolidated EBITDA" in Appendix A to
each of the Participation Agreements, "depreciation and amortization
and similar non-
8
cash charges" in clause (ii) thereof means all adjustments to
reconcile net income to net cash provided by (used in) operating
activities as disclosed on MIRMA's cash flow statement or projected,
as the case may be, excluding changes in operating assets and
liabilities. Exhibit Two sets forth the determination of Consolidated
EBITDA as of June 30, 2005.
(v) As used in the definition of "Qualifying Credit Support" in Appendix A
to each of the Participation Agreements, "uncollateralized" in the
second line thereof means not secured by a lien on the assets of
MIRMA, any Designated Subsidiary or any subsidiary of the foregoing.
(vi) As used in subsection (B) of Section 6.8 of each of the Participation
Agreements, the clause "the most recently ended four full Fiscal
Quarters" in the lead in language shall be qualified by the clause
"for which internal financial statements are available" at the end of
that subsection. In addition, as used in the first sentence of
subsection (D) of Section 6.8 of each Participation Agreement, "the
Fiscal Quarter immediately preceding payment of the Restricted
Payment" shall be such Fiscal Quarter for which internal financial
statements are available. MIRMA will prepare such internal financial
statements pertaining to a Fiscal Quarter as soon as is reasonably
practicable following the end of such Fiscal Quarter.
B. INTERPRETATION OF INDENTURE PROVISIONS GOVERNING APPLICATION OF RENTS AND
TREATMENT OF LESSOR NOTES
MIRMA has been informed that:
a) as a result of the bankruptcy filing by the Debtors, the Lease Indenture
Trustee, applied rent paid by MIRMA to the Lessor Notes in accordance
with Section 3.3 of the Indenture;
b) as a result of the application of Section 3.3 of the Indenture by the
Lease Indenture Trustee, some Lessor Notes were paid down in advance
of their originally scheduled amortization, and other Lessor Notes
received less than originally scheduled amortization;
c) the Lease Indentures contemplate that the parties thereto be restored to
their former positions and rights upon the emergence of MIRMA from
bankruptcy and the assumption by MIRMA of its obligations under the
Operative Documents, but the Indentures do not describe precisely how
such restoration is to occur with respect to Lessor Notes.
Accordingly, the Owner Lessors, the Pass Through Trustee, the Lease Indenture
Trustee and MIRMA will agree on a methodology for the restoration of the payment
schedule of the Lessor Notes pursuant to which as of June 30, 2006, the
originally anticipated principal balances of each Owner Lessor will be restored.
The methodology will be consistent with the Operative Documents, the most
reasonable interpretation of the Lease Indentures with respect to the
aforementioned issues and fair to each direct and indirect
9
holder of Lessor Notes, provided that MIRMA is not required to incur any
additional obligations other than as otherwise expressly as set forth herein
The parties will seek the Bankruptcy Court's approval of such methodology as
being consistent with the Operative Documents, the most reasonable
interpretation of the Indentures with respect to the aforementioned issues, and
fair to each direct and indirect holder of Lessor Notes.
10
EXHIBIT TWO
[TO BE FILED WITH THE BANKRUPTCY COURT]
EXHIBIT THREE
I. INFORMATION TO BE PROVIDED QUARTERLY:
1) Balance sheet, income statement and cash flow statement for MIRMA
(unconsolidated), Chalk Point, and Potomac River prepared in
accordance with U.S. GAAP. Statements are to reflect both quarterly
and cumulative year-to-date amounts.
2) A summary of capital expenditures broken down into categories
(e.g.: environmental, maintenance, construction, other) for the MIRMA
power plants as well as on the Facilities (i.e., the Dickerson and
Morgantown leased assets).
3) Operating statistics for each Facility by unit (eg, availability,
capacity, power production {MW-hr}, heat rate, average prices per
MW-hr).
4) Balance sheet and Income statement for MIRMA consolidated.
The information to be provided quarterly as described above shall be provided
within 45 days after the close of the preceding quarter.
II. INFORMATION TO BE PROVIDED ANNUALLY:
1) Projected 3-year income statement, balance sheet and cash flow
statement for MIRMA, Chalk Point, and Potomac River.
The projections are to summarize capital expenditures into categories
(e.g.: environmental, maintenance, construction, other) for the MIRMA
power plants as well as on the Facilities (ie, the Dickerson and
Morgantown leased assets).
The projections are to summarize the projected energy prices,
operating statistics (eg, capacity, availability, power production)
assumptions.
The projections are to describe projected information on a month by
month basis for at least the first calendar year of the three-year
plan.
The projection information is for supplemental purposes only and is
not being provided as part of or in connection with the FCCR
calculations.
2) The projections are to be delivered to the Owner Lessors within 30 days
of the date that they are finalized and approved by Mirant including,
if required, approval from Mirant's Board of Directors.
This Exhibit is not intended to diminish the informational requirements
currently in the Operative Documents.
PRIVILEGED AND CONFIDENTIAL - PREPARED IN FURTHERANCE OF SETTLEMENT DISCUSSIONS
PER RULE 408 OF THE FEDERAL RULES OF EVIDENCE
-12-