<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 14, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM F-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
YORK POWER FUNDING (CAYMAN) LIMITED
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
CAYMAN ISLANDS 4991 98-0190707
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
Number)
</TABLE>
------------------------
YORK POWER FUNDING (CAYMAN) LIMITED
C/O QUEENSGATE SPV SERVICES LIMITED
P.O. BOX 1093 GT, COMPASS CENTER, 2ND FLOOR
CREWE ROAD
GRAND CAYMAN, CAYMAN ISLANDS
(Address including zip code, and telephone number of Registrant's principal
executive offices)
------------------------
CORPORATE SERVICE COMPANY
2 WORLD TRADE CENTER, SUITE 8746
NEW YORK, NEW YORK 10048
(Name, address and telephone number of agent for service)
------------------------
COPIES OF ALL COMMUNICATIONS TO:
HOWARD R. HERMAN, ESQ.
MOSES & SINGER LLP
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-4315
(212) 554-7847
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF BE REGISTERED OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED MAXIMUM AGGREGATE UNIT(1)(2) PRICE(1)(2) FEE(3)
<S> <C> <C> <C> <C>
12% Series A Secured Bonds due
October 30, 2007................... U.S. $150,000,000 100% $150,000,000 $41,700
Guarantee of Senior Secured
Bonds(3)...........................
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Exclusive of accrued interest, if any.
(3) Pursuant to Rule 457(n), no separate fee is payable with respect to the
guarantee of the Bonds being registered.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 14, 1998
PROSPECTUS
YORK POWER FUNDING (CAYMAN) LIMITED
OFFER TO EXCHANGE ITS
12% SERIES A SENIOR SECURED BONDS DUE OCTOBER 30, 2007
FOR ANY AND ALL OF ITS OUTSTANDING
12% SENIOR SECURED BONDS DUE 2007
------------------------
York Power Funding (Cayman) Limited is offering to exchange up to
U.S.$150,000,000 of its 12% Series A Senior Secured Bonds Due October 30, 2007
(the "Exchange Securities"), which have been registered under the Securities Act
of 1933, pursuant to a Registration Statement of which this Prospectus
constitutes a part, for up to all $150,000,000 of its outstanding 12% Senior
Secured Bonds Due October 30, 2007 (the "Old Securities" and, together with the
Exchange Securities, the "Securities"). The terms of the Exchange Securities are
substantially identical in all material respects to the terms of the Old
Securities.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL REMAIN IN EFFECT FOR A MINIMUM
OF 30 DAYS AND WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
1999, UNLESS EXTENDED.
SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR A DISCUSSION OF CERTAIN FACTORS
YOU SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER AND AN INVESTMENT IN
THE EXCHANGE SECURITIES.
The Old Securities were originally issued and sold on August 4, 1998 in a
private placement. At that time, York Power Funding (Cayman) Limited agreed to
exchange registered securities for the privately placed securities.
Both the Old Securities and the Exchange Securities are expected to be paid
by cash flow generated by certain electrical generating facilities. The Old
Securities and the Exchange Securities are secured by certain assets of and cash
flow from these electrical generating facilities.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. YORK
POWER FUNDING (CAYMAN) LIMITED MAY NOT SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
You should rely only on the information contained in this Prospectus or that
we have referred you to. We have not authorized anyone to provide you with
information that is different. We are not offering to sell or asking you to buy
anything other than the Exchange Securities. We are not offering to sell or
asking you to buy anything in any jurisdiction where doing so would be against
the law.
<PAGE>
AVAILABLE INFORMATION
We have filed with the Securities and Exchange Commission (the "Commission")
a registration statement on Form F-4 (the "Registration Statement") with respect
to the 12% Series A Senior Secured Bonds due October 30, 2007 (the "Exchange
Notes"). This Prospectus, which is a part of the Registration Statement, omits
certain information included in the Registration Statement. Information omitted
from this Prospectus, but contained in the Registration Statement, may be
inspected and copied at the Commission's Public Reference Room at Room 1024, 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the
Commission at (800) SEC-0330. You may also obtain information about us from the
following regional offices of the Commission: Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade
Center, 13(th) Floor, New York, New York 10048. Copies of such material can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 at prescribed rates.
You may obtain our electronic filings filed through the Commission's Electronic
Data Gathering, Analysis and Retrieval system through the Commission's home page
on the Internet at http://www.sec.gov.
ADDITIONAL INFORMATION
Following the effectiveness of the Registration Statement covering the
Exchange Offer, we will be subject to certain of the informational requirements
of the Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, will file certain reports and other information with the Commission.
Such reports, other information and the Registration Statement (and the exhibits
and schedules thereto) may be inspected and copied at the Commission's Public
Reference Room at the addresses set forth above.
We will also provide The Bank of New York, as Trustee, and the holders of
the Securities certain other information, documents and other reports.
Notwithstanding that we may not be subject to the reporting requirement of
Section 13 or Section 15(d) of the Exchange Act, we will provide the Trustee and
the holders of the Securities which request such information from us. For
additional information, please refer to the section entitled "SUMMARY
DESCRIPTION OF THE PRINCIPAL FINANCING DOCUMENTS-Trust Indenture; Additional
Covenants" located elsewhere in this Prospectus.
You may contact us at York Power Funding (Cayman) Limited, c/o Queensgate
SPV Services Limited, P.O. Box 1093 GT, Compass Center, 2(nd) Floor, Crewe Road,
Grand Cayman, Cayman Islands, (345) 945-7099.
FORWARD-LOOKING STATEMENTS
The statements, other than statements of historical facts included in this
Prospectus, including statements set forth under the "Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and "Business" regarding the Funding Company's future financial
position, business strategy, budgets, projected costs and plans and objectives
of management, are forward-looking statements. In addition, forward-looking
statements generally can be identified by the use of forward-looking terminology
such as "may," "will," "expect," "intend," "estimate," "anticipate" or "believe"
or the negative thereof or variations thereon or similar terminology. Although
we believe that the expectations reflected in such forward-looking statements
will prove to have been correct, we can give no assurance that such exceptions
will prove to have been correct. You are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date of this
Prospectus. Except as required by law, we are not obligated to publicly release
any revisions to these forward-looking statements to reflect events or
circumstances after the date of this Prospectus or to reflect the occurrence of
unanticipated events. Important factors that could cause actual results to
differ materially from our expectations are disclosed under "Risk Factors" and
elsewhere in this Prospectus including in conjunction with some of the
forward-looking statements included in this Prospectus. All subsequent written
and oral forward-looking statements attributable to the Funding Company, or
persons acting on its behalf, are expressly qualified in their entirety by such
factors.
2
<PAGE>
PROSPECTUS SUMMARY
You should read the following summary together with more detailed
information and Financial Statements and notes thereto appearing elsewhere in
this Prospectus.
This Prospectus contains forward-looking statements. The outcome of the
events described in these forward-looking statements is subject to risks and
actual results could differ materially. The sections entitled "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition" and "Business of
the Funding Company, the Project Note Obligors and Guarantors" as well as those
discussed elsewhere in this Prospectus contain a discussion of some of the
factors and could contribute to these differences.
CERTAIN TERMS
In this summary, we have used certain terms to refer to certain of the
entities involved in the issuance of, and collateral for, the Securities. More
specific definitions are contained at the end of this Prospectus. However, for
convenience, the following is a short glossary of the terms used to describe
these entities, and their role:
- - Funding Company--the issuer of the Securities.
- - Warbasse Guarantors--the holders of the right to receive certain cash flow
from the Warbasse Project, and guarantors of the Securities.
- - Brooklyn Navy Yard Guarantor--the holder of the right to receive certain cash
flow from the Brooklyn Navy Yard Project, and a guarantor of the Securities.
- - Big Spring Guarantor--the owner of the Big Spring Project, and a guarantor of
the Securities.
- - U.S. Guarantors--the Warbasse Guarantors, the Big Spring Guarantor and the
Brooklyn Navy Yard Guarantor collectively, who together borrowed $50,000,000
from the Funding Company pursuant to the U.S. Project Loan.
- - InnCOGEN--the owner of the Trinidad Project.
- - Trinidad Guarantor--the sole stockholder of InnCOGEN, and a guarantor of the
$100,000,000 Trinidad Project Loan made to the Trinidad Parent.
- - Trinidad Parent--the sole stockholder of the Trinidad Guarantor and the
indirect sole stockholder of InnCOGEN, it borrowed $100,000,000 from Funding
Company pursuant to the Trinidad Project Loan.
- - York--York Research Corporation is the sponsor of the offering of the
Securities. York, through its subsidiaries, is engaged in the business of
developing, acquiring, owning and operating independent electric power
generating facilities. York is also engaged, through its subsidiaries, in the
gas marketing business. The Securities are non-recourse to York.
GENERAL
- - The proceeds from the sale of the Securities were used to make the
$100,000,000 Trinidad Project Loan to the Trinidad Parent, and the $50,000,000
U.S. Project Loan to the U.S. Guarantors.
- - The Trinidad Guarantor guaranteed only payment of $100,000,000 Trinidad
Project Loan. Substantially all of the assets of the Trinidad Parent, the
Trinidad Guarantor and InnCOGEN were pledged as collateral for the Trinidad
Project Loan.
3
<PAGE>
- - The U.S. Guarantors guaranteed the payment of the U.S. Project Loan, the
Trinidad Project Loan and the Securities. Substantially all of the assets of
U.S. Guarantors were pledged as collateral for payment of the U.S. Project
Loan, the Trinidad Project Loan and the Securities.
Set forth below is a chart depicting the transaction structure:
[LOGO]
THE PROJECTS
The cash flow to pay the Project Loans and the Securities is derived from
the following four Projects:
- - TRINIDAD PROJECT--the Trinidad Project is a 215 MW natural gas fired electric
generation facility being constructed by InnCOGEN in Trinidad. The Trinidad
Project will sell substantially all of its electricity to Trinidad's public
power distribution utility pursuant to a thirty (30) year power purchase
agreement. Certain obligations of the utility under the power purchase
agreement are guaranteed by the government of Trinidad. Debt securities issued
by the government of Trinidad are rated as BB+ by Standard & Poors, with a
positive outlook, and Ba1 by Moody's. InnCOGEN is 100% beneficially owned by
the Trinidad Guarantor, which in turn is 100% beneficially owned by the
Trinidad Parent, which in turn is indirectly beneficially wholly-owned by
York. All of the assets of and cash flow from the Trinidad Project are pledged
as collateral for the Trinidad Project Loan.
- - BROOKLYN NAVY YARD PROJECT--the Brooklyn Navy Yard Project is a 286 MW
cogeneration facility located in Brooklyn, New York. The Brooklyn Navy Yard
Guarantor has the right to receive certain fees and cash flow from the
Brooklyn Navy Yard Project. The Brooklyn Navy Yard Project sells the bulk of
its electrical and thermal output to Consolidated Edison Company of New York
Inc. (rated A1/A+), pursuant to an energy sales agreement ending in 2036, and
has been in commercial operation since March, 1997. The Brooklyn Navy Yard
Project has approximately $406,000,000 of senior
4
<PAGE>
project level debt outstanding with maturities ranging from 2020 through 2026,
which senior debt is rated BBB- by S&P and Baa3 by Moody's. Only the right of
the Brooklyn Navy Yard Guarantor to receive certain cash flow from the
Brooklyn Navy Yard Project is pledged as collateral for the Securities.
- - WARBASSE PROJECT--the Warbasse Project is a 38 MW cogeneration facility in
Brooklyn, New York. The Warbasse Project provides electrical and thermal
energy to its host, Amalgamated Warbasse Houses Inc., a housing project
located in Brooklyn, New York, pursuant to an energy purchase and sale
agreement ending in the year 2026, and to Consolidated Edison Company of New
York pursuant to a power purchase agreement for up to 21 MW ending in
December, 2011. The Warbasse Guarantors hold notes issued by the Warbasse
Project aggregating approximately $58,000,000, which represent the right to
receive approximately 84% of the net cash flow of the Warbasse Project. This
cash flow and the notes are pledged as collateral for the Securities. One
Warbasse Guarantor is an indirect wholly-owned subsidiary of York, and the
other is an indirect majority owned subsidiary of York.
- - BIG SPRING PROJECT--the Big Spring Project is a 34 MW wind energy project near
Big Spring, Texas, which is being constructed by the Big Spring Guarantor. The
Big Spring Project will supply electricity to Texas Utilities Electric
Company, a Texas corporation (rated Baa2/BBB) pursuant to a power purchase
agreement ending in the year 2014 (with two 5 year renewal options, extending
the term to 2024). All of the assets of and cash flow from the Big Spring
Project have been pledged as collateral for the Securities.
5
<PAGE>
THE PROJECTS
Set forth below is a table describing certain characteristics of the
Projects and of the interest of certain parties therein:
<TABLE>
<CAPTION>
PROJECT TRINIDAD BIG SPRING BROOKLYN NAVY YARD WARBASSE
<S> <C> <C> <C> <C>
Location Trinidad & Tobago Big Spring area, Texas Brooklyn, New York Brooklyn, New York
Status Under construction; Under construction; In Commercial In Commercial
Commercial Operation Commercial Operation Operation Operation
scheduled for began in December
September 1999; 1998, with completion
Engineering and scheduled for February
Equipment Supply 1999; Wind turbine
Contract with Duke/ supply, erection and
Fluor Daniel commission contract
International; Turnkey with Vestas
Construction Contract
with Duke/Fluor Daniel
International Services
Nameplate Capacity 215 MW, simple cycle 34 MW 286 MW, combined cycle 38 MW, combined cycle
Major Equipment General Electric Vestas wind turbines Siemens combustion and Allison combustion
Suppliers combustion turbines steam turbines; ABB turbines; Westinghouse
heat recovery steam steam turbines
generators
Principal Power Agreement for Sale and Energy Purchase Energy Sales Agreement Power Purchase
Purchase Agreement Purchase of Power with Agreement with TU with Con Ed ending in Agreement with Con Ed
Party and T&TEC for 30 years Electric for 15 years 2036. ending in 2011; Energy
Termination Date after Commercial after Commercial Purchase and Sale
Operation Operation, with two Agreement with AWH
5-year extensions ending in 2026
Plant Dispatch Base load As delivered Base load Base load, AWH;
Peaking, Con Ed
Fuel Type; Delivery Gas-fired, simple Wind-powered Gas-fired with firm Gas-fired with gas
cycle; Utility supply and purchased on spot
delivers and pays for transportation from basis and
all fuel Canadian and U.S. transportation
suppliers; oil back-up provided by Brooklyn
Union Gas Company oil
back-up
Portfolio Interest 100% 100% General Partner Fees 85% senior debt
and Royalty Fees of 5% interest
of revenues until 2002
and 2% until 2006.
Fixed declining
percentages thereafter
until 2036.
Other Project Debt None None $406 million (approx.) $11 million (approx.)
on PARI PASSU basis
Average Percentage of 55% 16% 15% 14%
Portfolio Cash Flows
until 2007
</TABLE>
6
<PAGE>
THE SECURITIES
<TABLE>
<S> <C>
Issuer York Power Funding (Cayman) Limited.
Exchange Securities Offered 12% Series A Senior Secured Bonds Due October 30, 2007 in
aggregate principal amount of up to $150,000,000. The
Exchange Securities are identical in all material respects
to the Old Securities.
Issuance of Old Securities We sold the Old Securities to Credit Suisse First Boston on
August 4, 1998, who in turn placed the Old Securities with
qualified institutional buyers.
Guarantors U.S. GUARANTORS
- Warbasse Power I LLC and Warbasse Power II LLC.
- Brooklyn Navy Yard Power LLC.
- New World Power Texas Renewable Energy Limited
Partnership.
TRINIDAD GUARANTOR
- York Holdings (Barbados) SRL.
Guarantees - The U.S. Guarantors jointly and severally guaranteed
payment of the $50,000,000 U.S. Project Loan, the
$100,000,000 Trinidad Project Loan and all of the
Securities.
- The Trinidad Guarantor guaranteed payment of only the
$100,000,000 Trinidad Project Loan.
Ratings - "Ba3" by Moody's.
- "BB-" by S&P.
Interest Payment Dates April 30 and October 30, commencing on April 30, 1999.
Denominations We sold the Old Securities initially in authorized
denominations of $100,000 or any integral multiple of $1,000
in excess thereof.
Initial Average Life The initial average life of the Securities as of the August,
1998 original date of issue was 8.78 years.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Scheduled Principal Payments We will pay the principal of the Exchange Securities in
semi-annual installments, beginning on April 30, 2000, as
follows:
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE OF
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
PAYMENT DATE PAYABLE PAYABLE
------------------- ---------------- -------------------
<S> <C> <C> <C>
April 30, 2000 $ 1,350,000 0.90%
October 30, 2000 1,338,000 0.89
April 30, 2001 1,650,000 1.10
October 30, 2001 1,602,000 1.07
April 30, 2002 750,000 0.50
October 30, 2002 717,000 0.48
April 30, 2003 547,000 0.36
October 30, 2003 518,000 0.35
April 30, 2004 1,148,000 0.77
October 30, 2004 1,074,000 0.72
April 30, 2005 1,890,000 1.26
October 30, 2005 1,731,000 1.15
April 30, 2006 757,000 0.50
October 30, 2006 681,000 0.45
April 30, 2007 660,000 0.44
October 30, 2007 $ 133,587,000 89.06
</TABLE>
<TABLE>
<S> <C>
Construction and Other Funds All of the cash flow received by each of the Guarantors from
the Projects will be deposited in accounts with The Bank of
New York, as depository. The accounts related to the U.S.
Projects and the U.S. Guarantors are separate from those
related to the Trinidad Guarantor and the Trinidad Project.
Amounts in the various accounts are used for specific
purposes, such as construction of the Trinidad Project and
the Big Spring Project, payment of principal and interest,
payment of operating and maintenance expenses, and other
items. All amounts held in the various accounts are subject
to a lien to secure the obligations with respect to the
Trinidad Project Note, in the case of the Trinidad
Guarantor, and in respect of the Trinidad Project Note, the
U.S. Project Note and the Securities, in the case of the
U.S. Guarantors. The depository agreement mandates the flow
of funds among the accounts in order of priority.
Distributions No distributions may be made from the accounts to any of the
Guarantors before the substantial completion of each of the
Big Spring Project and the Trinidad Project. From and after
substantial completion, certain specified conditions must be
satisfied for distributions to be made.
</TABLE>
See "SUMMARY DESCRIPTION OF THE PRINCIPAL FINANCING DOCUMENTS--U.S.
Depositary Agreement," "--U.S. Revenue Fund; Priority of Payment," "--Trinidad
Depositary Agreement" and "--Trinidad Revenue Fund; Priority of Payment."
8
<PAGE>
Set forth below is a chart depicting the flow of funds:
[CHART]
9
<PAGE>
<TABLE>
<S> <C>
Optional Redemption We can redeem the Securities at any time, in whole or in
part, pro rata at par plus interest to the redemption date
plus a specified premium calculated to "make whole" to
comparable to the U.S. Department of Treasury securities
plus and 75 basis points.
Mandatory Redemption We must redeem the Securities at par plus interest to the
redemption date, plus, in certain cases, a premium, upon
specified events, including certain buy-outs of power
contracts underlying the Projects, incurrence of certain
additional debt, and certain events of loss or condemnation.
</TABLE>
See "SUMMARY DESCRIPTION OF THE SECURITIES--Optional Redemption" and
"--Mandatory Redemption."
<TABLE>
<S> <C>
Ranking and Source of Payment
for the Securities - The Securities are Senior Debt of the Funding Company.
- We will make payment of the Securities with payments made
under the Project Notes. The Project Notes are payable out
of cash flow received from the proceeds.
Limited Recourse - Only the Funding Company is obligated to make payments on
the Securities.
- Payments on the Securities are recourse only to the
specified cash flow from the Brooklyn Navy Yard and
Warbasse Projects and the assets of and cash flow from the
Big Spring Project and the Trinidad Project.
- Neither York (nor any stockholder, officer, director or
employee thereof or of the Funding Company, or of the
Guarantors) nor any of its affiliates, (other than the
U.S. Guarantors pursuant to their Guarantees) nor the
Warbasse Project or the Brooklyn Navy Yard Project, has
guaranteed the payment of the Securities or has any
obligation with respect to the payment of the Securities.
Principal Covenants - Under the Trust Indenture between the Funding Company and
the Trustee, we will not
- exercise any remedies or waive any defaults under the
Project Loan Agreements and the Project Notes, except as
otherwise permitted under the Trust Indenture,
- incur (a) any debt other than certain permitted debt or
(b) any lien on any of its properties other than certain
permitted liens, and
- merge or consolidate with another entity or change its
form of organization or its business.
</TABLE>
See "SUMMARY DESCRIPTION OF PRINCIPAL FINANCING DOCUMENTS--Trust Indenture."
<TABLE>
<S> <C>
THE PROJECT LOANS
The proceeds of the sale of the Old Securities were used to
make the $100,000,000 Trinidad Project Loan and the
$50,000,000 U.S. Project Loan.
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
U.S. Project Note The Big Spring Guarantor, the Brooklyn Navy Yard Guarantor
and the Warbasse Guarantors jointly and severally issued the
U.S. Project Note in an initial principal amount of
$50,000,000.
Trinidad Project Note The Trinidad Parent has issued the Trinidad Project Note in
an initial principal amount of $100,000,000.
Ranking and Security for the
Project Note Issued by the
Trinidad Parent and the
Guarantee Issued by the
Trinidad Guarantor - The Guarantee issued by the Trinidad Guarantor is senior
secured debt of the Trinidad Guarantor, and guarantees
payment only of the $100,000,000 Trinidad Project Note.
- The Trinidad Project Note issued by the Trinidad Parent is
senior secured debt of the Trinidad Parent.
- Security for payment of the Guarantee issued by the
Trinidad Guarantor and the Trinidad Project Note issued by
the Trinidad Parent includes an assignment of all cash
flows received by InnCOGEN from the Trinidad Project and a
lien on substantially all of the assets of InnCOGEN, the
Trinidad Guarantor and the Trinidad Parent
Ranking and Security for the
Project Note and the
Guarantee Issued by the
Brooklyn Navy Yard Guarantor - The Guarantee issued by the Brooklyn Navy Yard Guarantor
and the U.S. Project Note are senior secured debt of the
Brooklyn Navy Yard Guarantor, and guarantees payment of
the $50,000,000 U.S. Project Note, the $100,000,000
Trinidad Project Note and the Securities.
- Security for the payment of the Guarantee issued by the
Brooklyn Navy Yard Guarantor and the U.S. Project Note
includes an assignment of the cash flows paid to the
Brooklyn Navy Yard Guarantor from the Brooklyn Navy Yard
Project and a pledge of the equity interest in the
Brooklyn Navy Yard Guarantor.
Ranking and Security for the
Project Note and the
Guarantee Issued by the
Warbasse Guarantors - The Guarantee issued by each of the Warbasse Guarantors
and the U.S. Project Note senior secured debt of the
Warbasse Guarantors, and guarantees payment of the
$50,000,000 U.S. Project Note, the $100,000,000 Trinidad
Project Note and the Securities.
- Security for payment of the Guarantee issued by each of
the Warbasse Guarantors and the U.S. Project Note includes
an assignment of all cash flows received by the Warbasse
Guarantors from the Warbasse Project, a lien on
substantially all of the assets of each of the Warbasse
Guarantors, and a pledge of the equity interests in the
Warbasse Guarantors.
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
Ranking and Security for the
Project Note and the
Guarantee Issued by the Big
Spring Guarantor - The Guarantee issued by the Big Spring Guarantor and the
U.S. Project Note are senior secured debt of the Big
Spring Guarantor, and guarantees payment of the
$50,000,000 U.S. Project Note, the $100,000,000 Trinidad
Project Note and the Securities.
- Security for the payment of the Guarantee issued by the
Big Spring Guarantor and the U.S. Project Note includes an
assignment of all cash flows received by the Big Spring
Guarantor from the Big Spring Project, a lien on
substantially all of the assets of the Big Spring Project,
and a pledge of the general and limited partnership
interests in the Big Spring Guarantor.
Principal Covenants Principal covenants under each of the Project Loan
Agreements prohibit:
- entering into any transaction of merger or consolidation,
change in form of organization, liquidation or similar
transaction,
- entering into non-arm's length transactions or agreements
with Affiliates,
- incurring any debt or liens except for certain permitted
debt and liens,
- engaging in any business other than as contemplated, and
- amending or terminating certain of the agreements to which
they are a party.
</TABLE>
See "SUMMARY DESCRIPTION OF PRINCIPAL FINANCING DOCUMENTS--Project Loan
Agreements."
<TABLE>
<S> <C>
Trustee, Collateral Agent and
Depositary - The Bank of New York, a New York banking corporation.
Form - The Exchange Securities will initially be issued in book
entry form through The Depository Trust Company ("DTC")
and DTC will act as the depositary for the Exchange
Securities.
- Unless a holder specifically requests the Exchange
Securities to be issued in a definitive form, the Exchange
Securities will be issued in global form ("DTC
Securities").
- The interests in DTC Securities will be shown on, and
transfers will be effected only through, records
maintained by DTC and its participants.
</TABLE>
See "SUMMARY DESCRIPTION OF THE EXCHANGE SECURITIES--Book Entry System."
12
<PAGE>
<TABLE>
<S> <C>
THE EXCHANGE OFFER
Exchange Securities - The forms and terms of the Exchange Securities are
identical in all material respects to the terms of the Old
Securities for which they may be exchanged pursuant to the
Exchange Offer, except for certain transfer restrictions,
registration rights and liquidated damages provisions
relating to the Old Securities described elsewhere in this
Prospectus under "SUMMARY DESCRIPTION OF THE PRINCIPAL
FINANCING DOCUMENTS."
The Exchange Offer - We are offering to exchange up to $150,000,000 aggregate
principal amount of the Exchange Securities for up to
$150,000,000 aggregate principal amount of Old Securities.
Old Securities may be exchanged only in integral multiples
of $1,000.
Expiration Date; Withdrawal
of Tender - Unless we extend the Exchange Offer, it will expire at
5:00 p.m., New York City time, on [ ], 1999. We will
not extend this time period to a date later than [ ],
1999. You may withdraw any Old Securities you tender
pursuant to the Exchange Offer at any time prior to
[ ], 1999. We will return, as promptly as practicable
after the expiration or termination of the Exchange Offer,
any Old Securities not accepted for exchange for any
reason without expense to you.
- We will maintain the registration statement relating to
the Exchange Offer continuously effective until (a) the
completion of the Exchange Offer or (b) 120 days after
effectiveness of the Registration Statement, whichever
period is longer.
Certain Conditions to the
Exchange Offer - The Exchange Offer is subject to customary conditions,
which may be waived by us.
Procedures for Tendering Old
Securities - If you wish to accept the Exchange Offer, you must
complete, sign and date the Letter of Transmittal in
accordance with the instructions, and deliver the Letter
of Transmittal, along with the Old Securities and any
other required documentation, to the Exchange Agent. By
executing the Letter of Transmittal, you will represent to
us that, among other things:
- any Exchange Securities you receive will be acquired in
the ordinary course of your business;
- you have no arrangement with any person to participate in
the distribution of the Exchange Securities; and
- you are not an "affiliate," as defined in Rule 405 of the
Securities Act of 1933, as amended (the "Securities Act"),
of the Funding Company or, if you are an affiliate, you
will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent
applicable.
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<S> <C>
If you hold your Old Securities through DTC and wish to
participate in the Exchange Offer, you may do so through
DTC's Automated Tender Offer Program ("ATOP"). By
participating in the Exchange Offer, you will agree to be
bound by the Letter of Transmittal as though you had
executed such Letter of Transmittal.
Interest on the New
Securities Interest on the Exchange Securities shall accrue from the
interest payment date (April 30 or October 30) on which
interest was last paid on the Old Securities exchanged.
Special Procedures for
Beneficial Owner If you are a beneficial owner whose Old Securities are
registered in the name of a broker, dealer, commercial bank,
trust company or other nominee and wish to tender such Old
Securities in the Exchange Offer, please contact the
registered holder as soon as possible and instruct them to
tender on your behalf and comply with our instructions set
forth elsewhere in this Prospectus.
Guaranteed Delivery Procedure If you wish to tender your Old Securities, you may, in
certain instances, do so according to the guaranteed
delivery procedures set forth elsewhere in this Prospectus
under "SUMMARY DESCRIPTION OF THE EXCHANGE OFFER--Guaranteed
Delivery Procedures."
Registration Rights Agreement We sold the Old Securities in a transaction exempt from the
registration requirements of the Securities Act, on August
4, 1998. At that time, the Funding Company entered into an
Exchange Registration Rights Agreement (the "Registration
Rights Agreement") which grants the holders of the Old
Securities certain exchange and registration rights. This
Exchange Offer satisfies those rights, which terminate upon
consummation of the Exchange Offer. You will not be entitled
to any exchange or registration rights with respect to the
Exchange Securities.
Certain Federal Tax
Considerations With respect to the exchange of the Old Securities for the
Exchange Securities:
-- the exchange should not constitute a taxable exchange for
U.S. federal income tax purposes;
-- you should not recognize gain or loss upon receipt of the
Exchange Securities;
-- you must include interest in gross income to the same
extent as the Old Securities; and
-- you should be able to tack the holding period of the
Exchange Securities to the holding period of the Old
Securities.
Use of Proceeds We will not receive any proceeds from the exchange of the
Securities pursuant to the Exchange Offer.
Exchange Agent We have appointed The Bank of New York as the Exchange Agent
for the Exchange Offer. The address and telephone number of
the Exchange Agent are 101 Barclay Street, New York, New
York 10286; (212) 495-1784.
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FINANCIAL INFORMATION AND OTHER DATA
RATIO OF EARNINGS TO FIXED CHANGES
Since the Funding Company is newly formed, it has no material earnings to
date. In addition, the Funding Company is designed as a special purpose company.
Accordingly, we have not included a ratio of earnings to fixed changes, as such
information would be meaningless.
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RISK FACTORS
In considering exchanging your Old Securities for Exchange Securities you
should consider carefully, in addition to other information contained in this
Prospectus, the following risk factors in evaluating the Funding Company and its
business before making the exchange.
This Prospectus also contains certain forward-looking statements that
involve risks and uncertainties. These statements may be identified by the use
of words such as "expects," "anticipates," "intends," and "plans" and similar
expressions. Our actual results could differ materially from those discussed in
these statements. Factors that could contribute to such differences include, but
are not limited to, those discussed below and elsewhere in this Prospectus.
CONSEQUENCES OF EXCHANGE
In making the Exchange Offer, we are relying on the position of the staff of
the Commission, which is expressed in certain no-action letters addressed to
other parties in transactions that are substantially similar to the Exchange
Offer. However, we did not seek our own no-action letter and cannot assure that
the staff of the Commission would make a similar determination with respect to
the Exchange Offer as it did in other similar transactions. Based on the
interpretations by the staff of the Commission, we believe that the Exchange
Securities may be offered for resale, resold or transferred through other means,
without registering or delivering a prospectus as required under the Securities
Act, if the holder acquired such Exchange Securities in the ordinary course of
such holder's business that such holder does not distribute, and has not agreed
with any person to distribute, such Exchange Securities. As a condition to the
exchange and the Old Securities for the Exchange Securities, you must comply
with the terms of the Exchange Offer and, in certain cases, make certain
representations. See "SUMMARY DESCRIPTION OF THE EXCHANGE OFFER--Purpose of the
Exchange Offer,"
"--Consequences of Exchange and Failure to Exchange Old Securities" and "PLAN OF
DISTRIBUTION."
FAILURE TO EXCHANGE OLD SECURITIES
If you do not exchange your Old Securities for the Exchange Securities, you
will continue to be subject to the restrictions on transfer of such Old
Securities written in the legend printed on the Old Securities. In general, the
Old Securities may not be offered or sold unless registered under the Securities
Act or exempted from registering under the Securities Act and applicable state
securities laws. We do not currently intend to register the Old Securities under
the Securities Act, and upon the completion of the Exchange Offer, holders of
the Securities that are either tendered but unaccepted or untendered will not
have the right to have such Old Securities registered under the Securities Act,
and their ability to sell the Old Securities could be adversely affected. See
"SUMMARY DESCRIPTION OF THE EXCHANGE OFFER--Consequences of Exchange and Failure
to Exchange Old Securities."
NON-RECOURSE PROJECT FINANCING
The Funding Company is a limited liability company created under the laws of
the Cayman Islands for the sole purpose of issuing the Securities. The only
significant assets of the Funding Company are the U.S. Project Note and the
Trinidad Project Note. The Securities are recourse only to the Project Notes and
certain other collateral. The Funding Company's ability to make payments on the
Securities entirely depends on payments under the Project Notes and the
Guarantees. The Project Note Obligors solely rely on certain assets and cash
flows to make payments on the Project Notes. Similarly, the Guarantors solely
rely on certain assets of, and cash flow from the Projects to make payments on
the Guarantees. This structure is a common non-recourse, project finance
structure.
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The Big Spring Guarantor is only engaged in the business of constructing and
operating the Big Spring Project and its only significant assets are the assets
related to the Big Spring Project. InnCOGEN, the Trinidad Parent and the
Trinidad Guarantor are only engaged in the business of constructing and
operating the Trinidad Project and their significant assets are only the assets
related to the Trinidad Project. The Warbasse Guarantors are only engaged in the
business of owning certain notes issued by WCTP and its significant assets are
only the assets related to such notes. The Brooklyn Navy Yard Guarantor is only
engaged in the business of receiving certain cash flow generated by the Brooklyn
Navy Yard Project and its significant assets are only the assets related to such
cash flow.
If an obligor fails to make payment on a Project Note or a Guarantee, the
Funding Company cannot assure that any remedies available to it for such failure
to pay, including foreclosure on the pledged assets of such obligor or
Guarantor, would be sufficient to pay such obligor's obligation under the
Project Note and the Guarantee. No partners or affiliates of the Funding Company
and no directors, officers or employees of the Funding Company, the Project Note
obligors or the other Guarantors, nor the Warbasse Project or the Brooklyn Navy
Yard Project, will guarantee or be in any way liable for the payment of the
Securities, the Project Notes or the Guarantees. As a result, payment of amounts
owed pursuant to the Project Notes, the Guarantees and the Securities is
dependent solely upon the performance of the Projects.
RELIANCE ON LIMITED NUMBER OF CUSTOMERS AND SUPPLIERS
Each of the Projects depends on third parties to, among other things (a)
purchase substantially all of the electricity, steam, and/or energy produced by
the Projects, (b) provide the fuel and other goods and services necessary for
the Projects to generate such electricity, steam and/or energy and (c) operate
and maintain the Projects. Each of the Projects relies, or will rely, on
agreements with a limited number of customers, typically utilities, to generate
100% of its operating revenues and expects to continue to do so during the terms
of the power purchase agreements. The power purchase agreements are generally
long-term agreements providing for the sale of electricity and thermal energy
for remaining terms of 13 through 38 years. Under the power purchase agreements,
the customers have the right to terminate or withhold payment or performance
under such agreements if certain events occur. The loss of any one power
purchase agreement with any of these customers could have a material adverse
effect on the related Project and the Guarantor.
CONSTRUCTION RISKS
The Big Spring Guarantor is currently constructing the Big Spring Project
and InnCOGEN is currently constructing the Trinidad Project. As with any major
construction effort, construction of the Big Spring Project and the Trinidad
Project involves many risks, including delays, cost overruns, performance
deficiencies, shortages of materials and labor or property, work stoppages,
labor disputes, engineering, environmental, permitting, political risks with
respect to the Trinidad Project, geological problems, force majeure and other
unanticipated problems beyond the control of the Funding Company, InnCOGEN and
the Big Spring Guarantor. A failure to complete construction of either such
Project in accordance with the terms of the agreements relating to such Project
could adversely affect the amount and timing of the revenues received by such
Project, including a termination of the relevant power purchase agreement.
If a Project fails to achieve commercial operation or certain operating
levels by specified dates or fails to make certain specified payments, the
relevant utility to terminate its power purchase agreement, or to retain
security posted as liquidated damages, or requires the applicable Project
Company and/or Guarantor to pay liquidated damages, and such Project may become
insolvent as a result.
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GENERAL OPERATING RISKS
The operation of the Projects involves many risks including the breakdown or
failure of equipment or processes, performance below expected levels of output,
interruptions in fuel supply, sub-normal wind regimes, pipeline or transmission
disruptions, disruptions in the supply of steam or electrical energy, extreme
weather conditions, violation of permit requirements, operator error, the
inability to meet expected efficiency standards or catastrophic events such as
fires, earthquakes or explosions. In addition, the operation of the Projects
involves risks relating to any increases in operating costs for any reason,
including, without limitation, fuel costs and any additional taxes. See "SUMMARY
DESCRIPTION OF THE PRINCIPAL PROJECT CONTRACTS--IDA Lease Agreement."
Any of these events could significantly reduce or eliminate revenues
generated by a Project or significantly increase the expenses of a Project,
which may adversely affect the ability of the Funding Company to make any
payments on the Securities. In addition, the Big Spring Project and the Trinidad
Project have no operating history and may use recently developed and
technologically complex equipment.
Each of the Projects currently possesses insurance, as required under the
relevant power purchase agreement, to minimize these risks; however, not all
risks are insured and the proceeds of such insurance may not be adequate to
cover losses. We cannot assure that such insurance coverage will be available in
the future on commercially reasonable terms or rates. Furthermore, we cannot
assure that the amounts for which the Projects are insured or amounts that the
Projects receive under such insurance coverage will cover all losses. If there
is a total or partial loss of a Project, we cannot assure that the insurance
proceeds received in respect thereof will be sufficient to satisfy all related
indebtedness, including the obligation to redeem the Securities under certain
circumstances as required under the Trust Indenture, dated as of August 4, 1998,
between the Trustee and the Funding Company (the "Indenture"). If insurance
continues to be unavailable, the purchaser of the electricity of relevant power
purchase agreement may terminate the power purchase agreement.
FACTORS RELATING TO TRINIDAD
POLITICAL RISK AND SOVEREIGN ACTION OF TRINIDAD.
The Trinidad Project is subject to political, economic and other
uncertainties, including the risks of war, expropriation, nationalism,
renegotiation or nullification of existing contracts, changes in taxation
policies, currency exchange restrictions, international monetary fluctuations
and changing political conditions. The Government of Trinidad traditionally has
played a central role in the development of Trinidad's hydrocarbon reserves and
has exercised, and continues to exercise, significant influence over many other
aspects of the Trinidadian economy. The actions by the Government of Trinidad
have had in the past, and could have in the future, significant effects on the
financial condition and results of operation of InnCOGEN, on the ability of
InnCOGEN to make capital expenditures and on the market price and liquidity of
debt securities of InnCOGEN. The Funding Company cannot assure that political
developments in Trinidad will not have a material adverse effect on the
operation of the Trinidad Project and the ability of the Trinidad Guarantor,
InnCOGEN or the Trinidad Parent to fulfill their respective obligations
described in this Prospectus.
In 1990, a local extremist group unsuccessfully attempted to take control of
the country. The then Prime Minister and eight Ministers were taken hostage and
that group took control of Trinidad's then-sole television broadcasting
facility. Although several persons, including one member of Parliament, were
killed, the crisis was resolved, and those involved were charged with offenses
relating to the uprising. There have been no subsequent extra-legal challenges
to the Government of Trinidad.
The operations and financial condition of the Trinidad Project are expected
to be affected generally by inflation, exchange rates and controls, interest
rates, changes in the Government of Trinidad's
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leadership, policy and taxation and other political, economic or other
developments in or affecting Trinidad. Although InnCOGEN has structured the
Trinidad power purchase agreement and agreed to purchase Trinidad Project
components to provide for payments to be made in, or indexed to, U.S. dollars or
a currency freely convertible into U.S. dollars, the Funding Company cannot
assure that InnCOGEN and/or the Trinidad Guarantor will be able to achieve this
structure in all cases or that a power purchaser or other customer will be able
to obtain sufficient U.S. dollars or other hard currency or that available U.S.
dollars will be allocated to pay such obligations. Although InnCOGEN may decide
to enter into certain transactions to hedge risks associated with exchange rate
fluctuations, the Funding Company cannot assure that it will do so, or that such
transactions will be successful in reducing such risks even if it does.
The adoption of new laws, policies or regulations, or changes in the
interpretation or application of existing laws, policies and regulations, so as
to modify the present regulatory regime (including those relating to the
environment) could have a material adverse effect on the construction and the
operation of the Trinidad Project.
LABOR RELATIONS.
During construction of the Trinidad Project, InnCOGEN will employ personnel,
who will be seconded, contracted and direct employees. After the Trinidad
Project is completed, InnCOGEN will maintain certain of those employees most of
whom will be full-time, local employees. These employees are not public
employees and will be entitled to form unions, to negotiate and contract with
InnCOGEN and to strike. Certain employees hired by InnCOGEN's contractor, in
connection with construction of the Trinidad Project may be union members.
Although InnCOGEN has good labor relations to date and has no reason to expect
any disputes with its employees, or in any way disruptive of the construction of
the Trinidad Project, InnCOGEN is unable to predict the outcome of future labor
negotiations and any future conflicts with InnCOGEN's, or its contractors,
employees and/or their respective unions. If there are conflicts, such conflicts
may have a material adverse effect on InnCOGEN, including its ability to
complete construction of the Trinidad Project.
FOREIGN EXCHANGE RISK AND INFLATION.
In April 1993, the Government of Trinidad allowed its currency, the TT
dollar, to be freely convertible and allowed its exchange rate relative to the
U.S. dollar to float based upon the market valuation of the TT dollar. Prior to
that time, the value of the TT dollar was pegged to the U.S. dollar at a rate
determined by the Government of Trinidad from time to time. If the Government of
Trinidad were to impose a different exchange rate system which causes the TT
dollar to be no longer freely convertible, the ability of InnCOGEN to receive
payments for sales of electricity in U.S. dollars and to exchange TT dollars for
U.S. dollars could be adversely affected. As a result, InnCOGEN could be forced
to hold TT dollars or accept an unfavorable rate of exchange, which may reduce
the amount of U.S. dollars received by InnCOGEN. Such an event could have a
material adverse effect on InnCOGEN's ability to repay the InnCOGEN Loan payable
by InnCOGEN to the Trinidad Guarantor.
Under the Trinidad power purchase agreement, capacity payments and energy
payments to InnCOGEN by T&TEC are tied to U.S. inflation indices. In the event
of a significant increase in inflation in Trinidad relative to inflation in the
U.S., payments by T&TEC in TT dollars could have an adverse effect on InnCOGEN's
ability to repay the InnCOGEN Loan. See "SUMMARY DESCRIPTION OF PRINCIPAL
DOCUMENTS--Trinidad Power Purchase Agreement."
REGULATORY MATTERS.
InnCOGEN must comply with Trinidadian laws, regulations and statutory and
regulatory standards (including those relating to the environment) which pertain
to electricity generation projects, and
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InnCOGEN is subject to their ongoing application and enforcement. In addition,
many permits and regulatory approvals are required for the Trinidad Project and
InnCOGEN's operations pursuant to Trinidadian industrial, environmental and
other relevant laws. Some of these permits were not required as of the Closing
Date and have not yet been obtained. Of those permits and approvals which have
been obtained, some are subject to certain conditions, and permits and approvals
still outstanding may, when issued, similarly be subject to conditions. If
InnCOGEN fails to obtain these permits or approvals or fails to obtain these
permits and approval on time, or cannot meet any of these conditions could delay
the Trinidad Project's construction, or result in InnCOGEN incurring additional
costs.
InnCOGEN has not yet received final planning approval from the Town and
Country Planning Division of the Trinidad Ministry of Planning and Development
in respect of the Trinidad Project. InnCOGEN believes that it is customary in
Trinidad to commence and complete construction of projects after receiving the
outline approval from the Town and Country Planning Division (which has been
received by InnCOGEN) and the Town and Country Planning Division will give the
final approval only after the Trinidad Project has been completed. However,
failure to obtain the requisite approvals, or breach of a condition attached to
any planning approval, entitles the Minister responsible for the Town and
Country Planning Division, to take enforcement action, and the local municipal
authority to independently take enforcement action. Such enforcement action may
require the non-complying party to comply with all outstanding requirements to
an order for demolition.
It has been a practice in Trinidad during the past 15 years for an
application is made to the local municipal authority for a Certificate of
Completion after receiving the final planning approval. This serves as proof
that all requisite inspections of the construction by local governmental
authorities have been carried out and have been passed, and that all necessary
approvals, permits and other documentation have been obtained. If InnCOGEN fails
to obtain the approval of the local municipal authority, which is usually
evidenced by a Certificate of Completion, the local municipal authority may take
enforcement action. Such enforcement action may require the non-complying party
to comply with all outstanding requirements to an order for demolition.
UNCERTAINTIES ASSOCIATED WITH ENVIRONMENTAL, ENERGY AND OTHER REGULATIONS
The Projects are subject to a number of environmental laws and regulations
affecting many aspects of their present and future operations. Generally, the
Project Companies have to obtain and comply with a wide variety of license,
permits and other approvals under such laws and regulations. The Project
Companies and the Guarantors are also subject to various environmental and
energy regulations that both public officials and private individuals may seek
to enforce. The Funding Company cannot assure that existing regulations which
could have an adverse impact on the operations of the Projects will not be
revised or that new regulations, which could have an adverse impact on their
operations, will not be adopted or become applicable to the Project Companies
and the Guarantors. In particular, the independent power market in the United
States is dependent on the existing energy regulatory structure, including the
Public Utility Regulatory Policies Act of 1978 ("PURPA"). The Warbasse Project
is certified as a QF pursuant to PURPA. As such, the Warbasse Project is exempt
under PURPA and federal regulations issued by the United States Federal Energy
Regulatory Commission ("FERC") to implement PURPA from (a) regulation as a
public utility under all provisions of the Federal Power Act ("FPA") other than
those related to transmission services, which are not relevant to the Warbasse
Project, (b) regulations as an electric utility company under Public Utilities
Holding Company Act of 1935, as amended, ("PUHCA") and (c) regulation respecting
rates and financial and organizational matters under New York state utility laws
and regulations. The Big Spring Project will be a small power production QF that
also will be exempt from relevant provisions of the FPA, PUHCA and state
regulation. However, BNYCP is subject to lightened state regulation in
connection with its authorization to sell steam and electricity at retail
pursuant to existing contracts. The structure of such federal and state energy
regulations has in the past, and may in the future, be challenged or proposed
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to be changed by utilities and other industry participants. If the regulations
are changed in response to such challenges or restructuring proposals, the
Guarantors may face more comprehensive or stringent requirements. This may cause
compliance costs to increase and other adverse effects on the Guarantors'
results of operations.
FUNDING RISKS; STRUCTURAL SUBORDINATION
The cash flow of the Funding Company, and its ability to make payments on
the Securities, depends on the cash flow from the U.S. Guarantors and InnCOGEN.
In the case of the Brooklyn Navy Yard Guarantor, the right to receive certain
cash flow from the Brooklyn Navy Yard Project is subordinate to, and subject to
the prior payment of, operating and maintenance costs and the debt service on
the senior debt of the Brooklyn Navy Yard Project. This senior debt includes
covenants and events of default customary for a project financing, and may also
limit the ability of BNYCP to make payments to the Brooklyn Navy Yard Guarantor
in certain circumstances. This senior debt is secured by a security interest in
and lien on substantially all of the assets of the Brooklyn Navy Yard Project.
Therefore, if there is a default on this senior debt, or some other event allows
the holders of this senior debt, or a trustee acting on their behalf, to stop
making payments to the Brooklyn Navy Yard Guarantor, the cash flow from the
Brooklyn Navy Yard Project could be interrupted. In addition, neither the
Funding Company nor the Brooklyn Navy Yard Guarantor will be able to realize on
the underlying assets of the Brooklyn Navy Yard Project. Any mandatory
redemption of the senior debt, including, without limitation, redemption risks
associated with Con Ed's maintenance of its status to provide electric service
to the general populace of the City of New York and Westchester County, will be
applied first to redemption of this senior debt. In addition, certain parties
have a prior security interest in certain of the cash flows from the Brooklyn
Navy Yard Project.
In the case of the Warbasse Guarantors, the right of the Warbasse Guarantors
to receive cash flow from the Warbasse Project depends on the cash flow from the
notes assigned by WCTP (the "WCTP Notes"). The WCTP Notes are senior obligations
of the Warbasse Project, and are secured by a security interest in substantially
all of the assets of the Warbasse Project. However, the rights under the WCTP
Notes are partly governed by the WCTP Intercreditor Agreement with a third
party, which also holds a secured debt obligation from the Warbasse Project.
Such note held by such third party ranks equally in priority with the WCTP
Notes. In addition, if any of the entities obligated under a Project Note or the
Securities becomes bankrupt or insolvent, it may be unable to make payments or
perform obligations. This could adversely affect the ability of other similar
obligors to make payments on the Securities.
CONSIDERATIONS REGARDING LIMITATION ON REMEDIES; FRAUDULENT CONVEYANCE ISSUES
As described under "Use of Proceeds," a portion of the proceeds of the
offering of the Securities was advanced or distributed to York for general
corporate purposes of York. Each U.S. Guarantor executed a Guarantee to
guarantee the entire amount of the Securities. Under certain circumstances
(including a proceeding under applicable bankruptcy law or any similar
proceeding), it is possible that a creditor of a Guarantor to claim under
federal or state fraudulent conveyance or fraudulent transfer laws, that the
Funding Company's claims under the applicable Project Loan Agreement or the
applicable Guarantee should be subordinated or unenforceable or that payments
thereunder (including payments to the registered holder of the Securities (the
"Holders")) should be recovered. In order to prevail on such a claim, a claimant
would have to demonstrate that, at the time of or after and giving effect to the
Securities, the applicable Project Loan Agreement or the applicable Guarantee,
such Guarantor (a) was insolvent or rendered insolvent thereby, (b) was engaged
in a business or transaction for which its remaining assets constituted
unreasonably small capital, (c) intended to incur, or believed that it would
incur, debts beyond its ability to pay as they matured or (d) intended to
hinder, delay or defraud creditors and, in the case of clauses (a), (b) and (c),
that the Guarantors did not receive
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reasonably equivalent value in connection with the issuance of the Securities,
the Project Loan Agreements or the Guarantees.
UNCERTAINTIES REGARDING RELIANCE ON PROJECTIONS AND UNDERLYING ASSUMPTIONS
The Indenture, the Securities, the Project Notes, the Project Loan
Agreements and the Guarantees rely on certain assumptions with respect to the
Guarantors' and the Projects' revenue generating capacity and the related costs
over the term of the Securities. Stone & Webster has evaluated and provided a
report on the technical, environmental and economic aspects of the Projects in
the Independent Engineer's Report. In the Independent Engineer's Report, Stone &
Webster also projected cash flow and discussed many assumptions which it made in
preparing these Projections. You should review the projection carefully.
All projections of future operations and the economic results thereof
included in the Independent Engineer's Report have been adopted by Stone &
Webster. Stone & Webster has neither examined nor compiled the projections and,
accordingly, does not express an opinion or cannot make any assurances relating
to the projections. After the Securities are issued, none of the Funding
Company, the Guarantors, Stone & Webster or any other person will provide the
Holders of the Securities with updated reports or revised projections comparing
the projections and actual operating results achieved by the Funding Company and
the Guarantors.
When preparing the projections, certain necessary assumptions were made with
respect to general business and economic conditions, the revenues the Guarantors
will earn in their respective businesses, and several other material
contingencies and other matters that cannot be controlled by the Guarantors and
the outcome of which cannot be predicted by the Funding Company, the Guarantors,
Stone & Webster or any other Person with any certainty of accuracy. The
assumptions used in the projections are uncertain and the results may be
different, perhaps significantly and materially, from those projected. None of
the Funding Company, the Guarantors, Stone & Webster or any other Person is
responsible for the accuracy of such projections. Therefore, none of the Funding
Company, the Guarantors, Stone & Webster or any other Person makes
representation as to the accuracy of the projections. Moreover, the Investors
should not assume that any particular facts or circumstances will occur. If the
actual results are less favorable than those shown or if the assumptions made in
preparing the projections are incorrect, the Funding Company's ability to make
payments under the Securities, the Project Note obligors' ability to make
payments under the Project Notes and the Guarantors' ability to make payments
under the Guarantees may be adversely affected.
REFINANCING RISKS
Only a small portion of the principal of the Securities and the Project
Notes will be amortized prior to the latest stated maturity date of any series
of the Securities. Upon such date, some or all Project Note obligors will need
to refinance the Project Notes in order for the Funding Company to pay the
Securities. The Funding Company cannot assure that such refinancing will be
successful. The Funding Company also cannot assure that the Project Notes or the
Securities will be able to be paid upon the final maturity date.
CONSIDERATIONS REGARDING TAX TREATMENT
Pursuant to the Trinidad Government Agreement, InnCOGEN is not required to
pay corporation tax in Trinidad for 8 years after September 9, 1999 (the
"Production Day"). In addition, amounts paid by InnCOGEN to the Trinidad
Guarantor, from the Trinidad Guarantor to the Trinidad Parent, or from the
Trinidad Parent to the Funding Company or from the Funding Company to the
Holder, is not expected to be taxed or withheld. However, we cannot assure that
the cash flow to or through these
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entities will not become subject to taxation or withholding, which may reduce
the cash flow available for debt service on the Securities. See "CERTAIN TAX
CONSIDERATIONS."
ABSENCE OF MARKET FOR THE SECURITIES
Prior to the offering of the Securities, there has been no public trading
market for the Securities, although the Old Securities were eligible for trading
in the Portal Market ("PORTAL") of the Nasdaq Stock Market, Inc. ("NASDAQ"). We
do not intend to apply for listing of the Exchange Securities on any securities
exchange or on any automated dealer quotation system. The Old Securities will
not be registered under the Securities Act and will continue to be subject to
certain restrictions on transfer. See "TRANSFER RESTRICTIONS." The Funding
Company has been advised by Credit Suisse First Boston that it intends to make a
market in the Securities as permitted by applicable laws and regulations.
However, it is not obligated to do so and may discontinue market-making at any
time without notice. The Funding Company cannot assure that an active public
trading market for the Securities will develop. If a public trading market for
the Securities does not develop, purchasers may be unable to resell the
Securities for an extended period of time, if at all. Therefore, a holder may
not be able to easily sell the Securities, and the Securities may not be readily
accepted as collateral for loans.
23
<PAGE>
REPUBLIC OF TRINIDAD AND TOBAGO
Trinidad, a two-island republic, comprises the southernmost islands in the
Caribbean island chain. Trinidad lies just off the South American mainland,
approximately 7 miles (11.3 kilometers) at the nearest point from Venezuela. The
combined area of both islands is approximately 1,980 square miles (5,128 square
kilometers). Port of Spain, which is located on the north-west coast of
Trinidad, is the capital of the country and the Point Lisas port is the busiest
industrial port on the island. A former British colony, Trinidad became an
independent state in 1962 and a republic in 1976. The country has been a stable
democracy since its independence. It has a population of 1.3 million and has a
literacy rate of 96%, the highest of any country in the western hemisphere.
In the decade prior to 1982, economic growth and prosperity in Trinidad was
founded on its oil sector. The country accumulated large monetary reserves which
it used to finance public sector activities, including large-scale investments
in enterprises, the establishment of a modern infrastructure and the development
of an extensive social safety net. However, from 1982 to 1991 there was a
downturn in oil production and prices, which caused declines in output and in
the level of international reserves.
Since 1992, the country has experienced a growth in its Gross Domestic
Profit ("GDP") (U.S.$3.66 billion in 1992) due primarily to the rapid growth in
the petroleum energy sector, as well as the steady growth in its non-petroleum
sectors. Based upon preliminary figures released by the Government of Trinidad,
in 1997 Trinidad and Tobago's GDP was U.S.$5.77 billion. Trinidad and Tobago's
external debt was rated BB+ by S&P with a positive outlook as of April 30, 1998,
and Ba1 by Moody's. The petroleum and petrochemical sector continues to be the
single largest contributor to GDP. The country has 32 oil producing and gas
fields; 18 on-shore and 14 off-shore, with 10 of the 32 fields producing natural
gas. On December 31, 1997, proven reserves of crude oil were 584 million
barrels, with a reserve life of approximately 12.4 years at current levels of
production. According to the Petroleum Economist, proven reserves of
"non-associated" natural gas at January 1, 1997 were 16.1 trillion cubic feet,
giving a reserve life of over 28 years at projected increased levels of
production.
In addition to the emphasis on developing the petroleum industry, the
government of the Republic of Trinidad and Tobago (the "Government of Trinidad")
has also encouraged investment in other sectors such as manufacturing, tourism
and financial services. The tourism industry, located mainly in Tobago,
contributed approximately 16% of GDP in 1997.
Economic growth has played a significant role in the Government of
Trinidad's efforts to control both unemployment and inflation. Unemployment has
been reduced from 19.6% in 1992 to 15.8% in 1997, and, given the substantial
construction activity taking place in the energy and social sectors, is expected
to decline further in 1998. In 1993, the Government of Trinidad introduced a
trade liberalization system, which had the effect of removing controls over the
movement of foreign exchange in and out of Trinidad, and also introduced the
flotation of the Trinidad dollar ("TT dollars") against the U.S. dollar. Since
that time, the exchange rate has remained relatively stable, depreciating on
average by 1.9% per annum since 1994. The Government of Trinidad has also been
successful in reducing inflation from 6.5% in 1992 to 3.8% in 1997.
During this period of economic growth, the Government of Trinidad has
instituted a number of economic reforms, the most significant of which has been
the divestment of state-owned enterprises. This divestment has coincided with an
increase in direct foreign investment into the oil and gas, manufacturing, power
and tourism industries. This measure has been complemented by a reform of the
country's taxation regime, which has included a reduction in the corporation tax
rate from 40% in 1992 to 35% in 1997.
The Government of Trinidad has utilized the proceeds of this economic growth
to improve the social infrastructure of the country, for example, the
improvement of primary and secondary roads, medical facilities and educational
facilities.
24
<PAGE>
INDEPENDENT ENGINEER'S REPORT
Stone & Webster Management Consultants, Inc. (referred to herein as "Stone &
Webster" or the "Independent Engineer"), an engineering consulting firm which
provides services related to the technical, environmental and economic aspects
of power projects, has prepared the Independent Engineer's Report concerning
certain technical, environmental and economic aspects of the Projects (the
"Independent Engineer's Report"). The Independent Engineer's Report was prepared
in connection with the offering of the Securities (the "Offering") and is
attached as Appendix B to this Prospectus. The Independent Engineer's Report
includes, among other things, the operating history and performance of the
Warbasse Project and the Brooklyn Navy Yard Project, the projected construction
cost of the Big Spring Project and the Trinidad Project, a review of the
material Project Documents, and projections of annual revenues, expenses and
debt service coverage for the Funding Company and the Guarantors for the term of
the Securities, adopted by Stone & Webster (the "Financial Projections"). For
purposes of preparing the Financial Projections, Stone & Webster relied on
certain assumptions regarding material contingencies and several other matters
that are not within the control of the Funding Company, the Guarantors, Stone &
Webster or any other Person.
SUMMARY
Set forth below are the principal opinions expressed by Stone & Webster
regarding the Projects. For a complete understanding of the estimates,
assumptions, and calculations upon which these opinions are based, the
Independent Engineer's Report should be read in its entirety.
TRINIDAD PROJECT.
(a) The Trinidad Project design and technology appear technically sound,
consistent with designs for similar power plants, and suitable for providing
power pursuant to the requirements of the Trinidad PPA.
(b) Major equipment, including the GE 7EA gas turbines, embodies proven
technology and is expected to be supplied by reputable manufacturers.
(c) The Trinidad Project should achieve the capacity required under the
Trinidad PPA.
(d) The Trinidad Project design and construction is within the capabilities
of the contractors, Duke/ Fluor Daniel and D/FDI, and the scope of the EES
Contract and the Turnkey Construction Contract is complete.
(e) The EES Contract and the Turnkey Construction Contracts are lump sum
turnkey contracts with satisfactory liquidated damages provisions for
performance and delay.
(f) T&TEC is an adequate provider of fuel for the Trinidad Project.
(g) The draft of the operating agreement and York's estimate of the
operating and maintenance costs for the Trinidad Project appear suitable to
operate and maintain the Trinidad Project in accordance with accepted industry
standards.
(h) The Project Documents related to the Trinidad Project are technically
reasonable and should allow the Trinidad Project to achieve the results in the
Financial Projections.
(i) InnCOGEN has secured all major permits necessary to construct the
Trinidad Project and is in the process of obtaining all permits necessary to
operate the Trinidad Project.
(j) Stone & Webster expects the Trinidad Project will have a useful physical
operating life though the 30-year term of the Trinidad PPA.
25
<PAGE>
(k) The Trinidad Project total construction cost is reasonable and within
the range of similar projects.
(l) The budgeted cost for the link-up to T&TEC's transmission system is
reasonable.
(m) Operating revenue and expense assumptions incorporated in the Financial
Projections are reasonable based on the Trinidad Project.
BROOKLYN NAVY YARD PROJECT.
(a) The Brooklyn Navy Yard Project design, construction and technology
appear technically sound and suitable for providing base load power and steam
generation pursuant to the requirements of the Brooklyn Navy Yard Project
Documents (as defined herein).
(b) The Brooklyn Navy Yard Project performance data to date confirms that
the Brooklyn Navy Yard Project has produced the electrical and steam capacity
required under the Energy Sales Agreement, dated as of October 31, 1996, by and
between BNYCP and Con Ed (the "BNY PPA") in all seasonal periods.
(c) The Brooklyn Navy Yard Project has achieved Qualifying Facility ("QF")
thermal and efficiency standards to date. Stone & Webster expects the Brooklyn
Navy Yard Project to continue to be able to meet the QF standards for the term
of the BNY PPA.
(d) Stone & Webster expects the Brooklyn Navy Yard Project to achieve a long
term all-hour average equivalent availability of 90.6% provided that Palmark,
Inc. ("Palmark") operates and maintains the Brooklyn Navy Yard Project in
accordance with the operating and maintenance agreement and within accepted
industry practice.
(e) Palmark appears capable and qualified to operate and maintain the
Brooklyn Navy Yard Project in accordance with the operating and maintenance
agreement and within accepted industry standards.
(f) Palmark's estimate of the costs of operating and maintaining the
Brooklyn Navy Yard Project, including provision for major maintenance, is
reasonable and in accordance with standard industry practice.
(g) The Brooklyn Navy Yard Project Documents are technically reasonable and
should allow the Brooklyn Navy Yard Project to achieve the results in the
Financial Projections.
(h) The Brooklyn Navy Yard Project was designed and equipped to comply with
the air and water discharge permit limitations.
(i) BNYCP has secured, or is in the process of obtaining, all major permits
to operate the Brooklyn Navy Yard Project.
(j) Stone & Webster expects the Brooklyn Navy Yard Project will have a
useful physical operating life through the 40-year term of the BNY PPA.
(k) Operating revenue and expense assumptions incorporated in the Financial
Projections are reasonable based on the Brooklyn Navy Yard Project Documents and
on operating performance to date.
WARBASSE PROJECT.
(a) The Warbasse Project design, construction and technology appear
technically sound and suitable for providing power and steam generation pursuant
to the requirements of the Warbasse Project Documents (as defined herein).
26
<PAGE>
(b) Warbasse Project's performance data to date confirms that the Warbasse
Project has produced the electrical and steam capacity required under the Power
Purchase Agreement, dated as of April 14, 1989, between Con Ed and
Warbasse-Cogeneration Technologies Partnership, L.P., a Delaware limited
partnership. (the "WCTP PPA") and the Energy Purchase and Sale Agreement, dated
as of July 15, 1987, between WCTP and AWH, as amended by the First Amendment
thereto (the "AWH PPA") in all seasonal periods.
(c) The Warbasse Project has achieved QF thermal and efficiency standards to
date. Stone & Webster expects the Warbasse Project to continue to be able to
meet the QF standards for the term of the Financial Projections.
(d) The Warbasse Project Documents are technically reasonable and should
allow the Warbasse Project to achieve the results in the Financial Projections.
(e) The Warbasse Project is designed and equipped to comply with the air
emission permit limitations.
(f) WCTP has secured, or is in the process of obtaining, all major permits
to operate the Warbasse Project.
(g) Stone & Webster expects the Warbasse Project will have a useful physical
operating life through the term of the Financial Projections.
(h) Operating revenue and expense assumptions incorporated in the financial
pro forma model and the Financial Projections are reasonable based on the
Warbasse Project Documents and on operating performance to date.
BIG SPRING PROJECT.
(a) Vestas is the most experienced designer and manufacturer of wind
turbines in the world with more than 2 decades of experience and Vestas' record
of quality in wind turbine manufacturing generally is proven.
(b) The design and manufacture of the Vestas V47 and V66 wind turbines are
based on sound and proven technology and the manufacturer's experience over two
decades.
(c) The Vestas V47 and V66 wind turbines are scale-ups of existing wind
turbines. The reliability and availability experience for these turbines in the
field is relevant and has been excellent.
(d) The Vestas V47 and V66 winds turbines have been certified for design and
effectiveness by Germanischer Lloyd, a stringent European certifying
organization.
(e) Based on a study by Richard L. Simon, the independent wind consultant
retained by the Funding Company (the "Independent Wind Consultant"), the wind
characteristics and land topography at the site of the Big Spring Project are
relatively benign and should enhance the longevity of the key load-carrying
components and help to lower long-term maintenance costs.
(f) In general, the site of the Big Spring Project is suitable for the
operation and site conditions should present no unusual problems that have not
been encountered before and for which the wind turbines are designed.
(g) The wind turbines will be maintained by York personnel who are
experienced in the operation and maintenance of wind turbines and York's
operating and maintenance budget is adequate. Additional on-site operating and
maintenance training specific to the wind turbines will be provided by Vestas.
27
<PAGE>
(h) The Big Spring Guarantor has applied for and secured all major permits
necessary to complete construction and is in the process of obtaining all major
permits necessary to commence operation of the Big Spring Project.
(i) The total budgeted equipment and construction cost are reasonable and
within the range of similar projects.
(j) York intends to, but has not executed, construction contracts for the
power collection system, system control and data acquisition system and the
transformers. Much of the design work is in progress and Stone & Webster does
not anticipate that York will have any difficulties executing construction
contracts for these items.
(k) The Substation and Commissioning Agreement between York and MSE Power
Systems is reasonable and appropriate.
(l) Operating revenue and expense assumptions incorporated in the Financial
Projections are reasonable based on the Big Spring Project Documents (as defined
herein). The Financial Projections include a reasonable contingency for
maintenance of the wind turbines.
FINANCIAL PROJECTIONS
Under base case assumptions, Stone & Webster has forecasted an average Debt
Service Coverage Ratio of 1.52 over the 9.25 year term of the Offering. The
minimum Debt Service Coverage Ratio is 1.51 which occurs in year five.
A number of sensitivities were performed to test the impact of changes in
key variables on the Debt Service Coverage Ratios.
<TABLE>
<CAPTION>
MIN./AVG.
CASE DSCR
------------------------------------------------------------------------------------------------- ----------
<S> <C> <C>
Base Case........................................................................................ 1.51/1.52
1. Trinidad Project with no inflation............................................................... 1.45/1.49
2. Trinidad Project with 20% higher O&M costs....................................................... 1.43/1.48
3. All Projects with higher O&M costs; 10% higher for U.S. Projects and 20% higher for Trinidad
Project.......................................................................................... 1.42/1.48
4. All Projects with lower availability............................................................. 1.38/1.41
5. Big Spring Project with lower energy sales; 78% of base case..................................... 1.43/1.46
6. Warbasse Project and Brooklyn Navy Yard Project with 10% higher gas prices....................... 1.49/1.52
</TABLE>
28
<PAGE>
CAPITALIZATION
The following tables set forth the capitalization of the Funding Company,
the U.S. Guarantors, the Trinidad Parent, and the combined capitalization of the
U.S. Guarantors and the Trinidad Parent as of August 31, 1998. The following
tables should be read in conjunction with the financial statements of the
Funding Company, the combined financial statements of the U.S. Guarantors and
the consolidated financial statements of the Trinidad Parent, respectively,
included elsewhere in this prospectus.
<TABLE>
<CAPTION>
AUGUST 31,
1998
--------------
<S> <C>
Capitalization of Funding Company
Long Term Liabilities
Senior Secured Bonds.......................................................................... $ 150,000,000
--------------
Shareholders' Equity
Common stock, par value $1; authorized 50,000 shares; issued and outstanding 1,000 shares..... 1,000
Retained Earnings............................................................................. 1,000
--------------
2,000
Less: Stock subscription receivable........................................................... (1,000)
--------------
1,000
--------------
Total Capitalization........................................................................ $ 150,001,000
--------------
--------------
Capitalization of U.S. Guarantors
Long Term Liabilities
Project Note payable.......................................................................... $ 50,000,000
Partners' and members' capital.................................................................. 61,174,768
--------------
Total Capitalization........................................................................ $ 111,174,768
--------------
--------------
Capitalization of Trinidad Parent
Long Term Liabilities
Project Note Payable.......................................................................... $ 100,000,000
--------------
Shareholders' Equity
Common stock, par value $1; 10,000 authorized shares; issued and outstanding 2001
shares...................................................................................... 2,001
Additional paid in capital.................................................................... 97,498
Accumulated Deficit........................................................................... (477,893)
--------------
(378,394)
Less: Stock subscription receivable........................................................... (2,001)
--------------
(380,395)
--------------
Total Capitalization........................................................................ $ 99,619,605
--------------
--------------
Combined Capitalization of U.S. Guarantors and Trinidad Parent
Long Term Liabilities
Project Notes Payable......................................................................... $ 150,000,000
--------------
Equity
Common stock, par value $1; 10,000 authorized shares; issued and outstanding 2001
shares...................................................................................... 2,001
Additional paid in capital.................................................................... 97,498
Accumulated Deficit........................................................................... (477,893)
--------------
(378,394)
Less: Stock subscription receivable........................................................... (2,001)
--------------
(380,395)
Partners' and members' capital................................................................ 61,174,768
--------------
60,794,373
--------------
Total Capitalization........................................................................ $ 210,794,373
--------------
--------------
</TABLE>
29
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data set forth below have been derived from the
financial statements of the Funding Company, the combined financial statements
of the U.S. Guarantors and the consolidated financial statements of the Trinidad
Parent included elsewhere in this Prospectus for the periods specified below.
The data should be read in conjunction with those financial statements and
related notes and other financial information appearing elsewhere in this
Prospectus.
STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
FOR THE PERIOD JUNE 12, 1998
THROUGH
AUGUST 31, 1998
---------------------------------
<S> <C>
Funding Company
Interest income.............................................................. $ 1,350,000
Interest expense............................................................. (1,350,000)
Other income................................................................. 1,000
-----------
Net income................................................................... $ 1,000
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD JUNE 2, 1998
THROUGH
AUGUST 31, 1998
---------------------------------
<S> <C>
U.S. Guarantors
Interest income.............................................................. $ 474,854
General Partner fees......................................................... 407,803
Interest expense............................................................. (462,394)
-----------
Net income................................................................... $ 420,263
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD JUNE 1, 1998
THROUGH
AUGUST 31, 1998
---------------------------------
<S> <C>
Trinidad Parent
Interest income.............................................................. $ 289,809
Interest expense............................................................. (767,702)
-----------
Net loss..................................................................... $ (477,893)
-----------
-----------
</TABLE>
30
<PAGE>
BALANCE SHEET DATA
AS OF AUGUST 31, 1998
<TABLE>
<S> <C>
Funding Company
Total assets................................................................ $151,351,000
Long-term obligations....................................................... 150,000,000
Shareholders' equity........................................................ 1,000
U.S. Guarantors
Note receivable--WCTP....................................................... $57,330,535
Construction in progress.................................................... 7,840,312
Cash in escrow.............................................................. 38,562,546
Total assets................................................................ 113,141,800
Long-term obligations....................................................... 50,000,000
Partners' and members' capital.............................................. 61,174,768
Trinidad Parent
Construction in progress.................................................... $28,309,848
Cash in escrow.............................................................. 74,099,961
Total assets................................................................ 112,593,168
Long-term obligations....................................................... 100,000,000
Shareholder's deficiency.................................................... (380,395)
</TABLE>
31
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
The Funding Company was formed in 1998 for the sole purpose of issuing the
Securities.
LIQUIDITY AND CAPITAL RESOURCES
PORTFOLIO BOND FINANCING
The Funding Company in August 1998, completed a $150,000,000, 12% portfolio
bond financing due October 30, 2007. The proceeds from this financing will
provide full funding for construction and completion of the Big Spring Project
and the Trinidad Project, and fund a debt service reserve, interest during
construction and other costs. This financing was underwritten by Credit Suisse
First Boston Corporation and is secured by certain assets and cash flow related
to the Brooklyn Navy Yard Project and the Warbasse Project, as well as cash flow
and assets of the Big Spring Project and the Trinidad Projects.
As noted in the Independent Engineer's Report, the net proceeds from the
Offering, together with net cash generated by the Projects during construction,
are expected to be sufficient to fund the balance of the construction costs of
the Big Spring Project and the Trinidad Project.
As noted in the Independent Engineer's Report, the Project Revenues are
expected to be adequate to pay the Projects' expenses and, through payments to
the Funding Company on the Project Notes, the Funding Company's obligations on
the Securities.
The Securities are guaranteed by the Warbasse Guarantors, the Brooklyn Navy
Yard Guarantor, the Big Spring Guarantor (collectively, the "U.S. Guarantors")
and, through its guarantee to the Funding Company of the Trinidad Project Note
of $100 million, the Trinidad Guarantor (collectively, with the U.S. Guarantors,
the "Guarantors"). The Guarantors are all indirectly wholly-owned or majority-
owned subsidiaries of York. The guarantees of the Guarantors are limited to the
extent of available cash flow, as defined, from the operations of the Big Spring
Project and the Trinidad Project and from certain assets and cash flows of the
Guarantors, as well as a pledge of capital stock of the indirect U.S. parent of
the Trinidad Guarantor.
Pursuant to the terms of the Project Notes, the net proceeds of the
financing are held in escrow by a bank until such time as they are available for
use, as defined, for the construction of the Big Spring Project and the Trinidad
Project. In addition, certain amounts are required to be held as a debt service
reserve, for interest during construction and other reserves.
BIG SPRING PROJECT
New World Power Texas Renewable Energy Limited Partnership is a party to a
15-year power purchase agreement with Texas Utilities Electric Company ("TU
Electric"), which may be extended for two 5-year periods. Partial commercial
operation is currently expected in December 1998, and full commercial operation
by February 1999. When completed, the facility will have a capacity of 34 MW and
include 46 turbines, including four 1,650 kilowatt ("kW") wind turbines.
Turbine supply, delivery, erection and commissioning (approximately 75% of
the project's estimated construction costs) has been subcontracted to Vestas
Wind Systems A/S, the largest manufacturer of wind turbines in the world.
TRINIDAD AND TOBAGO PROJECT
Construction of a 215MW natural gas fueled combustion turbine project in the
Republic of Trinidad and Tobago has begun for commercial operation by fall of
1999. The Trinidad Project will sell the bulk of its output under a 30-year
contract signed on February 12, 1998, as amended, with Trinidad and Tobago
Electricity Company ("T&TEC"), Trinidad's government-owned power distribution
utility. Fixed
32
<PAGE>
capacity payments, primarily tied to U.S. inflation rates, will constitute the
majority of project revenues. T&TEC will have the obligation to supply and pay
for fuel for the Trinidad Project, thereby eliminating fuel risk on the Trinidad
Project. T&TEC's obligations under the power purchase agreement are supported by
a guarantee of the Trinidad government. The Trinidad Project is also expected to
supply energy to several proposed new industrial developments.
GENERAL
Construction and development of the Big Spring Project and Trinidad Project
have begun. There are no significant capital commitments other than capital
commitments totaling approximately $102 million, of which $26.2 million has been
incurred through August 31, 1998, related to these projects.
There can be no assurance that the Big Spring Project and the Trinidad
Project will be completed in the manner described above, or that the offering of
the Securities will provide for all contingencies.
RESULTS OF OPERATIONS
There have been no commercial operations for either the Big Springs Project
or the Trinidad Project through August 31, 1998, however interest expense has
been incurred and interest income and certain fees have been earned by various
parties.
33
<PAGE>
DEFINED TERMS
All capitalized terms used in this Prospectus and not otherwise defined have
the meanings assigned thereto in Appendix A hereto. The indicated capacity of
each of the Projects is approximate and, with respect to the Big Spring Project
and the Trinidad Project, is dependent on completion of construction in
accordance with specifications. Unless otherwise indicated, all amounts are in
U.S. dollars.
BUSINESS OF THE FUNDING COMPANY, THE PROJECT NOTE OBLIGORS
AND THE GUARANTORS
THE FUNDING COMPANY
The Funding Company was organized as a special purpose limited liability
company under the laws of the Cayman Islands for the sole purpose of issuing the
Securities. The Funding Company's sole business activity is limited to the
issuance of the Securities, acting as lender and payee under the Project Notes,
and actions taken in connection therewith. The only income available to the
Funding Company to pay principal of, premium, if any, and interest on the
Securities are the payments made by the Project Note Obligors under the Project
Notes or by the Guarantors under the Guarantees.
THE PROJECT NOTE OBLIGORS AND THE GUARANTORS
Each of the U.S. Guarantors and the Trinidad Parent is a Project Note
Obligor. The obligations of the Trinidad Parent under the promissory note made
by the Trinidad Parent to the Funding Company, dated as of August 4, 1998 (the
"Closing Date") (the "Trinidad Project Note") are guaranteed by the Trinidad
Guarantor. The Big Spring Guarantor owns an equity interest in the Big Spring
Project and the Trinidad Guarantor owns an equity interest in the Trinidad
Project. Neither owns any other significant assets. Each of the Warbasse
Guarantors holds a note from the Warbasse Project and the Brooklyn Navy Yard
Guarantor holds the right to receive the BNY Cash Flow (as defined herein) from
the Brooklyn Navy Yard Project, and neither owns any other significant assets.
The sole business of the Big Spring Guarantor and the Trinidad Guarantor
consists of the management and ownership of its Project and neither owns any
other significant assets; the sole business of the Warbasse Guarantors is to
hold the WCTP Notes and the sole business of the Brooklyn Navy Yard Guarantor is
to receive the BNY Cash Flow from the Brooklyn Navy Yard Project. Distributions
or other payments or revenues derived from each Project constitutes the sole
source of revenues earned by each Guarantor.
The Warbasse Project and the Brooklyn Navy Yard Project are designed to
generate both electrical energy and thermal energy in the form of steam. The Big
Spring Project and the Trinidad Project are designed to generate only electrical
energy. Each Project's actual outputs of electrical energy and steam vary based
on their design or requirements of the Power Purchase Agreements.
The Warbasse Project, the Trinidad Project and the Brooklyn Navy Yard
Project use or will use natural gas as their primary source of fuel, however the
Warbasse Project and the Brooklyn Navy Yard Project also have the ability to use
other fuels in certain circumstances. The Big Spring Project will use wind power
to generate electricity.
TRINIDAD PROJECT
The Trinidad Project is a 215 Megawatt ("MW") natural gas-fired combustion
turbine electric generation facility under construction in Trinidad, scheduled
for Commercial Operation by September 1999. InnCOGEN will sell the bulk of the
Trinidad Project's output to T&TEC under the Trinidad PPA for a term of 30 years
from the date of Commercial Operation of the first turbine generator and
associated equipment (a "Unit") to be commercially available. Fixed capacity
payments, primarily tied to U.S. inflation rates, are expected to constitute the
majority of the Project Revenues from the Trinidad Project. T&TEC will have the
obligation to supply and deliver to InnCOGEN at no
34
<PAGE>
charge fuel related to the supply of electricity to T&TEC thereby mitigating
fuel risk on the Trinidad Project. Additionally, T&TEC will be obligated to
construct sub-stations and interconnection facilities from their electrical
substation located nearby. T&TEC's obligations under the Trinidad PPA are
supported by the Trinidad Government Agreement in accordance with the terms
therewith. See "SUMMARY DESCRIPTION OF THE PRINCIPAL PROJECT CONTRACTS--Trinidad
Government Agreement." The Trinidad Project may also supply energy to several
proposed new industrial facilities.
Duke/Fluor Daniel will be the contractor for the construction of the
Trinidad Project and for all work and services to be performed in Trinidad
pursuant to the Turnkey Construction Contract, which contains customary
liquidated damages provisions for failure to complete construction in a timely
manner.
D/FDI will be the contractor for the engineering, design and procurement
services for the Trinidad Project to be performed outside Trinidad pursuant to
the EES Contract, which contains customary liquidated damages provisions for the
Trinidad Project's failure to meet the Performance Guarantee (as described
herein).
After the completion of the Trinidad Project, Palmark will be the operator
of the Trinidad Project pursuant to the Operation and Maintenance Agreement with
customary provisions.
BROOKLYN NAVY YARD PROJECT
The Brooklyn Navy Yard Project is a 286 MW natural gas-fired cogeneration
facility located in a 260 acre industrial park in New York City. The Brooklyn
Navy Yard Project has been in Commercial Operation since March, 1997 and
substantially all of its electricity and steam is used to supply Con Ed under a
40-year energy sales contract (38 years remaining). Steam is delivered to Con
Ed's New York City district steam system, the world's largest, through a tunnel
under the East River. BNYCP currently provides more than 15% of Con Ed's total
steam consumption in New York City. Electric energy delivered represents about
3% of peak power demand in the service territory.
BNYCP completed long-term project financing on December 17, 1997 with the
sale of $100,000,000 aggregate principal amount of Senior Secured Bonds Due 2020
and $307,000,000 aggregate principal amount of New York City Industrial
Development Agency Industrial Development Revenue Bonds due from 2022 to 2036
(collectively, the "BNYCP Bonds").
The Brooklyn Navy Yard Guarantor has been assigned the right to receive,
pursuant to the BNYCP Partnership Agreement, the BNY Cash Flows from York
Partners. The General Partners Fees and the Royalty Fees are paid out of
revenues of the Brooklyn Navy Yard Project after payment of the Operation and
Maintenance Costs and debt service on the BNYCP Bonds and other required
deposits into certain designated funds and accounts and the satisfaction of
certain other conditions. The Equity Cash Flows are paid after all other
obligations of BNYCP, including a $93 million debt to Mission. In addition,
Mission and certain other parties have a prior security interest in certain of
the BNY Cash Flows, including a security interest, limited in annual amount, in
the General Partner Fees and Royalty Fees pursuant to the Mission Reimbursement
Agreement (as defined herein). See "SUMMARY DESCRIPTION OF THE PRINCIPAL PROJECT
CONTRACTS--Mission Reimbursement Agreement."
WARBASSE PROJECT
The Warbasse Project is a 38 MW natural gas-fired cogeneration facility
located in Brooklyn, New York, that supplies electricity and thermal energy to
the cooperative apartment complex (the "AWH Premises") administered by AWH and
provides energy (when dispatched) and capacity to Con Ed under a 22-year power
purchase agreement (13 years remaining).
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The Warbasse Project is owned by WCTP, which was formed to build a
cogeneration plant to service the residents of the AWH Premises. The Warbasse
Project entered into service in 1989 and supplied all of the electricity, heat,
central air conditioning and domestic hot water for the residents of the AWH
Premises. York constructed and financed the Warbasse Project and performs
operation and maintenance services.
The Warbasse Guarantors hold approximately $58 million notes of WCTP. The
other long-term debt of WCTP is evidenced by the Amended and Restated Promissory
Note, dated as of November 17, 1994, in the outstanding principal amount of
approximately $11 million issued by WCTP payable to Tomen (the "Tomen Note").
Each of these notes rank PARI PASSU and bear interest at LIBOR plus 2% per
annum, payable quarterly. The terms of the WCTP Notes and the Tomen Note provide
for the reduction in the principal balances of each such note from all operating
cash flow from WCTP, pro rata to the principal balances of each such note.
BIG SPRING PROJECT
The Big Spring Project is a wind power facility is under construction in the
Big Spring area of Texas. The Big Spring Project began energy production in
December of 1998, and is scheduled for Commercial Operation in February of 1999.
The Big Spring PPA requires Commercial Operation to occur before May 31, 1999.
When completed, the Big Spring Project is expected to have a capacity of 34 MW,
to be generated by four 1,650 kW wind turbines and forty-two 660 kW wind
turbines. The Big Spring Project will sell its power to TU Electric pursuant to
the Big Spring PPA. The Big Spring Guarantor has contracted the turbine supply,
delivery, erection and commissioning (approximately 80% of project construction
costs) to Vestas, the manufacturer of the wind turbines.
The Big Spring PPA has an initial term of 15 years. During the initial term,
TU Electric pays a fixed but escalating price (starting at 4.14 cents per
kilowatts per hour ("kWh")) for energy delivered up to a maximum of 116,900,000
kWh per year. A balancing account adjusts for variable wind years by allowing
any shortfall in production by the project to be carried forward and credited
against excess production over the life of the power purchase agreement. At the
end of the initial term, the Big Spring PPA may be extended by either party for
each of two 5-year periods. If the Big Spring PPA is not extended, the Big
Spring Guarantor may either sell its output to TU Electric at its then avoided
costs or market its energy elsewhere. The Big Spring Guarantor is entitled to
accelerated U.S. Federal income tax depreciation and to a 1.7 cents per kWh
(escalating) wind production tax credit over the first 10 years of operation of
the Big Spring Project. This credit may be applied to any U.S. Federal income
tax from other sources.
ENFORCEABILITY OF CIVIL LIABILITIES
The Funding Company is a limited liability company incorporated under the
laws of the Cayman Islands. In addition, most of the Funding Company's directors
and officers are not residents of the United States and their assets are located
outside of the United States. As a result, it may be difficult for investors to
effect service of process within the United States upon such persons or to
realize against them upon judgments of courts of the federal securities laws.
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MANAGEMENT
Executive officers, directors and other key employees of York and certain of
its subsidiaries are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Robert M. Beningson 69 Chairman of the Board, President and Chief Executive
Officer
Michael Trachtenberg 50 Executive Vice President, Chief Financial and
Accounting Officer and Secretary
Robert C. Paladino 47 Executive Vice President
Vito L. Elefante 48 Vice President
Mark E. Haller 47 Director Business Development-Wind
David P. Perri 34 Vice President, Engineering-CTI
Stanley Weinstein 72 Director
Howard F. Sommer 57 Director
Harvey W. Schultz 58 Director
Jerry Fuchs 37 Project Manager-Wind Projects
Richard Realmuto 31 Chief Electrical Engineer
</TABLE>
Robert M. Beningson was elected a director of York in October 1981. In
February 1982, Mr. Beningson was elected Chairman of the Board, President and
Chief Executive Officer of York. He also serves as President, Chief Executive
Officer and Chairman of the Board of each of York's subsidiaries. Mr. Beningson
received a Bachelor of Mechanical Engineering from Rensselaer Polytechnic
Institute in 1950 and served in the U.S. Army Corps of Engineers from 1951 to
1953.
Michael Trachtenberg, a Certified Public Accountant, joined York in January
1987 and was elected Vice President, Chief Financial Officer and Secretary in
March 1987 and was elected Executive Vice President in April 1990. From November
1985, until joining York, Mr. Trachtenberg was a financial consultant in private
practice. Prior thereto, Mr. Trachtenberg was Vice President-Finance and Chief
Financial Officer of S&S Corrugated Paper Machinery Co., Inc. From 1980 to 1984,
Mr. Trachtenberg held various positions with Carter Day Industries, Inc., an
agricultural equipment manufacturer and energy and environmental systems
company, culminating in his appointments as Vice President, Treasurer and Chief
Financial Officer. Mr. Trachtenberg received a B.B.A. from Bernard M. Baruch
College in June 1970.
Robert C. Paladino joined York in January 1987 and was elected Executive
Vice President in April 1990. From October 1980 until joining York, Mr. Paladino
was Senior Vice President and General Counsel of NPS Technologies Group, Inc.,
an engineering and construction company serving the electric utility industry.
From 1974 to 1980, Mr. Paladino held various positions with the Edison Electric
Institute, the national organization for the investor-owned electric utility
industry, leading to his appointment as Director of Fossil Fuels and Assistant
to the President. Mr. Paladino received his Bachelors in Chemical Engineering
from Manhattan College in 1972; Masters in Environmental Engineering from
Manhattan College in 1974; Juris Doctorate from George Washington University,
National Law Center in 1980. He was admitted to the New York State Bar in 1981.
Vito L. Elefante joined York in April 1998 and was then elected Vice
President. Prior to joining York, Mr. Elefante was Vice President of Edison
Mission Energy New York, Inc. and Executive Director of BNYCP. Prior to that,
Mr. Elefante worked at Long Island Lighting Company for 20 years, where he was
responsible for independent power generation, purchasing and fuels. Mr. Elefante
received his Bachelors in Mechanical Engineering from Manhattan College in 1972,
completed graduate studies in business administration at Long Island University
and participated in executive management programs at Duke University and
Pennsylvania State University.
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Mark E. Haller is responsible for identifying, developing and operating wind
power projects. From 1993 to 1996, Mr. Haller was Director of U.S. Operations
for Enercon, a German-based wind turbine manufacturer where his primary
responsibilities were marketing and business development. Prior to Enercon, Mr.
Haller held various positions with SeaWest Power Corporation from 1983 to 1993.
Mr. Haller received his degree in Wind Energy Technology from the Red Wind
Energy Education Center and the Red Wing Technical College, in Red Wing,
Minnesota in 1981.
David P. Perri is responsible for project development, engineering and
construction management, operation and maintenance management, permitting, and
budgets. He was the project manager for the Warbasse Project from 1986 to 1990.
Mr. Perri received Bachelor of Science and Master of Science degree in
Mechanical Engineering from Rensselaer Polytechnic Institute.
Stanley Weinstein was elected to York's Board of Directors in May, 1995.
Until 1991, Mr. Weinstein was a partner at Deloitte and Touche, certified public
accountants, and since such date, has been an independent consultant. He has
been a practicing accountant for almost 45 years, with primary client
responsibilities in the financial, retail, distribution, apparel and textile
industries. He co-authored the widely recognized SEC Compliance-Financial
Reporting and Forms handbook published by Prentice Hall, and served on the AICPA
committees that produced the Finance Companies Audit Guide and the International
Booklet Series for Professional Accounting in Foreign Countries. He received a
B.B.A. in Accounting from City College of New York.
Howard F. Sommer was elected to York's Board of Directors in September,
1997. In September 1995, Mr. Sommer was hired as the President and CEO of New
York Community Investment Company L.L.C., a new $10 million equity fund created
and funded by eleven major banks in New York City. Beginning in 1973, as
President of U.S. Capital Corporation and Fundex Capital Corporation, he has
managed finance and investment company activities that provided over $100
million in funding to small businesses. Mr. Sommer received a Bachelors Degree
in Electrical Engineering from City College of New York and an MBA from New York
University.
