[*REDACTED = Omitted pursuant to confidential
treatment request. Material filed separately
with SEC.]
EXHIBIT 10.85
Privileged and Confidential
EXECUTION ORIGINAL
SECOND AMENDMENT TO THE
NEW PARTICIPATION AGREEMENT
This SECOND AMENDMENT TO THE NEW PARTICIPATION AGREEMENT ("AMENDMENT")
dated this ___ day of June, 1998, is among BIG RIVERS ELECTRIC CORPORATION, a
Kentucky rural electric cooperative ("BIG RIVERS"), LG&E ENERGY MARKETING
INC., an Oklahoma corporation ("LEM"), WESTERN KENTUCKY LEASING CORP., a
Kentucky corporation ("LEASECO"), WKE Station Two Inc., a Kentucky
corporation ("STATION TWO SUBSIDIARY") and WESTERN KENTUCKY ENERGY CORP., a
Kentucky corporation ("WKEC") (hereinafter, LEM, Leaseco, Station Two
Subsidiary and WKEC are collectively referred to as the "LG&E PARTIES" and
together with Big Rivers, the "PARTIES").
RECITALS
WHEREAS, the Parties are signatories to the New Participation Agreement
dated April 6, 1998, as amended by that certain Letter Agreement dated April 6,
1998 (collectively, the "New Participation Agreement").
WHEREAS, the Parties wish to amend the New Participation Agreement in
certain respects as described herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth in this
Amendment, the Parties agree as follows:
Each direction to capitalize or make lower case a word or phrase means to
make the initial letter of each referenced word a capital letter or a lower case
letter, as directed.
1. NEW PARTICIPATION AGREEMENT. The Parties hereby agree to amend the
New Participation Agreement as follows:
- - Section 4.3.6 (p. 6). The phrase "and in Sections 23.3 and 23.5" is hereby
added immediately following the words "Article 5".
- - Section 5.1.24 (p.14). In the references to "Taxing authority," "Taxing" is
hereby made lower case.
- - Section 7.1.2 (p.17). In the reference to "tax liability", "tax" is hereby
capitalized.
- - Section 7.3.6 (p. 19). In the phrase "Effective Date, cause the Big
Rivers Qualified Plans" the word "and" is hereby inserted between the
word "date" and the word "cause."
- - Section 8.1 (p.19). The reference to "LG&E Parties" is hereby changed to
"LG&E Parties and their Affiliates." The reference to "such other LG&E
Party's use" is hereby changed to "use by the LG&E Parties or their
Affiliates," and the reference to "such LG&E Party agrees" is hereby
changed to "such LG&E Party agrees, and agrees to cause its Affiliates."
Privileged and Confidential
EXECUTION ORIGINAL
- - Section 9.3 (p. 22). In the parenthetical phrase "fuel and scrubber
reagent, inventory, spare parts and materials, and supplies" the commas
immediately following the words "reagent" and "materials" are hereby
deleted.
- - Section 9.6 (p.24-25). Each reference to "Transmission Services and
Interconnection Agreement" is hereby changed to "Transmission Service
and Interconnection Agreement."
- - Section 9.7 (p. 25 ): A new Section 9.7 is hereby added as follows:
9.7 INCREMENTAL REVENUE ALLOCATION
(a) On the 25th day of each month, commencing on the second
occurrence of a 25th day of the month after the Effective Date
and continuing until and including January 25, [REDACTED], Big
Rivers will pay to LEM [REDACTED]% of the total revenue
received by Big Rivers from [REDACTED] for transmission of
Tier 3 Energy to [REDACTED] (if any) during the preceding
month.
(b) On the 25th day of each month, commencing on February 25,
[REDACTED] and continuing until and including January 25,
[REDACTED], provided that [REDACTED] has entered into a
contract with Big Rivers for the transmission of Tier 3
Energy to [REDACTED], which contract provides for service to
commence January 1, [REDACTED], is of a duration of no less
than [REDACTED] years, assures Big Rivers of receipt of no
less than $[REDACTED] annually in transmission revenues, and
such minimum revenues are received by Big Rivers, Big Rivers
will pay to LEM an amount equal to $[REDACTED]. In addition,
on each February 25, commencing on February 25, [REDACTED]
and continuing until and including February 25, [REDACTED],
Big Rivers will pay LEM an amount equal to the lesser of
(i) $[REDACTED] or (ii) the difference between (a) the
total amount of revenue received by Big Rivers from
[REDACTED] for transmission of Tier 3 Energy to Southwire
in the preceding 12 calendar months and (b) $[REDACTED] less
the sum of amounts received by LEM from Big Rivers pursuant to
this Section 9.7(b) in the preceding 12 calendar months;
provided that if Big Rivers' OATT rate for firm point-to-point
service declines to less than $[REDACTED] per KW per month,
then the amount "$[REDACTED]" set forth in the preceding
clause will be reduced proportionally.
- - Section 10.3 (p.26). The reference to "WKEC shall not" is hereby
changed to "Neither WKEC nor its Affiliates shall."
- - Section 10.4 (p.26). The last reference to "or its Affiliates (as
applicable)" is hereby deleted.
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Privileged and Confidential
EXECUTION ORIGINAL
- - Section 10.5 (p. 26). The word "the" is hereby inserted before each of
the first, third, fourth and fifth references to "Big Rivers Severance
Plan."
- - Section 10.7 (p.28). The reference to "10.8.1, 10.8.2 and 10.8.3" is
hereby changed to "10.7.1, 10.7.2 and 10.7.3."
- - Section 11.6 (p.30). In each reference to "Federal income tax," "tax" is
hereby capitalized.
- - Section 12.1 (p.31). References to "Leaseco shall keep" and "Leaseco shall
retain" are hereby changed to "Leaseco shall keep, or cause to be kept,"
and "Leaseco shall retain, or cause to be retained,".
- - Section 12.4 (p. 31). The word "notice" is hereby made plural.
- - Section 14.5 (p.36). Each reference to "parties" is hereby capitalized.
- - Section 15.1 (p.38). The first and second references to "parties" are
hereby capitalized and the first, second and third references to "party"
is hereby capitalized.
- - Section 15.2.1 (p.39). The reference to "Party" is hereby made lower case.
- - Section 15.2.3 (p.39). The first reference to "Party" is hereby made lower
case.
- - Section 15.2.6 (p.39). The reference to "Parties" is hereby made lower
case.
- - Section 15.3.1 (p.40). The first and second references to "Party" are
hereby made lower case and the first reference to "Parties" is hereby made
lower case.
- - Section 15.3.2 (p.40). The last reference to "Party" is hereby made lower
case.
- - Section 15.3.4 (p.40). The first reference to "parties" is hereby
capitalized.
- - Section 15.3.6 (pp.40-41). Each reference to "Parties" or "Party" is hereby
made lower case.
- - Section 15.3.7 (p.41). Each reference to "Parties" or "Party" is hereby
made lower case.
- - Section 15.3.8 (p.41). The reference to "Parties" is hereby made lower
case.
- - Section 16.1 (p.41). The first reference to "party" is hereby
capitalized and the word "provided" is hereby inserted before the first
use of "however."
- - Section 16.2 (p.42). The first reference to "party" is hereby capitalized.
- - Section 20.3 (p.50). The reference to "party" is hereby capitalized.
- - Section 20.6 (p. 51). Section 20.6 is hereby amended to be and read in
its entirety as follows:
20.6 DEVELOPMENT OF BUDGETS; CAPITAL BUDGET LIMITS.
20.6.1 The Parties agree, notwithstanding the date upon which the
Closing occurs, that they will continue to work together to (i) develop
an Annual O&M Budget and an Annual Capital Budget with respect to the
"Initial Budget Period" (as defined in the Facilities Operating
Agreement or the Lease, as applicable), and (ii) consider matters of
concern relating to the operation of the Assets and Station Two
following the Closing with respect to which the Operating Committee is
given a role pursuant to the terms of the Lease or the Facilities
Operating Agreement. The applicable provisions contained in the Phase I
or Phase II Agreements, as applicable, shall replace this provision on
and after the Effective Date.
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Privileged and Confidential
EXECUTION ORIGINAL
20.6.2. Notwithstanding Section 20.6.1, above, the Parties hereby
agree that the Annual Capital Budgets for the Initial Budget Period to
be agreed to by the Parties as contemplated in Schedule 3.1 attached to
this Agreement, and the Annual Capital Budgets for each Year thereafter
during the Term, shall include as the aggregate budgeted amount for the
relevant Year (or portion thereof), in respect of all Non-Incremental
Capital Costs and Henderson Non-Incremental Capital Costs (as defined
in the Station Two Agreement) that are not for Major Capital Repairs or
Henderson Major Capital Repairs, respectively, the following amounts
(the "Capital Budget Limits"), which Capital Budget Limits shall not be
increased or decreased without the written approval of the Parties, but
shall be subject to adjustment pursuant to the procedures to be
developed by Big Rivers and Leaseco as contemplated in Section 20.6.4
below, and shall be subject to the other provisions of this Section
20.6:
- - First Partial Year following Effective Date
(assuming there are five full months then
remaining in that Year): $
- - First full Year following Effective Date: $
- - Second full Year following Effective Date: $
- - Third full Year following Effective Date: $
- - Fourth full Year following Effective Date: $
- - Fifth full Year following Effective Date: $
- - Sixth full Year following Effective Date: $
- - Seventh full Year following Effective Date: $
- - Eighth full Year following Effective Date: $
- - Ninth full Year following Effective Date: $
- - Tenth full Year following Effective Date: $
- - Eleventh full Year following Effective Date: $[REDACTED]
- - Twelfth full Year following Effective Date: $
- - Thirteenth full Year following Effective Date: $
- - Fourteenth full Year following Effective Date: $
- - Fifteenth full Year following Effective Date: $
- - Sixteenth full Year following Effective Date: $
- - Seventeenth full Year following Effective Date: $
- - Eighteenth full Year following Effective Date: $
- - Nineteenth full Year following Effective Date: $
- - Twentieth full Year following Effective Date: $
- - Twenty-First full Year following Effective Date: $
- - Twenty-Second full Year following Effective Date: $
- - Twenty-Third full Year following Effective Date: $
- - Twenty-Fourth full Year following Effective Date: $
- - Twenty-Fifth full Year following Effective Date: $
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Privileged and Confidential
EXECUTION ORIGINAL
Except as otherwise provided below, Big Rivers, Leaseco and/or Station
Two Subsidiary each agree to contribute their respective share of the
Capital Budget Limit for each Year (or portion thereof) during the
Term, based upon their respective Capital Asset Sharing Ratios or
Station Two Improvement Sharing Ratios (as defined in the Station Two
Agreement), as applicable; provided, that so long as the aggregate
budgeted amount for Non-Incremental Capital Costs and Henderson
Non-Incremental Capital Costs that are included in the approved Annual
Capital Budget and Operating Budget (in the case of Station Two) for a
particular Year, but which are not for Major Capital Repairs or
Henderson Major Capital Repairs, respectively (the "Approved Capital
Amount"), is equal to or greater than the Big Rivers Contribution for
that Year, then Big Rivers will contribute the entire Big Rivers
Contribution (as defined in Section 20.6.3 below) for that Year and
Leaseco and/or Station Two Subsidiary will contribute the remainder of
the Approved Capital Amount; and provided further, that in the event
the Approved Capital Amount for a particular Year is less than the Big
Rivers Contribution for that Year, then Big Rivers alone shall
contribute the entire Approved Capital Amount. Notwithstanding anything
contained in this Section 20.6 to the contrary Leaseco and/or Station
Two Subsidiary shall be entitled to propose an aggregate annual budget
for Non-Incremental Capital Costs (exclusive of costs for Major Capital
Repairs) and Henderson Non-Incremental Capital Costs (exclusive of
Costs for Henderson Major Capital Repairs) that is less than the
Capital Budget Limits for that Year, provided such budget is consistent
with Prudent Utility Practice, and such budget as proposed by Leaseco
and/or Station Two Subsidiary shall be approved if it meets the
criteria for such approval in Article 6 of the Cost Sharing Agreement,
Article 7 of the Lease and Section 8.15 or 9.8 of the Station Two
Agreement (as applicable) notwithstanding that it may be less than the
Capital Budget Limit. In addition to the foregoing, in the event the
Approved Capital Amount for a particular Year is less in the aggregate
than the Big Rivers Contribution for that Year, Big Rivers agrees to
contribute the amount by which the Big Rivers Contribution exceeds the
Approved Capital Amount, to fund any Non-Incremental Capital Costs and
Henderson Non-Incremental Capital Costs (in each case exclusive of
costs for Major Capital Repairs and Henderson Major Capital Repairs)
that were not included in the relevant approved budget, but which (i)
are required during that Year, consistent with Prudent Utility
Practice, to be expended in order to address unanticipated operating
problems at one or
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Privileged and Confidential
EXECUTION ORIGINAL
more of the Generating Plants, and (ii) meet the criteria and
conditions set forth in Article 7 of the Cost Sharing Agreement,
Article 8 of the Lease or Section 8.17 or 9.10 of the Station Two
Agreement (as applicable) for Big Rivers' obligation to fund the
same. Such contributions by Big Rivers will serve as an approved
deviation from the Annual Capital Budget for that Year as
contemplated in Section 6.5 of the Facilities Operating Agreement,
Section 7.5 of the Lease or Section 8.17(f) or 9.10(d) of the
Station Two Agreement, as applicable.