Harvey W. Schultz was elected to York's Board of Directors in November,
1998. He currently is President of AMREP Solutions, Inc. From 1970 through 1990,
Mr. Schultz held various positions with the City of New York, such as Director
of the Economic Development Section of the New York City Department of City
Planning, the Director of the Brooklyn Office of City Planning, the Director of
Land Use Planning & Environmental Management for the New York City Planning
Department, Executive Assistant to the Brooklyn Borough President, and the
Commissioner of the New York City Department of Environmental Protection. Mr.
Schultz has a Masters Degree in Urban Planning (1968, Hunter College), is a
member of the American Institute of Certified Planners, and Chairman of the
American Planning Association's Water, Sewer & Sanitation Committee.
Jerry Fuchs joined York in October 1997, as Project Manager-Wind Projects,
and is currently responsible for managing the development and construction of
the Big Spring Project. Mr. Fuchs has been actively involved in the wind power
industry since 1981, working for the State of Minnesota Department of Energy and
Fayette Manufacturing Corporation, a large wind farm developer and operator in
California. From 1991 to 1993, Mr. Fuchs was a consultant in the independent
power industry. Prior to joining York, Mr. Fuchs worked for the New World Power
Corporation where he was responsible for site selection, project planning and
design, permitting and environmental work in support of wind farm developments.
Mr. Fuchs graduated in 1982 from the Red Wind Energy Education Center in
Minnesota with a degree in Wind Energy Technology.
Richard Realmuto is responsible for managing operations at the Warbasse
Cogeneration Facility. In addition, he is Chief Electrical Engineer responsible
for engineer and design review, site inspection and utility coordination. Prior
to joining York, Mr. Realmuto was Project Engineer for Long Island Lighting
Company, responsible for the electrical and gas interconnection of the New York
Power Authority's 150 MW Holtsville Combined Cycle Facility. Mr. Realmuto is a
Professional Engineer,
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registered in New York. He received a Bachelor of Science and Master of Science
in Electrical Engineering from Polytechnic University of Brooklyn, New York and
a Master of Science in Environmental Technology from New York Institute of
Technology.
There are no family relationships between or among any directors or
executive officers of York.
York has elected an independent director of each of the U.S. Guarantors and
York T&T. The organizational documents of each of the U.S. Guarantors and York
T&T provide that the consent of such independent director or other person is
required for any such U.S. Guarantor or York T&T to file a voluntary bankruptcy
petition. Such independent director or other person has confirmed that he owes a
fiduciary duty to the creditors of such entity, as well its equity holders.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
York owns, directly or indirectly, all or a majority of the equity in the
Guarantors and the Project Note Obligors. In addition, York provides services to
each of the Guarantors and the Project Note Obligors and receives fees for such
services. The general partner of WCTP is owned by an entity controlled by Robert
Beningson, the Chairman of the Board of York.
Each of the Guarantors and the Project Note Obligors is organized and
operates as a legal entity separate and apart from York and any other affiliates
of York and, accordingly, the assets of the Guarantors and the Project Note
Obligors will not be generally available to satisfy the obligations of York or
any other affiliates of York; PROVIDED, HOWEVER, that the restricted cash of the
Guarantors and the Project Note Obligors or other assets which are available for
distribution may, subject to applicable law or the terms of financing agreements
of such parties, be advanced, loaned, paid as dividends or otherwise distributed
or contributed to York or affiliates thereof. The Securities are non-recourse to
York. See "SUMMARY DESCRIPTION OF THE SECURITIES--Nature of Recourse on the
Securities."
In connection with the Offering, York has agreed to certain limits on its
ability to incur debt (including guarantees), pay dividends, and continue
business segments which incur losses in excess of specified amounts. It has also
agreed that it will finance all new projects on a non-recourse basis through
special purpose vehicles, and will not pledge assets to third parties except as
required for financing.
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SUMMARY DESCRIPTION OF PRINCIPAL PROJECT CONTRACTS
THE FOLLOWING SUMMARIES ARE OF CERTAIN FEATURES OF THE PROJECTS AND MATERIAL
TERMS OF CERTAIN PRINCIPAL AGREEMENTS RELATED TO THE PROJECTS AND THE BUSINESS
OF THE GUARANTORS, AND SHOULD NOT BE CONSIDERED TO BE A FULL STATEMENT OF THE
TERMS AND PROVISIONS OF SUCH AGREEMENTS. ACCORDINGLY, THE FOLLOWING SUMMARIES
ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE APPLICABLE AGREEMENT AND ARE
SUBJECT TO THE TERMS OF THE FULL TEXT OF EACH AGREEMENT. UNLESS OTHERWISE
STATED, ANY REFERENCE IN THIS PROSPECTUS OR TO ANY AGREEMENT SHALL MEAN SUCH
AGREEMENT AND ALL SCHEDULES, EXHIBITS AND ATTACHMENTS THERETO AS AMENDED,
SUPPLIED OR OTHERWISE MODIFIED IN AND EFFECT AS OF THE DATE HEREOF. COPIES OF
CERTAIN OF SUCH DOCUMENTS HAVE BEEN FILED AS EXHIBITS TO THE REGISTRATION
STATEMENT OF WHICH THIS PROSPECTUS FORMS A PART.
TRINIDAD PROJECT
TRINIDAD POWER PURCHASE AGREEMENT
InnCOGEN has entered into a License Agreement and Agreement for Sale and
Purchase of Power with T&TEC, dated as of February 12, 1998, as amended by an
agreement dated as of June 18, 1998 (the "Trinidad PPA"). Pursuant to the
Trinidad and Tobago Electricity Commission Act, Chapter 54:70 of the Laws of
Trinidad (the "T&TEC Act"), the Trinidad PPA has been consented to and approved
by the Minister of Public Utilities of Trinidad. Under the terms of the Trinidad
PPA, InnCOGEN will sell and make available capacity and deliver energy to T&TEC,
who will (a) purchase and pay for all capacity made available and energy
delivered by InnCOGEN to T&TEC, subject to certain limitations and (b) supply
and deliver natural gas free of charge to InnCOGEN. The Trinidad Project will
have a total gross capacity of 215 MW, at site conditions.
T&TEC's obligation to purchase and pay for capacity shall be limited to (a)
the purchase of all of the capacity made available by InnCOGEN up to a maximum
of 195 MW, during the period from the commencement of Commercial Operation of
the first Unit to be commercially available through September 9, 2004 (the
"Initial Operating Period"), (b) the right, but not the obligation, at any time
and during the Initial Operating Period to purchase from InnCOGEN, at a price
including both the capacity and energy elements set forth in the Trinidad PPA,
electricity available from the Trinidad Project above 195 MW if and to the
extent such electricity is not being delivered to any of the Innercob facilities
and (c) the purchase of all of the capacity made available by InnCOGEN up to a
maximum of 210 MW after the Initial Operating Period to the end of the term of
the Trinidad PPA. T&TEC's maximum capacity purchase obligation pursuant to
clause (c) shall be reduced by the aggregate amount of capacity contracted by
InnCOGEN to Persons at the Innercob facilities, PROVIDED that no account shall
be taken of the termination of any such contract or any reduction in the amount
of capacity contracted thereunder unless and until InnCOGEN has complied with
the applicable notice requirements of the Trinidad PPA. T&TEC shall not be
obliged to purchase or pay for any capacity before the commencement of the
Initial Operating Period.
TERM AND OPTION TO EXTEND. Unless terminated earlier pursuant to the
provisions thereof, the Trinidad PPA shall remain in full force and effect for
30 years from the date of Commercial Operation of the first Unit to be
commercially available. Pursuant to the Trinidad PPA, the date of Commercial
Operation of the first Unit is the date on which electricity is first
commercially available to T&TEC from such Unit but shall be no earlier than the
later of (a) the date on which such relevant Unit is commissioned or deemed to
be commissioned and (b) the target date of Commercial Operation, September 9,
1999. Each party to the Trinidad PPA shall have the right, by written notice to
the other party at least 12 months before the expiration date of the Trinidad
PPA, to extend the term of the Trinidad PPA on terms and conditions mutually
acceptable to both InnCOGEN and T&TEC.
OPTION TO PURCHASE. T&TEC may, by written notice to InnCOGEN, seek to
purchase the Trinidad Project; PROVIDED that it gives such notice to purchase to
InnCOGEN not less than 24 months before
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the date on which the Trinidad PPA would otherwise expire. Any purchase and
sale, pursuant to such notice by T&TEC, shall only be made on terms and
conditions mutually acceptable to both parties.
RIGHT OF FIRST REFUSAL. If during the term of the Trinidad PPA, InnCOGEN
proposes to sell, transfer, convey or otherwise dispose of the whole or any part
of the Trinidad Project, InnCOGEN must give T&TEC advance written notice of such
proposal and T&TEC will have the right to purchase the whole or the relevant
part of the Trinidad Project on the terms contained in InnCOGEN's proposal by
giving InnCOGEN written notice no later than 45 days after receipt of InnCOGEN's
proposal. If T&TEC exercises its purchase right, T&TEC and InnCOGEN will
complete the sale and purchase within 90 days after T&TEC first gives notice of
its intention to exercise its purchase right. T&TEC's purchase right is
subordinate to the rights of lenders under the Financing Documents to purchase
or to sell the Trinidad Project to third parties in the event of default by
InnCOGEN thereunder.
SUPPLY OF GAS. T&TEC agreed to supply and deliver natural gas and InnCOGEN
agreed to accept and take the natural gas free of charge and value-added tax for
the purpose of electricity generation from the Trinidad Project and for InnCOGEN
to meet its obligations under the Trinidad PPA. T&TEC and InnCOGEN will
establish a nomination procedure enabling them to plan the quantities of natural
gas to be delivered to InnCOGEN pursuant to the Trinidad PPA on any given day at
the natural gas delivery point. The title and property in, and the risk of loss
of the natural gas delivered pursuant to the Trinidad PPA, shall pass to
InnCOGEN at the natural gas delivery point. Each of InnCOGEN and T&TEC, shall be
responsible for the safety and usage of the natural gas on its side of the
natural gas delivery point at the site of the Trinidad Project. Natural gas
delivered to InnCOGEN pursuant to the Trinidad PPA shall be used by InnCOGEN
solely for the purpose of electricity generation from the Trinidad Project and
to meet its obligations under the Trinidad PPA. InnCOGEN shall not sell, dispose
of for profit or use for any purpose any byproduct of natural gas delivered to
InnCOGEN pursuant to the Trinidad PPA without the prior written consent of
T&TEC. Each of T&TEC and InnCOGEN shall bear all capital and operating
maintenance costs associated with the supply, delivery and use of natural gas on
its side of the natural gas delivery point.
OPERATION AND MAINTENANCE OF THE TRINIDAD PROJECT. InnCOGEN shall operate
and maintain the Trinidad Project in accordance with Prudent Electrical Utility
Practice (as defined in the Trinidad PPA) and all Applicable Laws and
Governmental Authorisations (as defined in the Trinidad PPA). InnCOGEN and T&TEC
shall each appoint three members to a coordinating committee which shall be
responsible for the scheduling, testing and operation of the Trinidad Project as
it relates to T&TEC's Grid System (as defined herein). InnCOGEN must ensure that
all electricity delivered pursuant to the Trinidad PPA meets the specifications
set forth in the Trinidad PPA. T&TEC's substation, and the location of the
delivery point for electricity, is directly adjacent to the Trinidad Project.
INTERCONNECTION AND TRANSMISSION FACILITIES. T&TEC shall design, construct
and own the interconnection and transmission facilities and dedicated facilities
for which InnCOGEN shall pay T&TEC U.S.$3,950,000, in payment of or towards
T&TEC's costs of the design, construction, testing, completion and commissioning
of the interconnection and transmission facilities and dedicated facilities.
T&TEC must complete the construction of such facilities by May 9, 1999, as such
date shall be extended under the circumstances set forth in the Trinidad PPA,
including the occurrence of a Force Majeure Event affecting T&TEC as further
described in the Trinidad PPA.
CAPACITY PAYMENT. T&TEC must pay to InnCOGEN in respect of each Unit, from
the date of its Commercial Operation, monthly capacity payments calculated in
U.S. dollars based on the product of (a) the Monthly Average Declared Capacity
(determined pursuant to the provisions of the Trinidad PPA) ("MADC") of the
Trinidad Project, (b) the number of hours in the month, (c) the base capacity
rate (U.S.$0.012/kWh) and (d) the result of the following equation: [1 +
0.275(CPI(m)/CPI(0)-1)] where CPI(m) is the U.S. Consumer Price Index for the
month in question and CPI(0) is the U.S.
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Consumer Price Index for the month of September, 1999. T&TEC's obligation to
make capacity payments will not be terminated or suspended as a result of its
own failure to satisfy its obligations with respect to the transmission line or
gas supply.
InnCOGEN will submit to T&TEC declarations of the capacity available at the
beginning of each Shift (as defined in the Trinidad PPA) from a Unit or the
Trinidad Project at certain ambient conditions in accordance with the Operating
Procedures (as defined in the Trinidad PPA). If a misdeclaration occurs with
respect to any Shift and the Instructed Capacity (as defined in the Trinidad
PPA) does not exceed the Declared Capacity (as defined in the Trinidad PPA) for
such Shift, InnCOGEN will pay T&TEC liquidated damages of U.S.$30,000 (indexed
as from September 1999) for each occurrence in excess of two such
misdeclarations in any month.
ENERGY PAYMENT. T&TEC must pay to InnCOGEN in respect of each Unit from the
date of its synchronization to T&TEC's Grid System, monthly energy payments
calculated in U.S. dollars based on the product of (a) the energy delivered
(expressed in kWh) to the delivery point for each day in the month, (b) the base
energy rate (U.S. $0.00045/kWh) and (c) the result of the division of the U.S.
Consumer Price Index for the month in question by the U.S. Consumer Price Index
for the month of September 1999.
PAYMENTS AND INDEXATION. All undisputed amounts due and payable under the
Trinidad PPA may be subject to a right of reduction and set-off under the terms
of the Trinidad PPA. Each monthly billing statement rendered to T&TEC by
InnCOGEN shall be divided into a U.S. dollar designated payment equal to 85% of
the total amount due under the billing statement, excluding value-added tax and
a TT dollar designated payment. The balance of the bill, including value-added
tax, shall be payable in TT dollars fully indexed to the U.S. dollar at an
exchange rate calculated as the average of the "weighted average buying rate of
U.S. dollars" and the "weighted average selling rate of U.S. dollars" for
transactions on the due date for commercial banks in Trinidad on the business
day prior to the date of payment as published or otherwise determined by the
Central Bank of Trinidad and Tobago for such business day. If on the due date
for any payment U.S. dollars are not available from commercial banks in
Trinidad, T&TEC may pay all or such portion of the U.S. dollar designated
payment for which U.S. dollars are not available in TT dollars, PROVIDED that
T&TEC has first used its reasonable endeavors to obtain as many U.S. dollars as
are available from commercial banks in Trinidad to make such payment. The
exchange rate for any such payment in TT dollars shall be fully indexed to the
U.S. dollar at an exchange rate calculated to be the "weighted average selling
rate of U.S. dollars" for transactions of commercial banks in Trinidad on the
business day prior to the payment date and as published or otherwise determined
by the Central Bank of Trinidad and Tobago.
COMPLETION DELAY AND LIQUIDATED DAMAGES. Subject to certain exceptions, if
a Unit has not passed certain commissioning tests described in the Trinidad PPA
on or before the target date for its Commercial Operation due to delay caused by
InnCOGEN, T&TEC's exclusive remedy is the payment of liquidated damages by
InnCOGEN at the rate of U.S.$3,287.67 (indexed) for each day of delay for each
Unit, subject to a maximum aggregate amount for each such Unit of U.S.$900,000.
Any delay resulting from T&TEC's failure to meet its obligations with respect to
the transmission line or gas supply will not cause InnCOGEN to be liable for
liquidated damages. Subject to certain exceptions, if a Unit is not commissioned
on or before its target date for Commercial Operation due to delay caused by
T&TEC, InnCOGEN's exclusive remedy will be that the Unit will be deemed
commissioned and commercially available at 1 MW less than the nameplate capacity
of the Unit (subject to certain aggregate limits) for purposes of T&TEC's
obligation to make capacity payments. If a Unit thereafter fails any
commissioning test it will cease to be deemed commissioned and commercially
available and InnCOGEN will then be liable to pay liquidated damages as
described above until the actual date of Commercial Operation. If InnCOGEN fails
within 9 months (extendable to 12 months under certain circumstances) after the
date of Commercial Operation of the first Unit to be commercially available to
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achieve a Dependable Maximum Net Capacity ("DMNC") of 195 MW, InnCOGEN will make
a one time payment to T&TEC of liquidated damages at the rate of U.S.$45/kW for
the difference between 195 MW and the highest DMNC achieved during that period.
PERFORMANCE GUARANTEE. InnCOGEN shall provide, at its own cost, to T&TEC no
later than the earlier of (a) 5 days after the Closing Date and (b) August 6,
1998, a performance guarantee in an aggregate amount of U.S.$3 million. See
"Engineering and Equipment Supply Contract; Turnkey Construction
Contract-TRINIDAD PPA PERFORMANCE GUARANTEE" for a description of the
performance guarantee to be provided to InnCOGEN by Duke/Fluor Daniel. The
performance guarantee shall secure the payment by InnCOGEN of liquidated
damages, if any, due under the Trinidad PPA. The performance guarantee shall be
in the form of a cash deposit or an unconditional irrevocable letter of credit
or any other instrument reasonably satisfactory to T&TEC having terms and
conditions and from a financial institution, in each case reasonably acceptable
to T&TEC. InnCOGEN shall not be required to maintain a performance guarantee
once (a) InnCOGEN has achieved a DMNC of 195 MW or the Permitted Period has
expired and (b) all present and future, actual or contingent liability (if any)
of InnCOGEN to make payments of liquidated damages under those provisions of the
Trinidad PPA pertaining to commissioning delays caused by InnCOGEN and
shortfalls in nominal capacity has been discharged in full, whereupon such
performance guarantee shall be cancelled and returned to the provider thereof.
FORCE MAJEURE. Force Majeure Events recognized under the Trinidad PPA
generally include:
(a) Political Force Majeure Event (which after the end of the construction
period excuses performance only of InnCOGEN) including among other things, acts
of war, armed conflict or act of a foreign enemy, revolution or state of
emergency, go-slows of a political nature, unless directly caused by InnCOGEN,
expropriation of the Trinidad Project or any other material assets of InnCOGEN
in Trinidad, in whole or in part, failure of any Governmental Authority to issue
or renew any authorization required by InnCOGEN to construct or operate the
Trinidad Project, any other action, event, condition within the reasonable
control of the Government of Trinidad (for so long as the Government of Trinidad
holds the majority ownership of T&TEC) which substantially prevents or delays
the performance by InnCOGEN of any one or more of its obligations under the
Trinidad PPA;
(b) fire, explosion, earthquake, and other exceptional weather conditions or
other natural calamities and acts of God;
(c) embargo or closing of harbors or navigation;
(d) strikes, works to rule, go-slows or other labor disturbances or
industrial action; PROVIDED that the affected party is not required to settle on
terms it reasonably considers to be materially adverse to its interests;
(e) a Gas Force Majeure Event related to T&TEC's failure to supply or
procure the supply of natural gas in adequate quantity and conforming quality to
the gas delivery point at the Trinidad Project at the required times for any
reason, including a Force Majeure Event under any agreement or arrangement T&TEC
enters into with The National Gas Company of Trinidad and Tobago Limited, a
state enterprise incorporated as a limited liability company under the laws of
Trinidad ("NGC") or any other supplier or transporter of natural gas for sale
and purchase of natural gas for supply to the Trinidad Project; PROVIDED that if
the Gas Force Majeure Event is a Gas National Disaster (as defined herein),
T&TEC shall be relieved of its obligation to make capacity payments in relation
to the period from (and including) the 31st day after the commencement of the
Gas National Disaster to (but excluding) the date thereafter when natural gas is
first made available to T&TEC for delivery to generators of electricity; or
(f) a natural calamity or an act of God which destroys or disrupts T&TEC's
interconnection and transmission facilities and any other transmission or
distribution facilities on T&TEC's side of the
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delivery point through which electricity is transmitted and/or distributed by
T&TEC, such that T&TEC is unable to accept from InnCOGEN in any hour more than
20% of the DMNC of the Trinidad Project, which inability continues uninterrupted
for a period in excess of 30 consecutive days. In such an event, T&TEC shall
also be relieved of its obligation to make capacity payments in relation to the
period from (and including) the 31st day after the commencement of such natural
calamity or act of God to (but excluding) the date upon which T&TEC is able to
accept from InnCOGEN more than 20% of the DMNC of the Trinidad Project (during
any hour), provided that if T&TEC is able to accept energy during the period
from the 31st day to the end of such event, then T&TEC's obligation to make
capacity payments in respect of such period shall be determined in accordance
with the terms of the Trinidad PPA. Notwithstanding any of the foregoing, T&TEC
shall not be relieved of its obligations to make capacity payments upon the
occurrence of any other Force Majeure Event.
Except as expressly provided for in the Trinidad PPA, neither InnCOGEN nor
T&TEC shall be excused by force majeure from any obligation under the Trinidad
PPA to make monetary payments including, but not limited to, T&TEC's obligation
to make capacity payments and energy payments. Generally, the existence of a
Force Majeure Event applicable to the affected party excuses that party during
the continuance of the event from its respective obligations under the Trinidad
PPA; PROVIDED that the non-performing party gives the other party written notice
as soon as practicable after such Force Majeure Event and uses all reasonable
efforts to mitigate the effects of such Force Majeure Event, to remedy its
inability to perform and to resume full performance of its obligations under the
Trinidad PPA as soon as practical. If a Force Majeure Event causes a delay in
the achievement of any milestone related to the construction, testing,
completion, commissioning or Commercial Operation of the Trinidad Project then
the date for the achievement of such milestone shall be extended for a period
equal in length to the period of delay resulting from such Force Majeure Event.
Additionally, the force majeure provisions of the Trinidad PPA provide alternate
formulas for calculating capacity payments in the event of certain types of
force majeure occurring. If a Force Majeure Event prevents InnCOGEN from
constructing or operating the Trinidad Project for more than 15 months or, if
the Trinidad Project is totally destroyed by reason of such event for more than
18 months, T&TEC shall have the right, but not the obligation, to terminate the
Trinidad PPA by giving InnCOGEN written notice whereupon both parties shall be
excused and relieved of all obligations and liabilities under the Trinidad PPA
except for payment amounts due before the effective date of termination.
CHANGE IN LAW. If there is a Change in Law which increases any costs of
InnCOGEN related to the Trinidad Project, decreases InnCOGEN's revenues from the
Trinidad Project, reduces, prejudices or otherwise adversely affects the
interest of InnCOGEN in the Trinidad Project or InnCOGEN's economic return on
its investment in the Trinidad Project, the contract price for the remainder of
the term of the Trinidad PPA shall be adjusted upward on an equitable basis so
that InnCOGEN's economic return on its investment in the Trinidad Project is
maintained; PROVIDED no adjustment of the contract price therefor shall be made
until the cumulative adverse effect on InnCOGEN's financial position of such
Change in Law totals U.S.$4 million (indexed), whereupon the contract price
shall be adjusted so that InnCOGEN's economic return on its investment in the
Trinidad Project is not reduced, prejudiced, or otherwise adversely affected. If
there is a Change in Law which reduces any costs of InnCOGEN related to the
Trinidad Project, increases InnCOGEN's revenues from the Trinidad Project,
increases, enhances or otherwise beneficially affects the interest of InnCOGEN
in the Trinidad Project, or otherwise beneficially affects InnCOGEN's economic
return on its investment in the Trinidad Project, the contract price for the
remainder of the term of the Trinidad PPA shall be adjusted downward on an
equitable basis so that InnCOGEN's economic return on its investment in the
Trinidad Project is not increased, enhanced or otherwise beneficially affected;
PROVIDED no adjustment of the contract price therefor shall be made until the
cumulative beneficial effect on InnCOGEN's financial position of such Change in
Law totals U.S.$4 million (indexed), whereupon the contract price shall be
adjusted so that InnCOGEN's economic return on its investment in the Trinidad
Project is maintained. "Change in Law" shall not include (a) any change in
legislation relating to taxation of net income in Trinidad that
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is applicable to all companies carrying on business in Trinidad provided that
"Change in Law" shall be applicable to any such change which, following the
making of an Order under the Fiscal Incentives Act Ch. 85:01 of the Laws of
Trinidad in favor of InnCOGEN would prejudice or enhance any benefit to be
derived by InnCOGEN thereunder and in accordance therewith and (b) any
Applicable Law or Governmental Authorisation imposing environmental standards.
Pursuant to the Trinidad Government Agreement, increased costs resulting from a
change in Applicable Law or any Governmental Authorisation imposing
environmental standards will be borne by the Government of Trinidad.
EVENT OF DEFAULT. The following events, among others, shall be considered
defaults of InnCOGEN: (a) InnCOGEN fails to commence construction or fails to
place a firm order for the major equipment for the Trinidad Project within 60
days after the earlier of the Closing Date and July 31, 1998, (b) the date of
Commercial Operation of any Unit does not occur by the date falling nine months
after the target Commercial Operation date of September 9, 1999 and (c) at any
time after the date of Commercial Operation of the first Unit to and including
September 9, 2004 the average capacity available to T&TEC in any month is less
than 114 MW for each of 12 consecutive months, or after September 9, 2004, the
average capacity available to T&TEC in any month is less than 126 MW for each of
12 consecutive months. The following events, among others, shall be considered
defaults of T&TEC: (a) an expropriation, confiscation or compulsory acquisition
by the Government of Trinidad or any Governmental Authority of Trinidad of the
Trinidad Project or any other material assets of InnCOGEN in Trinidad, in whole
or in part and (b) the Government of Trinidad breaches or fails to observe or
perform any of its payment obligations to InnCOGEN under the Trinidad Government
Agreement or any of its undertakings relating to environmental matters affecting
the Trinidad Project set out in the Trinidad Government Agreement which in any
case materially affects InnCOGEN's rights under the Trinidad PPA, provided
InnCOGEN gives the Government of Trinidad written notice (with copies to T&TEC)
and such breach is not cured in 30 or, in certain circumstances, 90 days.
DEFAULT REMEDIES. Upon the occurrence of a default by InnCOGEN, T&TEC has
the right, in addition to any other rights expressly provided in the Trinidad
PPA, but not the obligation, upon written notice to InnCOGEN, to assume
operational responsibility for the Trinidad Project in order to continue
operation or complete any necessary repairs so as to endeavor to assure the
continued availability of electricity from the Trinidad Project. During this
period, however, T&TEC will be required to continue to make capacity and energy
payments, subject to certain deductions. T&TEC shall return operational
responsibility to InnCOGEN as soon as practicable after the cure of the
circumstances giving rise to InnCOGEN's default. In lieu of this right to assume
the operational responsibility, T&TEC may terminate the Trinidad PPA upon no
less than 60 days' notice to InnCOGEN.
RIGHTS OF LENDERS. InnCOGEN may, without the consent of T&TEC, pledge,
charge, mortgage, assign by way of security or otherwise encumber its interest
in the Trinidad Project and/or the site of the Trinidad Project and in the
Trinidad PPA in conjunction with a financing pertaining to the development,
construction or operation of the Trinidad Project. The execution of any such
Financing Documents pursuant to any such financing, or the foreclosure thereof,
or any sale of the Trinidad Project thereunder, either by judicial proceedings
or by virtue of any power reserved in any such Financing Documents or at law, or
the exercise of any right, power or privilege reserved in any Financing
Documents shall not be held as a violation of any of the terms and conditions of
the Trinidad PPA and is expressly permitted therein by T&TEC, or as an
assumption by any lender personally of the obligations of the Trinidad PPA. In
order to carry on the operations of InnCOGEN under the Trinidad PPA, the
lenders' agent may need to be declared an approved generator of electricity and
certain statutory preferences or liens may arise in limited circumstance which
could affect the lenders' rights. The liability of such a lender is limited to
the interest of such lender in the Trinidad Project. No such encumbrance,
foreclosure, conveyance or exercise of right shall relieve InnCOGEN of its
liability under the Trinidad PPA.
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DISPUTE RESOLUTION. In the event of a dispute between the parties to the
Trinidad PPA the party alleging the existence of the dispute shall give to the
other party written notice setting out the material particulars of the dispute.
Senior executive officers of the parties will, within 5 business days of the
date of receipt of such notice, personally meet in good faith to resolve the
dispute. If the parties are unable to resolve the dispute in accordance with the
Trinidad PPA, the dispute will be exclusively and finally settled by
arbitration, except disputes which are Technical Disputes (as defined herein),
which either party may submit to an Expert (as defined herein) for final
resolution. With respect to all other disputes, either InnCOGEN or T&TEC may
initiate the dispute resolution procedures set forth in the arbitration
provisions of the Trinidad PPA. The place of arbitration shall be London,
England unless both parties agree otherwise. Any question of law arising in the
course of arbitration or with respect to any arbitral award pursuant to the
Trinidad PPA regarding a dispute shall be final and binding on InnCOGEN and
T&TEC. Both parties to the Trinidad PPA agree to the extent permitted by law to
exclude any right of application or appeal to the courts of any jurisdiction in
connection with the arbitral decision. Both parties irrevocably waive, to the
fullest extent permitted by law, any and all right to trial by jury in any legal
proceeding arising out of or relating to the Trinidad PPA or the transactions
contemplated therein. Either party may apply at any time to a court of competent
jurisdiction in Trinidad for an order for an injunction, specific performance or
other interim reliefs or for any provisional or conservatory order for the
preservation of its rights and interests.
UNDERTAKINGS. InnCOGEN undertakes to T&TEC, among other things, that York,
or a wholly-owned subsidiary of York, shall own beneficially not less than 51%
of the issued share capital of InnCOGEN at all times from the date of Commercial
Operation of the first Unit to the tenth anniversary of such date, PROVIDED that
this undertaking does not prevent the assignment of any or all of the shares in
the capital of InnCOGEN to lenders as security for financing the Trinidad
Project or any sale or transfer of any or all shares in the capital of InnCOGEN
to lenders or to any person designated by lenders in either case pursuant to the
exercise by lenders of the remedies upon a default by InnCOGEN under any
Financing Documents. T&TEC undertakes to InnCOGEN to enter into a consent and
agreement substantially in the form set forth in the Trinidad PPA in favor of
the lenders or an agent on behalf of the lenders at InnCOGEN's request, cost and
expense.
REPRESENTATIONS AND WARRANTIES. T&TEC represents and warrants, among other
things, that (a) the Minister of Public Utilities of Trinidad has given his
approval and consent to the Trinidad PPA, in accordance with the T&TEC Act and
(b) T&TEC has, with the approval of the Minister of Public Utilities of
Trinidad, by order declared InnCOGEN an approved generator of electricity under
the T&TEC Act effective from February 10, 1998.
INSURANCE. InnCOGEN is required to obtain and maintain in force and cause
all contractors performing any services in connection with the construction,
operation and maintenance of the Trinidad Project to obtain and maintain in
force, at all times, insurance policies with reputable insurance companies
authorized to carry on business in Trinidad, including without limitation: all
risks builder's risk insurance, delayed income insurance, errors and omissions
insurance for the design engineers, automotive liability insurance, workers'
compensation insurance, commercial general liability insurance, all risks
property, mechanical and electrical breakdown and direct damage insurance
policies.
INDEMNIFICATION AND LIABILITY. T&TEC and InnCOGEN shall indemnify and hold
harmless the other party from and against any and all liabilities arising out of
or in connection with personal injury or death of third parties or damage to, or
destruction of, property of third parties caused by any act or omission of such
party under or pursuant to the Trinidad PPA, except to the extent such injury or
damage is attributable to the gross negligence or willful misconduct of the
other party. Neither InnCOGEN nor T&TEC shall be liable to the other in
contract, tort, warranty, strict liability or any other legal theory for any
indirect, consequential, incidental, punitive or exemplary damages, including
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consequential financial or economic loss. T&TEC unconditionally and irrevocably
agrees that the execution, delivery and performance by it of the Trinidad PPA
constitute private and commercial acts and, to the extent T&TEC may claim in any
jurisdiction any immunity (including sovereign immunity) for itself, its assets
or its revenues, T&TEC agrees not to claim and irrevocably waives such immunity.
With respect to court costs, a Trinidadian court may choose to exercise its
discretion in determining the reasonable costs.
GOVERNING LAW. The Trinidad PPA shall be governed by, and construed in
accordance with, the laws of Trinidad. If a Trinidadian court were to view any
provision herein as either an "agreement to agree" or as inchoate, such
provision may not be enforceable; however, it is the opinion of local counsel
that this will not affect the practical realization of the benefits provided by
the Trinidad PPA.
TRINIDAD GOVERNMENT AGREEMENT
InnCOGEN has entered into an agreement with the Government of Trinidad,
acting through the Minister of Finance of Trinidad, effective as of February 12,
1998, under which the Government of Trinidad has agreed, among other things, to
provide certain tax relief to InnCOGEN, guarantee to InnCOGEN the performance of
T&TEC's obligations and liabilities under the Trinidad PPA and provide various
rights, benefits and incentives to InnCOGEN, including environmental
indemnification, (the "Trinidad Government Agreement"). The Trinidad Government
Agreement is supplemental to the Trinidad PPA and the obligation of the Trinidad
Government thereunder shall not be impaired by any privatization of T&TEC.
TERM AND TERMINATION. The provisions of the Trinidad Government Agreement
and the rights and obligations thereunder (as appropriate in accordance with
relevant terms) shall remain in effect until the earlier of (a) 99 years from
February 12, 1998 or (b) the date upon which InnCOGEN, its successors and
assigns, including a lender or purchaser from the lenders in the exercise of
their security rights, permanently ceases to carry on its operations at the
Trinidad Project. The agreements and obligations of the Government of Trinidad
contained in the Trinidad Government Agreement shall, without prejudice to the
survival of other agreements of the Government of Trinidad therein, survive the
payment in full and the performance, satisfaction and discharge of all of the
obligations and liabilities of T&TEC under the Trinidad PPA. In no event shall
the Trinidad Government Agreement be impaired by reason of the dissolution,
insolvency, liquidation, reorganization, divestiture, privatization, or other
restructuring of T&TEC, any alteration of the status of T&TEC under the T&TEC
Act, or T&TEC having attributed to it at any time any immunity (on grounds of
sovereignty or otherwise) under any law from the jurisdiction of any court or
from any legal process with respect to itself or its property, and upon the
occurrence of any one or more of such events at any time, the Trinidad
Government Agreement shall remain in full force and effect.
UNDERTAKINGS. InnCOGEN undertakes, among other things, (a) to establish a
scholarship in electrical engineering at the University of the West Indies, St.
Augustine Campus, Trinidad in the sum of U.S.$2,000 per annum for the duration
of the tax holiday period described in the Trinidad Government Agreement, the
first annual payment of which is to be paid on or before the Commercial
Operation date and (b) in the event that the investment decision to proceed is
made, to proceed to implement the Trinidad Project with due diligence and to
complete the facility at the project site capable of generating approximately
215 MW of capacity and active electrical energy within approximately 18 months
after such investment decision to proceed, subject to any extensions of time as
provided in InnCOGEN's engineering and construction contracts with its
contractors and/or in the Trinidad PPA.
TAX HOLIDAY AND TAXATION. An order by the President of Trinidad has been
issued under the Fiscal Incentives Act, Ch. 85:01, declaring, among other
things, that InnCOGEN qualifies for a tax holiday for 8 years after September 9,
1999 (the "Production Day") and granting InnCOGEN all the benefits of such tax
holiday in respect of the approved product electricity (capacity and active
electrical energy),
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including (a) total relief from corporation tax and (b) total relief from
customs duty. The Government of Trinidad has agreed to favorably consider
granting InnCOGEN total relief from income tax on dividends or other
distributions (other than interest) out of profits or gains derived from the
manufacture by InnCOGEN of capacity and active electrical energy during the tax
holiday period even though paid or remitted after the expiration of the tax
holiday period. If a shareholder of InnCOGEN or its nominee is not a resident in
a member state of the CARICOM Treaty, the relief granted will equal the excess
of the Trinidad tax liability of the recipient shareholders over the tax
liability in the country in which the recipient shareholder is resident. The
Board of Inland Revenue of Trinidad will give assurances that goods imported by
InnCOGEN (or by contractors on behalf of InnCOGEN) for the construction and
commissioning of the Trinidad Project are free from the assessment of value
added tax for the duration of the tax holiday period. The Government of Trinidad
further agrees that InnCOGEN shall not be liable to pay any business levy during
the tax holiday period. After the tax holiday period concludes, the income of
InnCOGEN derived from the manufacture and sale of electricity shall be subject
to taxation under the Corporation Tax Act of Trinidad, or such other taxation
laws which may be subsisting at the time, at the generally prevailing rate and
terms which are applicable to all companies carrying on business in Trinidad.
The Board of Inland Revenue of Trinidad will give assurances that any losses
arising during the tax holiday period may be carried over and deducted by
InnCOGEN after the expiration of the tax holiday period. Based upon
representations of InnCOGEN in relation to the Trinidad Project, the Government
of Trinidad warrants to and agrees that the taxes listed in an appendix to the
Trinidad Government Agreement are the only taxes that are imposed in Trinidad
and payable directly or indirectly by InnCOGEN, its shareholders, its
contractors, the lenders and their respective employees as of the execution date
of the Trinidad Government Agreement. Additionally, any new taxes imposed on or
payable directly or indirectly by InnCOGEN from time to time during the term of
the Trinidad Government Agreement which would result in an increase in the tax
liability of InnCOGEN over the amount of such liability on the effective date of
the Trinidad Government Agreement calculated on the assumption that the tax
holiday period did not exist shall, except as otherwise provided in the Trinidad
PPA, qualify as a Change in Law and shall occasion the calculation of an
increase in the contract price as provided for in the Trinidad PPA. Finally, it
is agreed, once the necessary statutory and legal requirements are met, that the
President of Trinidad shall make an order under the T&TEC Act granting to
InnCOGEN as an approved generator of electricity for the duration of the
Trinidad PPA, exemption from the payment of stamp duty, customs duty,
value-added tax and any and all other taxes or duties payable on turbines and
other plant and equipment, cables, spare parts, raw materials and other goods
imported by InnCOGEN and its contractors for the construction, replacement,
operation, maintenance and repair of the Trinidad Project.
GOVERNMENT ASSURANCES AND APPROVALS. The Government of Trinidad agrees upon
necessary statutory and other legal requirements having been fulfilled, among
other things, that (a) subject to InnCOGEN's compliance with the Trinidad PPA,
neither the Government of Trinidad nor any Governmental Authority of Trinidad
will alter, vary, revoke or terminate the status of InnCOGEN as an approved
generator of electricity under the T&TEC Act, and any other related Trinidadian
governmental authorizations for the duration of the Trinidad PPA, (b) subject to
InnCOGEN's compliance with the terms of the Trinidad Government Agreement,
neither the Government of Trinidad nor any Governmental Authority of Trinidad
will alter, vary or terminate the Trinidad Government Agreement, nor prejudice
the rights of InnCOGEN, its shareholders or its lenders thereunder, (c) in the
event that any of the Trinidadian governmental authorizations pertaining to the
Trinidad PPA is altered, varied, revoked or terminated for any reason beyond the
reasonable control of InnCOGEN, the Government of Trinidad shall give favorable
consideration to the grant or regrant of any required Trinidadian governmental
authorization to enable InnCOGEN and its lenders, if necessary, to carry out
their respective obligations under the Trinidad PPA, (d) in the event the
Trinidad PPA is terminated for any reason, and within 45 days of such
termination, InnCOGEN's lenders, as assignees by way of security of the Trinidad
Government Agreement, or other successors, or permitted assigns of InnCOGEN
shall so
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request, the Government of Trinidad shall give favorable consideration to the
grant of the Trinidadian governmental authorizations relating to the Trinidad
PPA to a nominee of the lenders of similar financial standing and technical
expertise as InnCOGEN and to procure the entry into by T&TEC of a new power
purchase agreement with such nominee before effect is given to such termination,
(e) the appropriate minister or other Governmental Authority of Trinidad will
for the duration of the Trinidad Government Agreement, grant to InnCOGEN all
relevant Trinidadian governmental authorizations under the relevant laws which
are required to be obtained by InnCOGEN in order to develop, construct, own,
finance, operate and maintain the Trinidad Project, (f) governmental
authorizations listed in the Trinidad Government Agreement are the only
governmental authorizations required to be obtained by InnCOGEN for the
implementation, construction, operation and maintenance of the Trinidad Project,
and all such governmental authorizations will be issued on a timely basis to
facilitate the completion of the Trinidad Project on or before September 9,
1999, (g) upon the necessary statutory and other legal requirements having been
fulfilled, the Government of Trinidad shall grant licenses in accordance with
Section 56 of the Customs Act on an annual basis for the duty free importation
of all plant, machinery, equipment, raw materials and materials required for the
construction and/or operation of the Trinidad Project for a period commencing
with the construction day of on or about July 1, 1998, and expiring on the day
prior to the Production Day and such duty free importation will extend to such
goods imported by InnCOGEN for use by its contractors and that Third Schedule to
the Customs Act will be amended to include power generation as an approved
industry, (h) the appropriate minister or other Governmental Authority of
Trinidad will grant applications of InnCOGEN and its contractors for work
permits, visas and other permits, as necessary, for individuals involved in the
development, construction, operation, commissioning, maintenance, repair and
refurbishment of the Trinidad Project and the operations of InnCOGEN and (i) an
appropriate order will be made, as and if required, under Section 93 of the
Income Tax Act formally extending the Double Taxation Relief (Caricom) Order,
1994 to Barbados.
The Government of Trinidad covenants not to expropriate or nationalize,
either directly or indirectly, the Trinidad Project, InnCOGEN's assets and/or
the rights of the parties under the Trinidad PPA except for a public purpose, in
a non-discriminatory manner and upon payment of prompt, adequate and effective
compensation.
SUPPLY OF GAS. The Government of Trinidad agrees that the necessary
statutory and other legal requirements having been fulfilled, the appropriate
minister or other Governmental Authority of the Government of Trinidad will
grant all relevant governmental authorizations required to be obtained by
InnCOGEN to develop, construct, own, finance, operate and maintain the Trinidad
Project, including but not limited to (a) in respect to the supply of natural
gas required to operate the Trinidad Project, any license required under the
Petroleum Act Ch. 62:01 of Trinidad, to procure that NGC enters into a gas
contract with T&TEC to discharge T&TEC's obligations to supply natural gas to
InnCOGEN under the Trinidad PPA, to procure that NGC enters into a gas supply
contract with InnCOGEN to supply natural gas required for InnCOGEN's other
customers and to procure that NGC enters into contracts for the supply of
natural gas to fulfill its obligations to T&TEC and InnCOGEN, (b) all
Governmental Authorisations required to enable InnCOGEN to create its own supply
of capacity, active electrical energy, electricity, thermal energy, heat and
power for the Trinidad Project and (c) Town and Country Planning Outline and
Final Approvals and all other Governmental Authorisations necessary for the
sub-division and change of use of the site of the Trinidad Project as well as
for the construction, operation and maintenance of the Trinidad Project on its
site and all Governmental Authorisations in respect of or in relation to all
ancillary infrastructure, services and amenities for the Trinidad Project.
GOVERNMENT GUARANTEE. The Government of Trinidad absolutely,
unconditionally and irrevocably guarantees to InnCOGEN and its successors,
assigns, endorsees and transferees (including, in particular, lenders) the
prompt and timely payment and discharge of all the obligations and liabilities
of
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T&TEC to make payments under or pursuant to the Trinidad PPA and the prompt and
timely payment, performance, satisfaction and discharge of all of the other
obligations and liabilities of T&TEC under or pursuant to the Trinidad PPA. If
T&TEC fails to observe or perform any of its obligations and liabilities under
the Trinidad PPA guaranteed under the Trinidad Government Agreement (the
"Guaranteed Obligations"), then the Government of Trinidad shall promptly pay
such Guaranteed Obligations to InnCOGEN, its successors, assigns, endorsees, and
transferees (including, in particular, lenders) and/or shall promptly perform
such Guaranteed Obligations and shall also pay all losses, damages, costs and
expenses whatsoever which may be sustained or incurred by it or them directly or
indirectly by reason of any default on the part of T&TEC in performing and
observing the agreements and provisions on its part contained in the Trinidad
PPA. All obligations of the Government of Trinidad under the Trinidad Government
Agreement shall be without setoff or counterclaim and notwithstanding any
applicable cure or grace periods available to T&TEC under the Trinidad PPA. The
guarantee contained in the Trinidad Government Agreement is a continuing
guarantee and security and shall cover all or any of the Guaranteed Obligations
at any time and from time to time, and no demand or forbearance by InnCOGEN
shall affect or restrict the rights of InnCOGEN to make any or any further
demands. The guarantee shall remain in effect until the later of the date of
termination of the Trinidad PPA and the Trinidad Government Agreement in
accordance with its respective terms and all the Guaranteed Obligations have
been satisfied in full and all obligations undertaken by the Government of
Trinidad under the guarantee have been satisfied in full. If any of the
Guaranteed Obligations are not paid by T&TEC to InnCOGEN or fully performed,
satisfied or discharged by T&TEC when due in accordance with the terms of the
Trinidad PPA, in the case of payment obligations, the Government of Trinidad
will make such payments to InnCOGEN no later than 10 days after any demand is
made by InnCOGEN (or by its successors or assigns, including lenders) at any
time after the due date of such payment as provided for in the Trinidad PPA, at
the place and in the amounts and in the currency specified by the Trinidad PPA
and together with interest due on such payment obligations; and in the case of
performance obligations, the Government of Trinidad will promptly perform,
satisfy and discharge all such obligations in full; and in each case, whether a
payment or a performance obligation, without regard to any cure or grace periods
available to T&TEC under the Trinidad PPA, which cure or grace periods shall not
apply to the performance by the Government of Trinidad of its obligations to
InnCOGEN under the Trinidad Government Agreement. The Government of Trinidad
further agrees to pay promptly to InnCOGEN (or its successors or assigns,
including lenders) without setoff or counterclaim, all losses, damages, costs
and expenses whatsoever paid or incurred by it or them as a result of a failure
of T&TEC to pay and/or perform all or any part of the Guaranteed Obligations
when due, together with all expenses (including, without limitation, reasonable
attorney's fees and expenses) paid or incurred by it or them in collecting the
indebtedness or enforcing the obligations and liabilities of T&TEC and the
Trinidad Government Agreement. Any admission of liability or acknowledgement of
indebtedness in writing by T&TEC, any decision of an expert on a technical
dispute (as provided for in the Trinidad PPA), or any arbitral award on a
dispute (as provided for in the Trinidad PPA), in each case in respect of any
obligation of T&TEC under the Trinidad PPA, being a Guaranteed Obligation, shall
be final and binding on the Government of Trinidad. No action or omission by
InnCOGEN taken in connection with the Trinidad PPA, nor any course of dealing
with T&TEC or any other person shall constitute a waiver by InnCOGEN or shall
release the Government of Trinidad's obligations under its guarantee, affect the
Trinidad Government Agreement in any way, or afford the Government of Trinidad
any recourse or defense against InnCOGEN. The guarantee of the Government of
Trinidad is of payment and performance and not of collection. The liability of
the Government of Trinidad will be direct and immediate and is not conditional
or contingent upon the pursuit of any remedies against T&TEC or any other
person, nor against any other recourse available to InnCOGEN, its successors or
assigns (including lenders). The Government of Trinidad waives any and all
rights it may now or in the future have under any statue, law, treaty, under
common law, or otherwise at law or in equity to require either that an action be
brought against T&TEC or any other person as a condition to proceeding against
the Government of Trinidad, or to require that resort be had first against T&TEC
or to any
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security given by, or to any balance of any deposit account or any other person
in respect of the Guaranteed Obligations or to any rights of setoff or
counterclaim by T&TEC against InnCOGEN or any person, before proceeding against
the Government of Trinidad under the Trinidad Government Agreement. In the event
that T&TEC is liquidated, discharged by operation of law or otherwise altered in
constitution, including privatization, the Guaranteed Obligations will not be
discharged, reduced or otherwise affected.
ENVIRONMENTAL AND OTHER INDEMNIFICATION. The Government of Trinidad agrees
to indemnify and hold harmless InnCOGEN and its successors, assigns, endorsees,
and transferees (including, in particular, lenders) and their respective
officers, directors, agents and employees from and against any and all claims,
demands, actions, losses, liabilities, expenses (including, without limitation,
legal fees), suits or proceedings of any nature whatsoever and keep it and them
fully and effectively indemnified and held harmless from and against all of the
foregoing, arising out of or related to (a) environmental standards or practices
imposed by a Change of Law after February 12, 1998 and/or the provision of
appropriate environmental measures at the Trinidad Project which are
attributable to standards or practices imposed by a Change of Law after February
12, 1998, and (b) legal proceedings brought against T&TEC in which InnCOGEN as
an approved generator of electricity is joined as a party. If InnCOGEN proposes
to install, implement or otherwise provide for any new environmental measure at
the Trinidad Project to comply with certain laws and government authorizations
specified in the Trinidad PPA or to comply with a law that could give rise to a
claim by InnCOGEN against the Government of Trinidad under the Trinidad
Government Agreement, InnCOGEN shall give notice to the Government of Trinidad
in writing of its proposal, and InnCOGEN and the Government of Trinidad shall
thereafter promptly negotiate with one another in good faith in an attempt to
agree to a reasonable and prudent plan to remedy any environmental issue to be
addressed by such proposed new environmental measure. If the parties fail to
agree within 20 days following such notice from InnCOGEN, InnCOGEN shall be
entitled to implement such new environmental measure in a reasonable and prudent
manner at the full cost, expense and risk of the Government of Trinidad.
Further, InnCOGEN shall provide the Government of Trinidad with a written notice
of any event giving rise to indemnification together with a written demand for
indemnification. The Government of Trinidad absolutely, unconditionally, and
irrevocably undertakes to InnCOGEN and its successors, assigns, endorsees and
transferees (including, in particular, lenders) that if an indemnification
demand is made upon it, the Government of Trinidad shall promptly make payment,
without setoff or counterclaim, to InnCOGEN, its successors, assigns, endorsees,
and transferees (including, in particular, lenders) and their respective
officers, directors, agents and employees in respect of the amount provided in
the indemnification demand, no later than 10 days after the demand is made by
InnCOGEN. Indemnification payments shall be made in U.S. dollars and/or TT
dollars, to the extent such payment represents indemnification for a U.S. dollar
or TT dollar indemnity. An indemnification payment not made within 10 days after
demand therefor shall accrue interest at the rates provided for in the Trinidad
Government Agreement.
ASSIGNMENT. The rights and powers of InnCOGEN under the Trinidad Government
Agreement may be assigned with the prior written consent of the Government of
Trinidad, which consent shall not be unreasonably withheld, conditioned or
delayed. The Government of Trinidad consents to (a) the assignment by way of
security by InnCOGEN of its rights and powers under the Trinidad Government
Agreement to lenders, who shall not have any obligation under the Trinidad
Government Agreement as a result of such assignment, (b) the grant or creation
of a lien, charge, mortgage or other security interest by InnCOGEN over or in
respect of the Trinidad Government Agreement in favor of or to the lenders and
(c) the assignment by lenders (or by any receiver or receiver/manager of
InnCOGEN appointed by lenders) of the rights and powers of InnCOGEN under the
Trinidad Government Agreement to any third party purchaser or assignee in
exercise of the security rights of lenders or InnCOGEN (in receivership). The
Government of Trinidad undertakes at InnCOGEN's request, cost
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and expense to enter into a form of consent and agreement in favor of the
lenders or any agent or trustee on their behalf pursuant to the Trinidad
Government Agreement.
CHANGE OF LAW. Without prejudice to the rights of InnCOGEN, lenders, and
other assigns under other provisions of the Trinidad Government Agreement, the
Government of Trinidad recognizes and agrees that InnCOGEN, its shareholders,
and its lenders and any other assignees and their respective successors and
assigns each have rights arising under the Trinidad Government Agreement, the
Trinidad PPA and the laws of Trinidad which are entitled to protection under the
existing laws of Trinidad, and which rights, in the event of a Change of Law,
will be entitled to the protection and rights afforded to citizens of Trinidad
under the laws of Trinidad and under the principles of international law as may
be applicable and the provisions of the Trinidad Government Agreement relating
to arbitration shall apply thereto.
MODIFICATION TO GOVERNMENT AUTHORIZATIONS. Neither the Government of
Trinidad nor any Governmental Authority of Trinidad thereof will revoke,
terminate, suspend, alter, amend or modify any government authorizations issued
by the Government of Trinidad or any Governmental Authority thereof to InnCOGEN
(a) unless such revocation, termination, suspension, alteration or modification
is specifically provided for in the relevant law at the time of the grant of the
government authorization, in which case, InnCOGEN (and its assigns, in
particular, lenders) will be given adequate prior notice of the intention to
invoke any such provision of the relevant law and be afforded a reasonable
period of time in the circumstances to remedy any matter complained of to
preserve such government authorization or (b) except as provided by a Change of
Law, provided however, that any such action resulting from such Change of Law
shall not prejudice the rights of InnCOGEN (and its assigns, in particular,
lenders) under this Trinidad Government Agreement or the laws of Trinidad.
EXPROPRIATION OR NATIONALIZATION. The Government of Trinidad, T&TEC and
other relevant government authorities shall not expropriate or nationalize
(either directly or indirectly through measures tantamount to expropriation or
nationalization) the Trinidad Project, InnCOGEN's assets and/or the respective
interests or rights of any InnCOGEN's successors, assigns, endorsees,
transferees including, in particular, lenders and the shareholders of InnCOGEN
therein except for a public purpose, in a non-discriminatory manner and upon
payment of prompt, adequate and effective compensation as provided for pursuant
to the Trinidad Government Agreement and in accordance with due process of law.
In the event the Government or Trinidad expropriates the Trinidad Project, or
any part thereof, compensation shall be paid without delay to InnCOGEN in freely
useable and transferable U.S. dollars in an amount which shall be equivalent to
the fair market value of the Trinidad Project immediately before the
expropriatory action was taken.
DISPUTE RESOLUTION. All disputes arising in connection with the Trinidad
Government Agreement shall be finally settled under arbitration rules of the
International Chamber of Commerce by a panel of three arbitrators in London,
England under the terms and procedures set forth in the arbitration provisions
of the Trinidad Government Agreement. Either party to the Trinidad Government
Agreement may request at any time any court of competent jurisdiction to order
any provisional or conservatory measure for the preservation of its rights and
interests. The parties agree that they will be bound by the recommendations,
orders or awards that any arbitral tribunal constituted pursuant to the Trinidad
Government Agreement may make as to any provisional measures to be taken to
preserve the respective rights of either party.
JURISDICTION. The Government of Trinidad irrevocably submits to the
jurisdiction of any court of competent jurisdiction in Trinidad, the United
States of America, the United Kingdom and any member of the Commonwealth which
is a contracting state to the New York Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, and any appellate courts thereof, in any
judicial action or proceeding arising out of or relating to any interim relief
sought or to the enforcement of any award or decision of arbitration, rendered
pursuant to the arbitration provisions of the Trinidad Government
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Agreement, and the Government of Trinidad irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in any such
court of competent jurisdiction.
WAIVER OF IMMUNITY. The Government of Trinidad expressly acknowledges and
agrees that the Trinidad Government Agreement is being delivered as a part of a
commercial transaction. The Government of Trinidad waives for itself, its assets
or its revenues, and to the extent that T&TEC can claim sovereign immunity as a
governmental authority, on behalf of T&TEC in respect of the Trinidad PPA, any
and all immunity to the extent that any such immunity may at any time exist
whether on grounds of sovereignty or otherwise, from suit, arbitration,
proceeding, jurisdiction of any court, adjudication, enforcement of arbitration
award, judgment, service of process upon it or any agent, execution on judgment,
set off, attachment or other interim relief prior to judgment or on judgment or
other legal process, including, without limitation, the defenses of "sovereign
immunity" and "act of state", which the Government of Trinidad or its assets or
revenues may now have or may in the future have. The Government of Trinidad
agrees not to assert any such immunity or defenses in any proceedings with
respect to the Trinidad Government Agreement or in the enforcement of any
judgment or execution resulting therefrom or from any of the transactions
contemplated thereby or thereunder. The Government of Trinidad further consents
generally to the giving of any relief or the issue of any process or order of
any court or arbitration in connection with or arising from any such action,
arbitration proceeding or other proceeding including, without limitation, the
making, enforcement or execution against any property whatsoever (other than
diplomatic and consular property, or property which is, or is intended to by,
used in connection with a military activity or property which is located in
Trinidad and dedicated to a public or governmental use and a commercial use) of
any award or judgment which may be made in any proceeding.
GOVERNING LAW. Except as to those provisions of the Trinidad Government
Agreement pertaining to the Government of Trinidad's waivers of immunity for
itself, its assets or revenues and on behalf of T&TEC under the Trinidad PPA and
its submissions and consents under Article VIII of the Trinidad Government
Agreement (which shall be governed by the State Immunity Act of 1978 of the
United Kingdom, as construed by the courts of England and Wales), the Trinidad
Government Agreement shall be governed by and construed and all disputes
thereunder determined in accordance with the laws of the State of New York
without reference to its conflict of laws principles.
ENGINEERING AND EQUIPMENT SUPPLY CONTRACT; TURNKEY CONSTRUCTION CONTRACT
InnCOGEN has entered into contracts with two affiliates of Duke Capital
Corp. ("Duke Capital Corp.") and Fluor Daniel, Inc. ("Fluor Daniel, Inc.") for
the in-country and offshore engineering, design, procurement, construction and
testing activities for the Trinidad Project.
D/FDI will perform the offshore activities pursuant to an Engineering and
Equipment Supply Contract, dated as of June 26, 1998, between InnCOGEN and D/FDI
(the "EES Contract") and Duke/ Fluor Daniel will perform the field design,
construction, testing, and all other in-country work and services required for
the Trinidad Project pursuant to the Turnkey Construction Contract, dated as of
June 26, 1998, between InnCOGEN and Duke/Fluor Daniel (the "Turnkey Construction
Contract"). Duke Capital Corp. and Fluor Daniel, Inc. will act as guarantors of
the payment and performance obligations of D/FDI and Duke/Fluor Daniel,
respectively, under the EES Contract and the Turnkey Construction Contract,
respectively.
InnCOGEN, Duke/Flour Daniel and D/FDI have also entered into a coordination
letter regarding the EES Contract and the Turnkey Construction Contract. The
coordination letter provides, among other things, that the fact of duplicated or
substantially duplicated text in the EES Contract and the Turnkey Construction
Contract shall not be construed as imposing additive or cumulative liabilities
on Duke/Fluor Daniel and D/FDI or creating any additional rights, remedies or
defenses. In the event of the suspension or termination of either of the EES
Contract or the Turnkey Construction Contract or
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the occurrence of a force majeure (as defined in the EES Contract and the
Turnkey Construction Contract) affecting one such contract, the other contract
will be similarly suspended, terminated of affected.
EES CONTRACT. Under the EES Contract, D/FDI will perform certain design and
engineering services, procure offshore-sourced materials, equipment and
services, and provide personnel training materials for the operation and
maintenance of the Trinidad Project to meet or exceed the performance criteria
and other conditions of the EES Contract and the requirements and specifications
set forth in the Town and Country Outline Planning Approval, InnCOGEN's project
specification, and the Trinidad PPA. All work under the EES Contract will be
performed outside Trinidad.
TURNKEY CONSTRUCTION CONTRACT. Under the Turnkey Construction Contract,
Duke/Fluor Daniel will, on a turnkey basis, perform certain field design and
engineering, procure locally-sourced materials, equipment and services,
construct, start-up and test, and provide personnel training for the operation
and maintenance of the Trinidad Project to meet or exceed the performance
criteria and other conditions of the Turnkey Construction Contract and the
requirements and specifications set forth in the Town and Country Outline
Planning Approval, InnCOGEN's project specification, and the Trinidad PPA. Under
the Turnkey Construction Contract, Duke/Fluor Daniel must furnish all services,
supervision, labor, materials, supplies, equipment and machinery required to
complete, start-up and test the Trinidad Project, whether or not such services,
labor, materials, supplies, equipment and machinery are specifically mentioned
in the Turnkey Construction Contract. All work under the Turnkey Construction
Contract will be performed within Trinidad.
TERMS OF THE EES CONTRACT AND THE TURNKEY CONSTRUCTION CONTRACT.
The commercial, technical and legal provisions of the EES Contract and the
Turnkey Construction Contract are substantially similar and they are summarized
together below. Differences between the EES Contract and the Turnkey
Construction Contract are noted.
COMMENCEMENT OF THE WORK. The EES Contract and the Turnkey Construction
Contract were executed as of June 26, 1998, commencing D/FDI's and Duke/Fluor
Daniel's obligations to perform the work under their respective contracts as of
such date.
TRINIDAD PPA PERFORMANCE GUARANTEE. Under the Turnkey Construction
Contract, Duke/Fluor Daniel has agreed to provide a "Performance Guarantee" to
InnCOGEN equivalent to that required by the Trinidad PPA on InnCOGEN's behalf in
a form of letter of credit or guaranty which is acceptable to T&TEC.
CONTRACT PRICE; PAYMENT TERMS. As consideration under the EES Contract,
InnCOGEN will pay D/ FDI the contract price of U.S.$55.9 million according to a
progress payment schedule. As consideration under the Turnkey Construction
Contract, InnCOGEN will pay Duke/Fluor Daniel a contract price of U.S.$11
million according to a progress payment schedule. On August 1, 1998 or the date
of the first takedown under financing of the Trinidad Project, whichever comes
first, InnCOGEN is to pay D/FDI an initial payment under the EES Contract and
Duke/Fluor Daniel under the Turnkey Construction Contract of U.S.$5,499,200 and
U.S.$5,000, respectively. If the initial payment under the EES Contract has not
been made on or before August 1, 1998, InnCOGEN must pay D/FDI a preliminary
payment of U.S.$250,000, which payments will be deducted from the initial
payment required under the EES Contract to which such preliminary payment
relates. In addition, at the time of the respective initial payment, InnCOGEN
must reimburse D/FDI a portion of the cost of the premium to obtain certain
insurance required by the EES Contract upon D/FDI's presentation of invoices
supported by suitable documentation; PROVIDED, HOWEVER, that InnCOGEN will only
be responsible to reimburse D/FDI for such insurances in amounts up to
U.S.$162,500.
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Thereafter, on or about the first of each month following such payment date,
D/FDI and Duke/ Fluor Daniel must submit an application for the Progress Payment
(as defined in the EES Contract and the Turnkey Construction Contract,
respectively) payable upon completion of stages of the work during the preceding
month and as set forth in respective appendices to the EES Contract and the
Turnkey Construction Contract. Each such invoice must be certified by an
authorized officer of either D/FDI or Duke/Fluor Daniel, respectively, and the
Independent Engineer and must contain a detailed itemized description of the
work performed during such month. Within 30 days after the completion of the
Trinidad Project, InnCOGEN must pay to D/FDI and Duke/Fluor Daniel the balance
of the contract price under the EES Contract and the Turnkey Construction
Contract, respectively, previously unpaid less any retainage.
RETAINAGE. D/FDI and Duke/Fluor Daniel will establish each Retainage Letter
of Credit (as defined in the EES Contract and the Turnkey Construction Contract,
respectively) in favor of InnCOGEN at a bank reasonably acceptable to InnCOGEN
and the lender. The amount of each Retainage Letter of Credit will be 7.5% of
the aggregate amount of all invoices submitted by D/FDI under the EES Contract
and by Duke/Fluor Daniel under the Turnkey Construction Contract and paid to
that date. Upon the date on which electric power is first delivered to T&TEC,
each Retainage Letter of Credit will be reduced to 5% of the aggregate amount of
all invoices submitted by D/FDI under the EES Contract and by Duke/Fluor Daniel
under the Turnkey Construction Contract and paid to that date, and D/FDI and
Duke/Fluor Daniel must then deposit with InnCOGEN, or InnCOGEN may deduct from a
Progress Payment then payable, cash in the amount of 2.5% of the aggregate
amount of all invoices submitted by D/FDI and Duke/Fluor Daniel and paid to that
date (without regard to the Progress Payment then payable, if any) as cash
retainage. In addition, each Retainage Letter of Credit will be amended every
six months to reflect approved change orders which have been invoiced during the
preceding period. InnCOGEN must release each Retainage Letter of Credit upon
completion of the Trinidad Project or the date the EES Contract or the Turnkey
Construction Contract, as the case may be, is terminated. Nothing in the EES
Contract and the Turnkey Construction Contract may limit InnCOGEN's ability to
draw on either of the Retainage Letters of Credit in accordance with its terms
or to transfer to InnCOGEN's account by way of offset any portion of the 2.5%
cash retention, or both, with respect to any amount due from D/FDI and
Duke/Fluor Daniel to InnCOGEN in satisfaction of any obligation under the EES
Contract or the Turnkey Construction Contract that has not been paid within 10
days of InnCOGEN's demand therefor. Upon Substantial Completion, InnCOGEN must
return the amount of cash retention in excess of 200% of the value of the Punch
List (as defined in the EES Contract and the Turnkey Construction Contract,
respectively). The balance of each remaining Retainage Letter of Credit, if any,
must be paid to D/FDI and Duke/Fluor Daniel, respectively, upon completion of
the Trinidad Project or as otherwise provided in the EES Contract and the
Turnkey Construction Contract.
PERFORMANCE. All performance testing must be conducted using test
procedures developed by D/FDI and Duke/Fluor Daniel according to the Performance
and Emission Test Protocol set forth in an appendix to the EES Contract and the
Turnkey Construction Contract and approved by InnCOGEN (the "Test Procedures").
All performance testing must be conducted in conformance with then applicable
law and according to the requirements of the EES Contract and the Turnkey
Construction Contract and in the presence of InnCOGEN and the Independent
Engineer. If any performance testing fails to satisfy any Performance Guarantee
(as defined in the EES Contract and the Turnkey Construction Contract,
respectively), and if D/FDI and Duke/Fluor Daniel have not paid InnCOGEN the
Buy-Down Amount (as defined in the EES Contract and the Turnkey Construction
Contract, respectively) satisfying the failed test, such performance testing
must be repeated as soon as possible following notice to InnCOGEN, the lender
and the Independent Engineer.
SUBSTANTIAL COMPLETION. "Substantial Completion" will be deemed to have
occurred upon the satisfaction of the following conditions: (a) Performance
Tests (as defined under the EES Contract and
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the Turnkey Construction Contract, respectively) (excluding the Reliability Test
(as defined under the EES Contract and the Turnkey Construction Contract,
respectively)) must have been completed in conformance with the Test Procedures
and such Performance Tests (excluding the Reliability Test) must have satisfied
the Performance Guarantees or, at InnCOGEN's option and in its sole discretion,
InnCOGEN has elected to declare that, for purposes of Substantial Completion,
the performance testing requirements have been satisfied by virtue of the
Trinidad Project having achieved a performance level of 195 MW or greater during
Performance Tests, (b) the performance of the work has been completed according
to all of the provisions of the EES Contract and the Turnkey Construction
Contract, with the exception of those items specified in each punch list agreed
to by InnCOGEN, which items must not have an estimated cost of more than U.S.$1
million in total to complete and must be of such a nature that their completion
will not in any way impair the normal daily operation of the Trinidad Project
after Substantial Completion, (c) the Trinidad Project must be ready for
operation and generation of electricity and comply with all applicable laws,
ordinances, codes, and regulations and orders of all Governmental Authorities
and the Trinidad Project and its operations comply with all permits issued with
respect to the Trinidad Project, (d) D/FDI and Duke/Fluor Daniel must have
delivered to InnCOGEN and the Independent Engineer all required documents before
Substantial Completion and the duly completed and executed partial waiver of
lien and release in the form of required by the EES Contract and the Turnkey
Construction Contract, respectively, (e) D/FDI and Duke/Fluor Daniel must have
delivered to InnCOGEN and the Independent Engineer certificates stating that all
of the preceding conditions have been satisfied and (f) the Independent Engineer
must have delivered to InnCOGEN a certificate stating that all of the preceding
conditions have been satisfied. The date on which the conditions are satisfied
will be the "Substantial Completion Date". Upon the satisfaction of the above
conditions, InnCOGEN shall accept the Trinidad Project, subject to Final
Completion (as discussed herein), and deliver to D/FDI and Duke/Fluor Daniel
notice of such acceptance, whereupon, D/FDI and Duke/Fluor Daniel must turn over
control and operation of the Trinidad Project to InnCOGEN.
FINAL COMPLETION. "Final Completion" will be deemed to have occurred upon
the satisfaction of the following conditions: (a) the Substantial Completion
Date has occurred or must occur simultaneously with Final Completion, (b) the
performance of the work must be 100% complete including payment of the Buy-Down
Amount, if any, (c) D/FDI and Duke/Fluor Daniel must have delivered to InnCOGEN
and the Independent Engineer all documents required to be delivered to them as
of the Final Completion Date and (d) there must exist no event of default under
the terms of the EES Contract and the Turnkey Construction Contract.
PRINCIPAL WARRANTIES. D/FDI and Duke/Fluor Daniel warrant to InnCOGEN that
all materials and equipment furnished under the EES Contract and the Turnkey
Construction Contract will be new. D/FDI and Duke/Fluor Daniel further warrant
that, for 2 years after the Substantial Completion Date, all materials, certain
equipment and labor forming all or any portion of the work will be free from
defects in materials and workmanship, and all professional services performed by
D/FDI and Duke/ Fluor Daniel under the EES Contract and the Turnkey Construction
Contract (including, without limitation, engineering and design) must be
performed competently and according to industry standards for the type of work
involved and must be in full compliance with the requirements of the
specifications set forth in an appendix to the EES Contract and the Turnkey
Construction Contract. In the event D/FDI or Duke/Fluor Daniel elects to repair
or replace any component of the Trinidad Project to enhance or enable D/FDI's or
Duke/Fluor Daniel's ability to meet the Performance Guarantees subsequent to
Substantial Completion, then the warranty period for such repaired or replaced
components will commence on the date they are returned to or placed in service.
LATE COMPLETION LIQUIDATED DAMAGES. If the Substantial Completion Date does
not occur on or before September 9, 1999 for any reason other than (a)
InnCOGEN's failure to perform its obligations under the EES Contract and the
Turnkey Construction Contract, (b) or delays caused by InnCOGEN,
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InnCOGEN's lessor or lender, or (c) Force Majeure Events, D/FDI and Duke/Fluor
Daniel must pay to InnCOGEN as liquidated damages (i) U.S.$13,500/Unit/day less
(ii) the Net Revenues (as defined in the EES Contract and the Turnkey
Construction Contract) generated by the Trinidad Project for each day from and
including September 9, 1999 to and including the Substantial Completion Date. In
the event InnCOGEN, at its option and in its sole discretion, elects to declare
Substantial Completion in accordance with the provisions of the EES Contract and
the Turnkey Construction Contract allowing the same, liquidated damages will
cease to be assessed on the Substantial Completion Date established on the basis
of the Trinidad Project having achieved a performance level of 195 MW or greater
during the net electrical output test completed in accordance with the Test
Procedures, and all other conditions for Substantial Completion having been
satisfied. Once D/FDI and Duke/Fluor Daniel have paid the liquidated damages
provided in the EES Contract and the Turnkey Construction Contract,
respectively, D/FDI and Duke/Fluor Daniel shall have no further liability for
any extra costs, losses or expenses, claims and penalties, loss of the use of
the Trinidad Project, cost of capital, loss of revenue and any other damages,
whether special, indirect or consequential and of any nature incurred by
InnCOGEN which are occasioned by any such delay in achieving Substantial
Completion.
BUY-DOWN AMOUNT. In the event that upon completion of the performance
testing of the Trinidad Project according to the Test Procedures, the Trinidad
Project fails to satisfy the Performance Guarantees, D/FDI and Duke/Fluor Daniel
must take corrective action until subsequent Performance Tests demonstrate that
the Performance Guarantees have been met. Notwithstanding the foregoing, if the
Substantial Completion Date has occurred on or before September 9, 1999, and if
the demonstrated net electrical output is less than 224.7 MW, D/FDI and
Duke/Fluor Daniel have the option to satisfy the Performance Guarantees with
respect to net electrical output by paying InnCOGEN, as liquidated damages,
U.S.$500/kW for each kilowatt of net electrical output less than 224.7 MW to and
including 210 MW, calculated based on the most recently completed net electrical
output test, provided certain stated conditions are met. If the Substantial
Completion Date has not occurred on or before June 9, 2000, or such date
thereafter which is 270 days after September 9, 1999, D/FDI and Duke/Fluor
Daniel must, immediately upon the request of InnCOGEN, pay the Buy-Down Amount
to InnCOGEN calculated based on the most recent completed net electrical output
test in satisfaction of the output requirements therein. Once D/FDI and
Duke/Fluor Daniel have paid the Buy-Down Amount, the net electrical output
guarantee will be deemed fully satisfied for the Trinidad Project, and D/FDI and
Duke/Fluor Daniel will, without prejudice to any of their other obligations
under the EES Contract and the Turnkey Construction Contract (including, without
limitation, the obligation to complete the Trinidad Project according to certain
requirements of the EES Contract and the Turnkey Construction Contract), have no
further obligation under the EES Contract and the Turnkey Construction Contract
solely with respect to said Performance Guarantees for net electrical output.
UNCONDITIONAL OBLIGATION. Notwithstanding the limitations on D/FDI's and
Duke/Fluor Daniel's financial liability for net electrical output by paying the
Buy-Down Amount, D/FDI and Duke/Fluor Daniel have the absolute and unconditional
obligation to spend and cause to be spent all amounts necessary to cause the
Trinidad Project to achieve 210 MW of net electrical output unless and until
InnCOGEN requests D/FDI and Duke/Fluor Daniel to pay the Buy-Down Amount after
the 270-day period as described immediately above. The obligations of D/FDI and
Duke/Fluor Daniel to pay the Buy-Down Amount under the provisions of the EES
Contract and the Turnkey Construction Contract are absolute and unconditional
and shall not be released, discharged, diminished or in any way affected by (a)
any default by D/FDI and Duke/Fluor Daniel in the performance or observance of
any of their agreements or covenants under the EES Contract and the Turnkey
Construction Contract, respectively, (b) the assignment by InnCOGEN of the EES
Contract and/or the Turnkey Construction Contract to the lender or (c) except as
provided in the EES Contract and the Turnkey Construction Contract, any other
circumstance, happening, condition or event, whether similar to any of the
foregoing. Such Buy-Down Amount must be paid without set-off, counterclaim or
reduction whatsoever.
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RELIABILITY TEST. After the Substantial Completion Date, D/FDI and
Duke/Fluor Daniel each must perform a reliability test as set forth in the EES
Contract and the Turnkey Construction Contract. The "Reliability Test" will
consist of a capacity factor reliability test of each Unit and a capacity factor
reliability test of the Trinidad Project. Each Unit and the Trinidad Project as
a whole must attain a capacity factor of 90% over a 48-hour test period of
operation. The capacity factor will be based on 74,900 kW for each Unit and 195
MW for the Trinidad Project. In the event the Trinidad Project capacity factor
test results show a Trinidad Project capacity factor of less than 90% capacity
factor, D/FDI and Duke/Fluor Daniel must pay to InnCOGEN, as liquidated damages
the sum of U.S.$213,525 for each 1%, or portion thereof, the Trinidad Project's
capacity factor is below 90%. D/FDI and Duke/Fluor Daniel will have the right to
conduct tests and retests for a period of 60 days after the Substantial
Completion Date. If, at the end of such testing and retesting, the Trinidad
Project has not achieved 90% capacity factor, D/FDI and Duke/Fluor Daniel must
pay liquidated damages calculated on the basis of the capacity factor achieved
in the last Trinidad Project capacity factor test or retest.
LIMITATION ON LIABILITY. Except for the unconditional obligation to cause
the Trinidad Project to achieve net electrical output of 210 MW, in no event
will (a) the liquidated damages paid by D/FDI and Duke/Fluor Daniel pursuant to
the Late Completion Liquidated Damages and Buy-Down Amount provisions of the EES
Contract and the Turnkey Construction Contract exceed 25% of the contract price,
respectively, and 35% of the contract price in the aggregate, (b) D/FDI's and
Duke/ Fluor Daniel's liability for any damages arising out of the EES Contract
and the Turnkey Construction Contract for any cause or reason whatsoever exceed
the contract price less the amounts paid as liquidated damages pursuant to the
Late Completion Liquidated Damages and Buy-Down Amount provisions of the EES
Contract and the Turnkey Construction Contract and (c) D/FDI and Duke/Fluor
Daniel or their subcontractors be liable for any consequential damages for any
reason arising out of the EES Contract and the Turnkey Construction Contract,
except such liquidated damages as are specifically provided under the Late
Completion Liquidated Damages and Buy-Down Amount provisions of the EES Contract
and the Turnkey Construction Contract. D/FDI's and Duke/ Fluor Daniel's
liability in respect of liability under the Indemnities provisions of the EES
Contract and Turnkey Construction Contract are not limited by the foregoing
limitations on liability.
INDEMNITIES. Each party to the EES Contract and the Turnkey Construction
Contract agrees to defend, indemnify and hold harmless the other party and its
affiliates and principals, and the stockholders, directors, officers, agents and
employees of each of them, from and against any and all damages, costs, claims,
expenses and liabilities (including, without limitation, reasonable attorneys'
fees) (a) for bodily injury or damage to a third party's property that may arise
from the indemnifying party's negligence under the EES Contract and the Turnkey
Construction Contract, except to the extent arising from the negligence of the
indemnified parties, (b) because of any violation of a law to be complied with
by the indemnifying party under the EES Contract and the Turnkey Construction
Contract, (c) in the case of D/FDI and Duke/Fluor Daniel, in respect of any
demands or liens by subcontractors for nonpayment of amounts due as a result of
furnishing materials or work to D/FDI or Duke/Fluor Daniel which are payable by
D/FDI or Duke/Fluor Daniel for work performed pursuant to the EES Contract or
the Turnkey Construction Contract unless attributable to non-payment by
InnCOGEN, (d) in the case of InnCOGEN, in respect of the presence of
Pre-existing Contamination (as defined under the EES Contract and the Turnkey
Construction Contract), unless exacerbated by the actions of D/FDI or Duke/Fluor
Daniel or (e) in the case of D/FDI and Duke/Fluor Daniel, in respect of the
presence of Hazardous Materials (as defined in the EES Contract and the Turnkey
Construction Contract) brought onto or generated at the site of the Trinidad
Project following the Commencement Date (as defined in the EES Contract and the
Turnkey Construction Contract), unless attributable to the actions of InnCOGEN.
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INSURANCE. On and after the Commencement Date of the EES Contract and the
Turnkey Construction Contract, D/FDI and Duke/Fluor Daniel must obtain and
maintain until the Final Completion Date (except as otherwise noted) insurance
coverages including, without limitation, the following types and in the
following amounts: (a) worker's compensation insurance to meet the laws of
Trinidad, including, without limitation, employer's liability insurance of
U.S.$1 million per occurrence, (b) commercial general liability insurance
against claims for personal injury and property damage with a U.S.$1 million
limit per claim for combined bodily injury and property damage, and a U.S.$2
million aggregate annual limit, (c) comprehensive automobile liability coverage
against claims of personal injury and property damage with a U.S.$1 million
limit per occurrence for combined bodily injury and property damage, (d) excess
liability insurance with a U.S.$5 million limit per occurrence and a U.S.$5
million aggregate annual limit, (e) errors and omissions insurance coverage for
the design engineers on a claims made basis with a U.S.$500,000 limit per
occurrence and a U.S.$500,000 aggregate annual limit and (f) such other
insurance with respect to the work, in such amounts, against such insurable
hazards and in such form as may be reasonably required by InnCOGEN or the
lender. The cost of such additional insurance will be paid by InnCOGEN as an
addition to the contract price.
Under the Turnkey Construction Contract, Duke/Fluor Daniel also must provide
a Blanket Builder's Risk Insurance policy on an "all risk" basis including
coverage against damage or loss caused by earth movement, windstorm, flood,
boiler, turbine machinery accidents and operational testing and Duke/Fluor
Daniel will be responsible for deductibles for such insurance. The Blanket
Builder's Risk Insurance coverage must extend until Substantial Completion, at
which time InnCOGEN must provide permanent property insurance to cover the
Trinidad Project.
Insurance (other than worker's compensation insurance) maintained by D/FDI
and Duke/Fluor Daniel pursuant to the EES Contract and the Turnkey Construction
Contract must: (a) with respect to commercial general liability insurance and
excess liability insurance, specify as additional insured, as their interests
may appear, InnCOGEN and InnCOGEN's lender and lessor, (b) provide that no
cancellation or material change thereof must be effective until at least 60 days
after being mailed to InnCOGEN and (c) with respect to the commercial general
liability insurance, provide a severability of interest or cross liability
clause.
GUARANTY. On or before the Initial Payment Date (as defined in the EES
Contract and the Turnkey Construction Contract), D/FDI and Duke/Fluor Daniel
must deliver to InnCOGEN irrevocable and unconditional guaranties by Duke
Capital Corp. and by Fluor Daniel, Inc. of all of their obligations under the
EES Contract and the Turnkey Construction Contract, respectively, in the form as
attached in the respective appendices to the two contracts.
TRINIDAD HEAD LEASE
Caroni (1975) Limited, a state-owned company incorporated under the
Companies Ordinance Chapter 31 No. 1 of the Laws of Trinidad ("Caroni"), the
owner of the land on which the Trinidad Project will be built, has leased a
portion of land consisting of 3.2375 hectares (the "Lot") to Innercob Industries
(Trinidad) Limited ("Innercob") for sixty years and four days, commencing on
June 1, 1998, pursuant to a Deed of Lease made as of June 18, 1998 (the "Head
Lease"). The Head Lease provides that Innercob may use the Lot for industrial
purposes. The rent is forty cents per square meter per year for the first five
years and fifty cents per square meter per year for the second five years.
Thereafter, the rent is adjusted in five year intervals in accordance with
increases or decreases in the average of the Consumer Price Index for All Urban
Consumers for Size Class D (using then current base year) promulgated by the
United States Department of Labor, Bureau of Labor Statistics and in the Index
of Prices published by the Central Statistical Office of Trinidad. The rent
cannot be less than the rent for the preceding five year period nor can it
increase by more than ten percent. Innercob will pay the rent free of all
deductions, setoff or abatement, together with the value added tax thereon, and
will pay all taxes, assessments and charges imposed on the Lot.
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Innercob will at its own cost and expense provide and maintain adequate
anti-pollution facilities for all pollutants which may be produced as a result
of Innercob's use of the Lot.
Innercob cannot sublease or assign the Head Lease without the prior written
consent of Caroni, but Caroni has consented to a sublease or assignment in
connection with a mortgage.
At the expiration or earlier termination of the Head Lease, Innercob may
within thirty-six months or such other period of time agreed to by Caroni and
Innercob, remove all building and other structures, plant, machinery and
equipment erected or installed by Innercob or its sub-lessees upon the Lot, in
which case Innercob is obligated under the Head Lease to restore the Lot to its
former state and condition.
Caroni agrees under the Head Lease, among other things, to provide, maintain
and upkeep Caroni's private roads necessary to provide ingress to and egress
from the Lot over Caroni's private roads leading to and from certain public
roads. Caroni will, at Innercob's cost and expense, execute, acknowledge and
deliver certificates for the benefit of Innercob and persons that it designates
with regard to information concerning, among other things, any amendments or
modifications to the Head Lease, the existence of any defaults thereunder,
outstanding notices of default or termination and such other matters with
respect to the Head Lease as Innercob may reasonably request. Such certificates
may be relied upon by Innercob and any prospective assignee, sublessee or
mortgagee of the whole or part of the interest of Innercob under the Head Lease.
Caroni and Innercob have reciprocal general indemnification and
environmental indemnification.
The Head Lease will terminate if Innercob is in arrears for 90 days after a
payment date or a breach by Innercob of any of its covenants contained therein,
at which time Caroni may re-enter the Lot or any part thereof.
Subject to certain conditions, Innercob may renew the Head Lease for a
further term of 30 years by giving Caroni notice of its intention not less than
6 months before the scheduled expiry date of the term. Rent during such further
term will be calculated in accordance with the provisions for rent adjustments
in the Head Lease.
The parties will be excused from the performance of their obligations or
covenants under the Head Lease by the occurrence of force majeure events. Acts
of the Government of Trinidad or Caroni's agreements with third parties to
relieve Caroni of its obligations to Innercob under the Head Lease will not
constitute events of force majeure under the Head Lease except under certain
circumstances provided in the Head Lease.
Disputes are to be resolved through arbitration in Trinidad in accordance
with the Trinidad Arbitration Act Ch. 5:01.
The Head Lease is governed by, subject to and construed and interpreted in
accordance with the laws of Trinidad.
TRINIDAD SUB-LEASE
Innercob will sub-lease to InnCOGEN for an initial term of 32 years,
commencing on June 1, 1998, the Lot pursuant to a sub-lease made as of June 18,
1998 (the "Sub-Lease"). The Lot is the same land that was leased to Innercob by
Caroni under the Head Lease. The Sub-Lease provides that InnCOGEN may use and
occupy the Lot for the operation, maintenance and improvement of one or more
electricity generation plants, together with other ancillary and related
facilities and infrastructure. The rent is $0.40 per square meter per year for
the first 5 years and $0.50 per square meter per year for the second five years.
Thereafter, the rent is adjusted in five year intervals in accordance with
increases or decreases in the average of the Consumer Price Index for All Urban
Consumers for size class D (using then current base year) promulgated by the
United States Department of Labor, Bureau
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of Labor Statistics and in the Index of Prices published by the Central
Statistical Office of Trinidad and Tobago. The rent cannot be less than the rent
for the preceding five year period nor can it increase by more than ten percent.
InnCOGEN will pay the rent free of all deductions, setoff or abatement, together
with the value added tax thereon, and will pay all taxes, assessments and
charges imposed on the Lot.
InnCOGEN will at its own cost and expense provide and maintain adequate
anti-pollution facilities for all pollutants which may be produced as a result
of InnCOGEN's use of the Lot.
InnCOGEN cannot sublease or assign the Sub-Lease without the prior written
consent of Innercob, but Innercob has consented to a sublease, assignment,
charge, mortgage or grant of a security interest in connection with InnCOGEN's
obligations under any Financing Documents (as defined in the Sub-Lease).
InnCOGEN is obligated to take out and maintain in full force and effect all
necessary insurance with respect to InnCOGEN's activities and operations on the
Lot.
At the expiration or earlier termination of the Sub-Lease, InnCOGEN may
within twenty-two months or such other period of time agreed to by Innercob and
InnCOGEN, remove all buildings and other structures, plants, machinery and
equipment erected or installed by InnCOGEN or its sub-lessees upon the Lot, in
which case InnCOGEN is obligated under the Sub-Lease to restore the Lot to its
former state and condition. Innercob will, at InnCOGEN's cost and expense,
execute, acknowledge and deliver certificates for the benefit of InnCOGEN and
persons that it designates with regard to information concerning, among other
things, any amendments or modifications to the Sub-Lease, the existence of any
defaults thereunder, outstanding notices of default or termination and such
other matters with respect to the Sub-Lease as InnCOGEN may reasonably request.
Such certificates may be relied upon by InnCOGEN and any prospective assignee,
sublessee or mortgagee of the whole or part of the interest of InnCOGEN under
the Sub-Lease.
Innercob and InnCOGEN have reciprocal general indemnification and
environmental indemnification obligations under the Sub-Lease.
The Sub-Lease will terminate if InnCOGEN is in arrears for 75 days after a
payment date or 30 days after notice of a breach by InnCOGEN of any of its
covenants contained therein, at which time Innercob may re-enter the Lot or any
part thereof.
Subject to certain conditions, InnCOGEN may renew the Sub-Lease for a
further term of 28 years by giving Innercob notice of its intention not less
than 6 months before the scheduled expiry date of the term. Rent during such
further term will be calculated in accordance with the provisions for rent
adjustment in the Sub-Lease.
The parties will be excused from the performance of their obligations or
covenants under the Sub-Lease by the occurrence of force majeure events. Acts of
the Government of Trinidad or Innercob's agreements with third parties to
relieve Innercob of its obligations to InnCOGEN under the Sub-Lease will not
constitute events of force majeure under the Sub-Lease except under certain
circumstances provided in the Sub-Lease.
Disputes are to be resolved through arbitration in Trinidad in accordance
with the Trinidad Arbitration Act Ch. 5:01.
The Sub-Lease is governed by, subject to and construed and interpreted in
accordance with the laws of Trinidad.
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DEED OF LICENCE
Caroni, Innercob and InnCOGEN are parties to a Deed of Licence (the
"Licence") made as of June 18, 1998 to provide InnCOGEN certain assurances in
connection with the Sub-Lease from Innercob to InnCOGEN.
Caroni confirms its consent to Innercob's sub-lease of the Lot to InnCOGEN
and covenants with InnCOGEN to observe, perform and fulfill all of its
obligations under the Head Lease and comply with the provisions thereof and not
permit the Head Lease to be cancelled, surrendered or modified without the prior
written consent of InnCOGEN. Caroni further covenants not to do any act or thing
which would in any way prejudice the use or designation of the Lot as the
location for the generation of electricity, to permit InnCOGEN to comply with
governmental provisions and requirements, to not interrupt, sue, evict or
interfere with InnCOGEN's use of the Lot provided that InnCOGEN pays the rent
and performs the covenants specified in the Sub-Lease.
The Licence provides that InnCOGEN will have no liability or obligation to
Caroni under the Head Lease or the Licence except as provided in the Licence,
and that Innercob will remain liable for all payments due to Caroni under the
Head Lease.
In the event Caroni terminates the Head Lease, provided InnCOGEN is not in
default or in breach of the Sub-Lease then Caroni will grant to InnCOGEN a lease
for the same duration as the unexpired portion of the initial term or further
term of the Sub-Lease for the rent and on the terms and conditions of the
Sub-Lease.
Caroni will, subject to limitations, indemnify InnCOGEN from all loss,
liability and damage resulting from certain claims, actions, suits or
proceedings pursuant to or in connection with any violation of the Trinidad
Environmental Management Act of 1995 or any implementing policies, codes,
standards, rules and regulations authorized by such act or any statute, bylaw,
regulation, rule, ordinance, order, license or subordinate legislation
pertaining to the environment, relating to conditions of the Lot existing on or
before the date of the Licence or resulting from the conduct of Caroni.
InnCOGEN, will, subject to limitations, indemnify Caroni and its tenants from
any loss, liability or damage resulting from such claims relating to the conduct
of InnCOGEN and its contractors.
Caroni irrevocably waives any immunity, including sovereign immunity, from
the jurisdiction of any court or from any legal process, with respect to its
obligations under the Licence.
Caroni and Innercob agree, at InnCOGEN's request, to execute a deed of
consent and agreement with the lender in substantially the form attached as an
exhibit to the Licence.
Caroni agrees, at InnCOGEN's cost and expense, to execute certificates for
the benefit of InnCOGEN and its designee, regarding matters including the status
of the Licence, any defaults under the Head Lease, any outstanding notices of
default or termination and such other matters relating to the Lot, the Head
Lease, any deed of consent and agreement and the Licence to which Caroni and
InnCOGEN are parties as InnCOGEN may reasonably request. Such certificates
executed by Caroni may be relied upon by InnCOGEN and any lender and any
prospective assignee, sublessee or lender.
No amendment, alteration, changes or additions to the Licence will be
effective unless it is in writing and signed by the parties to the Licence.
Disputes are to be resolved through arbitration in Trinidad in accordance
with the Trinidad Arbitration Act Ch. 5:01.
The Licence is to be governed by, subject to and construed and interpreted
in accordance with the laws of Trinidad.
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TRINIDAD OPERATION AND MAINTENANCE AGREEMENT
On September 11, 1998, InnCOGEN, an indirect wholly owned Trinidadian
subsidiary of York signed a contract with Primesouth Inc., a subsidiary of Scana
Corporation, to operate and maintain the Trinidad Project.
The term of the operations and maintenance contract is for 5 years with 5
additional 5 year renewable extensions. InnCOGEN will pay Primesouth a monthly
management fee of $15,000 with no adjustment for staffing levels. The initial
plant staff that will be managed by Primesouth is approximately 22. The parties
have agreed to establish an incentive fee arrangement, in addition to the
management fee, following one full year of commercial operation of the project.
Primesouth currently operates the Brooklyn Navy Yard Project for York and
its partners under a similar agreement.
BROOKLYN NAVY YARD PROJECT
LIMITED PARTNERSHIP AGREEMENT
BNYCP was formed pursuant to a Limited Partnership Agreement, dated as of
October 19, 1992, (the "BNYCP Partnership Agreement") as amended and restated on
November 1, 1997, between MENY, as a general partner and as a limited partner,
and York Partners, as a general partner and as a limited partner.
PURPOSE. Following the financial closing of the Brooklyn Navy Yard Project,
BNYCP has continued to own, finance, manage and operate the Brooklyn Navy Yard
Project to provide electric and thermal energy and capacity for sale. In
addition, BNYCP may engage in any activities that BNYCP deems related and
necessary to the foregoing purpose, including construction of additional
improvements.
PERCENTAGE INTERESTS. Each of York Partners and MENY owns a 5% general
partner interest and a 45% limited partner interest in BNYCP.
TERM. BNYCP shall terminate on December 31, 2051, unless sooner terminated
in accordance with the BNYCP Partnership Agreement.
LOANS.
CONSTRUCTION LOANS. MENY made construction loans to BNYCP to pay project
costs, totaling approximately $93.8 million as of April 30, 1998. MENY may, in
its discretion, advance additional loans to BNYCP. The existing loans, and any
new loans, will be paid by BNYCP after payment of the Royalty Fees and the
General Partner Fees, but before distributions to any partner of BNYCP.
PRIORITY LOANS. MENY made priority loans to York Partners in connection
with the Brooklyn Navy Yard Project, totaling approximately $21.5 million as of
April 30, 1998. The priority loan is secured by a pledge by York Partners to
MENY of a portion of York Partners' limited partnership interest equal to a 30%
interest in BNYCP. The priority loan has no maturity date, and is payable only
out of equity distributions to York Partners (but not the General Partner Fees
or the Royalty Fees) and is otherwise non-recourse to York Partners.
MANAGEMENT OF BNYCP.
MANAGEMENT COMMITTEE. MENY and York Partners, through the management
committee, have the exclusive power and authority to direct and manage the
affairs of BNYCP. The management committee consists of two representatives, one
from each of MENY and York Partners. Each representative is entitled to vote in
proportion to its interest in BNYCP and decisions of the management committee
are made on the basis of a majority of percentage interests; PROVIDED, HOWEVER,
that if the management committee is unable to reach a determination or is
otherwise deadlocked on a decision, MENY will be entitled to cast a deciding
vote.
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EXECUTIVE DIRECTOR. An executive director shall be appointed by the
management committee to direct the day-to-day activities of BNYCP and the
Brooklyn Navy Yard Project. The executive director shall be an employee of MENY
or an affiliate of MENY. The executive director may also appoint additional
officers, who shall include representatives of MENY, for the purpose of
performing functions and duties as the executive director deems necessary from
time to time.
PRIORITY OF PAYMENTS. BNYCP's revenue will be disbursed in the following
order of priority:
(a) maintenance, operating and other business expenses and capital
expenditures necessary for the continued and safe and economic operation of
the Brooklyn Navy Yard Project;
(b) principal, interest, fees, rent costs and expenses of BNYCP pursuant
to the BNYCP Bonds and any and all reserves and deposits required therefor;
(c) to pay that portion of the General Partner Fees and the Royalty Fees
not paid on a prior Distribution Date, to the extent that payment of the
General Partner Fees or the Royalty Fees has been subordinated or deferred,
as result of, among other things, a prohibition under the BNYCP Bonds on
making such payment, or there is insufficient cash on any prior Distribution
Date to pay the General Partner Fees or the Royalty Fees, all such
subordinated, deferred or unpaid General Partner Fees and the Royalty Fees;
(d) the General Partner Fees and the Royalty Fees are scheduled to be
paid by BNYCP as set forth below:
<TABLE>
<CAPTION>
TIME PERIOD AFTER AGGREGATE PERCENTAGE
BOND OF GROSS REVENUE OF
CLOSING BNYCP FOR
(DECEMBER, 1997) TYPE OF FEE ALL RECIPIENTS RECIPIENT OF FEE
- --------------------- ------------------ ----------------------- -----------------------------------------
<C> <S> <C> <C>
1 month-48 months General Partner 0.5% York Partners
Fee
1 month-48 months Royalty Fee 4.5% York Partners
48 months-108 months General Partner 4.0% York Partners and MENY equally
Fee
108 months-168 months General Partner 3.0% York Partners and MENY equally
Fee
168 months-228 months General Partner 2.0% York Partners and MENY equally
Fee
228 months-468 months General Partner 1.0% York Partners and MENY equally
Fee
</TABLE>
(e) principal, interest, fees, costs and expenses due under the
construction loan by MENY to BNYCP;
(f) scheduled payments in that month of principal of and accrued
interest on any subordinated loans, including the priority loans made by
MENY to York Partners;
(g) any other reserves, which includes provisions for contingencies in
accordance with prudent management practices relative to the type of
business in which BNYCP is engaged and the levels of insurance maintained by
BNYCP and generally accepted accounting principles, or funds for capital
expenditures established in such amounts as the management committee
determines in its reasonable discretion to be necessary; and
(h) distribution to the partners.
MISSION REIMBURSEMENT AGREEMENT (PMNC)
On November 1, 1997, York Partners, BNYCP and Mission entered into the
Mission Reimbursement Agreement (the "Mission Reimbursement Agreement") related
to the PMNC litigation (as described below).
BNYCP entered into an agreement dated as of November 1, 1994 (the "Turnkey
Agreement") with PMNC, jointly and severally, for the engineering, design,
procurement and installation of equipment, construction, start-up and testing of
the Brooklyn Navy Yard Project. In addition, BNYCP received a guaranty from the
Parsons Corporation respecting PMNC's timely performance of its obligations
under the Turnkey Agreement. Currently, there is pending litigation between
BNYCP and York Partners on
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the one hand and PMNC and the Parsons Corporation on the other hand, both
relating to the disputes arising out of the Turnkey Agreement and the guaranty
from the Parsons Corporation. Mission, in connection with the issuance of the
BNYCP Bonds, agreed to defend, indemnify and hold harmless York Partners and
BNYCP from any losses arising out of or in connection with such pending
litigation under an indemnity agreement dated as of December 1, 1997.
REIMBURSEMENT. Under the Reimbursement Agreement, York Partners agrees in
its separate capacity and not in its capacity as a partner of BNYCP, absolutely
and unconditionally to pay to Mission a sum in the aggregate equal to 25% of the
total of all amounts paid by Mission upon a final determination of the claims
under that certain indemnity agreement in respect of claims exceeding
$10,000,000; PROVIDED, HOWEVER, that York Partners shall not be obligated to
reimburse Mission for more than $10,000,000 of claims and PROVIDED, FURTHER,
HOWEVER, that York Partners shall only be obligated to reimburse Mission from
payments of the General Partner Fees and the Royalty Fees or from distributions
to York Partners on an annual basis pursuant to the BNYCP Partnership Agreement
until all amounts due by York Partners are fully paid to Mission as set forth
below:
<TABLE>
<S> <C>
1998............................................................................ $1,000,000
1999............................................................................ $1,000,000
2000............................................................................ $1,000,000
2001 and thereafter............................................................. $2,000,000
(subject to a $10,000,000 maximum)
</TABLE>
LIABILITY. The obligations of York Partners under the Mission Reimbursement
Agreement shall be absolute and unconditional irrespective of certain
circumstances which may deem the agreement invalid.
GRANT OF SECURITY INTEREST. York Partners granted to Mission a security
interest in its portion of the General Partner Fees, the Royalty Fees and its
right to receive distributions pursuant to the BNYCP Partnership Agreement from
the general partner interest and a 30% limited partnership interest in BNYCP
(which is the same 30% limited partnership interest pledged to MENY to secure
the priority loan), together with the proceeds thereof, to secure its
obligations under the Mission Reimbursement.
AGREEMENT. Mission's security interest in the General Partner Fees and the
Royalty Fees is limited to the amounts set forth above for each year and any
amounts in excess thereof are not subject to such security interest. In
addition, in connection with the settlement of certain litigation, York Partners
has granted to third parties a security interest in a 20% limited partnership
interest of which 17.5% is subject to a prior security interest of Mission and
2.5% is not subject to such prior security interest.
EVENTS OF DEFAULTS. Failure of York Partners to pay any amounts due and
payable or to perform any of the covenants thereunder constitutes an "Event of
Default" under the Mission Reimbursement Agreement.
ENFORCEMENT OF REMEDIES. If any Event of Default shall have occurred and is
continuing for 30 days after receiving notice from Mission, Mission may proceed
to enforce all of its remedies available under the Mission Reimbursement
Agreement under applicable law and in equity.
OTHER LITIGATION
BNYCP is a party to numerous lawsuits filed by employees of previous
contractors arising from alleged injuries allegedly incurred in connection with
the construction of the Brooklyn Navy Yard Project. BNYCP is vigorously
contesting such suits and is pursuing subrogation, as applicable. BNYCP believes
that any liability resulting therefrom will be adequately covered by insurance.
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BNYCP BONDS
In December of 1997, BNYCP issued (a) $307,000,000 New York City Industrial
Development Agency Industrial Development Revenue Bonds (Brooklyn Navy Yard
Cogeneration Partners, L.P. Project), Series 1997, consisting of $31,960,000,
6.20% term bonds due October 1, 2022, $110,280,000, 5.65% term bonds due October
1, 2028 and $164,760,000, 5.75% term bonds due October 1, 2036, (b)
$100,000,000, 7.42% of taxable senior secured bonds due 2020 and (c) certain
letters of credit not to exceed $100,000,000 (collectively, the "BNYCP Bonds").
The BNYCP Bonds, which currently are rated "Baa3" by Moody's, "BBB-" by S&P
and "BBB-" by Fitch Investors Service, L.P., are senior secured debt obligations
of BNYCP secured by a lien on and security interest in (a) all personal property
owned or leased by BNYCP, (b) all of BNYCP's right, title and interest in and to
all contracts that have been or may be entered into by BNYCP, except for the
construction contract with PMNC, and (c) all revenues of BNYCP.
BNYCP's obligations under the BNYCP Bonds are obligations solely of BNYCP
and are non-recourse to any of its partners or affiliates or any shareholder,
partner, officer, employee or director of its partners or any affiliate thereof
(other than BNYCP).
REDEMPTION.
The bonds due 2022 are subject to mandatory sinking fund redemption
requirements commencing on October 1, 2021; the bonds due 2028 are subject to
mandatory sinking fund redemption commencing on October 1, 2023; the bonds due
2036 are subject to mandatory sinking fund redemption commencing on October 1,
2029.
Upon certain events of loss or eminent domain, subject to certain conditions
and except if the loss proceeds with respect thereto are less than $5 million,
the BNYCP Bonds will be subject to mandatory redemption at par plus accrued
interest to the redemption date and any applicable premium, depending on the
nature of the loss or eminent domain.
All monies received by or on behalf of BNYCP in respect of an energy
contract buy-out of the BNY PPA will be applied to the redemption or repayment
of the BNYCP Bonds if (a) the aggregate amount of monies then or theretofore
received by or on behalf of BNYCP in respect of such energy contract buy-outs
exceeds $20 million and (b) BNYCP is unable to obtain written confirmation from
two or more Rating Agencies that a lowering of the then current credit ratings
of the BNYCP Bonds will not result therefrom within 60 days after the receipt of
such monies. The redemption price shall be equal to par plus, if the energy
contract buy-out is not involuntary, a premium equal to that which would be
applicable to an optional redemption of the BNYCP Bond if an optional redemption
were permissible on the date of such redemption (and, if no such optional
redemption is permissible as of such date, a premium of 2%), together with
accrued interest thereon, if any, to the redemption date.
The BNYCP Bonds will be subject to mandatory redemption (or, in the case of
the taxable BNYCP Bonds, the holders thereof will have a "put") prior to their
stated maturity, at par plus accrued interest thereon to the redemption date,
plus any applicable premium, if (a) BNYCP is not operating the Brooklyn Navy
Yard Project as a qualified "project" under the New York State Industrial
Development Agency Act (the "IDA Act"), (b) BNYCP is operating the Brooklyn Navy
Yard Project in violation of material applicable law, (c) the Company Lease
Agreement, dated as of December 1, 1997, between BNYCP and the New York City
Industrial Development Agency ("IDA") expires or terminates, (d) the tax-exempt
BNYCP Bonds become taxable or (e) upon a change in the status of Con Ed as an
operator of an electric system providing electric service to the general
populace of the City of New York and Westchester County occurs or Con Ed fails
to use electricity from the Brooklyn Navy Yard Project in the provision if its
service in such areas.
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Other than the bonds due 2022, which are not subject to optional redemption
prior to final maturity, the BNYCP Bonds are subject to optional redemption
prior to maturity on or after October 1, 2008, in whole or in part (if in part,
by lot), at an initial redemption price equal to 102% of the principal amount
thereof and declining 1% annually to 100% of the principal amount thereof, in
each case plus accrued interest, if any.
ADDITIONAL DEBT.
In addition to the BNYCP Bonds, BNYCP may incur obligations in respect of
additional indebtedness pursuant to the indenture or the tax-exempt indenture
(a) in order to finance optional modifications to the Brooklyn Navy Yard Project
without restriction as to the principal amount thereof, if, among other things,
after giving effect to such additional bonds, the average of the annual senior
debt service coverage ratios is projected to be equal to or greater than 1.5 to
1.0 and the minimum annual projected senior debt service coverage ratio is to be
equal or greater than 1.4 to 1.0 in each fiscal year, in each case through the
final maturity date of the outstanding BNYCP Bonds or (b) in order to finance
modifications required by law without restriction as to the principal amount
thereof if, among other things, after giving effect to such additional bonds and
based upon the projections by BNYCP, the minimum annual senior debt service
coverage ratio is projected to be equal to or greater than 1.20 to 1.0 in each
fiscal year through the final maturity date of the outstanding; PROVIDED,
HOWEVER, that, in either case, in lieu of such projections, BNYCP may provide a
ratings confirmation with respect to the issuance of such new bonds and the
obligations of BNYCP to be undertaken by it in connection with such
modifications.
BNYCP may also incur additional indebtedness in accordance with the terms
and conditions of the indenture or the tax-exempt indenture if, among other
things, cash or cash equivalents sufficient to pay the principal of and premium,
if any, and interest on the outstanding indebtedness to be redeemed is held in
trust and (a) in order to refinance all or a portion of outstanding
indebtedness, in the case of replacement debt, BNYCP and an independent engineer
each certify that the average of the annual senior debt service coverage ratios
is projected to be equal to or greater than the lesser of (A) the then projected
average of the annual senior debt service coverage ratio without giving effect
to such proposed issuance and (B) 1.25 to 1.0 or (b) in order to refund all or a
portion of outstanding indebtedness, BNYCP and an independent engineer each
certify that the projected senior debt service requirement will not exceed the
senior debt service requirement without giving effect to such issuance by more
than 10% for any fiscal year and that either (A) the projected average annual
senior debt service requirement will not exceed the projected average annual
senior debt service requirement without giving effect to such issuance or (B)
the minimum annual senior debt service coverage ratio is projected to be equal
to or greater than 1.35 to 1.0 and the average annual senior debt service
coverage ratio is projected to be equal to or greater than 1.5 to 1.0.
BNYCP may also incur subordinated debt consisting solely of unsecured,
subordinated loans from affiliates of BNYCP, fully subordinated as to payment
and exercise of remedies and payable only from monies otherwise distributable by
BNYCP in accordance with the BNY Intercreditor Agreement.
COVENANTS.
The BNYCP Bond Documents contain certain affirmative and negative covenants,
including but not limited to: (a) the incurrence of additional indebtedness, (b)
maintaining the tax-exempt status of interest on the tax-exempt bonds, (c)
operating and maintaining the Brooklyn Navy Yard Project in compliance with the
project documents, (d) obtaining and maintaining in full force and effect all
necessary government approvals (and other consents and approvals required at any
time in connection with the Project) and maintaining the Brooklyn Navy Yard
Project as a QF, an Exempt Wholesale Generator ("EWG"), or another similar
entity exempt under PUHCA, (e) preserving and maintaining good title or valid
leasehold rights in its real property and the collateral, subject only to
permitted liens, (f) compliance with applicable laws, (g) obtaining and
maintaining customary insurance, (h) paying and
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discharging all taxes, assessments, charges and claims, (i) complying with
ERISA, (j) performing and observing all covenants in the BNYCP Bond Documents,
(k) compliance with certain covenants regarding the special purpose nature of
BNYCP and (l) ownership of the Brooklyn Navy Yard Project.
RESTRICTED PAYMENTS
BNYCP will not make any restricted payments (including the Royalty Fees, the
General Partner Fees and the Equity Cash Flows) unless BNYCP provides an
officer's certificate certifying that (a) the senior debt service coverage ratio
for the period consisting of the four fiscal quarters immediately preceding such
Distribution Date equals at least 1.25 to 1.0 and (b) based upon the projections
by BNYCP, the senior debt service coverage ratio for the period consisting of
the current fiscal quarter and the next succeeding three fiscal quarters is
projected to be at least 1.25 to 1.0.
BNYCP agreed not to make any restricted payments (which would include the
General Partner Fees and the Royalty Fees) unless, in the case of any such
payment, BNYCP delivers an officer's certificate certifying that (a) no default
or event of default has occurred and is continuing, (b) BNYCP is not insolvent
and would not be rendered insolvent by the making of such proposed payment and
no bankruptcy event has occurred and is continuing in respect of BNYCP, (c) Con
Ed has not, on or after October 2014, exercised, or delivered written notice of,
its option to terminate or reduce its obligations to purchase steam under the
Energy Sales Agreement, dated as of October 31, 1996, between Con Ed and BNYCP,
unless (i) BNYCP has certified to Con Ed that (A) the senior debt service
coverage ratio for the period consisting of the 4 fiscal quarters immediately
preceding such exercise or notice was equal to at least 1.4 to 1.0 and (B) based
on the projections by BNYCP, the minimum annual senior debt service coverage
ratio for each fiscal year through the final maturity date of the BNYCP Bonds is
projected to be equal to or greater than 1.4 to 1.0 or (ii) BNYCP has delivered
to a written confirmation from two or more ratings agencies that a lowering of
the then current credit ratings of the BNYCP Bonds will not result from such
payment, (d) any gas transportation agreement (each of which, upon BNYCP's
exercise of its extension option in certain cases, expires in 2016) has not been
extended and no replacement agreement providing for fuel transportation
containing substantially equivalent terms and conditions has been entered into
within 2 years of the termination date of such gas transportation agreement, (e)
all required funding of accounts, including debt service reserve and maintenance
accounts has occurred and (f) Con Ed is not then exercising rights under the BNY
PPA to assume the operation of the Brooklyn Navy Yard Project.
FLOW OF FUNDS
BNYCP will assign and arrange for the direct payment to the Collateral Agent
of all revenues in each month. Monies on deposit in the revenue fund will be
deposited into the following funds and in the following order of priority:
FIRST, to the operating fund, an amount that, together with amounts already
on deposit in such fund, will be sufficient to pay the operations and
maintenance costs and fuel expenses certified by BNYCP to be due and payable
prior to the next succeeding monthly transfer date;
SECOND, to the maintenance fund, an amount certified by BNYCP, but not less
than the required deposit;
THIRD, (a) to the working capital facility reimbursement fund, an amount
that will be sufficient to pay all amounts then due and payable as principal,
interest, fees and other amounts relating to any working capital facility, (b)
to the debt service reserve letter of credit reimbursement fund the amount
required to be deposited therein, (c) to the partnership letter of credit
reimbursement fund the amount required to be deposited therein, (d) to the
interest fund and principal fund the amount required to be deposited therein
with respect to the taxable BNYCP Bonds and (e) to the interest fund and
principal fund the amount required to be deposited therein with respect to the
tax-exempt BNYCP Bonds;
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FOURTH, to the debt service reserve letter of credit reimbursement fund, an
amount equal to all outstanding principal, premium (if any) and other amounts
with respect to outstanding debt service reserve letter of credit loans and, in
certain circumstances where a debt service reserve letter of credit has not been
renewed or reinstated by specified terms, ratably to the debt service reserve
replenishment fund;
FIFTH, to the debt service reserve replenishment fund, the amount required
to be deposited therein;
SIXTH, to the letter of credit reimbursement fund, an amount equal to the
outstanding principal amount of all letter of credit loans; and
SEVENTH, to the distribution fund, an amount equal to the balance of monies
remaining in the revenue fund.
In the event that monies are insufficient to make all the transfers to the
persons or funds required at any of the above levels, the monies available shall
be distributed ratably to each such fund or person, based on the amounts due to
each of them.
Of amounts available for distribution, subject to Mission's rights under the
Mission Reimbursement Agreement, the first available amounts shall be used to
pay the General Partner Fees and the Royalty Fees.
EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of default
under the BNYCP Bond Documents:
(a) failure of BNYCP to make any payment of interest or principal that
has become due and payable and such failure is continuing for 15 days;
(b) failure of BNYCP to pay any amount to that has become due and
payable or to comply with, perform or observe certain covenants, including
covenants relating to maintenance of the Brooklyn Navy Yard Project,
maintenance of insurance, sale of project property and indemnification, and
continuance of such failure by BNYCP for 30 days after receipt of written
notice specifying the nature of such failure;
(c) failure of BNYCP to observe and perform any covenant (other than
those set forth in (ii)), condition or agreement hereunder on its part to be
performed and continuance of such failure for 30 days after receipt of
written notice to BNYCP specifying the nature of such default to proceed
with reasonable diligence to cure such default or the failure for 90 days
after such written notice to cure such default;
(d) the occurrence of a bankruptcy event of BNYCP;
(e) so long as the Mission Reimbursement Agreement shall be in effect, a
bankruptcy event of Mission or the failure of Mission to make any payment
required under the Mission Reimbursement Agreement;
(f) any representation or warranty made by BNYCP in the BNYCP Project
Documents and other documents furnished that shall prove to be false,
misleading or incorrect in any material respect as of the date made;
(g) the commencement of a proceeding to foreclose any lien or security
interest granted to Con Ed;
(h) an "Event of Default" under any other BNYCP financing document shall
occur and be continuing and shall not have been waived;
(i) the entry of one or more judgments for the payment of money in an
aggregate amount in excess of $10,000,000 against BNYCP which remains unpaid
for a period of 90 days or more;
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(j) failure by BNYCP to make any payment when due or to comply with any
covenant in respect of any indebtedness for borrowed money in an amount
exceeding $10,000,000 (other than any amount due or pursuant to the
Financing Documents), but only if a default and acceleration have been
declared and remain in effect with respect to such indebtedness;
(k) any material contracts relating to the Brooklyn Navy Yard Project
expires or ceases to be valid and binding and in full force and effect;
(l) any of the Financing Documents ceases to be in full force and effect
or any grant of a lien with respect to any material collateral ceases to be
effective to grant a perfected lien thereon to the trustees appointed in
connection with the BNYCP Bonds and the letters of credit providers of
BNYCP; or
(m) failure of York and Mission to maintain aggregate ownership and
control, either directly or indirectly, of at least 50% of the partnership
interest in BNYCP.
QUALIFYING FACILITY. BNYCP is certified as a QF pursuant to PURPA and
accordingly is exempt from relevant provisions of the FPA and PUHCA. BNYCP is
also certified as an EWG, which provides an exemption from PUHCA. BNYCP is
authorized to sell electricity at wholesale under the BNY PPA and the BNYDC
Agreement; however, if BNYCP elects to operate solely as an EWG, BNYCP will be
subject to the FPA. BNYCP is an electric corporation under the NYPSL because it
owns and operates an electric generating facility larger than 80 MW in size and
received a certificate of public convenience and necessity from the New York
Public Service Commission ("NYPSC"). The NYPSC certificate permits BNYCP to sell
steam to Con Ed, BNYDC and deliver to the Red Hook Plant, and to sell
electricity to BNYDC for use in common areas of the Brooklyn Navy Yard and
BNYDC's offices, which are regarded as retail sales of electricity. The NYPSC
certificate establishes a regime of lightened regulation applicable to BNYCP
under which BNYCP is required to file annual reports regarding retail sales of
electricity, copies of filings made with the Commission, and to seek the NYPSC's
approval for issuances of debt and securities and for transfers of certain
assets. The NYPSC order states that applications for approval of such matters
will be acted upon swiftly and will be subject to reduced scrutiny. The NYPSC
also determined that BNYCP is a gas corporation pursuant to the NYPSL due to its
ownership of a short natural gas pipeline through which fuel is delivered to the
Brooklyn Navy Yard Project. BNYCP is not subject to regulation as a gas
corporation except for safety and environmental matters.
POWER PURCHASE AGREEMENT
The Brooklyn Navy Yard Project generates electricity and steam which sells
to Con Ed pursuant the BNY PPA.
TERM. The BNY PPA has a stated term of 40 years from November 1, 1996.
SALE AND PURCHASE OF ELECTRICITY AND STEAM. Subject to the terms of the BNY
PPA, the Brooklyn Navy Yard Project has agreed to deliver and sell to Con Ed all
the electricity and steam that the Brooklyn Navy Yard Project is capable of
producing at any given time, under normal operating conditions, up to the
applicable seasonal period DMNC for each of the summer period, the winter
period, the spring period and the fall period. Con Ed has agreed to accept and
purchase all the electricity and steam delivered by the Brooklyn Navy Yard
Project (up to a maximum capacity of 286 MW and 1,000,000 pounds of steam per
hour), subject to certain limitations as described in the BNY PPA. Except as
otherwise provided in the BNY PPA, the Brooklyn Navy Yard Project is prohibited
from selling or otherwise diverting to any other party any portion of the
electric or steam output of the Brooklyn Navy Yard Project committed to Con Ed
under the terms of the BNY PPA.
CONTRACT PAYMENTS. Under the BNY PPA, Con Ed is required to make payments
to the Brooklyn Navy Yard Project for electricity and steam on a monthly basis.
A general description of the payments are described below:
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(a) payments for electricity capacity commenced in March 1997 at $214/kW
per year and vary from $194.50/kW per year to $227/kW per year over the term
of the BNY PPA, with inflation adjustments based on changes in the Gross
Domestic Product Implicit Price Deflator ("GDPIPD") and with seasonal
adjustments based on a 95% on-peak availability in the summer and winter
periods. There is no availability adjustment in the spring and fall periods
(based on the Brooklyn Navy Yard Project's availability and on the
applicable DMNC, which may not exceed 220 MW);
(b) monthly payments shall be made for deliveries of electricity up to
220 MW, starting at $0.0253 per kWh from Monday through Saturday, 6:00 am to
10:00 pm, and $0.01863 per kWh during all other hours, adjusting for
inflation based on the GDPIPD (65% weight) and the New York Mercantile
Exchange gas index (35% weight) from 1995. Any electricity delivered in
excess of the DMNC (excluding electricity delivered in lieu of steam or
steam delivered in lieu of electricity) shall be paid at Con Ed's Marginal
Energy Costs (i.e., time-differentiated avoided cost);
(c) monthly payments for steam shall be based on a fixed capacity
payment (based on the Brooklyn Navy Yard Project's availability) at a
variable price starting at $2,417,000 per year in 1998 and resetting at $1
million per year starting in 2017, with inflation adjustments based on
changes in the GDPIPD, seasonal adjustments based on a 95% on-peak
availability in the summer and winter periods; and
(d) monthly payments shall be made for deliveries of steam starting at a
steam variable price equal to (i) Con Ed's avoided costs of water and
chemicals (excluding labor costs) applicable to Con Ed's steam stations in
such month plus (ii) 95% of the reference New York Mercantile Exchange gas
index multiplied by a conversion factor of 2.45/dt/1,000 pounds.
DELIVERIES OF ELECTRICITY AND STEAM. All deliveries of electricity and
steam from the Brooklyn Navy Yard Project to Con Ed are required to be made at
certain loss factors to a specific delivery point. The Brooklyn Navy Yard
Project will be responsible for any and all losses incurred in the delivery of
electricity and steam from the Brooklyn Navy Yard Project to the specific
delivery point. Title and risk of loss or damage to the electricity or steam
will pass from the Brooklyn Navy Yard Project to Con Ed at the specific delivery
point.
CON ED'S OBLIGATIONS TO PURCHASE STEAM. For the duration of the BNY PPA,
subject to Con Ed's rights, Con Ed will have the option to require the Brooklyn
Navy Yard Project to deliver electricity in lieu of all or portion of steam
offered for delivery, and to deliver steam in lieu of a portion of the
electricity offered for delivery, subject to Brooklyn Navy Yard Project
capabilities, all with no additional capacity payments. Notice is required
before the option may be exercised. The Brooklyn Navy Yard Project is required
to use reasonable efforts to comply with requests for conversions on short
notice, subject to Brooklyn Navy Yard Project capabilities. Output requirements
and payment amounts would be determined under the terms of the BNY PPA.
CURTAILMENT. Under the BNY PPA, Con Ed is required to make payments to
BNYCP for any curtailments exceeding 25 annually, starting at $5,825 and
adjusting for inflation based on the GDPIPD.
REDUCED LEVELS. In the event that Con Ed's peak steam load falls below
10,000,000 pounds per hour on or after November 1, 2014 and is reasonably
forecasted to remain below such level, subject to certain conditions, Con Ed may
exercise an option, in whole or in part, to reduce its steam purchase
obligations and corresponding payments to BNYCP. This option will not be
effective prior to the 21st year of the BNY PPA, provided that Con Ed gives
BNYCP at least 2 years' prior written notice of its exercise of the option.
PURCHASE OF FUEL. BNYCP is required to arrange for firm gas supply and
transportation sufficient to operate the BNYCP in accordance with the Brooklyn
Navy Yard Project's obligations under the BNY PPA. Such arrangements limit
interruptions of natural gas deliveries to the equivalent of no more
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than 19 full load days during the period November 1 to April 30 and provide for
no interruptions from May through October.
STORAGE OF BACK-UP FUEL. BNYCP is required to obtain permits to burn fuel
oil during all short-term interruptions of gas deliveries provided for in the
Brooklyn Navy Yard Project's gas supply and transportation arrangements. The
Brooklyn Navy Yard Project shall maintain adequate on-site fuel oil storage and
inventory.
MAINTENANCE OF BROOKLYN NAVY YARD PROJECT. For the duration of the BNY PPA,
BNYCP is required, at its sole expense, to maintain the Brooklyn Navy Yard
Project and the facilities (and any associated land and/or property rights) on
the Brooklyn Navy Yard Project's side of the steam/electricity delivery point
specified in the BNY PPA in good operating condition, and to provide for
adequate spare parts to be readily available for use at the Brooklyn Navy Yard
Project in order to assure, to the extent reasonably possible, the uninterrupted
generation and delivery of electricity and steam.
MAINTENANCE FUND. In order to assure the availability of adequate funds for
proper maintenance, BNYCP established the maintenance fund pursuant to the BNY
PPA.
PAYMENT. The quantities of electricity and steam delivered to Con Ed will
be metered in accordance with the provisions of the BNY PPA. Con Ed will read
the meters and pay the Brooklyn Navy Yard Project by means of electronic funds
transfer on a monthly basis. All amounts due and payable under the BNY PPA may
be subject to a right of reduction or set-off under the terms of the BNY PPA.
RIGHT TO OPERATE. Subject to the holders of certain prior rights, Con Ed
shall have the right, at its sole discretion, to possess, assume control of and
operate the Brooklyn Navy Yard Project as agent for BNYCP for all or part of the
remaining contract term upon (a) the Brooklyn Navy Yard Project's failure to
deliver electricity or deliver steam to Con Ed for a period of 60 days, not
excused by force majeure or Con Ed's failure to take such delivery and (b) the
Brooklyn Navy Yard Project's failure to use good faith efforts during such
period to begin to implement steps necessary to resume deliveries of electricity
or steam as soon as reasonably possible, including a failure to remedy or take
steps to remedy any event of force majeure.
Con Ed's rights to possess, assume control of and operate the Brooklyn Navy
Yard Project as agent for BNYCP may continue for so long as circumstances giving
rise to such rights continue without cure or correction. Con Ed will, however,
be required to provide the BNYCP and certain other parties with at least 30
days' advance written notice of Con Ed's intent to exercise such rights. Any
party who receives notice under the terms of the BNY PPA may, upon prescribed
notice to Con Ed and without the consent and approval of Con Ed, assume or cause
a qualified substitute operator to assume the operation of the Brooklyn Navy
Yard Project. The assumption of operations by a qualified substitute operator
may not prejudice Con Ed's rights under the BNY PPA nor may it relieve the
Brooklyn Navy Yard Project of its obligations thereunder.
During any period in which Con Ed operates the Brooklyn Navy Yard Project,
Con Ed will use the proceeds from the sale of electricity generated and steam
produced in accordance with the terms of the BNYCP Bonds; PROVIDED, HOWEVER,
that during such period, BNYCP shall not be permitted to receive any portion of
such proceeds until Con Ed has been reimbursed for any and all expenses
reasonably incurred by Con Ed in taking possession of and operating the Brooklyn
Navy Yard Project. BNYCP will be entitled to resume possession and operation of
the Brooklyn Navy Yard Project upon the cure, correction or other discontinuance
of the event or circumstance giving rise to the Brooklyn Navy Yard Project's
dispossession.
PURCHASE OF BROOKLYN NAVY YARD PROJECT. If BNYCP proposes to sell the
Brooklyn Navy Yard Project while the BNY PPA is in effect, it is required to
provide Con Ed with written notice of such intent including the terms and
conditions applicable to the sale. Upon receipt of such notice, Con Ed will have
90 days within which to make a written offer to the Brooklyn Navy Yard Project
to purchase
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the Brooklyn Navy Yard Project. Con Ed's rights to purchase the Brooklyn Navy
Yard Project are limited under the terms of the BNY PPA and are subordinate to
the rights of the holders of certain prior rights, including the project bonds.
FORCE MAJEURE. The BNY PPA has force majeure provisions typical of
agreements of this type. Neither Con Ed nor BNYCP will be liable for any failure
to perform, in whole or in part, its obligations under the BNYCP PPA because of
force majeure, except for the obligations to make payments for electricity
delivered to Con Ed; PROVIDED, that the non-performing party gives the other
party prompt written notice describing the particulars of the occurrence and
uses its best efforts to remedy its non-performance.
INDEMNIFICATION AND INSURANCE. Each party to the BNY PPA indemnifies each
other party against all claims and associated costs and expenses related to the
property damage or personal injury arising out of the indemnifying party's
action or failure to take any action in the operation, use or ownership of the
Brooklyn Navy Yard Project; PROVIDED that BNYCP has designed, operated and
maintained the equipment and systems of the Brooklyn Navy Yard Project in
conformity with Con Ed's specifications. At is own cost and expense, BNYCP is
required to maintain and keep insurance coverage subject to commercially
reasonable terms and in accordance with minimum coverage requirements set forth
in the BNY PPA.
SECURITY. BNYCP is obligated to grant Con Ed a lien and security interest
in the Brooklyn Navy Yard Project, subordinated as set forth in the BNY PPA, to
secure the payment by the Brooklyn Navy Yard Project of part or all of such
damages as Con Ed may be entitled to at law or equity upon any termination by
Con Ed of the BNY PPA prior to its expiration.
EVENTS OF BREACH. The occurrence of any one or more of the following events
shall constitute a breach under the BNY PPA:
(a) The sale or diversion by BNYCP to a third party of any part of the
electricity or steam committed to Con Ed under the BNY PPA or the refusal of
Con Ed to accept or purchase electricity and/or steam as required under the
BNY PPA.
(b) A material representation or warranty made by Con Ed or BNYCP shall
prove to have been false or incorrect in any material respect at the time
made and shall have been made willfully, knowingly or with a reckless
disregard for its truth or correctness.
(c) Failure by either party to make payments for undisputed amounts
within 30 days after such payments become due, if such payments due reach a
level which cannot be offset by any payments or refunds due and owing to
such party.
(d) Failure by BNYCP to use good faith efforts during a period of 60
days after the Brooklyn Navy Yard Project has ceased deliveries of
electricity or steam, not excused by force majeure, to begin to implement
the steps necessary to resume deliveries of steam or electricity to Con Ed.
(e) Failure by either party to materially perform or observe any of the
material terms, conditions or provisions of the BNY PPA.
(f) The dissolution or liquidation of either party, or the admission in
writing of either party of its inability to pay its debts as they become
due, or the failure by either party to lift any execution, garnishment or
attachment of such consequence as will impair such party's ability to
perform substantially its obligations pursuant to the BNY PPA, or the
commission by either party of any act of bankruptcy or reorganization.
REMEDIES AND TERMINATION. In the event of a breach of the BNY PPA, the
party claiming the breach shall provide written notice to the other party and
the other party shall have the right to cure or dispute the breach. Either party
may initiate the dispute resolution procedures set forth in the mediation and
arbitration provisions of the BNY PPA, and the BNY PPA shall not be terminated
by the
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party claiming the breach prior to resolution in accordance with such
provisions, subject to judicial review, if any. If there is a breach, and it is
not cured within the specified period, the BNY PPA may be terminated by the
party alleging the breach.
ASSIGNMENT. Con Ed has the ability to assign its rights and obligations
under the BNY PPA, without the consent of BNYCP, (a) to any other entity with
which it merges, consolidates or transfers all or substantially all of its
assets or to which it shall transfer all or substantially all of its electric
and/or steam generating assets or (b) if Con Ed's electric or steam generating
assets are transferred to more than one entity, to any other entity to which Con
Ed shall transfer a major portion or the largest portion of its electric and/or
steam generating assets. In addition, the BNY PPA provides that BNYCP may not
unreasonably withhold its consent to assignment of Con Ed's rights and
obligations thereunder.
BNYDC AGREEMENT
On April 29, 1994, BNYCP and the Brooklyn Navy Yard Development Corporation,
a New York not-for-profit development corporation ("BNYDC") entered into the
Amended and Restated Energy Sale Agreement, which was amended on July 29, 1997,
for the sale and delivery by BNYCP to BNYDC of BNYDC's requirements for
electricity and steam for resale to its tenants in the Brooklyn Navy Yard
Project from BNYCP (the "BNYDC Agreement").
TERM. The BNYDC Agreement will terminate one year prior to the termination
of the Site Lease (terms of the Site Lease are set forth hereinafter), as the
same may be extended or renewed from time to time. The scheduled termination
date of the Site Lease is December 31, 2040.
SALE OF ENERGY. BNYCP has agreed to sell and deliver to BNYDC all of
BNYDC's respective requirements for electricity and steam in amounts not to
exceed (a) 35 million kWh/yr (with a maximum peak demand of 10 MW) of
electricity and (b) up to 250 million pounds of steam per heating season (i.e.,
October 1 through May 15) (with a maximum peak demand of 100,000 pounds per
hour) for BNYDC's use and resale to its tenants in accordance with the terms of
the BNYDC Agreement. BNYDC has agreed to purchase from BNYCP all of its
requirements for electricity and steam except to the extent that BNYCP is unable
to produce and deliver such requirements.
PRICE AND PAYMENT. Electricity will be sold at a price equal to 78% of a
specified Con Ed filed tariff. The base price for steam is set at $6.57 (75% of
BNYDC's avoided cost for steam in the year prior to the date on which BNYCP
commenced delivery of steam to BNYDC), subject to inflation adjustment.
EVENTS OF DEFAULT.
(a) The following events shall constitute an event of default by BNYDC
under the BNYDC Agreement and give BNYCP the right to exercise the remedies:
(i) any failure by BNYDC to pay BNYCP's bills when the aggregate
arrearages equal $400,000 or more for more than 45 days; or
(ii) any material failure by BNYDC to perform or comply with the
terms and conditions of the BNYDC Agreement which continues for 60 days
after receiving notice from BNYCP of such breach.
(b) The following events shall constitute an event of default by BNYCP
under the BNYDC Agreement and give BNYDC the right to exercise the remedies:
(i) the failure by BNYCP to supply electricity or steam for a
continuous period of more than 60 days, unless such failure is the result
of force majeure;
(ii) the failure of BNYCP to commence the restoration or repair of
the Brooklyn Navy Yard Project after it is damaged; or
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(iii) any material failure by BNYP to perform or comply with the
terms and conditions of the BNYDC Agreement and such failure continues
for 60 days after receiving notice from BNYDC of such breach.
REMEDIES. In the event of a default by BNYDC, BNYCP, upon 30 days' written
notice in the case of default described in paragraph (a)(i) above and 60 days'
written notice in the case of default described in paragraph (a)(ii) above, may
(a) exercise all remedies available at law or in equity and or (b) suspend the
supply of electricity and/or steam to BNYDC, unless all required payments are
current.
In the event of BNYCP's default, BNYDC will have the right, upon 60 days'
written notice, to (a) terminate the BNYDC Agreement, and or (b) exercise all
remedies available at law or at equity as described in the BNYDC Agreement.
The BNYDC Agreement provides, with limited exceptions, that a default under
the BNYDC Agreement will not constitute a default under the Site Lease.
RED HOOK AGREEMENT
On January 31, 1995, BNYCP and The City of New York (the "City") on behalf
of the Red Hook Water Pollution Control Plant (the "Red Hook Plant") entered
into the Energy and Services Exchange Agreement, amended as of January 22, 1996
and January 28, 1997 (as so amended, the "Red Hook Agreement"), for the exchange
of thermal energy produced by the Brooklyn Navy Yard Project for waste water
effluent produced by the Red Hook Plant.
TERM. The Red Hook Agreement has a term of 40 years from March 1, 1997,
subject to earlier termination as specifically provided therein.
SUPPLY OF THERMAL ENERGY. During the term of the Red Hook Agreement, BNYCP
is required to deliver thermal energy to the City, at the City's request, in
amounts equal to 100% of Red Hook Plant's thermal energy requirements, up to the
thermal equivalent of 150,000,000 pounds of steam per calendar year with an
equivalent maximum peak demand of 60,000 pounds of steam per hour. The City
agreed to obtain all of the Red Hook Plant's thermal energy requirements from
BNYCP, as long as such thermal energy is made available by BNYCP. Deliveries of
thermal energy will be made at a certain delivery point, where title and risk of
loss related to thermal energy will pass from BNYCP to the City.
MAINTENANCE. BNYCP agreed to design, construct, operate and maintain the
cogeneration facility in accordance with prudent operation and maintenance
practices. New York City owns, operates and maintains the interconnections.
SUPPLY OF WASTE WATER. If requested by BNYCP, the City is required to
deliver waste water to BNYCP from the Red Hook Plant.
LILCO AGREEMENT
As of September 25, 1996, BNYCP and Long Island Lighting Company ("LILCO")
entered into the Second Revised Fuel Management Agreement, as amended on August
19, 1997 (the "LILCO Agreement"), under which LILCO will supply natural gas and
provide fuel management services for the Brooklyn Navy Yard Project.
TERM. The term of the LILCO Agreement has been extended until September 30,
2017, unless terminated earlier as provided therein. BNYCP, at its option, may
renew and extend the term of the LILCO Agreement for a single period of 9 years.
TELESCOPED RIGHTS. LILCO has released to BNYCP a quantity of LILCO's
specific level of firm transportation capacity rights on the gas transmission
system owned and operated by Transcontinental
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Gas Pipe Line Corporation, subject to certain limitations, in order to permit
the receipt by LILCO of BNYCP's gas at the point of delivery.
PARTIES' OBLIGATIONS AND FUEL CONTRACTS. The obligations of the parties
under the LILCO Agreement became effective on October 1, 1996. All fuel
contracts executed after September 1, 1996 are required to be submitted to LILCO
to determine if the contract contains such provisions as may be necessary in
LILCO's reasonable judgement to permit LILCO to perform its fuel management
services under the terms of the LILCO Agreement. LILCO is obligated to manage
and administer for the Brooklyn Navy Yard Project's account all fuel contracts
with respect to the purchase of gas under supply contracts, the transportation
of that gas and its delivery to the Brooklyn Navy Yard Project in a
manner to cause the cost of gas delivered at the Brooklyn Navy Yard Project to
be consistent with the terms of the fuel contracts. LILCO has also agreed to
perform certain transportation, gas account balancing and remarketing services
for BNYCP.
PANCANADIAN GAS SALES AGREEMENT
As of October 20, 1993, BNYCP and PanCanadian Petroleum Limited
("PanCanadian") entered into the Gas Sales Agreement, as amended, for the sale
and delivery of natural gas to BNYCP (the "PanCanadian Gas Sales Agreement").
SCOPE OF PANCANADIAN GAS SALES AGREEMENT. PanCanadian has agreed to sell
and deliver on a firm basis and BNYCP has agreed to buy and receive on a firm
basis up to 15,000 MMBtu of natural gas per day, plus the quantity of gas
required to satisfy the fuel and lost and unaccounted for gas requirements of
TransCanada Pipelines Limited ("TransCanada"), Iroquois Gas Transmission System,
L.P. ("Iroquois") and Brooklyn Union Gas Company ("BUG") (as set forth in their
applicable tariffs in effect from time to time during the term of the
PanCanadian Gas Agreement) for the transportation of 15,000 MMBtu of gas per day
from the delivery point to BNYCP, subject to certain limitations. BNYCP's
obligation to purchase is limited to gas for which BNYCP has firm
transportation. If PanCanadian is unable to sell or deliver that certain
quantity of natural gas to BNYCP, PanCanadian has agreed to immediately notify
BNYCP of its inability to perform its obligations under the PanCanadian Gas
Sales Agreement so that BNYCP may cover PanCanadian's inability to perform by
making purchases from other suppliers of fuel having the equivalent heating
content. BNYCP will be entitled to any costs of cover, including reasonable out-
of-pocket expenses and transportation costs. BNYCP has agreed to use reasonable
efforts to mitigate the cover costs for which PanCanadian is responsible.
TERM OF PANCANADIAN GAS SALES AGREEMENT. The PanCanadian Gas Sales
Agreement became effective as of October 20, 1993 and will continue in full
force and effect for a term of 20 years. This term may be extended in the event
of a force majeure, subject to receipt of government approvals.
PRICE. The contract price for gas sold and purchased under the PanCanadian
Gas Sales Agreement will be equal to the average closing price on the New York
Mercantile Exchange for Henry Hub gas deliveries on the last three days of
futures trading for the prior month, as reported in THE WALL STREET JOURNAL,
minus $0.45 per MMBtu. Payments are made on a monthly basis and are required to
be made in U.S. dollars.
CRESTAR GAS SALES AGREEMENT
As of October 21, 1993, BNYCP and Crestar Energy, a Canadian general
partnership ("Crestar") entered into the Gas Sales Agreement, as amended, for
the sale and delivery of natural gas to BNYCP (the "Crestar Gas Sales
Agreement").
SCOPE OF CRESTAR GAS SALES AGREEMENT. Crestar has agreed to sell and
deliver on a firm basis and BNYCP has agreed to buy and receive on a firm basis
up to 10,000 MMBtu per day of natural gas plus the quantity of gas required to
satisfy the fuel and lost and unaccounted for gas requirements of PanCanadian,
Iroquois and BUG (as set forth in their applicable tariffs during the term of
the Crestar
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Gas Sales Agreement) for the transportation of 10,000 MMBtu per day from the
interconnection point of the pipeline facilities in Alberta, Canada, to BNYCP
subject to certain limitations.
If Crestar is unable, or determines that it will be unable, to sell or
deliver that certain quantity of natural gas to BNYCP at the interconnection
point, Crestar is required to immediately notify BNYCP of its inability to
perform its obligations under the Crestar Gas Sales Agreement. Upon receipt of
notice or upon failure to perform, both parties are required to designate in
writing a new interconnection point. BNYCP may cover Crestar's inability to
perform by making purchases from other suppliers of fuel having the equivalent
heating content. BNYCP will be entitled to any costs of cover, including
reasonable out-of-pocket expenses and transportation costs. BNYCP has agreed to
use reasonable efforts to mitigate the cover costs for which Crestar is
responsible.
TERM. The Crestar Gas Sales Agreement became effective as of October 21,
1993 and will continue in full force and effect for a term of 20 years. This
term may be extended in the event of a force majeure, subject to receipt of
certain government approvals.
PRICE. The contract price for gas sold and purchased under the Crestar Gas
Sales Agreement will be equal to the average closing price on the New York
Mercantile Exchange for Henry Hub gas deliveries on the last three days of
futures trading on the prior month, as reported in THE WALL STREET JOURNAL,
minus $0.40 per MMBtu. Payments are made on a monthly basis and are required to
be made in U.S. dollars.
SONAT GAS SALES AGREEMENT
As of March 21, 1995, BNYCP and Sonat Marketing Company ("Sonat") entered
into the Gas Sales Agreement, as amended, for the sale and delivery of natural
gas to BNYCP (the "Sonat Gas Sales Agreement").
SCOPE OF SONAT GAS SALES AGREEMENT. Sonat has agreed to sell and deliver on
a firm basis and BNYCP has agreed to buy and receive on a firm basis up to
10,000 MMBtu per day of natural gas plus the quantity of gas required to satisfy
the fuel and lost and unaccounted for gas requirements of BUG and the interstate
natural gas pipeline system operated by Transcontinental Gas Pipe Line
Corporation (as set forth in their applicable tariffs in effect from time to
time during the term of the Sonat Gas Sales Agreement), for the transportation
of 10,000 MMBtu of gas from the delivery points to BNYCP, subject to certain
limitations.
If Sonat is unable, or determines that it will be unable, to sell or deliver
that certain quantity of natural gas to BNYCP, Sonat is required to immediately
notify BNYCP of its inability to perform its obligations under the Sonat Gas
Sales Agreement. BNYCP may cover Sonat's inability to perform by making
purchases from other suppliers of fuel having the equivalent heating content.
BNYCP will be entitled to any costs of cover, including reasonable out-of-pocket
expenses and transportation costs. BNYCP will also be entitled to certain
damages under the Sonat Gas Sales Agreement in the event that BNYCP cannot
obtain cover fuel. BNYCP has agreed to use reasonable best efforts to mitigate
the cover costs for which Sonat is responsible.
TERM. The Sonat Gas Sales Agreement became effective as of March 21, 1995
and will continue in force until March 21, 2016.
PRICE. The contract price for all gas sold and purchased under the Sonat
Gas Sales Agreement will be (a) for any additional quantity, the agreed upon
price and (b) for the fixed price, the arithmetic average of the settlement
prices as defined by the New York Mercantile Exchange for the Henry Hub gas
deliveries on the last three days of futures trading for a month plus $0.125 per
MMBtu. Payments will be on a monthly basis and are required to be made in U.S.
dollars.
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GAS TRANSPORTATION, BALANCING AND FUEL OIL AGREEMENTS
BNYCP has entered into Transportation Service Contracts with each of
TransCanada and Iroquois for the transport of gas for the Brooklyn Navy Yard
Project and also a Peaking Service and Delivery Agreement with BUG, and a Fuel
Oil Supply Agreement with Bayway Refining Company.
SITE LEASE
TERM. Pursuant to the Site Lease, dated as of December 18, 1989, BNYDC
subleases to BNYCP the site of the Brooklyn Navy Yard Project. The term of the
Site Lease commenced on January 1, 1990 and will expire, unless earlier
terminated in accordance with its terms, on December 31, 2040. BNYCP has the
option to renew the lease up to 5 times for a maximum of 34 additional years
upon prior written notice to BNYDC. During the term of the Site Lease the site
can only be used for the construction, renovation, reconstruction, operation
and/or maintenance of a cogeneration facility generating, manufacturing,
distributing and selling electricity, steam, hot water and thermal energy. BNYCP
is required to pay base rent according to the rent schedule attached to the Site
Lease, escalating from approximately $0.28 million in 1998 to approximately $2
million over the term of the Site Lease subject to certain adjustments and
offsets.
DAMAGE OR DESTRUCTION OF THE BROOKLYN NAVY YARD PROJECT SITE. If the
Brooklyn Navy Yard Project site is damaged or destroyed, BNYCP is required to
either proceed within 1 year to repair, alter, restore, replace and rebuild it
to a condition as similar as practicable under the circumstances in value,
function and operating efficiency as existing immediately before such casualty,
damage or destruction or, if the estimated cost of restoration equals or exceeds
$20 million, surrender the Brooklyn Navy Yard Project site and terminate the
Site Lease in accordance with its terms. BNYCP's obligations under the Site
Lease, subject to certain exceptions, will be unaffected by any damage or
destruction to the Brooklyn Navy Yard Project site.
TERMINATION; EVENTS OF DEFAULT. The Site Lease will terminate on the taking
of a material portion of the site for any public purpose by any lawful power or
authority. Upon an event of default (as defined in the Site Lease), BNYDC may
proceed to terminate the Site Lease, upon notice, if BNYCP has failed to
commence or shall not be proceeding with reasonable diligence to cure the
default which was the basis for the event of default.
An event of default, as defined in the Site Lease, includes (a) failure of
BNYCP to pay rent according to the conditions set forth in the Site Lease and
such failure continues for a period of 10 days after notice from BNYDC, (b)
failure of BNYCP to observe or perform (subject to some unavoidable delays, as
defined in the Site Lease) any of the other terms, conditions, covenants or
agreements of the Site Lease and such failure continues for a period of 30 days
(unless a cure of such failure, by its nature, will reasonably take more than
the 30-day period, in which case, there will be no default as long as BNYCP has
commenced to cure such failure within the 30-day period) and (c) certain
bankruptcy events of BNYCP.
IDA LEASE AGREEMENT
Pursuant to the Amended and Restated Lease Agreement, dated of December 1,
1997, between IDA and BNYCP, (the "IDA Lease Agreement"), IDA leased to BNYCP
and BNYCP leased from IDA, IDA's leasehold title in the Brooklyn Navy Yard
Project. BNYCP has agreed during the term of the IDA Lease Agreement to occupy,
use and operate the Brooklyn Navy Yard Project, or cause the Brooklyn Navy Yard
Project to be occupied, used and operating in accordance with the IDA Act.
PAYMENTS IN LIEU OF REAL ESTATE TAXES. BNYCP and IDA have agreed to amend
the IDA Lease Agreement to provide that during the term of the IDA Lease
Agreement BNYCP will be required to
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pay fixed payments in lieu of real estate taxes otherwise due and payable under
the Site Lease as set forth below:
<TABLE>
<CAPTION>
TAX YEAR ANNUAL PILOT PAYMENT
- ----------- --------------------
<S> <C>
97-98 $ 425,158
98-99 $ 316,734
99-00 $ 313,850
00-01 $ 311,130
01-02 $ 311,785
02-03 $ 889,066
03-04 $ 940,641
04-05 $ 900,256
05-06 $ 933,838
</TABLE>
and thereafter increasing to a maximum of $7.3 million per year in 2019 through
2020, and lesser amounts through 2036. The payment schedule set forth above is
subject to execution of a definitive amendment containing such payment schedule
and there is no assurance that such amendment will be executed. In the event
that such amendment is not executed, it is possible that additional real estate
taxes may be owed by BNYCP in excess of the above-listed payments, which may
have the effect of limiting or prohibiting payment of the General Partner Fees,
the Royalty Fees and the Equity Cash Flow to the Brooklyn Navy Yard Guarantor.
BROOKLYN NAVY YARD O&M AGREEMENT
The Brooklyn Navy Yard Project is operated and maintained by Palmark in
accordance with the BNY O&M Agreement.
Under the BNY O&M Agreement, BNYCP has agreed to pay Palmark for operations
and maintenance service and staffing. The contract price is comprised of: (a) a
management fee (adjusted quarterly for inflation), and (b) incentive fees, both
of which are based on operating performance that achieves target levels for
output, heat rate, steam availability and meeting target budgets. In addition,
BNYCP must pay for fixed and variable operating and maintenance expenses and the
costs for major maintenance.
TERM AND TERMINATION. The initial term of the BNY O&M Agreement continues
through March 31, 2002, subject to certain termination provisions. The BNY O&M
Agreement is terminable at the will of BNYCP or, after July 1998, at the will of
Palmark, at any time upon 8 months' notice. The parties may renew the BNY O&M
Agreement for an additional 5 year term, subject to the termination provisions
of the BNY O&M Agreement.
INDEMNIFICATION. Subject to certain limitations as specified in the BNY O&M
Agreement, BNYCP will have no liability to Palmark for liability, loss, damage,
claim, cost, charge or expense of any kind in connection with third party claims
for personal injury or property damage occurring at the Brooklyn Navy Yard
Project and arising out of the performance of Palmark's services. The BNY O&M
Agreement provides that Palmark will have no liability to BNYCP for any and all
liability, loss, damage, claim, cost, charge or expense of any kind in
connection with the Brooklyn Navy Yard Project and arising from any cause.
ENVIRONMENTAL MATTERS. BNYCP is required to make full disclosure of all
information regarding the environmental conditions at the site. BNYCP has agreed
to indemnify, defend and hold Palmark harmless from any and all environmental
claims directly or indirectly related to the actual or alleged existence,
generation, treatment, storage, transportation of, or disposal of hazardous
materials at the Brooklyn Navy Yard Project.
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WARBASSE PROJECT
The interest of the Warbasse Guarantors in the Warbasse Project is evidenced
by notes from WCTP in the aggregate $58 million. These notes are PARI PASSU with
the Tomen Note. The notes held by the Warbasse Guarantors and Tomen are secured
as set forth below, and pursuant to the WCTP Intercreditor Agreement described
below, share in the cash flow from the Warbasse Project.
WCTP NOTES
Warbasse I will hold, on or before the Closing Date, a note from WCTP for
approximately $29 million, evidenced by the Promissory Note dated as of November
17, 1994 (the "CTI Note"). Warbasse II will hold, on or before the Closing Date,
a note from WCTP for approximately $29 million, evidenced by the Promissory Note
dated as of June 8, 1989, as such note has been amended pursuant to the
Amendment and Consent, dated as of November 17, 1994, between WCTP and York
Partners (the "YCP Note," and together with the CTI Note, the "WCTP Notes").
Tomen holds a note from WCTP for approximately $11 million, evidenced by the
Tomen Note. Each of the WCTP Notes and the Tomen Note bears interest at the rate
of LIBOR plus 2% and have no stated maturity. Principal and interest on the WCTP
Notes and the Tomen Note is payable quarterly by WCTP, only to the extent of the
Net Cash Flow (as defined herein) of WCTP with the first available Net Cash Flow
being applied to pay interest on the WCTP Notes and the Tomen Note on a pro rata
basis in accordance with the relative amount outstanding under each of the WCTP
Notes and the Tomen Note.
YCP LOAN AGREEMENT
WTCP has entered into a Loan Agreement, dated as of April 28, 1989, as
amended and restated as of September 28, 1989, securing the obligations under
the YCP Note (the "YCP Loan Agreement").
INSURANCE. WCTP agreed to maintain general and third party liability,
property loss and business interruption insurance of the type usually carried by
corporations engaged in similar businesses satisfactory to YCP.
INDEBTEDNESS. WCTP agreed not to create or allow to exist any lien,
security interest or encumbrance upon or with respect to the Warbasse Project
other than (a) those existing on the site of the Warbasse Project at the time of
its acquisition or (b) those created in connection with the YCP Loan Agreement.
QUALIFYING FACILITY. WCTP agreed not to take any action, the effect of
which will cause the Warbasse Project to lose its status as a QF.
OPERATION OF THE PROJECT. WCTP must operate, maintain and administer the
Warbasse Project in accordance with practices and cost structures generally
prevailing in the cogeneration industry.
ADDITIONAL CONTRACTS. WCTP cannot modify, supplement or enter into any
contract or agreement to provide for the design, engineering, operation or
maintenance of the Warbasse Project or for the sale of electricity or thermal
energy therefrom other than those assigned to York Partners (and subsequently
assigned to YCP).
AMENDMENTS. The YCP Loan Agreement may not be amended without the written
consent of the York Partners.
EVENTS OF DEFAULT. The following events, among others, will constitute
events of default by WCTP under the YCP Loan Agreement: (a) the failure to make
any payment of principal or interest when due on the YCP Note, (b) the failure
to perform or observe any terms or agreement contained in the YCP Loan
Agreement, the AWH Lease or any energy contract to which WCTP is a party, (c)
the failure to pay any indebtedness in excess of $50,000 when due and payable,
(d) insolvency or the filing of bankruptcy or reorganization proceedings by or
on behalf of WCTP, and (e) the entering of a final
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judgment or order for the payment of money in excess of $150,000 against WCTP or
a final judgment or order which will materially adversely affect the performance
of WCTP under the YCP Loan Agreement.
The terms and conditions of the CTI Note are governed by the YCP Loan
Agreement.
SECURITY AGREEMENTS
WCTP has entered into two separate Security Agreements, each dated as of
November 17, 1994, securing the obligations under the Tomen Note and the CTI
Note, and the Security Agreement and the Assignment and Security Agreement, each
dated as of June 8, 1989, securing the obligations under the YCP Note
(collectively, the "WCTP Security Agreements"). Pursuant to the WCTP Security
Agreements, securing each of the WCTP Notes and the Tomen Note, such notes are
secured by a pledge of (a) all of WCTP's equipment located at or adjacent to the
Warbasse Project (to the extent permitted under the AWH PPA and the WCTP PPA),
(b) all contracts, accounts and general intangibles of WCTP, including without
limitation the AWH PPA and the WCTP PPA and (c) all proceeds of any and all of
the foregoing and all payments under the insurance policies required by the YCP
Loan Agreement (whether or not the secured party is a loss payee thereof), or
any indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing collateral pledged by WCTP.
Pursuant to the WCTP Security Agreements, the holders of the WCTP Notes and the
Tomen Note have the right to exercise all rights and remedies of a secured party
under the New York Uniform Commercial Code, subject to the provisions of the
WCTP Intercreditor Agreement. The secured parties must notify AWH of the
acceleration of the maturity of the WCTP Notes upon a default under any of the
WCTP Notes or the Tomen Note whereupon AWH shall have the right to cure such
default within 10 days following receipt of any such notice of default. The
secured parties agree that, notwithstanding any such default, they will not
remove the Warbasse Project from service or otherwise adversely affect the
continued supply of electric and thermal energy to AWH in any matter whatsoever.
The WCTP Security Agreements limit the ability of WCTP to grant other security
interests in its assets.
WCTP INTERCREDITOR AGREEMENT
Tomen, Warbasse I, as assignee, and Warbasse II, as assignee (in such
capacity, collectively the "Warbasse Creditors" and each a "Warbasse Creditor"),
are parties to an Intercreditor Agreement, dated as of November 17, 1994 (the
"WCTP Intercreditor Agreement"), to set forth, among other things, their
respective rights and establish their respective priorities in respect of the
collateral pledged by WCTP to secure the WCTP Notes and the Tomen Note.
CONSENT. Each Warbasse Creditor consents to the security interest of the
other Warbasse Creditors in the collateral.
PRIORITY. The lien and security interests of each Warbasse Creditor in the
collateral are equal in priority with the lien and security interest of each
other Warbasse Creditor in the collateral, irrespective of the time or order of
acquisition or perfection.
PAYMENTS. Any payment received or realized by a Warbasse Creditor through
the exercise of such Warbasse Creditor's rights in the collateral, or the
enforcement of its security interest, shall be shared and applied by the
Warbasse Creditor with each other Warbasse Creditor on a pro rata basis in
accordance with the unpaid principal and interest amount of the WCTP Notes and
the Tomen Note, immediately prior to the date of receipt of such payment. Except
for (a) reimbursement by WTCP of costs incurred by CTI in the operation of the
Warbasse Project (provided that the full amount of reimbursement shall reduce
the Net Cash Flow) or (b) payment of the obligations under the WCTP Security
Agreements, no Warbasse Creditor may receive any payments or distributions of
any kind
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whatsoever from WCTP without the prior written consent of each of the other
Warbasse Creditors, except in payment of the obligations pursuant to the WCTP
Security Agreements.
ENFORCEMENT OF OBLIGATIONS. A Warbasse Creditor has the right to enforce,
collect and realize upon the obligations owed to it or the collateral securing
such obligations in any manner which such Warbasse Creditor in its sole
discretion determines to be appropriate without any responsibility or liability
to any other Warbasse Creditor.
OTHER LIENS. Each Warbasse Creditor represents to each other Warbasse
Creditor that, except for the liens and security interests in the collateral
described in the WCTP Security Agreements, such Warbasse Creditor is not a
beneficiary of any other lien or security interest granted by WCTP. No Warbasse
Creditor is permitted to enter into any other agreement with WCTP granting or
purporting to grant any security interest, lien or encumbrance in favor of any
Warbasse Creditor.
WAIVER. Each Warbasse Creditor waives any right it may have to require the
other Warbasse Creditors to (a) proceed against any Person, including WCTP, (b)
proceed against or exhaust any security held from any Person, including WCTP or
(c) pursue any remedy in such Warbasse Creditor's power. Each Warbasse Creditor
waives any defense and cause of action relating to any failure by another
Warbasse Creditor to exercise reasonable care in the custody and preservation of
the collateral.
WCTP POWER PURCHASE AGREEMENT
WCTP sells all electricity the Warbasse Project is capable of producing,
except for such capacity as must be sold to WCTP's electric and thermal hosts,
to Con Ed pursuant to the WCTP PPA. The Warbasse Project is an expansion of an
existing cogeneration and steam turbine facility owned by WCTP located in
Brooklyn, New York. The expanded facility is capable of providing approximately
38 MW of electric energy annually of which approximately 21 MW are available for
Con Ed.
TERM AND TERMINATION. The WCTP PPA terminates on December 31, 2011 unless
it is terminated earlier pursuant to the provisions thereof. Upon the occurrence
of any one of the following events, Con Ed may terminate the WCTP PPA in its
sole discretion 60 days after written notice of such breach to WCTP:
(a) a failure to adhere to the oil use criteria established by the
NYPSC;
(b) sale by WCTP to a third party, or diversion by WCTP for any use, of
energy capacity committed to Con Ed by WCTP under the WCTP PPA, other than
such use permitted under the WCTP PPA. In the event that WCTP denies the
occurrence of such event, and the parties are unable to resolve such dispute
within 30 days, WCTP may take the dispute to the NYPSC for resolution and
the WCTP PPA shall not be terminated prior to such resolution;
(c) provided that a petition to the NYPSC by Con Ed is filed within one
year after actual discovery of the facts giving rise to such a claim, upon
determination by the NYPSC that the material and factual representations and
warranties made by WCTP or its assignee as a basis for Con Ed's willingness
to enter into the WCTP PPA, were made willingly and knowingly falsely by
WCTP;
(d) upon an assignment of the WCTP PPA or any rights created thereunder
in violation of the provisions of the WCTP PPA, the WCTP PPA may be
terminated after a 60-day cure period; or
(e) upon a failure by WCTP to use good faith efforts during a period of
60 days after the Warbasse Project has fully ceased operation to begin to
implement the necessary steps to commence to restore the Warbasse project
and make it capable of fulfilling its obligations pursuant to the WCTP PPA.
WCTP may terminate the WCTP PPA in its sole discretion 60 days after written
notice to Con Ed, upon a failure by Con Ed to make payments for uncontested
portions of the bills rendered by WCTP
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within 15 days after such payments become due, if such payments due exceed any
amounts due to Con Ed from WCTP.
OPERATION AND MAINTENANCE OF THE WARBASSE PROJECT. Other than unscheduled
maintenance, WCTP must use its best efforts to coordinate with Con Ed the timing
of any maintenance of the Warbasse Project required to ensure sound operation of
the Warbasse Project and Con Ed's system.
MAINTENANCE OF QUALIFYING FACILITY STATUS. Annually during the term of the
WCTP PPA, WCTP must certify to Con Ed that the Warbasse Project is a QF. WCTP
must notify Con Ed within 60 days after WCTP receives information or becomes
aware that the Warbasse Project has ceased or will cease to be a QF. In such an
event, Con Ed may elect to pay for electricity at a rate equal to 90% of (a) the
current rate or (b) Con Ed's actual avoided costs at the time of delivery.
POWER PURCHASE PROVISIONS. Capacity, energy and operation and maintenance
payments of the WCTP PPA are as set forth below:
CAPACITY PAYMENTS. Con Ed will pay to WCTP monthly capacity payments equal
to the product of (a) the DMNC (determined pursuant to the annual capacity test)
of the Warbasse Project, (b) the actual number of hours in the month, (c) the
Warbasse Project's Equivalent Availability Factor (determined in accordance with
the NORTH AMERICAN ELECTRIC RELIABILITY COUNCIL EQUIPMENT AVAILABILITY REPORT,
1985, APPENDIX C) ("EAF") applicable to that month and (d) the applicable
capacity rate. Until December 31, 2002, the capacity rate shall be two cents per
kWh ($0.02/kWh) and one and two-fifths cents per kilowatthour ($0.014/kWh)
thereafter.
ENERGY PAYMENTS. Con Ed will pay to WCTP monthly energy payments which
equal to the sum of (a) the product of (i) the total amount of energy delivered
to Con Ed at the delivery point during the applicable month and (ii) for the
applicable month, the sum of $2.00 MMBTu times (A) a commodity escalation
factor, based on #6 oil, times (B) a weighted average monthly heat rate and a
variable factor equal to $0.0031/kWh times the Transportation Escalation Factor
(as determined pursuant to the WCTP PPA), (b) the product of (i) a fixed
transportation charge of $0.0031 per kWh, (ii) the Transportation Escalation
Factor, (iii) the DMNC of the Warbasse Project, (iv) the actual number of hours
in the applicable month, and (v) the Warbasse Project's EAF for the applicable
month and (c) the product of (i) $500 per start-up requested by Con Ed during
the applicable month and (ii) the operation and maintenance factor (determined
pursuant to the provisions of the WCTP PPA).
OPERATION AND MAINTENANCE PAYMENTS. Con Ed will pay to WCTP monthly
operation and maintenance payments which equal to the sum of (a) a fixed
operation and maintenance charge equal to the product of (i) one cent per kWh
($0.01/kWh) times the operation and maintenance escalation factor, based on the
latest Consumer Price Index for All Urban Consumers in the New York City
Metropolitan area available at the end of the applicable month ("CPI"), (ii) the
DMNC of the Warbasse Project, (iii) the actual number of hours in the applicable
month and (iv) the Warbasse Project's EAF for the applicable month and (b) a
variable operation and maintenance charge equal to the product of (i) a half
cent per kwh ($0.005/kWh) times (ii) the operation and maintenance escalation
factor and (iii) the total amount of energy (kWh) delivered to Con Ed during the
applicable month.
REFUND TO CON ED. Pursuant to a supplemental agreement, WCTP agreed that if
it commences deliveries of energy from one or more of the 4.2 MW combustion
turbines prior to January 1, 2003 to an entity other than Con Ed, WCTP will
refund Con Ed $2 million per combustion turbine used for such energy deliveries.
However, WCTP does not waive any rights (a) to sell capacity and/or energy from
the combustion turbines to any party other than Con Ed, (subject to the refund
requirements set forth in the preceding sentence), (b) to sell electricity to
Con Ed from the combustion turbines under any new agreement on or after January
1, 2003 at actual avoided energy costs and (c) to participate in any request for
proposals or other bidding program in which Con Ed solicits capacity from third-
party sources.
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REPRESENTATIONS AND WARRANTIES. WCTP warrants, among other things, that (a)
it will operate and maintain the Warbasse Project in accordance with the terms
of the WCTP PPA, (b) the Warbasse Project, as expanded, will be a QF, (c) it
will maintain all authorizations and permits required for the continued
operation of the Warbasse Project and (d) all consents and authorizations
required under the WCTP PPA have been obtained.
INDEMNIFICATION. Each party to the WCTP PPA indemnifies each other party
against all claims and associated costs and expenses related to the property
damage or personal injury arising out of the indemnifying party's action or
failure to take any action in the operation, use or ownership of the Warbasse
Project; PROVIDED that WCTP has designed, operated and maintained the equipment
and systems of the Warbasse Project in conformity with ConEd's specifications.
INSURANCE. WCTP must (a) maintain and keep in full force general liability
insurance, (b) workers' compensation insurance, (c) employer's liability
insurance and (d) insure the Warbasse Project and its equipment and machinery
against loss or damage of the kinds customarily insured against by operators in
the industry.
FORCE MAJEURE. The WCTP PPA has force majeure provisions typical of
agreements of this type. Neither Con Ed nor WCTP will be liable for any failure
to perform, in whole or in part, its obligations under the WCTP PPA because of
force majeure, except for the obligations to make payments for electricity
delivered to Con Ed; PROVIDED, that the non-performing party gives the other
party prompt written notice describing the particulars of the occurrence and
uses its best efforts to remedy its non-performance.
ASSIGNMENT AND AMENDMENT. WCTP may assign the WCTP PPA to any of its
affiliates or to York or any of York's affiliates without the prior consent of
Con Ed, upon 30 days' prior written notice. No assignment by WCTP, including an
assignment permitted to be made without the consent of Con Ed, shall result in a
novation of the WCTP PPA unless Con Ed consented in writing to such novation.
Any amendment to the WCTP PPA must be approved in writing by both parties and
accepted or approved by the NYPSC.
QUALIFYING FACILITY. The Warbasse Project is certified as a QF and is
exempt by federal regulation from relevant provisions of the FPA, PUHCA and
state utility-type regulation. The Warbasse Project qualifies as a cogeneration
facility under the New York Public Service Law ("NYPSL") and is exempt from
state utility regulation applicable to electric corporations.
AWH POWER PURCHASE AGREEMENT
WCTP provides electricity to the AWH Premises pursuant to the AWH PPA.
TERM. The AWH PPA will expire in 2026, unless terminated earlier pursuant
to its provisions.
SALE AND PURCHASE OF ELECTRIC AND THERMAL ENERGY. WCTP agreed to sell and
deliver to AWH (a) up to 25,000,000 kWh and (b) thermal energy in such
combination of domestic hot water, hot water for heating and steam, including
thermal energy to AWH's absorption chillers for the production of chilled water,
up to 250,000,000 pounds of steam equivalent. AWH must purchase and accept only
the amount of electricity and thermal energy then actually required, even if
such amount is less than the amount set forth in (a) and (b) above. In the event
that AWH requests and WCTP is able to supply such excess energy, WCTP shall, to
the extent it is able to supply, furnish such excess energy to AWH. If AWH
requires energy in excess of what WCTP is able to supply, AWH may obtain such
excess energy from any other source available at its cost and expense. If AWH
declines to purchase any excess energy generated by WCTP, WCTP may sell and
delivery such excess energy to third parties, however, WTCP will not be relieved
of its obligations to provide AWH at all times with electric and thermal energy
with the AWH PPA.
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PRICE FOR ELECTRIC AND THERMAL ENERGY. AWH agreed to pay WCTP a base annual
fee of $3 million, which is adjusted annually for changes in CPI and fuel costs.
MAINTENANCE OF AWH'S EXISTING FACILITY. AWH may take any and all reasonable
steps at WCTP's expense to protect the existing facility of AWH and its personal
property contained thereon against any actual or potential damages, resulting
from any act or omission of WCTP in the construction, operation, maintenance and
repair of the Warbasse Project or resulting from any interruption or alteration
in the supply of electricity and/or thermal energy from the Warbasse Project to
the AWH Premises.
WCTP agreed to operate, maintain and renovate the facility at its expense in
accordance with (a) all applicable laws and/or requirements of public and
insurance authorities in effect during the term of the AWH PPA, (b) recognized
prudent electric and thermal generating plant practices in the State of New York
and (c) in a manner that does not cause damage to or interfere with the
operation of the facility, unless as a result of any negligent or willful act by
WCTP or its employees.
INSURANCE. WCTP shall, at its own cost and expense, obtain and maintain in
full force and effect and in the name of AWH, WCTP, New York State Housing
Finance Agency ("HFA") and New York State Division of Housing and Community
Renewal ("DHCR"), certain specified insurance policies, including any insurance
that is generally carried by other reasonably comparable cogeneration facilities
in the State of New York in amounts reasonably requested by AWH.
DAMAGES TO THE WARBASSE PROJECT. If any portion of the Warbasse Project is
damaged or destroyed by fire or other casualty, WCTP shall notify AWH and
repair, restore, rebuild or replace the damaged or destroyed portions of the
Warbasse Project at its cost and expense if the proceeds of insurance are
insufficient to pay the entire cost of such repair, restoration, rebuilding or
replacement.
INDEMNIFICATION. WCTP agreed to protect, defend, indemnify and hold
harmless AWH and its successor and assigns and certain affiliates from and
against any and all claims, damages, losses and liabilities in connection with
(a) WCTP's performance of the AWH PPA, (b) the design, construction maintenance,
repair or operation of the Warbasse Project, (c) any breach by WCTP of any term
of the AWH PPA, (d) any sales of energy to a third party purchaser pursuant to
the AWH PPA and (e) WCTP's use of certain AWH's areas permitted under the AWH
PPA. WCTP, however, is not required to reimburse or indemnify AWH for any loss
or claim arising out of negligence or willful misconduct of AWH. AWH agreed to
protect, defend, indemnify and hold harmless AWH and its successor and assigns
and certain affiliates from and against any and all claims, damages, losses and
liabilities in connection with AWH's performance required under the AWH PPA.
AWH, however, is not required to reimburse or indemnify WCTP for any loss or
claim arising out of negligence or willful misconduct of WCTP.
FORCE MAJEURE. The AWH PPA has force majeure provisions typical of
agreements of this type. Neither WCTP nor AWH will be liable for any failure to
perform its obligations, in whole or in part, under the AWH PPA resulting from
force majeure; PROVIDED that the non-performing party gives the other party
prompt written notice describing the particulars of the occurrence and uses its
best efforts to cure the non-performance.
AWH LEASE
AWH leased to WCTP certain parcels of land on the AWH Premises pursuant to
the Lease, dated as of July 15, 1987, between AWH, as landlord and WCTP, as
tenant (the "AWH Lease"), for the purpose of constructing, maintaining and
operating the Warbasse Project in accordance with the AWH PPA.
TERM. The term of the Lease commenced on February 1, 1989 and shall
continue until 2026, unless terminated earlier pursuant to the Lease.
FIXED ANNUAL RENT. WCTP agreed to pay to AWH an annual rent of $15,000,
subject to escalation, for the term of the Lease. WCTP further agreed to pay to
AWH additional rent consisting of all such other sums of money as shall become
due and payable by WCTP under the Lease.
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MAINTENANCE AND REPAIR. WCTP, at its sole cost and expense, agreed to
maintain the leased premises, the Warbasse Project and all surrounding areas, to
the extent the same are subject to WCTP's control.
INSURANCE. WCTP, at its own cost and expense, agreed to obtain and maintain
in full force and effect and in the name of WCTP, AWH, HFA and DHCR, all such
insurance and in such form and limits as the AWH PPA requires to be obtained and
maintained by WCTP.
WARBASSE O&M AGREEMENT
The Warbasse Project is operated and maintained by CTI pursuant to the
Operations and Maintenance Agreement, dated as of February 1, 1989, between WCTP
and CTI.
TERM AND TERMINATION. The term of the Warbasse O&M Agreement commenced on
February 1, 1989 and will expire on 2026, subject to WCTP's option of renewal.
SERVICES PROVIDED BY CTI. Under the Warbasse O&M Agreement, CTI has agreed
to provide the following operation and maintenance services, as required by the
AWH PPA: (a) purchase of all parts and supplies, fuel and oil, (b) maintenance
of an available back-up staff to operate the Warbasse Project in the event of an
emergency, (c) training of existing and future operating personnel, (d)
development and maintenance of operating procedures and an operating manual, (e)
collection and maintenance of all engineering and operating data, (f) continuous
analysis of operating data, (g) provision of up to maximum of four operating
staff to replace existing operating staff as attrition occurs and (h) supervise
the daily operation and maintenance of the Warbasse Project.
PAYMENT TERMS. WCTP agreed to pay CTI a monthly base fee equal to the
direct costs incurred by CTI for all services performed pursuant to the Warbasse
O&M Agreement, plus the direct overhead costs attributable to such services. As
of May 31, 1998, an aggregate of accrued and unpaid past due operating and
maintenance charges of approximately $6 million were payable to CTI. As a
condition to closing, such amounts will either be indefeasibly paid in full,
forgiven or, while the Securities are outstanding, fully subordinated to
payments on the WCTP Notes.
DEFAULTS. In the event that CTI fails to perform any of its obligations
pursuant to the Warbasse O&M Agreement for 5 consecutive days after receiving
notice from WCTP of such failure, or in the event that such failure causes a
default pursuant to the AWH PPA, WCTP shall have the right to terminate the
Warbasse O&M Agreement.
BIG SPRING PROJECT
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
In October 1997, York acquired all of the partnership interests in the Big
Spring Guarantor, which was formed to negotiate and execute the Big Spring PPA
(as defined hereinafter) and to construct, maintain and operate the Big Spring
Project, a windfarm near Big Spring, Texas.
The Second Amended and Restated Limited Partnership Agreement, dated as of
June 26, 1998, between Big Spring Holdings, Inc., a Delaware corporation, as the
limited partner, and Big Springs Texas Energy Management, Inc., a Delaware
corporation, as the general partner of the Big Spring Guarantor (the "Big Spring
Partnership Agreement") provides as follows:
TERM. Subject to the occurrence of certain events and earlier termination
by the general partner, the existence of the Big Spring Guarantor shall
terminate on December 31, 2024.
PURPOSE. The purpose of the Big Spring Guarantor is to construct, maintain
and operate the Big Spring Project to generate electricity to sell to TU
Electric.
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PERCENTAGE INTERESTS. The limited partner owns 99% of the partnership
interest of the Big Spring Guarantor and the general partner owns 1% of the
partnership interest in the Big Spring Guarantor.
AUTHORITY OF THE GENERAL PARTNER. The general partner has the power and
authority to direct and manage the affairs of the Big Spring Guarantor.
DISTRIBUTIONS. Any cash or other assets of the Big Spring Guarantor, which
the general partner may from time to time determine are not reasonably needed to
carry on the business of the Big Spring Guarantor and which the general partner
may decide to distribute, shall be distributed to the partners in proportion to
their respective partnership interest in the Big Spring Guarantor.
QUALIFYING FACILITY. The Big Spring Project is self-certified as a small
power production QF that also is an "eligible" wind facility pursuant to the
Solar, Wind, Waste and Geothermal Power Production Incentives Act of 1990.
Timely self-certification of the Big Spring Project under this statute provides
a federal regulatory exemption from regulation under the FPA, PUHCA and state
law that otherwise would apply to a wind-powered QF with a capacity greater than
30 MW. The Big Spring Guarantor in July 1998 filed a notice of
self-recertification as a qualifying small power production facility in order to
reflect the acquisition by York of the Big Spring Guarantor.
ADMISSION OF NEW PARTNERS. New limited partners may be admitted to the Big
Spring Guarantor from time to time as determined by the general partner.
ENERGY PURCHASE AGREEMENT
The Big Spring Guarantor has entered into a Renewable Resource Energy
Purchase Agreement with TU Electric dated September 13, 1994, as amended (the
"Big Spring PPA"). The Big Spring PPA has been approved by the Texas Public
Utilities Commission ("TPUC"). In accordance with the Big Spring PPA, the Big
Spring Guarantor intends, at its sole cost and expense, to design, construct and
operate the Big Spring Project. The Big Spring Project will have electrical
generating capacity of 34 MW and an expected annual energy production of
116,900,000 kWh.
TERM AND TERMINATION. Unless terminated earlier pursuant to certain
conditions, the Big Spring PPA will expire 15 years from the commercial
operation date of the Big Spring Project, which shall be on or before May 31,
1999 (the "Big Spring Commercial Operation Date").
The term of the Big Spring PPA may be extended (a) an additional 5 years (i)
if TU Electric gives notice of its intention to extend to the Big Spring
Guarantor during the 13th year of operation or (ii) in the event that TU
Electric does not give such notice, if the Big Spring Guarantor gives written
notice to TU Electric at any time during the 14th year of operations. In the
event TU Electric exercises the option set forth in clause (i), payments by TU
Electric to the Big Spring Guarantor for electrical energy will be made at rates
0.5% higher in each calendar year than the rate in effect in the immediately
preceding calendar year. In the event the Big Spring Guarantor exercises the
option set forth in clause (ii), payments by TU Electric for electrical energy
must be made at rates that are at TU Electric's Rate LPP or its successor
tariff, or if no such tariff exists at that time, at rates equal to 95% of TU
Electric's monthly avoided energy costs or (b) an additional 10 years (i) if TU
Electric has exercised its option pursuant to clause (a)(i) above and gives
notice to the Big Spring Guarantor of such further extension during the 18th
year of operation or (ii) if the Big Spring Guarantor gives written notice to TU
Electric during the 19th year of operation. In the event TU Electric exercises
this option, payments by TU Electric to the Big Spring Guarantor for electrical
energy must be made at rates 0.5% higher in each calendar year than the rate in
effect in the immediately preceding calendar year. In the event the Big Spring
Guarantor exercises this option, payments by TU Electric for electrical energy
must be made at rates that are at TU Electric's Rate LPP or its successor
tariff, or if no such tariff exists at that time, at rates 95% of TU Electric's
monthly avoided energy costs.
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COMMERCIAL OPERATION; PHASED COMPLETION. The Big Spring Project will be
completed and placed into Commercial Operation in three "phases," subject to
approval by TU Electric. The "phases" are defined based on the geographic
location of the wind turbines and the separation of the V66 turbines into their
own phase. Phase 1 includes 16 V47 wind turbines (numbers 27-42); Phase 2
includes 26 V27 wind turbines (numbers 1-26); and Phase 3 includes the 4 V66
wind turbines. Energy generated by the Big Spring Project, prior to Commercial
Operation, will be sold to TU Electric at its Rate LPP (avoided cost). After
each phase of turbines achieves Commercial Operation, payments for energy
generated will be at rates specified in the Big Spring PPA. The 15-year base
term of the Big Spring PPA will commence only after the Phase 3 of the Big
Spring Project has achieved Commercial Operation. The Big Spring Project is
expected to achieve full Commercial Operation during February of 1999. TU
Electric has the option to terminate the Big Spring PPA if Commercial Operation
is not attained on or before May 31, 1999, upon written notice to the Big Spring
Guarantor.
PAYMENTS FOR ENERGY; BALANCING ACCOUNT. Pursuant to an amendment to the Big
Spring PPA, a "balancing account" mechanism was established as part of the
payment terms of the Big Spring PPA. The balancing account adjusts for variable
wind years by allowing any shortfall in energy production by the Big Spring
Project to be carried forward and credited against excess production over the
life of the Big Spring PPA. The balancing account is beneficial to both the Big
Spring Guarantor and TU Electric as it minimizes revenue fluctuations to the Big
Spring Guarantor due to interannual fluctuations in the wind resources at the
project site, and, for TU Electric, the balancing account caps the energy
production over the life of the Big Spring PPA that must be paid at the fixed
rates. The Big Spring Guarantor and TU Electric have estimated, for contract
purposes, that the annual expected energy production of the Big Spring Project
will be 116,900,000 kWh and that the actual delivered energy will be 119,500,000
kWh. TU Electric will pay the power rates specified in the Big Spring PPA for
the expected energy produced each year, subject to increase pursuant to the
terms of the balancing account mechanism. In years where the annual energy
production from the Big Spring Project is less than the expected energy, the
production deficit will be carried forward into future years to allow excess
production (production greater than the expected energy) to be paid at contract
rates, to the extent that there is deficit production in the balancing account.
For years where energy production is greater than the expected energy and there
is no production deficit accumulated in the balancing account, energy production
in excess of the expected energy will be paid at TU Electric's Rate LPP (avoided
cost).
All rates payable by TU Electric under the Big Spring PPA were approved by
the TPUC. TU Electric's obligations to make payments to the Big Spring Guarantor
under the Big Spring PPA are conditioned upon TU Electric continuing to be
permitted by the TPUC or other regulatory authority to fully recoup from TU
Electric's ratepayers such payments. If the TPUC or other regulatory authority
by order or regulation fails to continue to allow TU Electric to fully recoup
payments under the Big Spring PPA or raises prices under the Big Spring PPA, TU
Electric may terminate the Big Spring PPA after giving written notice to the Big
Spring Guarantor. However, the Big Spring Guarantor will not be required to
refund to TU Electric any amount previously paid to the Big Spring Guarantor
that becomes non-recoverable by TU Electric on account of any such orders or
regulations.
OPERATION AND MAINTENANCE OF THE BIG SPRING PROJECT. All electric energy
generated at the Big Spring Project and delivered to TU Electric must have a
power factor greater than 95% and a nominal frequency of 60Hz. In addition, the
Big Spring Guarantor shall maintain and operate the Big Spring Project in
accordance with the applicable utility industry standards and good engineering
practices.
TESTING. In order for each phase of the Big Spring Project to achieve
Commercial Operation, it must pass certain tests, including verification of
facility power factor, and functional tests of the interconnect breakers and
protective relays. Vendors supplying critical components for the Big Spring
Project have confirmed the ability of the facility to meet these tests.