20.6.3 Except as otherwise provided in this Section 20.6, Big Rivers
agrees that its respective share of the Capital Budget Limit for each
Year shall be the amounts set forth below (collectively, the "Big
Rivers Contributions"), which amounts shall be paid by Big Rivers at
the time(s) provided in Article 7 of the Cost Sharing Agreement,
Article 8 of the Lease and Section 8.17 or 9.10 of the Station Two
Agreement, as applicable:
- - First Partial Year: $
- - First full Year: $
- - Second full Year: $
- - Third full Year: $
- - Fourth full Year: $
- - Fifth full Year: $
- - Sixth full Year: $
- - Seventh full Year: $
- - Eighth full Year: $
- - Ninth full Year: $
- - Tenth full Year: $
- - Eleventh full Year: $[REDACTED]
- - Twelfth full Year: $
- - Thirteenth full Year: $
- - Fourteenth full Year: $
- - Fifteenth full Year: $
- - Sixteenth full Year: $
- - Seventeenth full Year: $
- - Eighteenth full Year: $
- - Nineteenth full Year: $
- - Twentieth full Year: $
- - Twenty-First full Year: $
- - Twenty-Second full Year: $
- - Twenty-Third full Year: $
- - Twenty-Fourth full Year: $
- - Twenty-Fifth full Year: $
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Privileged and Confidential
EXECUTION ORIGINAL
Big Rivers agrees that the amount of the Big Rivers Contribution for a
particular Year shall not be reduced in the event the Approved Capital
Amount is less than the Capital Budget Limit for the year, so long as
the Approved Capital Amount is equal to or greater than the Big Rivers
Contribution.
20.6.4 The Parties agree that, as an additional condition to the
Closing and the Parties' obligation to consummate the transactions
contemplated at the Closing, Big Rivers and Leaseco must agree upon a
mutually satisfactory procedure by which the Capital Budget Limits and
the Big Rivers Contributions will be adjusted during the Term to
reflect inflationary increases in the cost of Non-Incremental Capital
Costs over that period. The Parties agree to negotiate in good faith to
develop and agree upon that procedure at the earliest practicable time
following the Execution Date, and shall document their agreement (if
any) in writing at or prior to the Closing.
20.6.5 Notwithstanding anything contained in any Operative
Document to the contrary, but subject to the limitations and conditions
set forth in this Section 20.6, at such time as Big Rivers shall have
paid the entire Big Rivers Contribution for a particular Year (or the
required portion thereof, as contemplated in Section 20.6.2 above)
toward the funding of one or more Non-Incremental Capital Costs (other
than for Major Capital Repairs) and/or Henderson Non-Incremental
Capital Costs (other than for Henderson Major Capital Repairs), in
either case in accordance with Article 7 of the Cost Sharing Agreement,
Article 8 of the Lease and/or Section 8.17 or 9.10 of the Station Two
Agreement (as applicable), then (a) Big Rivers shall be deemed to have
paid its entire share of all Non-Incremental Capital Costs (other than
for Major Capital Repairs) and Henderson
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Non-Incremental Capital Costs (other than for Henderson Major
Capital Repairs) for that Year (or portion thereof), regardless of
whether additional expenditures for those or other Non-Incremental
Capital Costs (other than for Major Capital Repairs) or Henderson
Non-Incremental Capital Costs (other than for Henderson Major
Capital Repairs) have been budgeted for, or are thereafter required
during that Year for the maintenance and upkeep of the Generating
Plants in accordance with the Operative Documents, and (b) Leaseco
or Station Two Subsidiary, as applicable, agree that they shall be
responsible for the payment of all other Non-Incremental Capital
Costs (exclusive of costs for Major Capital Repairs) and Henderson
Non-Incremental Capital Costs (exclusive of costs for Henderson
Major Capital Repairs) during that Year to maintain and operate the
Facilities and Station Two in accordance with the Operative
Documents notwithstanding the Capital Budget Limit for that Year
(or portion thereof). Notwithstanding the immediately preceding
sentence or any other provision in any Operative Document to the
contrary, Big Rivers' payment of the Big Rivers Contribution for a
particular Year as contemplated above shall not, and shall not be
deemed to, affect, limit or eliminate Big Rivers' continuing
obligation under Article 7 of the Cost Sharing Agreement, Article 8
of the Lease or Section 8.17 or 9.10 (as applicable) of the Station
Two Agreement for the payment of Big Rivers' relevant Capital Asset
Sharing Ratio or Station Two Improvement Sharing Ratio with respect
to (a) any Incremental Capital Costs or Henderson Incremental
Capital Costs, and (b) any Non-Incremental Capital Costs for Major
Capital Repairs or Henderson Non-Incremental Capital Costs for
Henderson Major Capital Repairs, in each case that are required to
be funded by Big Rivers, directly or indirectly, in accordance with
those Articles or Sections, it being expressly understood that all
such obligations of Big Rivers shall continue in accordance with
those provisions irrespective of the provisions of this Section
20.6, and, where reasonably possible, shall be separately budgeted
for by the Parties in the Annual Capital Budgets or Operating
Budgets (in the case of Station Two) in accordance with the Cost
Sharing Agreement, the Facilities Operating Agreement, the Lease or
the Station Two Agreement, as applicable. In addition to the
foregoing, and except as otherwise provided in this Section 20.6,
nothing in this Section 20.6 shall be deemed to affect, limit or
eliminate Big Rivers' or the LG&E Parties' respective obligations
or liabilities under or pursuant to this or any other Operative
Document by reason of any misrepresentation, breach of warranty or
non-fulfillment of any covenant or agreement of Big Rivers or such
LG&E Parties, including without limitation, any indemnification and
hold harmless covenant of Big Rivers or such LG&E Parties set forth
herein or therein.
20.6.6 To the extent any portion of a Big Rivers Contribution that
is included in an approved Annual Capital Budget or Operating Budget
(in the case of Station Two) is not thereafter used by Leaseco or
Station Two Subsidiary in the Year for which payable because the
project for which such funds were allocated was deferred or was not
completed during that Year, after complying with the provisions of the
Operative Documents, then such portion of the Big Rivers Contribution
necessary to complete such project will be carried forward and included
as an approved addition to the Annual Capital Budget or Operating
Budget (as applicable) for the following Year (for use solely in
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connection with the completion of such project), but shall not serve as
a credit against, or reduce, the Big Rivers Contribution for that
following Year; provided, that the obligation of Big Rivers to so
contribute any such portion of the Big Rivers Contribution in that
following Year shall be further conditioned on either (i) Leaseco or
Station Two Subsidiary having actually contributed, during the Year for
which budgeted, its commitment for Non-Incremental Capital Costs or
Henderson Non-Incremental Capital Costs that corresponds with such
portion of the Big Rivers Contribution (based upon Leaseco's Capital
Asset Sharing Ratio or Station Two Subsidiary's Station Two Improvement
Sharing Ratio, as applicable), or (ii) Leaseco's or Station Two
Subsidiary's agreement with Big Rivers to make those corresponding
contributions at the same time in the following Year as such
contributions are required by Big Rivers. References in this Section
20.6 to the Operating Budgets required for Station Two shall be deemed
to relate solely to the items and amounts set forth in those budgets
for which Big Rivers and/or Station Two Subsidiary are responsible
under the Station Two Agreement and the Station Two Contracts
referenced therein.
20.6.7 Notwithstanding anything contained in this Agreement or
in any other Operative Document to the contrary, the Parties agree that
they shall not, at any time after the sixtieth (60th) day following the
close of any Year, attempt to claim or assert any claim (A) that an
expenditure incurred in that Year and included in the approved Annual
O&M Budget, the approved Annual Capital Budget or the approved
Operating Budget (in the case of Station Two) for that Year (including
without limitation, items that were included in those budgets by
agreement of the Parties, by decision of the Operating Committee or
Oversight Committee (as applicable), or at the direction of an
arbitration panel pursuant to the procedures set forth in Article 15)
should in fact have been included in the other budget for that Year,
(B) that an expenditure incurred in that Year and included as an
expenditure for a Capital Asset or Station Two Improvement in any of
those approved budgets is in fact an operation or maintenance expense
or an Enhancement or Major Capital Improvement, or is a Capital Asset
or Station Two Improvement that Big Rivers is not otherwise obligated
to fund in part, (C) that an expenditure incurred in that Year and
included as an operation or maintenance expense in any of those
approved budgets is in fact an expenditure for a Capital Asset or
Station Two Improvement that Big Rivers is obligated to fund in part,
(D) that an expenditure incurred in that Year and included in those
approved budgets is or is not for a Major Capital Repair or a Henderson
Major Capital Repair, (E) that an expenditure incurred in that Year and
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included as Incremental Environmental O&M in any of those approved
budgets is not in fact Incremental Environmental O&M, or (F) that an
expenditure incurred in that Year and included as an operation and
maintenance expense that is not Incremental Environmental O&M is in
fact Incremental Environmental O&M; provided, however that nothing
contained in this Section 20.6.7 shall be deemed to affect, limit or
eliminate any such claims that are specifically asserted with respect
to one or more items included in those approved budgets at any time
prior to the expiration of the foregoing sixty-day period following the
close of any Year, any such claims that are asserted prior to the
approval of such budgets (or deemed approval pursuant to an arbitration
award as contemplated above), or any claims regarding expenditures the
approval or characterization of which was obtained by a Party through
any misrepresentation or fraudulent or other willful misconduct, all of
which claims shall be deemed to survive that sixty-day period for all
purposes.
- - Section 21.4 (p.54). The phrase "but without giving effect to the conflict
of law rules of such jurisdiction" is hereby added to the end of the
sentence.