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MONTHLY PAYMENTS. TU Electric will make monthly payments to the Big Spring
Guarantor for energy metered at the point of interconnection.
REPRESENTATIONS AND WARRANTIES. The Big Spring Guarantor warrants, among
other things, that (a) the Big Spring Project is a QF and that it shall maintain
the Big Spring Project as a QF, (b) it will use services of vendors located
within the TU Electric service area, (c) it will ensure that minority-owned and
women-owned business have equal opportunities to participate in its purchase of
material and services for, and its construction, operation, and maintenance of,
the Big Spring Project, (d) the major pieces of equipment and fixtures installed
at the Big Spring Project are newly manufactured and state-of-the-art
technology, (e) if it decides to retrofit the Big Spring Project with more
improved and economical technology, it will share any resulting savings with TU
Electric and (f) it will use its reasonable efforts to assure that the Big
Spring Project is maintained in accordance with prudent industry utility
practices.
INDEMNIFICATION. The Big Spring Guarantor indemnifies TU Electric against
any claims or any costs or expenses therefrom for property damage of or personal
injury to the Big Spring Guarantor arising out of or incident to the Big Spring
PPA.
INSURANCE. For the term of the Big Spring PPA and for two years after its
termination or expiration, the Big Spring Guarantor agrees to maintain and keep
in full force (a) employer's liability insurance and worker's compensation
insurance, (b) general liability insurance, (c) automobile liability insurance
and (d) excess liability insurance. In addition, the Big Spring Guarantor will
require all of its contractors and subcontractors to provide insurance coverage
satisfactory to the TU Electric.
FORCE MAJEURE. Neither the Big Spring Guarantor nor TU Electric will be
liable for any failure to perform its obligations, in whole or in part, under
the Big Spring PPA resulting from force majeure; PROVIDED that the
non-performing party gives the other party prompt written notice describing the
particulars of the occurrence and uses its best efforts to cure the
non-performance within 180 days of such non-performance.
WIND TURBINE EQUIPMENT SALES AND INSTALLATION CONTRACT
The Vestas Agreement, dated as of March 31, 1998, is between York and
Vestas.
Under the Vestas Agreement, Vestas agreed to supply, erect, install,
start-up, test and commission 46 wind Units ("WTGs") (Vestas Model V47 660kW WTG
and Vestas Model V66 1650kW WTG), the towers upon which the WTGs will be mounted
and certain other equipment for developing the Big Spring Project. Additionally,
the Big Spring Guarantor has the option to have Vestas construct the tower
foundations as part of its scope of work. If this option is exercised, Vestas
will construct the foundations for a fixed price and provide a warranty for the
foundations.
RESPONSIBILITIES OF VESTAS. Vestas commenced its obligations on May 1, 1998
for the V66 portion of the Big Spring Project and June 1, 1998 for the V47
portion of the Big Spring Project, upon receipt of down payments totaling
$4,032,691 received from York after York obtained all applicable permits,
licenses and other approvals required and necessary for commencing construction
of the Big Spring Project. Vestas agreed that time is of the essence in
achieving substantial completion of the Big Spring Project by the scheduled
completion date, which may be adjusted from time to time as provided in the
Vestas Agreement. In addition to its obligations set forth above, Vestas will
provide, among other things, a training program for operational personnel with
respect to the operation, start-up, maintenance and shutdown of the Big Spring
Project as well as develop and implement both a quality assurance and safety
program for the Big Spring Project.
FACILITY PRICE. The price payable by York to Vestas will be $24,689,500 for
the V47 portion of the Big Spring Project and $6,140,500 for the V66 portion of
the Big Spring Project, for a total facility price of $30,830,000. A portion of
the facility price attributable to the equipment to be procured from
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Denmark is to be paid by York to Vestas in Danish Kroner ("Dkk"). The facility
price quoted herein, which may be adjusted, assumes an exchange rate of 6.6 Dkk
to U.S.$1 and includes, without limitation, all equipment, labor, services,
storage fees, and expenses related to Vestas' performance of its obligations,
all work, materials, equipment and services provided by subcontractors and
suppliers.
WARRANTIES. Vestas warrants that (a) upon full payment of the facility
price, title to the Big Spring Project shall pass to York free and clear of any
liens, claims or other encumbrances and (b) the Big Spring Project shall be
installed using new materials and work performed by Vestas shall be and remain
free from defects in materials and workmanship for 1 year following the date of
substantial completion of the Big Spring Project. In the event that this
warranty is breached during this 1 year warranty period, Vestas shall promptly
repair the Big Spring Project, which repair shall be similarly warranted for a
period of 1 year from the date of repair. The Vestas Agreement provides further
that, after 1 year installation warranty covering the entire work supplied by
Vestas, the WTG's shall be free from defects for an additional 1 year.
Additionally, for a period of 2 years after the Big Spring Commercial Operation
Date, Vestas warrants that the power output of the WTG's will be at least 95% of
the expected and published power output of the WTG's. If the power output of the
WTG's is measured to be less than 95% of the expected and published power
output, Vestas shall be liable to correct the WTG's and compensate the Big
Spring Project for lost revenue resulting from the diminished power output.
LIQUIDATED DAMAGES. In the event that a phase of the construction is not in
substantial completion as of its scheduled date of Substantial Completion due to
a delay by Vestas or any of its subcontractors or suppliers, Vestas will pay
York an escalating amount liquidated damages for any and all losses suffered as
a result of such delay, up to a maximum of 20% of the facility price.
FORCE MAJEURE. Neither York nor Vestas will be liable for any failure to
perform its obligations under the Vestas Agreement, in whole or in part, because
of an event of FORCE MAJEURE; PROVIDED that the non-performing party gives the
other party a written notice within 5 days after becoming aware of an event of
force majeure describing the particulars of the occurrence and uses its best
efforts to remedy its non-performance.
INSURANCE. Prior to commencing work on the Big Spring Project Vestas will
provide the following insurance: (a) workmen's compensation insurance, (b)
comprehensive general liability insurance, (c) automobile liability insurance,
(d) shipping insurance and (e) excess liability insurance covering employer's
liability, comprehensive general liability and business automobile liability.
York will maintain the following insurance: (a) comprehensive general liability
insurance, (b) builder's "all risk" insurance and (c) permanent property
insurance.
INDEMNIFICATION BY VESTAS. Vestas shall indemnify and hold harmless York
against all claims, damages, losses and expenses, including, but not limited to,
attorneys' fees and related costs, resulting from (a) the negligent acts or
omissions of Vestas, (b) the failure of Vestas to comply with applicable laws or
the conditions of applicable permits obtained by Vestas, (c) hazardous materials
brought onto the Big Spring Project site by Vestas, unless such hazardous
materials are released as a result of negligent act by York or others or (d)
discharging of any liens or similar encumbrances filed in connection with the
Big Spring Project.
INDEMNIFICATION BY YORK. York shall indemnify and hold harmless Vestas
against all claims, damages, losses and expenses, including but not limited to
attorneys' fees and related costs, resulting from (a) the negligent acts or
omissions of York, (b) the failure of York to comply with applicable laws or the
conditions of applicable permits obtained by York or (c) hazardous materials
brought onto the Big Spring Project site by York, unless such hazardous
materials are released as a result of negligent act by Vestas or others.
SUBCONTRACTS. York has acted as the general contractor for the construction
of the Big Spring Project and has entered into the following agreements with
major subcontractors for completion of
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specific portions of the Big Spring Project: (a) Patrick & Henderson for the
civil works, (b) Vestas for supply, installation and commissioning of the wind
turbines and towers, (c) MSE Power Systems for design and construction of the
substation and (d) TU Electric for construction of the interconnect facilities.
York will also enter into a contract with a local contractor for construction of
the power collection system. All of these agreements will be assigned from York
to the Big Spring Guarantor as a condition to the closing of the Offering.
ASSIGNMENT. York, after receiving necessary consent from Vestas, will
assign the Vestas Agreement to the Big Spring Guarantor as a condition to the
closing of the Offering.
LAND LEASES AND INFRASTRUCTURE AGREEMENT
LAND LEASES. The Big Spring Guarantor entered into (a) Option and Lease
Agreement (the "Click Lease"), dated as of December 30, 1997, with R.G. and
Cheryl Click ("Click"), (b) Option and Lease Agreement (the "Morgan Ranches
Lease"), dated as of January 28, 1998, with Morgan Ranches, Ltd. ("Morgan
Ranches") and (c) Permit and Lease Agreement TPLT No. 7714 (the "Texas Pacific
Lease"), dated as of January 13, 1998, with Texas Pacific Land Trust ("Texas
Pacific"). The Click Lease, the Morgan Ranches Lease and the Texas Pacific Lease
will collectively be referred to herein as the "Big Spring Project Leases" and
Click, Morgan Ranches and Texas Pacific will collectively be referred to herein
as the "Big Spring Project Land Owners." The Big Spring Project Land Owners own
the lands on which the Big Spring Project will be constructed and operated.
INFRASTRUCTURE AGREEMENT. The Big Spring Guarantor entered into the
Infrastructure Agreement with Morgan Ranches (the "Morgan Ranches Infrastructure
Agreement"), dated as of January 28, 1998, which provides for additional rights
beyond those conveyed pursuant to the Morgan Ranches Lease.
EXERCISE OF BIG SPRING PROJECT LEASES. Each of the Big Spring Project
Leases is structured as an option to lease the property, which upon exercise of
the option, become a binding lease between the parties. The Big Spring Guarantor
paid $5,000 to each of the Big Spring Project Land Owners upon execution of the
Big Spring Project Leases. The option period for each of the Big Spring Project
Leases expired on February 15, 1998. The Big Spring Guarantor sent written
notice on February 10, 1998 to all of the Big Spring Project Land Owners
exercising the options.
TERM. Each of the Big Spring Project Leases has an initial term of 15
years, commencing on the Big Spring Commercial Operation Date, and may be
extended for two additional periods of five years each. The term of the Morgan
Ranches Infrastructure Agreement runs concurrently with that of the Morgan
Ranches Lease.
USES. The Big Spring Guarantor may construct wind turbines, transmission
equipment, roads, utilities and other improvements on the project sites. The
location of these improvements must be approved by the Big Spring Project Land
Owners, whose consent cannot be unreasonably withheld. The Big Spring Project
Land Owners may use the project site for uses that do not conflict with the
construction and operation of the Big Spring Project. All of the Big Spring
Project Leases contain covenants that the Big Spring Guarantor will use good
faith efforts to install a certain number of wind turbines on each of the Big
Spring Project Land Owners' sites, subject to certain restrictions on installing
additional wind turbines after the Big Spring Project has been completed. Within
6 months after the expiration or termination of the Big Spring Project Leases,
the Big Spring Guarantor must remove all improvements constructed on the Big
Spring Project site.
PAYMENT TERMS. The Big Spring Project Leases and the Morgan Ranches
Infrastructure Agreement require certain payments be made to the Big Spring
Project Land Owners in connection with the construction and operation of the Big
Spring Project.
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(a) All of the Big Spring Project Leases require payments be made to the
Big Spring Project Land Owners upon commencement of construction of the wind
turbines. The payment amounts are $450 per wind turbine to Texas Pacific
(which amount shall increase by $500 per wind turbine if less than 14 wind
turbines are installed on that land), $2,025 per wind turbine to Click, and
$900 per wind turbine to Morgan Ranches.
(b) The Click Lease requires the following additional payments to be
made in connection with the construction of the Big Spring Project: (i) a
payment of $4,000 upon commencement of construction of the operations and
maintenance facility to be located on their property, and $4,000 per year
thereafter during the term of the lease, payable on each anniversary of the
initial payment, (ii) a payment of $7,500 upon completion of construction of
the Big Spring Project as compensation for damage to the property resulting
from construction of the Big Spring Project and (iii) a payment of $20 per
rod for an easement to be granted to TU Electric for the construction of a
power distribution line.
(c) The Morgan Ranches Infrastructure Agreement requires a one time
facilities payment of $26,300 at the commencement of construction and a
payment of $15,000 to Morgan Ranches on March 15, 1999, and annually
thereafter for the term of the Morgan Ranches Infrastructure Agreement.
(d) All of the Big Spring Project Leases require rent payments be made
to the Big Spring Project Land Owners, commencing upon the start of
operation of the wind turbines, and continuing throughout the term of the
Big Spring Project Leases. The rent payments are due monthly, and are
calculated as the greater of a minimum payment or a percentage of the gross
revenues derived from the wind turbines located on each Big Spring Project
Land Owner's property. The percentage rents for all of the Big Spring
Project Leases are 3% of the gross revenues for years 1 through 12, 4% of
the gross revenues for years 13 through 20, and 5% of the gross revenues
during years 21 through 25. The minimum annual rent amounts pursuant to the
Texas Pacific Lease and the Morgan Ranches Lease are $1,200 per wind turbine
during years 1 through 12, $1,700 per wind turbine for years 13 through 20,
and $2,500 per wind turbine during years 21 through 25. The minimum annual
rent amounts pursuant to the Click Lease are $10,800 for years 1 through 12,
$15,300 for year 13 through 20, and $22,500 during years 21 through 25, all
such amounts are irrespective of the number of turbines installed on the
property.
(e) All of the Big Spring Project Leases contain provisions which modify
the payment terms should the Big Spring Project be acquired by TU Electric
or another utility to which power from the Big Spring Project is sold.
INSURANCE. The Big Spring Guarantor is required to obtain and keep in force
during the term of the Big Spring Project Leases (a) employer's liability
insurance and worker's compensation insurance, (b) general liability insurance,
(c) automobile liability insurance and (d) excess liability insurance.
TAX ABATEMENT CONTRACTS
The Big Spring Guarantor has entered into Tax Abatement Contracts with
Howard County and the Howard Junior College District. These contracts provide
abatement of a portion of the property taxes owed by the Big Spring Project.
EXECUTION. The Tax Abatement Contracts were executed with Howard County on
February 9, 1998 and on January 26, 1998 with the Howard Junior College
District.
AMOUNT ABATED. During the period of construction of the Big Spring Project,
but not after January 2, 2000, the ad valorem taxes owed to Howard County and
the Howard Junior College District are 100% abated. After the completion of
construction of the Big Spring Project, the tax abatement for
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taxes payable to Howard County and the Howard Junior College District are abated
100% in the first year, 90% in the second year, 80% in the third year, 70% in
the fourth year, and 60% in the fifth year.
COST VERIFICATION. The Big Spring Guarantor will provide Howard County and
the Howard Junior College District with a complete accounting of all costs
associated with the Big Spring Project by December 31, 1999 or 60 days after
completion of construction, whichever is later.
TERMINATION. Howard County and/or the Howard Junior College District have
the right to terminate the respective Tax Abatement Contract if the Big Spring
Guarantor fails to comply with the terms of the respective Tax Abatement
Contract or allows its ad valorem taxes to become delinquent without validly
contesting such taxes. Should the Tax Abatement Contract(s) be terminated, all
taxes abated pursuant to the terminated Tax Abatement Contract will be
recaptured and payable by the Big Spring Guarantor within 60 days of
termination.
OPERATION, MAINTENANCE AND SERVICE AGREEMENT
The Big Spring Guarantor has entered into an Operation, Maintenance and
Service Agreement, dated as of June 1, 1998, with York that may be assigned to a
York subsidiary (collectively the "O&M Wind Sub") for the operation, maintenance
and repair of the Big Spring Project (the "Big Spring O&M Agreement").
TERM. The term of the Big Spring O&M Agreement will be for a period of 15
years immediately after the occurrence of (a) the construction of the Big Spring
Project has been completed, except for minor punch-list type items which are not
material, either individually or in the aggregate, (b) the Big Spring Project is
available for normal and continuous operation, (c) the Big Spring Project meets
specifications contained in the protective relaying design as approved by TU
Electric, (d) TU Electric has given written approval of plans which are required
to design, construct and operate the Big Spring Project, (e) all insurance
policies required by the Big Spring O&M Agreement are in full force and effect,
(f) TPUC has approved the Big Spring PPA and (g) the Big Spring Guarantor has
paid in full any costs due to TU Electric.
SERVICES. The O&M Wind Sub shall perform or cause to be performed by
subcontractors, during the term of the Big Spring O&M Agreement the following
work: (a) wind turbine operations, (b) wind turbine & tower maintenance, (c)
power collection system maintenance, (d) communications system maintenance, (e)
civil works and tower foundation maintenance, (f) facility maintenance, (g)
substation operation & maintenance, (h) project operations and (i) equipment
repairs. The services shall be performed by the O&M Wind Sub in accordance with
applicable equipment manufacturer's manuals and procedures, terms and conditions
contained in the Big Spring PPA, and good utility practices.
REPORTING. The O&M Wind Sub will be required to provide various reports to
the Big Spring Guarantor, including: (a) energy production and availability
data, (b) information on the operational status of the wind turbines, (c) a
summary of scheduled maintenance performed and (c) summaries of warranty and
non-warranty repairs to the equipment.
OBLIGATIONS OF BIG SPRING GUARANTOR. The Big Spring Guarantor is required
to assist the O&M Wind Sub in performing the services by providing access to the
Big Spring Project, and to allow the O&M Wind Sub to utilize the operations and
maintenance facility and monitoring system. The Big Spring Guarantor must also
provide to the O&M Wind Sub a map of the Big Spring Project showing the
locations of all of the equipment, and the technical specifications and drawings
of the equipment.
FEES. The Big Spring Guarantor will pay the O&M Wind Sub a base service fee
of $28,750 per month for the operation and routine maintenance of the Big Spring
Project. The amount of the base fee escalates each year by the percentage change
in the CPI. Expenses incurred by the O&M Wind Sub for non-routine repairs and
assistance in completing warranty work will be paid on a time and materials
basis.
INSURANCE. The O&M Wind Sub will be required to obtain and keep in force
during the term of the Big Spring O&M Agreement (a) employer's liability
insurance and worker's compensation insurance, (b) general liability insurance,
(c) automobile liability insurance and (d) excess liability insurance.
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SUMMARY DESCRIPTION OF THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the Old Securities, the Funding Company
entered into the Registration Rights Agreement with Credit Suisse First Boston
(the "Initial Purchaser"), pursuant to which the Funding Company agreed to use
its best efforts to file with the Commission a registration statement with
respect to the exchange of the Old Securities for a series of registered debt
securities with terms substantially identical in all material respects to the
terms of the Old Securities. The Exchange Securities are issued free from any
covenant regarding transfer restrictions.
The Funding Company is making the Exchange Offer in reliance on the position
of the staff of the Commission as set forth in certain no-action letters
addressed to other parties in other transactions which are substantially similar
to the Exchange Offer. However, the Funding Company has not sought its own
no-action letter and there can be no assurance that the staff of the Commission
would make a similar determination with respect to the Exchange Offer as in such
other circumstances. Based upon these interpretations by the staff of the
Commission, the Funding Company believes that the Exchange Securities issued
pursuant to this Exchange Offer in exchange for the Old Securities may be
offered for resale, resold and otherwise transferred by a holder thereof (other
than to (a) any Affiliate of the Funding Company, (b) the Initial Purchaser or
(c) any Affiliate of the Initial Purchaser (other than Affiliates of the Initial
Purchaser that (i) are acquiring Exchange Securities in the ordinary course of
business and do not have an arrangement with any Person to distribute Exchange
Securities and (ii) may trade such Exchange Securities without restriction under
the Securities Act) ("Restricted Person")) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such Exchange Securities are acquired in the ordinary course of such
holder's business and that such holder is not participating, and has no
arrangement or understanding with any person to participate, in the distribution
of such Exchange Securities.
By tendering, each holder (other than a Restricted Person) will represent to
the Funding Company that, among other things, the person receiving the Exchange
Securities, whether or not such person is the holder, (a) is not an Affiliate of
the Funding Company, (b) any Exchange Securities to be received by it shall be
acquired in the ordinary course of its business and (c) that at the time of the
consummation of the Exchange Offer it shall have no arrangement with any person
to participate in the distribution (within the meaning of the Securities Act) of
the Exchange Securities. In the event that a holder of the Exchange Securities
cannot make such representation, such person (a) cannot rely on the applicable
interpretations of the staff of the Commission and (b) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, including the requirement that any such
secondary resale transactions be covered by an effective registration statement
containing the selling securityholder information required by Item 507 of
Regulation S-K of the Securities Act.
The Initial Purchaser acknowledges that it is the position of the staff of
the Commission that any broker-dealer that the receives Exchange Securities for
its own account in exchange for the Exchange Securities pursuant to the Exchange
Offer must deliver a Prospectus in connection with any resale of such Exchange
Securities. By so acknowledging, the Initial Purchaser shall not be deemed to
admit that, by delivering a Prospectus, it is an underwriter within the meaning
of the Securities Act. This Prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection with resales of
the Exchange Securities received in exchange for the Old Securities where such
Old Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Funding Company has agreed that for
a period of 120 days after 5:00 p.m., New York City time, on , 1999,
the date which the Exchange Offer shall expire, unless extended by the Funding
Company in its sole discretion (the "Expiration Date"), it will make this
Prospectus available to broker-dealers for use in connection with any such
resale. The Initial Purchaser
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shall notify the Funding Company promptly upon the completion of the resale of
the Exchange Securities received by such Initial Purchaser pursuant to the
Exchange Offer. Except as aforesaid, this Prospectus may not be used for an
offer to resell, resale or other retransfer of the Exchange Securities. See
"PLAN OF DISTRIBUTION."
The Exchange Offer is not being made to, nor will the Funding Company accept
tenders for exchange from, holders of the Old Securities in any jurisdiction in
which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction.
Holders of the Old Securities not tendered will not have any further
registration rights and the Old Securities not exchanged will continue to be
subject to certain restrictions on transfer of such Old Securities as set forth
in the legend thereon as a consequence of the issuance of the Old Securities
pursuant to exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws.
Accordingly, the liquidity of the markets for the Old Securities could be
adversely affected.
NEITHER THE DIRECTORS OR OFFICERS OF THE FUNDING COMPANY NOR THE FUNDING
COMPANY MAKES ANY RECOMMENDATION TO HOLDERS OF THE OLD SECURITIES AS TO WHETHER
TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OLD SECURITIES
PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE
ANY SUCH RECOMMENDATION, HOLDERS OF THE OLD SECURITIES MUST MAKE THEIR OWN
DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE
AGGREGATE AMOUNT OF THE OLD SECURITIES TO TENDER AFTER READING THIS PROSPECTUS
AND THE LETTER OF TRANSMITTAL AND CONSULTING THEIR ADVISERS, IF ANY, BASED ON
THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
REGISTRATION RIGHTS
Holders of the Exchange Securities are not entitled to any registration
rights with respect to the Exchange Securities; however, pursuant to the
Registration Rights Agreement, holders of the Old Securities are entitled to
certain registration rights. Under the Registration Rights Agreement, the
Funding Company has agreed, for the benefit of the holders of the Old
Securities, that it will, at its cost, use its reasonable best efforts to cause
the Registration Statement to be declared effective under the Securities Act
prior to the Effective Date.
The Registration Rights Agreement provides that if (a) the Exchange
Securities would not, upon receipt in the Exchange Offer by any holder of the
Old Securities (other than any Restricted Person and other than any holder who
is not acquiring such Exchange Securities in the ordinary course of business or
who has an arrangement with any person to participate in the distribution of
such Exchange Securities) be tradeable by each holder thereof without
restriction under the Securities Act and the Exchange Act and without
restriction under applicable state securities laws, (b) after conferring with
counsel, the Commission is unlikely to permit the Registration Statement to
become effective on or prior to the Effective Date or (c) the Exchange Offer may
not be made in compliance with Applicable Laws, then the Funding Company shall
promptly deliver notice to the holders of the Old Securities and to the Trustee
and shall thereafter file the Registration Statement, pursuant to Rule 415 of
the Securities Act, for an offering of the Old Securities to be made on a
continuous basis in the event that the Exchange Offer does not occur within 180
days following the Old Securities Offering (the "Initial Shelf Registration
Statement"), which shall be effective for 2 years following the Effective Date
(the "Effective Period"); PROVIDED, HOWEVER, that no holder of the Old
Securities or the Exchange Securities shall be entitled to have the Old
Securities or the Exchange Securities held by it covered by the Initial Shelf
Registration Statement unless such holder agrees in writing, within 10 business
days after actual receipt
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of a request therefrom, to be bound by all provisions of the Registration Rights
Agreement applicable to such holder.
If the Initial Shelf Registration Statement ceases to be effective for any
reason at any time during the Effective Period after the Effective Date, the
Funding Company may attempt to obtain the withdrawal of any order suspending the
effectiveness thereof, and may amend such Initial Shelf Registration Statement
in a manner reasonably expected to obtain the withdrawal of the order suspending
the effectiveness thereof, or file an additional "shelf" Registration Statement
applicable to the Old Securities pursuant to Rule 415 covering all of such Old
Securities remaining unsold (a "Subsequent Shelf Registration Statement"). If a
Subsequent Shelf Registration Statement is declared effective, the Funding
Company shall use its reasonable best efforts to keep such Subsequent Shelf
Registration Statement continuously effective for a period after the date of
such effectiveness equal in length to the length of the Effective Period plus
the aggregate number of days from the date of the order suspending the
effectiveness of the Initial Shelf Registration Statement or any Subsequent
Shelf Registration Statement to the date of the effectiveness of the Subsequent
Shelf Registration Statement.
The Funding Company shall use its reasonable best efforts to (a) cause the
Initial Shelf Registration Statement to be declared effective under the
Securities Act on or prior to the Effective Date and (b) keep the Initial Shelf
Registration Statement continuously effective for the Effective Period, subject
to extension, or such shorter period ending when (i) all Old Securities covered
by the Initial Shelf Registration Statement have been sold, (ii) a Subsequent
Shelf Registration Statement covering all of such Old Securities remaining
unsold has been declared effective under the Securities Act, (iii) all Old
Securities may be sold pursuant to Rule 144(k) of the Securities Act or (iv) no
Old Securities are outstanding.
Notwithstanding any other provisions hereof, the Funding Company will ensure
that (a) the Initial Shelf Registration Statement, Subsequent Shelf Registration
Statement and any amendments thereto (collectively, a "Shelf Registration
Statement") and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations thereunder, (b) any Shelf Registration Statement and any amendment
thereto (in either case, other than with respect to information included therein
in reliance upon or in conformity with written information furnished to the
Funding Company by or on behalf of any holder specifically for use therein
("Holders' Information")) does not, when it become effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(c) any prospectus forming part of any Shelf Registration Statement, and any
supplement to such prospectus (in either case, other than with respect to
Holders' Information), does not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
ILLIQUIDITY EVENT
Pursuant to the Registration Rights Agreement, the Funding Company agreed
that from and after the date on which any of the following events occur,
additional interest shall accrue with respect to the Old Securities (as further
discussed below):
(a) as of the Effective Date, both (i) the Registration Statement has
not become effective and (ii) the Exchange Securities are not the subject of
an Initial Shelf Registration Statement which has become effective;
(b) the Exchange Securities offered in exchange for the Old Securities
are the subject of the Registration Statement which was effective but ceased
to be effective for any reason prior to the (i)(1) the completion of the
Exchange Offer or (2) 120 days after effectiveness of the Registration
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Statement, whichever period is longer and (ii) the Registration Statement
covering such Old Securities has not become effective; or
(c) the Old Securities are the subject to the Initial Shelf Registration
Statement or the Subsequent Shelf Registration Statement which was effective
but which has ceased to be effective for any reason prior to the end of the
Effective Period (the "Illiquidity Event");
In the event of an Illiquidity Event, additional interest (in addition to
the interest otherwise payable with respect to the Exchange Securities) shall
accrue with respect to the Old Securities until but not including the date on
which such events shall cease to exist (and provided no other Illiquidity Event
with respect to Old Securities shall then be continuing), at the rate of one
half of one percent (0.50%) per annum, which additional interest shall be
payable by the Funding Company to the holders of all Old Securities at the
times, in the manner and subject to the same terms and conditions set forth in
the Indenture, as nearly as may be, as though the interest rates provided in
such Old Securities had been increased by one half of one percent (0.50%) per
annum. Notwithstanding that the Illiquidity Event may cease to exist, in the
event that the Registration Statement or the Initial Shelf Registration
Statement has not become on or prior to the Effective Date, the interest rates
on the Old Securities otherwise payable as provided in the Indenture shall
permanently remain increased by such one half of one percent (0.50%) per annum.
The Funding Company shall promptly notify the holders of the Old Securities and
the Trustee of the occurrence of any Illiquidity Event of which it has
knowledge.
Any additional interest accrued on any Old Securities as a result of an
Illiquidity Event, which remains unpaid on the date on which such interest
ceases to accrue, shall be due and payable on the first interest payment date
following the next record date following such date to the holders of record of
such Old Securities on such record date. If the date on which such interest
ceases to accrue is a record date, such interest shall be paid on the record
date occurring on such date.
Notwithstanding the foregoing, the Funding Company shall not be required to
pay the additional interest to a holder with respect to the Old Securities held
by such holder if the applicable Illiquidity Event arises by reason of the
failure of such holder to provide such information that (a) the Funding Company
may reasonably request, with reasonable prior written notice, for use in the
Shelf Registration Statement or any prospectus included therein to the extent
the Funding Company reasonably determines that such information is required to
be included therein by Applicable Law, (b) the National Association of
Securities Dealers, Inc. or the Commission may request in connection with such
Shelf Registration Statement or (c) is required to comply with the agreements of
such holder contained in the Registration Rights Agreement to the extent
compliance thereof is necessary for the Shelf Registration Statement to be
declared effective.
An Illiquidity Event shall be deemed to cease to exist on the date
subsequent to the occurrence of such Illiquidity Event on which:
(a) in the case of an Illiquidity Event described in clauses (a) and (b)
immediately above, either (i) the Registration Statement shall become
effective and the Exchange Offer for the Old Securities shall have commenced
or (ii) the Initial Shelf Registration Statement covering such Old
Securities shall become effective; or
(b) in the case of an Illiquidity Event described in clause (c) above, a
Subsequent Shelf Registration Statement covering such Old Securities shall
become effective.
TERMS OF THE EXCHANGE
Upon the terms and subject to the conditions of the Exchange Offer, the
Funding Company will, unless such Old Securities are withdrawn in accordance
with the withdrawal rights specified in "Withdrawal Rights" below, accept any
and all Old Securities validly tendered prior to 5:00 p.m., New York
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City time, on the Expiration Date. The Exchange Securities issued in connection
with the Exchange Offer will be delivered on the earliest practicable date on or
following the Expiration Date.
The terms of the Exchange Securities are identical in all material respects
to the terms of the Old Securities, except any changes (a) to the Indenture, or
any such substantially identical indenture as the Trustee and the Funding
Company may deem necessary, (i) in connection with the Trustee's rights and
duties or (ii) to comply with any requirements of the Commission to effect or
maintain the qualification thereof under the Trust Indenture Act, (b) relating
to restrictions on transfer set forth in this Prospectus and (c) relating to
registration rights set forth in this Prospectus. The Exchange Securities will
evidence the same debt as the Old Securities and will be issued under and be
entitled to the same benefits under the Indenture as the Old Securities.
Holders of the Old Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. The Old Securities which are not
tendered for exchange or are tendered but not accepted in connection with the
Exchange Offer will remain outstanding and be entitled to the benefits of the
Indenture, but will not be entitled to any registration rights under the
Registration Rights Agreement.
The Funding Company shall be deemed to have accepted validly tendered the
Old Securities when, as and if the Funding Company has given oral or written
notice thereof to the The Bank of New York, the Exchange Agent. The Exchange
Agent will act as agent for the tendering holders for the purposes of receiving
the Exchange Securities from the Funding Company. If any tendered Old Securities
are not accepted for exchange because of an invalid tender, the occurrence of
certain other events set forth herein or otherwise, certificates for any such
unaccepted Old Securities will be returned, without expense, to the tendering
holder thereof as promptly as practicable after the Expiration Date.
Holders who tender the Old Securities in connection with the Exchange Offer
will not be required to pay brokerage commissions or fees or, subject to the
instructions in the Letter of Transmittal (the "Letter of Transmittal"),
transfer taxes with respect to the exchange of the Old Securities in connection
with the Exchange Offer. The Funding Company will pay all charges and expenses,
other than certain applicable taxes described below, in connection with the
Exchange Offer. See "-Fees and Expenses."
EXPIRATION DATE OF THE EXCHANGE OFFER
The Funding Company shall use its reasonable best efforts to (a) cause the
Registration Statement to become effective under the Securities Act on or prior
to the Effective Date and (b) keep the Exchange Offer open for a period of not
less than the shorter of (i) the period ending when the last remaining Old
Securities is tendered into the Exchange Offer and (ii) 30 days from the date
notice is mailed to the holders of Initial Securities; PROVIDED, that in no
event shall such period be less than the period required under applicable
Federal and state securities laws.
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, unless extended by the Funding Company in its sole discretion, in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended.
INTEREST ON THE EXCHANGE SECURITIES
The Exchange Securities will bear interest at the rate of 12% per annum.
Interest on the Exchange Securities and shall accrue from the last Interest
Payment Date on which interest was paid on the Old Securities surrendered.
Interest on the Exchange Securities will be payable semiannually on April 30 or
October 30 of each year, commencing on the first Interest Payment Date following
the issuance thereof.
Holders of the Old Securities whose Old Securities are accepted for exchange
will not receive interest on such Old Securities for any period subsequent to
the last interest payment date to occur
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prior to the issue date of the Exchange Securities, and will be deemed to have
waived the right to receive any interest payment on the Old Securities accrued
from and after such interest payment date.
EXCHANGE OFFER PROCEDURES
The tender to the Funding Company of the Old Securities by a holder thereof
as set forth below and the acceptance thereof by the Funding Company will
constitute a binding agreement between the tendering holder and the Funding
Company upon the terms and subject to the conditions set forth in this
Prospectus and in the accompanying Letter of Transmittal. Except as set forth
below, a holder who wishes to tender the Old Securities for exchange pursuant to
the Exchange Offer must transmit a properly completed and duly executed Letter
of Transmittal, including all other documents required by such Letter of
Transmittal, to the Exchange Agent at one of the addresses set forth below under
"Exchange Agent" prior to 5:00 p.m. New York City time on or prior to the
Expiration Date. In addition, either (a) certificates for such Old Securities
must be received by the Exchange Agent along with the Letter of Transmittal, (b)
a timely confirmation of a book entry transfer of such Old Securities, if such
procedure is available, into the Exchange Agent's account at DTC pursuant to the
procedure for book entry transfer described below, must be received by the
Exchange Agent prior to 5:00 p.m. New York City time on the Expiration Date or
(c) the holder must comply with the guaranteed delivery procedures described
below.
THE METHOD OF DELIVERY OF THE OLD SECURITIES, LETTERS OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR THE OLD
SECURITIES SHOULD BE SENT TO THE FUNDING COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless the Old Securities surrendered for exchange
pursuant thereto are tendered (a) by a registered holder of the Old Securities
who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (b) for the
account of an Eligible Institution (as defined herein). In the event that
signatures on a Letter of Transmittal or a notice of withdrawal, as the case may
be, are required to be guaranteed, such guarantees must be by a firm which is a
member of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (each, an "Eligible
Institution" and collectively, "Eligible Institutions"). If the Old Securities
are registered in the name of a person other than the signer of a Letter of
Transmittal, such Old Securities surrendered for exchange must be endorsed by,
or be accompanied by a written instrument or instruments of transfer or
exchange, in satisfactory form as determined by the Funding Company in its sole
discretion, duly executed by the registered holder with the signature thereon
guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of the Old Securities tendered for exchange will be
determined by the Funding Company in its sole discretion, which determination
shall be final and binding. The Funding Company reserves the absolute right to
reject any and all tenders of any particular Old Securities not properly
tendered or to not accept any particular Old Securities which acceptance might,
in the judgment of the Funding Company or its counsel, be unlawful. The Funding
Company also reserves the absolute right to waive any defects or irregularities
or conditions of the Exchange Offer as to any particular Old Securities either
before or after the Expiration Date (including the right to waive the
ineligibility of any holder who seeks to tender Old Securities in the Exchange
Offer). The interpretation of the terms and conditions of the Exchange Offer as
to any particular Old Securities either before or after the Expiration Date
(including
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the Letter of Transmittal and the instructions thereto) by the Funding Company
shall be final and binding on all parties. Unless waived, all defects or
irregularities in connection with tenders of the Old Securities for exchange
must be cured within such reasonable period of time as the Funding Company shall
determine. Neither the Funding Company, the Exchange Agent nor any other person
shall be under any duty to give notification of any defect or irregularity with
respect to any tender of the Old Securities for exchange, nor shall any of them
incur any liability for failure to give such notification. The Exchange Agent
intends to use reasonable efforts to give notification of such defects or
irregularities. The Old Securities that are tendered but not accepted by the
Funding Company for exchange, will, following consummation of the Exchange
Offer, continue to be subject to the existing restrictions upon transfer thereof
under the Securities Act and, upon consummation of the Exchange Offer, certain
registration rights under the Registration Rights Agreement will terminate.
ACCEPTANCE OF OLD SECURITIES FOR EXCHANGE; DELIVERY OF EXCHANGE SECURITIES
The Funding Company will accept, promptly after the Expiration Date, all Old
Securities properly tendered and will issue the Exchange Securities promptly
after acceptance of the Old Securities. For purposes of the Exchange Offer, the
Funding Company shall be deemed to have accepted properly tendered the Old
Securities for exchange when, as and if the Funding Company has given oral or
written notice thereof to the Exchange Agent, with written confirmation of any
oral notice to be given promptly thereafter.
In all cases, issuance of the Exchange Securities for the Old Securities
that are accepted for exchange pursuant to the Exchange Offer will be made only
after timely receipt by the Exchange Agent of (a) certificates for such Old
Securities or a timely confirmation of such Old Securities into the Exchange
Agent's account at DTC, (b) a properly completed and duly executed Letter of
Transmittal and (c) all other required documents. If any tendered Old Securities
are not accepted for any reason set forth in the terms and conditions of the
Exchange Offer, or if the Old Securities are submitted for a greater amount than
the holder desires to exchange, such unaccepted or unexchanged Old Notes will be
returned without expense to the tendering holder thereof (or, in the case of the
Old Securities tendered by book entry transfer into the Exchange Agent's account
at DTC pursuant to the book entry procedures described below, such nonexchanged
Old Securities will be credited to an account maintained with DTC) designated by
the tendering holder as promptly as practicable after the expiration or
termination of the Exchange Offer.
BOOK ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Securities at DTC for purposes of the Exchange Offer promptly
following the date of this Prospectus, and any financial institution that is a
participant in the DTC systems may make book entry delivery of the Old
Securities by causing DTC to transfer such Old Securities into the Exchange
Agent's account at DTC in accordance with DTC's procedures for transfer.
However, although delivery of the Old Securities may be effected through book
entry transfer at DTC, the Letter of Transmittal or facsimile thereof, with any
required signature guarantees and any other required documents, must, in any
case, be transmitted to and received by the Exchange Agent at one of the
addresses set forth below under "-Exchange Agent" on or prior to the Expiration
Date or the guaranteed delivery procedures described below must be complied
with.
GUARANTEED DELIVERY PROCEDURES
If a holder of the Old Securities desires to tender such Old Securities and
such Old Securities are not immediately available, or time will not permit such
holder's Old Securities or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book entry transfer cannot be
completed on a timely basis, a tender may be effected if (a) the tender is made
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through an Eligible Institution, and, prior to the Expiration Date, the Exchange
Agent has received from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form of the corresponding exhibit to the
Registration Statement of which this Prospectus constitutes a part (by telegram,
telex, facsimile transmission, mail or hand delivery), setting forth the name
and address of the holder of the Old Securities and the amount of Old Securities
tendered, stating that the tender is being made thereby and guaranteeing that
within three (3) New York Stock Exchange trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates for all
physically tendered Old Securities, in proper form for transfer, or a timely
confirmation of a book entry transfer, as the case may be, and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent and (b) the certificates for all
physically tendered Old Securities, in proper form for transfer, or a timely
confirmation of a book entry transfer, as the case may be, and all other
documents required by the Letter of Transmittal, are received by the Exchange
Agent within three (3) New York Stock Exchange trading days after the date of
execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of the Old Securities may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address set forth below under "Exchange
Agent." Any such notice of withdrawal must specify the name of the person having
tendered the Old Securities to be withdrawn, identify the Old Securities to be
withdrawn, including the amount of such Old Securities, and specify the name in
which such Old Securities are registered, where certificates for the Old
Securities have been transmitted and if the name on such certificates is
different from that of the withdrawing holder. If certificates for the Old
Securities have been delivered or otherwise identified to the Exchange Agent,
then, prior to the release of such certificates, the withdrawing holder must
also submit the serial numbers of the particular certificates to be withdrawn
and a signed notice of withdrawal with signatures guaranteed by an Eligible
Institution unless such holder is an Eligible Institution. If the Old Securities
have been tendered pursuant to the procedure for book entry transfer described
above, any notice of withdrawal must specify the name and number of the account
at DTC to be credited with the withdrawn Old Securities and otherwise comply
with the procedures of such facility. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Funding Company, whose determination shall be final and binding on all
parties. Any Old Securities so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old Securities
which have been tendered for exchange but which are not exchanged for any reason
will be returned to the holder thereof without cost to such holder (or, in the
case of the Old Securities tendered by book entry transfer into the Exchange
Agent's account at DTC pursuant to the book entry transfer procedures described
above, such Old Securities will be credited to an account with DTC specified by
the holder of such Old Securities) as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn Old
Securities may be retendered by following one of the procedures described under
"Exchange Offer Procedures" above at any time on or prior to the Expiration
Date.
UNDERWRITTEN REGISTRATION
No holder may participate in any registration in which the Securities are
sold to an underwriter or group of underwriters for reoffering to the public.
Any such registration shall only be undertaken at the option of the Funding
Company, unless such holder (a) agrees to sell such holder's Old Securities on
the basis provided in any underwriting arrangements approved by the persons
entitled hereunder to
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approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
EXCHANGE AGENT
The Bank of New York has been appointed as the Exchange Agent in connection
with the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent, at its offices at 101 Barclay Street, New York,
New York 10286; telephone number: (212) 495-1784; and facsimile number (212
815-5544.
DELIVERY OF A LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
The Funding Company shall bear all expenses incurred in connection with the
Exchange Offer; PROVIDED, HOWEVER, that if the Funding Company permits sales to
an underwriter or a group of underwriters for reoffering to the public, the
Funding Company shall not be responsible for any fees and expenses of any
underwriter including any underwriting discounts and commissions or any legal
fees and expenses of counsel to the underwriters.
Holders who tender their Old Securities for exchange will not be obligated
to pay any transfer taxes in connection therewith. However, if the Exchange
Securities are to be delivered to, or are to be issued in the name of, any
person other than the registered holder of the Old Securities tendered, or if
tendered Old Securities are registered in the name of any person other than the
person signing the Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of the Old Securities in connection with the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or any other person) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted together with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendered holder.
TRANSFER TAXES
Holders who tender their Old Securities for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that holders who
instruct the Funding Company to register the Exchange Securities in the name of,
or request that the Old Securities not tendered or not accepted in the Exchange
Offer be returned to, a person other than the registered tendering holder will
be responsible for the payment of any applicable transfer tax thereon.
APPRAISAL RIGHTS
HOLDERS OF THE OLD SECURITIES WILL NOT HAVE DISSENTERS' RIGHTS OR APPRAISAL
RIGHTS IN CONNECTION WITH THE EXCHANGE OFFER.
ACCOUNTING TREATMENT
The Exchange Securities will be recorded at the same carrying value as the
Old Securities as reflected in the Funding Company's accounting records on the
date of the exchange. Accordingly, no
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gain or loss for accounting purposes will be recognized by the Funding Company
upon the consummation of the Exchange Offer. Any expenses of the Exchange Offer
that are paid by the Funding Company will be amortized by the Funding Company
over the term of the Exchange Securities under GAAP.
CONSEQUENCES OF EXCHANGE AND FAILURE TO EXCHANGE OLD SECURITIES
Holders of the Old Securities who do not exchange their Old Securities for
the Exchange Securities pursuant to the Exchange Offer will continue to be
subject to the restrictions on transfer of such Old Securities as set forth in
the legend thereon. In general, the Old Securities may not be offered or sold,
unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. Except under certain limited circumstances, the Funding
Company does not currently intend to register the Old Securities under the
Securities Act. In addition, upon the consummation of the Exchange Offer,
holders of the Old Securities which remain outstanding will not be entitled to
any rights to have such Old Securities registered under the Securities Act or to
any rights under the Registration Rights Agreement. To the extent that the Old
Securities are tendered and accepted in the Exchange Offer, a holder's ability
to sell untendered, or tendered but unaccepted, Old Securities could be
adversely affected. See "Consequences of Not Exchanging Old Securities."
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties in other transactions substantially
similar to the Exchange Offer, the Funding Company believes that the Exchange
Securities issued pursuant to the Exchange Offer in exchange for Old Securities
may be offered for resale, resold and otherwise transferred by a holder thereof,
other than a Restricted Person, without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange Securities are acquired in the ordinary course of such holder's
business and that such holder is not participating, and has no arrangement or
understanding with any person to participate, in the distribution of such
Exchange Securities. Each holder of the Old Securities to be exchanged in the
Exchange Offer (other than any Restricted Person) shall be required as a
condition to participating in the Exchange Offer to represent that (a) it is not
an Affiliate of the Funding Company, (b) any Exchange Securities to be received
by it shall be acquired in the ordinary course of its business and (c) that at
the time of the consummation of the Exchange Offer it shall have no arrangement
with any person to participate in the distribution (within the meaning of the
Securities Act) of the Exchange Securities. If a holder cannot make such
representation, such holder (a) cannot rely on the applicable interpretations of
the staff of the Commission and (b) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction, including the requirement that any such secondary resale
transactions be covered by an effective registration statement containing the
selling securityholder information required by Item 507 of Regulation S-K of the
Securities Act. A broker-dealer who receives the Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it acquired the Old
Securities as the result of market-making activities or other trading activities
and will deliver a prospectus in connection with any resale of such Exchange
Securities. Pursuant to Section 4(3) under the Securities Act, until
, 1999 all broker-dealers effecting transactions in the Exchange
Securities, whether or not participating in the Exchange Offer, may be required
to deliver a Prospectus. This Prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection with resales of
the Exchange Securities. See "Purpose of the Exchange Offer" and "PLAN OF
DISTRIBUTION."
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SUMMARY DESCRIPTION OF THE SECURITIES
THE FOLLOWING IS A DESCRIPTION OF CERTAIN PROVISIONS OF THE SECURITIES AND
DOES NOT PURPORT TO BE A COMPLETE DESCRIPTION OF THE SECURITIES AND IS SUBJECT
TO, AND QUALIFIED IN ITS ENTIRETY BY, REFERENCE TO THE SECURITIES AND THE
INDENTURE.
The Exchange Securities are identical in all material respects to be Old
Securities, except for certain transfer restrictions, registration rights and
liquidated damages provisions relating to the Old Securities described below.
GENERAL
The Securities were issued by the Funding Company and guaranteed by the U.S.
Guarantors and, indirectly, through its guarantee to the Funding Company of the
Trinidad Project Note, by the Trinidad Guarantor. InnCOGEN is currently
constructing, and will own and operate, the Trinidad Project. Subject to certain
conditions, the Brooklyn Navy Yard Guarantor has the right to receive certain
cash flow from the Brooklyn Navy Yard Project. The Warbasse Guarantors have the
right to receive certain senior cash flow from the Warbasse Project. The Big
Spring Guarantor is currently constructing, and will own and operate, the 34 MW
wind energy Big Spring Project.
The Securities are secured by (a) a pledge of capital stock of York T&T,
constituting 65% of the outstanding voting stock and 79% of all classes of
outstanding stock, (b) a security interest in substantially all of the tangible
and intangible property of the Funding Company, including both Project Notes and
each of the Funds, (c) the guarantees issued by the U.S. Guarantors and (d) the
right, on the terms set forth in the Declaration of Trust, to direct the voting
of the outstanding share capital of the Funding Company. The Guarantee issued by
each of the Warbasse Guarantors is secured by a pledge of certain senior secured
notes issued by the Warbasse Project to the Warbasse Guarantors and of the
equity interest in the Warbasse Guarantors. The Guarantee issued by the Brooklyn
Navy Yard Guarantor is secured by a pledge of certain cash flow from the
Brooklyn Navy Yard Project and of the equity interest in the Brooklyn Navy Yard
Guarantor. The Guarantee issued by the Big Spring Guarantor is secured by a lien
on substantially all of the assets of the Big Spring Project and a pledge of the
general and limited partnership interests in the Big Spring Guarantor. The
Guarantee issued by the Trinidad Guarantor is secured by a mortgage debenture on
substantially all of the assets of the Trinidad Project and a pledge of the
equity interest in the Trinidad Parent, York Cayman, the Trinidad Guarantor and
InnCOGEN.
The obligation to pay principal of, premium, if any, and interest on the
Securities is obligations solely of the Funding Company, secured by the Funding
Company Collateral and payable solely from, and recourse solely to, the Funding
Company Collateral. Neither York (nor any stockholder, officer, director or
employee thereof or of the Funding Company, or of the Guarantors) nor any
Affiliate thereof other than the U.S. Guarantors pursuant to their Guarantees,
guarantees the payment of the Securities or has any obligation with respect to
the payment of the Securities. The obligations to pay principal of, premium, if
any, and interest on the Trinidad Project Note is obligations solely of the
Trinidad Finance Parties.
Net proceeds of the offering of the Old Securities were used to fund the
Debt Service Reserve Fund and to make loans to the Project Note Obligors in
exchange for issuance of the Project Notes. The Big Spring Guarantor is
currently using certain net proceeds of the U.S. Project Loan to finance the
balance of construction costs of the Big Spring Project. The Trinidad Parent is
currently using certain net proceeds of the Trinidad Project Loan to make a
capital contribution to the Trinidad Guarantor, which was loaned to InnCOGEN, to
finance construction of the Trinidad Project. The balance of such proceeds was
made available to York for general corporate purposes.
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The Securities are payable from payments made under the Project Notes and
the Guarantees. Principal of the Securities is payable as described herein. The
Securities are subject to mandatory redemption at par plus accrued interest
(plus a yield maintenance premium in certain circumstances as described herein)
only in certain limited circumstances described herein, and are subject to
optional redemption at any time at par plus a yield maintenance premium as
described herein.
The Old Securities are issued under the Indenture and sold to qualified
institutional buyers ("QIBs") in reliance on Rule 144A under the Securities Act
("Rule 144A"), and to certain off-shore persons in reliance under Regulation S
under the Securities Act.
The Indenture provides for the issuance of other series of senior secured
bonds or notes as from time to time may be authorized by the Funding Company,
subject to the limitations set forth in the Indenture. See "SUMMARY DESCRIPTION
OF PRINCIPAL FINANCING DOCUMENTS-Trust Indenture," "-Additional Securities" and
"-Amendments and Supplements."
The Securities are direct obligations of the Funding Company, secured by and
with recourse limited to the Funding Company Collateral and jointly and
severally guaranteed by the U.S. Guarantors, and indirectly to the extent of the
guarantee of the Trinidad Project Note to the Funding Company, the Trinidad
Guarantor, pursuant to their respective Guarantees. The obligations of such
Guarantors under their Guarantees are secured by Collateral of each the
Guarantors.
PRINCIPAL AMOUNT, INTEREST RATE, FINAL MATURITY AND PAYMENT
The Exchange Securities will be issued in one series in the aggregate
principal amount of up to $150 million will bear interest from their date of
issuance at the rate per annum of 12%.
PAYMENT OF PRINCIPAL AND INTEREST
The principal of the Securities will be payable in semi-annual installments,
commencing April 30, 2000, as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
PAYMENT DATE PAYABLE PAYABLE
- ------------------- ---------------- -----------------
<S> <C> <C>
April 30, 2000 $ 1,350,000 0.90%
October 30, 2000 1,338,000 0.89
April 30, 2001 1,650,000 1.10
October 30, 2001 1,602,000 1.07
April 30, 2002 750,000 0.50
October 30, 2002 717,000 0.48
April 30, 2003 547,000 0.36
October 30, 2003 518,000 0.35
April 30, 2004 1,148,000 0.77
October 30, 2004 1,074,000 0.72
April 30, 2005 1,890,000 1.26
October 30, 2005 1,731,000 1.15
April 30, 2006 757,000 0.50
October 30, 2006 681,000 0.45
April 30, 2007 660,000 0.44
October 30, 2007 $ 133,587,000 89.06
------
100.00%
</TABLE>
Interest on the Securities will be payable semi-annually on each April 30
and October 30, commencing October 30, 1998 to the registered owners thereof
registered at the close of business on
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April 15 and October 15, as the case may be, preceding such Interest Payment
Date. Interest payments on the Securities will be on the basis of a 360-day year
consisting of twelve 30-day months.
OPTIONAL REDEMPTION
The Securities are subject to optional redemption at the instance of the
Funding Company, in whole or in part, pro rata, at any time, at par plus
interest to the to the date on which the Funding Company redeems such Securities
(the "Redemption Date") plus the Make-Whole Premium.
The Majority Holders may, following the request of the Funding Company or
upon their own decision, elect that the Funding Company redeem the Securities,
in whole or in part, at a redemption price equal to the principal amount thereof
plus accrued interest to the Redemption Date, with monies which remain on
deposit in the U.S. Distribution Suspense Fund or the Trinidad Distribution
Suspense Fund for at least 18 months in accordance with the applicable
Depositary Agreement as a result of the relevant Project Company's or the
Trinidad Finance Party's failure to satisfy the U.S. Distribution Conditions or
the Trinidad Distribution Conditions, as the case may be.
If the Funding Company elects to redeem the Initial Securities as set forth
in the paragraphs immediately above, it shall deliver to the Trustee, at least
30 days prior to the date upon which notice of redemption is required to be
given to the Holders pursuant to the Indenture, a certificate from the Funding
Company specifying the Redemption Date upon which such redemption shall occur
and the principal amount of Initial Securities to be redeemed.
MANDATORY REDEMPTION
The Securities will be subject to mandatory redemption, in whole or in part
at a redemption price equal to the principal amount thereof plus accrued
interest to the Redemption Date, plus in the case of clause (c), the Make-Whole
Premium, upon (a) receipt by a Guarantor of Loss Proceeds or Expropriation
Proceeds (each as defined herein) (or, in the case of the Warbasse Guarantors
and the Brooklyn Navy Yard Guarantor, cash flow representing Loss Proceeds or
Expropriation Proceeds) in connection with an event which causes all or a
portion of a Project to be damaged, destroyed or rendered unfit for normal use
for any reason whatsoever (an "Event of Loss") or any compulsory transfer or
taking or transfer under threat of compulsory transfer or taking of any material
part of the Collateral or Projects by any Governmental Authority (an
"Expropriation Event") related to such Guarantor's Project if the amount of such
Loss Proceeds or Expropriation Proceeds exceeds $2 million and, in the case of
the Big Spring Project and the Trinidad Project, if such Project is not repaired
or rebuilt in accordance with an Approved Restoration Plan (as defined herein),
or, if such Project is repaired or rebuilt in accordance with an Approved
Restoration Plan and such Guarantor receives Loss Proceeds or Expropriation
Proceeds in excess of $2 million in excess of the amount required for such
repair or rebuilding, (b) receipt by a Guarantor of amounts in excess of $2
million representing Power Contract Buy-Out Proceeds (as defined herein) (or, in
the case of the Warbasse Guarantors and the Brooklyn Navy Yard Guarantor, cash
flow representing Power Contract Buy-Out Proceeds) in connection with a buy-out
of any Guarantor's Power Purchase Agreement (a "Power Contract Buy-Out") or
similar event related to such Guarantor's Project; PROVIDED, that such proceeds
shall be distributed in accordance with the priority of payments provided if (i)
the Funding Company and the relevant Guarantor provides written affirmation from
each Rating Agency of the Ratings (taking into account the effects of such Power
Contract Buy-Out) and (ii) the Independent Engineer confirms that, after giving
effect to the Power Contract Buy-Out, the minimum and average Projected Debt
Service Coverage Ratio for the next four consecutive fiscal quarters and each
fiscal year thereafter through the latest stated maturity date of any of the
Securities (the "Final Maturity Date") will be greater than 1.55 to 1.0,
respectively, (c) receipt by the Big Spring Guarantor or InnCOGEN of liquidated
damages in excess of $1 million pursuant to the Vestas Agreement, the EES
Contract or the Turnkey Construction Contract, as applicable, other than those
applied to (i) construction of the applicable Project in accordance with the
then applicable
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construction budget or construction schedule, (ii) payment of interest during
construction, (iii) payments to T&TEC in accordance with the Trinidad PPA or
(iv) compensate the Big Spring Guarantor for lost tax credits, unless the Big
Spring Guarantor or InnCOGEN provides written affirmation from each Rating
Agency of the Ratings, (d) receipt by a Guarantor of any proceeds of Debt (other
than Permitted Debt) incurred by the respective Project Companies, (e) receipt
by the Funding Company of proceeds from the acceleration of the Project Loans
and from foreclosure of the Collateral securing the Project Loans, (f) receipt
by the Funding Company of any proceeds as a result of a default under any
Guarantee and the foreclosure of the Collateral securing such Guarantee and (g)
receipt by the Brooklyn Navy Yard Guarantor of any Equity Cash Flows upon the
dissolution of BNYCP or upon an change in the relative ownership percentage of
the partnership thereof, such proceeds shall be used to redeem the Initial
Securities in accordance with the Indenture. See "SUMMARY DESCRIPTION OF
PRINCIPAL FINANCING DOCUMENTS-Priority of Payments."
RATINGS
Moody's and S&P have assigned the Securities ratings of "Ba3" and "BB-"
respectively. There is no assurance that any such credit rating will remain in
effect for any given period of time or that such rating will not be lowered,
suspended or withdrawn entirely by the applicable Rating Agency, if, in such
Rating Agency's judgment, circumstances so warrant. Any such lowering,
suspension or withdrawal of any rating may have a material adverse effect on the
market price or marketability of the Securities.
BOOK ENTRY SYSTEM
THE FOLLOWING DESCRIPTION OF THE OPERATIONS AND PROCEDURES OF DTC AND
EUROCLEAR IS PROVIDED SOLELY AS A MATTER OF CONVENIENCE. THESE OPERATIONS AND
PROCEDURES ARE SOLELY WITHIN THE CONTROL OF THE RESPECTIVE SETTLEMENT SYSTEMS
AND ARE SUBJECT TO CHANGES BY SUCH SYSTEMS FROM TIME TO TIME. NEITHER THE
FUNDING COMPANY NOR ANY OF THE GUARANTORS TAKES ANY RESPONSIBILITY FOR THESE
OPERATIONS AND PROCEDURES AND URGES INVESTORS TO CONTACT THE SYSTEMS OR THEIR
PARTICIPANTS DIRECTLY TO DISCUSS THESE MATTERS.
The Securities will be issued in the form of a Global Security. The Global
Security will be deposited with, or on behalf of, DTC and registered in the name
of DTC or its nominee. Except as set forth below, the Global Security may be
transferred, in whole and not in part, only to DTC or another nominee of DTC.
Investors may hold their beneficial interest in the Global Security directly
through DTC if they have an account with DTC or indirectly through organizations
which have accounts with DTC.
Payments of principal of, premium if any, and interest on, the Global
Securities will be made by or on behalf of the Funding Company through the
Trustee to DTC or its nominee, as the case may be, as the registered owner of
such Global Security. None of the Funding Company, the Guarantors, the Trustee,
the Initial Purchaser, any paying agents or the registrar will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the Securities
held by Cede & Co., as nominee for DTC, or Euroclear, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
Because of time zone differences, the securities account of a Euroclear
participant purchasing an interest in a Global Security from a DTC Participant
will be credited during the securities settlement processing day (which must be
a business day for Euroclear, as applicable) immediately following the DTC
settlement date. Credit of such transactions in interests in a Global Security
settled during such processing day will be reported to the relevant Euroclear
participant on that day. Cash received in Euroclear as a result of sales of
interests in a Global Security by or through a Euroclear participant to a DTC
participant (the "DTC Participants") will be received with value on the DTC
settlement date but will be available in the relevant Euroclear cash account
only as of the business day following settlement in DTC.
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Any Person having a beneficial interest in the Securities evidenced by a
Global Security may (subject to the restrictions noted above), upon request,
exchange its interest in such Global Security for a Definitive Security. Upon
receipt by the Trustee of written or electronic instructions from DTC or its
nominee on behalf of any Person having a beneficial interest in the Securities
evidenced by such Global Security and upon receipt by the Trustee of a written
order of such Person containing registration instructions, the Trustee will
cause, in accordance with the standing instructions and procedures existing
between DTC and the Trustee, initially, and its successors and assigns or any
other custodian performing similar functions (the "Custodian"), the aggregate
principal amount of such Global Security to be reduced and, following such
reduction, the Funding Company will execute and the Trustee will authenticate
and deliver to such Person or the transferee, as the case may be, a Definitive
Security.
In addition, the Securities will be issued as Definitive Securities (as
defined herein) to Holders or their nominees, rather than to Cede & Co. as
nominee for DTC, if (a) the Funding Company advises the Trustee in writing that
DTC is no longer willing or able to discharge properly its responsibilities as
depositary with respect to the Securities and the Funding Company is unable to
locate a qualified successor, (b) the Funding Company, at its option, elects to
terminate the book entry system through DTC with respect to the Securities or
(c) after the occurrence of an Event of Default, beneficial owners holding
interest representing an aggregate principal amount of Securities of not less
than 51% of the Securities represented by the Global Security advise the Trustee
through DTC in writing that the continuation of a book entry system through DTC
(or a successor thereto) with respect to the Securities is no longer in such
beneficial owners' best interest.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee shall, upon written notice and receipt of a list of all
Persons who hold a beneficial interest in the Global Security from the
Depositary, be required to notify, at the expense of the Funding Company, all
Persons who hold a beneficial interest in the Global Security through DTC
Participants or Indirect Participants through such DTC Participants of the
issuance of Definitive Securities. Upon surrender by the Custodian of the Global
Security and receipt from the Depositary of instructions for re-registration,
the Funding Company will execute and the Trustee will authenticate and deliver
the Definitive Securities.
Subject to the terms of the Indenture, the Securities may be surrendered for
registration or transfer or exchange for Securities of the same series, of
authorized denomination, and of like tenor, maturity, and principal amount at
the corporate trust office of the Trustee. The Security registrar is not
required (a) to issue, register the transfer of or exchange any Securities of
any series during a period (i) beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption of the Securities of
such series selected for redemption and ending at the close of business on the
day of such mailing and (ii) beginning on the record date for the stated
maturity of any installment of principal of or payment of interest on the
Securities of such series and ending on the stated maturity of such installment
of principal of or payment of interest, or (b) to issue, register the transfer
or exchange of any Securities selected for redemption in whole or in part except
the unredeemed portion of any Securities selected for redemption in part. No
service charge will be required of any Holder participating in any transfer or
exchange of the Securities in respect of such transfer or exchange, but, with
certain exceptions, payment may be required of any tax or other governmental
charges that may be imposed in connection therewith.
Securities represented in the Global Security will be held as the DTC
Securities. DTC has advised the Funding Company that it is a limited purpose
trust company organized under the laws of the State of New York, a member of the
United States Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for the DTC Participants and to facilitate the clearance and
settlement of securities transactions between DTC Participants through
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electronic book entries, thereby eliminating the need for physical movement of
certificates. DTC Participants include securities brokers and dealers, banks,
trust companies and clearing corporations. Indirect access to the DTC system
also is available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a DTC Participant,
either directly or indirectly ("Indirect Participants").
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
DTC Securities among DTC Participants on whose behalf it acts and to receive and
transmit distributions of principal, premium and interest on the DTC Securities.
DTC Participants and Indirect Participants, with which beneficial owners of DTC
Securities have accounts with respect to the DTC Securities, similarly are
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective owners. Accordingly, although owners who hold DTC
Securities through DTC Participants or Indirect Participants will not possess
the Securities, the Rules, by virtue of the requirements described above,
provide a mechanism by which DTC Participants will receive payments and will be
able to transfer their interests with respect to the Securities.
Because DTC may only act on behalf of DTC Participants, who in turn act on
behalf of Indirect Participants, any Holder desiring to pledge DTC Securities to
persons or entities that do not participate in DTC, or otherwise take actions
with respect to such DTC Securities, will be required to withdraw its Securities
from DTC as described above.
DTC has advised the Funding Company that it will take any action permitted
to be taken by a Holder only at the direction of one or more DTC Participants to
whose account with DTC such Holder's DTC Securities are credited. Additionally,
DTC has advised the Funding Company that it will take such actions with respect
to any percentage of the beneficial interest of Holders who hold Securities
through DTC Participants or Indirect Participants only at the direction of and
on behalf of DTC Participants whose accounts holders include undivided interests
that satisfy any such percentage. DTC may take conflicting actions with respect
to other undivided interests to the extent that such actions are taken on behalf
of DTC Participants whose account holders include such undivided interests.
NATURE OF RECOURSE ON THE SECURITIES
The Funding Company's obligations to make payments of principal of, premium,
if any, and interest on the Securities are obligations secured solely by, and
recourse solely to, the Funding Company Collateral and guaranteed by the U.S.
Guarantors pursuant to their Guarantees. Neither the agent, officer, director or
employee of the Funding Company nor of any Affiliate, will guarantee the payment
of the Securities or has any obligation with respect to the payment of the
Securities (other than the U.S. Guarantors and with respect to obligations of
such U.S. Guarantor under the Transaction Documents to which they are parties)
and the Trinidad Finance Parties with respect to the obligations of the Trinidad
Finance Parties solely in connection with the Trinidad Project Loan.
SUMMARY DESCRIPTION OF PRINCIPAL FINANCING DOCUMENTS
THE FOLLOWING SUMMARIES OF CERTAIN PROVISIONS OF THE DEPOSITARY AGREEMENTS,
THE INDENTURE, THE GUARANTEES, THE PROJECT LOAN AGREEMENTS, THE PROJECT NOTES
AND THE INTERCREDITOR AGREEMENT (COLLECTIVELY, WITH THE SECURITIES AND THE OTHER
SECURITY DOCUMENTS, THE "FINANCING DOCUMENTS") DO NOT PURPORT TO BE COMPLETE AND
ARE SUBJECT TO, AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO, ALL OF THE
PROVISIONS THEREOF, INCLUDING DEFINITIONS THEREIN OF CERTAIN TERMS. CERTAIN OF
THE FINANCING DOCUMENTS HAVE BEEN FILED AS AN EXHIBIT TO THE REGISTRATION
STATEMENT OF WHICH THIS PROSPECTUS IS A PART. SEE "AVAILABLE INFORMATION."
CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE DEFINED IN THIS PROSPECTUS HAVE
THE MEANINGS ASCRIBED TO THEM IN THE FINANCING DOCUMENTS.
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DEPOSITARY AGREEMENTS
The Funding Company has entered into a U.S. Deposit and Disbursement
Agreement, dated as of the Closing Date, with the Collateral Agent, the
Depositary and the U.S. Guarantors (the "U.S. Depositary Agreement") and a
Trinidad Deposit and Disbursement Agreement, dated as of the Closing Date, with
the Collateral Agent, the Depositary, the Trinidad Guarantor, the Trinidad
Parent and InnCOGEN (the "Trinidad Depositary Agreement"). Pursuant to each of
the Depositary Agreements, the Collateral Agent, on behalf of the Secured
Parties, has appointed the Depositary as depository bank with respect to the
funds held in each of the Funds (as defined herein). Pursuant to the terms of
each Depositary Agreement, the Depositary will hold, invest and disburse monies
in which the Depositary and/or the Collateral Agent, on behalf of the Secured
Parties, has been granted a security interest. Neither the Funding Company, any
U.S. Guarantor nor any Trinidad Finance Party shall have any right of withdrawal
under any Fund, except under circumstances to be established in the Depositary
Agreements.
DEPOSITARY FUNDS
The following funds have been established and created with the Depositary
and pledged as security for the benefit of the Depositary and the Collateral
Agent acting on behalf of all the Secured Parties:
<TABLE>
<CAPTION>
U.S. FUNDS
TRINIDAD
FUNDS --------------------------------------------------
- --------------------------------------------------------
<S> <C>
(i) Big Spring Construction Fund with the
(i) Trinidad Construction Fund; Contingency
Reserve Subfund;
(ii) Trinidad Revenue Fund with the
(ii) U.S. Revenue Fund;Trinidad Guarantor Fund and
the
(iii) Big Spring Operating Fund;Trinidad Parent
Fund;
(iv) U.S. Interest Fund;
(iii) Trinidad Operating Fund;
(v) U.S. Principal Fund;
(iv) Trinidad Interest Fund;
(vi) Big Spring Maintenance Reserve Fund;
(v) Trinidad Principal Fund;
(vii) Debt Service Reserve Fund;
(vi) Trinidad Maintenance Reserve Fund;
(viii) Brooklyn Navy Yard Supplemental
(vii) Trinidad Additional Reserve Fund; Reserve
Fund;
(viii) Trinidad Distribution Fund;
(ix) U.S. Additional Reserve Fund;
(ix) Trinidad Distribution Suspense Fund;
(x) U.S. Distribution Fund;
(x) Trinidad Loss Proceeds Fund; and
(xi) U.S. Distribution Suspense Fund;
(xi) Trinidad Redemption Fund.
(xii) U.S. Loss Proceeds Fund; and
(xiii) U.S. Redemption Fund.
</TABLE>
TRINIDAD LOCAL FUND
InnCOGEN may establish a local account in Trinidad (the "Trinidad Local
Fund"), which may be funded with amounts anticipated to be due and payable
within 60 days with respect to the Operating and Maintenance Costs of the
Trinidad Project, if so directed by the Trinidad Finance Parties. The Trinidad
Local Fund shall be included in the definition of the "Trinidad Funds" for all
purposes of the Financing Documents and will be subject to the security interest
for the benefit of the Secured Parties. The Trinidad Local Fund, however, is not
required to be established with the Depositary but will be pledged for the
benefit of the Collateral Agent.
The Debt Service Reserve Fund, the U.S. Funds, the Trinidad Funds and the
Trinidad Local Fund shall collectively be referred to as the "Funds."
U.S. DEPOSITARY AGREEMENT
BIG SPRING CONSTRUCTION FUND
All amounts on-lent with respect to construction and operation of the Big
Spring Project prior to Substantial Completion of such Project were (i)
initially be deposited in the Big Spring Construction Fund from the proceeds of
the sale of the Initial Securities and (ii) deposited in the Contingency
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Reserve Subfund. Amounts will be disbursed from the Big Spring Construction Fund
upon receipt by the Depositary of the following:
(a) a current construction progress report and a requisition certificate
from an Authorized Officer of the Big Spring Guarantor confirmed by the
Independent Engineer that specifies the project costs and/or operating costs
that are due and payable or that are reasonably expected to be due and
payable within the next 30 days;
(b) a certificate from an Authorized Officer of the Big Spring Guarantor
confirming that no Default or Event of Default has occurred and is
continuing; and
(c) confirmation from the Independent Engineer that the construction
activities are proceeding in accordance with the construction contract and
in accordance with the project budget and schedule and that sufficient funds
are available to the Big Spring Guarantor to complete the Big Spring
Project.
If amounts on deposit in the Big Spring Construction Fund are insufficient
to complete the Big Spring Project or the Trinidad Project, monies may be
withdrawn first from the Contingency Reserve Subfund then from the U.S.
Distribution Suspense Fund and from the Debt Service Reserve Fund to complete
the Big Spring Project or the Trinidad Project. As of August 31, 1998,
approximately $175,000 has been disbursed from the Big Spring Construction Fund
for the Big Spring Project.
Following Substantial Completion of the Big Spring Project, excess funds in
the Big Spring Construction Fund shall be deposited in the U.S. Revenue Fund.
Following Substantial Completion of each of the Big Spring Project and the
Trinidad Project, as evidenced by a certificate from an Authorized Officer of
the Big Spring Guarantor and InnCOGEN, as applicable, delivered to the
Depositary, excess funds, if any, in the Contingency Reserve Subfund shall be
transferred to the U.S. Revenue Fund for distribution to other U.S. Funds
pursuant to the U.S. Depositary Agreement.
U.S. REVENUE FUND; PRIORITY OF PAYMENTS
All Cash Flows actually received by the U.S. Guarantors shall be paid into
the U.S. Revenue Fund maintained by the Depositary for the account of each of
the U.S. Guarantors. The U.S. Guarantors will arrange for the direct payment of
the Cash Flows into the U.S. Revenue Fund and no U.S. Guarantor shall have any
right of withdrawal under the U.S. Revenue Fund except pursuant to the priority
of payments set forth below.
The U.S. Revenue Fund shall be funded:
(a) from the Project Revenues and the Note Cash Flows actually received
by the Warbasse Guarantors;
(b) from the Project Revenues and the BNY Cash Flows actually received
by the Brooklyn Navy Yard Guarantor from the Brooklyn Navy Yard Project;
(c) from all Project Revenues actually received by the Big Spring
Guarantor;
(d) to the extent the amounts in the Debt Service Reserve Fund equal the
Debt Service Reserve Fund Required Balance, any income from the investment
of monies in any of the U.S. Funds;
(e) any proceeds actually received from the sale of assets by any U.S.
Guarantor in accordance with the terms of the U.S. Project Loan Agreement,
dated as of the Closing Date, among the Funding Company and the U.S.
Guarantors (the "U.S. Project Loan Agreement");
(f) all proceeds actually received from any business interruption
insurance;
(g) any proceeds of Additional Securities issued under the Indenture and
on-lent to any U.S. Guarantor;
(h) all Loss Proceeds and Expropriation Proceeds not required to be
maintained in the U.S. Loss Proceeds Fund pursuant to the terms of the U.S.
Depositary Agreement; and
(i) from other U.S. Funds as required to be transferred to the U.S.
Revenue Fund pursuant to the U.S. Depositary Agreement.
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Upon receipt of a certificate from the applicable Trinidad Finance Party (or
its duly authorized agent for such purposes) or the relevant Guarantor detailing
the amounts to be paid, funds in the U.S. Revenue Fund shall be distributed on a
monthly basis by the Depositary in the following order of priority:
FIRST, to the Depositary, the Trustee and the Collateral Agent any amounts
then due and payable to each of them as fees and expenses; PROVIDED, HOWEVER,
that if monies in the U.S. Revenue Fund are insufficient on any date to make the
payments specified in this paragraph FIRST, distribution of monies shall be made
ratably to the specified recipients, based on the respective amounts owed such
recipients;
SECOND, to the Big Spring Operating Fund up to 110% of budgeted Operating
and Maintenance Costs (as defined herein) of the Big Spring Project and up to
125% of the budgeted Operating and Maintenance Costs of the Trinidad Project
(prior to Substantial Completion of the Trinidad Project); PROVIDED that, if the
Operating and Maintenance Costs of the Big Spring Guarantor in any fiscal year
exceeds the projected Operating and Maintenance Costs in the annual Operating
Budget (as defined herein) of the Big Spring Guarantor by more than 10%, then no
amounts may be withdrawn on behalf of the Big Spring Guarantor to pay
non-budgeted Operating and Maintenance Costs unless (a) the Big Spring Guarantor
certifies that (i) such additional non-budgeted costs are reasonably designed to
permit the Big Spring Guarantor to satisfy its obligations in respect of the
U.S. Project Note and maximize its revenue and net income and (ii) Projected
Debt Service Coverage Ratio and a U.S. Projected Debt Service Coverage Ratio of
at least 1.5 to 1.0 will be maintained for the next 12-month period, or (b) the
Independent Engineer certifies that the additional cost is necessary and
reasonable; PROVIDED, FURTHER, that payments of royalties, Taxes and insurance
premiums will not be subject to the 110% limitation;
THIRD, (a)(i) to the U.S. Interest Fund an amount which, together with the
amount then in such Fund, equals one sixth of the interest due or becoming due
on the U.S. Project Note (without duplication) on the next succeeding Interest
Payment Date and all of the interest due or becoming due on all other U.S.
Permitted Project Debt prior to the next monthly funding date and/or, as
applicable, and thereafter, to the extent available (ii) to the U.S. Principal
Fund an amount which, together with the amount then in such Fund, equals
one-sixth of the principal and premium (if any) due or becoming due on the U.S.
Project Note on the next succeeding Principal Payment Date and all of the
principal due or becoming due on all other U.S. Permitted Project Debt prior to
the next monthly funding date and (b) to the Trinidad Interest Fund and/or the
Trinidad Principal Fund an amount equal to the amount required to be deposited
into the Trinidad Interest Fund and/or the Trinidad Principal Fund with respect
to the Trinidad Project Note and U.S. Permitted Project Debt (other than the
Securities and the Trinidad Project Note) incurred for the benefit of the
Trinidad Project on such date less the amounts on deposit in the Trinidad
Revenue Fund and available for such purpose. Any amounts due but not deposited
on the prior monthly funding date shall be deposited into the U.S. Interest
Fund, the U.S. Principal Fund, the Trinidad Interest Fund and/or the Trinidad
Principal Fund, as applicable, unless, with respect to transfers required
pursuant to clause (b) above, such amounts have already been deposited into the
applicable Fund in accordance with the Trinidad Depositary Agreement;
FOURTH, to the applicable Secured Parties the amount set forth in the
officer's certificate of any U.S. Guarantor for payment of any indemnification
expenses or other amounts not paid and required to be paid to any of the Secured
Parties, to the extent then due and payable; PROVIDED, HOWEVER, that if monies
in the U.S. Revenue Fund are insufficient on any date to make the payments
specified in this paragraph FOURTH, distribution of monies shall be made ratably
to the specified recipients based on the respective amounts owed to such
recipients;
FIFTH, following Substantial Completion of the Big Spring Project, to the
Big Spring Maintenance Reserve Fund an amount certified by the Big Spring
Guarantor, but not less than the Big Spring Maintenance Reserve Fund required
deposit in accordance with the requirements of the Independent Engineer;
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SIXTH, to the Debt Service Reserve Fund an amount that, together with
amounts already on deposit in such Fund, including amounts deposited therein in
accordance with the Trinidad Depositary Agreement, equals the Debt Service
Reserve Fund Required Balance;
SEVENTH, if an event triggering a liability under the Mission Reimbursement
Agreement has occurred, to pay up to $2 million per year into the U.S.
Supplemental Reserve Fund until the amount on deposit in the Supplemental
Reserve Fund is equal to 50% of the remaining liability under the Mission
Reimbursement Agreement;
EIGHTH, commencing October 30, 2005, to the U.S. Additional Reserve Fund in
an amount equal to 50% of all funds remaining in the U.S. Revenue Fund;
NINTH, to make additional payments into the Trinidad Funds at the discretion
of the U.S. Guarantors; and
TENTH, if, and to the extent there are funds remaining in the U.S. Revenue
Fund, to the U.S. Distribution Fund.
BIG SPRING OPERATING FUND
Funds in the Big Spring Operating Fund will be used to fund Operating and
Maintenance Costs of the Big Spring Project. Amounts will be disbursed from the
Big Spring Operating Fund monthly upon receipt by the Depositary of certain
required certificates from an Authorized Officer of the Big Spring Guarantor.
U.S. INTEREST FUND AND U.S. PRINCIPAL FUND
Funds in the U.S. Interest Fund and the U.S. Principal Fund shall be
utilized to make interest and principal payments on the U.S. Project Note and
the U.S. Project Loan and U.S. Permitted Project Debt (other than the Securities
and the U.S. Project Note) incurred for the benefit of the U.S. Projects. If
monies in the U.S. Interest Fund or the U.S. Principal Fund are insufficient on
any date to make required payments, distribution of monies shall be made ratably
to the specified recipients, based on the respective amounts owed to such
recipients.
BIG SPRING MAINTENANCE RESERVE FUND
Funds in the Big Spring Maintenance Reserve Fund will be used to fund the
Maintenance Costs of the Big Spring Project after Substantial Completion of the
Big Spring Project has occurred. Amounts will be disbursed from the Big Spring
Maintenance Reserve Fund in accordance with the requirements of the Independent
Engineer and upon receipt by the Depositary of a certificate from an Authorized
Officer of the Big Spring Guarantor.
DEBT SERVICE RESERVE FUND
The Debt Service Reserve Fund will be established under the U.S. Depositary
Agreement for the benefit of the Holders and will be funded on the Closing Date
with $15 million of the proceeds of the Offering.
The Debt Service Reserve Fund may accumulate cash deposits from the U.S.
Revenue Fund and/or the Trinidad Revenue Fund, as provided below under "U.S.
Revenue Fund; Priority of Payments" and "Trinidad Revenue Fund; Priority of
Payments," and net interest earned on amounts deposited in the Debt Service
Reserve Fund.
The amount held in the Debt Service Reserve Fund shall be no less than $15
million from the Closing Date through the Final Maturity Date. Once the amount
on deposit is equal to the Debt Service Reserve Fund Required Balance, all
income in excess of such amount shall be transferred to either the U.S. Revenue
Fund or the Trinidad Revenue Fund as directed by the Project Note Obligors.
BROOKLYN NAVY YARD SUPPLEMENTAL RESERVE FUND
Under the circumstances set forth in the Mission Reimbursement Agreement,
Mission has the right to deduct amounts payable to Mission under the Mission
Reimbursement Agreement from the General Partner Fees or the Royalty Fees
otherwise payable to the Brooklyn Navy Yard Guarantor. As
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and when the remaining liability under the Mission Reimbursement Agreement is
reduced, the excess of the amounts on deposit in the Brooklyn Navy Yard
Supplemental Reserve Fund over the amounts required to be on deposit therein
shall be withdrawn and transferred to the U.S. Revenue Fund. See "SUMMARY
DESCRIPTION OF THE PRINCIPAL PROJECT CONTRACTS-Mission Reimbursement Agreement".
U.S. ADDITIONAL RESERVE FUND
Funds in the U.S. Additional Reserve Fund will be used to make interest and
principal payments on the Securities and the U.S. Project Note (without
duplication) in the event insufficient amounts are on deposit in the U.S.
Interest Fund or the U.S. Principal Fund, respectively, the Debt Service Reserve
Fund and the U.S. Distribution Suspense Fund to make such payments.
U.S. DISTRIBUTION FUND
The U.S. Distribution Fund will be funded from monies transferred from the
U.S. Revenue Fund, as specified in the U.S. Depositary Agreement, after all
other then required amounts have been paid as provided above under "U.S. Revenue
Fund; Priority of Payments." Distributions to the U.S. Guarantors may be made on
any October 30, January 30, April 30 and July 30 (each a "Distribution Date")
only from and to the extent of monies on deposit in the U.S. Distribution Fund
subject to the prior satisfaction of the following conditions (the "U.S.
Distribution Conditions"):
(a) delivery of a certificate of an Authorized Officer of the Funding
Company and the U.S. Guarantors certifying that no Default or Event of
Default has occurred and is continuing;
(b) delivery of a certificate of an Authorized Officer of the Funding
Company and the U.S. Guarantors certifying that the Funding Company and the
Project Note Obligors have fully complied with the reporting covenants set
forth in the Indenture and the applicable Financing Documents;
(c) each of the Debt Service Coverage Ratio and the U.S. Debt Service
Coverage Ratio for the preceding four fiscal quarters, measured as one
annual period (or with respect to first three Distribution Dates following
Substantial Completion of the Big Spring Project and the Trinidad Project,
the preceding applicable fiscal quarters after Substantial Completion), is
greater than 1.25 to 1.0, as certified by an Authorized Officer of each of
the U.S. Guarantors and the Independent Engineer;
(d) the Projected Debt Service Coverage Ratio and the U.S. Projected
Debt Service Coverage Ratio for the succeeding four fiscal quarters, taken
as one annual period, is greater than 1.25 to 1.0, as certified by an
Authorized Officer of each of the U.S. Guarantors and the Independent
Engineer;
(e) the Debt Service Reserve Fund shall have a balance equal to or
greater than the Debt Service Reserve Fund Required Balance and the other
Funds have been funded to their required levels; PROVIDED, that with respect
to the first distribution following Substantial Completion of the Big Spring
Project and the Trinidad Project, the balance in the applicable Interest
Fund and the Principal Fund shall be equal to the amount required to be on
deposit in such fund on the next Scheduled Payment Date;
(f) neither the Funding Company nor any of the U.S. Guarantors is
insolvent and would not be rendered insolvent by such distribution; and
(g) Substantial Completion of the Big Spring Project and the Trinidad
Project has occurred.
Monies may be withdrawn from the U.S. Distribution Fund on a monthly basis
from and to the extent of monies on deposit in the U.S. Distribution Fund to pay
to the general partner of the Big Spring Guarantor, general partner,
administrative and management fees of up to 5% of revenues of the Big Spring
Guarantor subject to the prior satisfaction of the U.S. Distribution Conditions;
PROVIDED that the certification of the Independent Engineer required by clauses
(c) and (d) above will not be required if the date such fees are to be paid is
not also a Distribution Date.
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U.S. DISTRIBUTION SUSPENSE FUND
Funds in the U.S. Distribution Fund which may not be distributed as a result
of the failure to satisfy the U.S. Distribution Conditions will be transferred
to the U.S. Distribution Suspense Fund. Monies shall be withdrawn from the U.S.
Distribution Suspense Fund and transferred to the U.S. Distribution Fund and be
available for distribution on any date, whether or not such date is a
Distribution Date, upon which the U.S. Distribution Conditions are satisfied. If
such funds remain on deposit in the U.S. Distribution Suspense Fund for greater
than 18 months, then, if a majority of the Holders so elect, either
independently or upon request by the Funding Company, such funds shall be used
to redeem the Securities in an amount equal to the amount of such funds which
have been on deposit in the U.S. Distribution Suspense Fund for greater than 18
months.
At any time that monies on deposit in any of the other U.S. Funds are not
sufficient to make the payments in the U.S. Revenue Fund, or are not equal to
the required balance of such U.S. Funds, then monies on deposit in the U.S.
Distribution Suspend Fund shall be withdrawn and transferred to the U.S. Revenue
Fund for application in accordance with the priority set forth in the U.S.
Depositary Agreement.
U.S. LOSS PROCEEDS FUND
All Loss Proceeds and Expropriation Proceeds received by the U.S. Guarantors
shall be deposited in the U.S. Loss Proceeds Fund, subject to disbursement for
repair or replacement of the assets affected, or otherwise, as follows:
Upon the Depositary's receipt of an Approved Restoration Plan the Depositary
will apply, in accordance with such Approved Restoration Plan, the amounts in
the U.S. Loss Proceeds Fund or the U.S. Revenue Fund, as the case may be, to the
payment, or reimbursement to the extent the same have been paid or satisfied by
the Big Spring Guarantor, of the costs of repair or replacement of the Big
Spring Project or any part thereof that has been affected due to an Event of
Loss or Expropriation Event. If the Loss Proceeds or Expropriation Proceeds
received by the Big Spring Guarantor exceed the cost of such repair and
replacement of the Big Spring Project by more than $2 million, or if the Big
Spring Guarantor repairs or rebuilds the Big Spring Project in accordance with
an Approved Restoration Plan and the excess Loss Proceeds or Expropriation
Proceeds following such repair or replacement exceed $2 million, then the
Depositary shall transfer such excess proceeds to the U.S. Redemption Fund in
accordance with the Indenture and the U.S. Depositary Agreement; PROVIDED that,
such excess Loss Proceeds and Expropriation Proceeds that do not exceed the cost
of such repair and replacement by $2 million shall be transferred to the U.S.
Revenue Fund. After such transfer to the U.S. Revenue Fund, the Trustee shall
apply the fund to the redemption of the Securities as set forth in the
Indenture, and, upon such application, the U.S. Project Loan to the U.S.
Guarantors then required to be prepaid in accordance with the U.S. Project Loan
Agreement shall be deemed to be prepaid as well.
If the Big Spring Guarantor determines that the Big Spring Project is not
capable of being rebuilt or replaced in accordance with an Approved Restoration
Plan or determines not to rebuild, repair or restore the Big Spring Project and
the Loss Proceeds and Expropriation Proceeds exceed $2 million, the Depositary
shall transfer the Loss Proceeds and Expropriation Proceeds to the U.S.
Redemption Fund for redemption of the Securities in accordance with the
Indenture. If the Big Spring Guarantor does not rebuild or replace the Big
Spring Project and the Loss Proceeds and Expropriation Proceeds are equal to or
less than $2 million, funds in the U.S. Loss Proceeds Fund shall be transferred
to the U.S. Revenue Fund for distribution to other U.S. Funds, as provided above
under "U.S. Revenue Fund; Priority of Payments." See "SUMMARY DESCRIPTION OF THE
SECURITIES-Mandatory Redemption."
In the event that any U.S. Guarantor receives amounts in excess of $2
million representing Power Contract Buy-Out Proceeds (or, in the case of the
Warbasse Guarantor and the Brooklyn Navy Yard Guarantor, cash flow representing
the Power Contract Buy-Out Proceeds) in connection with a Power Contract Buy-Out
or similar event related to such U.S. Guarantor's Project, such excess proceeds
shall be deposited into the U.S. Loss Proceeds Fund and shall be withdrawn and
transferred to the U.S.
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Redemption Fund; PROVIDED, that such proceeds shall be distributed in accordance
with the priority of payments as set forth in the U.S. Depositary Agreement if
(a) the relevant U.S. Guarantor provides written affirmation from each Rating
Agency of the Ratings (taking into account the effects of such Power Contract
Buy-Out) and (b) the Independent Engineer confirms that, after giving effect to
the Power Contract Buy-Out, the minimum and average Debt Service Coverage Ratio
through the Final Maturity Date will be greater than 1.5 to 1.0 and 1.55 to 1.0,
respectively. After such transfer to the U.S. Redemption Fund, the Trustee shall
apply the funds to the redemption of the Securities as set forth in the
Indenture, and, upon such application, the Project Loans to the U.S. Guarantors
then required to be prepaid in accordance with the U.S. Project Loan Agreement
shall be deemed to be prepaid as well. Any proceeds of any Power Contract
Buy-Out not required pursuant to the Indenture to be used for the redemption of
the Securities shall be withdrawn from the U.S. Loss Proceeds Fund and
transferred to the U.S. Revenue Fund.
In the event that the Big Spring Guarantor receives liquidated damages
pursuant to the Vestas Agreement in excess of $1 million, such proceeds shall be
deposited into the U.S. Loss Proceeds Fund and shall be withdrawn and
transferred to the U.S. Redemption Fund; PROVIDED, that such proceeds shall be
distributed in accordance with the priority of payments as set forth in the U.S.
Depositary Agreement if (a) the Big Spring Guarantor provides written
confirmation from each Rating Agency of the Ratings or (b) such liquidated
damages are applied to (i) construction of the Big Spring Project in accordance
with the then applicable construction budget or construction schedule, (ii)
payment of interest during construction, or (iii) compensate the Big Spring
Guarantor for lost tax credits. After such transfer to the U.S. Redemption Fund,
the Trustee shall apply the funds to the redemption of the Securities as set
forth in the Indenture, and, upon such application, the U.S. Project Loan to the
U.S. Guarantors then required to be prepaid in accordance with the U.S. Project
Loan Agreement shall be deemed to be prepaid as well. Any liquidated damages not
required pursuant to the Indenture to be used for the redemption of the
Securities shall be withdrawn from the U.S. Loss Proceeds Fund and transferred
to the U.S. Revenue Fund.
U.S. REDEMPTION FUND
All Loss Proceeds, Expropriation Proceeds, Power Contract Buy-Out Proceeds
and other proceeds received by any of the U.S. Guarantors in amounts requiring a
prepayment of the Securities as set forth above under "SUMMARY DESCRIPTION OF
THE SECURITIES-Mandatory Redemption" will be deposited into the U.S. Redemption
Fund.
TRINIDAD DEPOSITARY AGREEMENT
TRINIDAD CONSTRUCTION FUND
All amounts on-lent with respect to construction of the Trinidad Project
prior to Substantial Completion of such Project were deposited in the Trinidad
Construction Fund. Amounts will be disbursed from the Trinidad Construction Fund
upon receipt by the Depositary of the following:
(a) a requisition certificate from an Authorized Officer of InnCOGEN and
confirmed by the Independent Engineer that specifies the project costs that
are due and payable or that are reasonably expected to be due and payable
within the next 30 days;
(b) a certificate from an Authorized Officer of InnCOGEN confirming
that, among other things, no Default or Event of Default has occurred and is
continuing; and
(c) a certificate from the Independent Engineer that the construction
activities are proceeding in accordance with the construction contract and
in accordance with the project budget and schedule and that sufficient funds
are available to InnCOGEN to complete the Trinidad Project.
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If amounts on deposit in the Trinidad Construction Fund are insufficient to
complete the Trinidad Project, monies may be withdrawn first from the Trinidad
Distribution Suspense Fund and secondly from the Debt Service Reserve Fund to
complete the Trinidad Project. As of August 31, 1998, approximately $12.2
million has been disbursed from the Trinidad Construction Fund for the Trinidad
Project.
Following Substantial Completion of the Trinidad Project as evidenced by an
officer's certificate from InnCOGEN, excess funds in the Trinidad Construction
Fund shall be deposited in the Trinidad Revenue Fund for distribution to other
Trinidad Depositary Funds in accordance with the Trinidad Depositary Agreement.
TRINIDAD REVENUE FUND; PRIORITY OF PAYMENTS
All Cash Flows actually received by InnCOGEN shall be initially deposited
into an account in Trinidad maintained by the Depositary and immediately
transferred to the Trinidad Revenue Fund or the Trinidad Local Fund, as
permitted herein. The Trinidad Finance Parties will arrange for the direct
payment of all such revenues into the Trinidad Revenue Fund or the Trinidad
Local Fund, and the Trinidad Finance Parties shall not have any right of
withdrawal under the Trinidad Revenue Fund or the Trinidad Local Fund except
pursuant to the priority of payments set forth below. Cash Flows originating in
Trinidad will first be transferred to the Trinidad Guarantor Fund and the
Trinidad Parent Fund prior to being deposited in the Trinidad Revenue Fund.
The Trinidad Revenue Fund shall be funded:
(a) from all Cash Flows actually received by the Trinidad Finance
Parties not deposited into the Trinidad Local Fund as permitted herein and
all such monies will be immediately converted into U.S. dollars;
(b) to the extent the amounts in the Debt Service Reserve Fund equal the
Debt Service Reserve Fund Required Balance, any income from the investment
of monies in any of the Trinidad Funds;
(c) any proceeds actually received from the sale of assets in accordance
with the Trinidad Loan Agreement;
(d) all proceeds actually received from any business interruption
insurance;
(e) any proceeds of Additional Securities issued under the Indenture and
on-lent to any Trinidad Finance Party;
(f) all Loss Proceeds and Expropriation Proceeds not required to be
maintained in the Loss Proceeds Fund pursuant to the terms of the Trinidad
Depositary Agreement; and
(g) from other Trinidad Funds as required to be transferred to the
Trinidad Revenue Fund pursuant to the Trinidad Depositary Agreement.
Upon receipt of a certificate from the applicable Trinidad Finance Party
detailing the amounts to be paid, funds in the Trinidad Revenue Fund shall be
distributed on a monthly basis by the Depositary in the following order of
priority:
FIRST, to the Depositary, the Trustee and the Collateral Agent any amounts
then due and payable to each of them as fees and expenses; PROVIDED, HOWEVER,
that if monies in the Trinidad Revenue Fund are insufficient on any date to make
the payments specified in this paragraph FIRST, distribution of monies shall be
made ratably to the specified recipients based on the respective amounts owed
such recipients;
SECOND, to the Trinidad Operating Fund up to 125% of budgeted Operating and
Maintenance Costs of the Trinidad Project; PROVIDEDthat, if the Operating and
Maintenance Costs of InnCOGEN in
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any fiscal year exceeds the projected Operating and Maintenance Costs in the
annual Operating Budget of InnCOGEN by more than 25%, then no amounts may be
withdrawn on behalf of InnCOGEN to pay non-budgeted Operating and Maintenance
Costs unless (a) InnCOGEN certifies that (i) such additional non-budgeted costs
are reasonably designed to permit InnCOGEN to satisfy its obligations in respect
of the Trinidad Project Note and maximize its revenue and net income and (ii) a
Projected Debt Service Coverage Ratio of at least 1.5 to 1.0 will be maintained
for the next 12-month period or (b) the Independent Engineer certifies that the
additional cost is necessary and reasonable;
THIRD, (a) to the Trinidad Interest Fund an amount which, together with the
amount then in such Fund, equals all of the interest due or becoming due on the
Trinidad Project Note and the InnCOGEN Loan (without duplication) and other
Trinidad Permitted Project Debt on the next succeeding Interest Payment Date and
thereafter, to the extent available (b) to the Trinidad Principal Fund an amount
which, together with the amount then in such Fund, equals all of the principal
and, premium (if any) due or becoming due on the Trinidad Project Note, the
InnCOGEN Loan and other Trinidad Permitted Project Debt on the next succeeding
Principal Payment Date. On each monthly funding date, one-sixth of the interest,
principal and other amounts due during the current semi-annual period (together
with any amounts due but not deposited on the prior monthly funding date) shall
be deposited into the Trinidad Interest Fund and the Trinidad Principal Fund,
respectively;
FOURTH, to the applicable Secured Parties the amount set forth in the
officer's certificate of the Trinidad Finance Parties for payment of any
indemnification expenses or other amounts not previously paid and required to be
paid to any of the Secured Parties, to the extent then due and payable;
PROVIDED, HOWEVER, that if monies in the Trinidad Revenue Fund are insufficient
on any date to make the payments specified in this paragraph FOURTH,
distribution of monies shall be made ratably to the specified recipients based
on the respective amounts owed to such recipients;
FIFTH, following Substantial Completion of the Trinidad Project, to the
Trinidad Maintenance Reserve Fund, an amount certified by InnCOGEN, but not less
than the Trinidad Maintenance Reserve Fund required deposit, in accordance with
the requirements of the Independent Engineer;
SIXTH, to the Debt Service Reserve Fund an amount as necessary to fund the
Debt Service Reserve Fund up to the Debt Service Reserve Fund Required Balance,
including amounts deposited therein by the U.S. Guarantors;
SEVENTH, commencing October 30, 2005, to the Trinidad Additional Reserve
Fund in an amount equal to 50% of all funds remaining in the Trinidad Revenue
Fund; and
EIGHTH, to the Trinidad Distribution Fund to make distribution on any
Distribution Date, PROVIDED that the Trinidad Distribution Conditions have been
satisfied.
In addition, in determining whether amounts are required to be deposited in
any Trinidad Fund, credit will be given to amounts deposited therein by the U.S.
Guarantors or by any other party.
TRINIDAD OPERATING FUND
Funds in the Trinidad Operating Fund will be used to fund Operating and
Maintenance Costs of the Trinidad Project. Amounts due and payable in Trinidad
with respect to the Operating and Maintenance Costs for the Trinidad Project for
the next 60 days (less amounts already on deposit in the Trinidad Local Fund)
shall be transferred to the Trinidad Local Fund if so directed by the Trinidad
Finance Parties. Upon receipt by the Depositary of certain required certificates
from an Authorized Officer of InnCOGEN, amounts will be disbursed monthly from
the Trinidad Operating Fund and payment will be made either to the Person
entitled to the payment of such Operating and Maintenance Costs or to the
Trinidad Local Fund as directed by InnCOGEN.
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TRINIDAD INTEREST FUND AND TRINIDAD PRINCIPAL FUND
Funds in the Trinidad Interest Fund and the Trinidad Principal Fund shall be
utilized to make interest and principal payments on the Trinidad Project Note
and the InnCOGEN Loan (without duplication) and other Trinidad Permitted Project
Debt (other than the Securities and the Trinidad Project Note) incurred for the
benefit of the Trinidad Project. If monies in the Trinidad Interest Fund or the
Trinidad Principal Fund are insufficient on any date to make required payments,
distribution of monies shall be made ratably to the specified recipients based
on the respective amounts owed to such recipients.
TRINIDAD MAINTENANCE RESERVE FUND
Funds in the Trinidad Maintenance Reserve Fund will be used to fund the
Maintenance Costs of the Trinidad Project after Substantial Completion of the
Trinidad Project has occurred. Amounts will be disbursed from the Trinidad
Maintenance Reserve Fund in accordance with the requirements of the Independent
Engineer and upon receipt by the Depositary of a certificate from an Authorized
Officer of InnCOGEN.
TRINIDAD ADDITIONAL RESERVE FUND
Funds in the Trinidad Additional Reserve Fund will be used to make interest
and principal payments on the Trinidad Project Note in the event insufficient
amounts are on deposit in the Trinidad Interest Fund or the Trinidad Principal
Fund, respectively, the Debt Service Reserve Fund and the Trinidad Distribution
Suspense Fund to make such payments.
TRINIDAD DISTRIBUTION FUND
The Trinidad Distribution Fund will be funded from monies transferred from
the Trinidad Revenue Fund, as specified in the Trinidad Depositary Agreement,
after all other then required amounts have been paid as provided above under
"Trinidad Revenue Fund; Priority of Payments." Distributions to the Trinidad
Finance Parties may be made on a Distribution Date only from and to the extent
of monies on deposit in the Trinidad Distribution Fund subject to the prior
satisfaction of the following conditions (the "Trinidad Distribution
Conditions"):
(a) delivery of a certificate of an Authorized Officer of the Funding
Company and the Trinidad Finance Parties certifying that no Default or Event
of Default has occurred and is continuing;
(b) delivery of a certificate of an Authorized Officer of the Trinidad
Finance Parties certifying that the Funding Company and Trinidad Finance
Parties have fully complied with the reporting covenants set forth in the
Indenture and the applicable Financing Documents;
(c) delivery of a certificate from an Authorized Officer of each of the
Trinidad Finance Parties and the Independent Engineer certifying that the
Debt Service Coverage Ratio for the preceding four fiscal quarters, measured
as one annual period (with respect to first three Distribution Dates
following Substantial Completion of the Big Spring and Trinidad Project, the
preceding applicable fiscal quarters after Substantial Completion), is equal
to or greater than 1.25 to 1.0;
(d) delivery of a certificate from an Authorized Officer of each of the
Trinidad Finance Parties and the Independent Engineer certifying that the
Projected Debt Service Coverage Ratio for the succeeding four fiscal
quarters, taken as one annual period, is greater than 1.25 to 1.0;
(e) the Debt Service Reserve Fund shall have a balance equal to or
greater than the Debt Service Reserve Fund Required Balance and the other
Trinidad Funds have been funded to their required levels; PROVIDED, that
with respect to the first distribution following Substantial Completion of
the Big Spring Project and the Trinidad Project, the balance in the
applicable Interest Fund and
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the Principal Fund shall be equal to the amount required to be on deposit in
such fund on the next Scheduled Payment Date;
(f) neither the Funding Company nor any Guarantor is insolvent and would
not be rendered insolvent by such distribution; and
(g) Substantial Completion of the Trinidad Project and the Big Spring
Project has occurred.
TRINIDAD DISTRIBUTION SUSPENSE FUND
Funds in the Trinidad Distribution Fund which may not be distributed as a
result of the failure to satisfy the Trinidad Distribution Conditions will be
transferred to the Trinidad Distribution Suspense Fund. Monies shall be
withdrawn from the Trinidad Distribution Suspense Fund and transferred to the
Trinidad Distribution Fund and be available for distribution on any date,
whether or not such date is a Distribution Date, upon which the Trinidad
Distribution Conditions are satisfied. If such funds remain on deposit in the
Trinidad Distribution Suspense Fund for greater than 18 months, then, if a
majority of the Holders so elect, either independently or upon request by the
Funding Company, such funds shall be used to redeem all or a portion of the
Trinidad Project Loan in an amount equal to the amount of such funds which have
been on deposit in the Trinidad Distribution Suspense Fund for greater than 18
months.
At any time that monies on deposit in any of the other Trinidad Funds are
not sufficient to make the payments in the Trinidad Revenue Fund, or are not
equal to the required balance of such Trinidad Funds, then monies on deposit in
the Trinidad Distribution Suspense Fund shall be withdrawn and transferred to
the Trinidad Revenue Fund for application in accordance with the priority set
forth in the Trinidad Depositary Agreement.
TRINIDAD LOSS PROCEEDS FUND
All Loss Proceeds and Expropriation Proceeds received by InnCOGEN shall be
deposited in the Trinidad Loss Proceeds Fund, subject to disbursement for repair
or replacement of the assets affected, or otherwise, as follows.
Upon the Depositary's receipt of a complete and properly executed
requisition from an Authorized Officer of InnCOGEN and approved by the
Independent Engineer, the Depositary will apply the amounts in the Trinidad Loss
Proceeds Fund or the Trinidad Revenue Fund, as the case may be, to the payment,
or reimbursement to the extent the same have been paid or satisfied by InnCOGEN,
of the costs of repair or replacement of the Trinidad Project or any part
thereof that has been affected due to an Event of Loss or Expropriation Event.
If an Event of Loss or Expropriation Event shall have occurred and the
Trinidad Project is not capable of being rebuilt or replaced to permit operation
on a commercially reasonable basis, (or the Loss Proceeds and Expropriation
Proceeds, together with any other amounts available to InnCOGEN for such
rebuilding or replacement, are not sufficient to permit such rebuilding or
replacement), and the Loss Proceeds and Expropriation Proceeds exceed $2
million, or if InnCOGEN repairs or rebuilds the Trinidad Project in accordance
with an Approved Restoration Plan and the excess Loss Proceeds or Expropriation
Proceeds following such repair or replacement exceed $2 million, the Depositary
shall transfer the Loss Proceeds and Expropriation Proceeds to the Depositary
for distribution to the Trinidad Redemption Fund in accordance with the
Indenture, the Trinidad Depositary Agreement and the Intercreditor Agreement. If
InnCOGEN does not rebuild or replace the Trinidad Project following such Event
of Loss or Expropriation Event and the Loss Proceeds and Expropriation Proceeds
are equal to or less than $2 million or the excess Loss Proceeds and
Expropriation Proceeds after rebuilding and replacement of the Trinidad Project
are equal to or less than $2 million, funds in the Trinidad Loss Proceeds Fund
shall be transferred to the Trinidad Revenue Fund for distribution to other
Trinidad
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Funds, as provided above under "Trinidad Revenue Fund; Priority of Payments."
See "Intercreditor Agreement" and "SUMMARY DESCRIPTION OF THE
SECURITIES-Mandatory Redemption."
If an Event of Loss or Expropriation Event with respect to the Trinidad
Project shall have occurred requiring the payment of Loss Proceeds or
Expropriation Proceeds in excess of $2 million and the Trinidad Project is not
or cannot be repaired, rebuilt or restored in accordance with an Approved
Restoration Plan, the Depositary shall withdraw and transfer to the Trinidad
Redemption Fund all such proceeds on deposit in the Trinidad Loss Proceeds Fund
relating to such Event of Loss or Expropriation Event for application by the
Trustee to the redemption of the Securities as set forth in the Indenture, and,
upon such application, the Project Loan to the Trinidad Project Note Obligor
then required to be prepaid in accordance with the Trinidad Project Loan
Agreement and the InnCOGEN Loan to InnCOGEN then required to be prepaid in
accordance with the Trinidad Loan Agreement shall be deemed to be prepaid as
well. In the event that the Loss Proceeds or Expropriation Proceeds received
relating to such Event of Loss do not exceed $2 million, then such Loss Proceeds
or Expropriation Proceeds shall be withdrawn from the Trinidad Loss Proceeds
Fund and deposited into the Trinidad Revenue Fund.
In the event that the Trinidad Parent receives amounts in excess of $2
million representing Power Contract Buy-Out Proceeds in connection with a Power
Contract Buy-Out or similar event related to the Trinidad Project, such excess
proceeds shall be deposited into the Trinidad Loss Proceeds Fund and withdrawn
and transferred to the Trinidad Redemption Fund; PROVIDED, that such proceeds
shall be distributed in accordance with the priority of payments as set forth in
the Trinidad Depositary Agreement if (a) the Trinidad Parent provides written
affirmation from each Rating Agency of the Ratings (taking into account the
effects of such Power Contract Buy-Out) and (b) the Independent Engineer
confirms that, after giving effect to the Power Contract Buy-Out, the minimum
and average Debt Service Coverage Ratios through the Final Maturity Date will be
greater than 1.5 to 1.0 and 1.55 to 1.0, respectively. After such transfer to
the Trinidad Redemption Fund, the Trustee shall apply the fund to the redemption
of the Securities as set forth in the Indenture, and, upon such application, the
Trinidad Project Loan to the Trinidad Parent then required to be prepaid in
accordance with the Trinidad Project Loan Agreement and the InnCOGEN Loan to
InnCOGEN then required to be prepaid in accordance with the Trinidad Loan
Agreement shall be deemed to be prepaid as well. Any proceeds of any Power
Contract Buy-Out not required pursuant to the Indenture to be used for the
redemption of the Securities shall be withdrawn from the Trinidad Loss Proceeds
Fund and transferred to the Trinidad Revenue Fund.
In the event that InnCOGEN receives liquidated damages pursuant to the EES
Contract or the Turnkey Construction Contract in excess of $1 million, such
proceeds shall be deposited into the Trinidad Loss Proceeds Fund and shall be
withdrawn and transferred to the Trinidad Redemption Fund; PROVIDED,that such
proceeds shall be distributed in accordance with the priority of payments as set
forth in the Trinidad Depositary Agreement if (a) InnCOGEN provides written
confirmation from each Rating Agency of the Ratings or (b) such liquidated
damages are applied to (i) construction of the Trinidad Project in accordance
with the applicable construction budget or construction schedule, (ii) payment
of interest during construction, or (iii) payments to T&TEC in accordance with
the Trinidad PPA. After such transfer to the Trinidad Redemption Fund, the
Trustee shall apply the funds to the redemption of the Securities as set forth
in the Indenture, and, upon such application, the Trinidad Project Loan to the
Trinidad Parent then required to be prepaid in accordance with the Trinidad
Project Loan Agreement and the InnCOGEN Loan to InnCOGEN then required to be
prepaid in accordance with the Trinidad Loan Agreement shall be deemed to be
prepaid as well. Any liquidated damages not required pursuant to the Indenture
to be used for the redemption of the Securities shall be withdrawn from the
Trinidad Loss Proceeds Fund and transferred to the Trinidad Revenue Fund.
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TRINIDAD REDEMPTION FUND
All Loss Proceeds, Expropriation Proceeds and other proceeds received by
InnCOGEN in amounts requiring a prepayment of the Trinidad Project Note and the
Trinidad Project Loan as set forth above under "SUMMARY DESCRIPTION OF THE
SECURITIES-Mandatory Redemption" will be deposited into the Trinidad Redemption
Fund.
INVESTMENT OF MONIES
Amounts on deposit in the Funds shall, at the written request and direction
of the Trinidad Finance Parties, be invested by the Depositary in Permitted
Investments. Such investments shall generally mature in such amounts and not
later than such times as may be necessary to provide monies when needed to make
payments from such monies as provided in the applicable Depositary Agreement.
Net interest or gain received from such investments shall be applied as provided
in the applicable Depositary Agreement. Absent written instructions from a
Trinidad Finance Party, the Depositary shall invest the amounts held in the
Funds in securities that are direct obligations of the United States or any
agency thereof. So long as an outstanding balance shall remain in any of the
Funds, the Depositary shall provide the Trinidad Finance Parties and the
Guarantors with monthly statements showing the amount of all receipts, the net
investment income or gain received and collected, all disbursements and the
amount then available in each such Fund.
TRUST INDENTURE
GENERAL.
The Old Securities were, and the Exchange Securities and Additional
Securities, if any, will be issued under the Indenture. The Funding Company has
issued and will issue the Securities in its individual capacity as principal and
as agent on behalf of the U.S. Guarantors. The Securities will be issued in
series pursuant to the Indenture or one or more supplemental indentures which
will set forth the terms of such series including (a) the title of such series,
(b) any limit on the aggregate principal amount of such series that may be
authenticated and delivered under the Indenture or a supplemental indenture, as
the case may be, (c) the dates on which the principal of the Securities of such
series is payable and the amount of principal payable on such dates, (d) the
interest rate on such series and the dates interest will accrue and be payable,
(e) the place where payments under such series will be payable, (f) the terms of
any redemption provisions related to such series and (g) other terms of such
series.
ADDITIONAL SECURITIES
The Indenture provides that Additional Securities may be issued thereunder
subject to the satisfaction of certain conditions set forth in the Indenture.
All Additional Securities shall rank PARI PASSU with the Securities, shall be
secured by the Funding Company Collateral and guaranteed pursuant to the
Guarantees and shall have such terms, be in such form and be issued at such
prices as shall be approved in writing by the Funding Company. No Additional
Securities (other than those used to finance capital improvements in certain
circumstances when required for the Big Spring Project or the Trinidad Project
to maintain compliance under applicable law) may be issued at any time if a
Default or Event of Default shall result from such issuance. All net proceeds of
Additional Securities must be loaned to the Project Note Obligors and must be
utilized by the Project Note Obligors for one or more of the purposes for which
Permitted Project Debt (as defined herein) may be incurred. Holders of
Additional Securities shall have the same voting rights under the Indenture as
Holders of the Initial Securities.
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CERTAIN COVENANTS
USE OF PROCEEDS. The Funding Company will use the proceeds from the sale of
the Securities solely to make the Project Loans to the U.S. Guarantors and to
the Trinidad Parent pursuant to the Project Loan Agreements.
ACTIONS WITH RESPECT TO PROJECT LOAN AGREEMENTS. The Funding Company will
enforce all of its rights under the Project Loan Agreements and the Project
Notes for the benefit of the Trustee and the Security Holders. The Funding
Company will not grant any consents or waivers thereunder, amend or modify any
provisions thereof or otherwise modify the Project Loan Agreements or the
Project Notes, except as provided below. See "-Amendment of Project Loan
Agreements and Project Notes."
LIMITATIONS ON DEBT/LIENS. The Funding Company will not create or incur or
suffer to exist any Debt except Permitted Funding Debt. The Funding Company will
not grant, create, incur or suffer to exist any Liens upon any of its properties
except for Permitted Funding Liens (as defined herein).
LIMITATIONS ON GUARANTEES. The Funding Company will not contingently or
otherwise be or become liable in connection with any guarantee, except for
endorsements and similar obligations in the ordinary course of business.
RESTRICTED PAYMENTS. The Funding Company will not make any Restricted
Payments or direct any Restricted Payments to be made on behalf of any Guarantor
except for payments permitted under the Depositary Agreements.
PROHIBITIONS ON OTHER OBLIGATIONS OR ASSIGNMENTS. The Funding Company will
not assign any of its rights or obligations under any Financing Document, and
will not enter into additional contracts if the transactions contemplated by
such assignment or additional contract could be reasonably expected to cause a
Material Adverse Effect; PROVIDED that the Funding Company will be permitted to
assign any of its rights or obligations under the Indenture if such assignment
is necessary to avoid any adverse tax consequences resulting from a change in
Applicable Law (or the interpretation thereof) and (a) no Default or Event of
Default exists and is continuing at such time, (b) the Trustee shall receive
written confirmation from each Rating Agency that such assignment shall not
result in a Ratings Downgrade and (c) the Trustee receives satisfactory legal
opinions of counsel to the Funding Company stating that (i) such assignment is
enforceable and creates a legal, valid binding obligation of the Funding
Company, (ii) such assignment has no adverse consequences upon the rights and
remedies of the Secured Parties with respect to the Collateral and (iii) such
assignment shall have no adverse effects on the tax structure of the transaction
prior to the assignment or upon payments to or from any Guarantor or otherwise
related to the Securities and each of the Project Notes.
PROHIBITIONS ON FUNDAMENTAL CHANGES. The Funding Company may not enter into
any transaction of merger or consolidation, change its form of organization or
its business, liquidate, wind-up or dissolve itself or discontinue its business,
except as may be contemplated by the Financing Documents. The Funding Company is
also restricted from engaging in any business other than in connection with the
issuance of the Securities, the incurrence of Permitted Debt and the performance
of its obligations under the Financing Documents. The Funding Company will not
lease, sell, transfer, assign, hypothecate, pledge or otherwise dispose of any
of its property or assets, except as may be contemplated by the Financing
Documents.
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ADDITIONAL COVENANTS
In addition to the covenants described above, the Indenture also contains
covenants of the Funding Company regarding (a) maintenance of existence, (b)
payment of taxes, (c) maintenance of books and records, (d) compliance with
laws, (e) delivery to the Trustee of compliance certificates and of notices of
Project Loan Agreement Events of Default and Guarantee Events of Default, (f)
delivery to the Trustee of unaudited quarterly report of the Funding Company and
the Guarantors for the first three quarters of each fiscal year containing
condensed financial information and audited annual reports of the Funding
Company and the Guarantors, (g) delivery to the Trustee and the Holders of a
list of the current balances in each of the Funds and (h) delivery to the
Trustee of all other information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act in order to permit compliance by a Holder
with Rule 144A in connection with the resale of the Securities.
REDEMPTION OF SECURITIES; NOTICE
NOTICE TO TRUSTEE. The election or requirement of the Funding Company to
redeem any Securities will be evidenced by a written request of the Funding
Company (a "Funding Order"). If the Funding Company elects or is required to
redeem any Securities, the Funding Company will, at least 30 days prior to the
date upon which notice of redemption is required to be given to the Holders (or
such shorter period as may be agreed by the Trustee), deliver to the Trustee a
Funding Order specifying the Redemption Date, series and principal amount of
Securities to be redeemed.
NOTICE OF REDEMPTION. Notice of redemption will be given to the Holders of
Securities of such series to be redeemed at least 30 days but not more than 60
days prior to the Redemption Date. All notices of redemption will state (a) the
Redemption Date, (b) the premium payable on redemption, if any, the portion of
the principal amount of each Security of such series to be redeemed, (c) that on
the Redemption Date interest thereon will cease to accrue on and after said
date, (c) the place of payment where such Securities are to be surrendered for
payment of the amount in respect of such redemption and (e) that the
availability in the applicable Redemption Fund of an amount of immediately
available funds to pay the Securities to be redeemed in full is a condition
precedent to the redemption.
SECURITIES PAYABLE ON REDEMPTION DATE. The Securities or portions thereof
to be redeemed will, on the Redemption Date, become due and payable, and from
and after such date such Securities or portions thereof will cease to bear
interest. Upon surrender of any such Security for redemption, an amount in
respect of such Security or portion thereof will be paid as provided therein;
PROVIDED, HOWEVER, that any payment of interest on any Security the scheduled
payment date of which is on or prior to the Redemption Date will be payable to
the Holder of such Security, at the close of business on the record date
according to the terms of such Security and the Indenture.
EVENTS OF DEFAULT
CERTAIN EVENTS. The following events constitute Events of Default under the
Indenture:
(a) failure by the Funding Company to pay any principal of, premium, of any,
interest on, or any other amounts (including any unscheduled cost or charge)
owed on any Security when the same becomes due and payable, whether by scheduled
maturity or required prepayment or redemption or by acceleration or otherwise,
and such failure continues for 10 days or more following the due date for
payment;
(b) a Project Loan Agreement Event of Default or a Guarantee Event of
Default has occurred and is continuing (other than Project Loan Agreement Event
of Default related to failure to pay the Project Notes or a Guarantee Event of
Default related to failure to make payments owed under the Guarantees);
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(c) any representation or warranty made by the Funding Company in any
Financing Document or any representation, warranty or statement in any
certificate, financial statement or other document furnished to the Trustee or
any other Person by or on behalf of the Funding Company proves to have been
untrue or misleading in any material respect as of the time made, confirmed or
furnished and the fact, event or circumstance that gave rise to such inaccuracy
has resulted in, or could reasonably be expected to result in, a Material
Adverse Effect and that fact, event or circumstance continues uncured for 30 or
more days from the date an Authorized Officer of each of the Project Note
Obligors obtains actual knowledge thereof; PROVIDED that, if the Funding Company
commences and diligently pursues efforts to cure such fact, event or
circumstance within such 30-day period and delivers written notice to the
Trustee thereof, the Funding Company may continue to effect such cure, and such
misrepresentation shall not be deemed an Event of Default for an additional 90
days so long as the Funding Company is diligently pursuing such cure;
(d) the Funding Company fails to perform or observe any covenant or
agreement contained in the Indenture regarding maintenance of existence,
restrictions on Debt, Liens, Restricted Payments, guarantees, disposition of
assets, amendments to the Project Loan Agreements or the Project Notes or taking
of actions thereunder as directed by the Holders of not less than a majority of
the aggregate principal amount of the Outstanding Securities (the "Majority
Holders"), fundamental changes or nature of business and such failure continues
uncured for 30 or more days from the date an Authorized Officer of each of the
Project Note Obligors obtains actual knowledge thereof;
(e) the Funding Company fails to perform or observe any of its covenants
contained in the Indenture (other than those contained in (d) above) and such
failure continues uncured for 60 or more days from the date an Authorized
Officer of each of the Project Note Obligors obtains actual knowledge of such
failure; PROVIDED that if the Funding Company commences and diligently pursues
efforts to cure such default within such 60-day period the Funding Company may
continue to effect such cure of the default and such default will not be deemed
an Event of Default for an additional 30 days so long as the Funding Company is
diligently pursuing such cure;
(f) certain events involving the bankruptcy, insolvency, receivership or
reorganization of the Funding Company;
(g) any Security Document related to the Funding Company Collateral or any
Guarantee ceases to be in full force and effect or there is a Material Adverse
Effect on the Lien purported to be granted by any of the Security Documents such
that it ceases to be a valid and perfected Lien in favor of the Collateral Agent
for the benefit of the secured parties on the Funding Company Collateral
described therein with the priority purported to be created thereby; PROVIDED,
HOWEVER, that the Funding Company has 10 days to cure any such cessation, if
curable, or to furnish to the Collateral Agent all documents or instruments
required to cure any cessation, if curable;
(h) any event of default under any Permitted Debt of Funding Company which
results in Permitted Debt in excess of $5 million becoming due and payable prior
to its stated maturity;
(i) one or more final and non-appealable judgment(s) for the payment of
money in excess of $5 million is entered against the Funding Company and remains
unpaid or unstayed for a period of 90 or more consecutive days;
(j) a Guarantor breaches or fails to perform or observe any covenant under
any of the Financing Documents to which such Guarantor is a party and such
failure could reasonably be expected to result in a Material Adverse Effect; and
(k)(i) York or an Affiliate of York fails to maintain direct or indirect
beneficial ownership of (A) 51% of InnCOGEN; PROVIDED that (1) any purchaser
with respect to InnCOGEN shall agree to (x) provide a limited recourse guarantee
of the Trinidad Project Loan secured by a pledge of the purchased interest in
InnCOGEN and (y) York maintains control of InnCOGEN and (2) such sale does
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not result in a Ratings Downgrade, (B) 25% of the Big Spring Guarantor;
PROVIDED, that any sale with respect to the Big Spring Guarantor shall not
result in (x) a Ratings Downgrade or (y) York's failure to maintain control of
the Big Spring Guarantor and (C) 100% of the Brooklyn Navy Yard Guarantor, the
Warbasse Guarantor, the Trinidad Parent, the Trinidad Guarantor, York T&T and
York Cayman and (ii) Queensgate SPV, as trustee, shall fail to maintain direct
or indirect beneficial ownership of the Funding Company.
CONTROL BY HOLDERS. The Majority Holders have the right to direct the time,
place and method of conducting any proceeding for any right or remedy available
to the Trustee or exercising any trust or power conferred on the Trustee in the
Indenture. The Majority Holders, acting through the Trustee, have the right to
direct the time, place and method for exercising any right or remedy available
to the Funding Company under the Project Loan Agreements and the Project Notes;
PROVIDED that upon the occurrence of an Event of Default related to failure to
make payments on the Securities, Holders of 33 1/3% in aggregate principal
amount of the Outstanding Securities have the right to cause the acceleration of
any Project Note pursuant to which a payment default related to such Event of
Default has occurred.
Subject to the above paragraph, if an Event of Default has occurred and is
continuing and as a result thereof or in connection therewith or pursuant to an
acceleration of the Securities arising therefrom, payments on the Securities are
not made when due, the Trustee is required to enforce the U.S. Guarantees and
the rights of the Holders thereunder.
ENFORCEMENT OF REMEDIES.
(a) If one or more Events of Default have occurred and are continuing, then:
(i) in the case of an Event of Default described in clause (a) above,
upon the direction of the Holders of no less than 33 1/3% in aggregate
principal amount of the Outstanding Securities, the Trustee will, by notice
to the Funding Company, declare the entire principal amount of the
Outstanding Securities, all interest accrued and unpaid thereon, and all
premium and other amounts payable under the Securities and the Indenture, if
any, to be due and payable; or
(ii) in the case of an Event of Default described in clause (f) above,
the entire principal amount of the Outstanding Securities, all interest
accrued and unpaid thereon, and all premium (if any) and other amounts
payable under the Securities and the Indenture, if any, shall automatically
become due and payable without presentment, demand, protest or notice of any
kind; or
(iii) in the case of an Event of Default described in clause (b) above
relating to certain events involving the bankruptcy, insolvency,
receivership or reorganization of any of the Guarantors, a principal amount
of the Outstanding Securities (on a pro rata basis) which is equal to the
principal amount of the Project Notes automatically accelerated in
connection with such Event of Default under the Project Loan Agreements, all
interest accrued and unpaid thereon, and all premium and other amounts
payable under the Securities and the Indenture, if any, will automatically
become due and payable without presentment, demand, protest or notice of any
kind;
(iv) in the case of an Event of Default described in clauses (c), (d),
(e), (g), (h), (i), (j) or (k) above, upon the direction of the Majority
Holders, the Trustee will, by notice to the Funding Company, declare the
entire principal amount of the Outstanding Securities, all interest accrued
and unpaid thereon, and all premium and other amounts payable under the
Securities and the Indenture, if any, to be due and payable; or
(v) in the case of an Event of Default described clause (b) above
(except as described in clause (a)(iii) above) upon the direction of the
Majority Holders, the Trustee will, by notice to the Funding Company,
declare a principal amount of the Outstanding Securities which is equal to
the principal amount of the Project Notes related to such respective Project
Loan Agreement to be
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accelerated in connection with such Project Loan Agreement Event of Default,
and all interest accrued and unpaid thereon, and all premium (if any), to be
due and payable, whereupon the same shall become due and payable without
presentment, demand, protest or further notice of any kind.
If an Event of Default occurs and is continuing and is known to the Trustee,
the Trustee will mail to each Holder notice of the Event of Default within 30
days after the occurrence thereof. Except in the case of an Event of Default in
payment of principal of or interest on any Security, the Trustee may withhold
the notice to the Holders if the Trustee in good faith determines that
withholding the notice is in the interest of the Holders.
If an Event of Default relating to failure to pay amounts owed on the
Securities has occurred and is continuing, the Trustee may declare the principal
amount of the Outstanding Securities, all interest accrued and unpaid thereon,
and all premium and other amounts payable under the Securities and the
Indenture, if any, to be due and payable notwithstanding the absence of
direction from Holders of at least 33 1/3% in aggregate principal amount of the
Outstanding Securities directing the Trustee to accelerate the maturity of the
Securities, if in the good faith exercise of its discretion the Trustee
determines that such action is necessary to protect the interests of the
Holders.
In addition, if one or more of the Events of Default referred to in clause
(a)(iii) immediately above has occurred and is continuing, the Trustee may
declare the entire principal amount of the Outstanding Securities, all interest
accrued and unpaid thereon, and all premium and other amounts payable under the
Securities and the Indenture, if any, to be due and payable notwithstanding the
absence of direction from the Majority Holders directing the Trustee to
accelerate the maturity of the Securities, if in the good faith exercise of its
discretion the Trustee determines that such action is necessary to protect the
interests of the Holders.
(b) At any time after the principal of the Securities has become due and
payable upon a declared acceleration, and before any judgment or decree for the
payment of the money so due, or any portion thereof, has been entered, the
Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities, by written notice to the Funding Company and the
Trustee, may rescind and annul such declaration and its consequences if:
(i) there has been paid to or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on the Securities,
(B) the principal of and premium, if any, on any Securities that have
become due (including overdue principal) other than by such declaration
of acceleration and interest thereon at the respective rates provided in
the Securities for overdue principal,
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the respective rates provided in the Securities
for overdue interest, and
(D) all sums paid or advanced by the Trustee and the reasonable
compensation, expenses, disbursements, and advances of the Trustee, its
agents and counsel, and
(ii) all Events of Default, other than the nonpayment of the principal
of the Securities that has become due solely by such acceleration, have been
cured or waived in accordance with the Indenture.
(c) If an Event of Default relating to the failure to pay amounts owed on
the Securities has occurred and is continuing and an acceleration has occurred,
the Trustee may (as the Holders of 33 1/3% in aggregate principal amount of the
Outstanding Securities request) direct the Collateral Agent to take possession
of all Collateral and, pursuant to the Intercreditor Agreement, to sell such
Collateral, as and to the extent permitted under the Intercreditor Agreement.
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(d) If a Project Loan Agreement Event of Default or a Guarantee Event of
Default (other than a Project Loan Agreement Event of Default related to failure
to pay the Project Note or a Guarantee Event of Default related to failure to
pay amounts owed on the Securities) has occurred and is continuing and an
acceleration has occurred, the Trustee may (at the Majority Holders request)
direct the Collateral Agent to take possession of all Collateral pledged to
secure the portion of the Project Note to be accelerated in connection with such
Event of Default and all Collateral pledged to secure any Guarantee pursuant to
which such Guarantee Event of Default has occurred and, pursuant to the
Intercreditor Agreement, to sell such Collateral, as and to the extent permitted
under the Intercreditor Agreement.
(e) If an Event of Default other than those referred to in clause (c) above
has occurred and is continuing and an acceleration has occurred, the Trustee may
(as the Holders request) direct the Collateral Agent to take possession of all
Collateral and, pursuant to the Intercreditor Agreement, to sell such
Collateral, as and to the extent permitted under the Intercreditor Agreement.
(f) If one or more Guarantee Events of Default shall have occurred and be
continuing under any Guarantee, the Trustee may (as the Holders request) direct
the Collateral Agent to take possession of all Collateral pledged to secure the
obligations of the defaulting Guarantor under the Guarantee in connection with
such Guarantee Event of Default and, pursuant to the Intercreditor Agreement, to
sell such Collateral, as and to the extent permitted under the Intercreditor
Agreement. Pursuant to the Intercreditor Agreement, all monies received by the
Trustee resulting from such sale shall be made available for redemption of
Securities. APPLICATION OF MONIES COLLECTED BY TRUSTEE.
Any money collected or to be applied by the Trustee after an Event of
Default in respect of the Securities will be applied to amounts owed with
respect to all Securities on a pro rata basis and, in respect of Securities of a
series, will be applied ratably to the Holders of Securities in the following
order of priority, on the date or dates fixed by the Trustee: (a) to the payment
of all amounts due to the Trustee or the predecessor Trustee under the
Indenture, (b) (i) in case the unpaid principal amount of the Outstanding
Securities which has not become due, to the payment of any overdue interest, in
the order of the maturity of the payments thereof, with interest at the rates
specified in the respective Securities in respect of overdue interest, (ii) in
case the unpaid principal amount of a portion of the Outstanding Securities
which has become due, first to the payment of accrued interest on all
Outstanding Securities in the order of the maturity of the payments thereof,
with interest at the respective rates specified in the Securities for overdue
principal, premium, if any, and overdue interest and next to the payment of the
overdue principal on all Securities then due or (iii) in case the unpaid
principal amount of all the Outstanding Securities which has become due, first
to the payment of the whole amount then due and unpaid upon the Outstanding
Securities for principal, premium, if any, and interest, together with interest
at the respective rates specified in the Securities which for overdue principal,
premium, if any, and overdue interest and (c) in case the unpaid principal
amount of all the Outstanding Securities has become due, and all of the
outstanding principal, premium, if any, interest and other amounts owed in
connection with Securities which have been fully paid, any surplus then
remaining will be paid to the Funding Company, or to whomsoever may be lawfully
entitled to receive the same, or as a court of competent jurisdiction may
direct.
AMENDMENTS AND SUPPLEMENTS
The Funding Company and the Trustee may amend or supplement the Indenture
without the consent of the Security Holders (a) to add additional covenants of
the Funding Company, to surrender rights conferred upon the Funding Company, or
to confer additional benefits upon the Security Holders, (b) to increase the
assets securing the Funding Company's obligations under the Indenture, (c) to
provide for the issuance of Additional Securities on the conditions described
herein, (d) for any purpose not inconsistent with the terms of the Indenture or
to cure any ambiguity, defect or inconsistency, (e) to reflect any amendments
required by a Rating Agency in circumstances where
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confirmation of the Ratings is required or permitted under the Indenture, or (f)
to provide for the issuance of Exchange Securities as contemplated by the
Registration Rights Agreement.
The Indenture may be otherwise amended or supplemented by the Funding
Company and the Trustee with the consent of the Majority Holders; PROVIDED that
no such amendment or supplement may, without the consent of all Holders of
Outstanding Securities, modify: (a) the principal, premium (if any) or interest
payable upon any Securities, (b) the dates on which interest or principal on any
Securities is paid, (c) the dates of maturity of any Securities and (d) the
procedures for amendment by a supplemental indenture.
AMENDMENT OF PROJECT LOAN AGREEMENTS AND PROJECT NOTES
The Funding Company and the Trustee may, without the consent of or notice to
the Security Holders, consent to any amendment or modification of any Project
Loan Agreements or Project Notes (a) as permitted by the provisions of such
Project Loan Agreements, Project Notes or the Indenture, (b) to cure any
ambiguity or formal defect, (c) to add additional rights in favor of the Funding
Company, or (d) in connection with any other amendment to the Project Loan
Agreements or the Project Notes, including any amendment required by a Rating
Agency in circumstances where confirmation of the Ratings are required or
permitted under the Indenture or the Project Loan Agreements. Except as
described above, neither the Funding Company nor the Trustee shall consent to
any other amendment or modification of a Project Loan Agreement or a Project
Note or grant any waiver or consent thereunder without the consent of the
Majority Holders. Amendments to the Project Loan Agreements or the Project Notes
which changes the amounts of payments due thereunder, the Person to whom such
payments are to be made or the dates on which such payments are to be made shall
not be made without the unanimous consent of the Security Holders.
SATISFACTION AND DISCHARGE OF THE INDENTURE; DEFEASANCE
The Funding Company may terminate the Indenture and the Guarantees by
delivering all Outstanding Securities to the Trustee for cancellation and by
paying all other sums payable under the Indenture.
Legal and covenant defeasance shall be permitted upon terms and conditions
customary for transactions of this nature, including, without limitation,
delivery of legal opinions from tax counsels.
TRUSTEE
There shall at all times be a Trustee under the Indenture, which shall be a
corporation having either (a) a combined capital and surplus of at least $100
million, or (b) having a combined capital and surplus of at least $50 million
and being a wholly-owned subsidiary of a corporation having a combined capital
and surplus of at least $100 million, in each case subject to supervision or
examination by a Federal or State or District of Columbia authority and having a
corporate trust office in New York, New York, to the extent there is such an
institution eligible and willing to serve. The Funding Company agrees to
indemnify and hold harmless the Trustee in connection with the performance of
its duties under the Indenture, except for liability which results from the
gross negligence, bad faith or willful misconduct of the Trustee.
The Trustee may resign at any time by giving written notice thereof to the
Funding Company. The Trustee may be removed at any time by act of the Holders of
a majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Funding Company. The Funding Company shall give notice of
each resignation and removal of the Trustee and each appointment of a successor
Trustee to all Holders.
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INFORMATION AVAILABLE TO SECURITY HOLDERS
Pursuant to the Indenture, the Funding Company has agreed to provide to
Holders, prospective Holders and owners of beneficial interests in Securities in
global form, upon written request, such information as is appropriate under Rule
144A(d)(4) under the Securities Act to enable resales of the Securities to be
made pursuant to Rule 144A, including, but not limited to, the quarterly and the
audited annual financial reports for the Funding Company and for each Guarantor,
together with a schedule of the current and historical Debt Service Coverage
Ratios for each quarter and a list of the current balances in each of the Funds.
See "AVAILABLE INFORMATION."
AGENT RELATIONSHIP
Each of the U.S. Guarantors has designated the Funding Company as its agent
under the Indenture for the sole purpose of (a) issuing the Securities to the
extent of each such U.S. Guarantor's obligations thereunder and (b) otherwise
carrying out each U.S. Guarantor's obligations and duties and exercising each
U.S. Guarantor's rights and privileges under the Indenture. Each U.S. Guarantor
will indemnify the Funding Company against all claims arising in connection with
the Funding Company's performance of its obligations.
GUARANTEES
GUARANTEE OF THE TRINIDAD GUARANTOR.
Pursuant to the Trinidad Guarantee issued by the Trinidad Guarantor in favor
of the Funding Company, the Trinidad Guarantor has unconditionally guaranteed
the payment of principal of, premium, if any, and interest on the Trinidad
Project Note. Such Guarantee is a guarantee of payment and the Funding Company
shall be entitled to make demands for payment thereunder at any time that
amounts due and payable on the Trinidad Project Note have not been paid.
Under the Trinidad Guarantee, the Trinidad Guarantor agreed to be bound by
and to perform all of its obligations pursuant to covenants substantially
similar to those contained in the Trinidad Project Loan Agreement from and after
the date that the Trinidad Project Note is executed and repaid in full. Failure
to perform such covenants will result in a Guarantee Event of Default after the
expiration of any applicable grace period.
GUARANTEE OF THE BROOKLYN NAVY YARD GUARANTOR.
Pursuant to the Brooklyn Navy Yard Guarantee issued by the Brooklyn Navy
Yard Guarantor in favor of the Collateral Agent for the benefit of the Secured
Parties, the Brooklyn Navy Yard Guarantor, unconditionally and irrevocably has
guaranteed the payment of principal of, premium, if any, and interest on the
Securities. Such Guarantee is a guarantee of payment and the Trustee and the
Collateral Agent shall be entitled to make demands for payment thereunder at any
time that amounts due and payable on the Securities have not been paid.
Under the Brooklyn Navy Yard Guarantee the Brooklyn Navy Yard Guarantor has
agreed to be bound by and to perform all of its obligations under covenants
contained in the U.S. Project Loan Agreement in favor of the Trustee and the
Collateral Agent from and after the date that the U.S. Project Note is repaid in
full. Failure to perform such covenants will result in a Guarantee Event of
Default, after the expiration of any applicable grace period.
GUARANTEE OF THE WARBASSE GUARANTORS.
Pursuant to the Warbasse Guarantee issued by the Warbasse Guarantors in
favor of the Collateral Agent for the benefit of the Secured Parties, the
Warbasse Guarantors have each, on a joint and several basis, unconditionally and
irrevocably guaranteed the payment of principal of, premium, if any,
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and interest on the Securities. Such Guarantee is a guarantee of payment and the
Trustee and the Collateral Agent shall be entitled to make demands for payment
thereunder at any time that amounts due and payable on the Securities have not
been paid.
Under the Warbasse Guarantee, the Warbasse Guarantors have agreed to be
bound by and to perform all of their obligations under covenants contained in
the U.S. Project Loan Agreement in favor of the Trustee and the Collateral Agent
from and after the date that the U.S. Project Note are repaid in full. Failure
to perform such covenants will result in a Guarantee Event of Default, after the
expiration of any applicable grace period.
GUARANTEE OF THE BIG SPRING GUARANTOR.
Pursuant to the Big Spring Guarantee issued by the Big Spring Guarantor in
favor of the Collateral Agent for the benefit of the Secured Parties, the Big
Spring Guarantor has unconditionally and irrevocably guaranteed the payment of
principal of, premium, if any, and interest on the Securities. Such Guarantee is
a guarantee of payment and the Trustee and the Collateral Agent shall be
entitled to make demands for payment thereunder at any time that amounts due and
payable on the Securities have not been paid.
Under the Big Spring Guarantee, the Big Spring Guarantor has agreed to be
bound by and to perform all of its obligations under covenants contained in the
U.S. Project Loan Agreement in favor of the Trustee and the Collateral Agent
from and after the date that the U.S. Project Note is repaid in full. Failure to
perform such covenants will result in a Guarantee Event of Default, after the
expiration of any applicable grace period.
PROJECT LOAN AGREEMENTS
U.S. PROJECT LOAN AGREEMENT.
GENERAL.
Pursuant to the U.S. Project Loan Agreement, the U.S. Guarantors issued the
U.S. Project Note payable to the Funding Company and agreed to make payments on
the U.S. Project Note, on a joint and several basis, in amounts which are
sufficient, together with payments under the Trinidad Project Note, to enable
the Funding Company to pay scheduled principal of, premium if any, and interest
on, the Securities.
The U.S. Guarantors absolutely and unconditionally agreed to make payments
on the U.S. Project Note in scheduled installments and to pay interest, in
arrears, on the unpaid principal amount of each installment. If the Funding
Company issues Additional Securities, the proceeds of which must be loaned to
the U.S. Guarantors, an additional U.S. Project Note having principal amounts in
the aggregate equal to the amount of such proceeds so loaned will be issued by
the U.S. Guarantors and such principal will be payable in scheduled installments
which correspond to the repayment of principal of such Additional Securities.
The U.S. Guarantors' obligations to make payments on the U.S. Project Note are
joint and several with respect to each U.S. Guarantor.
MANDATORY PREPAYMENT.
The U.S. Project Note is required to be prepaid with proceeds received by
the U.S. Guarantors in connection with an Event of Loss, an Expropriation Event,
a Power Contract Buy-Out, or the incurrence of additional Debt (or, in the case
of the Warbasse Guarantors and the Brooklyn Navy Yard Guarantor, cash flow
representing Loss Proceeds, Expropriation Proceeds or Buy-Out Proceeds), each as
and to the extent the Securities are required to be redeemed in connection with
the receipt of such proceeds in an amount as provided in the Indenture. See
"SUMMARY DESCRIPTION OF THE
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PRINCIPAL FINANCING DOCUMENTS-Depositary Agreements" and "SUMMARY DESCRIPTION OF
THE SECURITIES-Mandatory Redemption."
CERTAIN COVENANTS.
Set forth below are certain covenants of the U.S. Guarantors contained in
the U.S. Project Loan Agreement.
(a) REPORTING REQUIREMENTS. Each U.S. Guarantor and, with respect to clause
(a)(ii), WCTP and BNYCP shall provide to the Funding Company (a)(i) unaudited
financial statements for the first three quarters of each fiscal year containing
condensed financial information and (ii) audited annual reports, (b) all other
information in respect of such U.S. Guarantor or its Project requested by the
Funding Company to enable the Funding Company to meet its obligations under the
Indenture, (c) copies of material notices delivered in connection with any U.S.
Project Documents, (d) written notice of any Project Loan Agreement Default or
Event of Default under the U.S. Project Loan Agreement or any event or condition
that could reasonably be expected to result in a Material Adverse Effect and (e)
with respect to the Big Spring Project, copies of all construction schedules,
construction budgets and Operating Budgets (together with evidence of compliance
therewith and bi-monthly reports issued by the Independent Engineer prior to
Substantial Completion) of the Big Spring Project and each annual report
thereafter.
(b) COMPLIANCE WITH LAWS. Each U.S. Guarantor shall comply with all
Applicable Laws, except where non-compliance could not reasonably be expected to
have a Material Adverse Effect.
(c) QF STATUS. The Big Spring Guarantor shall at all times cause the Big
Spring Project to maintain its QF status, unless failure to do so (a) would not
cause a breach under, or forfeiture of, the pricing or other material benefits
of the U.S. Project Documents or (b) could not reasonably be expected to result
in a Material Adverse Effect.
(d) GOVERNMENTAL APPROVALS; TITLE. Each U.S. Guarantor shall at all times
(a) obtain and maintain in full force and effect all material Governmental
Approvals and other consents and approvals required at any time in connection
with its business and (b) preserve and maintain good and valid title to its
properties and assets (subject to no Liens other than Permitted Liens), except
in each case where the failure to do so could not reasonably be expected to have
a Material Adverse Effect.
(e) PERFORMANCE OF OBLIGATIONS. Each U.S. Guarantor shall (a) exercise all
of its rights under any Transaction Document to which it is a party, (b) perform
all of its covenants and obligations under each Transaction Document to which it
is a party and (c) take all necessary actions to prevent the termination or
cancellation of any Transaction Document to which it is a party, except, in each
case, the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
(f) BOOKS AND RECORDS. Each U.S. Guarantor shall maintain proper books and
records in conformity with GAAP and all Applicable Law and give the Funding
Company, the Trustee, the Collateral Agent and the Independent Engineer
inspection rights.
(g) REVENUE FUND. Each U.S. Guarantor shall take all actions as may be
necessary to cause all Cash Flows of such U.S. Guarantor to be deposited in the
U.S. Revenue Fund.
(h) ACCEPTANCE OF PROJECT. The Big Spring Guarantor shall not accept
Substantial Completion of the Big Spring Project unless an Authorized Officer of
the Independent Engineer shall have certified that Substantial Completion has
occurred.
(i) INSURANCE. The Big Spring Guarantor shall at all times maintain the
customary insurance in such amounts, terms and conditions in accordance with the
standard industry practice, including, without limitation, business interruption
insurance with respect to the Big Spring Project. All policies of physical
damage and business interruption insurance shall name the Collateral Agent as
sole loss payee
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and the Collateral Agent shall be named and additional insured under any general
liability, automotive liability, excess liability or other policy similar in
nature in accordance with standard industry practice. The Big Spring Guarantor
shall not terminate or amend any insurance policy unless such termination could
not reasonably be expected to result in a Material Adverse Effect.
(j) LIMITATIONS ON DEBT/LIENS. No U.S. Guarantor shall create or incur or
suffer to exist any Debt except Permitted Project Debt. No U.S. Guarantor shall
grant, create, incur or suffer to exist any Liens upon any of their properties,
except for Permitted Liens.
(k) NATURE OF BUSINESS. No U.S. Guarantor shall engage in any business other
than its existing business and the ownership, development, acquisition,
construction, financing, and operation of the U.S. Projects and the right to
receive cash flow thereunder as contemplated by the Transaction Documents.
(l) PROHIBITION ON FUNDAMENTAL CHANGES. No U.S. Guarantor shall enter into
any transaction of merger or consolidation, change its form of organization or
its business, liquidate or dissolve themselves (or suffer any liquidation or
dissolution), discontinue its business or purchase or otherwise acquire all or
substantially all of its assets of any other Person except in any such case as
contemplated by the Financing Documents.
(m) SALE OF ASSETS. Except as contemplated by the U.S. Project Documents, no
U.S. Guarantor shall sell, lease or transfer any property or assets material to
its operations except in the ordinary course of business to the extent that such
property is no longer useful or necessary in connection with its operation.
(n) TRANSACTIONS WITH AFFILIATES. No U.S. Guarantor shall enter into any
transaction or agreement with any Affiliate of the Big Spring Guarantor other
than (a) as contemplated under the Transaction Documents or (b) transactions in
the ordinary course of business and on terms no less favorable to the Big Spring
Guarantor than the Big Spring Guarantor would obtain in an arms length
transaction with a Person that is not an Affiliate of the Big Spring Guarantor.
(o) RESTRICTED PAYMENTS. No U.S. Guarantor shall make any Restricted
Payments, except as permitted under the U.S. Depositary Agreement.
(p) AMENDMENTS TO U.S. PROJECT DOCUMENTS. Other than with respect to
Permitted Power Contract Buy-Outs, no U.S. Guarantor shall terminate, amend,
replace or modify any of the U.S. Project Documents to which it is a party or
permit the assignment of the rights and obligations of any party thereto unless
such U.S. Guarantor certifies that such termination, amendment, replacement,
modification or assignment could not reasonably be expected to result in a
Material Adverse Effect, PROVIDED that in the case of any assignment, amendment,
termination or modification of any Power Purchase Agreements which affects the
revenues derived by such U.S. Guarantor, in addition to the condition set forth
above, (a) the Independent Engineer certifies that such assignment, amendment,
termination or modification could not reasonably be expected to have a Material
Adverse Effect and (b) such U.S. Guarantor provides a letter from each of the
Rating Agencies confirming that such assignment, amendment, termination or
modification will not result in a Ratings Downgrade. Notwithstanding the
foregoing, the Warbasse Guarantors shall not directly or indirectly, terminate,
amend, modify, replace, supplement or waive, or permit or consent to the
termination, modification, replacement supplement or waiver of any of the
provisions of, or give any consent under either of the WCTP Notes or permit the
assignment of the rights and obligations of any party thereto unless (a)
modification, replacement, supplement, waiver or consent could not reasonably be
expected to result in a Material Adverse Effect and (b) the Warbasse Guarantors
provide a letter from each of the Rating Agencies confirming that such
assignment, termination, amendment, modification, replacement, supplement,
waiver or consent will not resulting a Ratings Downgrade.
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(q) ADDITIONAL PROJECT DOCUMENTS. No U.S. Guarantor shall enter into any
Additional Project Document if the transactions contemplated by such document
could reasonably be expected to result in a Material Adverse Effect.
(r) ADDITIONAL COVENANTS. In addition to the covenants described above, the
U.S. Project Loan Agreement also contains covenants of the Big Spring Guarantor
regarding (a) maintenance of existence, (b) payment of taxes and claims unless
being contested in good faith and (c) the preservation and maintenance of Liens
on the Collateral and the priority thereof.
EVENTS OF DEFAULT.
CERTAIN EVENTS. The following events constitute Project Loan Agreement
Events of Default under the U.S. Project Loan Agreement:
(a) failure by any of the U.S. Guarantors to pay or cause to be paid any
principal of, premium, if any, or interest, fees or any other obligations on the
U.S. Project Note for 10 or more days after the same becomes due and payable,
whether by scheduled maturity or required prepayment, or by acceleration or
otherwise;
(b) any representation or warranty made by any of the U.S. Guarantors under
the U.S. Project Loan Agreement or in any other Transaction Document to which
such U.S. Guarantor is a party, or any representation, warranty or statement in
any certificate, financial statement or other document furnished to the Funding
Company, the Trustee or any other Holder by or on behalf of any U.S. Guarantor
thereunder, shall prove to have been untrue or misleading in any material
respect as of the time made, confirmed or furnished and the fact, event or
circumstance that gave rise to such inaccuracy could reasonably be expected to
result in a Material Adverse Effect and such fact, event or circumstance shall
continue to be uncured for 30 or more days from the date an Authorized Officer
of such U.S. Guarantor has actual knowledge thereof; PROVIDED that if such U.S.
Guarantor commences efforts to cure such fact, event or circumstance within such
30-day period, such U.S. Guarantor may continue to effect such cure and such
misrepresentation shall not be deemed a Project Loan Agreement Event of Default
for an additional 90 days so long as such U.S. Guarantor is diligently pursuing
such cure;
(c) the failure by any of the U.S. Guarantors to perform or observe any
covenant under the U.S. Project Loan Agreement relating to maintenance of
existence and formation documents, Debt, Permitted Liens, Restricted Payments,
guarantees, disposition of assets, maintenance of insurance, amendments to
assignments of or exercise of rights and performance under the U.S. Project
Documents, filings and recordings, books and records, taxes and taxation,
fundamental changes, contingent liabilities, or nature of business or operation,
abandonment and completion of the Big Spring Project and such failure shall
continue uncured for 30 or more days after an Authorized Officer of such U.S.
Guarantor has actual knowledge of such failure;
(d) the failure by any of the U.S. Guarantors to perform or observe any of
the other covenants contained in the U.S. Project Loan Agreement or in the other
Financing Documents to which such U.S. Guarantor is party (other than such
failures described in clause (c) above) and such failure shall continue uncured
for 60 or more days after an Authorized Officer of such U.S. Guarantor has
actual knowledge of such failure; PROVIDED that if such U.S. Guarantor commences
and diligently pursues efforts to cure such default within such 60-day period,
such U.S. Guarantor may continue to effect such cure of the default and such
default will not be deemed a Project Loan Agreement Event of Default for an
additional 30 days so long as such U.S. Guarantor is diligently pursuing such
cure;
(e) certain events involving the bankruptcy, insolvency, receivership or
reorganization of any of the U.S. Guarantors or any other party to a material
Project Document;
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(f) the entry of one or more final and non-appealable judgment or judgments
for the payment of money in excess of $5 million (exclusive of judgment amounts
fully covered by insurance or indemnity) against any of the U.S. Guarantors,
which remain unpaid or unstayed for a period of 90 or more consecutive days
other than judgments contemplated by the Mission Reimbursement Agreement;
(g) Permitted Debt of any of the U.S. Guarantors in excess of $5 million
(other than debt incurred pursuant to the U.S. Project Loan Agreement) becomes
due and payable prior to its stated maturity other than by regularly scheduled
repayment as the result of an event of default thereunder;
(h) any Governmental Approval required for the operation of a U.S. Project
is revoked, terminated, withdrawn or ceases to be in full force and effect if
such revocation, termination, withdrawal or cessation could reasonably be
expected to have a Material Adverse Effect and such revocation, termination,
withdrawal or cessation is not cured for 60 days following the occurrence
thereof;
(i) any material U.S. Project Document ceases to be valid and binding and in
full force and effect other than as a result of an amendment, termination or
Power Contract Buy-Out permitted under the U.S. Project Loan Agreement, or any
third party thereto fails to perform its material obligations thereunder or
makes any material misrepresentation thereunder and any such event results in a
Material Adverse Effect;
(j) the failure of any of the U.S. Guarantors or any other party to perform
or observe any of its covenants or obligations contained in any of the U.S.
Project Documents to which it is a party, subject to applicable cure periods, if
such failure shall result in the receipt of a notice of termination of such U.S.
Project Document or otherwise result in a Material Adverse Effect;
(k) any of the Security Documents with respect to any of the Project
Collateral ceases to be effective or any Lien granted therein ceases to be a
valid and perfected Lien in favor of the Collateral Agent on the Collateral
described therein with the priority purported to be created thereby; PROVIDED,
HOWEVER, that the relevant U.S. Guarantor shall have 10 days to cure any such
cessation or to furnish to the Trustee, the Collateral Agent or the Depositary
all documents or instruments required to cure any such cessation;
(l) all or a material part of a Project is destroyed or suffers a material
actual loss or material damage and there does not exist an Approved Restoration
Plan in respect thereof within 30 days; or
(m) an Event of Default under the Indenture has occurred and is continuing.
"SUMMARY DESCRIPTION OF THE PRINCIPAL FINANCING DOCUMENTS-Trust Indenture."
ENFORCEMENT OF REMEDIES.
If one or more Project Loan Agreement Events of Default under the U.S.
Project Loan Agreement has occurred and is continuing, then:
(a) in the case of a Project Loan Agreement Event of Default described in
clause (m) above relating to certain bankruptcy related Events of Default under
the Indenture, the entire outstanding principal amount of the U.S. Project Note,
all interest accrued and unpaid thereon, and all premium and other amounts
payable under the U.S. Project Note and the U.S. Project Loan Agreement, if any,
will automatically become due and payable without presentment, demand, protest
or notice of any kind;
(b) in the case of a Project Loan Agreement Event of Default described in
clauses (a) or (m) above relating to payment defaults under the Indenture, upon
the direction of the Holders of no less than 33 1/3% in aggregate principal
amount of the Outstanding Securities, the Funding Company will declare the
outstanding principal amount of the U.S. Project Note to be accelerated and due
and payable and all interest accrued and unpaid thereon, and all premium and
other amounts payable under the U.S. Project Loan Agreement, if any, to be due
and payable; or
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(c) in the case of any Project Loan Agreement Event of Default other than
those described in clauses (a) and (b) above, upon written direction of the
Majority Holders, the Funding Company will declare that portion of the
outstanding principal amount of the U.S. Project Note and all interest accrued
and unpaid thereon, and all premium and other amounts payable under the U.S.
Project Loan Agreement, if any, in each case equal to that portion of such
amount incurred for the benefit of the U.S. Guarantor that caused such Project
Loan Agreement Event of Default to be immediately due and payable without
presentment, demand, protest or notice of any kind.
TRINIDAD PROJECT LOAN AGREEMENT.
GENERAL.
Pursuant to the Trinidad Project Loan Agreement, dated as of the Closing
Date (the "Trinidad Project Loan Agreement"), between the Funding Company and
the Trinidad Parent, the Trinidad Parent issued the Trinidad Project Note
payable to the Funding Company and agreed to make payments on the Trinidad
Project Note in amounts which are sufficient to enable the Funding Company to
pay the corresponding amount of scheduled principal of, premium if any, and
interest on, the Securities.
The Trinidad Parent absolutely and unconditionally agreed to make payments
on the Trinidad Project Note in scheduled installments and to pay interest, in
arrears, on the unpaid principal amount of each installment. If the Funding
Company issues Additional Securities, the proceeds of which must be loaned to
the Trinidad Parent, an additional Trinidad Project Note having principal
amounts in the aggregate equal to the amount of such proceeds so loaned will be
issued by the Trinidad Parent and such principal will be payable in scheduled
installments which correspond to the repayment of principal of such Additional
Securities.
MANDATORY PREPAYMENT.
The Trinidad Project Note is required to be prepaid with proceeds received
by the Trinidad Parent in connection with an Event of Loss, an Expropriation
Event or a Power Contract Buy-Out, each as and to the extent the Securities are
required to be redeemed in connection with the receipt of such proceeds in an
amount as provided in the Indenture. See "SUMMARY DESCRIPTION OF THE PRINCIPAL
FINANCING DOCUMENTS-Depositary Agreements" and "SUMMARY DESCRIPTION OF THE
SECURITIES-Mandatory Redemption."
CERTAIN COVENANTS.
Set forth below are certain covenants of the Trinidad Parent contained in
the Trinidad Project Loan Agreement.
(a) REPORTING REQUIREMENTS. The Trinidad Parent shall provide to the Funding
Company (a)(i) unaudited financial statements for the first three quarters of
each fiscal year containing condensed financial information and (ii) audited
annual reports, (b) all other information in respect of the Trinidad Parent or
the Trinidad Project requested by the Funding Company to enable the Funding
Company to meet its obligations under the Indenture, (c) copies of material
notices delivered in connection with any Trinidad Project Documents, (d) written
notice of any Project Loan Agreement Default or Event of Default under the
Trinidad Project Loan Agreement or any event or condition that could reasonably
be expected to result in a Material Adverse Effect and (e) with respect to the
Trinidad Project, copies of all construction schedules, construction budgets and
Operating Budgets (together with evidence of compliance therewith) and
bi-monthly reports issued by the Independent Engineer prior to Substantial
Completion of the Trinidad Project and each annual report thereafter.
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(b) COMPLIANCE WITH LAWS. The Trinidad Parent shall comply with all
Applicable Laws, except where non-compliance could not reasonably be expected to
have a Material Adverse Effect.
(c) GOVERNMENTAL APPROVALS; TITLE. The Trinidad Parent shall at all times
(a) cause InnCOGEN to obtain and maintain in full force and effect all material
Governmental Approvals and other consents and approvals required at any time in
connection with its business and (b) preserve and maintain good and valid title
to its properties and assets (subject to no Liens other than Permitted Liens),
except in each case where the failure to do so could not reasonably be expected
to have a Material Adverse Effect.
(d) PERFORMANCE OF OBLIGATIONS. The Trinidad Parent shall (a) exercise all
of its rights under any Transaction Document to which it is a party, (b) perform
all of its covenants and obligations under each Transaction Document to which it
is a party and (c) take all necessary actions to prevent the termination or
cancellation of any Transaction Document to which it is a party, except, in each
case, the failure to do so could not reasonably expect to result in a Material
Adverse Effect.
(e) BOOKS AND RECORDS. The Trinidad Parent shall maintain proper books and
records in conformity with GAAP and all Applicable Law and give the Funding
Company, the Trustee, the Collateral Agent and the Independent Engineer
inspection rights.
(f) REVENUE FUND. The Trinidad Parent shall take all actions as may be
necessary to cause all Cash Flows of the Trinidad Parent to be deposited in the
Trinidad Revenue Fund.
(g) NATURE OF BUSINESS. The Trinidad Parent shall not engage in any business
other than its existing business and the development, acquisition, construction,
operation and financing of the Trinidad Project through the Trinidad Guarantor
and InnCOGEN as contemplated by the Trinidad Project Documents.
(h) PROHIBITION ON FUNDAMENTAL CHANGES. The Trinidad Parent shall not enter
into any transaction of merger or consolidation, change its form of organization
or its business, liquidate or dissolve itself (or suffer any liquidation or
dissolution), discontinue its business or purchase or otherwise acquire all or
substantially all of its assets of any other Person except in any such case as
contemplated by the Financing Documents.
(i) TRANSACTIONS WITH AFFILIATES. The Trinidad Parent shall not enter into
any transaction or agreement with any Affiliate other than (a) as contemplated
under the Transaction Documents or (b) transactions on terms no less favorable
to the Trinidad Parent than the Trinidad Parent would obtain in an arms length
transaction with a Person that is not an Affiliate.
(j) RESTRICTED PAYMENTS. The Trinidad Parent shall not make any Restricted
Payments, except as permitted under the Trinidad Depositary Agreement.
(k) AMENDMENTS TO TRINIDAD PROJECT DOCUMENTS. Other than with respect to
Permitted Power Contract Buy-Outs, the Trinidad Parent shall not terminate,
amend, replace or modify any of the Trinidad Project Documents to which it is a
party or permit the assignment of the rights and obligations of any party
thereto unless the Trinidad Parent certifies that such termination, amendment,
replacement, modification, or assignment could not reasonably be expected to
result in a Material Adverse Effect, PROVIDED that in the case of any
assignment, amendment, termination or modification of the Trinidad PPA which
affects the revenues derived by Trinidad Parent in addition to the conditions
set forth in clause above, (a) the Independent Engineer certifies that such
assignment, amendment, termination or modification could not reasonably be
expected to have a Material Adverse Effect and (b) the Trinidad Parent provides
a letter from each of the Rating Agencies confirming that such assignment,
amendment, termination or modification will not result in a Ratings Downgrade.
(l) LIMITATIONS ON DEBT/LIENS. The Trinidad Parent shall not create or incur
or suffer to exist any Debt except Permitted Project Debt. The Trinidad Parent
shall not grant, create, incur or suffer to exist any Liens upon any of their
properties, except for Permitted Project Liens.
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(m) ADDITIONAL PROJECT DOCUMENTS. The Trinidad Parent shall not enter into
any Additional Project Document if the transactions contemplated by such
document could reasonably be expected to result in a Material Adverse Effect.
(n) ADDITIONAL COVENANTS. In addition to the covenants described above, the
Trinidad Project Loan Agreement also contains covenants of the Trinidad Parent
regarding (a) maintenance of existence, (b) payment of taxes and claims unless
being contested in good faith and (c) the preservation and maintenance of Liens
on the Collateral and the priority thereof.
EVENTS OF DEFAULT.
The following events constitute "Project Loan Agreement Events of Default"
under the Trinidad Project Loan Agreement:
(a) failure by the Trinidad Parent to pay or cause to be paid any principal
of, premium, if any, or interest, fees or any other obligations on the Trinidad
Project Note for 10 or more days after the same becomes due and payable, whether
by scheduled maturity, required prepayment, acceleration or otherwise;
(b) any representation or warranty made by the Trinidad Parent under the
Trinidad Project Loan Agreement or in any other Transaction Document to which
the Trinidad Parent is a party, or any representation, warranty or statement in
any certificate, financial statement or other document furnished to the Funding
Company, the Trustee or any other Holder by or on behalf of the Trinidad Parent
thereunder, shall prove to have been untrue or misleading in any material
respect as of the time made, confirmed or furnished and the fact, event or
circumstance that gave rise to such inaccuracy could reasonably be expected to
result in a Material Adverse Effect and such fact, event or circumstance shall
continue to be uncured for 30 or more days from the date an Authorized Officer
of the Trinidad Parent has actual knowledge thereof; PROVIDED that if the
Trinidad Parent commences efforts to cure such fact, event or circumstance
within such 30-day period, the Trinidad Parent may continue to effect such cure
and such misrepresentation shall not be deemed a Project Loan Agreement Event of
Default for an additional 90 days so long as the Trinidad Parent is diligently
pursuing such cure;
(c) the failure by the Trinidad Parent to perform or observe any covenant
under the Trinidad Project Loan Agreement relating to maintenance of existence
and formation documents, Debt, Permitted Liens, Restricted Payments, guarantees,
disposition of assets, maintenance of insurance, amendments to assignments of or
exercise of rights and performance under the Trinidad Project Documents, filings
and recordings, books and records, taxes and taxation, fundamental changes,
contingent liabilities, nature of business or operation, Project implementation,
abandonment and completion of the Trinidad Project and such failure shall
continue uncured for 30 or more days after an Authorized Officer of the Trinidad
Parent has actual knowledge of such failure;
(d) the failure by the Trinidad Parent to perform or observe any of the
other covenants contained in the Trinidad Project Loan Agreement or in the other
Financing Documents to which the Trinidad Parent is party (other than such
failures described in clause (c) above) and such failure shall continue uncured
for 60 or more days after an Authorized Officer of the Trinidad Parent has
actual knowledge of such failure; PROVIDED that if the Trinidad Parent commences
and diligently pursues efforts to cure such default within such 60-day period,
the Trinidad Parent may continue to effect such cure of the default and such
default will not be deemed a Project Loan Agreement Event of Default for an
additional 30 days so long as the Trinidad Parent is diligently pursuing such
cure;
(e) certain events involving the bankruptcy, insolvency, receivership or
reorganization of the Trinidad Parent or any of its subsidiaries;
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(f) the entry of one or more final and non-appealable judgment or judgments
for the payment of money in excess of $5 million (exclusive of judgment amounts
fully covered by insurance or indemnity) against the Trinidad Parent, which
remain unpaid or unstayed for a period of 90 or more consecutive days;
(g) Permitted Debt of the Trinidad Parent in excess of $5 million (other
than debt incurred pursuant to the Trinidad Project Loan Agreement) becomes due
and payable prior to its stated maturity other than by regularly scheduled
repayment as the result of an event of default thereunder;
(h) any material Trinidad Project Document ceases to be valid and binding
and in full force and effect other than as a result of an amendment, termination
or Power Contract Buy-Out permitted under the Trinidad Project Loan Agreement,
or any third party thereto fails to perform its material obligations thereunder
or makes any material misrepresentation thereunder and any such event results in
a Material Adverse Effect;
(i) any Governmental Approval required for the operation of the Trinidad
Project is revoked, terminated, withdrawn or ceases to be in full force and
effect if such revocation, termination, withdrawal or cessation could reasonably
be expected to have a Material Adverse Effect and such revocation, termination,
withdrawal or cessation is not cured for 60 days following the occurrence
thereof;
(j) the failure of the Trinidad Parent or any other party to perform or
observe any of its covenants or obligations contained in any of the Trinidad
Project Documents to which it is a party, subject to applicable cure periods, if
such failure shall result in the receipt of a notice of termination of such
Trinidad Project Document or otherwise result in a Material Adverse Effect;
(k) any of the Security Documents ceases to be effective or any Lien granted
therein ceases to be a valid and perfected Lien in favor of the Collateral Agent
on the Collateral described therein with the priority purported to be created
thereby; PROVIDED, HOWEVER, that the Trinidad Parent shall have 10 days to cure
any such cessation or to furnish to the Trustee, the Collateral Agent or the
Depositary all documents or instruments required to cure any such cessation;
(l) all or a material part of the Trinidad Project is destroyed or suffers a
material actual loss or material damage and there does not exist an Approved
Restoration Plan in respect thereof within 30 days; or
(m) an Event of Default under the Indenture shall have occurred and be
continuing. See "SUMMARY DESCRIPTION OF THE PRINCIPAL FINANCING DOCUMENTS-Trust
Indenture."
ENFORCEMENT OF REMEDIES.
If one or more Project Loan Agreement Events of Default under the Trinidad
Project Loan Agreement have occurred and are continuing, then:
(a) in the case of a Project Loan Agreement Event of Default under the
Trinidad Project Loan Agreement described in clauses (e) or (m) above relating
to certain bankruptcy related Events of Default under the Indenture, the entire
outstanding principal amount of the Trinidad Project Note, all interest accrued
and unpaid thereon, and all premium and other amounts payable under the Trinidad
Project Note and the Trinidad Project Loan Agreement, if any, will automatically
become due and payable without presentment, demand, protest or notice of any
kind;
(b) in the case of a Project Loan Agreement Event of Default described in
clauses (a) and (m) above relating to payment defaults under the Indenture, upon
the direction of the Holders of no less than 33 1/3% in aggregate principal
amount of the Outstanding Securities, the Funding Company will declare the
outstanding principal amount of the Trinidad Project Note to be accelerated and
due and
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payable and all interest accrued and unpaid thereon, and all premium and other
amounts payable under the Trinidad Project Loan Agreement, if any, to be due and
payable; or
(c) in the case of a Project Loan Agreement Event of Default other than
those described in clauses (a) or (b) above, upon written direction of the
Majority Holders, the Funding Company will declare the outstanding principal
amount of the Trinidad Project Note to be accelerated and due and payable and
all interest accrued and unpaid thereon, and all premium and other amounts
payable under the Trinidad Project Loan Agreement, if any, to be due and
payable.
TRINIDAD LOAN AGREEMENT
The Trinidad Parent made a capital contribution to the Trinidad Guarantor,
which was subsequently loaned to InnCOGEN pursuant to the Trinidad Loan
Agreement, dated as of the Closing Date (the "Trinidad Loan Agreement"), between
the Trinidad Guarantor and InnCOGEN and evidenced by the InnCOGEN Loan. The
InnCOGEN Loan is secured by all of the assets of InnCOGEN, including all assets
related to the Trinidad Project. The Trinidad Loan Agreement contains
representations and warranties and events of default substantially similar to
those set forth in the Trinidad Project Loan Agreement and the U.S. Project Loan
Agreement. The Trinidad Loan Agreement also contains similar affirmative and
negative covenants to those set forth in the Trinidad Project Loan Agreement and
the U.S. Project Loan Agreement, including, without limitation, covenants
related to reporting requirements, insurance, performance obligations,
limitations on Debt and Liens, and restrictions on amendments to the Trinidad
Project Documents and Additional Project Documents. See "SUMMARY DESCRIPTION OF
THE PRINCIPAL FINANCING DOCUMENTS-Trinidad Project Loan Agreement" and "-U.S.
Project Loan Agreement."
The InnCOGEN Loan is a non-interest-bearing loan until at least 8 years
following the Production Day and may have a different amortization schedule from
the Trinidad Project Loan. Pursuant to the Trinidad Loan Agreement, InnCOGEN is
required to distribute all Cash Flows received by InnCOGEN to the Trinidad
Guarantor through either repayment of the InnCOGEN Loan or by means of a
distribution. If necessary, each Trinidad Finance Party will be permitted to
make Subordinated Loans to each other Trinidad Finance Party so that InnCOGEN
will be able to make all necessary distributions.
THE SECURITY
SHARING OF SECURITY. The Trustee, the Collateral Agent, the Depositary, the
U.S. Guarantors, the Trinidad Finance Parties and the Funding Company entered
into the Intercreditor Agreement designating the Collateral Agent as the agent
for each of the Secured Parties and describing, among other things, (a) the
preservation and administration of the Collateral and (b) the disposition of the
Collateral among the Secured Parties upon acceleration and foreclosure. The
Collateral shall be shared among the Secured Parties as provided in the
Intercreditor Agreement and the Depositary Agreements. See "SUMMARY DESCRIPTION
OF THE PRINCIPAL FINANCING DOCUMENTS-Depositary Agreements" and "-Intercreditor
Agreement." Any entity that becomes a creditor of the Funding Company or any
Guarantor in accordance with the terms of the Indenture and the Project Loan
Agreement must agree to be bound by the terms of the Intercreditor Agreement.
FUNDING COMPANY COLLATERAL.
The Securities are secured by (a) an assignment and pledge to the Collateral
Agent of the capital stock of York T&T, constituting 65% of the outstanding
voting stock and 79% of all classes of outstanding stock, (b) a security
interest in substantially all other tangible and intangible property of the
Funding Company, including the Project Notes and each of the Funds (but is
otherwise non- recourse to the Funding Company), (c) the U.S. Guarantees and (d)
the right, on the terms set forth in the Declaration of Trust, to direct the
voting of the outstanding share capital of the Funding Company.
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Pursuant to the Funding Security Agreement and the U.S. Project Note Pledge
Agreement, the Funding Company granted the Collateral Agent a security interest
in the Funding Company Collateral, in each case, now owned or hereafter
acquired, and all dividends, cash, instruments and other property and proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any of the foregoing.
The issued share capital of the Funding Company is held in two trusts by
Queensgate SPV, as trustee for both trusts, pursuant to the Declaration of
Trust, which is not for the benefit of York or any of its Affiliates.
Upon satisfaction by the Funding Company of the conditions to discharge the
Indenture and all Senior Debt (as defined herein), the Lien of the Collateral
Agent on all the Funding Company Collateral will terminate and all the Funding
Company Collateral will be released without any further action by the Collateral
Agent or any other Person.
DESCRIPTION OF PROJECT COLLATERAL
TRINIDAD COLLATERAL.
The obligations of the Trinidad Parent under the Trinidad Project Loan
Agreement and the Trinidad Guarantor under the Trinidad Guarantee are secured by
the Trinidad Collateral as follows: (a) an assignment of all Cash Flows received
by InnCOGEN from the Trinidad Project, (b) a Lien on substantially all of the
assets of the Trinidad Guarantor (including all of the assets of InnCOGEN which
include, among other things, the Trinidad Project and the Trinidad Project
Documents) and the Trinidad Parent, (c) a pledge of the equity interest in the
Trinidad Guarantor, InnCOGEN, the Trinidad Parent and York Cayman and (d) a Lien
on any other funds of the Trinidad Finance Parties on deposit under the Trinidad
Depositary Agreement.
BROOKLYN NAVY YARD COLLATERAL.
The obligations of the Brooklyn Navy Yard Guarantor under the U.S. Project
Loan Agreement and its Guarantee are secured by the Brooklyn Navy Yard
Collateral as follows: (a) an assignment of the BNY Cash Flows paid to the
Brooklyn Navy Yard Guarantor, (b) a pledge of the equity interest in the
Brooklyn Navy Yard Guarantor and (c) a Lien on any funds of the Brooklyn Navy
Yard Guarantor on deposit under the U.S. Depositary Agreement.
In addition, York Partners will agree not to pledge any of its partnership
interest in BNYCP other than the 30% limited partnership interest already
pledged by it.
WARBASSE COLLATERAL.
The obligations of the Warbasse Guarantors under the U.S. Project Loan
Agreement and its Guarantees are secured by the Warbasse Collateral as follows:
(a) an assignment of all Cash Flows received by the Warbasse Guarantors from the
Warbasse Project, (b) a Lien on substantially all of the assets of each of the
Warbasse Guarantors, (c) a collateral assignment of the WCTP Notes, including
all security pledged by WCTP to secure its obligations under the WCTP Notes, (d)
a pledge of the equity interests in the Warbasse Guarantors and (e) a Lien on
any other funds of the Warbasse Guarantors on deposit under the U.S. Depositary
Agreement.
In addition, RRR'S Ventures, Ltd., the general partner of WCTP ("RRR'S"),
will agree not to sell, assign or otherwise dispose of its general partnership
interest in WCTP, except to another entity wholly-owned by RRR'S or its owners.
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BIG SPRING COLLATERAL.
The obligations of the Big Spring Guarantor under the U.S. Project Loan
Agreement and its Guarantee are secured by the Big Spring Collateral as follows:
(a) an assignment of all Cash Flows received by the Big Spring Guarantor from
the Big Spring Project on account of energy sales to TU Electric pursuant to the
Big Spring PPA, (b) a Lien on substantially all of the assets of the Big Spring
Guarantor (including the Big Spring Project and the Big Spring Project
Documents), (c) a pledge of the general and limited partnership interests in the
Big Spring Guarantor and (d) a lien on any other funds of the Big Spring
Guarantor on deposit under the U.S. Depositary Agreement.
INTERCREDITOR AGREEMENT
The affirmative vote of Secured Parties holding at least 33 1/3% of the
aggregate principal amount of the Outstanding Securities (in the case of a
payment default) or the Majority Holders (in the case of all other defaults) (in
each case, the "Required Secured Parties") shall be sufficient to direct certain
actions of the Collateral Agent, including the exercise of remedies following a
Trigger Event; PROVIDED that, for purposes of directing such actions, (a) the
Funding Company shall convey, transfer and assign its right to vote on all
matters under the Intercreditor Agreement to the Trustee and (b) the Trustee
shall be entitled to vote on all matters under the Intercreditor Agreement
according to the aggregate principal amount of the Outstanding Securities
subject, however, in all events to the terms and provisions of the Indenture.
Each Person replacing any of the Secured Parties and each Person (or trustee or
agent thereof) providing Senior Debt to the Funding Company will be required to
become a party to the Intercreditor Agreement, which shall be amended to the
extent necessary to accommodate the replacement or addition of such Persons.
TRIGGER EVENTS
Each of the following shall be an event of default (a "Trigger Event") under
the Intercreditor Agreement: (a) an Event of Default under the Indenture and an
acceleration of all or a portion of the indebtedness issued thereunder, (b) a
Project Loan Agreement Event of Default and an acceleration of all or a portion
of the Indebtedness incurred thereunder, (c) an "Event of Default" under a
Senior Debt instrument and an acceleration of all or a portion of the Debt
issued thereunder in an aggregate amount in excess of $5,000,000 and (d) certain
Guarantee Events of Default under a Guarantee, and, in each case, the Collateral
Agent shall have, upon direction from the Required Secured Parties, declared
such event to be a Trigger Event.
If a Trigger Event shall have occurred and be continuing, and only in such
event, upon the written request of the Required Secured Parties (subject to the
requirement that the Collateral Agent shall have given written notice of the
occurrence of such Trigger Event to the Funding Company), the Collateral Agent
shall be authorized to take any and all actions and to exercise any and all
rights, remedies and options which it may have under the Security Documents;
PROVIDED, HOWEVER, that, if a bankruptcy event in respect of the Funding Company
has caused the Trigger Event, the Collateral Agent shall automatically be
authorized to take such action without the written request of the Required
Secured Parties; and PROVIDED, FURTHER, that if such Trigger Event relates to a
Project Loan Agreement Event of Default which is not a payment default which has
resulted in an acceleration of a Project Loan, or a portion of the U.S. Project
Loan or a comparable Guarantee Event of Default, the Collateral Agent shall be
authorized only to take such actions and exercise such rights, remedies and
options under the Security Documents which relate to the Project Notes, or a
portion of the U.S. Project Note, which have or could have been automatically
accelerated or requested by the Trustee to be accelerated in connection with
such default or such Project Loan Agreement Event of Default or the Guarantee
pursuant to which such Guarantee Event of Default has occurred.
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EXERCISE OF REMEDIES AND APPLICATION OF PROCEEDS
Upon a foreclosure or other exercise of remedies following a Trigger Event,
the proceeds of any sale, disposition or other realization upon any or all of
the Collateral and Funding Company Collateral shall be distributed in the
following order of priority: FIRST, to the Trustee, the Collateral Agent, and
the Depositary, ratably, all administrative fees, costs and expenses due and
owing to such parties under the Financing Documents and the Intercreditor
Agreement; SECOND, to the Secured Parties, ratably, an amount equal to the
unpaid amount of all Senior Debt constituting principal, interest, premium (if
any) and certain fees due and owing to such Secured Parties by the Funding
Company and the Guarantors; THIRD, to the Secured Parties, ratably, an amount
equal to all other unpaid amounts then due and payable in respect of all Senior
Debt owed to such Secured Parties; FOURTH, to the Funding Company (or its
successors or assigns) or to whomever a court of competent jurisdiction may
direct, any surplus remaining after giving effect to clauses FIRST, SECOND and
THIRD above.
The proceeds of any sale, disposition or other realization with respect to
Collateral or Funding Company Collateral held for the benefit of some but not
all of the Secured Parties shall be applied to the payment of obligations owed
to the parties for whose benefit the specific Collateral or Funding Company
Collateral was held.
SUBSCRIPTION AGREEMENTS
Each of the Trinidad Finance Parties received capital contributions from its
parent entity pursuant to a subscription agreement or other appropriate evidence
of ownership. Each such agreement was executed prior to the Closing Date and
contains customary terms and conditions for such agreement.
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TRANSFER RESTRICTIONS
The following transfer restrictions shall apply to any outstanding Old
Securities which are not tendered and exchanged for Exchange Securities pursuant
to the Exchange Offer.
The Old Securities have not been registered under the Securities Act and may
not be offered or sold within the United States or to, or for the account or
benefit of, U.S. Persons (as defined in Regulation S under the Securities Act)
except to (a) QIBs in reliance on the exemption from the registration
requirements of the Securities Act provided by Rule 144A and (b) certain Persons
in offshore transactions in reliance on Regulation S.
Each purchaser of the Old Securities will be deemed to have represented and
agreed as follows (terms used in this paragraph that are defined in Rule 144A or
Regulation S, as applicable, under the Securities Act are used herein as defined
therein):
(a) The purchaser (i)(A) is a Qualified Institutional Buyer as defined in
Rule 144A, (B) is aware that the sale to it is being made in reliance on Rule
144A and (C) is acquiring such Securities for its own account or for the account
of a Qualified Institutional Buyer or (ii) is not a U.S. Person and is
purchasing such Securities in an offshore transaction pursuant to Regulation S.