- - Section 22.2 (p.59). The first and second sentences of Section 22.2
are hereby deleted and are replaced with the following new sentence:
"LEM covenants and agrees, and Big Rivers acknowledges and agrees, that
on the Closing Date and in the event the Marketing Payment contemplated
in Section 4.3.9 exceeds $[REDACTED], LEM will execute and deliver to the
RUS a Demand Promissory Note in a principal amount equal to the amount
by which such Marketing Payment so exceeds $[REDACTED], and in the form
attached to this Agreement as Exhibit Q (the "Demand Note")." Exhibit Q
attached to this Amendment shall constitute Exhibit Q of the New
Participation Agreement as contemplated above. The fifth sentence of
Section 22.2 is hereby amended to be and read in its entirety as
follows: "Notwithstanding the foregoing, so long as any amount remains
outstanding under either of the two Promissory Notes to be issued by Big
Rivers to the RUS pursuant to the New RUS Agreement (as defined in the
Non-Disturbance Agreement) or under the "1983 Reimbursement Agreement",
the "1985 Reimbursement Agreement" or the "AMBAC Notes" (each with AMBAC
as referred to in Recital A of the Non-Disturbance Agreement), or under
Big Rivers' pollution control bonds as outstanding on the Effective
Date, Big Rivers agrees that it shall not, and LEM agrees that Big
Rivers shall have no obligation to, pay any amount with respect to Big
Rivers' Reimbursement Obligation(s), provided however, that interest at
the Default Rate will continue to accrue during all such periods during
which Big Rivers has no payment obligation." A new sentence is hereby
added to the end of Section 22.2 of the New Participation Agreement as
follows: "Big Rivers' Reimbursement Obligation(s), together with its
obligation to pay interest accruing on such reimbursement amounts, shall
survive any expiration or termination of this Agreement and shall
continue to be binding on Big Rivers."
- - New Sections (p.60). New Sections 23.2 through 23.9, inclusive, are hereby
added to Article
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Privileged and Confidential
EXECUTION ORIGINAL
23 of the New Participation Agreement as follows:
23.2 COLEMAN UNIT NO. 2 ISSUES. Big Rivers agrees that it will fully
repair and rectify, at its expense and consistent with Prudent Utility
Practice, all equipment and operating problems at the Coleman Unit No.
2 facility identified in the letter dated May 14, 1998 from Michael
Core to George Basinger, as well as all other problems (whether or not
related) that may exist and that may prevent bringing that unit back on
line for regular operation to its full rated capacity. Big Rivers will
use its commercially reasonable efforts to address those problems at
the earliest practicable time, in an effort to return the Coleman Unit
No. 2 facility on-line prior to July 14, 1998 (or as soon thereafter as
is reasonably possible). The foregoing obligations of Big Rivers will
survive the Closing and shall continue to be binding on Big Rivers.
Notwithstanding the foregoing, Big Rivers acknowledges and agrees that
the LG&E Parties shall be under no obligation to effect the Closing or
to consummate the transactions contemplated at the Closing until such
time as the Coleman Unit 2 facility is repaired in accordance with the
preceding provisions.
23.3 GREEN AND WILSON LANDFILL ISSUES. Big Rivers hereby represents and
warrants to the LG&E Parties that the landfill located at the Green
Station has a remaining useful life and capacity, based upon coal
qualities that are consistent with Big Rivers' prior practices, of at
least nine (9) years, without modification of any of the existing
Permits relative to that landfill, without the need for capital
improvements or the disruption or removal of materials located in that
landfill, and based upon both vertical and horizontal measurement
limitations, but assuming the continuation of Big Rivers' past
operation and disposal practices by WKEC or Leaseco, as applicable,
following the Effective Date. Big Rivers agrees that prior to the
Closing (or as soon thereafter as is reasonably possible, using its
commercially reasonable efforts) Big Rivers will, at its expense and
consistent with Prudent Utility Practice, construct a new retainment
road/wall at the Green Station landfill as contemplated by the pending
Permit modification filed with the KNREPC and in compliance with all
applicable Laws and Permits. Big Rivers further agrees, at its expense
and at the earliest practicable time, to obtain all changes in existing
Permits required for the full and lawful use and operation of the Green
landfill (as expanded) and the Wilson landfill by the LG&E Parties
following the Closing. In the event changes in existing Permits that
would allow Big Rivers to forego such removal action in compliance with
applicable Laws cannot be obtained despite Big Rivers' commercially
reasonable efforts to do so, Big Rivers
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EXECUTION ORIGINAL
agrees, at its expense and consistent with Prudent Utility Practice,
to ensure that any landfill materials that have been placed or
disposed of outside the permitted boundaries of the Green landfill
and the Wilson landfill are removed along with any affected soil or
debris, and disposed of in compliance with applicable Laws at the
earliest possible time. Big Rivers also agrees to be solely
responsible for, and to indemnify and hold harmless the LG&E Parties
from and against, all claims, demands, losses, damages, liabilities,
costs, expenses, obligations and deficiencies (including without
limitation, costs of corrective or remedial actions, fines, civil or
criminal penalties, settlements and attorney's fees) that have been
or may be suffered or incurred resulting from or arising out of any
failure of the Green landfill and/or the Wilson landfill to comply
with applicable Permits and/or conditions thereof at any time prior
to the Closing or completion of the construction work described
above, or the approval by the KNREPC of changes to the existing
Permits as described above, whichever is later, unless such failure
is caused by any action by any of the LG&E Parties or any of their
Affiliates, successors or assigns or their respective officers,
employees, consultants or agents.
23.4 COLEMAN ASH POND ISSUES. The LG&E Parties agree that, except as
otherwise required by applicable Laws, the LG&E Parties shall not
attempt to unilaterally close the "Southern Ash Pond" or the "Former
Ash Pond" at the Coleman facility without the prior written consent of
Big Rivers. Big Rivers agrees that it shall be solely responsible, at
its expense and as and when required by applicable Laws, for promptly
taking all actions, and duly filing all instruments and documents with
federal, state and local governmental agencies, as shall be required to
officially close the "Southern Ash Pond" and the "Former Ash Pond" at
the Coleman facility (as identified on the Coleman facility site map
prepared in connection with the Baseline Environmental Audit Report) in
accordance with all applicable Laws, Permits and Prudent Utility
Practice. Notwithstanding the foregoing, in the event the LG&E Parties
elect, in their discretion, to dispose of materials in the Southern Ash
Pond or the Former Ash Pond, WKEC or Leaseco, as applicable, shall be
responsible for a pro rata portion of those closure costs based on the
total amount (in tons) of ash disposed of in those ash ponds by the
LG&E Parties as compared with the total amount of ash in the ponds at
their closure. In addition to the foregoing, Big Rivers agrees, at its
expense, to promptly commence and continue to dredge and excavate the
remaining active ash pond (the "Active Ash Pond") at the Coleman
facility in such a manner as shall be sufficient to cause the remaining
useful life and capacity of that ash pond (based on horizontal and
vertical measurements) as of one (1) month following the Closing to be
at least
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EXECUTION ORIGINAL
thirteen (13) months under its existing Permits, assuming a
continuation of the current capacity factor of the Coleman facility,
and assuming no additional dredging or excavation of that ash pond
during that 13-month period. All materials so dredged from the Coleman
ash pond shall be disposed of by Big Rivers, at its expense, at a
permitted landfill or other permitted site located outside the
boundaries of any of the Generating Plants or related facilities other
than the Coleman Station, and otherwise in compliance with all
applicable Laws. Big Rivers also agrees to be solely responsible for,
and to indemnify and hold harmless the LG&E Parties from and against,
all claims, demands, losses, damages, liabilities, costs, expenses,
obligations, and deficiencies (including without limitation, costs of
corrective or remedial actions, fines, civil or criminal penalties,
settlements and attorney's fees) that have been or may be suffered or
incurred resulting from or arising out of (a) any failure of the Active
Ash Pond to comply with all applicable Permits at any time prior to the
Closing or the completion of the dredging and excavation work described
above, whichever is later, (b) any use or disturbance of the "Southern
Ash Pond" or the "Former Ash Pond" by Big Rivers at any time prior to
the Closing, or any failure of those ash ponds to comply with all
applicable Permits at any time prior to the closure of the same as
contemplated above (except to the extent that such non-compliance is
caused by the use of or the failure to permit (assuming they are
otherwise permittable) those ash ponds by the LG&E Parties following
the Closing), and (c) any delay in the closure of the "Southern Ash
Pond" or the "Former Ash Pond" at the Coleman facility (except to the
extent that such delay is caused by the LG&E Parties or any of their
Affiliates, successors or assigns or their respective officers,
employees, consultants or agents).
23.5 COLEMAN OPACITY ISSUE. Big Rivers hereby represents and warrants
to the LG&E Parties that Big Rivers has taken all such actions, and has
made all such repairs (at its expense and consistent with Prudent
Utility Practice), in respect of the Coleman facility as were necessary
to eliminate the opacity issues or problems identified in the letter
from Big Rivers to the KNREPC dated February 11, 1998, relating to
opacity exceedances at that facility.
23.6 YEAR 2000 COMPLIANCE ISSUE. Big Rivers hereby agrees to take all
such actions, at its expense and consistent with Prudent Utility
Practice, as shall be necessary in order to avoid any loss of
transmission or other services in violation of its obligations under
the Transmission Agreement or Big Rivers' Open Access Transmission
Tariff by any of the LG&E Parties, the Members, the Smelters or Big
Rivers over or in respect of
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EXECUTION ORIGINAL
Big Rivers' transmission system and related facilities by reason of
the passage of time from the year 1999 to the year 2000 (otherwise
known as the "millennium problem" or the "Year 2000 problem").
23.7 M&S INVENTORY. Consistent with Section 9.1 of the New
Participation Agreement, Big Rivers and Leaseco agree that, assuming
the Parties agree upon the procedures to be set forth on Schedule 9.1
to this Agreement as of the Closing (which agreement is a condition to
the Closing), the fair market value to be paid by Leaseco at the
Closing for all materials and supplies Inventory of Big Rivers shall be
$[REDACTED].
23.8 MAJOR CAPITAL REPAIRS. As an additional condition to the Parties'
obligations to consummate the transactions contemplated at the Closing,
the Parties shall have agreed upon a definition of "Major Capital
Repairs" which generally shall include expenditures for Capital Assets
which (i) are necessary to repair any turbine, scrubber or boiler at
any of the Generating Plants, (ii) are not covered by insurance or any
warranty, (iii) are not the result of the negligence or willful
misconduct of any of the LG&E Parties or any of their Affiliates,
successors or assigns or their respective officers, employees,
consultants or agents or any breach or default by any of the LG&E
Parties or their Affiliates under any of the Operative Documents and
(iv) exceed a threshold amount to be agreed upon by the Parties.
23.9 MISCELLANEOUS. Notwithstanding the provisions of Section 5.1.27 of
this Agreement, the Parties acknowledge that the representations and
warranties of Big Rivers set forth in Sections 23.2 through 23.9,
inclusive, shall supplement the representations and warranties set
forth in Article 5, and shall be in addition to and not in lieu of
those representations and warranties.
- - Section 24.3 (p.71). In the phrase "Big Rivers nor its successor or
assigns," the word successor is hereby made plural.
- - Section 24.5 (p.72). The reference to "Mortgagees" is hereby changed to
lower case.
2. COST SHARING AGREEMENT. The Parties hereby agree to amend Exhibit A to the
New Participation Agreement (Cost Sharing Agreement) as follows:
- - Article 1 (p.1). The phrase "on Exhibit X" is hereby changed to "in
Exhibit X."
- - Section 6.7 (p.4). The phrase "ACTION. Without Meeting" is hereby
changed to "ACTION WITHOUT MEETING."
- - Section 6.10 (p.4). The reference to "parties" is hereby capitalized.
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EXECUTION ORIGINAL
- - Section 7.1 (p.5). The reference to "Section 5.1" is hereby changed to
"Article 5."
- - Section 7.3 (p.5). The phrase "On the first day of each month during
the Term Leaseco and Big Rivers shall each deposit sufficient funds into
the Capital Account based on their Capital Asset Sharing Ratios (defined
in Section 7.4 below) (i)" is hereby changed to "On the first day of
each month during the Term, Leaseco and Big Rivers shall each deposit
sufficient funds into the Capital Account based on their Capital Asset
Sharing Ratios (defined in Section 7.4 below), but limited in the case
of Big Rivers to the remaining Big Rivers Contribution (as defined in
Section 20.6 of the Participation Agreement) for that Year with respect
to Non-Incremental Capital Costs that are not for Major Capital Repairs
(i)".