(b) The purchaser understands that the Old Securities are being offered in a
transaction not involving any public offering in the United States within the
meaning of the Securities Act, that the Old Securities have not been and, except
as described in this Prospectus, will not be registered under the Securities Act
and that (i) if in the future it decides to offer, resell, pledge or otherwise
transfer any Securities, such Securities may be offered, resold, pledged or
otherwise transferred only (A) inside the United States to a Person whom the
seller reasonably believes is a Qualified Institutional Buyer in a transaction
meeting the requirements of Rule 144A, (B) outside the United States to a
foreign Person in a transaction complying with the provisions of Rule 904 under
the Securities Act and subject to the Funding Company's and the Trustee's right
prior to any such reoffer, resale or transfer to require the delivery of an
opinion of counsel, certification or other information reasonably satisfactory
to each of them that such reoffer, resale or transfer is in compliance with the
Securities Act and other applicable laws, (C) pursuant to an exemption from
registration under Rule 144 of the Securities Act (if available) or (D) pursuant
to an effective registration statement under the Securities Act, in each of
cases (A) through (D), in accordance with any applicable securities laws of any
state of the United States, and that (ii) the purchaser will, and each
subsequent holder is required to, notify any subsequent purchaser of such
Securities from it of the resale restrictions referred to in (i) immediately
above.
(c) The purchaser acknowledges that none of the Funding Company, the
Guarantors, the Initial Purchaser or any Person representing any of the Funding
Company, the Guarantors or the Initial Purchaser has made any representation to
it with respect to the Funding Company, the Guarantors, any Affiliates thereof,
the Projects or the offering or sale of the Old Securities, other than the
information contained in this Prospectus. It is purchasing the Old Securities
for its own account, or for one or more investor accounts for which it is acting
as a fiduciary or agent, in each case for investment, and not with a view to, or
for offer or sale in connection with, any distribution thereof in violation of
the Securities Act, subject to any requirements of law that the disposition of
its property or the property of such investor account be at all times within its
or their control and subject to its or their ability to resell such Securities
pursuant to Rule 144A.
(d) The purchaser understands that the Old Securities will, until the later
of the second anniversary of (i) their date of original issuance or (ii) the
last date on which the Funding Company or any Affiliate of the Funding Company
was the owner of such Securities (or any predecessor thereto) (the
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"Resale Restriction Date"), unless otherwise agreed by the Funding Company and
the Holder thereof, bear a legend substantially to the following effect:
(A) The Old Securities (or its predecessor) was originally issued in a
transaction exempt from registration under the Securities Act, and the Old
Securities may not be offered, sold or otherwise transferred in the absence
of such registration or an applicable exemption therefrom. Each purchaser of
the Old Securities is hereby notified that the seller of this Security may
be relying on the exemption from the provisions of Section 5 of the
Securities Act provided by Rule 144A thereunder.
(B) The holder of the Old Securities by its acceptance hereof agrees for
the benefit of the Funding Company that (1) the Securities may be offered,
resold, pledged or otherwise transferred, only (w) inside the United States
to a person whom the seller reasonably believes is a Qualified Institutional
Buyer that purchases for its own account or for the account of a Qualified
Institutional Buyer in a transaction meeting the requirements of Rule 144A,
(x) outside the United States to a foreign person in a transaction in
accordance with Rule 904 under the Securities Act (y) pursuant to an
exemption from registration under Rule 144 of the Securities Act (if
available) or (z) pursuant to an effective registration statement under the
Securities Act, in each of cases (w) through (z) in accordance with any
applicable securities laws of any state of the United States, and (2) the
holder will, and each subsequent holder is required to, notify any purchaser
of the Old Securities from it of the resale restrictions referred to in (1)
above.
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CERTAIN TAX CONSIDERATIONS
PROSPECTIVE PURCHASERS OF SECURITIES SHOULD CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE TAX CONSEQUENCES, IN THEIR PARTICULAR CIRCUMSTANCES, UNDER THE
CODE (AS DEFINED HEREIN) AND THE LAWS OF ANY OTHER TAXING JURISDICTION, OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF SECURITIES.
The following is a summary of certain U.S. federal income tax consequences
associated with the exchange of the Old Securities for the Exchange Securities
pursuant to the Exchange Offer, and does not purport to be a complete analysis
of all potential tax effects. This summary is based upon the Internal Revenue
Code of 1986, as amended (the "Code"), existing and proposed regulations
thereunder, published rulings and court decisions, all as in effect and existing
on the date hereof and all of which are subject to change at any time, which
change may be retroactive. This summary is not binding on the Internal Revenue
Service or on the courts, and no ruling will be requested from the Internal
Revenue Service on any issues described below. There can be no assurance that
the Internal Revenue Service will not take a different position concerning the
matters discussed below.
This summary applies only to those persons who are the initial holders of
the Old Securities, who acquired the Old Securities for cash and who hold the
Old Securities as capital assets, and assumes that the Old Securities were not
issued with "original issue discount," as defined in the Code. It does not
address the tax consequences to taxpayers who are subject to special rules (such
as financial institutions, tax-exempt organizations, insurance companies and
persons who are not "U.S. Holders"), or local or foreign tax laws. For purposes
of this summary, a "U.S. Holder" means a beneficial owner of the Securities who
purchased the Securities pursuant to the Offering that is for U.S. federal
income taxes purposes (a) a citizen or resident of the United States, (b) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof; (c) an estate
the income of which is subject to U.S. federal income taxation regardless of its
source; or (d) a trust if (i) a court within the United States is able to
exercise primary supervision over the administration of the trust and (ii) one
or more U.S. fiduciaries have the authority to control all substantial decisions
of the trust.
EXCHANGE OFFER
The exchange of the Old Securities for the Exchange Securities pursuant to
the Exchange Offer should not constitute a taxable event for U.S. federal income
tax purposes. As a result, (i) a U.S. Holder should not recognize taxable gain
or loss upon the receipt of the Exchange Securities pursuant to the Exchange
Offer, (ii) a U.S. Holder's holding period for the Exchange Securities should
include the holding period of the Old Securities surrendered in exchange
therefor and (iii) a U.S. Holder's adjusted basis in the Exchange Securities
should be the same as the basis of the Old Securities exchanged therefore.
UNITED STATES TAXATION
The following is a summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of Securities by a U.S.
Holder. This summary deals only with the Securities held as capital assets by
U.S. Holders who purchased the Securities in this Offering at the offering
price, and not with special classes of Holders, such as dealers in securities or
currencies, traders in securities that elect to mark to market, banks,
tax-exempt organizations, life insurance companies, persons that hold the
Securities that are a hedge or that are hedged against currency risks or that
are part of a straddle, integrated or conversion transaction, or persons whose
functional currency is not the U.S. dollar. This summary is based on Code,
existing and proposed regulations thereunder,
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published rulings and court decisions, all as currently in effect and all
subject to change at any time, perhaps with retroactive effect.
PAYMENTS OF INTEREST
The gross amount of interest accrued or received in respect of a Security or
under a U.S. Guarantee generally will be includible in the gross income of a
U.S. Holder as ordinary interest income in accordance with the U.S. Holder's
usual method of accounting for tax purposes. It is expected that interest paid
by the Funding Company on the Securities or by a U.S. Guarantor under a U.S.
Guarantee constitutes income from sources outside of the United States, and,
with certain exceptions, will be "passive" or "financial services" income, which
is treated separately from other types of income for purposes of computing the
foreign tax credit allowable in the United States. However, it is possible that
the Internal Revenue Service might seek to characterize that portion of the
interest on the Securities that is attributable to the U.S. Project Loan as
income from sources within the United States.
PURCHASE, SALE, RETIREMENT AND OTHER DISPOSITION OF THE SECURITIES
Upon the sale, exchange or retirement of a Security, a U.S. Holder will
generally recognize gain or loss equal to the difference between the amount
realized (not including any amounts attributable to accrued and unpaid interest)
and the Holder's tax basis in the Security. A U.S. Holder's tax basis in a
Security generally will be its cost. Gain or loss recognized on the sale,
exchange or retirement of a Security will be capital gain or loss. Long-term
capital gain for individuals is generally subject to a maximum rate of 20% in
respect of property held for more than one year. Any gain realized on a sale,
exchange or retirement of a Security generally will be treated as U.S. source
income.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments of
principal and interest on a Security and the proceeds of the sale of a Security
before maturity within the United States (including payments made by wire
transfer from outside the United States to an account maintained by the holder
with a fiscal or paying agent in the United States) to non-corporate U.S.
Holders. "Backup withholding" at a rate of 31% will apply to such payments if
the U.S. Holder fails to provide an accurate taxpayer identification number or
is notified by the Internal Revenue Service that it has failed to report all
interest and dividends required to be shown on its federal income tax returns.
The backup withholding tax is not an additional tax and may be credited against
a United States Holder's United States federal income tax liability, provided
that correct information is provided to the Internal Revenue Service.
TRINIDAD TAXATION
The following is a general summary of the material tax consequences under
Trinidad law, as currently in effect, of the Trinidad Project and an investment
in the Securities.
Under the Trinidad Government Agreement, InnCOGEN will qualify for a tax
holiday for 8 years after the Production Day. See "SUMMARY DESCRIPTION OF
PRINCIPAL PROJECT CONTRACTS-Trinidad Government Agreement."
The loan by the Trinidad Guarantor to InnCOGEN, which is evidenced by the
InnCOGEN Loan, is a non-interest bearing loan for at least 8 years after the
Production Day and therefore there will be no payments of interest by InnCOGEN
to the Trinidad Guarantor through September 2007, which could be subject to
withholding taxation in Trinidad. Payments of interest from InnCOGEN to the
Trinidad Guarantor under the InnCOGEN Loan, which is evidenced by the Trinidad
Loan Agreement, after October 1, 2007, will be subject to a 15% withholding tax
by operation of the CARICOM Treaty.
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Payments of dividends or other distributions (excluding preference dividends)
paid by InnCOGEN to the Trinidad Guarantor will be subject to 0% withholding tax
under the CARICOM Treaty.
Payment of principal and interest in respect of the Securities to a
non-resident Holder will not be subject to Trinidad income or corporation tax. A
non-resident Holder will not be subject to Trinidad capital gains tax on the
sale of the Securities. There is no Trinidad inheritance, gift or transfer tax
which would apply upon the transfer of a Security outside of Trinidad.
In addition, various stamp duties may be payable in Trinidad in connection
with the Financing Documents with respect to the Trinidad Project.
BARBADOS TAXATION
The following is a general summary of the material tax consequences under
Barbados law, as currently in effect, applicable to the Barbados ownership
structure of the Trinidad Project, the InnCOGEN Loan, the Trinidad Project Loan
and of an investment in the Securities.
The Trinidad Guarantor is generally subject to tax in Barbados on its
world-wide income at the rate of 40%. However, payments of dividends from
InnCOGEN to the Trinidad Guarantor will not be subject to taxation in Barbados
by operation of the CARICOM Treaty. A payment of principal from InnCOGEN to the
Trinidad Guarantor under the InnCOGEN Loan, which is evidenced by the Trinidad
Loan Agreement, will not be taxable in Barbados. Payments of any interest from
InnCOGEN to the Trinidad Guarantor under the InnCOGEN Loan, which is evidenced
by the Trinidad Loan Agreement, from October 1, 2007, will not be taxable in
Barbados by operation of the CARICOM Treaty.
The Trinidad Parent, which is licensed as an exempt society under the
Barbados Societies with Restricted Liabilities Act, is generally subject to
taxation in Barbados on its world-wide income at the rate of 2.5% declining to
1%. Dividend payments from the Trinidad Guarantor to the Trinidad Parent will be
exempt from tax in Barbados by virtue of an inter-company dividend exemption
that is available to Barbados tax resident companies under the Barbados Income
Tax Act. Pursuant to Barbados domestic tax law governing the Trinidad Parent,
payments of principal and interest by the Trinidad Parent to the Funding Company
under the Trinidad Project Loan, which is evidenced by the Trinidad Project
Note, will not be subject to withholding taxes in Barbados.
Payments of principal and interest in respect of the Securities to a Holder
who is not a tax resident of Barbados will not be subject to Barbados income or
corporation tax. A Holder will not be subject to Barbados capital gains tax on
the sale of the Securities. There is no Barbados inheritance, gift or transfer
tax which would apply upon the transfer of a Security outside of Barbados.
In addition, various stamp duties may be payable in Barbados in connection
with the Financing Documents with respect to the Trinidad Project.
CAYMAN ISLANDS TAXATION
The following is a general summary of the principal tax consequences under
Cayman Islands law, as currently in effect, of the Trinidad Project Loan and an
investment in the Securities.
Payments of principal and interest in respect of the Securities will not be
subject to taxation in the Cayman Islands, no withholding will be required on
such payments to the Holder of the Securities, and gains derived from the sale
of the Securities will not be subject to Cayman Islands income or corporation
tax. The Cayman Islands currently have no income, corporation or capital gains
tax and no estate duty, inheritance tax or gift tax. The only government charge
payable by the Funding Company in the Cayman Islands is an annual registration
fee payable to the Registrar of Companies of the Cayman Islands calculated on
the nominal amount of the authorized share capital of the Funding Company. At
current rates and based on the current authorized share capital of the Funding
Company, this will be
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approximately $500. Stamp duty will be payable on the Securities and any
Transaction Documents that are executed in or brought into the Cayman Islands,
for example, for enforcement in the courts of the Cayman Islands.
The Funding Company has been incorporated under the laws of the Cayman
Islands as an exempted company and, as such, has applied for and expects to
obtain an undertaking from the Governor in Council of the Cayman Islands
substantially to the effect that, for a period of 20 years from the date of
issuance of the undertaking, no law thereafter enacted in the Cayman Islands
imposing any tax to be levied on profits or income or gains or appreciation will
apply to the Funding Company or its operations, nor shall any such tax be
payable on the shares, debentures or other obligations of the Funding Company or
by way of withholding.
TAX CONSIDERATIONS APPLICABLE TO THE OWNERSHIP STRUCTURE OF THE TRINIDAD PROJECT
The ownership and operation of InnCOGEN and the other Trinidad Finance
Parties and the proposed financing have been structured with the intention that
income recognized by York Cayman and its subsidiaries will not be required to be
included in United States federal taxable income of York T&T until such time as
such income is repatriated to the United States as a dividend, or a liquidating
distribution. No assurances, however, can be given that the positions to be
adopted by York, in its U.S. consolidated return will not be successfully
challenged.
If, notwithstanding the foregoing, it were determined that York T&T is
required to include in United States taxable income the earnings of York Cayman
or, if York T&T repatriates such earnings to the United States, York and each of
its U.S. subsidiaries that join in its consolidated return would be severally
liable for the consolidated tax, including deficiencies. Accordingly, if it were
determined that York T&T is required to include in income any of York Cayman's
income, York T&T and certain of York's U.S. subsidiaries may be called upon to
bear a portion of such tax liability which may reduce the capacity to service
the financing.
PLAN OF DISTRIBUTION
Each broker-dealer that receives the Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of the Exchange Securities
received in exchange for the Old Securities where such Old Securities were
acquired as a result of market-making activities or other trading activities.
The Funding Company has agreed that, for a period of 90 days after the
Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale.
The Funding Company will not receive any proceeds from any sale of the
Exchange Securities by broker-dealers. The Exchange Securities received by
broker-dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers-dealers who may receive compensation in the
form of commissions or concessions from any such broker-dealer or the purchasers
of any such Exchange Securities. Any broker-dealer that resells the Exchange
Securities that were received by it for its own account pursuant to the Exchange
Offer and any broker or dealer that participates in a distribution of such
Exchange Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of the Exchange Securities and
any commission or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The
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Letter of Transmittal states that, by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date the Funding Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Funding Company has agreed to pay all expenses
incident to the Exchange Offer, other than commissions or concessions of any
broker-dealers and will indemnify the holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Securities in Canada is being made only on a private
placement basis exempt from the requirement that the Funding Company prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of the Securities are effected. Accordingly, any resale of the
Securities in Canada must be made in accordance with applicable securities laws
which will vary depending on the relevant jurisdiction, and which may require
resales to be made in accordance with available statutory exemptions or pursuant
to a discretionary exemption granted by the applicable Canadian securities
regulatory authority. Purchasers are advised to seek legal advice prior to any
such resale of the Securities.
REPRESENTATIONS OF PURCHASERS
Each purchaser of the Securities in Canada who receives a purchase
confirmation will be deemed to represent to the Funding Company and the dealer
from whom such purchase confirmation is received that (a) such purchaser is
entitled under applicable provincial securities laws to purchase such Securities
without the benefit of a prospectus qualified under such securities laws and,
(b) where required by law, that such purchaser is purchasing as principal and
not as agent.
RIGHTS OF ACTION (ONTARIO'S PURCHASERS)
The securities are those of foreign issuer and Ontario purchasers will not
receive the contractual right of action prescribed by section 32 of the
Regulation under the Securities Act (Ontario). As a result, Ontario purchasers
must rely on other remedies that may be available, including common law rights
of action for damages or rescission or rights of action under the civil
liability provisions of the U.S. federal securities laws. Following a decision
of the U.S. Supreme Court, it is possible that Ontario purchasers will not be
able to rely upon the remedies set out in Section 12(2) of the United States
Securities Act of 1933 where securities are being offered under a U.S. private
placement memorandum such as this document.
ENFORCEMENT OF LEGAL RIGHTS
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result it may not be
possible to satisfy a judgment against the issuer or such persons in Canada or
to enforce a judgment obtained in Canadian courts against such issuer or persons
outside of Canada.
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NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Securities to whom the SECURITIES ACT (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
Securities acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from the Funding Company. Only
one such report must be filed in respect of Securities acquired on the same date
under the same prospectus exemption.
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of the Securities should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the Securities
in their particular circumstances and with respect to the eligibility of the
Securities for investment by the purchaser under relevant Canadian legislation.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE UNIFORM
SECURITIES ACT WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER
RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE
FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION
MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR
QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR
TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE
PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE
PROVISIONS OF THIS PARAGRAPH.
LEGAL MATTERS
Certain legal matters with respect to the Securities will be passed upon for
the Funding Company and the Guarantors by Moses & Singer LLP, 1301 Avenue of the
Americas, New York, New York 10019. Skadden, Arps, Slate, Meagher & Flom LLP,
919 Third Avenue, New York, New York 10022, will pass upon certain legal matters
for the Initial Purchaser in connection with the issuance of the Securities.
EXPERTS
The audited balance sheet of the Funding Company as of June 12, 1998, the
audited combined balance sheet of the U.S. Guarantors as of June 2, 1998 and the
audited consolidated balance sheet of the Trinidad Parent as of May 31, 1998,
which are included in this Prospectus have been audited by Grant Thornton LLP,
Certified Public Accountants, as stated in their reports appearing herein.
INDEPENDENT ENGINEER
Stone & Webster, 245 Summer Street, Boston, Massachusetts 02210, has
prepared the Independent Engineer's Report dated June 30, 1998, included as
Appendix B to this Prospectus. The Independent Engineer's Report should be read
in its entirety by all investors for information with respect to the Projects
and the related subjects discussed therein. The Independent Engineer's Report
has been
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included in this Prospectus in reliance upon the conclusions therein of Stone &
Webster and upon such firm's experience in preparing independent engineer's
reports for independent power projects.
The Funding Company is required by the terms of the Indenture, under which
the Old Securities are issued, to furnish the Trustee with annual reports
containing condensed financial statements audited by their independent certified
public accountants and with quarterly reports containing unaudited condensed
financial statements for each of the first three quarters of each fiscal year.
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE EXCHANGE OFFER COVERED BY THIS PROSPECTUS. IF SUCH
INFORMATION OR REPRESENTATIONS HAVE BEEN GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDING
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, THE EXCHANGE NOTES IN ANY JURISDICTION WHERE, OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATIONS THAT THERE HAS NOT BEEN ANY CHANGE IN THE
FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE FUNDING COMPANY
SINCE THE DATE HEREOF.
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APPENDIX A
GLOSSARY OF DEFINED TERMS
Unless the context requires otherwise, any reference in this Prospectus to
any agreement shall mean such agreement and all schedules, exhibits and
attachments thereto as amended, supplemented or otherwise modified and in effect
as of the date of this Prospectus, and as the same may thereafter be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and of the Transaction Documents. All terms defined herein used in
the singular shall have the same meanings when used in the plural and vice
versa.
Certain terms defined below are summaries of terms defined in, and are
defined more specifically in, the Project Documents and the Financing Documents.
Such summaries do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all of the provisions of the
Project Documents and the Financing Documents.
"Additional Project Document" means (a) any contract or undertaking relating
to the purchase or sale of electricity from the Projects entered into by the
U.S. Guarantors or the Trinidad Finance Parties after the Closing Date, (b) any
consent or security instrument entered into by the Guarantors or any other
relevant party in connection with an Additional Project Document or (c) any
contract or undertaking to which the Funding Company or any Guarantor is a party
entered into after the Closing Date, relating to the capital improvements,
operation or maintenance of the Projects, in each case which is material to the
applicable Project.
"Additional Securities" means Securities, which are ranked PARI PASSU with
the Securities, that are issued after the Closing Date under the Indenture
subject to the satisfaction of conditions set forth therein.
"Administrative Agent" means The Bank of New York in its capacity as an
administrative agent pursuant to the Equity Cash Flow Participation Agreement.
"Affiliate" means, with respect to a Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, is controlled by or
is under common control with such first Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Applicable Law" means, with respect to any Person, property or matter, any
of the following applicable thereto: any statute, law, regulation, ordinance,
rule, judgment, rule of common law, order, decree, Governmental Approval,
approval, concession, grant, franchise, license, agreement, directive,
guideline, policy, requirement or other governmental restriction or any similar
form of decision of, determination by, or any interpretation or administration
of any of the foregoing by, any Governmental Authority, whether in effect as of
the Closing Date or thereafter and in each case as amended.
"Approved Restoration Plan" means a plan submitted to and approved by the
Independent Engineer which provides for the repair or rebuilding of all or any
portion of the Big Spring Project or the Trinidad Project and which is
accompanied by a certificate of (a) the Independent Engineer certifying that (i)
such plan is reasonable and technically feasible and will restore the Big Spring
Project or the Trinidad Project to at least as good condition or state of repair
as it was in prior to such Event of Loss, (ii) the repair or restoration of the
Big Spring Project or the Trinidad Project in accordance with the plan or the
operation of the Big Spring Project or the Trinidad Project following such
repair will not violate (A) the terms of any other Transaction Document or (B)
any of the Governmental Approvals of the Big Spring Project or the Trinidad
Project, (iii) after taking into consideration the availability of Loss
Proceeds, Expropriation Proceeds and such other proceeds available for the
repair or restoration of the Big Spring Project or the Trinidad Project, there
will be adequate cash flow during the period of
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repair or restoration to pay all ongoing expenses, including Debt Service due on
the Securities, and the Big Spring Guarantor's or InnCOGEN's ability to pay such
expenses will not be materially adversely affected following such repair and
(iv) the repair or restoration in accordance with the plan will not materially
adversely affect the construction budget or construction schedule of the Big
Spring Project or the Trinidad Project and (b) the relevant Project Company
certifying that (i) such plan is reasonable and technically feasible and will
restore the Big Spring Project or the Trinidad Project to at least as good
condition or state of repair as it was in prior to such Event of Loss and (ii)
the repair or restoration of the Big Spring Project or the Trinidad Project in
accordance with the plan or the operation of the Big Spring Project or the
Trinidad Project following such repair will not violate Applicable Law.
"ATOP" means Automated Tender Offer Program of DTC.
"Authorized Officer" means, with respect to knowledge of any default under
the Indenture or any of the Project Loan Agreement, the chief executive officer,
president, chief financial officer, general counsel, principal accounting
officer, treasurer, or any vice president of the Funding Company, a U.S.
Guarantor or a Trinidad Finance Party, as applicable, or other officer of such
corporation who in the normal performance of his or her operational duties would
have knowledge of the subject matter relating to such default.
"Available Cash Flow" means, for any period (a) for the Trinidad Project,
the total Equity Cash Flows received by the Trinidad Parent, minus debt service,
all as computed by the Trinidad Parent for such period and (b) for the Big
Spring Project, the total revenues received by the Big Spring Guarantor, minus,
without duplication, (i) all Operating and Maintenance Costs, (ii) all capital
expenditures for the Big Spring Guarantor and the Big Spring Project and (iii)
debt service, all as computed by the Big Spring Guarantor for such period, (c)
for the Brooklyn Navy Yard Project, the total BNY Cash Flows received by the
Brooklyn Navy Yard Guarantor and (d) for the Warbasse Project, the Note Cash
Flow from the WCTP Notes received by the Warbasse Guarantors.
"AWH" means Amalgamated Warbasse Houses, Inc.
"AWH Lease" means the Lease, dated as of July 15, 1987, between AWH, as
landlord and WCTP, as tenant.
"AWH PPA" means the Energy Purchase and Sale Agreement, dated as of July 15,
1987, between WCTP and AWH, which has been amended by the First Amendment
thereto dated as of June 2, 1990.
"AWH Premises" means the 2,585 apartments in 5 buildings and approximately
20,000 square feet of commercial space administered by AWH located at 2800 West
Fifth Street, Brooklyn, State of New York.
"Big Spring Collateral" means (a) an assignment of all Cash Flows received
by the Big Spring Guarantor from the Big Spring Project, (b) a Lien on
substantially all of the assets of the Big Spring Guarantor, (c) a pledge of the
partnership interests in the Big Spring Guarantor and (d) a Lien on any other
funds of the Big Spring Guarantor on deposit under the U.S. Depositary
Agreements.
"Big Spring Commercial Operation Date" means the Commercial Operation date
of the Big Spring Project, which shall be on or before May 31, 1999 pursuant to
the Big Spring PPA.
"Big Spring Construction Fund" means the fund of such name created under the
U.S. Depositary Agreement.
"Big Spring Guarantee" means the Guarantee, dated as of the Closing Date, by
the Big Spring Guarantor in favor of the Trustee and the Collateral Agent for
the benefit of the Secured Parties.
"Big Spring Guarantor" means New World Power Texas Renewable Energy Limited
Partnership, a Delaware limited partnership.
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"Big Spring Maintenance Reserve Fund" means the fund of such name created
under the U.S. Depositary Agreement.
"Big Spring O&M Agreement" means the Operating and Maintenance Agreement,
dated as of June 1, 1998, between the Big Spring Guarantor and the O&M Wind Sub
for the operation, maintenance and repair of the Big Spring Project.
"Big Spring Partnership Agreement" means the Amended and Restated Limited
Partnership Agreement, dated as of September 12, 1994, as amended as of June 26,
1998, between Big Springs Holdings, Inc., as the limited partner, and Big
Springs Texas Energy Management, Inc., as the general partner.
"Big Spring Pledge Agreement" means the Pledge Agreement, dated as of the
Closing Date, between Big Springs Texas Management, Inc., Big Springs Holdings,
Inc. and the Collateral Agent for the benefit of the Secured Parties with
respect to the partnership interests in the Big Spring Guarantor.
"Big Spring PPA" means the Big Spring Power Purchase Agreement, dated
September 13, 1994, as amended, between the Big Spring Guarantor and TU
Electric.
"Big Spring Project" means the 34 MW wind energy project to be constructed
near Big Spring, Texas, by the Big Spring Guarantor.
"Big Spring Project Documents" means, collectively, the Big Spring O&M
Agreement, the Big Spring PPA, the Big Spring Partnership Agreement, the Vestas
Agreement, the Big Spring Project Leases, the Big Spring Tax Abatement Contracts
and any Additional Project Document entered into by the Big Spring Guarantor
with respect to the Big Spring Project.
"Big Spring Project Land Owners" means Texas Pacific, R. G. and Cheryl
Click, and Morgan Ranches.
"Big Spring Project Leases" means, collectively, the Texas Pacific Lease,
the Click Lease and the Morgan Ranches Lease.
"Big Spring Security Agreement" means the Assignment and Security Agreement,
dated as of the Closing Date, between the Big Spring Guarantor and the
Collateral Agent.
"Big Spring Security Documents" means the Big Spring Security Agreement, the
Big Spring Pledge Agreement and all other Security Documents securing the
obligations of the Big Spring Guarantor under the Big Spring Guarantee and the
U.S. Project Note.
"BNY Cash Flows" means, collectively, the General Partner Fees, the Royalty
Fees and the Equity Cash Flows, subject to the U.S. Permitted Project Liens.
"BNY Intercreditor Agreement" means the Collateral Agency and Intercreditor
Agreement, dated as of December 1, 1997, among BNYCP, the trustees, the letter
of credit providers, MENY, IDA and United States Trustee Company of New York, as
collateral agent.
"BNY O&M Agreement" means the Operations and Maintenance Agreement, dated as
of March 8, 1996, between BNYCP and Palmark.
"BNY PPA" means the Energy Sales Agreement, dated as of October 31, 1996, by
and between BNYCP and Con Ed.
"BNYCP" means Brooklyn Navy Yard Cogeneration Partners, L.P., a Delaware
limited partnership.
"BNYCP Bond Documents" means documents under which the BNYCP Bonds are
issued.
"BNYCP Bonds" means (a) $307,000,000 New York City Industrial Development
Agency Industrial Development Revenue Bonds (Brooklyn Navy Yard Cogeneration
Partners, L.P. Project), Series 1997,
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consisting of $31,960,000, 6.20% term bonds due October 1, 2002, $110,280,000,
5.65% term bonds due October 1, 2028 and $164,760,000, 5.75% term bonds due
October 1, 2036 and (b) $100,000,000 of taxable senior secured bonds due 2020.
"BNYCP Partnership Agreement" means the Amended and Restated Limited
Partnership Agreement of BNYCP, dated as of November 1, 1997, between MENY and
York Partners.
"BNYDC" means Brooklyn Navy Yard Development Corporation, a New York
not-for-profit development corporation.
"BNYDC Agreement" means the Amended and Restated Energy Sale Agreement,
dated as of April 29,1994, as amended on July 29, 1997, between BNYCP and BNYDC.
"Board of Directors" when used with respect to a corporation, means either
the board of directors of such corporation or any committee of that board duly
authorized to act for that board.
"Brooklyn Navy Yard Collateral" means (a) an assignment of the BNY Cash
Flows, (b) a pledge of the equity interest in the Brooklyn Navy Yard Guarantor
and (c) a Lien on any funds of the Brooklyn Navy Yard Guarantor on deposit under
the U.S. Depositary Agreement.
"Brooklyn Navy Yard Guarantee" means the Guarantee, dated as of the Closing
Date, by the Brooklyn Navy Yard Guarantor in favor of the Trustee and the
Collateral Agent for the benefit of the Secured Parties.
"Brooklyn Navy Yard Guarantor" means Brooklyn Navy Yard Power LLC, a
Delaware limited liability company formed to receive the BNY Cash Flows.
"Brooklyn Navy Yard Pledge Agreement" means the Pledge Agreement, dated as
of the Closing Date, pledging the equity interests in the Brooklyn Navy Yard
Guarantor, between York Partners and the Collateral Agent for the benefit of the
Secured Parties.
"Brooklyn Navy Yard Project" means the 286 MW cogeneration facility located
in the Brooklyn Navy Yard, Brooklyn, New York.
"Brooklyn Navy Yard Project Documents" means, collectively, the BNYCP
Partnership Agreement, the BNY PPA, the BNYDC Agreement, the Mission
Reimbursement Agreement, the BNY O&M Agreement, the Red Hook Agreement, the
LILCO Agreement, the PanCanadian Gas Sales Agreement, Crestar Gas Sales
Agreement, Sonat Gas Sales Agreement, the BNY Services Agreements and any
Additional Project Document entered into by the Brooklyn Navy Yard Guarantor
with respect to the Brooklyn Navy Yard Project.
"Brooklyn Navy Yard Security Agreement" means the Assignment and Security
Agreement, dated as of the Closing Date, between the Brooklyn Navy Yard
Guarantor and the Collateral Agent.
"Brooklyn Navy Yard Security Documents" means the Brooklyn Navy Yard
Security Agreement, the Brooklyn Navy Yard Pledge Agreement and all other
Security Documents securing the obligations of the Brooklyn Navy Yard Guarantor
under the Brooklyn Navy Yard Guarantee and the U.S. Project Note.
"Brooklyn Navy Yard Supplemental Reserve Fund" means the fund of such name
created under the U.S. Depositary Agreement.
"BUG" means Brooklyn Union Gas Company.
"CARICOM Treaty" means the agreement among the governments of the member
states of the Caricom Community for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income, profits or gains
and capital gains and for the encouragement of regional trade and investment.
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"Caroni" means Caroni (1975) Limited, a state-owned company incorporated
under the Companies Ordinance Chapter 31 No. 1 of the Laws of Trinidad, which
owns the land on which the Trinidad Project will be built.
"Cash Flow Available for Debt Service" means the Project Revenues, Equity
Cash Flows and the Note Cash Flow less the sum of all Operating and Maintenance
Costs.
"Cash Flows" means the Project Revenues, the Equity Cash Flows, the Note
Cash Flows and/or the BNY Cash Flows, as applicable.
"Cede & Co." means the nominee of DTC.
"Change in Law" means, regarding the Trinidad PPA, (a) any enactment or
issue of any new law, (b) any judgment or order of any court or tribunal of
competent jurisdiction in Trinidad declaring the law to be different from the
law as at the date of the Trinidad PPA, (c) any amendment, alteration,
modification, expiry or repeal of any law by the parliament of Trinidad, the
Government of Trinidad or any competent Governmental Authority of Trinidad, any
change in the interpretation of any existing law by a competent court, tribunal
or Governmental Authority, and any revocation, suspension or non-renewal of any
government authorization (other than any revocation, suspension or non-renewal
of any government authorization applicable to InnCOGEN or the Trinidad Project
in accordance with its terms because of the fault or negligence on the part of
InnCOGEN, any contractor or the Trinidad Project), (d) a change in the specified
standards or criteria contained in or required by a governmental authorization
and required for or material in any way to the development, construction,
ownership, financing, operation or maintenance of the Trinidad Project (other
than because of the fault or negligence on the part of InnCOGEN, any contractor
or the Trinidad Project and (e) any change in the administrative rules or
guidelines for the issue, alteration, modification or revocation of governmental
authorizations required for the Trinidad Project (other than because of the
fault or negligence on the part of InnCOGEN, any contractor, or the Trinidad
Project), in each case coming into effect after the date of the Trinidad PPA but
excluding any change in (i) legislation relating to taxation of net income in
Trinidad that is applicable to all companies carrying on business in Trinidad
provided that Change in Law shall be applicable to any such change which,
following the making of an Order under the Fiscal Incentives Act Chap. 85:01 of
the Laws of Trinidad in favor of InnCOGEN, would prejudice or enhance any
benefit to be derived by Seller thereunder and in accordance therewith and (ii)
any law or governmental authorization imposing environmental standards.
"Change of Law" means, relating to the Trinidad Government Agreement, (a)
any enactment or issue of any new law, (b) any judgment or order of any court or
tribunal of competent jurisdiction in Trinidad declaring the law to be different
from the law as at the date of the Trinidad Government Agreement, (c) any
amendment, alteration, modification, expiry or repeal of any existing law by the
parliament of Trinidad, the Government of Trinidad or any competent Governmental
Authority of Trinidad, any change in the interpretation of any existing law by a
competent court, tribunal or government authority, and any revocation,
suspension or non-renewal of any governmental authorization, (d) a change in the
specified standards or criteria contained in or required by a governmental
authorization and required for or material in any way to the development,
construction, ownership, financing, operation or maintenance of the Trinidad
Project, (e) any change in the administrative rules or guidelines for the issue,
alteration, modification or revocation of governmental authorizations required
for the Trinidad Project, (f) any law or governmental authorization imposing
environmental standards, including, but not limited to, any standard, policy,
rule, regulation, order, directive or action made or taken by the government
authority under the Environmental Management Act or under or pursuant to any
other law and (g) any change in the World Bank environmental standards; in each
case coming into effect after the date of the Trinidad Government Agreement.
"City" means the City of New York.
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"Click" means R.G. and Cheryl Click, one of the Big Spring Project Land
Owners and a party to the Click Lease.
"Click Lease" means the Option and Lease Agreement, dated as of December 30,
1997, between the Big Spring Guarantor and Click.
"Closing Date" means, August 4, 1998, the date of the Old Securities
Offering.
"Code" means Internal Revenue Code of 1986, as amended.
"Collateral" means the Funding Company Collateral, the Warbasse Collateral,
the Brooklyn Navy Yard Collateral, the Big Spring Collateral and the Trinidad
Collateral.
"Collateral Agent" means The Bank of New York, a New York banking
corporation, as collateral agent for the benefit of the Secured Parties,
together with its successors and assigns.
"Commercial Operation" means, in connection with any Project, the
achievement by the Project of certain operational criteria under the relevant
Power Purchase Agreement and the capability of such Project of delivering
electricity in accordance therewith and the acceptance and/or confirmation from
the applicable power purchaser as such.
"Commission" means the United States Securities and Exchange Commission.
"Con Ed" means Consolidated Edison Company of New York, Inc., a corporation
organized under the Transportation Corporation Law of State of New York and
authorized by the State of New York to engage in the production, transmission,
sale and distribution of electricity for heat, light and power to the public.
"Construction Funds" means, collectively, the Big Spring Construction Fund
and the Trinidad Construction Fund.
"Contingency Reserve Subfund" means the fund of such name created under the
U.S. Depositary Agreement.
"CPI" means the Consumer Prince Index for All Urban Consumers in the New
York City Metropolitan area available at the end of the applicable month.
"Credit Suisse First Boston" means Credit Suisse First Boston Corporation,
the Initial Purchaser.
"Crestar" means Crestar Energy, a Canadian general partnership.
"Crestar Gas Sales Agreement" means the Gas Sales Agreement between BNYCP
and Crestar, dated as of October 21, 1993.
"CTI" means Cogeneration Technologies, Inc., a Delaware corporation.
"CTI Note" means the Promissory Note, dated as of November 17, 1994, for
approximately $29 million issued by WCTP payable to CTI, which is held by
Warbasse I.
"Custodian" means, initially, the Trustee, and its successors and assigns or
any other custodian performing similar functions.
"Debt" of any Person means, at any date, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments
(excluding "deposit only" endorsements on checks payable to the order of such
Person), (c) all obligations of such Person to pay the deferred purchase price
of property or services (except accounts payable and similar obligations arising
in the ordinary course of business shall not be included herein), (d) all
obligations of such Person as lessee under capital leases to the extent required
to be capitalized on the books of such Person in accordance with GAAP and (e)
all obligations of others of the type referred to in clause (a) through (d)
above guaranteed by such Person (other than
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performance guarantees pursuant to the Power Purchase Agreements), whether or
not secured by a lien or other security interest on any asset of such Person.
"Debt Service" means, without duplication, all principal, interest, premium
(if any) and other amounts due with respect to the Securities and all other
Permitted Debt.
"Debt Service Coverage Ratio" means, for any period, the ratio of (a) Cash
Flow Available for Debt Service for such period to (b) the aggregate of all Debt
Service due during such period.
"Debt Service Reserve Fund" means the fund of such name created under the
U.S. Depositary Agreement.
"Debt Service Reserve Fund Required Balance" means $15,000,000 from the
Closing Date through the Final Maturity Date.
"Debt Termination Date" means the date on which all Finance Liabilities,
other than contingent liabilities and obligations which are unasserted at such
date, have been paid and satisfied in full and all Finance Commitments have been
terminated. Notwithstanding anything herein to the contrary, the Debt
Termination Date shall be deemed to have occurred if the only Finance Liability
and/or Finance Commitment outstanding as of such date is the Finance Liability
and/or Finance Commitment incurred pursuant to the Equity Cash Flow
Participation Agreement.
"Declaration of Trust" means the Declaration of Trust Relating to Issued
Share Capital of York Power Funding (Cayman) Limited, dated as of July 23, 1998,
by Queensgate SPV, as trustee.
"Default" means an event or condition that, with the giving of notice, lapse
of time or failure to satisfy certain specified conditions, or any combination
thereof, would become an Event of Default.
"Definitive Security" means a registered definitive Security, without
coupons, issued to Holders of Securities or their nominees.
"Depositary" means The Bank of New York, a New York banking corporation, as
depositary under the Depositary Agreements.
"Depositary Agreements" means the U.S. Depositary Agreement and the Trinidad
Depositary Agreement.
"D/FDI" means Duke/Fluor Daniel International, a Nevada general partnership,
which entered into the EES Contract with InnCOGEN to perform certain offshore
activities related to the design, procurement and construction of the Trinidad
Project.
"DHCR" means the New York State Division of Housing and Community Renewal.
"Distribution Date" means each October 30, January 30, April 30 and July 30.
"Dkk" means the Danish Kroner.
"DMNC" means Dependable Maximum Net Capacity. "DMNC," relating to the WCTP
PPA, shall mean the sustained maximum net output of the Warbasse Project
averaged over four consecutive hour period, less the electricity capacity
committed by WCTP to its thermal customer, adjusted to the average ambient
temperature experienced at the Warbasse Project during Con Ed's summer peaks
during the previous four summers.
"DTC" means The Depository Trust Company, having a principal office at 55
Water Street, New York, New York, 10041-0099, together with any Person
succeeding thereto by merger, consolidation or acquisition of all or
substantially all of its assets, including substantially all of its securities
payment and transfer operations. DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the United States
Federal Reserve System, a "clearing corporation" within the
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meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act.
"DTC Participants" means the securities brokers and dealers, banks, trust
companies and clearing corporations who participate in DTC.
"DTC Securities" means the Securities represented by the Global Security
held in book-entry form by DTC.
"Duke Capital Corp." means Duke Capital Corp., a Delaware corporation, which
will act as one of the guarantors of the payment and performance obligations of
D/FDI and Duke/Fluor Daniel, respectively, under the EES Contract and the
Turnkey Construction Contract, respectively.
"Duke/Fluor Daniel" means Duke/Fluor Daniel International Services, a Nevada
general partnership, which entered into the Turnkey Construction Contract with
InnCOGEN to perform certain in-country activities related to the design,
procurement and construction of the Trinidad Project.
"EAF" means Equivalent Availability Factor.
"EES Contract" means the Engineering and Equipment Supply Contract for the
Trinidad Project, dated as of June 26, 1998, between InnCOGEN and D/FDI.
"Eligible Institutions" means, individually or collectively, the National
Association of Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States.
"Equity Cash Flow Participation Agreement" means the Equity Cash Flow
Participation Agreement, dated as of the Closing Date, among the U.S.
Guarantors, York T&T and The Bank of New York, as Administrative Agent.
"Equity Cash Flows" means (a) in the case of the Brooklyn Navy Yard Project,
distributions made by BNYCP to York Partners in respect of the limited
partnership interest in BNYCP other than the General Partner Fees and the
Royalty Fees or (b) in the case of the Trinidad Project, (i) the cash flow
available to the Trinidad Parent and not otherwise required to be used (A) for
Maintenance Costs or Operating and Maintenance Costs or (B) otherwise pursuant
to the Trinidad Project Documents or the Financing Documents related to the
Trinidad Project or (ii) any proceeds of any distributions from InnCOGEN to
another Trinidad Finance Party.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System, or any successor to Morgan Guaranty
Trust Company of New York, Brussels office, as operator thereof.
"Event of Default" means the occurrence of an event of default under the
Indenture.
"Event of Loss" means an event which causes all or a portion of a Project to
be damaged, destroyed or rendered unfit for normal use for any reason
whatsoever, other than an Expropriation Event.
"EWG" means Exempt Wholesale Generator as specified in Section 32(a)(1) of
PUHCA.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" means The Bank of New York.
"Exchange Securities" means the 12% Series A Senior Secured Bonds Due
October 30, 2007 issued by the Funding Company in aggregate principal amount of
up to U.S.$150,000,000.
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"Exchange Offer Registration Statement" means the registration statement
with respect to the Exchange Securities, which is to become effective within 180
days after the Old Securities Offering.
"Exchange Securities" means Securities which may be exchanged for debt
securities of the Funding Company.
"Expert" means, in relation to the Trinidad PPA, a person who has not had
any commercial relationship with either InnCOGEN or T&TEC and who has
significant expertise in the design, construction, operation and maintenance of
power plants of the size and nature similar to that of the Trinidad Project.
"Expiration Date" means the 5:00 p.m., New York City time, on ,
1999, the date which the Exchange Offer shall expire, unless extended by the
Funding Company in its sole discretion.
"Expropriation Event" means any compulsory transfer or taking or transfer
under threat of compulsory transfer or taking of any material part of the
Collateral or Projects by any Governmental Authority.
"Expropriation Proceeds" means all amounts and proceeds (including
instruments) received in respect of any Expropriation Event, after deducting all
reasonable expenses incurred in litigating, arbitrating, compromising, settling
or consenting to the settlement of any claims against the appropriate
Governmental Authority.
"Federal Bankruptcy Code" means the Federal Bankruptcy Code of 1978.
"FERC" means the United States Federal Energy Regulatory Commission, or any
successor thereto.
"Final Maturity Date" means the latest stated maturity date of any series of
the Securities.
"Finance Commitment" means any commitment pursuant to any of the Financing
Documents (or any other similar agreement entered into by the Funding Company or
any Project Note Obligor with respect to the incurrence of Permitted Debt (other
than the Securities)) to provide credit to the Funding Company or such Project
Note Obligor.
"Finance Liabilities" means all Debt, liabilities and obligations of the
Funding Company and each Project Note Obligor (including but not limited to,
principal, interest, fees, reimbursement obligations, penalties, indemnities and
legal and other expenses, whether due after acceleration or otherwise) to the
Secured Parties (of whatsoever nature and howsoever evidenced) under or pursuant
to the Indenture, the Securities, the Project Loan Agreements, the Project
Notes, the Guarantees, Additional Securities, and any other Financing Document
(or any other similar agreement entered into by the Funding Company or any
Project Note Obligor with respect to the incurrence of Permitted Debt (other
than the Securities)), to the extent arising on or prior to the Debt Termination
Date, in each case, direct or indirect, primary or secondary, fixed or
contingent, now or hereafter arising out of or relating to any such agreements;
and also shall mean all interest owed to the Secured Parities and accrued
following the commencement of a case (whether voluntary or involuntary) under
the Federal Bankruptcy Code with respect to the Funding Company or any Project
Note Obligor PROVIDED that Subordinated Debt among the Trinidad Finance Parties
shall not be deemed a Finance Liability.
"Financial Projections" means the projected construction costs of the Big
Spring Project and the Trinidad Project, the review of material Project
Documents, and projections of annual revenues, expenses and debt service
coverage for the Funding Company and the Guarantors for the term of the
Securities adopted by Stone & Webster.
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"Financing Documents" means, collectively, the Project Loan Agreements, the
Guarantees, the Indenture, the Purchase Agreement, the Securities, the Project
Notes, the Registration Rights Agreement, the Depositary Agreements, the
Intercreditor Agreement, the Security Documents and all other documents related
to any of the foregoing or otherwise related to the issuance of the Securities.
"Fluor Daniel, Inc." means Fluor Daniel, Inc., a California corporation,
which will act as one of the guarantors of the payment and performance
obligations of D/FDI and Duke/Fluor Daniel, respectively, under the EES Contract
and the Turnkey Construction Contract, respectively.
"Force Majeure Event" means, with respect to the Trinidad Project, an event,
condition or circumstance beyond the reasonable control and without the fault or
negligence of the affected party which, despite all reasonable efforts of the
affected party to prevent it or mitigate its effects, materially and adversely
affects the performance by the affected party of its obligations under the
Trinidad PPA. Subject to the foregoing, a Force Majeure Event shall include,
without limitation:
(a) a Political Force Majeure Event provided that, after the end of the
construction period, only InnCOGEN shall be entitled to claim force
majeure in this case;
(b) fire, explosion, earthquake, storm, hurricane, drought, flood, other
exceptional weather conditions or other natural calamity or act of God;
(c) embargo, closing of harbors, docks or other assistance to or adjuncts of
the shipping or navigation of or within any place;
(d) strikes, works to rule, go-slows or other labor disturbances or
industrial action; PROVIDED that the affected party is not required to
settle on terms it reasonably considers to be materially adverse to its
interests; or
(e) a Gas Force Majeure Event.
"FPA" means the Federal Power Act of the United States of America.
"Funding Company" means York Power Funding (Cayman) Limited, the issuer of
the Securities.
"Funding Company Collateral" means (a) a pledge of capital stock of York T&T
constituting 65% of the outstanding voting stock and 79% of all classes of
outstanding stock, (b) a security interest in substantially all of the tangible
and intangible property of the Funding Company, including the Project Notes and
each of the Funds (but is otherwise non-recourse to the Funding Company), (c)
the U.S. Guarantees and (d) the right, on the terms set forth in the Declaration
of Trust, to direct the voting of the outstanding share capital of the Funding
Company.
"Funding Order" means a written request of the Funding Company to redeem any
Securities, whether by optional or mandatory redemption, in accordance with the
Indenture.
"Funding Security Agreement" means the Assignment and Security Agreement,
dated as of the Closing Date, between the Funding Company and the Collateral
Agent.
"Funds" means the funds established under the Depositary Agreements.
"GAAP" means generally accepted accounting principles as in effect in the
United States from time to time.
"Gas Force Majeure Event" means, with respect to the Trinidad Project, the
failure of T&TEC to supply or procure the supply of natural gas conforming to
the gas specifications to the gas delivery point and in the quantities and at
the times required under Clause 8.3(B) of the Trinidad PPA for any reason
including force majeure declared under any agreement or arrangement from time to
time between T&TEC and NCG or any other supplier or transporter of natural gas
for sale and purchase of natural gas for supply to the Trinidad Project.
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"Gas National Disaster" means a natural calamity or act of God which causes
a complete cessation of the supply of gas to more than 50% of the installed
electric generating capacity in Trinidad connected to and feeding T&TEC's Grid
System, which cessation continues for a period in excess of 30 consecutive days.
"GDP" means Gross Domestic Profit.
"GDPIPD" means Gross Domestic Product Implicit Price Deflator.
"General Partner Fees" means, from and after October 16, 1999, the general
partner fees payable pursuant to the BNYCP Partnership Agreement which have been
assigned to the Brooklyn Navy Yard Guarantor.
"Global Security" or "Global Securities" means the Securities offered and
sold in their initial distribution in reliance on an exemption from registration
under the Securities Act.
"Government of Trinidad" means the government of the Republic of Trinidad
and Tobago.
"Governmental Approvals" means all governmental approvals, authorizations,
consents, decrees, permits, licenses, waivers, privileges and filings with all
Governmental Authorities.
"Governmental Authority" means the government of any federal, state,
municipal or other political subdivision in which the Projects are located (or
of any other relevant jurisdiction as required by the Financing Documents) and
any other government or political subdivision thereof exercising jurisdiction
over the Projects or any party to any of the Project Documents, including all
agencies and instrumentalities of such governments and political subdivisions.
"Gross Revenues of BNYCP" means BNYCP's monthly revenue received for the
sale or transfer of electricity, thermal energy and fuel.
"Guarantee Event of Default" means an "Event of Default" as defined in a
Guarantee.
"Guaranteed Obligations" means the obligations of T&TEC under the Trinidad
PPA guaranteed by the Government of Trinidad under the Trinidad Government
Agreement.
"Guarantees" means, individually or collectively, the Warbasse Guarantee,
the Big Spring Guarantee, the Brooklyn Navy Yard Guarantee and the Trinidad
Guarantee.
"Guarantors" means, individually or collectively, the Warbasse Guarantors,
the Brooklyn Navy Yard Guarantor, the Big Spring Guarantor and the Trinidad
Guarantor.
"Head Lease" means the lease of the Lot from Caroni to Innercob pursuant to
a deed of lease made as of June 18, 1998.
"HFA" means the New York State Housing and Finance Agency.
"Holder" means the registered holder of any Security from time to time.
"HRSG" means heat recovery steam generators.
"IDA" means New York City Industrial Development Agency.
"IDA Act" means New York State Industrial Development Agency Act.
"IDA Lease Agreement" means the Amended and Restated Lease Agreement, dated
of December 1, 1997, between BNYCP and IDA.
"Indenture" means the Trust Indenture, dated as of the Closing Date, between
the Funding Company and the Trustee.
"Independent Accountants" means Grant Thornton LLP.
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"Independent Engineer" means Stone & Webster Management Consultants, Inc. or
another widely recognized independent engineering firm for engineer consulting
work retained as independent engineer by the Trustee who is reasonably
acceptable to the Funding Company.
"Independent Engineer's Report" means the Independent Engineer's Report
prepared by Stone & Webster and attached to this Prospectus as Appendix B.
"Independent Wind Consultant" means Richard L. Simon, the wind consultant
retained by the Funding Company.
"Independent Wind Consultant's Report" means the Independent Wind
Consultant's Report prepared by Richard L. Simon.
"Indirect Participants" means banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a DTC Participant
either directly or indirectly.
"Initial Operating Period" means, with respect to the Trinidad Project, the
period of Commercial Operation of the first Unit to be commercially available
until September 9, 2004.
"Initial Purchaser" means Credit Suisse First Boston Corporation.
"Initial Security" or "Initial Securities" means any of the $150,000,000
York Power Funding (Cayman) Limited 12% Senior Secured Bonds Due October 30,
2007 issued by the Funding Company.
"Initial Shelf Registration Statement" means filing of the Registration
Statement, pursuant to Rule 415 of the Securities Act, for an offering of the
Old Securities to be made on a continuous basis in the event that the Exchange
Offer does not occur within 180 days following the Old Securities Offering.
"InnCOGEN" means InnCOGEN, Limited, a Trinidad limited liability company, a
100% beneficially owned subsidiary of the Trinidad Guarantor, which will own,
construct and operate the Trinidad Project.
"InnCOGEN Loan" means the $100 million loan payable by InnCOGEN to the
Trinidad Guarantor.
"Innercob" means Innercob Industries (Trinidad) Limited, a company
incorporated under the Companies Ordinance Chapter 31 No. 1 of the Laws of
Trinidad.
"Intercreditor Agreement" means the Collateral Agency and Intercreditor
Agreement, dated as of the Closing Date, among the Collateral Agent, the
Depositary, the Secured Parties, the Funding Company, the U.S. Guarantors, the
Trinidad Finance Parties and the Trustee.
"Interest Payment Date" means April 30 and October 30.
"Iroquois" means Iroquois Gas Transmission System, L.P.
"kW" means a unit of electrical energy equal to one thousand watts of power.
"kWh" means a unit of electrical energy equal to one kW of power supplied or
taken from an electric circuit steadily for one hour.
"Letter of Transmittal" means the Letter of Transmittal attached hereto as
Exhibit , which shall accompany the Registration Statement to complete the
Exchange Offer.
"LIBOR" means the London Interbank Offered Rate.
"Licence" means, the deed of licence to which Caroni, Innercob and InnCOGEN
are parties made as of June 18, 1998.
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"Liens" means any mortgage debenture, pledge, hypothecation, assignment,
mandatory deposit arrangement with any Person owning Debt of such Person,
encumbrance, lien (statutory or other), preference, priority or other security
agreement of any kind or nature whatsoever which has the substantial effect of
constituting a security interest, including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same effect as any of the foregoing and the filing of any
financing statement or similar instrument under the Uniform Commercial Code or
comparable law of any jurisdiction, domestic or foreign.
"LILCO" means the Long Island Lighting Company.
"LILCO Agreement" means the Second Revised Fuel Management Agreement, dated
as of September 25, 1996, as amended, between BNYCP and LILCO.
"Loss Proceeds" means all net proceeds from an Event of Loss, including,
without limitation, insurance proceeds or other amounts actually received,
except proceeds of delayed opening or business interruption insurance, on
account of an event which causes all or a substantial portion of the relevant
Project to be damaged, destroyed or rendered unfit for normal use.
"Lot" means the 3.2375 hectares of land leased by Caroni to Innercob
pursuant to the Head Lease and subleased by InnCOGEN, pursuant to the Sub-Lease,
on which the Trinidad Project will be built.
"MADC" means the Monthly Average Declared Capacity.
"Maintenance Costs" means all expenditures by the Big Spring Guarantor or
InnCOGEN on regularly scheduled (or reasonably anticipated) maintenance of the
Big Spring Project or the Trinidad Project, respectively, in accordance with
good utility practice and vendor and supplier requirements constituting major
maintenance (including, without limitation, teardowns, overhauls, capital
improvements, replacements and/or refurbishments of major components of such
Project).
"Majority Holders" means those Holders holding greater than 50% in aggregate
principal amount of the Outstanding Securities.
"Make-Whole Premium" means an amount equal to the Discounted Present Value
calculated for any Initial Security subject to redemption pursuant to the
Indenture less the unpaid principal amount of such Initial Security; PROVIDED,
that the Make-Whole Premium shall not be less than zero. For purposes of this
definition, the "Discounted Present Value" of any Initial Security subject to
redemption pursuant to the Indenture shall be equal to the discounted present
value of all principal and interest payments scheduled to become due in respect
of such Initial Security after the date of such redemption, calculated using a
discount rate equal to the sum of (a) the yield to maturity on the United States
treasury security having an average life equal to the remaining average life of
such Initial Security and trading in the secondary market at the price closest
to par and (b) 75 basis points; PROVIDED, HOWEVER, that if there is no United
States treasury security having an average life equal to the remaining average
life of such Initial Security, such discount rate shall be calculated using a
yield to maturity interpolated or extrapolated on a straight-line basis
(rounding to the nearest month, if necessary) from the yields to maturity for 2
United States treasury securities having average lives most closely
corresponding to the remaining average life of such Initial Security and trading
in the secondary market at the price closest to par.
"Mandatory Redemption Fund" means the fund of such name created under the
Indenture.
"Material Adverse Effect" means a material adverse effect on (a) the
financial condition, results of operation, business or prospects of the Funding
Company or any U.S. Guarantors and the Trinidad Finance Parties, (b) the
validity or priority of the Liens on the Collateral, (c) the ability of the
Funding Company to perform its material obligations under the Indenture, the
Securities or any of the other Financing Documents, (d) the ability of any U.S.
Guarantors and the Trinidad Finance Parties to perform its material obligations
under its Project Loan Agreement, Project Note, Guarantee or any of
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the other Financing Document or (e) the ability of any U.S. Guarantors and the
Trinidad Finance Parties to perform its material obligations under any Project
Document.
"MENY" means Mission Energy New York, Inc., a California corporation.
"Mission" means Edison Mission Energy, a California corporation.
"Mission Reimbursement Agreement" means the Reimbursement Agreement, dated
as of November 1, 1997, among York Partners, BNYCP and Mission.
"MMBtu" means one million British thermal units.
"Moody's" means Moody's Investors Service, Inc., a corporation organized and
existing under the laws of the State of Delaware, its successors and assigns.
"Morgan Ranches" means Morgan Ranches, Ltd., one of the Big Spring Project
Land Owners and a party to the Morgan Ranches Lease and the Morgan Ranches
Infrastructure Agreement.
"Morgan Ranches Infrastructure Agreement" means the Infrastructure
Agreement, dated as of January 28, 1998, between the Big Spring Guarantor and
Morgan Ranches.
"Morgan Ranches Lease" means the Option and Lease Agreement, dated as of
January 28, 1998, between Morgan Ranches and the Big Spring Guarantor.
"MW" means a unit of electrical energy equal to one million watts of power.
"NASDAQ" means National Association of Securities Dealers Automated
Quotations system.
"Net Cash Flow" means all cash proceeds of WCTP from whatever source other
than capital contributions or sale of certain additional rights to Con Ed, less
(a) all expenses for operation, maintenance, repairs, fuel and insurance, (b)
rent payable to AWH, (c) expenditures required to fulfill its obligations under
the WCTP PPA and the AWH PPA and (d) a general partner fee of up to 5% of gross
cash revenues, and capital proceeds, replacements and contingencies, all as
determined by WCTP in good faith.
"NGC" means The National Gas Company of Trinidad and Tobago Limited, a state
enterprise incorporated as a limited liability company under the laws of
Trinidad, whose issued capital, as of the date of the Trinidad Government
Agreement, is wholly-owned by the Government of Trinidad, and its successors and
assigns.
"Note Cash Flow" means, with respect to the Warbasse Guarantors and the
Trinidad Parent, the cash flow available to such Person from payments, whether
scheduled or otherwise, on the WCTP Notes and the Trinidad Project Note,
respectively.
"NYPSC" means New York Public Service Commission.
"NYPSL" means New York Public Service Law.
"Offering" means offering of the Old Securities pursuant to the Offering
Circular dated July 31, 1998.
"Offering Circular" means the Offering Circular, dated July 31, 1998, which
the Old Securities were issued pursuant to the terms thereto.
"Old Securities" means the 12% Senior Secured Bonds Due October 30, 2007
issued by the Funding Company on August 4, 1998.
"Old Securities Offering" means August 4, 1998, the date which the Old
Securities were issued and sold to the Initial Purchaser.
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"O&M Wind Sub" means a subsidiary of York which entered into the Big Spring
O&M Agreement with the Big Spring Guarantor for the operation, maintenance and
repair of the Big Spring Project.
"Operating and Maintenance Costs" means all amounts disbursed for operation,
maintenance, repair, or improvement of the Projects, including, without
limitation, premiums on insurance policies, property and other Taxes, and
payments under the relevant operating and maintenance agreements, leases,
royalty and other land use agreements, and any other payments required under the
Project Documents; PROVIDED that "Operating and Maintenance Costs" does not
include all maintenance and other capital expenditures funded from the Big
Spring Maintenance Reserve Fund or the Trinidad Maintenance Reserve Fund, as
applicable.
"Operating Budget" means a budget of Operating and Maintenance Costs, and a
long-term maintenance program with respect to the Projects for any given fiscal
year, or part thereof, and prepared on the basis of estimated requirements,
showing such costs by category for such fiscal year.
"Outstanding," in connection with Securities, means, as of the time in
question, all Securities authenticated and delivered under the Indenture, except
(a) Securities theretofore canceled or required to be canceled under the
Indenture, (b) Securities for which provision for payment shall have been made
in accordance with the Indenture, and (c) Securities in substitution for which
other Securities have been authenticated and delivered pursuant to the
Indenture.
"Palmark" means Palmark, Inc.
"PanCanadian" means PanCanadian Petroleum Limited.
"PanCanadian Gas Sales Agreement" means the Gas Sales Agreement, dated as of
October 20, 1993, as amended, between BNYCP and PanCanadian.
"Payment Date" means any Interest Payment Date or Principal Payment Date.
"Permitted Debt" means the Permitted Funding Debt and the Permitted Project
Debt.
"Permitted Funding Debt" means (a) indebtedness incurred by the Funding
Company pursuant to the Indenture and (b) Debt incurred and the proceeds of
which shall be used by the Funding Company to provide loans to the Project Note
Obligors; PROVIDED that such Debt constitutes Permitted Project Debt.
"Permitted Funding Liens" means the following Liens which are permitted to
be incurred by the Funding Company:
(a) Liens specifically permitted or required by, or created by, any Security
Document;
(b) Liens to secure the Permitted Funding Debt; PROVIDED that the holder of
such Permitted Funding Debt, or a representative thereof, shall have
entered into the Intercreditor Agreement;
(c) Liens for taxes, assessments or governmental charges which are either
not yet due or which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves are established
in accordance with GAAP; and
(d) other Liens incidental to the conduct of the Funding Company's business
which were not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than statutory liens arising in
the ordinary course of business), and which do not in aggregate
materially impair the use thereof in the operation of the Funding
Company's business.
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"Permitted Investments" means investments in securities that are: (a) direct
obligations of the United States, or any agency thereof, (b) obligations fully
guaranteed by the United States or any agency thereof, (c) certificates of
deposit or bankers acceptances issued by commercial banks (including the Trustee
or any of its Affiliates) organized under the laws of the United States or of
any political subdivision thereof or under the laws of Canada, Japan,
Switzerland or any country that is a member of the European Economic Community
having a combined capital and surplus of at least $250 million and having
long-term unsecured debt securities then rated "A" or better by S&P or "A-2" or
better by Moody's (but at the time of investment not more than $25,000,000 may
be invested in such certificates of deposit from any one bank), (d) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (a) and (b) above, entered into with any
financial institution meeting the qualifications specified in clause (c) above,
(e) open market commercial paper of any corporation incorporated or doing
business under the laws of the United States or of any political subdivision
thereof having a rating of at least "A-1" from S&P and "P-1" from Moody's (but
at the time of investment not more than $25,000,000 may be invested in such
commercial paper from any one company), (f) auction rate securities or money
market preferred stock having one of the two highest ratings obtainable from
either S&P or Moody's (or, if at any time neither S&P nor Moody's may be rating
such obligations, then from another nationally recognized rating service
acceptable to the Trustee) or (g) investments in money market funds or money
market mutual funds sponsored by any securities broker dealer of recognized
national standing for an Affiliate thereof), having an investment policy that
requires substantially all the invested assets of such fund to be invested in
investments described in any one or more of the foregoing clauses having a
rating of "A" or better by S&P or "A-2" or better by Moody's (including money
market funds for which the Depositary in its individual capacity or any of its
affiliates is investment manager or adviser); PROVIDED that with respect to
amounts on deposit in the Trinidad Local Fund, "Permitted Investments" shall
mean the deposits and certificates of deposit, with maturities of not more than
3 months from the date of acquisition by such Person.
"Permitted Liens" means, individually and collectively, the Permitted
Project Liens and the Permitted Funding Liens.
"Permitted Period" means, with respect to the Trinidad Project, 9 months
after the date of Commercial Operation of the first Unit to be commercially
available PROVIDED that if InnCOGEN has failed at the end of that period of 9
months to achieve DMNC of 195 MW but demonstrates to the reasonable satisfaction
of T&TEC that it has promptly taken all such steps as may be reasonably required
to remedy such failure and is diligently pursuing (and for so long as it
continues diligently to pursue) such remedy, the Permitted Period shall be
extended to 12 months after the date of Commercial Operation of such Unit but no
further.
"Permitted Power Contract Buy-Out" means a Power Contract Buy-Out with
respect to the Big Spring Project or the Trinidad Project which satisfies the
following conditions: (a) the Big Spring Guarantor or InnCOGEN, as applicable,
delivers an Officer's Certificate to the Trustee certifying that such Power
Contract Buy-Out will not result in a Material Adverse Effect nor will it
adversely affect such Project throughout the life of the Big Spring PPA or the
Trinidad PPA, respectively, (b) each Rating Agency then rating the Securities
provides written confirmation to the Trustee that such Power Contract Buy-Out
will not result in a Ratings Downgrade and (c) the Independent Engineer
certifies to the Trustee that the minimum and average Projected Debt Service
Coverage Ratio and, if such Power Contract Buy-Out is with respect to a U.S.
Project Document, the minimum and average U.S. Projected Debt Service Coverage
Ratio for both (i) the next four consecutive fiscal quarters, commencing with
the fiscal quarter in which such Power Contract Buy-Out occurs, taken as one
annual period and (ii) each fiscal year through the Final Maturity Date, will
not be less than 1.5 to 1.0 and 1.55 to 1.0, respectively.
"Permitted Project Debt" means, individually and collectively, the U.S.
Permitted Project Debt and the Trinidad Permitted Project Debt.
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"Permitted Project Liens" means, individually and collectively, the U.S.
Permitted Project Liens and the Trinidad Permitted Project Liens.
"Person" means any individual, sole proprietorship, corporation,
partnership, joint venture, limited liability partnership, limited liability
corporation, trust, unincorporated association, institution, Governmental
Authority or any other entity.
"Pledge Agreements" means the Trinidad U.S. Pledge Agreement, the Brooklyn
Navy Yard Pledge Agreement, each Warbasse Pledge Agreement, the Big Spring
Pledge Agreement and each Trinidad Pledge Agreement.
"PMNC" means, collectively, PMNC, A Joint Venture, and its members, Parsons
Main of New York, Inc., Nab Construction Corporation and L.K. Comstock &
Company, Inc.
"Political Force Majeure Event" means, with respect to the Trinidad Project,
a Force Majeure Event which occurs inside or involves Trinidad and falls within
one of the categories set out in paragraphs (a) to (h) of this definition:
(a) act of war (whether declared or undeclared), invasion, armed conflict or
act of a foreign enemy;
(b) revolution, riot, mutiny, rebellion, insurrection, military or usurped
power, state of siege, or declaration of a state of emergency or martial
law or any of the events or causes which shall or could reasonably be
expected to result in the declaration or maintenance of martial law or
state of siege;
(c) act of terrorism or sabotage;
(d) strikes, works to rule or go-slows which are either widespread or
nationwide or, unless directly caused by InnCOGEN, are of a political
nature;
(e) expropriation, confiscation, nationalization or compulsory acquisition
by the government or any Governmental Authority of Trinidad of the
Trinidad Project or any other material assets of InnCOGEN in Trinidad, in
whole or in part;
(f) any failure by any Governmental Authority of Trinidad to issue or renew
any authorization required by InnCOGEN (other than because of the fault
or negligence on the part of InnCOGEN, any contractor or the Trinidad
Project), any revocation by any Governmental Authority of any
authorization required by InnCOGEN (other than because of the fault or
negligence on the part of InnCOGEN, any contractor or the Trinidad
Project) or any attachment (other than because of the fault or negligence
on the part of InnCOGEN, any contractor or the Trinidad Project) by any
Governmental Authority of Trinidad or any terms or conditions to any
authorization required by InnCOGEN which substantially prevents the
construction or operation by InnCOGEN of the Trinidad Project or any one
or more of the gas Units and Unit in accordance with the terms of the
Trinidad PPA;
(g) a Change in Law; and
(h) any other event, condition or circumstance within the reasonable control
of the government or of any Governmental Authority of Trinidad or (for so
long as the Government of Trinidad holds the majority ownership of T&TEC)
of T&TEC which substantially prevents or delays the performance by
InnCOGEN of any one or more of its obligations under the Trinidad PPA.
"PORTAL" means The Portal(sm) Market, a subsidiary of The Nasdaq Stock
Market, Inc.
"Power Contract Buy-Out" means any cash payment by an electricity purchaser
or steam purchaser, the effect of which is to result in the termination or
cancellation or, reduce future payments
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under, or change the term of, the electricity or steam purchase contract between
such purchaser and the relevant U.S. Guarantor or the Trinidad Finance Party.
"Power Contract Buy-Out Proceeds" means all amounts and proceeds actually
received as a result of Power Contract Buy-Out.
"Power Purchase Agreements" means, individually or collectively, the Big
Spring PPA, the BNY PPA, the BNYDC Agreement, the AWH PPA, the WCTP PPA and the
Trinidad PPA.
"Principal Payment Date" when used with respect to any Security means the
date on which all or a portion of the principal of such Security becomes due and
payable as provided therein or in the Indenture, whether on a scheduled date for
payment of principal at a Redemption Date, the Final Maturity Date, a date of
declaration of acceleration, or otherwise.
"Production Day" means, with respect to the Trinidad Project, September 9,
1999.
"Project Companies" means BNYCP, WCTP, the Big Spring Guarantor and
InnCOGEN.
"Project Documents" means, collectively, the Big Spring Project Documents,
the Brooklyn Navy Yard Project Documents, the Warbasse Project Documents and the
Trinidad Project Documents.
"Project Loan" means, individually and collectively, the U.S. Project Loan,
the InnCOGEN Loan and the Trinidad Project Loan.
"Project Loan Agreement Event of Default" means an "Event of Default" as
defined in a Project Loan Agreement.
"Project Loan Agreements" means, individually or collectively, the U.S.
Project Loan Agreement, the Trinidad Loan Agreement and the Trinidad Project
Loan Agreement.
"Project Note Obligors" means the Warbasse Guarantors, the Brooklyn Navy
Yard Guarantor, the Big Spring Guarantor and the Trinidad Parent.
"Project Notes" means, individually or collectively, the U.S. Project Note
and the Trinidad Project Note.
"Project Revenues" means the net revenues or net income calculated on a cash
basis and recognized pursuant to the terms of the relevant Project Documents,
including, without limitation, proceeds of any Power Contract Buy-Out not
required to be used to redeem the Securities, the proceeds of any draws with
respect to any working capital facility and refunds or returns of any amounts
previously paid for Operating and Maintenance Costs; PROVIDED that for purposes
of calculating any Debt Service Coverage Ratio "Project Revenues" shall not
include draws with respect to any working capital facility draws from either of
the U.S. Maintenance Reserve Fund or the Trinidad Maintenance Reserve Fund or
any proceeds of any Power Contract Buy-Out.
"Projected Debt Service Coverage Ratio" means, for any period and on any
date of determination, a projection of the Debt Service Coverage Ratio for such
period.
"Projections" means projections, adopted by Stone & Webster, of annual
revenues, expenses and debt service coverage for the Funding Company and the
Guarantors for the term of the Securities.
"Projects" means, individually or collectively, the Warbasse Project, the
Brooklyn Navy Yard Project, the Big Spring Project and the Trinidad Project.
"Prospectus" means this Prospectus included in the Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act),
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as amended or supplemented by any prospectus supplement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments and all material incorporated by reference into such prospectus.
"PUHCA" means the Public Utilities Holding Company Act of 1935, as amended.
"Purchase Agreement" means the Purchase Agreement, to be entered into on or
about the Closing Date, between the Initial Purchaser and the Funding Company,
providing for the sale of the Securities to the Initial Purchaser.
"PURPA" means the Public Utility Regulatory Policies Act of 1978, as
amended.
"QF" or "Qualifying Facility" means a "small power production facility" or a
"qualifying cogeneration facility" in accordance with PURPA and the rules and
regulations of FERC under PURPA relating thereto.
"Qualified Institutional Buyers" or "QIBs" means "qualified institutional
buyers" as defined in Rule 144A of the Securities Act.
"Queensgate SPV" means Queensgate SPV Services Limited, having a principal
office at P.O. Box 1093 GT, Compass Center, 2nd Floor, Crewe Road, Grand Cayman,
Cayman Islands, as trustee of two charitable trusts which hold the entire issued
share capital of the Funding Company pursuant to the Declaration of Trust.
"Rate LPP" means large power purchase rate as applied by TU Electric.
"Rating" means the rating of the Securities by the Rating Agencies.
"Rating Agency" or "Rating Agencies" means, individually or collectively,
Moody's and S&P or if either shall cease to rate securities of the type
equivalent to the Securities, another nationally recognized rating agency.
"Ratings Downgrade" means a lowering by the Rating Agencies of the then
current credit ratings of the Securities.
"Red Hook Agreement" means the Energy and Services Exchange Agreement, dated
as of January 31, 1995, as amended, between BNYCP and The City of New York.
"Red Hook Plant" means the Red Hook Water Pollution Control Plant.
"Redemption Date" means the date on which Funding Company redeems or shall
redeem any Securities in accordance with the Indenture.
"Registration Rights Agreement" means the Exchange and Registration Rights
Agreement, dated as of the Old Securities Offering, between the Funding Company
and the Initial Purchaser for the benefit of the holders of the Old Securities.
"Registration Statement" means the Registration Statement on Form F-4, of
which this Prospectus constitutes a part, and all amendments, exhibits, annexes
and schedules thereto.
"Regulation S" means Regulation S under the Securities Act.
"Required Secured Parties" means, at any time, the required percentage of
Holders set forth in the Project Loan Agreements or of the Indenture.
"Resale Restriction Date" means, until the later of the second anniversary
of (a) the date of original issuance of the Securities or (b) the last date on
which the Funding Company or any Affiliate of the Funding Company was the owner
of such Securities (or any predecessor thereto).
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"Restricted Payment" means, with respect to any Person, (a) the declaration
and payment of distributions, dividends or any other payment made in cash,
property, obligations or other securities, (b) any payment of the principal of
or interest on any Subordinated Debt or (c) the making of any loans or advances
to any Affiliate (other than Permitted Debt); in each case from cash,
investments, securities or other funds from time to time in the Distribution
Fund.
"Restricted Person" means (a) any Affiliate of the Funding Company, (b) the
Initial Purchaser or (c) any Affiliate of the Initial Purchaser (other than
Affiliates of the Initial Purchaser that (i) are acquiring Exchange Securities
in the ordinary course of business and do not have an arrangement with any
Person to distribute Exchange Securities and (ii) may trade such Exchange
Securities without restriction under the Securities Act).
"Royalty Fees" means, from and after October 16, 1999, the royalties payable
pursuant to the BNYCP Partnership Agreement, which have been assigned to the
Brooklyn Navy Yard Guarantor.
"RRR'S" means RRR'S Ventures, Ltd., the general partner of WCTP.
"Rule 144A" means Rule 144A under the Securities Act.
"Rules" means the rules, regulations and procedures creating and affecting
DTC and its operations.
"S&P" means Standard & Poor's Rating Services, a Division of the McGraw-Hill
Companies, Inc., a corporation organized and existing under the laws of the
State of New York, its successors and assigns.
"Scheduled Payment Date" means any October 30 or April 30.
"Secured Obligations" means all indebtedness, liabilities and obligations,
of whatsoever nature and howsoever evidenced (including, but not limited to,
principal, interest, fees, reimbursement obligations, penalties, indemnities and
legal and other expenses, whether due after acceleration or otherwise), to the
Secured Parties, in each case, direct or indirect, primary or secondary, fixed
or contingent, now or hereafter arising.
"Secured Parties" means, collectively, the Trustee, the Collateral Agent,
the Depositary, the Holders and, with respect to the Project Loans, the Funding
Company, and, with respect to the Trinidad Project Loan, the Trinidad Guarantor,
and any holder of senior indebtedness other than the Securities or the Project
Loans and any other Person that becomes a secured party under any Financing
Document.
"Securities Act" means the Securities Act of 1933, as amended.
"Security" or "Securities" means the Old Securities issued pursuant to the
Indenture and the Exchange Securities exchanged pursuant to the Registration
Statement.
"Security Documents" means, collectively, the Intercreditor Agreement, the
Pledge Agreements, the Depositary Agreements, the Brooklyn Navy Yard Security
Documents, the Big Spring Security Documents, the Warbasse Security Documents,
the Trinidad Security Documents, the U.S. Project Note Pledge Agreement and any
other documents providing for any lien, pledge, encumbrance, mortgage or
security interest on any or all of the Collateral.
"Senior Debt" means all amounts owning to any Secured Party pursuant to the
terms of any Financing Document, including, without limitation, (a) the
principal of and interest on the Securities (and any and all renewals,
extensions and refinancing thereof) and all other obligations and liabilities
(including, without limitation, indemnities and interest on all of the
foregoing) owed to the Secured Parties incurred under, arising under out of or
in connection with the Secured Parties incurred under (and any and all renewals,
extensions and refinancing thereof) or any Financing Document, (b) any and
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all sums advanced by the Collateral Agent in order to preserve the Collateral or
preserve the security interest in the Collateral in accordance with the terms of
the Security Documents, and (c) in the event of any proceeding for the
collection or enforcement of the Secured Obligation, after an Event of Default
of the Project Loan Agreement Event of Default shall have occurred and be
continuing, the reasonable expenses of retaking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by any Secured Party or its rights under any of the Financing
Documents, together with reasonable attorneys' fees and court costs.
"Shelf Registration Statement" means the Initial Shelf Registration
Statement and any Subsequent Shelf Registration Statement.
"Site Lease" means the Lease, dated as of December 18, 1989, as amended,
between BNYCP and BNYDC.
"Sonat" means Sonat Marketing Company.
"Sonat Gas Sales Agreement" means the Gas Sales Agreement, dated as of March
21, 1995, between BNYCP and Sonat.
"Stone & Webster" means Stone & Webster Management Consultants, Inc. or the
Independent Engineer.
"Sub-Lease" means the sublease of the Lot from Innercob to InnCOGEN pursuant
to a deed of sublease made as of June 18, 1998.
"Subordinated Debt" means Debt (and the note or other instrument evidencing
the same) of a Trinidad Finance Party to another Trinidad Finance Party which by
its terms has been incurred for the sole purpose of permitting such Trinidad
Finance Party to distribute all its cash flow to another Trinidad Finance Party
in order to make payments on the Trinidad Project Loan or the InnCOGEN Loan and
which is unsecured, unassignable subordinated to the Secured Obligations and all
other unsubordinated Debt of such Trinidad Finance Party, payable only from
distributions permitted in accordance with the Trinidad Depositary Agreement
which has been subordinated, on terms and conditions substantially the same as
those permitted under the Indenture.
"Subsequent Shelf Registration Statement" means any additional "shelf"
Registration Statement applicable to the Old Securities pursuant to Rule 415
covering all of such Old Securities remaining unsold in the event that the
Initial Shelf Registration Statement ceases to be effective for any reason at
any time during the Effective Period after the Effective Date.
"Substantial Completion" means (a) in the case of the Big Spring Project,
confirmation by the Independent Engineer that (i) the Big Spring Guarantor has
received a confirmation from TU Electric that the Big Spring Project has
commenced Commercial Operation and (ii)(x) Vestas will be liable for any items
required to be completed pursuant to the terms of the Vestas Agreement which
have not been completed as of such date and that all amounts owed by Vestas
under the Vestas Agreement will be sufficient to complete such items and (y) the
failure to complete such items will not materially adversely affect the
performance of the Big Spring Project during the term of the Big Spring PPA and
(b) in the case of the Trinidad Project, confirmation by the Independent
Engineer that (i) InnCOGEN has received a confirmation from T&TEC that the date
of Commercial Operation for the Trinidad Project has occurred or the date of
Commercial Operation is deemed to have occurred under the Trinidad PPA and
(ii)(x) D/FDI and Duke/Fluor Daniel, respectively, will be liable for any items
required to be completed pursuant to the terms of the EES Contract and the
Turnkey Construction Contract which have not been completed as of such date and
that all amounts owed by D/FDI and Duke Fluor Daniel under the EES Contract and
the Turnkey Construction Contract will be sufficient to complete such items, and
(y) the failure to complete such items will not materially adversely affect the
performance of the Trinidad Project during the term of the Trinidad PPA.
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"T&TEC" means the Trinidad and Tobago Electricity Commission, Trinidad's
government-owned power distribution utility.
"T&TEC Act" means the Trinidad and Tobago Electricity Commission Act,
Chapter 54:70 of the Laws of Trinidad. "T&TEC's Grid System" means the
interconnection and transmission facilities and any other transmission or
distribution facilities on T&TEC's side of the delivery point through which
electricity is transmitted and/or distributed by T&TEC.
"Tax" and "Taxes" includes all taxes, including without limitation, income,
windfall, profit, gains, franchise, gross receipts, transfer, license,
environmental, customs duty, capital stock, severance, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with interest, penalties and additions imposed with
respect to such amounts and any interest in respect of such penalties and
additions. "Technical Dispute" means, in relation to the Trinidad PPA, any
dispute related solely to technical matters arising out of the design,
construction, operation or maintenance of the Trinidad Project or T&TEC's Grid
System.
"Texas Pacific" means Texas Pacific Land Trust, one of the Big Spring
Project Land Owners and a party to the Texas Pacific Lease.
"Texas Pacific Lease" means the Permit and Lease Agreement TPLT No. 7714,
dated as of January 13, 1998, between Texas Pacific and the Big Spring
Guarantor.
"Tomen" means Tomen Power Corporation, a California corporation.
"Tomen Note" means the Amended and Restated Promissory Note, dated as of
November 17, 1994 for approximately $11 million, issued by WCTP payable to
Tomen.
"Town and Country Outline Planning Approval" means the Governmental Approval
obtained by InnCOGEN for the Trinidad Project which is attached to the EES
Contract and the Turnkey Construction Contract.
"TPUC" means the Texas Public Utilities Commission.
"Transportation Escalation Factor," as defined in the WCTP PPA, shall be
equal to 0.5 plus: (a) one-half of the latest CPI available at the end of the
applicable month from the U.S. Department of Labor, Bureau of Labor Statistics,
(base year 1982/84 = 100) divided by (b) the corresponding base CPI for the
month of January of 1988, which is equal to 121.3.
"Transaction Documents" means the Project Documents and the Financing
Documents.
"TransCanada" means TransCanada Pipelines Limited.
"Trigger Event" means (a) an Event of Default under the Indenture and an
acceleration of all or a portion of the indebtedness issued thereunder, (b) an
event of default under a Senior Debt instrument and an acceleration of all or a
portion of the Debt issued thereunder in an aggregate principal amount in excess
of $5 million and (c) certain Guarantee Events of Default under the Guarantees;
and, in each case, the Collateral Agent shall have, upon direction from the
Required Secured Parties, declared such event to be a Trigger Event.
"Trinidad" means the Republic of Trinidad and Tobago.
"Trinidad Additional Reserve Fund" means the fund of such name created under
the Trinidad Depositary Agreement.
"Trinidad Collateral" means (a) an assignment of all Cash Flows received by
the Trinidad Guarantor from the Trinidad Project, (b) a Lien on substantially
all of the assets of the Trinidad Guarantor (including all assets of InnCOGEN
which includes, among other things, the Trinidad Project and the
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Trinidad Project Documents) and the Trinidad Parent, (c) a pledge of the equity
interest in the Trinidad Guarantor, InnCOGEN, the Trinidad Parent and York
Cayman and (d) a Lien on any other funds of the Trinidad Finance Parties on
deposit under the Trinidad Depositary Agreement.
"Trinidad Construction Fund" means the fund of such name created under the
Trinidad Depositary Agreement.
"Trinidad Depositary Agreement" means the Trinidad Deposit and Disbursement
Agreement, dated as of the Closing Date, among the Funding Company, the Trinidad
Guarantor, the Trinidad Parent, InnCOGEN, the Collateral Agent and the
Depositary.
"Trinidad Distribution Conditions" means the conditions which must be
satisfied by the Trinidad Guarantor prior to receiving funds from the Trinidad
Distribution Fund, which are more specifically described under "Trinidad
Distribution Fund" herein.
"Trinidad Distribution Fund" means the fund of such name created under the
Trinidad Depositary Agreement.
"Trinidad Distribution Suspense Fund" means the fund of such name created
under the Trinidad Depositary Agreement.
"Trinidad Finance Party" or "Trinidad Finance Parties" means, individually
or collectively, the Trinidad Guarantor, the Trinidad Parent and InnCOGEN.
"Trinidad Funds" means the Trinidad Revenue Fund, the Trinidad Guarantor
Fund, the Trinidad Parent Fund, the Trinidad Operating Fund, the Trinidad
Interest Fund, the Trinidad Principal Fund, the Trinidad Additional Reserve
Fund, the Trinidad Distribution Fund, the Trinidad Distribution Suspense Fund,
the Trinidad Loss Proceeds Fund, the Trinidad Redemption Fund, the Trinidad
Construction Fund, the Trinidad Maintenance Reserve Fund and the Trinidad Local
Fund, as created under the Trinidad Depositary Agreement.
"Trinidad Government Agreement" means the Government Agreement, made and
entered into with effect from February 12, 1998, between the Government of
Trinidad and InnCOGEN.
"Trinidad Guarantee" means the Guarantee, dated as of the Closing Date,
among the Trinidad Guarantor, the Trustee and the Collateral Agent for the
benefit of the Funding Company.
"Trinidad Guarantor" means York Holdings (Barbados) SRL, a society with
restricted liability organized in Barbados under the Society With Restricted
Liability Act.
"Trinidad Guarantor Fund" means the fund of such name created under the
Trinidad Depositary Agreement.
"Trinidad Interest Fund" means the fund of such name created under the
Trinidad Depositary Agreement.
"Trinidad Loan Agreement" means the Trinidad Loan Agreement, dated as of the
Closing Date, between the Trinidad Guarantor and InnCOGEN.
"Trinidad Local Fund" means the fund of such name created under the Trinidad
Depositary Agreement.
"Trinidad Loss Proceeds Fund" means the fund of such name created under the
Trinidad Depositary Agreement.
"Trinidad Maintenance Reserve Fund" means the fund of such name created
under the Trinidad Depositary Agreement.
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"Trinidad Operating Fund" means the fund of such name created under the
Trinidad Depositary Agreement.
"Trinidad Parent" means York Ex International SRL, a society with restricted
liability organized in Barbados under the Society With Restricted Liability Act
and licensed under that Act as an exempt society.
"Trinidad Parent Fund" means the fund of such name created under the
Trinidad Depositary Agreement.
"Trinidad Permitted Project Debt" means (a) Debt incurred in respect of the
Trinidad Project Loan, (b) Debt incurred pursuant to the Trinidad Guarantee by
the Trinidad Guarantor, (c) Debt incurred to make capital improvements to the
Trinidad Project required by Applicable Law provided that the Independent
Engineer certifies that (i) a certificate from an Authorized Officer of InnCOGEN
certifying that the indebtedness is required to make a capital improvement
required by Applicable Law is reasonable, (ii) after giving effect to the
incurrence of such additional indebtedness, the minimum Projected Debt Service
Coverage Ratio for (x) the next four consecutive fiscal quarters, commencing
with the quarter in which such indebtedness is incurred and (y) for each
subsequent fiscal year through Final Maturity Date, will not be less than 1.20
to 1.0 and (iii) such indebtedness is the most effective means of completing the
Trinidad Project or making such capital expenditure, (d) Debt to make
discretionary capital improvements to the Trinidad Project, so long as after
giving effect to the incurrence of such Debt, (i) there is no current Default or
Event of Default, (ii) the Independent Engineer certifies that (i) the minimum
Projected Debt Service Coverage Ratio for (x) the next four consecutive fiscal
quarters, commencing with the quarter in which such Debt is incurred and (y) for
each subsequent fiscal year through the Final Maturity Date of the Securities,
will not be less than 1.50 to 1.0, (ii) the average Project Debt Service
Coverage Ratio for all such fiscal years will not be less than 1.55 to 1.0, and
(iii) the Rating Agencies confirm that there will be no Rating Downgrade as a
result of such occurrence, (e) working capital indebtedness not in excess of $3
million with respect to the Trinidad Project, PROVIDED that the amount of all
outstanding working capital loans will be reduced to zero for 10 days each year,
(f) Debt relating to the Trinidad Permitted Project Liens and (g) Subordinated
Debt from any Trinidad Finance Party to another Trinidad Finance Party.
"Trinidad Permitted Project Liens" means (a) Liens specifically permitted or
required by, or created by, any Security Document or any Transaction Document
including, without limitation, the Trinidad PPA, (b) Liens for taxes,
assessments or governmental charges which are either not yet due or which are
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves are established in accordance with GAAP and (c) other
Liens incidental to the conduct of the Trinidad Parent's business or the
ownership of properties and assets which were not incurred in connection with
the borrowing of money or the obtaining of advances or credit (other than liens
by operation of law or statute arising in the ordinary course of business), and
which do not in the aggregate materially impair the use thereof in the operation
of the Trinidad Parent's business.
"Trinidad Pledge Agreement" means each of (a) the Pledge Agreement, dated as
of the Closing Date, between York T&T and the Collateral Agent for the benefit
of the Secured Parties with respect to the equity interests in York Cayman, (b)
the Pledge Agreement, dated as of the Closing Date, between York Cayman and the
Collateral Agent for the benefit of the Secured Parties with respect to the
equity interests in the Trinidad Parent, (c) the Pledge Agreement, dated as of
the Closing Date, between the Trinidad Parent and the Collateral Agent for the
benefit of the Secured Parties with respect to the equity interests in the
Trinidad Guarantor and (d) the Pledge Agreement, dated as of the Closing Date,
between the Trinidad Guarantor and the Collateral Agent for the benefit of the
Secured Parties with respect to the equity interests in the InnCOGEN.
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"Trinidad PPA" means the License Agreement and Agreement for Sale and
Purchase of Power, dated as of February 12, 1998, between InnCOGEN and T&TEC, as
amended by an agreement dated as of June 18, 1998.
"Trinidad Principal Fund" means the fund of such name created under the
Trinidad Depositary Agreement.
"Trinidad Project" means the 215 MW natural gas-fired combustion turbine
electric generation facility to be constructed in Trinidad by InnCOGEN.
"Trinidad Project Documents" means, collectively, the Trinidad PPA, the
Trinidad Government Agreement, the EES Contract, Turnkey Construction Contract,
all third party consents related to any other Trinidad Project Document and any
Additional Project Document entered into by InnCOGEN with respect to the
Trinidad Project.
"Trinidad Project Loan" means the Project Loan made to the Trinidad Parent
pursuant to the Trinidad Project Loan Agreement, evidenced by the Trinidad
Project Note, in the initial principal amount of $100,000,000.
"Trinidad Project Loan Agreement" means the Trinidad Project Loan Agreement,
dated as of the Closing Date, between Funding Company and the Trinidad Parent.
"Trinidad Project Note" means the promissory note or notes issued, pursuant
to the Trinidad Project Loan Agreement, by the Trinidad Parent to the Funding
Company.
"Trinidad Redemption Fund" means the fund of such name created under the
Trinidad Depositary Agreement.
"Trinidad Revenue Fund" means the fund of such name created under the
Trinidad Depositary Agreement.
"Trinidad Security Agreement" means (a) the Assignment and Security
Agreement, dated as of the Closing Date, between the Trinidad Parent and the
Collateral Agent and (b) the Assignment and Security Agreement, dated as of the
Closing Date, between InnCOGEN and the Collateral Agent.
"Trinidad Security Documents" means the Trinidad Security Agreement, the
Trinidad Pledge Agreements, Trinidad Charge and Security Agreement and all other
Security Documents securing the obligations of the Trinidad Guarantor under the
Trinidad Guarantee, of InnCOGEN under the Trinidad Loan Agreement and of the
Trinidad Parent under the Trinidad Project Note.
"Trinidad U.S. Pledge Agreement" means the Pledge Agreement, dated as of the
Closing Date, between York and the Collateral Agent for the benefit of the
Secured Parties with respect to the equity interests of the York T&T.
"Trustee" means The Bank of New York, a New York banking corporation, as
trustee under the Indenture, together with its successors and assigns.
"TT dollars" means the lawful currency of the Republic of Trinidad and
Tobago.
"TU Electric" means Texas Utilities Electric Company, a Texas corporation.
"Turnkey Agreement" means the Turnkey Agreement between BNYCP and PMNC dated
as of November 1, 1994.
"Turnkey Construction Contract" means the Turnkey Construction Contract for
the Trinidad Project, dated as of June 26, 1998, between InnCOGEN and Duke/Fluor
Daniel.
"U.S. Additional Reserve Fund" means the fund of such name created under the
U.S. Depositary Agreement.
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"U.S. Debt Service Coverage Ratio" means for an period the ratio of (a) Cash
Flow Available for Debt Service for such period generated or earned with respect
to any of the U.S. Projects and (b) the aggregate of all Debt Service due with
respect to Debt incurred for the benefit of, or on-lent, to any of the U.S.
Guarantors.
"U.S. Depositary Agreement" means the U.S. Deposit and Disbursement
Agreement, dated as of the Closing Date, among the Funding Company, the Brooklyn
Navy Yard Guarantor, the Warbasse Guarantors, the Big Spring Guarantor, the
Collateral Agent and the Depositary.
"U.S. Distribution Conditions" means the conditions which must be satisfied
by the U.S. Guarantors prior to receiving funds from the U.S. Distribution Fund,
which are more specifically described under "U.S. Distribution Fund" herein.
"U.S. Distribution Fund" means the fund of such name created under the U.S.
Depositary Agreement.
"U.S. Distribution Suspense Fund" means the fund of such name created under
the U.S. Depositary Agreement.
"U.S. Funds" means the U.S. Revenue Fund, the Big Spring Operating Fund, the
U.S. Interest Fund, the U.S. Principal Fund, the U.S. Additional Reserve Fund,
the U.S. Distribution Fund, the U.S. Distribution Suspense Fund, the U.S. Loss
Proceeds Fund, the U.S. Redemption Fund, the Big Spring Construction Fund, the
Contingency Reserve Subfund and the Big Spring Maintenance Reserve Fund, as
created under the U.S. Depositary Agreement.
"U.S. Guarantee" means, individually or collectively, the Big Spring
Guarantee, the Brooklyn Navy Yard Guarantee and the Warbasse Guarantee.
"U.S. Guarantors" means the Big Spring Guarantor, the Brooklyn Navy Yard
Guarantor and the Warbasse Guarantors.
"U.S. Interest Fund" means the fund of such name created under the U.S.
Depositary Agreement.
"U.S. Loss Proceeds Fund" means the fund of such name created under the U.S.
Depositary Agreement.
"U.S. Permitted Project Debt" means (a) Debt incurred in respect of the U.S.
Project Loan, (b) Debt incurred pursuant to any Guarantee by a U.S. Guarantor,
(c) Debt incurred to make capital improvements to the Big Spring Project
required by Applicable Law provided that the Independent Engineer certifies that
(i) a certification from an Authorized Officer of the Big Spring Guarantor
certifying that the indebtedness is required to make a capital improvement
required by Applicable Law is reasonable, (ii) after giving effect to the
incurrence of such additional indebtedness, the minimum Projected Debt Service
Coverage Ratio and U.S. Projected Debt Service Coverage Ratio for (A) the next
four consecutive fiscal quarters, commencing with the quarter in which such
indebtedness is incurred and (B) for each subsequent fiscal year through Final
Maturity Date, will not be less than 1.20 to 1.0 and (iii) such indebtedness is
the most effective means of completing the Big Spring Project or making such
capital expenditure, (d) Debt to make discretionary capital improvements to the
Big Spring Project or Debt incurred to purchase Mission's loans to York Partners
or BNYCP with respect to the Brooklyn Navy Yard Project, so long as after giving
effect to the incurrence of such Debt, (i) there is no current Default or Event
of Default, (ii) the Independent Engineer certifies that (A) the minimum
Projected Debt Service Coverage Ratio for (1) the next four consecutive fiscal
quarters, commencing with the quarter in which such Debt is incurred and (2) for
each subsequent fiscal year through the Final Maturity Date of the Securities,
will not be less than 1.50 to 1.0, (B) the average Project Debt Service Coverage
Ratio and U.S. Projected Debt Service Coverage Ratio for all such fiscal years
will not be less than 1.55 to 1.0 and (iii) the Rating Agencies confirm that
there will be no Rating Downgrade as a result of such occurrence, (e) working
capital indebtedness not in excess of $2 million
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with respect to the Big Spring Project, PROVIDED that the amount of all
outstanding working capital loans will be reduced to zero for 10 days each year,
(f) Debt incurred by the U.S. Guarantors under the U.S. Project Documents and
the WCTP Notes and (g) Debt relating to the U.S. Permitted Project Liens.
"U.S. Permitted Project Liens" means (a) Liens specifically permitted or
required by, or created by, any Security Document or any Transaction Document,
(b) Liens for taxes, assessments or governmental charges which are either not
yet due or which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves are established in accordance with
GAAP, (c) other Liens incidental to the conduct of any U.S. Guarantor's business
or the ownership of properties and assets which were not incurred in connection
with the borrowing of money or the obtaining of advances or credit (other than
statutory liens arising in the ordinary course of business), and which do not in
the aggregate materially impair the use thereof in the operation of such U.S.
Guarantor's business, (d) the security interest on certain cash flows of BNYCP
granted to Mission and (e) a security interest in a limited partnership interest
in BNYCP granted by York Partners to the representatives of the class of
plaintiffs with respect to that certain settlement discussed herein.
"U.S. Principal Fund" means the fund of such name created under the U.S.
Depositary Agreement.
"U.S. Projects" means, individually or collectively, the Big Spring Project,
the Brooklyn Navy Yard Project or the Warbasse Project.
"U.S. Project Documents" means the Big Spring Project Documents, the
Brooklyn Navy Yard Project Documents and the Warbasse Project Documents.
"U.S. Project Loan" means the Project Loan made to the U.S. Guarantors
pursuant to the U.S. Project Loan Agreement, evidenced by the U.S. Project Note,
in the initial principal amount of $50,000,000.
"U.S. Project Loan Agreement" means the U.S. Project Loan Agreement, dated
as of the Closing Date, among the U.S. Guarantors and the Funding Company.
"U.S. Project Note" means the Project Note issued, pursuant to the U.S.
Project Loan Agreement, jointly and severally by the U.S. Guarantors to the
Funding Company in the initial principal amount of $50,000,000.
"U.S. Project Note Pledge Agreement" means the Note Pledge Agreement, dated
as of the Closing Date, between the Collateral Agent and the Funding Company.
"U.S. Projected Debt Service Coverage Ratio" means, for any period, on any
date of determination, a projection of the U.S. Debt Service Coverage Ratio for
the applicable period.
"U.S. Redemption Fund" means the fund of such name created under the U.S.
Depositary Agreement.
"U.S. Revenue Fund" means the fund of such name created under the U.S.
Depositary Agreement.
"U.S. Supplemental Reserve Fund" means the fund of such name created under
the U.S. Depositary Agreement.
"Unit" means, with respect to the Trinidad Project, a turbine generator and
associated equipment.
"Vestas" means Vestas-American Wind Technology, Inc., a California
corporation.
"Vestas Agreement" means the Wind Turbine Equipment Sales and Installation
Contract, dated as of March 31, 1998, between York and Vestas.
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"Warbasse Collateral" means (a) an assignment of all Cash Flows received by
the Warbasse Guarantors from the Warbasse Project, (b) a Lien on substantially
all of the assets of each of the Warbasse Guarantors, (c) a collateral
assignment of the WCTP Notes, (d) a pledge of the equity interest in the
Warbasse Guarantors and (e) a Lien on any other funds of the Warbasse Guarantors
on deposit under the U.S. Depositary Agreement.
"Warbasse Creditor" or "Warbasse Creditors" means, individually or
collectively, Tomen, Warbasse I, as assignee, or Warbasse II, as assignee, as
creditors of WCTP.
"Warbasse Guarantee" means the Guarantee, dated as of the Closing Date, by
the Warbasse Guarantors in favor of the Trustee and the Collateral Agent for the
benefit of the Secured Parties.
"Warbasse Guarantors" means Warbasse I and Warbasse II.
"Warbasse I" means Warbasse Power I LLC, a Delaware limited liability
company.
"Warbasse II" means Warbasse Power II LLC, a Delaware limited liability
company.
"Warbasse O&M Agreement" means the Operations and Maintenance Agreement,
dated as of February 1, 1989, between WCTP and York.
"Warbasse Pledge Agreements" means (a) the Pledge Agreement, dated as of the
Closing Date, between CTI and the Collateral Agent for the benefit of the
Secured Parties with respect to the membership interests in Warbasse I and (b)
the Pledge Agreement, dated as of the Closing Date, between York Cogen Partners,
LP and the Collateral Agent for the benefit of the Secured Parties with respect
to the membership interests in Warbasse II.
"Warbasse Project" means the 38 MW cogeneration facility located in
Brooklyn, New York, owned by WCTP.
"Warbasse Project Documents" means, collectively, the Warbasse PPA, the AWH
PPA, the WCTP Security Agreements, the Warbasse O&M Agreement, the RV Agreement
and any Additional Project Document entered into by the Warbasse Guarantors with
respect to the Warbasse Project.
"Warbasse Security Agreement" means the Assignment and Security Agreement,
dated as of the Closing Date, between the Warbasse Guarantors and the Collateral
Agent.
"Warbasse Security Documents" means the Warbasse Security Agreement, the
Warbasse Pledge Agreements and all other Security Documents securing the
obligations of the Warbasse Guarantors under the Warbasse Guarantee and the U.S.
Project Note.
"WCTP" means Warbasse-Cogeneration Technologies Partnership, L.P., a
Delaware limited partnership.
"WCTP Intercreditor Agreement" means the Intercreditor Agreement, dated as
of November 17, 1994, among WCTP, Tomen and Warbasse I, as assignee, and
Warbasse II, as assignee.
"WCTP Notes" means, collectively, the CTI Note and the YCP Note.
"WCTP PPA" means the Power Purchase Agreement, dated as of April 14, 1989,
between Con Ed and WCTP.
"WCTP Security Agreements" means (a) the Security Agreements, each dated as
of November 17, 1994, in favor of the holder of the CTI Note and the Tomen Note
and (b) the Security Agreement and the Assignment and Security Agreement, each
dated as of June 8, 1989, in favor of the holder of the YCP Note.
"WTGs" means wind turbine generators.
"YCP" means York Cogen Partners, L.P., a Delaware limited partnership.
A-28
<PAGE>
"YCP Loan Agreement" means the Amended and Restated Loan Agreement, dated as
of September 28, 1989, between WCTP and YCP.
"YCP Note" means the Promissory Note, dated as of June 8, 1989, as amended,
for approximately $29 million issued by WCTP payable to YCP, which is held by
Warbasse II.
"York" means York Research Corporation, a Delaware corporation.
"York Cayman" means York Holdings (Caymans) L.L.C., a Cayman Islands limited
liability company, the indirect Cayman parent of the Trinidad Guarantor, the
Trinidad Parent and InnCOGEN.
"York Partners" means B-41 Associates, L.P., a Delaware limited partnership.
"York T&T" means York T&T Holdings, Inc., a Delaware corporation, the
indirect U.S. parent of the Trinidad Parent, the Trinidad Guarantor and
InnCOGEN.
"York Windpower" means York Windpower Corp., a Canadian corporation.
A-29
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
York Power Funding (Cayman) Limited
Report of Independent Certified Public Accountants................................................. F-2
Balance Sheets..................................................................................... F-3
Statement of Operations and Retained Earnings...................................................... F-4
Statement of Cash Flows............................................................................ F-5
Notes to Financial Statements...................................................................... F-6-F-8
York Power Funding (Cayman) Limited U.S. Guarantors
Report of Independent Certified Public Accountants................................................. F-9
Combined Balance Sheets............................................................................ F-10
Combined Statement of Operations................................................................... F-11
Combined Statement of Partners' and Members' Capital............................................... F-12
Combined Statement of Cash Flows................................................................... F-13
Notes to Combined Financial Statements............................................................. F-14-F-21
York Ex International SRL and Subsidiaries
Report of Independent Certified Public Accountants................................................. F-22
Consolidated Balance Sheets........................................................................ F-23
Consolidated Statement of Operations and Accumulated Deficit....................................... F-24
Consolidated Statement of Cash Flows............................................................... F-25
Notes to Consolidated Financial Statements......................................................... F-26-F-30
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
YORK POWER FUNDING (CAYMAN) LIMITED
We have audited the accompanying balance sheet of York Power Funding
(Cayman) Limited (the "Company") as of June 12, 1998 (inception). This financial
statement is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of York Power Funding (Cayman) Limited
as of June 12, 1998 (inception), in conformity with generally accepted
accounting principles.
New York, New York
June 26, 1998
F-2
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 12,
1998
----------- AUGUST 31,
1998
--------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Interest receivable--Project Notes................................................... $ -- $ 1,350,000
Due from York Research Corporation................................................... -- 1,000
----------- --------------
-- 1,351,000
Project Note receivable--U.S. Project.................................................. -- 50,000,000
Project Note receivable--Trinidad Project.............................................. -- 100,000,000
----------- --------------
$ -- $ 151,351,000
----------- --------------
----------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Interest payable--bondholders........................................................ $ -- $ 1,350,000
Senior Secured Bonds payable........................................................... -- 150,000,000
----------- --------------
-- 151,350,000
----------- --------------
Common stock, par value $1; authorized, 50,000 shares; issued and outstanding 2
shares and 1,000 shares as of June 12, 1998 and August 31, 1998, respectively...... 2 1,000
Retained earnings.................................................................... 1,000
----------- --------------
2 2,000
Less: stock subscription receivable.................................................... (2) (1,000)
----------- --------------
-- 1,000
----------- --------------
$ -- $ 151,351,000
----------- --------------
----------- --------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
F-3
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
PERIOD FROM JUNE 12, 1998 (INCEPTION)
THROUGH AUGUST 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
Interest income................................................................. $1,350,000
Interest expense................................................................ (1,350,000)
---------
--
Fee income--York Research....................................................... 1,000
---------
Net income...................................................................... 1,000
Retained earnings, June 12, 1998................................................ --
---------
Retained earnings, August 31, 1998.............................................. $ 1,000
---------
---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.
F-4
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED
STATEMENT OF CASH FLOWS
PERIOD FROM JUNE 12, 1998 (INCEPTION)
THROUGH AUGUST 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
Cash flows from operating activities
Net income....................................................................... $ 1,000
Adjustments to reconcile net income to net cash provided by operating activities
Due from York Research Corporation............................................. (1,000)
Net cash provided by operating activities...................................... --
Cash, June 12, 1998................................................................ --
---------
Cash, August 31, 1998.............................................................. $ --
---------
---------
Interest paid...................................................................... $ --
---------
---------
</TABLE>
Noncash investing and financing activity:
The Company issued $150 million of Senior Secured Bonds for proceeds placed
in escrow to fund Project Notes totalling $150 million.
The accompanying notes are an integral part of this statement.
F-5
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED
NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE PERIOD FROM JUNE 13, 1998 THROUGH AUGUST 31,
1998 IS UNAUDITED)
NOTE A--THE PURPOSE AND BUSINESS OF YORK POWER FUNDING (CAYMAN) LIMITED
York Power Funding (Cayman) Limited (the "Company") was formed on June 12,
1998, as a special purpose Cayman Islands limited liability company for the sole
purpose of issuing $150 million of 12% Senior Secured Bonds Due October 30, 2007
(the "Securities"). The Company's business activity is limited to the issuance
of the Securities, acting as lender and payee under certain notes that will
finance certain projects (the "Project Notes"), and other related purposes as
deemed necessary. The Project Notes relate to the development and construction
of a wind turbine facility in Big Spring, Texas (the "Big Spring Project") and
the construction and development of a gas-fired generation facility in the
Republic of Trinidad and Tobago (the "Trinidad Project").
The Securities are payable from the proceeds of payments of interest and
principal on the Project Notes to the Company.
The Company does not conduct any operations apart from issuing the
Securities and is owned by a trust not related to York Research Corporation and
Subsidiaries ("York").
On June 12, 1998, there was no activity in the Company. Consequently, no
statement of operations, statement of equity or statement of cash flows activity
has been presented as of that date.
NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. GENERAL
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly York Powers
Funding (Cayman) Limited's financial position as at August 31, 1998 and results
of operations and cash flows for the period June 12, 1998 through August 31,
1998.
Certain financial information which is normally included in financial
statements prepared in accordance with generally accepted accounting principles,
but which is not required for interim reporting purposes, has been condensed or
omitted.
Any adjustments that have been made to the financial statements are of a
normal recurring nature.
2. INCOME TAXES
The Company has been incorporated under the laws of the Cayman Islands as an
exempt company. As such, the Company has applied for, and expects to obtain, an
undertaking from the Governor in Council of the Cayman Islands that, for a
period of 20 years from the date of issuance of the undertaking, the Company
will be exempt from tax on any and all profits, income and gains.
3. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-6
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION WITH RESPECT TO THE PERIOD FROM JUNE 13, 1998 THROUGH AUGUST 31,
1998 IS UNAUDITED)
NOTE C--SENIOR SECURED BONDS
In August 1998, the Company issued 12% Senior Secured Bonds Due October 30,
2007 totaling $150 million. Interest is payable at the rate of 12% on April 30
and October 30, commencing October 30, 1998. The Securities can be redeemed
earlier as specified in the bond indentures.
The proceeds from the offering were loaned through the Project Notes to
finance the balance of construction and development of the Big Spring Project
and the Trinidad Project. The balance of such proceeds was used to pay costs
associated with the issuance of the bonds, establish funds as required, pay
certain other costs and provide funds to York for general corporate purposes.
The Company has agreed to use its best reasonable efforts to file and to
cause to become effective within 180 days a registration of the Securities with
the Securities and Exchange Commission. Costs associated with the Securities
have been allocated to the issuers of the U.S. and Trinidad Project Notes.
As of August 31, 1998, the Securities mature as follows:
<TABLE>
<S> <C>
Twelve months ending August 31,
1999........................................................ $ --
2000........................................................ 1,350,000
2001........................................................ 2,988,000
2002........................................................ 2,352,000
2003........................................................ 1,264,000
Thereafter.................................................. 142,046,000
-----------
$150,000,000
-----------
-----------
</TABLE>
The Securities are guaranteed by the Warbasse Guarantors, the Brooklyn Navy
Yard Guarantor, the Big Spring Guarantor (collectively, the "U.S. Guarantors")
and, through its guarantee to the Company of the Trinidad Project Note of $100
million, the Trinidad Guarantor (collectively, with the U.S. Guarantors, the
"Guarantors"). The Guarantors are all indirect wholly-owned or majority-owned
subsidiaries of York. The guarantees of the Guarantors are limited to the extent
of available cash flow, as defined, from the operations of the Big Spring
Project and the Trinidad Project and from certain assets and cash flows of the
Guarantors, as well as a pledge of capital stock of the indirect United States
parent of the Trinidad Guarantor.
The Company and York are required to meet certain covenants for the
Securities, including a limitation on the issuance of additional debt and
distribution payments.
F-7
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION WITH RESPECT TO THE PERIOD FROM JUNE 13, 1998 THROUGH AUGUST 31,
1998 IS UNAUDITED)
NOTE D--PROJECT NOTES RECEIVABLE
The U.S. Project Note receivable is due in full on October 30, 2007. The
Trinidad Project Note receivable is due in installments. The Project Notes are
due as follows:
<TABLE>
<S> <C>
Twelve months ending August 31,
1999........................................................ $ --
2000........................................................ 1,350,000
2001........................................................ 2,988,000
2002........................................................ 2,352,000
2003........................................................ 1,264,000
Thereafter.................................................. 142,046,000
-----------
$150,000,000
-----------
-----------
</TABLE>
Both Project Notes bear interest at 12% and have interest receivable on
April 30 and October 30, commencing October 30, 1998. The Trinidad Guarantor has
guaranteed the Trinidad Project Note.
NOTE E--FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the project notes receivable and senior secured bonds
payable approximate their fair value based on current interest rates available
to the U.S. and Trinidad Guarantors and the Company.
F-8
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Partners and Members
NEW WORLD POWER TEXAS RENEWABLE ENERGY LIMITED PARTNERSHIP
BROOKLYN NAVY YARD POWER LLC
WARBASSE POWER I LLC
WARBASSE POWER II LLC
We have audited the accompanying combined balance sheet of York Power
Funding (Cayman) Limited U.S. Guarantors (the "U.S. Guarantors") as of June 2,
1998. This combined financial statement is the responsibility of the U.S.
Guarantor's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the combined balance sheet provides a reasonable basis
for our opinion.
In our opinion, the combined balance sheet referred to above presents
fairly, in all material respects, the combined financial position of York Power
Fund (Cayman) Limited U.S. Guarantors as of June 2, 1998, in conformity with
generally accepted accounting principles.
New York, New York
June 17, 1998
F-9
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED U.S. GUARANTORS
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 2,
1998
---------- AUGUST 31,
1998
--------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash............................................................................... $ -- $ 4,775
Interest receivable--WCTP.......................................................... -- 2,254,516
Royalty fees receivable--BNYCP..................................................... -- 407,803
---------- --------------
-- 2,667,094
Due from affiliate--York Research Corporation and Subsidiaries....................... -- 2,737,525
Notes receivable--WCTP............................................................... -- 57,330,535
Construction in progress............................................................. -- 7,840,312
Power purchase agreement............................................................. -- 1,500,000
Cash in escrow....................................................................... -- 38,562,546
Deferred financing costs, net of amortization of $18,562............................. -- 2,503,788
---------- --------------
$ -- $ 113,141,800
---------- --------------
---------- --------------
LIABILITIES AND CAPITAL
Current liabilities
Accounts payable................................................................... $ -- $ 1,517,032
Accrued interest................................................................... -- 450,000
---------- --------------
-- 1,967,032
Project Note payable................................................................. -- 50,000,000
---------- --------------
-- 51,967,032
---------- --------------
Partners' and members' capital....................................................... 400 61,174,768
Capital contributions receivable..................................................... (400) --
---------- --------------
-- 61,174,768
---------- --------------
$ -- $ 113,141,800
---------- --------------
---------- --------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
F-10
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED U.S. GUARANTORS
COMBINED STATEMENT OF OPERATIONS
PERIOD FROM JUNE 2, 1998 THROUGH AUGUST 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
Interest income................................................................... $ 474,854
General partner fees.............................................................. 407,803
Interest expense.................................................................. (462,394)
---------
Net income........................................................................ $ 420,263
---------
---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.
F-11
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED U.S. GUARANTORS
COMBINED STATEMENT OF PARTNERS' AND MEMBERS' CAPITAL
PERIOD FROM JUNE 2, 1998 THROUGH AUGUST 31, 1998
<TABLE>
<S> <C>
Partners' and members' capital, June 2, 1998................................... $ --
Capital contribution (unaudited)............................................... 60,754,505
Net income (unaudited)......................................................... 420,263
----------
Partners' and members' capital, August 31, 1998 (unaudited).................... $61,174,768
----------
----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.
F-12
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED U.S. GUARANTORS
COMBINED STATEMENT OF CASH FLOWS
PERIOD FROM JUNE 2, 1998 THROUGH AUGUST 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
Cash flows from operating activities
Net income................................................................... $ 420,263
Adjustments to reconcile net income to net cash provided by operating
activities
Amortization of deferred finance charges................................... 18,562
Changes in operating assets and liabilities
Interest receivable...................................................... (330,546)
Royalty fees receivable.................................................. (407,803)
Accrued interest payable................................................. 450,000
----------
Net cash provided by operating activities................................ 150,476
----------
Cash flows from investing activities
Proceeds from affiliates..................................................... 277,407
Construction in progress..................................................... (455,120)
Receipts into escrow......................................................... (143,308)
Payments from escrow......................................................... 175,320
----------
Net cash used in investing activities.................................... (145,701)
----------
INCREASE IN CASH......................................................... 4,775
Cash at June 2, 1998........................................................... --
----------
Cash at August 31, 1998........................................................ $ 4,775
----------
----------
Interest paid.................................................................. $ --
----------
----------
Supplemental noncash investing and financing activities:
Capital contributions of notes receivable, interest receivable and power
purchase agreement......................................................... $60,754,505
Net proceeds from Project Note deposited in a cash escrow account............ 38,596,333
Reduction of due from affiliates relating to transfer of construction in
progress and deferred financing costs...................................... 6,891,188
Advances to York Research Corporation and Subsidiaries....................... 9,906,120
Fixed asset purchases in accounts payable.................................... 1,493,077
</TABLE>
The accompanying notes are an integral part of this statement.
F-13
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED U.S. GUARANTORS
NOTES TO COMBINED FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE PERIOD FROM JUNE 3, 1998
THROUGH AUGUST 31, 1998 IS UNAUDITED)
NOTE A--ORGANIZATION AND OPERATIONS
The York Power Funding (Cayman) Limited U.S. Guarantors (the "U.S.
Guarantors") (not a legal entity) consists of the combination of New World Power
Texas Renewable Energy Limited Partnership (the "Big Spring Guarantor"),
Brooklyn Navy Yard Power LLC (the "Brooklyn Navy Yard Guarantor"), Warbasse
Power I LLC ("Warbasse I") and Warbasse Power II LLC ("Warbasse II," and
together with Warbasse I, the "Warbasse Guarantors") (see Notes F, G, and H,
respectively.) The U.S. Guarantors are all indirect wholly-owned or
majority-owned subsidiaries of York Research Corporation ("York"). The U.S.
Guarantors guarantee certain bonds issued by York Power Funding (Cayman) Limited
(the "Funding Company") (see Note I).
The Big Spring Guarantor intends to design, construct and operate a wind
turbine facility in Big Spring, Texas (the "Big Spring Project"). It is
anticipated that the Big Spring Project will have electrical generating capacity
of 34 megawatts ("MW").
As of June 2, 1998, there has been no activity in any of the combined
companies. Consequently, no statement of operations, statement of equity or
statement of cash flows activity has been presented as of that date.
NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF PRESENTATION
The accompanying combined financial statements consist of the accounts of
the Big Spring Guarantor, Warbasse I, Warbasse II and the Brooklyn Navy Yard
Guarantor. All significant intercompany transactions and accounts have been
eliminated.
In the opinion of management of the U.S. Guarantors, the accompanying
combined unaudited financial statements contain all adjustments necessary to
present fairly the U.S. Guarantors' combined financial position as at August 31,
1998 and results of operations and cash flows for the period June 2, 1998
through August 31, 1998.
Certain financial information which is normally included in financial
statements prepared in accordance with generally accepted accounting principles,
but which is not required for interim reporting purposes, has been condensed or
omitted.
Any adjustments that have been made to the financial statements are of a
normal recurring nature.
2. CONSTRUCTION IN PROGRESS
Construction in progress includes engineering, professional fees, equipment
procurement costs, construction costs and other costs related to the project
under development. As part of construction in progress, the Big Spring Guarantor
has capitalized interest of approximately $6,200.
F-14
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED U.S. GUARANTORS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION WITH RESPECT TO THE PERIOD FROM JUNE 3, 1998
THROUGH AUGUST 31, 1998 IS UNAUDITED)
NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3. POWER PURCHASE AGREEMENT
The costs relating to the power purchase agreement in connection with the
Big Spring Project will be amortized by the straight-line method over 25 years,
the term of the agreement, including expected renewals, commencing upon
commercial operation, as defined.
4. DEFERRED FINANCING COSTS
The costs incurred to obtain financing are deferred and amortized over the
length of the Project Note, and are included in interest expense.
5. INCOME TAXES
Income taxes are not reflected in the accompanying balance sheet because the
U.S. Guarantors are either partnerships or limited liability companies, which
are treated as partnerships for income tax purposes. The income or loss of each
entity for income tax purposes, along with any associated tax credits, is the
responsibility of the individual partners or members and not that of the
respective entity.
6. NOTES RECEIVABLE--WCTP
The realizability of the Notes Receivable--WCTP is evaluated by the Warbasse
Guarantors by review of the present value of the currently expected future cash
flow from the Warbasse facility.
7 USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
8. SIGNIFICANT NEW ACCOUNTING PRONOUNCEMENTS
The American Institute of Certified Public Accountants' Accounting Standards
Executive Committee recently issued Statement of Position 98-5 ("SOP 98-5"),
"Reporting on the Costs of Start-Up Activities." SOP 98-5 requires that the
costs of start-up activities, including organization costs, be expensed as
incurred. Start-up activities are broadly defined and include one-time
activities related to opening a new facility, introducing a new product or
service, conducting business in a new territory, conducting business with a new
class of customer or beneficiary, initiating a new process in an existing
facility, commencing some new operation, and organizing a new entity. SOP 98-5
is generally effective for financial statements for fiscal years beginning after
December 15, 1998, with initial application reported as the cumulative effect of
a change in accounting principle. The impact of SOP 98-5 is not expected to be
material to the combined financial statements.
F-15
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED U.S. GUARANTORS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION WITH RESPECT TO THE PERIOD FROM JUNE 3, 1998
THROUGH AUGUST 31, 1998 IS UNAUDITED)
NOTE C--POWER PURCHASE AGREEMENT
In October 1997, York purchased the entire interest of the Big Spring
Guarantor, whose only asset was a Renewable Resource Energy Purchase Agreement
("PPA") with Texas Utilities Electric Company, a Texas corporation ("TU
Electric"). The Purchase price, which was $1.5 million dollars, has been
allocated in full to the PPA.
In accordance with the PPA, the Big Spring Guarantor intends to design,
construct and operate the Big Spring Project. It is anticipated that the Big
Spring Project will have electrical generating capacity of 34 megawatts ("MW").
The PPA will continue in effect for 15 years from the commercial operations
date of the Big Spring Project as defined in the PPA. Subject to certain
conditions being met, the PPA may be extended for two additional consecutive
periods of five years.
During the initial term, TU Electric will pay a fixed but escalating price
per kilowatt hour for energy delivered up to a specified maximum. A balancing
account adjusts for variable wind years by allowing any shortfall in production
by the project to be carried forward and credited against excess production over
the life of the PPA.
NOTE D--PROJECT NOTES
During August 1998, the U.S. Guarantors received gross proceeds of $50
million from the issuance of a Project Note (the "U.S. Project Note") to the
Funding Company. Each of the U.S. Guarantors has agreed to be jointly and
severally liable for the U.S. Project Note, as well as another Project Note for
$100 million to another York indirect subsidiary (collectively, the "Project
Notes"), which will be used primarily for the construction of a gas-fired
generation facility in the Republic of Trinidad and Tobago (the "Trinidad
Project"), as well as certain senior secured bonds (see Note I).
Both Project Notes bear interest at the rate of 12% per annum. The U.S.
Project Note has a maturity date of October 30, 2007 and pays interest on April
30 and October 30, commencing October 30, 1998.
The U.S. Guarantors are required to meet certain covenants relating to the
U.S. Project Note including a limitation on the issuance of additional debt and
the sale of certain assets.
NOTE E--CASH IN ESCROW
Pursuant to the terms of the U.S. Project Note, the net proceeds of the note
payable are held in escrow by a bank until such time as they are available for
use, as defined, for the construction of the Big Spring Project. In addition,
approximately $7 million of the escrow is required to be held in debt service
and other reserves.
NOTE F--THE BIG SPRING GUARANTOR
The Big Spring Guarantor is a Delaware limited partnership. The Big Spring
Guarantor is an indirect wholly-owned subsidiary of York. The Big Spring
Guarantor has the right to construct, operate and own the Big Spring Project.
The Big Spring Guarantor expects full commercial operation of the Big Spring
Project by February 1999, and, when completed, the facility is expected to have
a capacity of
F-16
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED U.S. GUARANTORS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION WITH RESPECT TO THE PERIOD FROM JUNE 3, 1998
THROUGH AUGUST 31, 1998 IS UNAUDITED)
NOTE F--THE BIG SPRING GUARANTOR (CONTINUED)
34 MW and include 46 turbines, including four 1,650 Kilowatt ("KW") wind
turbines. The Big Spring Project will supply energy to TU Electric pursuant to
the PPA as discussed in Note C.
The guarantee issued by the Big Spring Guarantor on the Project Notes is
collateralized by: (a) an assignment of all cash flows received by the Big
Spring Guarantor from the Big Spring Project, which will be applied in
accordance with the priorities established pursuant to a U.S. Deposit and
Disbursement Agreement, (b) a lien on substantially all of the assets of the Big
Spring Guarantor and the Big Spring Project, (c) a pledge of the general and
limited partnership interests in the Big Spring Guarantor, and (d) a lien on any
reserves the Big Spring Guarantor funded as part of the guarantee.
NOTE G--THE BROOKLYN NAVY YARD GUARANTOR
Brooklyn Navy Yard Power LLC is a Delaware limited liability company formed
for the sole purpose of receiving certain royalty fees, general partner fees and
equity distributions from Brooklyn Navy Yard Cogeneration Partners, L.P.
("BNYCP"). The Brooklyn Navy Yard Guarantor is a wholly-owned subsidiary of B-41
Associates, L.P., which is owned 74.7% by York.
BNYCP owns and operates a 286 MW cogeneration facility located in the
Brooklyn Navy Yard in Brooklyn, New York (the "BNY Project.") The BNY Project
sells the bulk of its electrical and thermal output to Consolidated Edison
Company of New York, Inc. ("Con Ed") pursuant to a 40-year energy sales
agreement.
BNYCP is owned equally by a subsidiary of Edison Mission Energy, which is an
indirect wholly-owned subsidiary of Edison International, and B-41 Associates,
L.P.
In December 1997, BNYCP issued $407 million of senior debt, with maturities
ranging from 2020 to 2036.
The guarantee issued by the Brooklyn Navy Yard Guarantor on the Project
Notes is collateralized by: (a) an assignment of the general partner fees,
royalty fees and equity cash flow paid to the Brooklyn Navy Yard Guarantor,
which will be applied in accordance with the priorities established pursuant to
a U.S. Deposit and Disbursement Agreement, (b) a pledge of the equity interest
in the Brooklyn Navy Yard Guarantor and (c) a lien on any reserves the Brooklyn
Navy Yard Guarantor will be required to fund as part of the guarantee.
NOTE H--THE WARBASSE GUARANTORS
Warbasse I and Warbasse II are Delaware limited liability companies. The
Warbasse Guarantors were assigned certain senior secured notes (the "WCTP
Notes"), and accrued interest thereon, issued by Warbasse-Cogeneration
Technologies Partnership L.P., a Delaware limited partnership ("WCTP"), which
owns and operates a 38 MW cogeneration facility in Brooklyn, New York (the
"Warbasse Project.")
The WCTP Notes held by the Warbasse Guarantors aggregate approximately $57.3
million, represent the right to receive approximately 84% of the cash flow from
WCTP and are secured (together with the Amended and Restated Promissory Note in
the principal amount of approximately
F-17
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED U.S. GUARANTORS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION WITH RESPECT TO THE PERIOD FROM JUNE 3, 1998
THROUGH AUGUST 31, 1998 IS UNAUDITED)
NOTE H--THE WARBASSE GUARANTORS (CONTINUED)
$11 million held by Tomen Power Corporation, which ranks PARI PASSU with the
WCTP Notes), by substantially all the assets of WCTP.
The Warbasse Project provides electrical and thermal Energy to Amalgamated
Warbasse Houses, Inc., a housing project located in Brooklyn, New York, pursuant
to an Energy Purchase and Sale Agreement ending in 2026 and up to 21MW of
electric energy to Con Ed pursuant to a power purchase agreement ending in
December 2011. The WCTP Notes and the Tomen Note are senior secured obligations
constituting all the senior debt of WCTP. Warbasse I is an indirect wholly-owned
subsidiary of York and Warbasse II is an indirect majority-owned subsidiary of
York.
The guarantee issued by the Warbasse Guarantors on the Project Notes is
collateralized by: (a) an assignment of all cash flows received by the Warbasse
Guarantors from the Warbasse Project, which will be applied in accordance with
the priorities established pursuant to a U.S. Deposit and Disbursement
Agreement, (b) a lien on substantially all of the assets of the Warbasse
Guarantors, (c) a collateral assignment of the WCTP Notes, (d) a pledge of the
equity interests in the Warbasse Guarantors and (e) a lien on any reserves the
Warbasse Guarantors funded as part of the guarantee.
NOTE I--SENIOR SECURED BONDS
In August 1998, the Funding Company issued securities of $150 million 12%
Senior Secured Bonds Due October 30, 2007 (the "Securities") to make loans to
the U.S. Guarantors and to York Ex International SRL, an indirect wholly-owned
subsidiary of York (the "Trinidad Parent") in exchange for issuance of the
Project Notes. The U.S. Guarantors borrowed $50 million under the U.S. Project
Note. The Trinidad Parent made a $100 million capital contribution to its
subsidiary, York Holdings (Barbados) SRL (the "Trinidad Guarantor"), which was
loaned to the Trinidad Guarantor's subsidiary, InnCOGEN, Limited, to finance the
balance of construction costs of the Trinidad Project. The balance of such
proceeds was used to pay costs associated with the issuance of the bonds,
establish funds as required, make available a debt service reserve fund, pay
certain other costs and provide funds to York for general corporate purposes.
NOTE J--TRANSACTIONS WITH YORK RESEARCH CORPORATION
York, through its subsidiaries, is engaged in the business of developing,
acquiring, owning and operating independent electric power generating
facilities. York is also engaged, through a subsidiary, in the natural gas
marketing business. The Project Notes and the Securities are nonrecourse to
York.
F-18
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED U.S. GUARANTORS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION WITH RESPECT TO THE PERIOD FROM JUNE 3, 1998
THROUGH AUGUST 31, 1998 IS UNAUDITED)
NOTE J--TRANSACTIONS WITH YORK RESEARCH CORPORATION (CONTINUED)
In connection with the Project Note payable, York was required to transfer
certain assets to the U.S. Guarantors totaling approximately $67.6 million. Such
amounts were transferred as follows:
<TABLE>
<CAPTION>
Due to affiliates
<S> <C>
Construction in progress..................................... $5,885,947
Deferred financing costs..................................... 1,005,241
----------
6,891,188
----------
Capital contribution
Notes receivable--WCTP....................................... 57,330,535
Interest receivable--WCTP.................................... 1,923,970
Power Purchase Agreement..................................... 1,500,000
----------
60,754,505
----------
Total transferred to U.S. Guarantors........................... $67,645,693
----------
----------
</TABLE>
In connection with the financing, the U.S. Guarantors advanced approximately
$9.9 million to York, which is included in "Due from affiliates."
The net advances are noninterest bearing and the ultimate character and
terms are currently being determined. As of August 31, 1998, the receivable from
York approximated $2.7 million.
NOTE K--COMMITMENTS
1. PURCHASE COMMITMENTS
York, on behalf of the Big Spring Guarantor, entered into a Wind Turbine
Equipment Sales and Installation Contract, dated as of March 31, 1998 (the
"Vestas Agreement"), with Vestas-American Wind Technology, Inc., a California
corporation ("Vestas"). Such agreement was assigned to the Big Spring Guarantor
in August 1998. The Vestas Agreement effectively subcontracts turbine supply,
delivery, erection and commissioning of the Big Spring Project to Vestas. The
total contract amounts to approximately $31 million, which is to be paid in both
U.S. dollars and Danish kroner. As of June 2, 1998 and August 31, 1998,
approximately $4 million has been paid on the contract.
2. DEVELOPMENT AND CONSTRUCTION
In connection with the construction of an interconnect facility, the Big
Spring Guarantor has entered into an agreement with TU Electric for
approximately $860,000. An initial payment of $430,000 was due and paid in July
1998. This agreement has been guaranteed by York.
York, on behalf of the Big Spring Guarantor, has entered into several
agreements for the turnkey design and construction of a wind farm substation
facility and the construction of the infrastructure of the Big Spring Project.
Such agreements were assigned to the Big Spring Guarantor in August 1998. These
contracts aggregate approximately $4.5 million and will be paid based on certain
milestones, as
F-19
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED U.S. GUARANTORS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION WITH RESPECT TO THE PERIOD FROM JUNE 3, 1998
THROUGH AUGUST 31, 1998 IS UNAUDITED)
NOTE K--COMMITMENTS (CONTINUED)
defined in the applicable agreement. As of August 31, 1998, approximately
$371,000 has been paid on these contracts.
3. LEASES
The Big Spring Guarantor has entered into land leases (the "Big Spring
Project Leases") with three land owners who own the land on which the Big Spring
Project will be constructed and operated. Each of the Big Spring Project Leases
has an initial term of 15 years, commencing on the Big Spring Commercial
Operations date, as defined in the leases, and may be extended for two
additional periods of five years each.
The Big Spring Guarantor has also entered into a separate Infrastructure
Agreement with one of the land owners which provides for additional rights
beyond those conveyed pursuant to the lease (the "Infrastructure Agreement").
The term of the Infrastructure Agreement is for twenty-five years, commencing
with the Commercial Operations date, as defined in the agreement.
All rental payments on the leases are calculated as the greater of the
leases' minimum payment or a percentage of the gross revenues derived from the
wind turbines.
Future minimum lease payments under these aforementioned leases are as
follows:
<TABLE>
<S> <C>
Twelve months ending May 31,
1999.......................................................... $ 53,000
2000.......................................................... 80,000
2001.......................................................... 80,000
2002.......................................................... 80,000
2003.......................................................... 80,000
Thereafter.................................................... 1,096,000
---------
$1,469,000
---------
---------
</TABLE>
4. OPERATION, MAINTENANCE AND SERVICE AGREEMENT
In June 1998, the Big Spring Guarantor entered into an Operation,
Maintenance and Service Agreement (the "O&M Agreement") with York that may be
assigned to a York subsidiary for the operation, maintenance and repair of the
Big Spring Project.
The term of the O&M Agreement will be concurrent with the PPA. It will
commence after substantial completion of the Big Spring Project and certain
other requirements are met, as defined in the O&M Agreement.
The Big Spring Guarantor will be required to pay a base service fee of
approximately $29,000 per month, subject to escalation, for the operation and
routine maintenance of the Big Spring Project. Other expenses will be paid as
incurred.
F-20
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED U.S. GUARANTORS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION WITH RESPECT TO THE PERIOD FROM JUNE 3, 1998
THROUGH AUGUST 31, 1998 IS UNAUDITED)
NOTE L--FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash in escrow approximate fair value
because of their short-term maturities. The carrying amount of the Project Note
payable approximates fair value based on current rates available to the combined
companies. For due from affiliate and notes receivable, there are no quoted
market prices and a reasonable estimate of fair value could not be made without
incurring excessive costs.
F-21
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Managers
York Ex International SRL and Subsidiaries
We have audited the accompanying consolidated balance sheet of York Ex
International SRL (the "Trinidad Parent") and Subsidiaries as of May 31, 1998.
This consolidated financial statement is the responsibility of the Trinidad
Parent's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated balance sheet referred to above presents
fairly, in all material respects, the consolidated financial position of York Ex
International SRL and Subsidiaries as of May 31, 1998, in conformity with
generally accepted accounting principles.
New York, New York
June 17, 1998
F-22
<PAGE>
YORK EX INTERNATIONAL SRL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MAY 31,
1998
--------- AUGUST 31,
1998
--------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current asset
Cash................................................................................. $ 31,440 $ 66,805
Due from affiliates--York Research Corporation and Subsidiaries........................ -- 5,071,842
Property and equipment................................................................. 36,639 36,639
Construction in progress............................................................... 29,419 28,309,848
Cash in escrow......................................................................... -- 74,099,961
Deferred financing costs, net of amortization of $37,123............................... -- 5,008,073
--------- --------------
$ 97,498 $ 112,593,168
--------- --------------
--------- --------------
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Accounts payable..................................................................... $ -- $ 12,073,563
Accrued interest..................................................................... -- 900,000
--------- --------------
-- 12,973,563
Project Note payable................................................................... -- 100,000,000
--------- --------------
-- 112,973,563
--------- --------------
Common stock, par value $1; authorized 10,000 shares; issued and outstanding, 2,001
shares................................................................................. 2,001 2,001
Additional paid-in capital............................................................. 97,498 97,498
Accumulated deficit.................................................................... -- (477,893)
--------- --------------
99,499 (378,394)
Less: stock subscription receivable.................................................... (2,001) (2,001)
--------- --------------
97,498 (380,395)
--------- --------------
$ 97,498 $ 112,593,168
--------- --------------
--------- --------------
</TABLE>
The accompanying notes are an integral part of these statements.
F-23
<PAGE>
YORK EX INTERNATIONAL SRL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
PERIOD FROM JUNE 1, 1998 THROUGH AUGUST 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
Interest income.................................................................. $ 289,809
Interest expense................................................................. (767,702)
---------
NET LOSS................................................................. (477,893)
Accumulated deficit, June 1, 1998................................................ --
---------
Accumulated deficit, August 31, 1998............................................. $(477,893)
---------
---------
</TABLE>
The accompanying notes are an integral part of this statement.
F-24
<PAGE>
YORK EX INTERNATIONAL SRL AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD FROM JUNE 1, 1998 THROUGH AUGUST 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
Cash flows from operating activities
Net loss..................................................................... $ (477,893)
Adjustment to reconcile net loss to net cash provided by operating activities
Amortization of deferred finance charges................................... 37,123
Changes in operating assets and liabilities
Accrued interest payable................................................. 900,000
-----------
Net cash provided by operating activities.................................. 459,230
-----------
Cash flows from investing activities
Construction in progress..................................................... (13,411,444)
Net proceeds from affiliates................................................. 1,070,873
Receipts into escrow......................................................... (277,294)
Payments from escrow......................................................... 12,194,000
-----------
Net cash used in investing activities...................................... (423,865)
-----------
INCREASE IN CASH........................................................... 35,365
Cash, June 1, 1998............................................................. 31,440
-----------
Cash, August 31, 1998.......................................................... $ 66,805
-----------
-----------
Supplemental cash flow information:
Interest paid................................................................ $ --
-----------
-----------
Supplemental noncash investing and financing activities:
Net proceeds of Project Note deposited into cash escrow account.............. $86,016,667
Reduction of due from affiliates relating to transfer of construction in
progress and deferred financing costs...................................... 4,843,025
Advances to York Research Corporation and Subsidiaries....................... 10,985,740
Fixed asset purchases in accounts payable.................................... 12,073,563
</TABLE>
The accompanying notes are an integral part of this statement.
F-25
<PAGE>
YORK EX INTERNATIONAL SRL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO THE PERIOD FROM JUNE 1, 1998 THROUGH AUGUST 31,
1998 IS UNAUDITED)
NOTE A--ORGANIZATION AND OPERATIONS
The consolidated financial statements include the accounts of York Ex
International SRL (the "Trinidad Parent"), York Holdings (Barbados) SRL (the
"Trinidad Guarantor") and the Trinidad Guarantors' 100% beneficially owned
subsidiary InnCOGEN, Limited, a Trinidad and Tobago limited liability company
("InnCOGEN"). The Trinidad Parent is licensed as a Barbados exempt society with
restricted liability. The Trinidad Guarantor, which is a wholly owned subsidiary
of the Trinidad Parent, is a Barbados society with restricted liability. The
Trinidad Parent is beneficially wholly-owned by York Holdings (Caymans) L.L.C.,
a Cayman Islands limited liability company ("York Holdings"), which in turns is
a wholly-owned subsidiary of York T&T Holdings, Inc. ("York T&T"), which is a
wholly-owned subsidiary of York Research Corporation ("York").
InnCOGEN intends to construct, own and operate a 225 megawatt ("MW") natural
gas-fired generation facility (the "Trinidad Project") to be constructed in the
Republic of Trinidad and Tobago ("Trinidad"). The Trinidad Project will sell
substantially all of its electricity to the Trinidad and Tobago Electricity
Commission ("T&TEC"), Trinidad's public power distribution facility pursuant to
a License Agreement and Agreement for Sale and Purchase of Power (the "Trinidad
PPA").
The Trinidad Guarantor guarantees a loan (the "Trinidad Project Note") made
to the Trinidad Parent from York Power Funding (Cayman) Limited, a Cayman
limited liability company (the "Funding Company") for the development and
construction of the Trinidad Project.
The Trinidad Parent and the Trinidad Guarantor were formed with limited
lives of 49 years. As of May 31, 1998, there has been minimal activity in the
Trinidad Parent, InnCOGEN and the Trinidad Guarantor. Consequently, no statement
of operations, statement of equity or statement of cash flows activity has been
presented as of that date.
NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
the Trinidad Parent, Trinidad Guarantor and InnCOGEN. All significant
intercompany transactions and accounts have been eliminated.
In the opinion of management, the accompanying consolidated, unaudited
financial statements contain all adjustments necessary to present fairly York Ex
International SRL and Subsidiaries consolidated financial position as at August
31, 1998 and results of operations and cash flows for the three months ended
August 31, 1998.
Certain financial information which is normally included in financial
statements prepared in accordance with generally accepted accounting principles,
but which is not required for interim reporting purposes, has been condensed or
omitted.
Any adjustments that have been made to the financial statements are of a
normal recurring nature.
2. CONSTRUCTION IN PROGRESS
Construction in progress includes payroll, professional fees, construction
costs and other costs related to the Trinidad Project.
F-26
<PAGE>
YORK EX INTERNATIONAL SRL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION WITH RESPECT TO THE PERIOD FROM JUNE 1, 1998 THROUGH AUGUST 31,
1998 IS UNAUDITED)
NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
As part of construction in progress, InnCOGEN has capitalized interest of
approximately $169,000.
3. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and will be depreciated or
amortized by the straight-line method over their estimated useful lives. The
estimated useful lives are as follows:
<TABLE>
<S> <C>
Computer equipment................................................. 5 years
Furniture and fixtures............................................. 5 years
Motor vehicles..................................................... 3 years
</TABLE>
4. DEFERRED FINANCING COSTS
The costs incurred to obtain financing are deferred and amortized over the
length of the Trinidad Project Note, and are included in interest expense.
5. INCOME TAXES
The Trinidad Parent is generally subject to taxation in Barbados on its
worldwide income at the rate of 2.5% declining to 1%. Dividend payments from the
Trinidad Guarantor to the Trinidad Parent will be exempt from tax in Barbados by
virtue of an intercompany dividend exemption that is available to Barbados tax
resident companies.
The Trinidad Guarantor is generally subject to tax in Barbados on its
worldwide income at the rate of 40%. However, payments of dividends, principal
and interest from InnCOGEN to the Trinidad Guarantor will not be subject to
taxation in Barbados.
Pursuant to an agreement signed with the government of Trinidad and Tobago,
InnCOGEN will be exempt from the payment of tax in Trinidad for 96 months after
the commencement of commercial operations of the Trinidad Project, as defined in
the Trinidad PPA, other than for interest.
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and cash in escrow approximate fair value
because of their short-term maturities. The carrying amount of the Project Note
payable approximates fair value based on current interest rates available to the
consolidated company. For Due from affiliates, there are no quoted market
prices, and a reasonable estimate of fair value could not be made without
incurring excessive costs.
7. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-27
<PAGE>
YORK EX INTERNATIONAL SRL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION WITH RESPECT TO THE PERIOD FROM JUNE 1, 1998 THROUGH AUGUST 31,
1998 IS UNAUDITED)
NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
8. SIGNIFICANT NEW ACCOUNTING PRONOUNCEMENTS
The American Institute of Certified Public Accountants' Accounting Standards
Executive Committee recently issued Statement of Position 98-5 ("SOP 98-5"),
"Reporting on the Costs of Start-Up Activities." SOP 98-5 requires that the
costs of start-up activities, including organization costs, be expensed as
incurred. Start-up activities are broadly defined and include one-time
activities related to opening a new facility, introducing a new product or
service, conducting business in a new territory, conducting business with a new
class of customer or beneficiary, initiating a new process in an existing
facility, commencing some operation, and organizing a new entity. SOP 98-5 is
generally effective for financial statements for fiscal years beginning after
December 15, 1998, with initial application reported as the cumulative effect of
a change in accounting principle. The impact of SOP 98-5 is not expected to be
material to the consolidated financial statements.
NOTE C--POWER PURCHASE AGREEMENT
Under the terms of the Trinidad PPA, InnCOGEN will sell and deliver capacity
and energy to T&TEC, who will: (a) purchase and pay for all capacity and energy
made available by InnCOGEN to T&TEC, subject to certain limitations, and (b)
supply and deliver natural gas free of charge to InnCOGEN.
Unless terminated earlier pursuant to certain provisions of the Trinidad
PPA, the agreement shall remain in full force and effect for thirty years from
the date of commercial operation, as defined in the agreement.
Under the Trinidad PPA, T&TEC has the right to seek to purchase the Trinidad
Project on terms and conditions mutually acceptable to InnCOGEN and T&TEC.
In connection with the Trinidad PPA, InnCOGEN has agreed to operate and
maintain the Trinidad Project.
As part of the Trinidad PPA, T&TEC shall design, construct and own the
interconnection and control facilities for which InnCOGEN shall pay T&TEC
approximately $4 million in payments towards such facilities. As of August 31,
1998, $2.5 million has been paid.
T&TEC must pay to InnCOGEN monthly energy and capacity payments as
determined per the Trinidad PPA with respect to each turbine generator and
associated equipment.
InnCOGEN agreed to provide at is own cost to T&TEC, at the earlier of: (a)
August 6, 1998 or (b) five days after the financial closing of the Trinidad
Project, a performance guarantee in an aggregate amount of $3 million in a
financial instrument satisfactory to T&TEC. Such guarantee was provided in the
form of a letter of credit posted by the construction contractor.
NOTE D--TRINIDAD PROJECT NOTE
The Trinidad Parent received gross proceeds of $100 million from the
issuance of the Trinidad Project Note to the Funding Company.
The guarantee issued by the Trinidad Guarantor and the Trinidad Project Note
issued by the Trinidad Parent is senior secured debt of the Trinidad Guarantor
and the Trinidad Parent, respectively.
F-28
<PAGE>
YORK EX INTERNATIONAL SRL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION WITH RESPECT TO THE PERIOD FROM JUNE 1, 1998 THROUGH AUGUST 31,
1998 IS UNAUDITED)
NOTE D--TRINIDAD PROJECT NOTE (CONTINUED)
Security for payment on the Trinidad Project Note includes: (a) an assignment of
all cash flows received by InnCOGEN from the Trinidad Project which will be
applied in accordance with the priorities established pursuant to a Trinidad
Deposit and Disbursement Agreement, (b) a lien on all of the assets of the
Trinidad Guarantor (including the InnCOGEN loan to the Trinidad Parent, which is
secured by a lien on all of the assets of the Trinidad Project and the Trinidad
Project Documents) and the Trinidad Parent, (c) a pledge of equity interest in
York Holdings, the Trinidad Parent, the Trinidad Guarantor and InnCOGEN, and (d)
a lien on any reserve the Trinidad Parent or the Trinidad Guarantor are required
to fund as part of the guarantee.
The Trinidad Parent is required to meet certain covenants for the Trinidad
Project Note, including a limitation on the issuance of additional debt.
NOTE E--CASH IN ESCROW
Pursuant to the terms of the Trinidad Project Note, the net proceeds of the
note payable are held in escrow by a bank until such time as they are available
for use, as defined, for the construction of the Trinidad Project. In addition,
approximately $16 million of the escrow is required to be held in debt service
and other reserves.
NOTE F--SENIOR SECURED BONDS
In August 1998, the Funding Company issued securities of $150 million 12%
Senior Secured Bonds Due October 30, 2007 (the "Securities"), to make loans to
subsidiaries of York (the "U.S. Guarantors") and to the Trinidad Parent in
exchange for issuance of Project Notes. The U.S. Guarantors borrowed $50 million
(the "U.S. Project Note"). The Securities will be guaranteed by the U.S.
Guarantors and by a pledge of an equity interest in York T&T. In August 1998,
the Trinidad Parent made a $100 million capital contribution to the Trinidad
Guarantor, which was loaned to InnCOGEN to finance the balance of construction
costs of the Trinidad Project. The balance of such proceeds was used to pay
costs associated with the issuance of the bonds, establish funds as required,
make available a debt service reserve fund, pay certain other costs and provide
funds to York for general corporate purposes.
NOTE G--YORK RESEARCH CORPORATION
York, through its subsidiaries, is engaged in the business of developing,
acquiring, owning and operating independent electric power generating
facilities. York is also engaged, through a subsidiary, in the natural gas
marketing business. The Project Note and the Securities will be nonrecourse to
York.
In connection with the financing, InnCOGEN advanced approximately $11
million to York, which is included in "Due from affiliates."
F-29
<PAGE>
YORK EX INTERNATIONAL SRL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION WITH RESPECT TO THE PERIOD FROM JUNE 1, 1998 THROUGH AUGUST 31,
1998 IS UNAUDITED)
NOTE G--YORK RESEARCH CORPORATION (CONTINUED)
In connection with the Project Note payable, York was required to transfer
certain assets to InnCOGEN totalling approximately $4.8 million. Such amounts
were transferred as a reduction in the amount due from affiliates as follows:
<TABLE>
<S> <C>
Construction in progress........................................ $2,795,422
Deferred financing costs........................................ 2,047,603
---------
$4,843,025
---------
---------
</TABLE>
The net advances are noninterest bearing and the ultimate character and
terms are currently being determined. As of August 31, 1998, the receivable from
York approximated $5.1 million.
NOTE H--COMMITMENTS
EQUIPMENT PURCHASE CONTRACT
In June, 1998, InnCOGEN entered into contracts (the "Contracts"), under
which the contractors will, on a turnkey basis, design, engineer, procure,
construct, start up, test and provide personnel training for the operation and
maintenance of the Trinidad Project.
As consideration under the Contracts, InnCOGEN will pay a total contract
price totalling $66.9 million. The contract price required an initial payment
totalling approximately $5.5 million, which was made in August 1998. Thereafter,
progress payments are payable based upon the stage of completion as determined
in the Contracts. Progress payments under the Contracts are subject to retainage
and the contractors will establish a retainage letter of credit, as defined in
the Contracts, in the amount of 7.5% of each progress payment. As of August 31,
1998, approximately $9.7 million has been paid on these Contracts and $1.4
million has been posted as a letter of credit for retainage.
LEASE COMMITMENTS
In June, 1998, InnCOGEN entered into a lease to sublease the land on which
the Trinidad Project will be built. The sublease has an original term of 32
years. The rent is $.40 per square meter per year for the first five years and
$.50 per square meter per year for the second five years. Thereafter, the rent
is to be adjusted in five-year intervals based on the consumer price index.
However, the rent cannot be less than the rent for the preceding five-year
period or increase by more than 10%.
In addition, InnCOGEN has entered into a one-year lease agreement for space
expiring in February 1999. The lease contains a provision for InnCOGEN to renew
the lease for an additional year. The lease requires monthly payments of $4,200.
F-30
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DEALER PROSPECTUS DELIVERY OBLIGATION
UNTIL , 1999, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS EXCHANGE OFFER, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information................. 2
Forward-Looking Statements............ 2
Prospectus Summary.................... 3
Financial Information and Other
Data................................ 15
Risk Factors.......................... 16
Republic of Trinidad and Tobago....... 24
Independent Engineer's Report......... 25
Capitalization........................ 29
Management's Discussion and Analysis
of Financial Condition.............. 32
Defined Terms......................... 34
Business of the Funding Company, the
Project Note Obligors and the
Guarantors.......................... 34
Enforceability of Civil Liabilities... 36
Management............................ 37
Certain Relationships and Related
Transactions........................ 39
Summary Description of Principal
Project Contracts................... 40
Summary Description of the
Securities.......................... 104
Summary Description of Principal
Financing Documents................. 109
Certain Tax Considerations............ 146
Plan of Distribution.................. 149
Notice to Canadian Residents.......... 150
Legal Matters......................... 151
Experts............................... 151
Independent Engineer.................. 151
Financial Statements.................. F-1
Appendix A-Glossary of Defined
Terms............................... A-1
</TABLE>
YORK POWER FUNDING
(CAYMAN) LIMITED
OFFER TO EXCHANGE
$150,000,000
12% SERIES A SENIOR SECURED BONDS DUE
OCTOBER 30, 2007
FOR ITS
$150,000,000
12% SENIOR SECURED BONDS DUE
OCTOBER 30, 2007
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Reference is made to Article 123 of the Articles of Association of the
Funding Company, filed herewith as Exhibit 3.1 which, among other things, and
subject to certain conditions, authorize the Funding Company to indemnify the
directors and officers of the Funding Company out of the assets of the Funding
Company against all costs, charges, losses, damages and liabilities incurred by
him in the actual or purported execution or discharge of his duties or exercise
of his powers.
ITEM 21. EXHIBITS
The following exhibits are filed as part of the Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------------------------- -----------------------------------------------------------------------------------------
<C> <S>
1.1 Purchase Agreement between the Funding Company and the Initial Purchaser dated July 30,
1998.
3.1* Memorandum and Articles of Association of York Power Funding (Cayman) Limited.
4.1 Trust Indenture, between York Power Funding (Cayman) Limited and The Bank of New York, as
Trustee, dated July 30, 1998.
4.2 Form of 12% Senior Bonds due October 30, 2007 (included in Exhibit 4.1 hereto).
4.3 Form of 12% Series A Senior Bonds due October 30, 2007 (included in Exhibit 4.1 hereto).
4.4 Exchange and Registration Rights Agreement between the Funding Company and the Initial
Purchaser dated August 4, 1998.
5.1* Opinion of regarding the legality of the securities being registered hereby.
8.1* Opinion of regarding tax matters.
10.* Material Contracts
23.1 Consent of Grant Thornton LLP.
24.1* Power of Attorney.
25.1 Statement of Eligibility of Trustee.
99.1* Form of Letter of Transmittal.
99.2* Form of Notice of Guaranteed Delivery.
99.3* Form of Letter to Clients.
99.4* Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
</TABLE>
- ------------------------
* to be filed by an amendment.
II-1
<PAGE>
ITEM 22. UNDERTAKINGS
(a) Each of the undersigned registrant hereby undertakes:
(i) To respond to requests for information that is incorporated by reference
into the Prospectus pursuant to Item 4, 10(b), 11, or 13 of this Form,
within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent
to the effective date of the Registration Statement through the date of
responding to the request.
(ii) To supply by means of post-effective amendment all information
concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the Registration
Statement when it became effective.
(b) The undersigned registrant hereby undertakes:
(i) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(1) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(2) To reflect in the prospectus of any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 242(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement.
(3) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(ii) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof;
(iii) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offer.
(c) (i) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(ii) The officers, directors and controlling persons of the Funding Company
have been indemnified liability by the Funding Company.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS
FOR FILING ON FORM F-4 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON DECEMBER
10, 1998.
<TABLE>
<S> <C> <C>
YORK POWER FUNDING (CAYMAN) LIMITED
By: /s/ MARTIN COUCH
-----------------------------------------
Name: Martin Couch
Title: Director
</TABLE>
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Michael Trachtenberg or R.M. Beningson, his true
and lawful attorney-in-fact and agent, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendment (including post-effective amendments)
to this Registration Statement, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON DECEMBER 11, 1998 IN THE
CAPACITIES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<C> <S>
Director, York Power
/s/ HELEN ALLEN Funding (Cayman) Limited
- ------------------------------ ------------------------
Director, York Power
/s/ PHIL HINDS Funding (Cayman) Limited
- ------------------------------ ------------------------
</TABLE>
Pursuant to the requirements of the Securities Act, the undersigned has duly
signed this Registration Statement solely in its capacity as agent for service
of process in the United States, on December 11, 1998.
<TABLE>
<S> <C> <C>
Agent for Service of Process in the United
States
CORPORATION SERVICE COMPANY
By: /s/ CASSANDRA ANTONETZ
-----------------------------------------
Name: Cassandra Antonetz
Title: Assistant Vice President
</TABLE>
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT CERTIFIES
THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS
FOR FILING ON FORM F-4 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON DECEMBER
10, 1998.
<TABLE>
<S> <C> <C>
BROOKLYN NAVY YARD POWER LLC
By: /s/ MICHAEL TRACHTENBERG
-----------------------------------------
Name: Michael Trachtenberg
Title: Vice President
</TABLE>
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Michael Trachtenberg or R.M. Beningson, his true
and lawful attorney-in-fact and agent, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendment (including post-effective amendments)
to this Registration Statement, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON DECEMBER 10, 1998 IN THE
CAPACITIES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<C> <S>
Vice President, B-41
/s/ MICHAEL TRACHTENBERG Management Corporation
- ------------------------------ ------------------------
------------------------
- ------------------------------
</TABLE>
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, EACH OF THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM F-4 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, ON DECEMBER 10, 1998.
<TABLE>
<S> <C> <C>
NEW WORLD POWER TEXAS RENEWABLE
ENERGY LIMITED PARTNERSHIP
By: BIG SPRINGS TEXAS ENERGY
MANAGEMENT, INC.,
its Managing General Partner
By: /s/ MICHAEL TRACHTENBERG
-----------------------------------------
Name: Michael Trachtenberg
Title: Vice President
</TABLE>
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Michael Trachtenberg or R.M. Beningson, his true
and lawful attorney-in-fact and agent, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendment (including post-effective amendments)
to this Registration Statement, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON DECEMBER 10, 1998 IN THE
CAPACITIES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<C> <S>
Vice President, Big Spring
Texas Energy Management,
/s/ MICHAEL TRACHTENBERG Inc.
- ------------------------------ ------------------------
------------------------
- ------------------------------
</TABLE>
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, EACH OF THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM F-4 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, ON DECEMBER 10, 1998.
<TABLE>
<S> <C> <C>
WARBASSE POWER I LLC
By: /s/ MICHAEL TRACHTENBERG
-----------------------------------------
Name: Michael Trachtenberg
Title: Vice President
</TABLE>
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Michael Trachtenberg or R.M. Beningson, his true
and lawful attorney-in-fact and agent, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendment (including post-effective amendments)
to this Registration Statement, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON DECEMBER 10, 1998 IN THE
CAPACITIES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<C> <S>
Executive Vice President,
Cogeneration
/s/ MICHAEL TRACHTENBERG Technologies, Inc.
- ------------------------------ ------------------------
------------------------
- ------------------------------
</TABLE>
II-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, EACH OF THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM F-4 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, ON DECEMBER 10, 1998.
<TABLE>
<S> <C> <C>
WARBASSE POWER II LLC
By: /s/ MICHAEL TRACHTENBERG
-----------------------------------------
Name: Michael Trachtenberg
Title: Vice President
</TABLE>
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Michael Trachtenberg or R.M. Beningson, his true
and lawful attorney-in-fact and agent, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendment (including post-effective amendments)
to this Registration Statement, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON DECEMBER 10, 1998 IN THE
CAPACITIES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<C> <S>
Vice President, RRR's
/s/ MICHAEL TRACHTENBERG Ventures, Ltd.
- ------------------------------ ------------------------
------------------------
- ------------------------------
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- --------------------------- -----------------------------------------------------------------------------------------
<C> <S>
1.1 Purchase Agreement between the Funding Company and the Initial Purchaser dated July 30,
1998.
3.1* Memorandum and Articles of Association of York Power Funding (Cayman) Limited.
4.1 Trust Indenture, between York Power Funding (Cayman) Limited and The Bank of New York, as
Trustee, dated July 30, 1998.
4.2 Form of 12% Senior Bonds due October 30, 2007 (included in Exhibit 4.1 hereto).
4.3 Form of 12% Series A Senior Bonds due October 30, 2007 (included in Exhibit 4.1 hereto).
4.4 Exchange and Registration Rights Agreement between the Funding Company and the Initial
Purchaser dated August 4, 1998.
5.1* Opinion of regarding the legality of the securities being registered hereby.
8.1* Opinion of regarding tax matters.
10.* Material Contracts
23.1 Consent of Grant Thornton LLP.
24.1* Power of Attorney.
25.1 Statement of Eligibility of Trustee.
99.1* Form of Letter of Transmittal.
99.2* Form of Notice of Guaranteed Delivery.
99.3* Form of Letter to Clients.
99.4* Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
</TABLE>
- ------------------------
* to be filed by an amendment.
<PAGE>
Exhibit 1.1
YORK POWER FUNDING (CAYMAN) LIMITED
$150,000,000 12% Senior Secured Bonds Due October 30, 2007
PURCHASE AGREEMENT
July 30, 1998
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Dear Ladies and Gentlemen:
1. Introductory. York Power Funding (Cayman) Limited, a special
purpose limited liability company incorporated under the laws of the Cayman
Islands (the "Funding Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to Credit Suisse First Boston Corporation, as
the initial purchaser (the "Initial Purchaser"), U.S. $150,000,000 principal
amount of its 12% Senior Secured Bonds due October 30, 2007 (the "Securities"),
to be issued under an Indenture to be dated as of August 4, 1998 (the
"Indenture"), by and between the Funding Company and The Bank of New York, as
trustee (the "Bond Trustee") on a private placement basis pursuant to an
exemption under Section 4(2) of the U.S. Securities Act of 1933, as amended (the
"Securities Act"). Payments owed under the Securities will be jointly and
severally guaranteed by Brooklyn Navy Yard Power LLC, a Delaware limited
liability company (the "BNY Guarantor"), Warbasse Power I LLC, a Delaware
limited liability company ("Warbasse I") and Warbasse Power II LLC, a Delaware
limited liability company ("Warbasse II" and, together with Warbasse I, the
"Warbasse Guarantors") and New World Power Texas Renewable Energy Limited
Partnership, a Delaware limited partnership (the "Big Spring Guarantor" and,
collectively with the BNY Guarantor and the Warbasse Guarantors, the "U.S.
Guarantors"). Capitalized terms used herein without being defined herein shall
have the meanings ascribed to such terms in the form of the Indenture attached
as Annex A hereto.
Each of the Funding Company and the U.S. Guarantors hereby agrees
with the Initial Purchaser as follows:
2. Representations and Warranties of the Funding Company and the U.S.
Guarantors. Each of the Funding Company, and the U.S. Guarantors jointly and
severally, represent and warrant to, and agree with, the Initial Purchaser that:
<PAGE>
(a) The Funding Company and the U.S. Guarantors have prepared a
preliminary offering circular dated July 2, 1998 (as it may be amended or
supplemented, the "Preliminary Offering Circular") and a final offering circular
dated July , 1998 (as it may be amended or supplemented, the "Offering
Circular") relating to the Securities. Copies of the Preliminary Offering
Circular and the Offering Circular have been delivered by the Funding Company
and the U.S. Guarantors to the Initial Purchaser. The Preliminary Offering
Circular was on the date thereof accurate in all material respects and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
the Offering Circular is as of its date (and any amendment or supplement thereto
will be as of its date) accurate in all material respects and does not (and any
such amendment or supplement thereto will not) contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that the Funding Company and the U.S. Guarantors
make no representation or warranty as to information contained in or omitted
from the Preliminary Offering Circular or the Offering Circular in reliance upon
and in conformity with written information furnished to the Funding Company
through the Initial Purchaser specifically for inclusion therein, it being
understood and agreed that the only such information is that described as such
in Section 7(b) hereof.
(b) The Funding Company has been duly incorporated and is validly
existing as a special purpose limited liability company in good standing under
the laws of the Cayman Islands. Each of the U.S. Guarantors is in good standing
and is duly qualified to do business under the laws of the jurisdiction of its
organization, and is a foreign limited liability company or, in the case of the
Big Spring Guarantor, a foreign limited partnership, in good standing in each
jurisdiction in which its ownership or lease of property or in which the nature
of its business requires such qualification except where the failure to so
qualify could not reasonably be expected to have a Material Adverse Effect. The
Funding Company and each U.S. Guarantor have all necessary power and authority
to own or lease their respective properties and to conduct the respective
businesses in which they are engaged, as described in the Offering Circular on
the Closing Date. All of the membership interests in the Funding Company are
beneficially owned by Queensgate SPV Limited, free and clear of any Lien, except
as contemplated by the Finance Documents. All of the membership interests in the
BNY Guarantor are owned by B-41 L.P. free and clear of any Lien, except as
contemplated by the Finance Documents. All of the membership interests in
Warbasse I are owned by Cogeneration Technologies, Inc. and all of the
membership interests in Warbasse II are owned by York Cogeneration Partners,
L.P., in each case free and clear of any Lien, except as contemplated by the
Finance Documents. All of the general and limited partnership interests in the
Big Spring Guarantor are owned by wholly-owned subsidiaries of the Sponsor, free
and clear of any Lien, except as contemplated by the Finance Documents.
(c) None of the U.S. Guarantors has engaged in any business or
activity other than in connection with the development, construction, operation
and financing of the Projects as contemplated by the Transaction Documents to
which any of the U.S. Guarantors is a party and activities reasonably related
thereto. The Funding Company has not engaged in any business or activity other
than in connection with the issuance of the Securities and other Permitted
Indebtedness and activities related thereto as contemplated by the Offering
Circular and the Finance Documents to which the Funding Company is a party.
(d) Each of the Funding Company and each U.S. Guarantor has all power
and authority necessary to execute and deliver this Agreement and each other
Transaction Document to which it is a party and to perform its obligations
hereunder and thereunder. Each of this Agreement and each other Transaction
Document to which the Funding Company or any of the U.S. Guarantors is a party
has been
2
<PAGE>
or on the Closing Date will have been duly authorized, executed and delivered by
such party or parties thereto and constitute or on the Closing Date will
constitute the legal, valid and binding obligation of such party or parties,
enforceable in accordance with its terms, subject to the qualification that the
enforceability of such party's or parties' obligations hereunder or thereunder
may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other Applicable Laws relating to or affecting creditors' rights
generally and by general equitable principles and except as rights to indemnity
and contribution hereunder may be limited by federal or state securities laws,
principles of public policy or foreign laws affecting creditors' rights
generally.
(e) The execution, delivery and performance by each of the Funding
Company and each U.S. Guarantor of this Agreement and the other Finance
Documents to which it is a party and its compliance with the provisions hereof
and thereof will not breach or (except as contemplated by the Finance Documents)
result in the creation or imposition of any Lien upon any asset which is
material to the business of the Funding Company, any of the U.S. Guarantors or
any other Project Obligor pursuant to the terms of, or constitute a breach of,
or default under, the certificate of formation, certificate of limited
partnership, memorandum and articles of association, operating agreement or
partnership agreement, as the case may be, of the Funding Company, any of the
U.S. Guarantors or any other Project Obligor or any agreement, indenture or
other instrument to which the Funding Company, any of the U.S. Guarantors or any
other Project Obligor is a party or by which the Funding Company, any of the
U.S. Guarantors or any other Project Obligor is bound or to which any of their
respective assets which is material to the business of the Funding Company, any
of the U.S. Guarantors or any other Project Obligor is subject, or any
Applicable Law of any Governmental Authority having jurisdiction over the
Funding Company, any of the U.S. Guarantors or any other Project Obligor or any
material asset of the Funding Company, any of the U.S. Guarantors or any other
Project Obligor, nor will such execution, delivery or performance contravene any
public policy of the United States, the Cayman Islands, Barbados or Trinidad
applicable to the Funding Company, any of the U.S. Guarantors or any other
Project Obligor; and, except as completed on or prior to the Closing Date or as
required by applicable state or foreign securities laws, no approval, consent,
authorization or order of, or filing or registration by the Funding Company, any
of the U.S. Guarantors or any other Project Obligor with, any Governmental
Authority or third party is required for the consummation of the transactions
contemplated by this Agreement and the other Finance Documents to which any of
the Funding Company, any of the U.S. Guarantors or any other Project Obligor is
a party or in connection with the issuance and sale of the Securities (other
than the filings or recording of any agreements, instruments or other documents
necessary to create or perfect any assignment, lien, security interest, charge
or other encumbrance contemplated by the Finance Documents).
(f) Neither the Funding Company nor any U.S. Guarantor is in
violation of its respective certificate of formation or certificate of limited
partnership or memorandum and articles of association or in violation of its
respective operating agreement or partnership agreement. None of the Funding
Company, any U.S. Guarantor nor, to the best knowledge of the Funding Company or
any U.S. Guarantor, any other Project Obligor (i) is in default, and no event
has occurred which with notice or lapse of time or both would constitute such a
default, in the due performance and observance of any material term,
representation, covenant or condition contained in any material lease, license,
indenture, mortgage, deed of trust, note, bank loan or other evidence of
indebtedness or any other material agreement, understanding or instrument to
which the Funding Company, any U.S. Guarantor or any other Project Obligor is a
party or by which the Funding Company, any U.S. Guarantor or any other Project
Obligor or any property of the Funding Company, any U.S. Guarantor or any other
Project Obligor may be bound or affected, which default would have a Material
Adverse Effect, or (ii) is in violation of any Applicable Law to which any of
them may be subject, which violation would have a Material Adverse Effect.
3
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(g) Except as described in the Offering Circular, each of the Funding
Company and each U.S. Guarantor represents, after due inquiry, that it, its
subsidiaries and Affiliates and, to the best of its knowledge, each other
Project Obligor and its subsidiaries and Affiliates, (i) has properly obtained
each Governmental Approval necessary to the ownership of its property or to the
conduct of its business as described in the Offering Circular and (ii) is in
compliance with all terms and conditions of such Governmental Approval, except
(x) such as may be required for future operating activities which are ordinarily
deemed to be ministerial in nature and which are anticipated to be obtained in
the ordinary course, (y) such as may be required for developmental or
construction activities which have not yet been obtained but which have been or
will be applied for in the course of development or construction and which are
anticipated to be obtained in the ordinary course and (z) where the failure to
so qualify would not reasonably be expected to have a Material Adverse Effect.
(h) Except as described in or contemplated by the Offering Circular,
each of the Funding Company, each U.S. Guarantor and each other Project Obligor
holds, as applicable, good and valid title to, or valid and enforceable
leasehold or contractual interests in, all items of real and personal property
which are material to the business of the Funding Company, the U.S. Guarantors
and the other Project Obligors taken as a whole, free and clear of all Liens
which would materially interfere with the conduct of the business of the Funding
Company, the U.S. Guarantors and the other Project Obligors taken as a whole, as
described in the Offering Circular or as contemplated by the Finance Documents.
Each of the Funding Company, each U.S. Guarantor and each other Project Obligor
carries insurance in such amounts and covering such risks as is adequate for the
conduct of its business and the value of its properties and which is consistent
with what is customarily carried by similar companies engaged in similar
businesses. Each of the foregoing insurance policies is valid and in full force
and effect. The Funding Company, the U.S. Guarantors and the other Project
Obligors are presently conducting their respective businesses as described in
the Offering Circular and in substantial compliance with all Applicable Laws.
(i) Each of (i) Stone & Webster Management Consultants, Inc. (the
"Independent Engineer"), whose report appears in the Offering Circular and who
has delivered the certificate referred to in Section 6(j) hereof, (ii) Richard
L. Simon (the "Independent Wind Consultant") whose report is referenced in the
Offering Circular and who has delivered the certificate referred to in Section
6(k) hereof, and (iii) Lockton Insurance (the "Independent Insurance
Consultant"), who has prepared the report and delivered the certificate referred
to in Section 6(l) hereof, was, as of the date of such report, and is, as of the
date hereof, "independent". For purposes of this Section 2(i), the Independent
Engineer, the Independent Wind Consultant and the Independent Insurance
Consultant, as applicable, shall be considered independent if from the date
which was six (6) months prior to the date of the Offering Circular, (A) neither
such Person nor any Member (as defined below) of such Person (x) had, or was
committed to acquire, any direct financial interest or material indirect
financial interest in the Funding Company, any U.S. Guarantor or any other
Project Obligor (other than the purchase of any public securities acquired by
such Person or any Member of such Person) respectively, or (y) was, or will be
connected as, a promoter, underwriter, voting trustee, director, officer or
employee of Funding Company, any U.S. Guarantor or any other Project Obligor or
any affiliate thereof, respectively and (B) and none of Funding Company, any
U.S. Guarantor or any Project Obligor had, or was committed to acquire, any
direct financial interest or material indirect financial interest in either such
Person. "Member" shall mean (a) all partners, shareholders and other principals
of the applicable Person, (b) any professional employee involved in providing
any professional service to the Funding Company, any U.S. Guarantor or any other
Project Obligor or any Affiliate thereof, respectively, and (c) any professional
employee having managerial responsibilities and located in an office of such
Person which will participate in a significant portion of the services to be
performed by such Person.
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(j) Grant Thornton LLP (the "Accountants"), whose report appears in
the Offering Circular, are and were, during the period covered by their report,
independent with respect to the Funding Company and the U.S. Guarantors within
the meaning of the U.S. Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the applicable rules and regulations thereunder.
(k) The Indenture has been validly authorized by the Funding Company
and, when executed by the proper officers of the Funding Company (assuming the
due authorization, execution and delivery thereof by the Bond Trustee) and
delivered by the Funding Company, will constitute the legal, valid and binding
obligation of the Funding Company, subject to the qualification that the
enforceability of the Funding Company's obligations thereunder may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other Applicable Laws relating to or affecting creditors' rights generally and
by general equitable principles; the Securities have been duly and validly
authorized by the Funding Company, and, when issued and authenticated pursuant
to the Indenture in the form provided therein, and delivered and paid for
pursuant to this Agreement, will have been duly executed, authenticated, validly
issued, delivered and outstanding, and will constitute legal, valid and binding
obligations of the Funding Company enforceable and entitled to the benefits of
the Indenture, subject to the qualification that the enforceability of the
Funding Company's obligations thereunder may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other Applicable
Laws relating to or affecting creditors' rights generally and by general
equitable principles and to possible judicial action giving effect to
governmental actions or foreign laws affecting creditors' rights generally and
conform in all material respects to the description thereof in the Offering
Circular.
(l) This Agreement has been duly authorized, executed and delivered
by the Funding Company and each of the U.S. Guarantors.
(m) Each Project Document to which any of the U.S. Guarantors is a
party has been duly authorized, executed and delivered by the U.S. Guarantors
party thereto and, assuming due authorization, execution and delivery by the
other parties thereto (other than such Persons as are other U.S. Guarantors or
Affiliates thereof), constitutes the legal, valid and binding agreement of the
U.S. Guarantors party thereto, enforceable in accordance with its terms, subject
to the qualification that enforceability of the respective U.S. Guarantor's
obligations thereunder may be subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other Applicable Laws of general
applicability related to or affecting creditors' rights generally and general
principles of equity and except as rights to indemnity or contribution
thereunder may be limited by federal or state securities laws, principles of
public policy or foreign laws affecting creditors' rights generally.
(n) The Security Documents create, as security for the Secured
Obligations described therein, valid and enforceable security interests in and
Liens on all of the Collateral, in favor of the Collateral Agent, subject to
Permitted Liens. Upon satisfaction of the conditions precedent described in
Section 6(f), such security interests in and Liens on the Collateral shall be
superior to and prior to the rights of all third parties (except third parties
holding Permitted Liens) and no further recordings or filings are or will be
required in connection with the creation, perfection or enforcement or such
security interests and Liens, other than the filing of continuation statements
in accordance with Applicable Law and other ministerial matters.
(o) The Funding Company, the U.S. Guarantors and the other Project
Obligors, as applicable, will own all of the Collateral on the Closing Date,
free and clear of any Liens other than Permitted Liens.
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(p) Except as described in the Offering Circular, there is no
litigation or proceeding pending before or by any Governmental Authority, or any
arbitrator in the United States, the Cayman Islands, Trinidad or Barbados or, to
the best knowledge of the Funding Company or any U.S. Guarantor, threatened, to
which the Funding Company, any U.S. Guarantor or any other Project Obligor is a
party or of which any material asset of the Funding Company, any U.S. Guarantor
or any other Project Obligor is the subject, including, without limitation, any
audit by the Internal Revenue Service (or similar Governmental Authority in the
Cayman Islands, Trinidad or Barbados) of the Federal income tax returns (or
similar filings in the Cayman Islands, Trinidad or Barbados) of any U.S.
Guarantor, which, if an adverse decision were reached, would reasonably be
expected to have a Material Adverse Effect.
(q) The financial statements (including the related notes) included
on pages F-1 through F-20 of the Offering Circular present fairly the financial
condition, results of operations and changes in financial position of the
entities purported to be shown thereby, at the dates and for the periods
indicated, and, except as otherwise described in the Offering Circular, have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved, and the
capitalization of the Funding Company and the U.S. Guarantors, as set forth
under the caption "CAPITALIZATION" in the Offering Circular is accurate as of
the date presented therein.
(r) Except as disclosed in the Offering Circular, since the date of
the latest audited financial statements included in the Offering Circular there
has been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Funding Company and the
U.S. Guarantors taken as a whole, and, except as disclosed or contemplated by
the Offering Circular or the Finance Documents, there has been no dividend or
distribution of any kind declared, paid or made by the Funding Company or the
U.S. Guarantors or the other Project Obligors on any of their equity capital.
(s) No circumstance or other event has arisen that has caused or,
with the giving of notice or the lapse of time, or both, would cause the Funding
Company, any U.S. Guarantor or any other Project Obligor to be in default under
any provision of any Transaction Document, which default could, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
(t) The factual information provided by the Funding Company and the
U.S. Guarantors and the other Project Obligors to the Independent Engineer in
the preparation of its report set forth at Appendix B to the Offering Circular
and to the Independent Wind Consultant in the preparation of its report (which
factual information is referenced in those reports) was provided in good faith;
provided that the foregoing does not imply or express any representation or
warranty by the Funding Company, any of the U.S. Guarantors or other Project
Obligors as to the accuracy of the projections or conclusions contained in such
reports and does not constitute any obligation to update such reports.
(u) No labor problem or disturbance with respect to the employees of
the Funding Company or any U.S. Guarantor, or with respect to the persons
employed in connection with the Projects, exists or, to the best knowledge of
the Funding Company or any U.S. Guarantor, is threatened which might reasonably
be expected to have a Material Adverse Effect.
(v) None of the Funding Company, any U.S. Guarantor, any other
Project Obligor or any of their respective Affiliates or (assuming the accuracy
of the representations of the Initial Purchaser set forth herein) any person
acting on their behalf has made offers or sales of securities under
circumstances that would require the registration of the Securities under the
Securities Act.
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(w) Neither the Funding Company nor any U.S. Guarantor is an open-end
investment company, unit investment trust or face-amount certificate company
that is or is required to be registered under Section 8 of the United States
Investment Company Act of 1940, as amended (the "Investment Company Act"); and
neither the Funding Company nor any U.S. Guarantor nor any other Project Obligor
is and, after giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in the Offering Circular,
neither the Funding Company nor any U.S. Guarantor nor any other Project Obligor
will be, an "investment company" as defined in the Investment Company Act.
(x) The Securities meet the eligibility requirements of Rule
144A(d)(3) under the Securities Act. No securities of the same class (within the
meaning of Rule 144A(d)(3) under the Securities Act) as the Securities are
listed on any national securities exchange registered under Section 12 of the
Exchange Act or quoted in a U.S. automated inter-dealer quotation system.
(y) Assuming the accuracy of the representations of the Initial
Purchaser herein, the offer and sale of the Securities in the manner
contemplated by this Agreement will be exempt from the registration requirements
of the Securities Act by reason of Section 4(2) thereof and Regulation D and
Regulation S thereunder; and it is not necessary to qualify an indenture in
respect of the Securities under the United States Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act").
(z) None of the Funding Company, any U.S. Guarantor, any of their
Affiliates or any Person acting on their behalf (i) has, within the six-month
period prior to the date hereof, offered or sold in the United States or to any
U.S. person (as such terms are defined in Regulation S under the Securities Act
("Regulation S")) the Securities or any security of the same class or series as
the Securities or (ii) has offered or will offer or sell the Securities (A) in
the United States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D under the
Securities Act or (B) with respect to any such securities sold in reliance on
Rule 903 of Regulation S under the Securities Act, by means of any directed
selling efforts within the meaning of Rule 902(b) of Regulation S of the
Securities Act. The Funding Company, the U.S. Guarantors and any person acting
on their behalf have complied and will comply with the offering restrictions
requirement of Regulation S of the Securities Act.