- - Section 7.4(1) (p.6). The reference to "Incremental Capital Asset" is
hereby changed to "Capital Asset" and the phrase "Leaseco's share of each
Incremental Capital Cost, determined as of the date payment for such
Capital Asset is required," is hereby changed to "Leaseco's share of each
Incremental Capital Cost, determined as of the date payment for such
Capital Asset is required to be made to the Capital Account pursuant to the
forecast prepared by Leaseco pursuant to Section 7.2,".
- - Section 7.4(2) (p.7). The reference to "Non-Incremental Capital Asset" is
hereby changed to "Capital Asset" and the phrase "Leaseco's share of each
Non-Incremental Capital Cost" is hereby changed to "Leaseco's share of each
Non-Incremental Capital Cost, determined as of the date payment for such
Capital Asset is required to be made to the Capital Account pursuant to the
forecast prepared by Leaseco pursuant to Section 7.2,".
- - Section 14.1 (p.13). The reference to "Notices" is hereby changed to
"notices (Section 21.1)."
- - Section 14.4 (p.13). The phrase "but without giving effect to the conflict
of law rules of such jurisdiction" is hereby added to the end of the
sentence.
- - Section 14.14.2 (p.15). In the phrase "Leaseco nor its successor or
assigns," the word successor is hereby made plural.
- - Section 14.14.3 (p.16). The reference to "Mortgagees" is hereby made lower
case.
3. FACILITIES OPERATING AGREEMENT. The Parties hereby agree to amend Exhibit B
to the New Participation Agreement (Facilities Operating Agreement) as follows:
- - Section 5.4(a) (p.3). The reference to "Big Rivers' transmission
system" is hereby changed to "Big Rivers' Transmission System."
- - Section 5.6 (p.4). The phrase "the books and records that WKEC is required
to keep pursuant to this Agreement" is hereby changed to "the books and
records that WKEC is required to keep, or cause to be kept, pursuant to
this Agreement."
- - Section 5.7 (p.4). The phrase "shall administer all Big Rivers' fuel supply
agreements, procure and pay for all fuel" is hereby changed to "shall
administer, or cause to be administered, all Big Rivers' fuel supply
agreements, procure, or cause to be procured, and pay for all fuel."
- - Section 5.11 (p.5). The phrase "WKEC shall keep up-to-date books and
records" is hereby changed to "WKEC shall keep, or cause to be kept,
up-to-date books and records."
- - Section 6.5. Section 6.5 is hereby deleted and replaced in its entirety as
follows:
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Privileged and Confidential
EXECUTION ORIGINAL
6.5 BUDGET DEVIATIONS. WKEC shall immediately notify the Operating
Committee of any anticipated departure of [REDACTED]% or more from an
approved Annual Capital Budget or Annual O&M Budget. WKEC shall use
reasonable efforts to (a) operate within [REDACTED] percent to
110 percent of the total approved Annual Capital Budget and
(b) spend at least [REDACTED] percent of the total approved Annual
O&M Budget (not including the fuel or reagent budget). Subject to
the provisions set forth below, any increase of [REDACTED]%
or more proposed by WKEC to either budget shall be subject to review
and approval by the Operating Committee (or in the case of the Annual
Capital Budget, the Oversight Committee); provided, that such review
and approval shall not apply to the Annual O&M Budgets that are
included in the Initial Period Budgets, it being understood that
increases of [REDACTED]% or more proposed by WKEC to those budgets
shall be permissible without that review and approval if the relevant
expenditures are consistent with Prudent Utility Practice, in which
case the additional costs will be borne by WKEC unless they constitute
Incremental Environmental O&M required to be borne solely by Leaseco
and Big Rivers in the manner provided for in Section 5 of the Cost
Sharing Agreement. If WKEC exceeds the total budget for Non-Incremental
Capital Costs (exclusive of such costs as are for Major Capital
Repairs) that are included in an approved Annual Capital Budget, the
additional cost of those Non-Incremental Capital Costs shall be borne
by Leaseco unless the Parties otherwise agree, or unless remaining
portions of the Big Rivers Contribution for that Year that were not
included in the approved Annual Capital Budget are available as
contemplated in Section 20.6.2 of the Participation Agreement (in which
event such amounts will be applied as contemplated in that Section).
Subject to the next succeeding sentence, if WKEC exceeds [REDACTED]
percent of the total budget for Incremental Capital Costs, or for Non-
Incremental Capital Costs for Major Capital Repairs, in either case
that are included in an approved Annual Capital Budget, the additional
costs of those Capital Assets shall be borne by Leaseco unless the
Parties otherwise agree, or unless the dispute resolution procedure
under Article 15 of the Participation Agreement determines that at the
time WKEC proposed the applicable portions of the Annual Capital
Budget (or modification thereof) relating to those expenditures WKEC
acted consistent with Prudent Utility Practice, in which case the
additional costs shall be borne by Leaseco and Big Rivers in accordance
with Sections 7.3 and 7.4 of the Cost Sharing Agreement.
Notwithstanding the provisions of the immediately preceding sentence,
if WKEC exceeds [REDACTED] percent of the total of any budget for
Incremental Capital Costs, or for Non-Incremental Capital Costs for
Major Capital Repairs, that are included in
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EXECUTION ORIGINAL
an approved Annual Capital Budget that is a part of the Initial
Period Budgets, the additional cost of those Capital Assets shall be
borne by Leaseco unless the Parties otherwise agree, or unless the
dispute resolution procedure under Article 15 of the Participation
Agreement determines that the purchase and installation of those
Capital Assets, and the costs thereof, are consistent with Prudent
Utility Practice, regardless of whether the relevant Initial Period
Budget, or WKEC's or Leaseco's (as applicable) actions in connection
with the same, were consistent with Prudent Utility Practice at the
time that budget was prepared, in which case the additional costs
shall be borne by Leaseco and Big Rivers in accordance with Sections
7.3 and 7.4 of the Cost Sharing Agreement. If WKEC fails or refuses
to use reasonable efforts to spend at least [REDACTED] percent of the
total approved Annual Capital Budget or the total approved Annual O&M
Budget (excluding that portion relating to Incremental Environmental
O&M) and pursuant to the dispute resolution procedure under Article
15 of the Participation Agreement it is determined that such failure
or refusal is inconsistent with Prudent Utility Practice, WKEC shall
make the omitted expenditure as required pursuant to the applicable
dispute resolution procedure.
- - Section 6.6 (p.8). The last sentence of Section 6.6 is hereby deleted and
replaced with the following sentence:
Additional capital expenditures incurred by WKEC in response to an
Operating Emergency which are not already included in an approved
Annual Capital Budget shall be paid for by Leaseco unless (a) the same
represents an Incremental Capital Cost or expenditures for a Major
Capital Repair, in which case such expenditures shall be paid by
Leaseco and Big Rivers in accordance with Article 7 of the Cost Sharing
Agreement, or (b) Big Rivers shall not have paid the entire Big Rivers
Contribution for that Year toward funding of one or more
Non-Incremental Capital Costs (other than costs for Major Capital
Repairs) and/or Henderson Non-Incremental Capital Costs (other than
costs for Henderson Major Capital Costs) in accordance with Article 7
of the Cost Sharing Agreement, Article 8 of the Lease and/or Section
8.17 or 9.10 of the Station Two Agreement (as applicable), then that
remaining amount will be allocated to any Non-Incremental Capital Costs
in that Year resulting from that Operating Emergency as contemplated in
Section 20.6.2 of the Participation Agreement.
- - Section 15.2 (pp.15-16). The phrase "WKEC shall deliver to Big Rivers" is
hereby changed to "WKEC shall deliver, or cause to be delivered, to Big
Rivers" and the phrase "developed by WKEC" is hereby changed to "developed,
or caused to be developed, by WKEC."
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- - Section 17.9 (p.16). The first reference to "parties"" is hereby changed to
"Parties'", and the second reference to "parties" is hereby capitalized.
- - Section 17.13(a) (p.17). In the phrase "Big Rivers nor its successor or
assigns," the word successor is hereby made plural.
- - Section 17.13(b) (p.18). In the phrase "WKEC nor its successor or assigns,"
the word successor is hereby made plural.
- - Section 17.13(c) (p.19). The reference to "Mortgagees" is hereby made lower
case.
4. LEASE AND OPERATING AGREEMENT. The Parties hereby agree to amend Exhibit C to
the New Participation Agreement (Lease and Operating Agreement) as follows:
- - Article 1 (p.1). The phrase "on Exhibit X" is hereby changed to "in
Exhibit X."
- - Section 2.3.2(c). The reference to "LEM" is hereby changed to
"Leaseco."
- - Section 2.3.2(f)(iii) (p.5). The reference to "Federal Energy
Regulatory Commission" is hereby changed to "FERC."
- - Section 5.4.1 (p.8). The reference to "Big Rivers' transmission
system" is hereby changed to "Big Rivers' Transmission System."
- - Section 5.4.3 (p.9). The phrase "the books and records Leaseco is required
to keep pursuant to this Agreement" is hereby changed to "the books and
records Leaseco is required to keep, or cause to be kept, pursuant to this
Agreement."
- - Sections 7.5 and 7.6. Sections 7.5 and 7.6 are hereby amended to be and
read in their entirety as follows:
7.5 BUDGET DEVIATIONS. Leaseco shall immediately notify the
Operating Committee of any anticipated departure of [REDACTED]% or more
from an approved Annual Capital Budget or Annual O&M Budget. Leaseco
shall use reasonable efforts to (a) operate within [REDACTED] percent
to [REDACTED] percent of the total approved Annual Capital Budget and
(b) spend at least [REDACTED] percent of the total approved Annual
O&M Budget (not including the fuel and reagent budget). Subject to
the provisions set forth below, any increase of [REDACTED]% or more
proposed by Leaseco to either budget shall be subject to review and
approval by the Operating Committee; provided, that such review and
approval shall not apply to the Annual O&M Budgets that are included
in the Initial Period Budgets, it being understood that increases of
[REDACTED]% or more proposed by Leaseco to those budgets shall be
permissible without that review and approval if the relevant
expenditures are consistent with Prudent Utility Practice, in which
case the additional costs will be borne by Leaseco unless they
constitute Incremental Environmental O&M required to be borne solely by
Leaseco and Big Rivers in the manner provided for in Section 2.3.3. If
Leaseco exceeds the total budget for Non-Incremental Capital Costs
(exclusive of such costs as are for Major Capital Repairs) that are
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included in an approved Annual Capital Budget, the additional cost of
those Non-Incremental Capital Costs shall be borne by Leaseco unless
the Parties otherwise agree, or unless remaining portions of the Big
Rivers Contribution for that Year that were not included in the
approved Annual Capital Budget are available as contemplated in Section
20.6.2 of the Participation Agreement (in which event such amounts will
be applied as contemplated in that Section). Subject to the next
succeeding sentence, if Leaseco exceeds [REDACTED] percent of the total
budget for Incremental Capital Costs, or for Non-Incremental Capital
Costs for Major Capital Repairs, in either case that are included in an
approved Annual Capital Budget, the additional costs of those Capital
Assets shall be borne by Leaseco unless the Parties otherwise agree, or
unless the dispute resolution procedure under Article 15 of the
Participation Agreement determines that at the time Leaseco proposed
the applicable portions of the Annual Capital Budget (or modification
thereof) relating to those expenditures Leaseco acted consistent with
Prudent Utility Practice, in which case the additional costs shall be
borne by Leaseco and Big Rivers in accordance with Sections 8.3 and
8.4. Notwithstanding the provisions of the immediately preceding
sentence, if Leaseco exceeds [REDACTED] percent of the total of any
budget for Incremental Capital Costs, or for Non-Incremental Capital
Costs for Major Capital Repairs, that are included in an approved
Annual Capital Budget that is a part of the Initial Period Budgets,
the additional cost of those Capital Assets shall be borne by Leaseco
unless the Parties otherwise agree, or unless the dispute resolution
procedure under Article 15 of the Participation Agreement determines
that the purchase and installation of those Capital Assets, and the
costs thereof, are consistent with Prudent Utility Practice, regardless
of whether the relevant Initial Period Budget, or Leaseco's actions in
connection with the same, were consistent with Prudent Utility Practice
at the time that budget was prepared, in which case the additional
costs shall be borne by Leaseco and Big Rivers in accordance with
Sections 8.3 and 8.4. If Leaseco fails or refuses to use reasonable
efforts to spend at least [REDACTED] percent of the total approved
Annual Capital Budget or the total approved Annual O&M Budget
(excluding that portion relating to Incremental Environmental O&M) and
pursuant to the dispute resolution procedure under Article 15 of the
Participation Agreement it is determined that such failure or refusal
is inconsistent with Prudent Utility Practice, Leaseco shall make the
omitted expenditure as required pursuant to the applicable dispute
resolution procedure.
7.6 OPERATING EMERGENCY. Notwithstanding any other provision of
this Agreement, in the event of an Operating Emergency, Leaseco
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EXECUTION ORIGINAL
may take such action as in its sole discretion it may deem prudent
or necessary to terminate the Operating Emergency, to preserve and
maintain the safety, integrity and operability of the Tangible
Assets and to maintain Capacity and the availability of the Tangible
Assets to the maximum extent. Additional capital expenditures
incurred by Leaseco in response to an Operating Emergency which are
not already included in an approved Annual Capital Budget shall be
paid for by Leaseco unless (a) the same represents an Incremental
Capital Cost or expenditures for a Major Capital Repair, in which
case such expenditures shall be paid by Leaseco and Big Rivers in
accordance with Article 8 of this Agreement, or (b) Big Rivers shall
not have paid the entire Big Rivers Contribution for that year
toward funding of one or more Non-Incremental Capital Costs (other
than costs for Major Capital Repairs) and/or Henderson
Non-Incremental Capital Costs (other than costs for Henderson Major
Capital Costs) in accordance with Article 7 of the Cost Sharing
Agreement, Article 8 of the Lease and/or Section 8.17 or 9.10 of the
Station Two Agreement (as applicable), then that remaining amount
will be allocated to any Non-Incremental Capital Costs resulting
from that Operating Emergency as contemplated in Section 20.6.2 of
the Participation Agreement.
- - Section 8.3 (p.15). The phrase "On the first day of each month during
the Term Leaseco and Big Rivers shall each deposit sufficient funds into
the Capital Account based on their Capital Asset Sharing Ratios (defined
in Section 8.4 below) (i)" is hereby changed to "On the first day of
each month during the Term, Leaseco and Big Rivers shall each deposit
sufficient funds into the Capital Account based on their Capital Asset
Sharing Ratios (defined in Section 8.4 below), but limited in the case
of Big Rivers to the remaining Big Rivers Contribution (as defined in
Section 20.6 of the Participation Agreement) for that Year with respect
to Non-Incremental Capital Costs that are not for Major Capital Repairs
(i)".
- - Section 10.2.2 (p.19). The phrase "the fixed rental payments payable by
Leaseco under Section 2.3.2 and the Monthly Margin Payments payable by
Leaseco pursuant to Article 2 of this Agreement" is hereby changed to the
"fixed rental payments and the Monthly Margin Payments payable by Leaseco
pursuant to Section 2.3.2 of this Agreement."
- - Section 11.6 (p.22). The reference to the "Transmission Agreement" is
hereby changed to the "Transmission Service and Interconnection
Agreement."
- - Section 13.4 (p.22). The phrase "but without giving effect to the conflict
of law rules of such jurisdiction" is hereby added to the end of the
sentence.
- - Section 13.14.2 (p.24). In the phrase "Leaseco nor its successor or
assigns," the word successor is hereby made plural.
- - Section 13.14.3 (p.25). The reference to "Mortgagees" is hereby made lower
case.
- - Schedule 2.3 (in the form attached hereto) is hereby added to the Lease and
Operating Agreement.
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5. POWER PURCHASE AGREEMENT. The Parties hereby agree to amend Exhibit D to the
New Participation Agreement (Power Purchase Agreement) as follows:
- - Section 2.2(d) (p.5). The reference to "tangible assets" is hereby
capitalized.
- - Section 3.3(a)(iii) (p.8). The phrase "The first Monthly Margin Payment
shall be due on the second occurrence" is hereby changed to "The first
Monthly Margin Payment shall be due from LEM to Big Rivers on the second
occurrence."
- - Section 3.3(a)(viii)(3) (p.11). The phrase "Federal Energy Regulatory
Commission" is hereby changed to "FERC."
- - Section 4.2 (p.14). The phrase "(i) the Members may acquire Power from a
Person other than Big Rivers after the first January 1 that is three full
Years after the Effective Date to the extent necessary for the Members to
fulfill their obligations to provide market-priced Power to certain of
their non-Smelter industrial customers as contemplated in the Plan, and
(ii)" is hereby deleted.
- - Section 4.3(b)(iv). (p.15). The phrase "(determined by reference to
(iii), above)" is hereby deleted.
- - Section 4.3(d)(iv) (p.16). The phrase "(determined by reference to (iii),
above)" is hereby deleted.
- - Section 4.3(e)(p.16). The reference to "December 31, 1997" is hereby
changed to "December 31, 1998."
- - Section 4.4(a)(iii) (p.18). The phrases "market-priced" and "as
contemplated in the Plan or Big Rivers' Transaction Tariff" are hereby
deleted.
- - Section 5.4 (p.21). The references to "transmission system" are hereby
capitalized.
- - Sections 5.5(b)(iii), 5.6, 5.6 and 5.8 (pp.22-24). The references to
"Control Area" are hereby made lower case.
- - Section 5.7 (p.23). Section 5.7 is hereby modified by deleting the last
sentence of the Section and inserting at the end of the second to last (now
last) sentence the following:
;provided, that in the event that two or more Generating Plant units
are off-line and Big Rivers is experiencing low voltage problems, the
Operator of the Generating Plants will, without adjustment in the Power
Value Amount, operate the Generating Plant units down to the design
lagging power factor without a loss of megawatt output, but only to the
extent necessary to produce an amount of megavars equal to [REDACTED]
multiplied by the net output of the Generating Plants that would exist
if the units that are off-line at the time the calculation was made are
operating. At any time, any additional megavars requested by Big Rivers
in excess of [REDACTED] multiplied by the net output of the Generating
Plants, assuming no units are off-line, if available from the
Generating Plants without loss of megawatt output capabilities, shall
be provided to Big Rivers from LEM at LEM's rates for sale of reactive
power set forth in its tariff for the sale of ancillary services (as
filed with FERC and revised from time-to-time). LEM may also elect (but
is not obligated) to
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EXECUTION ORIGINAL
provide, in any hour at Big Rivers' request, megavars in such
quantities that their production adversely impacts the Generating
Plants' capability to produce megawatts at the rated lagging power
factor, but shall do so only at the rate set forth in LEM's tariff
for the sale of ancillary services (as filed with FERC and revised
from time-to-time) or such other rates as FERC may accept for filing.
- - Section 6.2(g) (p.25). The reference to "transmission system" is hereby
capitalized.
- - Section 6.4(a) (p.28). In the reference to "Base Power Rates," "Rates" is
hereby made lower case.
- - Section 6.6(b) (p.30). The references to "Excess Credit" are hereby made
lower case.
- - Section 9.1(a) (p.32). A close parenthesis is hereby added after
"Section 15.2."
- - Section 13 (p.36) is hereby deleted and left as a "Reserved" section.
- - Section 17.3 (p.40). The reference to "Mortgagees" is hereby made
lower case.
- - Section 18.1 (p.40). The reference to "Notices" is hereby changed to
"notices (Section 21.1)."
- - Section 18.4 (p.41). The phrase "but without giving effect to the conflict
of law rules of such jurisdiction" is hereby added to the end of the
sentence.
- - Signature Block (p.42). The reference to "LG&E Power Marketing Inc."
is hereby changed to "LG&E Energy Marketing Inc."
- - Schedule 3.3(a) (in the form attached hereto) is hereby added to the Power
Purchase Agreement.
- - Exhibit C. The reference to "26 rural delivery points" under Green River
Electric is hereby changed to "27 rural delivery points."
- - Exhibit C. An additional delivery point for Green River Electric is
hereby added as follows: "ACMI 13,800 volts."
- - Exhibit C. The reference to "Costain East Portal" under Henderson
Union Electric is hereby changed to "Lodestar Energy."
- - Exhibit C. The reference to "Green Coal" under Henderson Union
Electric is hereby changed to "C.R. Mining."
- - Exhibit C. The reference to "Peabody Breck" under Henderson Union
Electric is hereby changed to "Peabody Breckenridge."
- - Exhibit C. The reference to "Providence Mine" under Henderson Union
Electric is hereby changed to "Victory Processing."
- - Exhibit C. The reference to "Sextet Dorea Mine 69,000 volts" under
Henderson Union Electric is hereby deleted.
- - Exhibit C. An additional delivery point for Henderson Union Electric
is hereby added as follows: "Dotiki #3 12,470 volts."
6. TRANSMISSION SERVICE AND INTERCONNECTION AGREEMENT. The Parties hereby agree
to amend Exhibit E to the New Participation Agreement (Transmission Service and
Interconnection Agreement) as follows:
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EXECUTION ORIGINAL
- - Recital B (p.2). The reference to "ancillary services" is hereby
capitalized.
- - Before Section 2.5 (ECAR) (p.4), a new Section is hereby added which states
"`Default Rate' shall have the meaning set forth in Exhibit X to the
Participation Agreement."
- - Section 2.8 (p.4). The reference to "`Guaranty Agreement'" is hereby
changed to "`Guaranty.'"
- - Section 3.2(a)(iv) (p.9). The phrase "Chapter 11 Case" is hereby changed to
"Big Rivers' Chapter 11 case pending before the U.S. Bankruptcy Court for
the Western District of Kentucky, Case No.
96-41168."
- - Section 5.1 (p.15). A comma is hereby inserted after the phrase "Big Rivers
shall operate and maintain, or cause to be operated and maintained."
- - Section 5.2 (p.16). The reference to "Firm Transmission Services
Agreement" is hereby changed to "Service Agreement."
- - Section 6.2 (p.17). The references to "Short-Term Firm Transmission
Service" are hereby changed to "Short-Term Firm Point-to-Point Transmission
Service" and the references to "Non-Firm Transmission Service" are hereby
changed to "Non-Firm Point-to-Point Transmission Service."
- - Section 6.3 (p.18). The reference to "Firm Transmission Service" is hereby
changed to "Firm Point-to-Point Transmission Service," the references to
"Long-Term Firm Transmission Service" are hereby changed to "Long-Term Firm
Point-to-Point Transmission Service" and the reference to "completed
Transmission Services Agreement" is hereby changed to "a completed Service
Agreement."
- - Section 6.5.1 (p.20). The reference to "RUS" is hereby changed to
"Administrator of the Rural Utilities Service, U.S. Department of
Agriculture or any successor agency or administration."
- - Section 6.5.2 (pp.21-25). The reference to "Open Access Transmission
Tariff" is hereby changed to "Tariff," the references to "Lease" are hereby
changed to "Lease and Operating Agreement" and the reference to
"Transmission Service Agreement" is hereby changed to "Service Agreement."
- - Section 6.5.3 (p.25). The reference to "FPA" is hereby changed to
"Federal Power Act."
- - Section 7.1 (p.26). The reference to "Transmission Provider" is hereby
changed to "Transmission Provider (as defined in FERC's Order No. 888)" and
the reference "WKEC and Station Two Subsidiary" is hereby changed to "LEM."
- - Section 8.1.1.1 (p.27). The reference to "Transmission system" is
hereby changed to "Transmission System."
- - Section 8.1.1.9 (p.28). The reference to "Transmission Facilities" is
hereby made lower case.
- - Section 8.1.2.8 (p.30). The reference to "control area" is hereby
capitalized.
- - Section 9.1 (p.33). The reference to "Firm Transmission Service" is
hereby changed to "Firm Point-to-Point Transmission Service."
- - Section 9.3 (pp.34-35). The references to "Lease Agreement" and "Lease" are
hereby changed to "Lease and Operating Agreement," the reference to "Green
River Electric Corporation" is hereby changed to "Green River Electric,"
and the reference to
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EXECUTION ORIGINAL
"Henderson Union Electric Cooperative Corporation" is hereby changed to
"Henderson Union."
- - Section 9.4 (p.35). The reference to "Kentucky Utilities" is hereby changed
to "Kentucky Utilities Company" and the reference to "tariff" is hereby
capitalized.
- - Section 9.6 (p.36). The reference to "Transmission Providers" is
hereby changed to "Transmission Providers (as defined in FERC's Order
No. 888)."
- - Section 10 (p.37). The references to "Non-Firm Transmission Credit"
are hereby changed to "Non-Firm Transmission Use Credit."
- - Section 11.1 (p.39). The reference to "Power Contract" is hereby changed to
"Power Purchase Agreement" and, in the reference to "Control Area
Operator," "Operator" is hereby made lower case.
- - Section 16.3 (pp.49-51). The references to "power" and "energy" are hereby
capitalized, the references to "Lease" are hereby changed to "Lease and
Operating Agreement," and the references to "transmission service" and
"transmission system" are hereby capitalized.
- - Section 18.4 (p.54). The reference to "Firm Transmission Services
Agreements" is hereby changed to "Service Agreements for Firm
Point-to-Point Transmission Service."
- - Exhibit 5. The reference to "26 rural delivery points" under Green River
Electric is hereby changed to "27 rural electric points."
- - Exhibit 5. The reference to "Southwire #1 13,800 volts" under Green River
Electric is hereby deleted.
- - Exhibit 5. The reference to "Southwire #2 13,800 volts" under Green River
Electric is hereby deleted.
- - Exhibit 5. An additional delivery point for Green River Electric is
hereby added as follows: "ACMI 13,800 volts."
- - Exhibit 5. The reference to "Costain East Portal" under Henderson
Union Electric is hereby changed to "Lodestar Energy."
- - Exhibit 5. The reference to "Green Coal" under Henderson Union
Electric is hereby changed to "C.R. Mining."
- - Exhibit 5. The reference to "Peabody Breck" under Henderson Union
Electric is hereby changed to "Peabody Breckenridge."
- - Exhibit 5. The reference to "Providence Mine" under Henderson Union
Electric is hereby changed to "Victory Processing."
- - Exhibit 5. The reference to "Sextet Dorea Mine 69,000 volts" under
Henderson Union Electric is hereby deleted.
- - Exhibit 5. An additional delivery point for Henderson Union Electric
is hereby added as follows: "Dotiki #3 12,470 volts."
7. TAX INDEMNIFICATION AGREEMENT. The Parties hereby agree to amend Exhibit F
to the New Participation Agreement (Tax Indemnification Agreement) as follows:
- - Recital A (p.1). The reference to "Participation Agreement" is hereby
changed to "New Participation Agreement."
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- - Recitals B and C (p.1). The references to "LPM" are hereby changed to
"LEM."
- - Section 2 (p.4). The reference to "December 31, 1997" is hereby changed to
"December 31, 1998," and the reference to "member" is hereby capitalized.
- - Section 6(c) (p.6). The reference to "Section 7" is hereby changed to
"Article 7."
- - Section 8(a) (p.7). The reference to "Section 7" is hereby changed to
"Article 7."
- - Section 9(b) (p.8). The reference to "Operative Agreements" is hereby
changed to "Operative Documents."
- - Section 11(b) (p.10). After the reference to "(July 7, 1985)," the phrase
"("ABA Opinion 352")" is hereby added.
- - Section 11(f) (p.11). The phrase "but without giving effect to the conflict
of law rules of such jurisdiction" is hereby added to the end of the
sentence.
8. MORTGAGE AND SECURITY AGREEMENT. The Parties hereby agree to amend Exhibit G
to the New Participation Agreement (Mortgage and Security Agreement) as follows:
- - The reference to "Participation Agreement" on the fourth line of page 2 is
hereby changed to "New Participation Agreement."
- - Section 6 (p.3). The following clause is added within the parenthetical at
the end of subpart (a) of Section 6, following the text contained in that
parenthetical: "and which are stipulated to be Permitted Liens"; and the
following parenthetical is hereby added at the end of subpart (b) of
Section 6: "(which is also stipulated to be a Permitted Lien)."
9. STATION TWO AGREEMENT. The Parties hereby agree to amend Exhibit M to the
New Participation Agreement (Station Two Agreement) as follows:
- - Section 3.5(d) (p.10). Section 3.5(d) is hereby deleted and replaced with
the following new section: "(d) A Certificate of an authorized officer of
Station Two Subsidiary certifying that, as of the effective date of the
Station Two Agreement, Station Two Subsidiary is an "affiliate" of a
utility subject to regulation by the KPSC in compliance with KRS
Section 96.520."
- - Section 8.7 (p.32). The phrase "keep up-to-date books and records" is
hereby changed to "keep, or cause to be kept, up-to-date books and
records." The phrase "retain those books and records" is hereby changed to
"retain, or cause to be retained, those books and records."
- - Section 8.14(c) (p.50). The phrase "administer, all of Big Rivers' fuel and
reagent supply agreements" is hereby changed to "administer, or cause to be
administered, all of Big Rivers' fuel and reagent supply agreements." The
phrase "procure and initially pay for all fuel and reagents" is hereby
changed to "procure, or cause to be procured, and initially pay for all
fuel and reagents."
- - Section 8.17(a) (p.56). The first sentence of Section 8.17(a) is hereby
amended to be and read in its entirety as follows:
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For purposes of this Agreement (including without limitation, Section 9
of this Agreement, entitled "Phase II Assignments") as between Big
Rivers and Station Two Subsidiary, "Station Two Improvements" shall
mean any betterments, renewals, replacements or additions to the
Station Two Assets used in the operation of Station Two and/or the Reid
Station (but only if not otherwise accounted for under the Cost Sharing
Agreement or the Lease, as applicable), (i) that are made pursuant to
the Operating Budget, or an approved modification thereof, or a
deviation therefrom as permitted by Section 8.17(f) or Section 9.10(d),
as applicable, or that result from an Operating Emergency as
contemplated in those Sections, or that are required to be made under
the Station Two Contracts in the absence of an approved Operating
Budget, and (ii) that should ordinarily be capitalized in accordance
with the RUS Uniform System of Accounts Bulletin 1767 B, as such
bulletin may be amended, modified, or replaced from time to time (but
subject to the Capitalization Guidelines).
- - The reference on the last line of Section 8.17(a) to "Article 17" is
hereby changed to "Article 7."
- - Section 8.17(d) (p.59). The phrase "On the first day of each month
during the Phase I Subcontract Term Station Two Subsidiary and Big
Rivers shall each deposit sufficient funds into the Station Two
Improvements Account based on their respective Station Two Improvement
Sharing Ratios (defined in Section 8.17(e) below) (i)" is hereby changed
to "On the first day of each month during the Phase I Subcontract Term
Station Two Subsidiary and Big Rivers shall each deposit sufficient
funds into the Station Two Improvements Account based on their
respective Station Two Improvement Sharing Ratios (defined in Section
8.17(e) below) but limited in the case of Big Rivers to the remaining
Big Rivers Contribution (as defined in Section 20.6 of the Participation
Agreement) for that Year with respect to Henderson Non-Incremental
Capital Costs that are not for Henderson Major Capital Repairs (as
defined in the Participation Agreement) (i)".
- - Section 8.17(f). Section 8.17(f) is hereby amended to be and read in its
entirety as follows:
(f) Station Two Subsidiary and Big Rivers agree with each other as
follows: Station Two Subsidiary shall immediately notify the Operating
Committee of any anticipated departure of [REDACTED]% or more from the
budget for Station Two Improvements or for operating and maintenance
expenses included in any approved Operating Budget. Station Two
Subsidiary shall use reasonable efforts to (a) operate within
[REDACTED] percent to [REDACTED] percent of the total approved budget
for Station Two Improvements included in an Operating Budget, and
(b) to spend at least [REDACTED] percent of the total approved budget
for operating and maintenance expenses included in an Operating Budget
(not including the fuel or
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Privileged and Confidential
EXECUTION ORIGINAL
reagent budget). Subject to the provisions set forth below, any
increase of [REDACTED] percent or more proposed by Station Two
Subsidiary to either the Station Two Improvements budget or the
operating and maintenance expense budget set forth in an approved
Operating Budget shall be subject to review and approval by the
Operating Committee; provided, that such review and approval shall
not apply to the operating and maintenance expense budgets that are
included in an Operating Budget that is a part of the Initial Period
Budgets, it being understood that increases of [REDACTED] percent or
more proposed by Station Two Subsidiary to those budgets shall be
permissible without that review and approval if the relevant
expenditures are consistent with Prudent Utility Practice, in which
case the additional costs that are allocable to Big Rivers under
the Station Two Contracts shall, as between Big Rivers and Station
Two Subsidiary, be borne by Station Two Subsidiary unless they
constitute Henderson Incremental Environmental O&M required to be
borne by both Station Two Subsidiary and Big Rivers in the manner
provided for in Section 8.16. If Station Two Subsidiary exceeds
the total budget for Henderson Non-Incremental Capital Costs
(exclusive of such costs as are for Henderson Major Capital Repairs)
that are included in an approved budget for Station Two Improvements
in an Operating Budget, the additional cost of those Henderson Non-
Incremental Capital Costs that are allocable to Big Rivers under
the Station Two Contracts shall, as between Big Rivers and Station
Two Subsidiary, be borne by Station Two Subsidiary unless the
parties agree otherwise, or unless remaining portions of the Big
Rivers Contribution for that Year that were not included in the
approved Operating Budget are available as contemplated in
Section 20.6.2 of the Participation Agreement (in which event such
amounts will be applied as contemplated in that Section). Subject
to the next succeeding sentence, if Station Two Subsidiary exceeds
[REDACTED] percent of the total approved budget for Henderson
Incremental Capital Costs, or for Henderson Non-Incremental Capital
Costs for Major Capital Repairs, in either case that are included
in an approved Operating Budget, the additional costs of those
Station Two Improvements that are allocable to Big Rivers under the
Station Two Contracts shall, as between Big Rivers and Station Two
Subsidiary, be borne by Station Two Subsidiary unless the Parties
otherwise agree, or unless the dispute resolution procedure under
Article 15 of the Participation Agreement (and contemplated in
Section 13.5(e) of this Agreement) determines that at the time
Station Two Subsidiary proposed the applicable portions of the
Operating Budget (or modification thereof) relating to those
expenditures Station Two Subsidiary acted consistent with Prudent
Utility Practice, in which case the additional costs shall be borne
by Station Two Subsidiary and Big Rivers in accordance with
Sections 8.17(d) and 8.17(e) of this Agreement. Notwithstanding
the provisions
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EXECUTION ORIGINAL
of the immediately preceding sentence, if Station Two Subsidiary
exceeds [REDACTED] percent of the total of any approved budget for
Henderson Incremental Capital Costs, or for Henderson
Non-Incremental Capital Costs for Major Capital Repairs, that are
included in an Operating Budget that is a part of the Initial Period
Budgets, the additional cost of those Station Two Improvements that
are allocable to Big Rivers under the Station Two Contracts shall,
as between Big Rivers and Station Two Subsidiary, be borne by
Station Two Subsidiary unless the Parties otherwise agree, or unless
the dispute resolution procedure set forth in Article 15 of the
Participation Agreement determines that the purchase and
installation of those Station Two Improvements, and the costs
thereof, are consistent with Prudent Utility Practice, regardless of
whether the relevant Initial Period Budget, or Station Two
Subsidiary's actions in connection with the same, were consistent
with Prudent Utility Practice at the time that the budget was
prepared, in which case the additional costs that are allocable to
Big Rivers under the Station Two Contracts shall, as between Big
Rivers and Station Two Subsidiary, be borne by Station Two
Subsidiary and Big Rivers in accordance with Sections 8.17(d) and
8.17(e) of this Agreement. If Station Two Subsidiary fails or
refuses to use reasonable efforts to spend at least [REDACTED] percent
of the total budget for Station Two Improvements or for operating and
maintenance expenses included in an approved Operating Budget
(excluding that portion relating to Henderson Incremental
Environment O&M), and pursuant to the dispute resolution procedure
under Article 15 of the Participation Agreement it is determined
that such failure or refusal was inconsistent with Prudent Utility
Practice, Station Two Subsidiary shall make the omitted expenditures
as required pursuant to the applicable dispute resolution procedure.
Notwithstanding anything contained in this Section 8.17(f) to the
contrary, Station Two Subsidiary shall in no event be required to
expend the monies included in an approved Operating Budget where to
do so would cause Station Two Subsidiary to be in breach or default
under any Station Two Contract. Additional capital expenditures
incurred by Station Two Subsidiary in response to an Operating
Emergency (as defined in the Participation Agreement) which are not
already included in an approved Operating Budget, and which are
allocated to Big Rivers under the Station Two Contracts shall, as
between Big Rivers and Station Two Subsidiary, be paid for by
Station Two Subsidiary unless (a) the same represents a Henderson
Incremental Capital Cost or expenditures for a Henderson Major
Capital Repair (as defined in the Participation Agreement), in which
case such expenditures shall be paid by Station Two Subsidiary and
Big Rivers in accordance with Sections 8.17(d) and 8.17(e), or (b)
there are remaining amounts in the Big Rivers Contribution for that
Year that were not included in the budget for
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Henderson Non-Incremental Capital Costs in the approved Operating
Budget, as contemplated in Section 20.6.2 of the Participation
Agreement, in which case that remaining amount will be allocated to
any Henderson Non-Incremental Capital Costs in that Year resulting
from that Operating Emergency as contemplated in Section 20.6.2.
- - Section 8.18 (p.62). The reference to "Section 6.3(a) of the Station Two
Operating Agreement is hereby changed to "Section 6.3(a) of the Station Two
Power Sales Agreement."
- - Section 9.3 (p.65). The reference to "LG&E" is hereby changed to
"Station Two Subsidiary."
- - Section 9.10(c) (p.86). In the third sentence, the phrase "On the
first day of each month during the Phase II Assignment Term Station Two
Subsidiary and Big Rivers shall each directly deposit sufficient funds
into the Station Two Improvements Account based on their respective
Station Two Improvement Sharing Ratios (defined in Section 8.17(e)), as
then applicable, (i)" is hereby changed to "On the first day of each
month during the Phase II Assignment Term Station Two Subsidiary and Big
Rivers shall each deposit sufficient funds into the Station Two
Improvements Account based on their respective Station Two Improvement
Sharing Ratios (defined in Section 8.17(e)), as then applicable, but
limited in the case of Big Rivers to the remaining Big Rivers
Contribution (as defined in Section 20.6 of the Participation Agreement)
for that Year with respect to Henderson Non-Incremental Capital Costs
that are not for Henderson Major Capital Repairs (as defined in the
Participation Agreement) (i)".
- - Section 9.10(d). Section 9.10(d) is hereby amended to be and read in its
entirety as follows:
(d) Station Two Subsidiary and Big Rivers agree with each other as
follows: Station Two Subsidiary shall immediately notify the Operating
Committee of any anticipated departure of [REDACTED]% or more from the
budget for Station Two Improvements or for operating and maintenance
expenses included in any approved Operating Budget. Station Two
Subsidiary shall use reasonable efforts to (a) operate within
[REDACTED] percent to [REDACTED] percent of the total approved budget
for Station Two Improvements included in an Operating Budget, and
(b) to spend at least [REDACTED] percent of the total approved budget
for operating and maintenance expenses included in an Operating Budget
(not including the fuel or reagent budget). Subject to the provisions
set forth below, any increase of [REDACTED] percent or more proposed
by Station Two Subsidiary to either the Station Two Improvements budget
or the operating and maintenance expense budget set forth in an
approved Operating Budget shall be subject to review and approval by
the Operating Committee; provided, that such review and approval shall
not apply to the operating and maintenance expense budgets that are
included in an Operating Budget that is a part of the Initial Period
Budgets, it being understood that
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increases of [REDACTED] percent or more proposed by Station Two
Subsidiary to those budgets shall be permissible without that review
and approval if the relevant expenditures are consistent with Prudent
Utility Practice, in which case the additional costs shall, as
between Big Rivers and Station Two Subsidiary, be borne by Station
Two Subsidiary unless they constitute Henderson Incremental
Environmental O&M required to be borne by both Station Two
Subsidiary and Big Rivers in the manner provided for in Section 9.9.
If Station Two Subsidiary exceeds the total budget for Henderson
Non-Incremental Capital Costs (exclusive of such costs as are for
Henderson Major Capital Repairs (as defined in the Participation
Agreement) that are included in an approved budget for Station Two
Improvements in an Operating Budget, the additional cost of those
Henderson Non-Incremental Capital Costs that are allocable to
Station Two Subsidiary under the Station Two Contracts shall, as
between Big Rivers and Station Two Subsidiary, be borne by Station
Two Subsidiary unless the parties agree otherwise, or unless
remaining portions of the Big Rivers Contribution for that Year that
were not included in the approved Operating Budget are available as
contemplated in Section 20.6.2 of the Participation Agreement (in
which event such amounts will be applied as contemplated in that
Section). Subject to the next succeeding sentence, if Station Two
Subsidiary exceeds [REDACTED] percent of the total approved budget for
Henderson Incremental Capital Costs, or for Henderson
Non-Incremental Capital Costs for Henderson Major Capital Repairs,
in either case that are included in an approved Operating Budget,
the additional costs of those Station Two Improvements that are
allocable to Station Two Subsidiary under the Station Two Contracts
shall, as between Big Rivers and Station Two Subsidiary, be borne by
Station Two Subsidiary unless the Parties otherwise agree, or unless
the dispute resolution procedure under Article 15 of the
Participation Agreement (and contemplated in Section 13.5(e) of this
Agreement) determines that at the time Station Two Subsidiary
proposed the applicable portions of the Operating Budget (or
modification thereof) relating to those expenditures Station Two
Subsidiary acted consistent with Prudent Utility Practice, in which
case the additional costs shall be borne by Station Two Subsidiary
and Big Rivers in accordance with Section 9.10(c) of this Agreement.
Notwithstanding the provisions of the immediately preceding
sentence, if Station Two Subsidiary exceeds 110 percent of the total
of any approved budget for Henderson Incremental Capital Costs, or
for Henderson Non-Incremental Capital Costs for Henderson Major
Capital Repairs, that are included in an Operating Budget that is a
part of the Initial Period Budgets, the additional cost of those
Station Two Improvements that are allocable to Big Rivers under the
Station Two Contracts shall, as between Big Rivers and Station Two
Subsidiary, be borne by Station
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Two Subsidiary unless the Parties otherwise agree, or unless the
dispute resolution procedure set forth in Article 15 of the
Participation Agreement determines that the purchase and
installation of those Station Two Improvements, and the costs
thereof, are consistent with Prudent Utility Practice, regardless of
whether the relevant Initial Period Budget, or Station Two
Subsidiary's actions in connection with the same, were consistent
with Prudent Utility Practice at the time that the budget was
prepared, in which case the additional costs that are allocable to
Station Two Subsidiary under the Station Two Contracts shall, as
between Big Rivers and Station Two Subsidiary, be borne by Station
Two Subsidiary and Big Rivers in accordance with Section 9.10(c) of
this Agreement. If Station Two Subsidiary fails or refuses to use
reasonable efforts to spend at least [REDACTED] percent of the total
budget for Station Two Improvements or for operating and maintenance
expenses included in an approved Operating Budget (excluding that
portion relating to Henderson Incremental Environmental O&M), and
pursuant to the dispute resolution procedure under Article 15 of the
Participation Agreement it is determined that such failure or
refusal was inconsistent with Prudent Utility Practice, Station Two
Subsidiary shall make the omitted expenditures as required pursuant
to the applicable dispute resolution procedure. Notwithstanding
anything contained in this Section 9.10(d) to the contrary, Station
Two Subsidiary shall in no event be required to expend the monies
included in an approved Operating Budget where to do so would cause
Station Two Subsidiary to be in breach or default under any Station
Two Contract. Additional capital expenditures incurred by Station
Two Subsidiary in response to an Operating Emergency (as defined in
the Participation Agreement) which are not already included in an
approved Operating Budget, and which are allocated to Station Two
Subsidiary under the Station Two Contracts shall, as between Big
Rivers and Station Two Subsidiary, be paid for by Station Two
Subsidiary unless (a) the same represents a Henderson Incremental
Capital Cost or expenditures for a Henderson Major Capital Repair,
in which case such expenditures shall be paid by Station Two
Subsidiary and Big Rivers in accordance with Section 9.10(c), or (b)
there are remaining amounts in the Big Rivers Contribution for that
Year that were not included in the budget for Henderson
Non-Incremental Capital Costs in the approved Operating Budget, as
contemplated in Section 20.6.2 of the Participation Agreement, in
which case that remaining amount will be allocated to any Henderson
Non-Incremental Capital Costs in that Year resulting from that
Operating Emergency as contemplated in Section 20.6.2.
- - Section 10.9 (p.120). The first reference to "Station Two Subsidiary"
is hereby changed to "Station Two Subsidiary or its Affiliates."
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- - Section 10.19(c)(3) (p.141). The first reference to "Station Two Subsidiary"
is hereby changed to "Station Two Subsidiary and its agents, authorized
representatives or employees."
- - Section 11.1(a) (p.157). In the phrase "Pre-closing Development Agreements,"
"closing" is hereby capitalized.
- - Section 16.2 (p.229). The reference to "uncontrollable force" is hereby
capitalized.
- - Section 17 (p.229). The reference to "section 17" is hereby capitalized.
10. ADDITIONAL DEFINITIONS TO STATION TWO AGREEMENT. The Parties agree to amend
Exhibit B to the Station Two Agreement (Additional Definitions to Station Two
Agreement) as follows:
- - Section 7 (Bankruptcy Code) is hereby moved to precede Section 6 (Bankruptcy
Court) and those sections are hereby renumbered accordingly.
- - Section 6 (p.2). The reference to "Western District of Kentucky" is
hereby changed to "Western District of Kentucky, Owensboro Division."
- - Section 27 (Facilities) is hereby moved to precede Section 26 (Facilities
Operating Agreement) and those sections are hereby renumbered accordingly.
- - Section 32 (p.5). The reference to "Amended and Restated Guarantee
Agreement" is hereby changed to "New Guarantee Agreement."
- - Section 33 (p.5). Section 33 is hereby amended to be and read in its entirety
as follows: "'GUARANTY' shall mean the Guarantee Agreement (Station Two
Obligations) executed by LEC on the Execution Date for the benefit of
Henderson, pursuant to which LEC guarantees the obligations of the LG&E
Companies pursuant to the Station Two Agreement, as well as their obligations
pursuant to the Systems Reserves Agreement and the G&A Allocation Agreement
to be entered into in connection therewith."
- - Section 53 (p.7). The phrase "of this Agreement" is hereby deleted.
- - Section 54 (p.7). The phrase "of this Agreement" is hereby deleted.
- - Section 56 (p.7). The reference to "Kentucky Public Service
Commission" is hereby changed to "KPSC."
- - Section 59 (p.8). The phrase "of this Agreement" is hereby deleted.
- - Section 60 (p.8). The phrase "of this Agreement" is hereby deleted.
- - Section 63 (p.8). The reference therein to "subordination,
Non-Disturbance, Attornment and Inter-Creditor Agreement" is hereby
changed to "Subordination, Non-Disturbance, Attornment and Inter-Creditor
Agreements."
- - Section 65 (p.8). The reference to "Section 8.16" is hereby changed to
"Section 8.15."
- - Section 74 (p.9). The phrase "PERMITTED LIEN" shall mean the liens
granted by Big Rivers in favor of the RUS and the LC Issuer securing all
indebtedness outstanding on the Effective Date to the RUS and the LC
Issuer, provided that RUS has executed a Non-Disturbance Agreement with
the LG&E Parties and WKEC, and including any lien of the RUS shared by an
LC Issuer, provided the LC Issuer has also executed a Non-Disturbance
Agreement with the LG&E Parties and KEC, and any of the following
additional liens:" is hereby changed to "PERMITTED LIEN" shall mean the
liens granted by Big Rivers in favor of the
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RUS, the LC Issuer and the [Bank] provided that the RUS, the LC Issuer
and/or the [Bank], in each case, has executed a Non-Disturbance
Agreement with the LG&E Parties, and any of the following additional
liens:"
- - Section 94 (Tax or Taxes) is hereby moved to precede Section 93 (Tax
Indemnification Agreement) and those sections are hereby renumbered
accordingly.
- - Section 96 (p.13) Each reference to "Transmission Services and
Interconnection Agreement" is hereby changed to "Transmission Service and
Interconnection Agreement."
- - Section 100 (p.13). The phrase "of this Agreement" is hereby deleted.
11. G&A ALLOCATION AGREEMENT. The Parties hereby agree to amend Exhibit C to
the Station Two Agreement (G&A Allocation Agreement) as follows:
- - Section 4.3(d) (p.6). The reference to "each administrative building
occupied by personnel of Station Two Subsidiary (or its successor in
interest) in a Station Two Subsidiary Support Position" is hereby
changed to "each administrative building located in Henderson County,
Kentucky occupied by personnel of Station Two Subsidiary or its
Affiliates (or their successors in interest) in a Station Two Subsidiary
Support Position."
- - Section 5.2(a) (p.7). The reference to "Section 4.2" is hereby changed
to "Section 4.1."
12. OPERATING RESERVES AGREEMENT. The Parties hereby agree to amend the
"A greement with Respect to Operating Reserves and Amendment No. 1 to Systems
Re serves Agreement" as follows:
- - Section J(a) (p.3). The amount "$[REDACTED] per KW" is hereby changed
to "$[REDACTED] per KW."
- - Section J(b) (p.4). The amount "$[REDACTED] per KW" is hereby changed
to "$[REDACTED] per KW."
13. SETTLEMENT MORTGAGE. The Parties hereby agree to amend Exhibit N to the New
Participation Agreement (Settlement Mortgage) as follows:
- - The reference to "Participation Agreement" in the second sentence of the
second full paragraph on page 1 is hereby changed to "New Participation
Agreement."
14. EXHIBIT X. The Parties hereby agree to amend Exhibit X to the New
Participation Agreement (Definitions) as follows:
- - New Section (p. 1). A new section is hereby added between Section 4
(Alcan) and Section 5 (Ancillary Services) which reads: "AMENDED AND
RESTATED GUARANTEE AGREEMENT. `AMENDED AND RESTATED GUARANTEE AGREEMENT'
shall mean the Guaranty dated March 18, 1998, and made by LEC in favor of
Big Rivers."
- - Section 5 (p.1). The reference to "Open Access Transmission Service
Tariff" is hereby changed to "Open Access Transmission Tariff."
- - New Section (p.7). A new Section is hereby added between Section 59
(Hazardous Substances) and Section 60 (Henderson Union) which reads:
"HENDERSON MAJOR CAPITAL
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Privileged and Confidential
EXECUTION ORIGINAL
REPAIRS. `HENDERSON MAJOR CAPITAL REPAIRS' shall mean Major Capital Repairs
conducted at or with respect to Station Two."
- - New Section (p.10). A new Section is hereby added between Section 93 (Major
Capital Improvement) and Section 94 (Management Fee) which reads: "MAJOR
CAPITAL REPAIRS. `MAJOR CAPITAL REPAIRS' shall be as defined by the Parties
and set forth in a written document prior to the Closing.
- - Section 11 (Assets) is hereby moved to precede Section 10 (Assets Insurance)
and those sections are hereby renumbered accordingly.
- - Section 14 (Bankruptcy Code) is hereby moved to precede Section 13
(Bankruptcy Court) and those sections are hereby renumbered accordingly.
- - Section 13 (p.2). The reference to "Western District of Kentucky" is
hereby changed to "Western District of Kentucky, Owensboro Division."
- - Section 23 (p.3) The phrase "prior to April 7, 1998" is hereby changed to "on
or prior to May 29, 1998."
- - Section 26 (p.3). Section 26 is amended to include after the reference to
"Annual Capital Budget" therein the following: ", an approved modification
thereof, or a deviation therefrom as permitted by Section 6.5 of the
Facilities Operating Agreement, Section 7.5 of the Lease, or Section 8.17(f)
or 9.10(d) of the Station Two Agreement (as applicable), or that result from
an Operating Emergency as contemplated in Section 6.6 of the Facilities
Operating Agreement and Section 7.6 of the Lease."
- - Section 27 (p.3). In the reference to "Capitalization guidelines,"
"capitalization" is hereby made lower case.
- - Section 58 (p.6). The phrase "Amended and Restated Guarantee
Agreement" is hereby changed to "New Guarantee Agreement."
- - Section 86 (p.9). The phrase "prior to April 7, 1998" is hereby
changed to "on or prior to May 29, 1998."
- - Section 87 (p.9). The phrase "prior to April 7, 1998" is hereby
changed to "on or prior to May 29, 1998."
- - Section 95 (p.10). The phrase "of this Agreement" is hereby deleted.
- - Section 96 (p.10). The phrase "of this Agreement" is hereby deleted.
- - Section 98 (p.10). The reference to "Kentucky Public Service
Commission" is hereby changed to "KPSC."
- - Section 102 (p.11). The reference to "Kentucky Public Service
Commission" is hereby changed to "KPSC."
- - Section 103 (p.11). The phrase "of this Agreement" is hereby deleted.
- - Section 104 (p.11). The phrase "of this Agreement" is hereby deleted.
- - Section 106 (Minimum Requirement) is hereby moved to precede Section
105 (Minimum Requirement Revision Event) and those sections are renumbered
accordingly.
- - Section 123 (p.13). The reference to "the Guaranty dated" is hereby changed
to "the Guarantee Agreement dated" and the following phrase is added to the
end of the sentence: ",which was superseded and replaced by the Amended and
Restated Guarantee Agreement dated March 18, 1998."
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Privileged and Confidential
EXECUTION ORIGINAL
- - Section 128 (Participation Agreement) is hereby amended by adding ", as
amended" at the end of the Section.
- - Section 128 (Participation Agreement) is hereby moved to precede Section 127
(Participation Effective Date) and those sections are renumbered accordingly.
- - Section 130 (p.14). The phrase "`PERMITTED LIEN' shall mean the liens
granted by Big Rivers in favor of the RUS and the LC Issuer securing all
indebtedness outstanding on the Effective Date to the RUS and the LC
Issuer, provided that RUS has executed a Non-Disturbance Agreement with
the LG&E Parties, and including any lien of the RUS shared by an LC
Issuer, provided the LC Issuer has also executed a Non-Disturbance
Agreement with the LG&E Parties, and any of the following additional
liens:" is hereby changed to "`PERMITTED LIEN' shall mean the liens
granted by Big Rivers in favor of the RUS, the LC Issuer and the [Bank],
in each case, provided that the RUS, the LC Issuer and/or the [Bank] has
executed a Non-Disturbance Agreement with the LG&E Parties, and any of the
following additional liens:"
- - Section 158 (SO2 Allowances) is hereby moved to precede Section 166
(Southwire) and Sections 159 through 165 are hereby renumbered accordingly.
- - Section 164 (p.18). The phrase "on or prior to April 7, 1998" is hereby
changed to "on or prior to May 29, 1998."
- - Section 167 (p.19). The reference to "the City of Henderson's" is
hereby changed to "HMP&L's."
- - Section 175 (Tax or Taxes) is hereby moved to precede Section 173 (Tax Return
or Return) and Section 174 (Tax Indemnification Agreement) and those sections
are hereby renumbered accordingly.
- - Section 180 (p.20) Each reference to "Transmission Services and
Interconnection Agreement" is hereby changed to "Transmission Service and
Interconnection Agreement."
- - Section 186 (p.21). The reference to "Henderson" is hereby changed to
"HMP&L."
- - Section 189 (p.21). The phrase "of this Agreement" is hereby deleted.
15. NON-DISTURBANCE AGREEMENT. The parties hereby agree to amend the
Non-Disturbance Agreement as follows:
- - Section 1.5(c)(i) (p. 5). The phrase "excluding any sums owed in respect of
Enhancements or Major Capital Improvements if any amounts are paid to the
LG&E Parties under Section 1.5(b)" is hereby added at the end of the Section,
immediately following the term "New Participation Agreement."
16. NEW GUARANTEE AGREEMENT. The parties agree to amend the New Guarantee
Agreement as follows:
- - Second paragraph of the preamble, third sentence (p. 1). The phrase
"as amended" is hereby added after "LG&E Affiliates."
- - Second paragraph of the preamble, last sentence (p.1). The phrase "as
amended," preceded
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EXECUTION ORIGINAL
by a comma, is hereby added after "June 9, 1997" and before the period.
17. CAPITALIZATION GUIDELINES. The parties agree to amend the Capitalization
Guidelines attached to the New Participation Agreement as Exhibit P as follows:
- - To delete therefrom in its entirety Section 1.a., which reads "a. The
Big Rivers 20,000- item Continuing Property Record (CPR) file."
- - To renumber the remaining subsections of Section 1 as a., b. and c.
- - To change the reference in Section 1.d. from "a, b or c, above" to "a
or b, above."
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Except as expressly provided herein, the provisions of the New
Participation Agreement shall remain in full force and effect from and after
the execution hereof to the same extent as prior to such execution.
IN WITNESS WHEREOF, the Parties have caused this Amendment to be
executed as of the day and year first written above.
BIG RIVERS ELECTRIC CORPORATION
By: /S/ MICHAEL H. CORE
---------------------------
Printed Name: Michael H. Core
Title: President/CEO
WESTERN KENTUCKY ENERGY CORP.
By: /S/ GEORGE BASINGER
---------------------------
Printed Name: George W. Basinger
Title: President
LG&E ENERGY MARKETING INC.
By: /S/ JOHN R. McCALL
---------------------------
Printed Name: John R. McCall
Title: Secretary
WESTERN KENTUCKY LEASING CORP.
By: /S/ GEORGE BASINGER
---------------------------
Printed Name: George W. Basinger
Title: President
WKE STATION TWO INC.
By: /S/ GEORGE BASINGER
---------------------------
Printed Name: George W. Basinger
Title: President
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[* All Exhibits and Schedules REDACTED.]