(aa) No Governmental Approval is required for the issue and sale of
the Securities or the consummation by the Funding Company and the U.S.
Guarantors of the transactions contemplated by this Agreement, the Indenture and
the other Finance Documents, except such consents, approvals, authorizations,
registrations, qualifications or notices as have been obtained or given under
the laws of the Cayman Islands, Trinidad or Barbados and as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Initial Purchaser.
(bb) The proceeds to the Funding Company from the offering of the
Securities will not be used to purchase or carry any security, except that such
proceeds will be loaned to the Project Borrowers in exchange for the issuance of
the Project Notes. The proceeds from the sale of Securities will be loaned by
the Funding Company to the Project Borrowers and utilized as described under the
section of the Offering Circular titled "Use of Proceeds."
(cc) Each of the U.S. Projects is a "qualifying cogeneration
facility" or a "small power production facility," as such terms are defined
pursuant to the Public Utility Regulatory Policies Act of 1978, as amended.
Neither the Funding Company nor the U.S. Guarantors will, solely as a result of
the participation by such parties separately or as a group in the transactions
contemplated by the Transaction Documents and the ownership, use or operation of
the Projects, be subject to regulation by any
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Governmental Authority as a "public utility," an "electric utility," an
"electric utility holding company," a "public utility holding company," a
"holding company," or an "electrical corporation" or a subsidiary or affiliate
of any of the foregoing under any Applicable Law (including, without limitation,
rules and regulations of the Public Utility Holding Company Act of 1935, the
Federal Power Act of 1920 and the Public Utility Regulatory Policies Act of
1978, each as amended).
(dd) (i) All tax returns, declarations of estimated tax and tax
reports (collectively, the "Tax Returns") required to be filed on or before
(after consideration of any allowable extensions of time to file) the Closing
Date with respect to all federal, state or local income, gross receipts,
severance, property, productions, sales, use, license, excise, franchise,
employment, withholding or similar taxes, together with any interest, additions
or penalties with respect thereto and any interest of such additions or
penalties, (collectively, the "Taxes") by the Funding Company or the U.S.
Guarantors have been duly filed, (ii) all taxes due on the Tax Returns referred
to in clause (i) that are required to be paid or withheld by the Funding Company
or the U.S. Guarantors (the "Funding Company and Guarantor Taxes") have been
paid or withheld in full, (iii) all deficiencies asserted or assessments made
against the Funding Company or any of the U.S. Guarantors with respect to Tax
Returns as a result of an examination of such Tax Returns referred to in clause
(i) have been paid in full, (iv) no issues that have been raised with respect to
the Funding Company and Guarantor Taxes by the relevant taxing authority in
connection with an examination of Tax Returns are currently pending and (v) no
waivers of statutes of limitations have been given or requested by or with
respect to any Funding Company and Guarantor Taxes.
(ee) Except as disclosed in the Offering Circular, under the
Applicable Laws of the Cayman Islands and any political subdivision thereof, all
interest, principal, premium, if any, and other payments due or made on the
Securities may be paid by the Funding Company to the holder thereof in United
States dollars and freely transferred out of the Cayman Islands and all such
payments made to holders thereof who are considered nonresidents of the Cayman
Islands for purposes of the Cayman Islands' tax laws will not be subject to
income, withholding or other taxes under Applicable Laws of the Cayman Islands
or any political subdivision or taxing authority thereof or therein and will
otherwise be free and clear of any other tax, duty, withholding or deduction in
the Cayman Islands or any political subdivision or taxing authority thereof or
therein and without the necessity of obtaining any Governmental Approval in the
Cayman Islands or any political subdivision or taxing authority thereof or
therein; except as disclosed in the Offering Circular, under Applicable Laws of
Barbados and any political subdivision thereof, all interest, principal,
premium, if any, and other payments due or made on the Trinidad Guarantee may be
made by the Trinidad Guarantor in United States dollars and freely transferred
out of Barbados. Except as disclosed in the Offering Circular, no income, stamp,
or other taxes or levies, imposts, deductions, charges, compulsory loans or
withholdings whatsoever are, or will be, under Applicable Laws in the Cayman
Islands, imposed, assessed, levied or collected by the Cayman Islands or any
other political subdivision or taxing authority thereof or therein on or in
respect of principal, interest or other amounts payable by the Funding Company
pursuant to the Indenture. Except as disclosed in the Offering Circular, no
income, stamp or other taxes or levies, imposts, deductions, charges, compulsory
loans or withholdings whatsoever are, or will be, under Applicable Laws in
Barbados, imposed, assessed, levied or collected by Barbados or any political
subdivision or taxing authority thereof or therein on or in respect of
principal, interest or other amounts payable by the Trinidad Project Borrower to
the Funding Company pursuant to the Trinidad Project Loan. Except as disclosed
in the Offering Circular, no income, stamp or other taxes or levies, imposts,
deductions, charges, compulsory loans or withholdings whatsoever are, or will
be, under Applicable Laws in Trinidad, imposed, assessed, levied or collected by
Trinidad or any political subdivision or taxing authority thereof or therein on
or in respect of principal, interest or other amounts payable by the Trinidad
Obligor to the Trinidad Guarantor pursuant to the Trinidad Loan.
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(ff) Except as disclosed in the Offering Circular, under the
Applicable Laws of Trinidad and any political subdivision thereof, all dividends
and other equity distributions made by the Trinidad Obligor to the Trinidad
Guarantor may be made in United States dollars and freely transferred out of
Trinidad and all such payments will not be subject to income, withholding or
other taxes under Applicable Laws of Trinidad or any political subdivision or
taxing authority thereof or therein and will otherwise be free and clear of any
other tax, duty, withholding or deduction in Trinidad or any political
subdivision or taxing authority thereof or therein and without the necessity of
obtaining any Governmental Approval in Trinidad or any political subdivision or
taxing authority thereof or therein.
(gg) Except as disclosed in the Offering Circular, none of the
Funding Company, any of the U.S. Guarantors, any other Project Obligor or any of
their subsidiaries, (i) is in violation of any Applicable Law of any
Governmental Authority relating to the use, disposal or release of hazardous or
toxic substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances or to pollution, including,
without limitation, those that relate to any Hazardous Material (collectively,
"environmental laws"), (ii) owns or operates any real property contaminated with
any substance that is subject to any environmental laws, (iii) is liable for any
off-site disposal or contamination pursuant to any environmental, or (iv) is
subject to any claim relating to any environmental laws; and the Funding
Company, the U.S. Guarantors and the other Project Obligors are not aware of any
pending investigation which might lead to such a claim, in each instance, that
would reasonably be expected to have a Material Adverse Effect. The term
"Hazardous Material" means any pollutant, contaminant or waste, or any
hazardous, dangerous or toxic chemical, material, waste, substance or
constituent subject to regulation under any environmental law, whether of the
United States, the Cayman Islands, Barbados or Trinidad.
(hh) None of the Funding Company or any of the U.S. Guarantors is a
"party in interest" or a "disqualified person" (within the meaning of Section
4975 of the Code) with respect to any "employee benefit plan" (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended).
(ii) None of the Funding Company or any of the U.S. Guarantors or any
of their respective material assets are entitled to any immunity from
jurisdiction of any relevant court or from any relevant legal process (whether
through service, notice, attachment in aid of execution, execution or
otherwise); the Funding Company and the U.S. Guarantors have effectively waived
any right of immunity on the grounds of sovereignty or otherwise from
jurisdiction or execution in respect of any action or proceeding relating in any
way to the Finance Documents and the transactions contemplated thereby that may
be brought in the courts of the Cayman Islands, Barbados, Trinidad or elsewhere.
(jj) The are no material contracts or other documents to which any of
the Funding Company, any of the U.S. Guarantors or any other Project Obligor is
a party which have not been described or referred to in the Offering Circular.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Funding Company agrees to sell to
the Initial Purchaser, and the Initial Purchaser agrees to purchase from the
Funding Company the Securities, at a purchase price of 97.5%.
The Funding Company will deliver against payment of the
purchase price the Securities to be offered and sold by the Initial Purchaser in
reliance on Rule 144A in the form of one or more
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permanent global Securities in registered form without interest coupons (the
"Restricted Global Security") deposited with the Bond Trustee as custodian for
The Depository Trust Company ("DTC") and registered in the name of Cede & Co.,
as nominee for DTC. The Funding Company will deliver against payment of the
purchase price the Securities to be offered and sold by the Initial Purchaser in
reliance on Regulation S in the form of one or more permanent global Securities
in registered form without interest coupons (the "Unrestricted Global Security
and together with the Restricted Global Security, the "Global Securities") which
will be deposited with the Bond Trustee as custodian for DTC for the respective
accounts of the DTC participants for Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System ("Euroclear"), and Cedel
Bank, societe anonyme ("Cedel") and registered in the name of Cede & Co., as
nominee for DTC. The Global Securities shall be assigned separate CUSIP numbers
and shall include the legend regarding restrictions on transfer set forth under
"Transfer Restrictions" in the Offering Circular. Until the termination of the
restricted period (as defined in Regulation S) with respect to the offering of
the Securities, interests in the Unrestricted Global Security may be held only
by the DTC participants for Euroclear and Cedel. Interests in the Global
Securities will be held only in book-entry form through DTC or its nominee
except in the limited circumstances described in the Offering Circular.
Payment for the Securities shall be made by the Initial Purchaser in
federal (same day) funds by wire transfer to an account at a bank acceptable to
the Initial Purchaser drawn to the order of the Funding Company, at the office
of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New
York, 10022 at 10:00 A.M., (New York time), on August 4, 1998 or at such other
time not later than seven (7) full business days thereafter as the Initial
Purchaser and the Funding Company determine, such time being herein referred to
as the "Closing Date", against delivery to the Bond Trustee as custodian for DTC
of (i) the Restricted Global Security representing all of the 144A Securities,
and (ii) the Unrestricted Global Security representing all of the Regulation S
Securities for the respective accounts of the DTC participants for Euroclear and
Cedel. The Global Securities will be made available for checking at the above
office of Skadden, Arps, Slate, Meagher & Flom LLP at least twenty-four (24)
hours prior to the Closing Date.
4. Representations by Initial Purchaser; Resale by Initial
Purchaser.
(a) The Initial Purchaser represents and warrants to the Funding
Company that it is an "accredited investor" within the meaning of Regulation D
under the Securities Act.
(b) The Initial Purchaser acknowledges that the Securities have not
been registered under the Securities Act and may not be offered or sold within
the United States or to, or for the account or benefit of, U.S. Persons, except
in accordance with Regulation S or pursuant to an exemption from the
registration requirements of the Securities Act. The Initial Purchaser
represents and agrees that it has offered and sold the Securities, and will
offer and sell the Securities (i) as part of its distribution at any time and
(ii) otherwise until forty (40) days after the later of the commencement of the
offering and the Closing Date, only in accordance with Rule 903 of Regulation S
under the Securities Act or Rule 144A under the Securities Act. Accordingly,
neither the Initial Purchaser nor its Affiliates, nor any Persons acting on its
or their behalf, have engaged or will engage in any directed selling efforts
within the meaning of Rule 902(b) of Regulation S under the Securities Act with
respect to the Securities, and the Initial Purchaser, its Affiliates and all
Persons acting on its or their behalf have complied and will comply with the
offering restrictions requirement of Regulation S. The Initial Purchaser agrees
that, at or prior to confirmation of sale pursuant to Rule 144A, the Initial
Purchaser will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases the Securities from
it a confirmation or notice to substantially the following effect:
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"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and
may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of their distribution
at any time or (ii) otherwise until the later of forty (40) days
after the date of the commencement of the offering and the closing
date, except in either case in accordance with Regulation S (or Rule
144A if available) under the Securities Act. Terms used above have
the meanings given to them by Regulation S."
Terms in this subsection (b) have the meanings given to
them by Regulation S.
(c) The Initial Purchaser agrees that neither it nor any of its
Affiliates has entered into or will enter into any contractual arrangement with
respect to the distribution of the Securities except for any such arrangements
with the prior written consent of Funding Company and the U.S. Guarantors.
(d) The Initial Purchaser agrees that neither it nor any of its
Affiliates has offered or sold the Securities or will offer or sell the
Securities in the United States by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the Securities Act,
including, but not limited to (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio, or (ii) any seminar or meeting whose attendees have
been invited by any general solicitation or general advertising. The Initial
Purchaser agrees, with respect to resales made in reliance on Rule 144A of any
of the Securities, to deliver either with the confirmation of such resale or
otherwise prior to settlement of such resale a notice to the effect that the
resale of such Securities has been made in reliance upon the exemption from the
registration requirements of the Securities Act provided by Rule 144A.
(e) The Initial Purchaser represents and agrees that (i) it has not
offered or sold and prior to the date six (6) months after the date of issue of
the Securities will not offer or sell any Securities to Persons in the United
Kingdom except to Persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the
Securities in, from or otherwise involving the United Kingdom; and (iii) it has
only issued or passed on, and will only issue or pass on, in the United Kingdom
any document received by it in connection with the issue of the Securities to a
Person who is of the kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a Person to
whom such document may otherwise lawfully be issued or passed on.
5. Certain Agreements of the Funding Company and the U.S.
Guarantors. The Funding Company and the U.S. Guarantors agree with the Initial
Purchaser that:
(a) The Funding Company and the U.S. Guarantors will advise the
Initial Purchaser promptly of any proposal to amend or supplement the Offering
Circular and will not effect such amendment or supplementation without the
Initial Purchaser's consent. If, at any time prior to the completion of the
resale of the Securities by the Initial Purchaser, any event occurs as a result
of which the Offering Circular as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, the Funding Company and the U.S.
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Guarantors promptly will notify the Initial Purchaser of such event and promptly
will prepare, at their own expense, an amendment or supplement which will
correct such statement or omission. Neither the Initial Purchaser's consent to,
nor the Initial Purchaser's delivery to offerees or investors of, any such
amendment or supplement shall constitute a waiver of any of the conditions set
forth in Section 6.
(b) The Funding Company and the U.S. Guarantors will furnish to the
Initial Purchaser copies of the Preliminary Offering Circular, the Offering
Circular and all amendments and supplements to such documents, in each case as
soon as available and in such quantities as the Initial Purchaser requests, and
the Funding Company will furnish to the Initial Purchaser on the date hereof
three copies of the Offering Circular certified as being true, complete and
correct by a duly authorized officer of the Funding Company, together with
certified copies of the Accountant's consents with respect to the use of its
reports therein. The Funding Company will promptly furnish or cause to be
furnished to the Initial Purchaser and, upon request of Holders and prospective
purchasers of the Securities, to such Holders and prospective purchasers, copies
of the information required to be delivered to Holders and prospective
purchasers of the Securities pursuant to Rule 144A(d)(4) under the Securities
Act (or any successor provision thereto) in order to permit compliance with Rule
144A in connection with resales by such holders of the Securities. The Funding
Company and the U.S. Guarantors will pay the expenses of printing and
distributing to the Initial Purchaser and such Holders and prospective
purchasers all such documents.
(c) The Funding Company and the U.S. Guarantors will arrange for the
qualification of the Securities for sale and the determination of their
eligibility for investment under the Applicable Laws of such jurisdictions in
the United States and Canada as the Initial Purchaser designates and will
continue such qualifications in effect so long as required for the resale of the
Securities by the Initial Purchaser, provided that the Funding Company and the
U.S. Guarantors will not be required to qualify as a foreign corporation or to
file a general consent to service of process in any such jurisdiction.
(d) During the period of five (5) years hereafter, the Funding
Company will furnish to the Initial Purchaser, as soon as available after the
end of each fiscal year, a copy of such notices and reports as it is required to
deliver to the Bond Trustee or any Holder under Section 4.2 of the Indenture.
(e) During the period of two (2) years after the Closing Date, the
Funding Company will, upon request, furnish to the Initial Purchaser and any
holder of Securities a copy of the restrictions on transfer applicable to the
Securities.
(f) During the period of two (2) years after the Closing Date, the
Funding Company and the U.S. Guarantors will not, and will not permit any of
their Affiliates (as defined in Rule 144 under the Securities Act) to, resell
any of the Securities that have been acquired or reacquired by any of them.
(g) During the period of two (2) years after the Closing Date, the
Funding Company and the U.S. Guarantors will not be or become an open-end
investment company, unit investment trust or face-amount certificate company
that is or is required to be registered under Section 8 of the Investment
Company Act.
(h) The Funding Company and the U.S. Guarantors will pay all expenses
incidental to the performance of their obligations under this Agreement, the
Indenture and the other Transaction Documents, including (i) the fees and
expenses of the Bond Trustee and the fees and expenses of its professional
advisers and consultants (including legal counsel); (ii) all expenses in
connection with the execution, issue, authentication, packaging and initial
delivery of the Securities, the preparation and
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printing of this Agreement, the Securities, the other Finance Documents, the
Preliminary Offering Circular, the Offering Circular and amendments and
supplements thereto, and any other document relating to the issuance, offer,
sale and delivery of the Securities, (iii) any reasonable expenses (including
fees and disbursements of counsel) incurred in connection with qualification of
the Securities for sale under the Applicable Laws of such jurisdictions in the
United States and Canada as the Initial Purchaser designates and the printing of
memoranda relating thereto, (iv) for any fees charged by investment rating
agencies for the rating of the Securities, and (v) for expenses incurred in
distributing Preliminary Offering Circular and the Offering Circular (including
any amendments and supplements thereto) to the Initial Purchaser and such
prospective purchasers. The Funding Company and the U.S. Guarantors, jointly and
severally, will also pay or reimburse the Initial Purchaser (to the extent
incurred by it) for all travel expenses of the Initial Purchaser and the Funding
Company's or the U.S. Guarantors' officers and employees and any other expenses
of the Initial Purchaser and the Funding Company or the U.S. Guarantors in
connection with attending or hosting meetings with prospective purchasers of the
Securities from the Initial Purchaser.
(i) In connection with the offering, until the earlier of (x) one
hundred eighty (180) days following the Closing Date and (y) the date on which
the Initial Purchaser shall have notified the Funding Company of the completion
of the resale of the Securities, none of the Funding Company, the U.S.
Guarantors or any of their Affiliates has or will, either alone or with one or
more other persons, bid for or purchase for any account in which it or any of
its Affiliates has a beneficial interest any Securities or attempt to induce any
person to purchase any Securities; and none of the Funding Company, the U.S.
Guarantors or any of their Affiliates will make bids or purchases for the
purpose of creating actual, or apparent, active trading in, or of raising the
price of, the Securities.
(j) The Funding Company will not, until thirty (30) days following
the Closing Date, without the prior written consent of the Initial Purchaser,
pursuant to Rule 144A, Regulation S or an offering registered under the
Securities Act, offer, sell or contract to sell, or otherwise dispose of,
directly or indirectly, or announce the offering of, any debt securities issued
or guaranteed by the Funding Company or any of the U.S. Guarantors (other than
the Securities).
(k) The Funding Company and the U.S. Guarantors, jointly and
severally, agree to indemnify and hold harmless the Initial Purchaser against
any documentary, stamp or similar issuance tax imposed by the Cayman Islands,
Barbados or Trinidad, including any interest and penalties, on the creation,
issuance and sale of the Securities to the Initial Purchaser and the subsequent
initial resale by the Initial Purchaser on the execution and delivery of this
Agreement. All payments to be made by the Funding Company or any of the U.S.
Guarantors hereunder shall be made without withholding or deduction for or on
account of any present (as of the Closing Date) or, with respect to payments
made pursuant to the indemnities provided for in this Agreement, future taxes,
duties or governmental charges whatsoever unless the Funding Company or such
U.S. Guarantor is compelled by law to deduct or withhold such taxes, duties or
charges, and in such event the Funding Company or any of the U.S. Guarantors
agrees to pay such additional amounts as may be necessary in order that the net
amounts received after such withholding or deduction shall equal the amounts
that would have been received if no withholding or deduction had been made.
(l) The Funding Company and the U.S. Guarantors will obtain, make and
keep in full force and effect all Governmental Approvals that may be required in
any of the Cayman Islands, Barbados or Trinidad for the enforceability against
the Funding Company and the U.S. Guarantors of this Agreement for five (5) years
after the date hereof unless a claim has been brought pursuant to Section 7
hereof, in
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which case, if long, the Funding Company and the U.S. Guarantors will obtain,
make and keep in full force and effect all such Governmental Approvals until the
final, nonappealable resolution of such claims.
6. Conditions of the Obligations of the Initial Purchaser. The
obligations of the Initial Purchaser to purchase and pay for the Securities will
be subject to the accuracy of the representations and warranties made by the
Funding Company and the U.S. Guarantors herein, to the accuracy of the
statements of officers of the Funding Company and the U.S. Guarantors made
pursuant to the provisions hereof, to the performance by the Funding Company and
the U.S. Guarantors of their obligations hereunder and to the following
additional conditions precedent:
(a) The Initial Purchaser shall have received letters, dated the date
of this Agreement, of the Accountants in form and substance satisfactory to the
Initial Purchaser concerning the financial information with respect to the
Funding Company and the U.S. Guarantors set forth in the Offering Circular.
(b) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event involving a
prospective change, in or affecting the financial condition, business or results
of operations of the Funding Company or any of the U.S. Guarantors which, in the
judgment of the Initial Purchaser, materially impairs the investment quality of
the Securities or is material and adverse and makes it impractical or
inadvisable to proceed with the offering of the Securities; (ii) any downgrading
in the rating of the any debt securities of the Funding Company by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Securities Act) or any public announcement that any
such organization has under surveillance or review its rating of any debt
securities of the Funding Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any suspension or limitation of trading in
securities generally on the New York Stock Exchange, or any setting of minimum
prices for trading on such exchange or any suspension of trading of any
securities of the Funding Company or the Sponsor on any exchange or in the over
the counter market; (iv) any banking moratorium declared by United States
Federal, New York state, Cayman Islands, Barbados or Trinidad authorities; (v)
any outbreak or escalation of major hostilities in which the United States, the
Cayman Islands, Barbados or Trinidad is involved, any declaration of war by
Congress or any other change in financial markets or substantial national
calamity or emergency if, in the judgment of the Initial Purchaser, the effect
of any such outbreak, escalation, declaration, change, calamity or emergency
makes it impractical or inadvisable to proceed with completion of the sale of
and payment for the Securities; or (vi) any change in United States, Cayman
Islands, Barbados, Trinidad or international financial, political or economic
conditions or currency exchange rates or exchange controls as would, in the
reasonable judgment of the Initial Purchaser, be likely to materially and
adversely prejudice the success of the proposed issue, sale or distribution of
the Securities, whether in the primary market or in respect of dealings in the
secondary market.
(c) The Funding Company and the U.S. Guarantors shall have furnished
the Initial Purchaser with such assurance and evidence as the Initial Purchaser
may require to confirm that, as of the Closing Date, all Indebtedness previously
incurred by the Funding Company and its subsidiaries and Affiliates in
connection with the financing of the Projects will be repaid in full and all
Liens and collateral securing such previously incurred Indebtedness shall be
released.
(d) The Funding Company and the U.S. Guarantors shall have furnished
the Initial Purchaser with such assurance and evidence as the Initial Purchaser
may require to confirm that, as of the Closing
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Date, all Indebtedness owed by the U.S. Guarantors (other than Permitted
Indebtedness) will be repaid in full and all Liens and collateral securing such
Indebtedness shall be released.
(e) The representations and warranties of each of the Funding Company
and each Project Obligor contained herein and in each Transaction Document to
which the Funding Company or any of the Project Obligors is party shall be true
and correct on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date, each
of the Funding Company and the Project Obligors shall have complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
hereunder or thereunder at or prior to the Closing Date, subsequent to the
respective dates of the most recent financial statements in the Offering
Circular, there shall have been no material adverse change in the financial
position or results of operation of the Funding Company and the Project
Obligors, taken as a whole, and the information in the Offering Circular or any
amendment or supplement thereto regarding the Funding Company or any Project
Obligor shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein to make the statements
therein, under the circumstances in which they were made, not misleading, each
as evidenced by an Officer's Certificate, dated the Closing Date, of an
Authorized Officer of each of the Funding Company and the Project Obligors.
(f) On or prior to the Closing Date, each of the Financing Statements
shall have been delivered for filing, recordation and/or registration in each
office and in each jurisdiction where required to create and perfect a valid and
enforceable security interest in the Collateral covered or purported to be
covered by the Security Documents, with the priority purported to be created
thereby. All taxes and recording and filing fees required to be paid with
respect to the execution, recording or filing of the Financing Statements shall
have been paid or provided for. All Collateral shall be subject to no Liens
other than Permitted Liens.
(g) On or prior to the Closing Date, each of the Project Documents,
in the forms as previously delivered to the Initial Purchaser or its counsel and
as they exist as executed versions as of the date of this Agreement or in such
forms as shall be satisfactory in form and substance to the Initial Purchaser
and its counsel, shall have been executed and delivered, shall remain in full
force and effect, no default shall have occurred and be continuing thereunder,
all conditions precedent thereunder to be satisfied as of the Closing Date shall
be satisfied and there shall not have occurred any event of force majeure
thereunder on and as of the Closing Date.
(h) [Intentionally Omitted.]
(i) The Initial Purchaser shall have received a letter, dated the
Closing Date, of the Accountants that meets the requirements of subsection (a)
of this Section, except that the specified date referred to in such subsection
will be a date not more than three (3) days prior to the Closing Date for the
purposes of this subsection.
(j) The Independent Engineer shall have consented to the references
to it in the Offering Circular and the use of the Independent Engineer's Report
(as defined in the Offering Circular) prepared by the Independent Engineer and
contained in Appendix B to the Offering Circular and certified that since the
date of the Independent Engineer's Report, no event affecting the Independent
Engineer's Report or the matters referred to therein shall have occurred (A)
which shall make untrue or incorrect in any material respect, as of the Closing
Date, any information or statement contained in the Independent Engineer's
Report or in the Offering Circular relating to matters referred to in the
Independent Engineer's Report, or (B) which shall not be reflected in the
Offering Circular but should be reflected therein in
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order to make the statements and information contained in the Independent
Engineer's Report, or in the Offering Circular relating to matters referred to
in the Independent Engineer's Report, in light of the circumstances under which
they were made, not misleading, as evidenced by a certificate satisfactory to
the Initial Purchaser of an authorized officer of the Independent Engineer,
dated the Closing Date.
(k) The Independent Wind Consultant shall have consented to the
references to it in the Offering Circular and certified that since the date of
the Independent Wind Consultant's Report, no event affecting the Independent
Wind Consultant's Report or the matters referred to therein shall have occurred
(A) which shall make untrue or incorrect in any material respect, as of the
Closing Date, any information or statement contained in the Independent Wind
Consultant's Report or in the Offering Circular relating to matters referred to
in the Independent Wind Consultant's Report or (B) which shall not be reflected
in the Offering Circular but should be reflected therein in order to make the
statements and information contained in the Independent Wind Consultant's
Report, or in the Offering Circular relating to matters referred to in the
Independent Wind Consultant's Report, in light of the circumstances under which
they were made, not misleading, as evidenced by a certificate satisfactory to
the Initial Purchaser of an authorized officer of the Independent Wind
Consultant, dated the Closing Date.
(l) The Insurance Consultant shall have certified that since the date
of the Independent Insurance Consultant's Report, no event affecting the
Independent Insurance Consultant's Report or the matters referred to therein
shall have occurred (i) which shall make untrue or incorrect in any material
respect, as of the Closing Date, any information or statement contained in the
Independent Insurance Consultant's Report or in the Offering Circular relating
to matters referred to in the Independent Insurance Consultant's Report, or (ii)
which shall cause the Offering Circular to omit to state a material fact
necessary in order to make the statements and information contained in the
Independent Insurance Consultant's Report, in light of the circumstances under
which they were made, not misleading, as evidenced by a certificate of an
authorized officer of the Independent Insurance Consultant, dated the Closing
Date, confirming the matters set forth in this paragraph in form and substance
satisfactory to the Initial Purchaser.
(m) Moses & Singer shall have furnished to the Initial Purchaser its
written opinions, as counsel to the Funding Company and each of the Sponsor
Subsidiaries (as defined below), that:
(i) Each of the BNY Guarantor and each of the Warbasse
Guarantors is validly existing and in good standing as a limited liability
company under the laws of the State of Delaware, with limited liability company
power and authority to enter into each of the documents set forth on Schedule
6.1(m) hereto (the "U.S. Documents") to which it is a party and perform its
obligations thereunder. Each of the BNY Guarantor and each of the Warbasse
Guarantors is qualified to do business in the State of New York.
(ii) Each of B-41, L.P., the Big Spring Guarantor and York
Cogen Partners, L.P. ("YCP") is validly existing and in good standing as a
limited partnership under the laws of the State of Delaware, with partnership
power and authority to enter into each of the U.S. Documents to which it is a
party and perform its obligations thereunder. B-41, L.P. and YCP are qualified
to do business in the State of New York. The Big Spring Guarantor is qualified
to do business in the State of Texas.
(iii) Each of Cogeneration Technologies, Inc. ("CTI") and the
Trinidad U.S. Parent is validly existing and in good standing as a corporation
under the laws of the State of Delaware, with corporate power and authority to
enter into each of the U.S. Documents to which it is a party and perform its
obligations thereunder. CTI is qualified to do business in the State of New
York.
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(iv) The execution, delivery and performance by the Sponsor,
each U.S. Guarantor, B-41, L.P., CTI, YCP, the Big Spring Partners and the
Trinidad U.S. Parent (B-41, L.P., CTI, YCP, the Big Spring Partners and the
Trinidad U.S. Parent, collectively, the "U.S. Sponsor Subsidiaries" and,
together with the Trinidad Cayman Parent and the Project Obligors, the "Sponsor
Subsidiaries") of each of the U.S. Documents to which it is a party and the
consummation by each such party of the transactions contemplated thereby have
been duly authorized by all necessary action on the part of such party, and each
of the U.S. Documents to which each such party is a party has been duly executed
and delivered by such party. Each of the U.S. Documents constitutes a legally
valid and binding obligation of each of the Funding Company, Sponsor, each of
the U.S. Guarantors or each of the U.S. Sponsor Subsidiaries that is a party
thereto, enforceable against each such party in accordance with the terms of
such U.S. Document.
(v) The execution and delivery by each of the U.S. Guarantors,
the Sponsor and each of the U.S. Sponsor Subsidiaries of each of the U.S.
Documents to which it is a party will not conflict with or constitute a breach
or violation of any of the terms or provisions of (A) the certificate of
incorporation, by-laws, certificate of limited liability company, operating
agreement, certificate of limited partnership or partnership agreement of the
U.S. Guarantors, the Sponsor or the U.S. Sponsor Subsidiaries, as applicable,
(B) any existing federal or Delaware or New York statute, rule or regulation
applicable to any of the U.S. Guarantors, the Sponsor or the U.S. Sponsor
Subsidiaries or any of their material properties or (C) to its knowledge, any
material agreement or instrument to which any of the U.S. Guarantors, the
Sponsor or the U.S. Sponsor Subsidiaries, as applicable, is a party or by which
they or any of their respective properties or assets are bound or to which they
may be subject.
(vi) The execution and delivery by each of the U.S.
Guarantors, the Sponsor and each of the U.S. Sponsor Subsidiaries of each of the
U.S. Documents to which it is a party will not require any consents, approvals,
authorizations, or other actions by any Governmental Authority or any
registrations, declarations or filings by any such party with any Governmental
Authority, in each case under any Delaware or New York statute, rule or
regulation applicable to such party which have not been obtained as of the date
hereof, except such consents, approvals, authorizations, other actions,
registrations, declarations or filings the failure to obtain which would not
have a Material Adverse Effect.
(vii) The provisions of the BNY Pledge Agreement, each
Warbasse Pledge Agreement, each Big Spring Pledge Agreement, the U.S. Depositary
Agreement, the BNY Security Agreement, the Warbasse Security Agreements, the Big
Spring Security Agreement and the U.S. Project Note Pledge Agreement are
effective to create a valid security interest in favor of the Collateral Agent
for the benefit of Secured Parties in that portion of the Collateral described
therein which is subject to Article 9 of the New York UCC as security for the
performance of all of the obligations of the U.S. Guarantors described therein.
(viii) The provisions of the U.S. Depositary Agreement are
effective to create, in favor of the Collateral Agent for the benefit of the
Secured Parties, a security interest in all the "security entitlements" (as
defined in Section 8-102(a)(17) of the New York UCC) with respect to "financial
assets" (as defined in Section 8-102(a)(9) of the New York UCC) now or hereafter
credited to the each U.S. Depositary Account.
(ix) The provisions of the U.S. Depositary Agreement are
effective to perfect the security interest of the Collateral Agent for the
benefit of the Secured Parties in all the "security
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entitlements" (as defined in Section 8-102(a)(17) of the New York UCC) with
respect to "financial assets" (as defined in Section 8-102(a)(9) of the New York
UCC) now or hereafter credited to the each U.S. Depositary Account. No other
security interest of any creditor of the Funding Company or any U.S. Guarantor
will be equal or prior to the security interest of the Collateral Agent for the
benefit of the Secured Parties in such Collateral.
(x) The U.S. Depositary Agreement is effective to create a
valid security interest in that portion of the Collateral described therein
consisting of instruments (as defined in Section 9-105(1)(i) of the New York
UCC) or cash in the possession of the Depositary Bank in the State of New York
to secure the obligations of the Funding Company and the U.S. Guarantors who are
party to the U.S. Depositary Agreement, described in the U.S. Depositary
Agreement. The security interest of the Collateral Agent for the benefit of the
Secured Parties in each such instrument (with any necessary indorsement) or cash
will be perfected upon notice (within the meaning of Section 9-305 of the UCC)
to the Depositary Bank of the security interest of the Collateral Agent and the
sending of a confirmation by the Depositary Bank to the Collateral Agent, in
each case in the State of New York, No other security interest of any creditor
of the Funding Company or any U.S. Guarantor will be equal or prior to the
security interest of the Collateral Agent for the benefit of the Secured Parties
in such Collateral.
(xi) Each UCC financing statement attached hereto as Schedule
IV (each, a "Financing Statement") is in appropriate form for filing in each
jurisdiction within the State of New York where required to perfect a security
interest under the New York UCC in the Collateral described in the BNY Pledge
Agreement, each Warbasse Pledge Agreement, each Big Spring Pledge Agreement, the
U.S. Depositary Agreement, the BNY Security Agreement, the Warbasse Security
Agreements, the Big Spring Security Agreements and the U.S. Project Note Pledge
Agreement to the extent a security interest in such Collateral can be perfected
by filing a financing statement in the State of New York under the provisions of
the New York UCC. Upon the proper filing of each Financing Statement with the
Department of State of New York and the city register for New York County, New
York, the security interest in favor of the Collateral Agent for the benefit of
the Secured Parties in the Collateral described in each Financing Statement
which is subject to Article 9 of the New York UCC will be perfected to the
extent a security interest in such Collateral can be perfected by filing a
financing statement in the State of New York under the provisions of the New
York UCC. No other security interest of any creditor of the Funding Company, any
U.S. Guarantor, or any of the U.S. Sponsor Subsidiaries will be equal or prior
to the security interest of the Collateral Agent for the benefit of the Secured
Parties in such Collateral.
(xii) Assuming the Collateral Agent takes and maintains
continuous possession in the State of New York of any and all certificates
evidencing the equity interests in each of the U.S. Guarantors described in and
pledged pursuant to each of the BNY Pledge Agreement, each Warbasse Pledge
Agreement and the Big Spring Pledge Agreement (the "Pledged Equity"), with
undated stock powers fully endorsed in blank, each of the BNY Pledge Agreement,
each Warbasse Pledge Agreement and the Big Spring Pledge Agreement creates a
perfected security interest in favor of the Collateral Agent for the benefit of
the Secured Parties in the rights in such Pledged Equity constituting a
"certificated security" (as defined in Section 8-102(a)(4) of the New York UCC)
which each pledgor thereunder (each, a "Pledgor") has or has actual authority to
convey as security for the payment, to the extent set forth in each of the BNY
Pledge Agreement, each Warbasse Pledge Agreement and the Big Spring Pledge
Agreement, of all obligations of the U.S. Guarantors and the U.S. Sponsor
Subsidiaries described therein. No other security interest of any creditor of
any Pledgor will be equal or prior to the security interest of the Collateral
Agent for the benefit of the Secured Parties in such Collateral.
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(xiii) The offer, sale and delivery of the Securities by the
Funding Company to the Initial Purchaser pursuant to the Purchase Agreement and
the initial resales of the Securities by the Initial Purchaser in accordance
with Section 4 of the Purchase Agreement and in the manner contemplated by the
Offering Circular and the Purchase Agreement do not require registration of the
Securities under the Securities Act and the Indenture does not require
qualification under the Trust Indenture Act of 1939, as amended.
(xiv) Neither the consummation of the transactions
contemplated by the Purchase Agreement nor the sale, issuance, execution or
delivery of the Securities by the Funding Company will violate Regulation T, U,
or X of the Board of Governors of the Federal Reserve System.
(xv) Neither the Funding Company, the Guarantors nor any
Sponsor Subsidiary is, and one of such parties owns or controls or is owned or
controlled by an "investment company" that is or is required to be registered
under Section 8 of the Investment Company Act, as amended.
(xvi) There are no mortgage taxes or filing fees payable to
the State of New York or any of its political subdivisions as a consequence
of the execution or delivery of the U.S. Documents or the creation of the
indebtedness evidenced or secured by any of the U.S. Documents or the filing
or recording of any of the U.S. Documents, except (i) normal filing fees
payable to the Secretary of State of the State of New York and normal filing
or recording fees payable to the political subdivisions thereof; and (ii) any
fee or charge payable to any entity whose services may have been used to
assist in such filing and recordation.
(xvii) To the best of our knowledge other than as set forth
in the Offering Circular, there is no action, suit or proceeding by or before
any court, arbitrator, administrative agency or Governmental Authority pending,
to which any of the Funding Company, the U.S. Guarantors, the Sponsor or the
U.S. Sponsor Subsidiaries is a party or, to the best of our knowledge,
threatened against in writing any of the Funding Company, the U.S. Guarantors,
the Sponsor or the U.S. Sponsor Subsidiaries which (i) would adversely affect
the ability of any of the Funding Company, the U.S. Guarantors, the Sponsor or
the U.S. Sponsor Subsidiaries to perform their respective obligations under any
U.S. Document to which it is a party or (ii) challenge the legality, validity
or enforceability of any of the U.S. Documents.
(xviii) The choice of New York law as the governing law for
each of the Indenture, the U.S. Project Loan Agreement, the BNY Guarantee, the
Warbasse Guarantee, the Big Spring Guarantee, the Intercreditor Agreement, the
Purchase Agreement, the Securities, the U.S. Project Notes, the BNY Pledge
Agreement, each Warbasse Pledge Agreement, the Big Spring Pledge Agreement, the
U.S. Depositary Agreement, the BNY Security Agreement, the Warbasse Security
Agreements, the Big Spring Security Agreement and the U.S. Project Note Pledge
Agreement will be recognized in the courts of the State of New York having
jurisdiction as a valid choice of law in any action to enforce such U.S.
Document.
(xix) The Preliminary Offering Circular and the Offering
Circular or any amendment or supplement thereto, as of their respective dates
did not contain any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or that any contracts or documents pertaining to the
Funding Company, the Guarantors, the Sponsor or the Sponsor Subsidiaries of a
character required to be described in the Preliminary Offering Circular or
Offering Circular not described as required.
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(xx) Each of the Funding Company and the U.S. Guarantors has
validly appointed Corporation Service Company as its agent to receive service of
process in the State of New York for the purposes described in the relevant
section of the applicable Transaction Documents. Service of process effected in
the manner set forth in relevant sections of the applicable Transaction
Documents will be effective to confer valid personal jurisdiction over the
Funding Company and the U.S. Guarantors, as applicable, in any legal action or
proceeding against the Funding Company or the U.S. Guarantors with respect to
any such Transaction Document to which it is a party, as applicable, in the
courts of the State of New York located in the County of New York.
(xxi) The submission of each of the Funding Company, the U.S.
Guarantors, the Sponsor and the U.S. Sponsor Subsidiaries pursuant to the
Indenture, the U.S. Project Loan Agreement, the Intercreditor Agreement, the
Purchase Agreement, the BNY Pledge Agreement, each Warbasse Pledge Agreement,
the Big Spring Pledge Agreement, the U.S. Depositary Agreement, the BNY Security
Agreement, the Warbasse Security Agreements, the Big Spring Security Agreement
and the U.S. Project Note Pledge Agreement to which it is a party, as
applicable, to the non-exclusive jurisdiction of the courts of the State of New
York in the County of New York with respect to any legal action or proceeding
arising with respect to such U.S. Document to which it is a party, as
applicable, is valid and binding on it.
(n) LeBoeuf, Lamb, Greene and MacRae shall have furnished to the
Initial Purchaser its written opinions, as counsel to the Trinidad Finance
Parties, that:
(i) The execution and delivery by each of the Trinidad Finance
Parties and the Trinidad Cayman Parent to each of the Finance Documents and
Trinidad Project Documents to which it is a party will not conflict with or
constitute a breach or violation of any of the terms or provisions of, or
constitute a default under (A) any applicable existing United States federal or
New York State statute, rule or regulation (including PUHCA, the Federal Power
Act ("FPA"), and the New York Public Service Law ("NYPSL")) or (B) to its
knowledge, any material agreement or instrument to which any of the Trinidad
Finance Parties or the Trinidad Cayman Parent is a party or by which they or any
of their properties or assets are bound or to which they may be subject. Each of
the Trinidad Government Agreement and the Finance Agreements to which any of the
Trinidad Finance Parties or the Trinidad Cayman Parent is a party constitutes a
legally valid and binding obligation of the applicable Trinidad Finance Parties
or the Trinidad Cayman Parent, as the case may be, enforceable against it in
accordance with the terms of such agreement.
(ii) The execution and delivery be each of the Trinidad
Finance Parties and the Trinidad Cayman Parent of each of the Finance Documents
and Trinidad Project Documents to which it is a party will not require any
consent, approval, authorization, or other action by, or any registration,
declaration or filing by any such party with, any United States federal or New
York State Governmental Authority under any United States federal or New York
State statute, rule or regulation (including PUHCA, the FPA and the NYPSL)
applicable to such party which has not been obtained as of the date hereof,
except such consents, approvals, authorizations, other actions, registrations,
declarations or filings the failure to obtain which would not have a Material
Adverse Effect on the Trinidad Finance Parties or the Trinidad Cayman Parent.
(iii) The Trinidad Pledge Agreements and the Trinidad Charge
and Security Agreement create valid, perfected and enforceable security
interests in favor of the Collateral Agent for the benefit of the Secured
Parties in the rights in the equity interests in each of the Trinidad Finance
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Parties pledged pursuant to the Trinidad Pledge Agreements and the Trinidad
Charge and Security Agreement (the "Pledged Equity") which each pledgor has, as
security for the payment, to the extent set forth in each of such Trinidad
Pledge Agreement or Trinidad Charge and Security Agreement, of all obligations
of the Trinidad Finance Parties and the Trinidad Cayman Parent to the Funding
Company and the Collateral Agent under the applicable Finance Documents to which
the such parties are parties; and, to the extent such Pledged Equity constitutes
certificated securities (as defined in Section 8-102(a)(4) of the New York UCC,
assuming the Collateral Agent takes and maintains continuous possession in the
State of New York of the certificates evidencing such Pledged Equity together
with undated stock powers or similar instruments endorsed in blank by an
appropriate person, such security interest will be perfected under the laws of
the State of New York and no other consensual security interest under the New
York UCC of any creditor of the Funding Company, the Trinidad Finance Parties or
the Trinidad Cayman Parent will be equal to or prior to the security interests
of the Collateral Agent in such Pledged Equity;
(iv) The provisions of the Trinidad Security Documents are
effective to create, in favor of the Collateral Agent on behalf of and for the
benefit of the Secured Parties, a valid security interest in that portion of the
Collateral set forth below (the "Other Financial Collateral") as security for
the performance of the respective obligations of the Trinidad Finance Parties
and the Funding Company described in the Trinidad Security Documents: (a) the
rights and interests of the Trinidad Guarantor under the Trinidad Loan
Agreement; (b) the rights and interests of the Funding Company under the
Trinidad Project Loan Agreement and the Trinidad Project Note; and (c) the
rights and interests of the Trinidad Finance Parties and the Trinidad Cayman
Parent in the security entitlements (as defined in Section 8-102(a)(17) of the
New York UCC) from time to time credited to the Trinidad Depositary Account; and
to the extent the Other Financial Collateral constitutes instruments, assuming
the Collateral Agent has taken and maintains possession of such instruments in
the State of New York, duly endorsed, for value, in good faith and without
notice that any of such instruments is overdue or has been dishonored or of any
defenses against or claims to it on the part of any other person, such security
interests will be perfected under the law of the State of New York and no other
consensual security interests under the New York UCC of any creditor of the
Funding Company, the Trinidad Finance Parties or the Trinidad Cayman Parent will
be equal to or prior to such security interests; and to the extent to Other
Financial Collateral constitutes securities entitlements (as defined in Section
8-102(a)(17) of the New York UCC) arising under the Trinidad Depositary
Agreement, assuming that the Trinidad Depositary Accounts are established in the
name of the Collateral Agent and are maintained in accordance with the terms of
the Trinidad Depositary Agreement, that the Depositary Bank has agreed to comply
with entitlement orders from the Collateral Agent without further consent by and
of the Funding Company or the Trinidad Finance Parties and has not agreed to so
comply with entitlement orders of any other person or entity, and that the
security entitlements and financial assets related thereto have been acquired
for value and without notice on the part of the Collateral Agent, the Depositary
Bank, the Secured Parties, the Funding Company, the Trinidad Finance Parties or
the Trinidad Cayman Parent of any adverse claim, such security interests will be
perfected under the law of the State of New York and no other consensual
security interests under the New York UCC of any creditor of the Funding
Company, the Trinidad Finance Parties or the Trinidad Cayman Parent will be
equal to or prior to such security interests.
(v) To their knowledge, there is no action, suit or proceeding
by or before any court, arbiter, administrative agency or Governmental Authority
pending or threatened against or affecting any of the Trinidad Finance Parties
or the Trinidad Cayman Parent which (x) would materially adversely affect the
ability of any of the Trinidad Finance Parties or the Trinidad Cayman Parent to
perform its respective obligations under any of the Finance Documents or the
Trinidad Project Documents to which it is a party or (y) challenges the
legality, validity or enforceability or any of such Finance Documents or
Trinidad Project Documents.
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(vi) The statements set forth in the Offering Circular under
"OFFERING CIRCULAR SUMMARY - Trinidad Guarantor," "RISK FACTORS - Uncertainties
Associated with Environmental, Energy and Other Regulations" (as it relates to
the United States energy regulations), "BUSINESS OF THE FUNDING COMPANY, THE
PROJECT NOTE OBLIGORS AND THE GUARANTORS - Trinidad Project," "SUMMARY
DESCRIPTION OF PRINCIPAL PROJECT CONTRACTS - Trinidad Project - Trinidad Power
Purchase Agreement," "-Trinidad Project - Trinidad Government Agreement,"
"-Trinidad Project - Engineering and Equipment Supply Contract; Turnkey
Construction Contract," "-Brooklyn Navy Yard Project - Flow of Funds -
Qualifying Facility" (solely as it relates to energy regulatory matters), "-
Warbasse Project - WCTP Power Purchase Agreement - Qualifying Facility" (solely
as it relates to energy regulatory matters), "-Big Spring Project - Amended and
Restated Limited Partnership Agreement - Qualifying Facility" (solely as it
relates to energy regulatory matters), "SUMMARY DESCRIPTION OF PRINCIPAL
FINANCING DOCUMENTS - Depositary Funds - Trinidad Funds," "-Depositary Funds -
Trinidad Local Fund," "-Trinidad Depositary Agreement," "-Guarantees - Guarantee
of the Trinidad Guarantor," "- Project Loan Agreements - Trinidad Project Loan
Agreement," "-Trinidad Loan Agreement," "- Description of Project Collateral -
Trinidad Collateral," and " - Subscription Agreements," insofar as such
statements constitute summaries of the terms of the Finance Documents or of the
Trinidad Project Documents to which any of the Trinidad Finance Parties or the
Trinidad Cayman Parent is a party or legal matters or proceedings (other than
those governed by the laws of Trinidad, Barbados or Cayman Islands) are accurate
in all material respects and do not contain any untrue statements of a material
fact or fail to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading.
(vii) The choice of New York law as the governing law of the
Finance Documents to which any of the Trinidad Finance Parties and the Trinidad
Cayman Parent is a party will be recognized in the courts of the State of New
York as a valid choice of law in any action in such courts to enforce such
agreements.
(viii) Each of the Trinidad Finance Parties and the Trinidad
Cayman Parent has, under the laws of the State of New York, validly appointed
Corporation Service Company as its agent to receive service of process in New
York for the purposes described in the relevant section of the applicable
Finance Documents to which it is a party, and service of process effected in the
manner set forth in relevant sections of such Finance Documents will be
effective under United States federal and New York State Law to confer valid
personal jurisdiction over each of such Trinidad Finance Parties.
(ix) The submission of each of the Trinidad Finance Parties
and the Trinidad Cayman Parent to the jurisdiction of the courts of the State of
New York in the County of New York with respect to any matter arising from the
Finance Documents to which it is a party is valid and binding under New York
State Law on each of such Trinidad Finance Parties.
(x) (a) The Trinidad Obligor is exempt from the definition of
an "electric utility company" under section 2(a)(3) of PUHCA; (b) the Trinidad
Obligor is not subject to regulation as a "public utility" as defined in Section
201 of the FPA, 16 U.S.C. ss. 824; (c) the Trinidad Obligor is not subject to
regulation under the NYPSL; and (d) none of Funding Company, the Trinidad U.S.
Parent, the Trinidad Cayman Parent, the Trinidad Project Borrower, and the
Trinidad Guarantor, solely by virtue of its direct or indirect interests in the
Trinidad Obligor, is subject to regulation under PUHCA as a "public utility
company" or a "holding company" or a "subsidiary" or "affiliate" of a holding
company, as defined in Section 2 of PUHCA, or as a "public utility" under the
FPA, or under the NYPSL.
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(xi) (a) the Warbasse Project is a QF under PURPA; (b)
pursuant to 18 C.F.R. Section 292.601 the Warbasse Project Company is not
subject to regulation as a "public utility" under the FPA, except to the
extent contemplated by 18 C.F.R. Section 292.601(c); (c) pursuant to 18
C.F.R. Section 292.602(b), the Warbasse Project Company is not considered to
be an "electric utility company" as defined in Section 2(a)(3) of PUHCA; (d)
pursuant to 19 C.F.R. Section 292.602(c), the Warbasse Project Company is
exempt from state law and regulation respecting the rates of electric
utilities and the financial and organizational regulation of electric
utilities; and (e) none of the Funding Company and the Warbasse Guarantors,
solely by virtue of its relationship with the Warbasse Project Company, is
subject to regulation under PUHCA as a "public utility company" or a "holding
company" or a "subsidiary" or "affiliate" of a holding company, as defined in
Section 2 of PUHCA, or as a "public utility" under the FPA as defined in
Section 201 of the FPA, or under the NYPSL. In addition, assuming that the
Warbasse Project is operated as a cogeneration facility less than 80 MW in
size, the Warbasse Project Company is a co-generation facility as defined in
Section 2 (2-a) of the NYPSL, and as such is exempt from regulation as an
"electric corporation" or a "steam corporation" under the NYPSL.
(xii) (a) the Big Spring Project is a qualifying small
power production facility and an "eligible" wind facility as defined by
Section 3 (17) (E) of the FPA, as amended by Pub. L. 101-575; (b) pursuant to
18 C.F.R. Section 292.601, the Big Spring Guarantor is not subject to
regulation as a "public utility" under the FPA, except to the extent
contemplated by 18 C.F.R. Section 292.601(c); (c) pursuant to 18 C.F.R.
Section 292.602(b), the Big Spring Guarantor is not considered to be an
"electric utility company" as defined in Section 2(a)(3) of PUHCA; (d)
pursuant to 18 C.F.R. Section 292.602(c), the Big Spring Guarantor is exempt
from state law and regulation respecting the rates of electric utilities and
the financial and organizational regulation of electric utilities; and (v)
the Funding Company is not, solely by virtue of its relationship with the Big
Spring Guarantor, subject to regulation under PUHCA as a "public utility
company" or a "holding company" or a "subsidiary" or "affiliate" of a holding
company, as defined in Section 2 of PUHCA, or as a "public utility" under the
FPA as defined in Section 201 of the FPA.
(xiii) (a) the BNY Project, if owned and operated in
accordance with the BNY QF Order and the representations on which the BNY QF
Order (as defined in the opinion) is based, is a QF under PURPA; (b) pursuant
to 18 C.F.R. Section 292.601, the BNY Project Company is not subject to
regulations as a "public utility" under the Federal Power Act, except to the
extent contemplated by 18 C.F.R. Section 292.601(c); (c) pursuant to 18
C.F.R. Section 292.602 (b), the BNY Project Company is not considered to be
an "electric utility company" as defined in Section 2(a)(3) of PUHCA; (d)
neither of the Funding Company and the BNY Guarantor, solely by virtue of its
relationship with the BNY Project Company, is subject to regulation under
PUHCA as a "public utility company" or a "holding company" or a "subsidiary"
or "affiliate" of a holding company, as defined in Section 2 of PUHCA, or as
a "public utility" under the FPA, or under the NYPSL; and (e) the BNY Project
Company, assuming that it is operated in accordance with the representations
on which the NYPSC Orders (as defined in the opinion) are based, is subject
to lightened regulation as an "electric corporation" and a "steam
corporation" and is subject to regulation for safety and environmental
matters as a "gas corporation" pursuant to the NYPSL.
(o) Maples & Calder shall have furnished to the Initial Purchaser
its written opinion, as counsel to the Funding Company and the Trinidad
Cayman Parent (together, the "Cayman Parties") that:
(i) the Cayman Parties have been duly incorporated and are
validly existing and in good standing under the laws of the Cayman Islands;
(ii) each of the Cayman Parties have full power and authority
under its Memorandum and Articles of Association to enter into each of the
documents listed on Schedule 6(o)
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hereto (the "Cayman Documents") to which it is a party and perform its
obligations thereunder and the Funding Company has full power and authority to
enter into and perform its obligations under the Securities;
(iii) the execution, delivery and performance of the Cayman
Documents by the Cayman Parties and the performance of their obligations
thereunder and the creation, issue, execution and delivery and the performance
by the Funding Company of its obligations in respect of the Securities do not
conflict with or result in a breach of any of the terms or provisions of the
Memorandum and Articles of Association of the respective Cayman Parties or any
law, public rule, existing published order or regulation applicable to the
Trinidad Cayman Parent or decree of any governmental authority or agency or any
official body in the Cayman Islands;
(iv) each of the Cayman Documents to which each of the Cayman
Parties is a party has been duly authorized by and on behalf of each of the
Cayman Parties and, assuming that they have been or will be duly executed (as a
deed where required) and unconditionally delivered on behalf of the Cayman
parties, each constitutes, or will constitute, as the case may be, the valid and
binding obligations of the Cayman Parties and , to the extent so enforceable as
a matter of the proper governing law thereof in each case, enforceable in
accordance with its terms;
(v) the creation, issue, offering, execution and delivery of
the Securities have been duly authorized by the Funding Company and when signed
by a Director on behalf of the Funding Company and authenticated in the manner
referred to in the Trust Indenture and unconditionally delivered against due
payment therefor, and in the case of Registered Securities, due registration ,
will constitute the leal, valid and binding obligations of the Funding Company
enforceable in accordance with their respective terms;
(vi) no consents, approvals, or authorizations are required
from any governmental or other regulatory agencies in the Cayman Islands in
connection with the execution or delivery of, or the performance of obligations
contained in the Cayman Documents including, without limitation, the performance
by the Cayman Parties of their obligations under any of them;
(vii) no stamp duties or other taxes are payable under the
laws of the Cayman Islands in respect of the creation, offering, issue or
delivery of the Securities or the execution or delivery of the Cayman Documents
or the enforcement of any thereof and the holders of the Securities will not
incur or become liable for any transfer or other like taxes unde the laws of the
Cayman Islands by reason of the acquisition, ownership or disposal of the
Securities;
(viii) it is not necessary to ensure the legality, validity,
enforceability or admissibility in evidence of the Securities or the Cayman
Documents that any document be filed, recorded or enrolled with any governmental
department or other authority of the Cayman Islands, and further, it is not a
requirement of Cayman Islands law that the offering Circular should be filed,
recorded or enrolled with any governmental department or other authority in the
Cayman islands. The Offering Circular may not be circulated within or to the
public in the Cayman islands, and no invitation to the public in the Cayman
Islands to subscribe for the Securities may be made, unless the Funding Company
is listed on the Cayman Islands Stock Exchange at the time of circulation and
invitation;
(ix) currently, no Taxes will be payable (by withholding or
otherwise) to the Government of the Cayman Islands or any political subdivision
thereof or taxing authority thereof or therein in respect of payments made under
the Cayman Documents. Holders of the Securities will not be
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subject to Cayman Islands taxes or duties on gains realized on the sale or
redemption of the Securities. The Cayman Islands currently have no income,
corporate or capital gains tax and no estate duty, inheritance tax or gift tax;
(x) the courts of the Cayman Islands will observe and give
effect to the choice of New York law as the governing law for the Cayman
Documents and the Securities; and
(xi) based on a search of the Register of Writs and Other
Originating Process, there were no actions pending against the Cayman Parties in
the Grand Court of the Cayman Islands as at the close of business on [the day
preceding the Closing Date].
(p) Fitzwilliam, Stone, Furness-Smith & Morgan shall have furnished
to the Initial Purchaser its written opinion, as counsel to the Trinidad
Obligor, that:
(i) The Trinidad Obligor has been duly organized and is
validly existing and in good standing in Trinidad with corporate power and
authority to enter into each of the documents listed on Schedule 6(p) hereto
(the "Trinidad Documents") to which it is a party and perform its obligations
thereunder;
(ii) the execution, delivery and performance of each of the
Trinidad Documents to which the Trinidad Obligor is a party have been duly
authorized by all necessary corporate action of the Trinidad Obligor, and the
Trinidad Documents to which the Trinidad Obligor is a party have been duly
executed and delivered by the Trinidad Obligor;
(iii) the entry into and performance of the Trinidad
Documents by the Trinidad Obligor will not violate any existing law, order,
decree or regulation in Trinidad or any of the applicable formation documents
of the Trinidad Obligor;
(iv) each of the Trinidad Documents to which the Trinidad
Obligor is a party are valid and binding obligations of the Trinidad Obligor;
(v) the choice of governing law for each of the Trinidad
Documents is a valid choice of law to enforce any such Document and the
submission by the Trinidad Obligor to the jurisdiction of the courts of the
state of the governing law with respect to matters arising from the Trinidad
Documents to which the Trinidad Obligor is a party is valid and binding on
the Trinidad Obligor;
(vi) the appointments of agents for service of process in
accordance with each of the Trinidad Documents to which the Trinidad Obligor
is a party are legal, valid and binding;
(vii) in any proceeding taken in Trinidad for the
enforcement of the Trinidad Documents, a Trinidad court will accept, and give
effect to, a judgment in which damages awarded are denominated in U.S.
currency;
(viii) there are no consents, approvals, authorizations or
orders required under the laws of Trinidad from any governmental or other
regulatory agencies in Trinidad in connection with the execution or delivery
of, or the performance of obligations contained in, the Trinidad Documents
including, without limitation, the performance by the Trinidad Obligor of its
obligations under any of
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them or in connection with any Security interests created by the Trinidad
Obligor under the Trinidad Documents;
(ix) no stamp duties, registration taxes or other duties or
similar taxes or charges are now imposed, or under the present laws of
Trinidad could in the future become imposed, in connection with the
execution, delivery, enforcement or admissibility in evidence of the Trinidad
Documents or the execution of any transactions contemplated thereunder or in
any schedule, exhibit, appendix thereto, other than (a) the documentary stamp
tax and registration fees due upon the stamping and registration of the
Trinidad Loan Agreement and the Mortgage Debenture and (b) the fees dues upon
the filing of the particulars of charge is respect of the Mortgage Debenture
and the Trinidad Obligor Security Agreement;
(x) pursuant to an order of the President of Trinidad under
the Fiscal Incentives Act Ch. 85:01, the Trinidad Obligor has been (a)
classified as a highly capital intensive enterprise, (b) declared an approved
enterprise in respect of its approved product of electricity and (c) granted
total relief from corporation tax and customs duty in respect of its approved
product (the "tax holiday") for a period of eight (8) years following
commercial operation of the Trinidad Project;
(xi) it is not necessary to ensure the legality, validity,
enforceability, priority or admissibility in evidence of the Trinidad
Documents that any Document or any document referred to therein or in any
schedules, exhibits or appendices thereto be filed, recorded or enrolled
with, or approved or exempted by, any governmental department, commission,
agency or other authority of Trinidad or that any other act be done in
Trinidad;
(xii) no party to the Trinidad Documents other than the
Trinidad Obligor and T&TEC is or will be (a) deemed to be resident, domiciled
or carrying on business in Trinidad or (b) required to be licensed, qualified
or otherwise entitled to carry on business in Trinidad in order to enforce
its rights under, or by reason of the execution or delivery and performance
of any of the Trinidad Documents to which it is a party;
(xiii) neither the Trinidad Obligor nor any of its assets
is entitled to immunity from suit or enforcement of a judgment on the grounds
of sovereignty or otherwise in the Courts of Trinidad in proceedings against
it or any of its respective properties in respect of the Trinidad Obligor's
obligations under the Trinidad Documents;
(xiv) upon the proper stamping and registration of the
Trinidad Loan Agreement and the Mortgage Debenture and the filing of
particulars of charge in respect of the Mortgage Debenture, the provisions of
the Trinidad Mortgage Debenture are enforceable against the Trinidad Obligor
thereto and are effective to create, in favor of the Collateral Agent, as
agent, a valid first ranking security interest in the property in or over
which a security interest is granted as described therein;
(xv) the Trinidad Project Documents are valid and binding
obligations of the Trinidad Obligor, enforceable in accordance with their
respective terms;
(xvi) all authorizations, permits or approvals, including,
without limitation, foreign exchange permits, that are required or will
become required to be obtained by the Trinidad Obligor in connection with the
execution, delivery or performance of the Trinidad Project Documents to which
the Trinidad Obligor is a party have been obtained and are in full force and
effect; and
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(xvii) T&TEC is subject to civil and commercial law with
respect to its obligations under the Trinidad Project Documents and T&TEC
should not be entitled to claim and sovereign or statutory immunity including
any immunity against attachment or seizure of assets or enforcement of
judgments with respect to its obligations under the Trinidad Project
Documents. If T&TEC did claim sovereign immunity in respect if the Trinidad
Project Documents, it would be unlikely to be successful in such claim.
(q) Lex Carribean shall have furnished to the Initial Purchaser
its written opinion, as counsel to the Trinidad Project Borrower and the
Trinidad Guarantor (together, the "Barbados Parties"), that:
(i) the Trinidad Guarantor is a society with restricted
liability and has been duly organized and is validly existing and in good
standing in Barbados with corporate power and authority to enter into each of
the documents set forth on Schedule 6(q) hereto (the "Barbados Documents") and
perform its obligations thereunder;
(ii) the Trinidad Project Borrower is licensed as an exempt
society with restricted liability under the Societies with Restricted
Liability Act 1995-7 of Barbados and is validly existing and in good standing
in Barbados with corporate power and authority to enter into each of the
Barbados Documents to which its is a party and perform its obligations
thereunder;
(iii) the execution, delivery and performance of each of
the Barbados Documents to which either Barbados Party is a party have been
duly authorized by all necessary corporate action of either Barbados Party,
and the Barbados Documents to which either Barbados Party is a party have
been duly executed and delivered by the Barbados Party party to such Barbados
Document and when delivered by or on behalf of such party will constitute the
valid and legally binding obligations of each such party in accordance with
the terms thereof;
(iv) the entry into and performance of the Barbados
Documents by either of the Barbados Parties party thereto will not violate
any existing law, order, decree or regulation in Barbados or any of the
applicable formation documents of either Barbados Party;
(v) the choice of New York law as the governing law for
each of the Barbados Documents is a valid choice of law to enforce any such
Barbados Document and the submission by each of the Barbados Parties to the
jurisdiction of New York courts with respect to matters arising from the
Barbados Documents to which either Barbados Party is a party is valid and
binding on each Barbados Party;
(vi) the appointments of agents for service of process are
in accordance with each of the Barbados Documents to which either Barbados
Party is a party and are legal, valid and binding;
(vii) in any proceeding taken in Barbados for the
enforcement of the Barbados Documents, a Barbadian court will accept, and
give effect to, a judgment in which damages awarded are denominated in U.S.
currency. The payment of the judgment will be exempt from Exchange Control
requirements in the case of the Trinidad Project Borrower by virtue of the
provisions of the Societies with Restricted Liability Act and in the case of
the Trinidad Guarantor by virtue of the permission to incur debts in foreign
currency in favor of non-resident persons which has been granted to the
Trinidad Guarantor by the Exchange Control Authority of Barbados;
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(viii) there are no consents, approvals, authorizations or
orders (other than those which have already been obtained) required under the
laws of Barbados from any governmental or other regulatory agencies in
Barbados in connection with the execution or delivery of, or the performance
of obligations contained in, the Barbados Documents including, without
limitation, the performance by either Barbados Party of its obligations under
any of the Barbados Documents or in connection with any security interests
created by either Barbados Party under the Barbados Documents;
(ix) no stamp duties, income taxes, withholdings, levies,
registration taxes or other duties or similar taxes or charges are now
imposed in Barbados or under the present laws or Barbados could in the future
become imposed, in connection with the execution, delivery, enforcement or
admissibility in evidence of the Barbados Documents or the execution of any
transactions contemplated thereunder or in any schedule, exhibit, appendix
thereto or on any payment to be made by the Collateral Agent and/or either of
the Barbados Parties or any other party to the Barbados Documents, as the
case may be, pursuant to the Barbados Documents;
(x) under the present laws of Barbados, no corporation or
income tax or other tax will be imposed on the Trinidad Guarantor, with
respect to its receipt of principal payments made or payable from the
Trinidad Obligor pursuant to the Barbados Documents;
(xi) under the present laws of Barbados, no withholding or
other tax will apply to payments or dividends or the return of capital made
or payable from the Trinidad Guarantor to the Trinidad Project Borrower
(other than on any payment of dividends which may be attributable to the one
outstanding quota which is not held by the Trinidad Project Borrower) and no
corporation or income or other tax will be imposed on the Trinidad Project
Borrower, with respect to its receipt of dividend payments or the return
capital made or payable from the Trinidad Guarantor, pursuant to the Barbados
Documents;
(xii) under the present laws of Barbados, no withholding or
other tax will apply to payments of interest or principal made or payable
from the Trinidad Project Borrower to the Funding Company, pursuant to the
Barbados Documents;
(xiii) it is not necessary to ensure the legality,
validity, enforceability, priority or admissibility in evidence of the
Barbados Documents that any Barbados Document or any document referred to
therein or in any schedules thereto be filed, recorded or enrolled with, or
approved or exempted by, any governmental department, commission, agency or
other authority of Barbados or that any other act be done in Barbados;
(xiv) no party to the Barbados Documents other than either
of the Barbados Parties (a) is or will be deemed to be resident, domiciled or
carrying on business in Barbados (provided that the businesses of the
non-Barbados parties are not centrally managed and controlled in Barbados) or
(b) is required to be licensed, qualified or otherwise entitled to carry on
business in Barbados in order to enforce its rights under, or by reason of
the execution or delivery and performance of any of the Barbados Documents to
which it is a party;
(xv) neither of the Barbados Parties nor any of its assets
is entitled to immunity from suit or enforcement of a judgment on the grounds
of sovereignty or otherwise in the courts of Barbados in proceedings against
it or any of its respective properties in respect of either of the Barbados
Parties' obligations under the Barbados Documents; and
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(xvi) under the present provisions of the CARICOM Treaty,
no corporation or income tax or other tax will be imposed on the Trinidad
Guarantor, with respect to its receipt of dividend payments made or payable
from the Trinidad Obligor, pursuant to the Barbados Documents.
(r) Ernst & Young shall have furnished to the Initial Purchaser
its written opinion, as special tax counsel to the Barbados Parties and the
Trinidad Obligor, that:
(i) The Trinidad Obligor should be regarded as a resident
of Trinidad for tax purposes under Trinidad domestic law and under Article 4
of the CARICOM Treaty;
(ii) Payments of dividends (other than preference
dividends) from the Trinidad Obligor to the Trinidad Guarantor will be
subject to withholding tax in Trinidad at the rate of zero percent pursuant
to paragraph 2, Article 11 of the CARICOM Treaty;
(iii) Payments of principal from the Trinidad Obligor to
the Trinidad Guarantor under the Trinidad Loan prior to October 30, 2007,
will not be subject to withholding taxes in Trinidad;
(iv) Payments of interest from the Trinidad Obligor to the
Trinidad Guarantor under the Trinidad Loan from October 30, 2007, will be
subject to a 15% withholding tax in Trinidad pursuant to paragraph 2, Article
12 of the CARICOM Treaty;
(v) The interest payments from October 30, 2007 will be
deductible by the Trinidad Obligor for Trinidad income tax purposes pursuant
to section 10 of the Trinidad Income Tax Act;
(vi) The Trinidad Guarantor should be regarded as a
resident of Barbados for tax purposes under Barbados domestic law and under
Article 4 of the CARICOM Treaty;
(vii) Although, as a general rule, the Trinidad Guarantor
is subject to tax on its worldwide income at the current rate of 40%, by
virtue of paragraph 1 of Article 11 and paragraph 1 of Article 12,
respectively, of the CARICOM Treaty, no further Barbados corporation tax is
payable on receipt of non-preference dividends and interest from the Trinidad
Obligor;
(viii) Repayments of principal made by the Trinidad Obligor
to the Trinidad Guarantor under the Trinidad Loan will not be taxable under
Barbados law;
(ix) Pursuant to section 65 of the Barbados Income Tax Act
("BITA"), no Barbados withholding tax is payable on dividends paid from the
Trinidad Guarantor to the Trinidad Project Borrower;
(x) Payments by the Trinidad Guarantor to the Trinidad
Project Borrower which represent returns of contributed capital, will not be
subject to withholding tax in Barbados;
(xi) The Trinidad Project Borrower should be regarded as a
resident of Barbados for the purposes under Barbados domestic law;
(xii) Although, as a general rule, the Trinidad Project
Borrower is subject to tax on its worldwide income at rates ranging from 2
1/2% to 1%, pursuant to paragraph 9(l)(ii) of BITA,
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<PAGE>
no further Barbados tax is payable on receipt of the non-preference dividend
payments from the Trinidad Guarantor;
(xiii) Under Barbados domestic law, returns of contributed
capital are not taxable; and
(xiv) Pursuant to section 45 of the Barbados Society with
Restricted Liability Act, payments of any kind by the Trinidad project
Borrower to the Funding Company (including those on the Trinidad Project
Note) will be exempt from Barbados withholding tax.
(s) Clarke, Thomas & Winters shall have furnished to the Initial
Purchaser their written opinion, as counsel to the Big Spring Guarantor, that:
(i) The Big Spring Guarantor is in good standing as a
foreign limited partnership under the laws of the State of Texas with power
and authority to (i) execute, deliver and perform its obligations under each
of the documents set forth on Schedule 6.1(s) (the "Texas Documents"), (ii)
carry on its business as it is currently being conducted and (iii) own, lease
and operate its properties;
(ii) the Big Spring Deed of Trust, when duly executed,
properly acknowledged and recorded with a complete and accurate legal
description of the real property attached and the required filing fees are
paid (a) is in proper form under the laws of the State of Texas to be legally
binding, valid and enforceable against the Big Spring Guarantor in accordance
with its terms and (b) is in proper form for recording in the State of Texas;
(iii) there are no consents, approvals, authorizations or
orders, except for such as have been obtained, required under the laws of
Texas from any governmental or other regulatory agencies in Texas in
connection with the execution or delivery of, or the performance of
obligations contained in, the Texas Documents including, without limitation,
the performance by the Big Spring Guarantor of its obligations under any of
them or in connection with any security interests created by the Texas
Documents;
(iv) the execution and delivery of each Document to which
the Big Spring Guarantor is a party will not conflict with or constitute a
breach or violation of any Texas state statute, rule or regulation applicable
to the Big Spring Guarantor;
(v) the form of Big Spring Deed of Trust, when duly
executed and properly acknowledged and recorded with a complete and accurate
legal description of the real property attached, and the required filing fees
are paid, is sufficient to create a valid, perfected, enforceable lien in
favor of the Collateral Agent, on behalf of the Secured Parties upon the
leasehold estate of the Big Spring Guarantor described therein;
(vi) the Big Spring Deed of Trust and the Financing
Statement to be filled in the Office of the County Clerk of each county in
Texas in which the Big Spring Guarantor leases real property with respect to
goods which are or are to become fixtures, when duly executed and properly
acknowledged and recorded with a complete and accurate legal description of
the real property attached, and the required filing fees are paid, are
sufficient to constitute "fixture filings" within the meaning of the UCC as
enacted in the State of Texas, and to give constructive notice to third
parties of the security interest granted to Collateral Agent, on behalf of
the Secured Parties; in such fixtures; and
30
<PAGE>
(vii) there are no mortgage taxes or filing fees payable to
the State of Texas or any of its political subdivisions as a consequence of
the execution or delivery of the Texas Documents or the creation of the
indebtedness evidenced or secured by any of the Texas Documents or the filing
or recording of any of the Texas Documents, except (a) normal filing fees
payable to the Secretary of State of the State of Texas and normal recording
fees payable to the political subdivisions thereof; and (b) any fee or charge
payable to any entity whose services may have been used to assist in such
filing and recordation.
(t) Moses & Singer, as special New York counsel to Funding Company
and each of the Sponsor Subsidiaries, shall have furnished to the Initial
Purchaser their written opinion, addressed to the Initial Purchaser and dated
the Closing Date, with respect to the non-consolidation and bankruptcy
remoteness among the Sponsor and the Sponsor Subsidiaries in form and
substance satisfactory to the Initial Purchaser.
(u) Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the
Initial Purchaser shall have furnished to the Initial Purchaser their written
opinion, as counsel to the Initial Purchaser, addressed to the Initial
Purchaser and dated the Closing Date, with respect to the issuance and sale
of the Securities, the Indenture, the Offering Circular (together with any
amendment or supplement thereto) and other related matters as the Initial
Purchaser shall reasonably require, and the Funding Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(v) On or prior to the Closing Date, each of the Deeds of Trust
shall have been delivered to the Real Property Records of Howard County,
Texas for due recordation as a mortgage of real estate, and any required
filings with respect to personal property and fixtures subject to the Liens
of the Deeds of Trust shall have been delivered to the Real Property Records
of Howard County, Texas for filing and to each other place in which such
recording or filing is required to protect, preserve and perfect the Liens of
the Deeds of Trust as a valid and enforceable Lien on the real estate and as
a valid and enforceable security interest in the personal property and
fixtures covered or purported to be covered by the Deeds of Trust.
(w) On or prior to the Closing Date, the Funding Company, each
U.S. Guarantor and each other Project Obligor shall have furnished to the
Initial Purchaser evidence reasonably satisfactory to the Initial Purchaser
of the appointment by each such party of the agent for service of process
referenced in Section 6(m)(xxiv) and the acceptance of each such appointment
by such agent.
(x) On or prior to the Closing Date, the Sponsor and the Bond
Trustee shall have entered into that certain covenant agreement pursuant to
which the Sponsor agrees to certain restrictions on its business activities
while the Securities remain outstanding or unless the Funding Company's
Rating is reaffirmed by S&P.
(y) On or prior to the Closing Date, Funding Company and/or the
Big Spring Guarantor shall have delivered evidence reasonably satisfactory to
the Initial Purchaser that the Vestas Agreement and related material
sub-contracts shall have been assigned from the Sponsor to the Big Spring
Guarantor.
(z) On or prior to the Closing Date Funding Company and/or the
Warbasse Guarantor shall have delivered evidence reasonably satisfactory to
the Initial Purchaser that all amounts owed to Cogeneration Technologies,
Inc. pursuant to the operating agreement for the Warbasse Project shall have
been either indefeasibly paid in full, forgiven or fully subordinated to
payment on the Warbasse Notes.
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(aa) Copies of such opinions, certificates, letters and documents
as the Initial Purchaser may reasonably request, in form and substance
reasonably satisfactory to the Initial Purchaser and its counsel, shall have
been furnished to the Initial Purchaser.
7. Indemnification and Contribution.
(a) The Funding Company and the U.S. Guarantors, jointly and
severally, will indemnify and hold harmless the Initial Purchaser against any
losses, claims, damages or liabilities, joint or several, to which the
Initial Purchaser may become subject, under the Securities Act or the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any breach of any of the representations and warranties of the Funding
Company and the U.S. Guarantors contained herein or any untrue statement or
alleged untrue statement of any material fact contained in the Offering
Circular, or any amendment or supplement thereto, or any related Preliminary
Offering Circular, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and will reimburse the Initial Purchaser for any legal
or other expenses reasonably incurred by the Initial Purchaser in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Funding
Company and the U.S. Guarantors will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Funding Company by the
Initial Purchaser specifically for use therein, it being understood and
agreed that the only such information consists of the information described
as such in subsection (b) below.
(b) The Initial Purchaser will indemnify and hold harmless the
Funding Company and the U.S. Guarantors against any losses, claims, damages
or liabilities to which the Funding Company and the U.S. Guarantors may
become subject, under the Securities Act or the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Offering Circular, or
any amendment or supplement thereto, or any related Preliminary Offering
Circular, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Funding Company by the Initial Purchaser specifically for
use therein, and will reimburse any legal or other expenses reasonably
incurred by the Funding Company in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by the Initial Purchaser consists of the following information in
the Offering Circular: the last paragraph at the bottom of the cover page
concerning the terms of the offering by the Initial Purchaser; the legend
concerning stabilizing on page 3; and under the caption "Plan of
Distribution", the second paragraph the fifth paragraph, the third sentence
of the seventh paragraph and the eighth paragraph.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any
32
<PAGE>
liability which it may have to any indemnified party otherwise than under
subsection (a) or (b) above unless the indemnifying party is prejudiced. In case
any such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party (which consent shall not be unreasonably
withheld), effect any settlement of any pending or threatened action in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on any claims that are the subject matter of such action.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Funding Company and the U.S. Guarantors on the one hand and the Initial
Purchaser on the other from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by Applicable Law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Funding
Company and the U.S. Guarantors on the one hand and the Initial Purchaser on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Funding Company and the
U.S. Guarantors on the one hand and the Initial Purchaser on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Funding Company and the U.S.
Guarantors bear to the total discounts and commissions received by the Initial
Purchaser from the Funding Company under this Agreement. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Funding Company
or the U.S. Guarantors, on the one hand, or the Initial Purchaser, on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The amount
paid by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), the Initial Purchaser shall not be required
to contribute any amount in excess of the amount by which the total price at
which the Securities purchased by it were resold exceeds the amount of any
damages which the Initial Purchaser has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission.
(e) The obligations of the Funding Company and the U.S. Guarantors
under this Section 7 shall be in addition to any liability which the Funding
Company and the U.S. Guarantors may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls the Initial
Purchaser within the meaning of the Securities Act or the Exchange Act; and
the obligations of the Initial Purchaser under this Section 7 shall be in
addition to any liability which the Initial Purchaser may
33
<PAGE>
otherwise have and shall extend, upon the same terms and conditions, to each
officer, director, employee, agent or shareholder member, or partner, as the
case may be, of the Funding Company and each U.S. Guarantor and to each officer,
director, employee, agent or shareholder member, or partner, as the case may be,
of each Person, if any, who controls the Funding Company and the U.S. Guarantors
within the meaning of the Securities Act or the Exchange Act.
8. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Funding Company and the U.S. Guarantors or their officers and
of the Initial Purchaser set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation, or statement
as to the results thereof, made by or on behalf of the Initial Purchaser, the
Funding Company and the U.S. Guarantors or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Securities. If for any reason the
purchase of the Securities by the Initial Purchaser is not consummated, the
Funding Company and the U.S. Guarantors shall remain responsible for the
expenses to be paid or reimbursed by them pursuant to Section 5 and the
respective obligations of the Funding Company and the U.S. Guarantors and the
Initial Purchaser pursuant to Section 7 shall remain in effect. If the purchase
of the Securities by the Initial Purchaser is not consummated for any reason
other than solely because of the occurrence of any event specified in clause
(iii), (iv) or (v) of Section 6(b), the Funding Company will reimburse the
Initial Purchaser for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by it in connection with the
offering of the Securities.
9. Notices. All communications hereunder will be in writing and, if
sent to the Initial Purchaser will be mailed, delivered or telegraphed and
confirmed to Credit Suisse First Boston Corporation, Eleven Madison Avenue, New
York, N.Y. 10010, Attention: Investment Banking Department -- Transactions
Advisory Group or, if sent to (i) the Funding Company will be mailed, delivered
or telegraphed and confirmed to it c/o Queensgate SPV Services Limited at P.O.
Box 1093, GT Compass Centre, 2nd Floor, Crewe Road, Grand Cayman, Cayman Islands
and (ii) the U.S. Guarantors, will be mailed, delivered or telegraphed and
confirmed to it at 280 Park Avenue, Suite 2700W, New York, New York 10017,
Attention: Michael Trachtenberg; provided, however that any notice to the
Initial Purchaser pursuant to Section 7 hereof shall be mailed, delivered or
telegraphed and confirmed to the Initial Purchaser.
10. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7, and no other person will have any
right or obligation hereunder except that holders of Securities shall be
entitled to enforce the agreements for their benefit contained in the second and
third sentences of Section 5(b) hereof against Funding Company as if such
holders were party hereto.
11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
12. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to principles of conflicts of laws.
13. Jurisdiction. The Funding Company and each of the U.S. Guarantors
hereby submit to the non-exclusive jurisdiction of the Federal and state courts
in the Borough of Manhattan in The City of New York in any suit or proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. The Funding Company and each of the U.S. Guarantors irrevocably waives
any claim, defense or
34
<PAGE>
objection that it is not subject to personal jurisdiction in a Federal or state
court in the Borough of Manhattan in The City of New York or that venue for such
suit is not properly laid in such court. The Funding Company and each of the
U.S. Guarantors irrevocably appoints Corporation Services Company as its
authorized agent in the Borough of Manhattan in The City of New York upon which
process may be serviced in any such suit or proceeding, and agrees that service
of process upon such agent, and written notice of said service to such entity,
by the person serving the same to the address provided in Section 9 hereof shall
be deemed in every respect effective service of process upon the Funding Company
or any U.S. Guarantor, as the case may be, in any such suit or proceeding. The
Funding Company and each of the U.S. Guarantors hereby further agree to take any
and all action as may be necessary to maintain such designation and appointment
of such agent in full force and effect for a period of six (6) years from the
dat e of this Agreement.
14. Limitation on Liability. The obligations and liabilities of the
Funding Company hereunder are payable from, and recourse solely to, the Funding
Company's interest in the Funding Collateral. Neither the Initial Purchase nor
any other Person (including the Holders) shall be entitled to take further steps
in respect of any claim against the Funding Company to recover amounts due
following the application of the Funding Collateral to meet any claims against
the Funding Company.
If the foregoing is in accordance with the Initial Purchaser's
understanding of our agreement, kindly sign and return to us one of the
counterparts hereof, whereupon it will become a binding agreement between the
Funding Company, each of the U.S. Guarantors and the Initial Purchaser in
accordance with its terms.
Very truly yours,
35
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED
By:
----------------------------------
Name: Martin Couch
Title: Director
BROOKLYN NAVY YARD POWER LLC
By: B-41 ASSOCIATES, L.P.,
its Managing Member
By: B-41 MANAGEMENT CORPORATION,
its General Partner
By:
---------------------------
Name: Michael Trachtenberg
Title: Vice President
WARBASSE POWER I LLC
By: COGENERATION TECHNOLOGIES, INC.
its Managing Member
By:
---------------------------
Name: Michael Trachtenberg
Title: Executive Vice President
36
<PAGE>
WARBASSE POWER II LLC
By: YORK COGEN PARTNERS, L.P.
its Managing Member
By: RRR'S VENTURES, LTD.
its General Partner
By:
----------------------------
Name: Michael Tractenberg
Title: Vice President
NEW WORLD POWER TEXAS RENEWABLE ENERGY
LIMITED PARTNERSHIP
By: BIG SPRINGS TEXAS
ENERGY MANAGEMENT, INC.
its General Partner
By:
---------------------------
Name: Michael Trachtenberg
Title: Vice President
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
By:
------------------------------
Name:
Title:
37
<PAGE>
Schedule 6(m): U.S. Documents
1. The Securities
2. The Indenture
3. The Purchase Agreement
4. The U.S. Deposit and Disbursement Agreement
5. The Trinidad Deposit and Disbursement Agreement
6. The Intercreditor Agreement
7. The Exchange and Registration Rights Agreement
8. The Trinidad U.S. Parent Pledge Agreement
9. The Funding Company Security Agreement
10. The U.S. Project Loan Agreement
11. The Trinidad Project Loan Agreement
12. The Subscription Agreement, dated as of August 4, 1998, between the
Trinidad Cayman Parent and the Trinidad U.S. Parent
13. The U.S. Project Note Pledge Agreement
14. The Trinidad Project Note Pledge Agreements
15. The Trinidad Loan Agreement
16. The BNY Guarantee
17. The BNY Security Agreement
18. The BNY Pledge Agreement
19. The Warbasse Guarantees
20. The Warbasse Security Agreements
21. The Warbasse Pledge Agreements
22. The Big Spring Security Agreement
23. The Big Spring Pledge Agreement
24. The Big Spring Mortgage
25. The Big Spring Guarantee
26. The Assignment and Security Agreement, dated as of August 4, 1998, between
the Trinidad Project Borrower and the Collateral Agent
27. The Assignment and Security Agreement, dated as of August 4, 1998, between
the Trinidad Obligor and the Collateral Agent
28. The Assignment and Security Agreement, dated as of August 4, 1998, between
the Trinidad Obligor and the Collateral Agent
29. The Trinidad Pledge Agreement dated as of August 4, 1998, between the
Trinidad U.S. Parent in favor of the Collateral Agent
30. The Trinidad Pledge Agreement dated as of August 4, 1998, between the
Trinidad Guarantor in favor of the Collateral Agent
31. The Trinidad Pledge Agreement dated as of August 4, 1998, between the
Trinidad Project Borrower in favor of the Collateral Agent
32. The Trinidad Pledge Agreement dated as of August 4, 1998, between the
Trinidad Cayman Parent in favor of the Collateral Agent
33. The U.S. Project Note
34. The Trinidad Project Note
1
<PAGE>
Schedule 6(o): Cayman Documents
1. The Indenture
2. The Purchase Agreement
3. The U.S. Deposit and Disbursement Agreement
4. The Trinidad Deposit and Disbursement Agreement
5. The Intercreditor Agreement
6. The Registration Rights Agreement
7. The Trinidad Pledge Agreement, dated as of August 4, 1998, by the Trinidad
Cayman Parent in favor of the Collateral Agent.
8. The Funding Company Security Agreement
9. The U.S. Project Loan Agreement
10. The Trinidad Project Loan Agreement
11. The U.S. Project Note Pledge Agreement
12. The Trinidad Project Note Pledge Agreement
13. The Subscription Agreement, dated as of August 4, 1998, between the
Trinidad Cayman Parent and York T&T Holdings, Inc.
14. The Subscription Agreement, dated as of August 4, 1998, between the
Trinidad Project Borrower and Trinidad Cayman Parent.
1
<PAGE>
Schedule 6(p): Trinidad Documents
1. The Trinidad Deposit and Disbursement Agreement
2. The Intercreditor Agreement
3. The Subscription Agreement, dated as of August 4, 1998, between the
Trinidad Guarantor and the Trinidad Obligor
4. The Trinidad Loan Agreement
5. The Trinidad Mortgage Debenture
6. The Pledge Agreement, dated as of August 4, 1998, by the Trinidad Obligor
in favor of the Collateral Agent
7. The Trinidad PPA
1
<PAGE>
Schedule 6(q): Barbados Documents
1. The Trinidad Deposit and Disbursement Agreement
2. The Intercreditor Agreement
3. The Purchase Agreement
4. The Subscription Agreement, dated as of August 4, 1998, between the
Trinidad Guarantor and the Trinidad Obligor
5. The Subscription Agreement, dated as of August 4, 1998, between the
Trinidad Guarantor and the Trinidad Project Borrower
6. The Subscription Agreement, dated as of August 4, 1998, between the
Trinidad Project Borrower and the Trinidad Cayman Parent
7. The Trinidad Guarantee
8. The Trinidad Project Loan Agreement
9. The Trinidad Assignment and Security Agreement, dated as of August 4, 1998,
between the Trinidad Project Borrower and the Collateral Agent
10. The Trinidad Assignment and Security Agreement, dated as of August 4, 1998,
between the Trinidad Guarantor and the Collateral Agent
11. The Trinidad Loan Agreement
12. The Pledge Agreement, dated as of August 4, 1998, by the Trinidad Guarantor
in favor of the Collateral Agent
13. The Pledge Agreement, dated as of August 4, 1998, by the Trinidad Project
Borrower in favor of the Collateral Agent
1
<PAGE>
Schedule 6(s): Texas Documents
1. The Big Spring Deed of Trust
2. The Big Spring PPA
3. Each of the UCC-1's to be filed in the State of Texas
1
<PAGE>
ANNEX A
INDENTURE
1
<PAGE>
Exhibit 4.1
TRUST INDENTURE
between
YORK POWER FUNDING (CAYMAN) LIMITED
as Issuer
and
THE BANK OF NEW YORK,
as Bond Trustee
------------------------------------
Dated as of August 4, 1998
------------------------------------
12.0% Senior Secured Bonds Due 2007
<PAGE>
TABLE OF CONTENTS
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Page
ARTICLE 1 DEFINITIONS AND CONSTRUCTION; INDENTURE TO CONSTITUTECONTRACT; AGENCY
<S> <C>
Section 1.1 Definitions; Construction...................................................................2
Section 1.2 Indenture to Constitute Contract............................................................3
Section 1.3 Conflict with Trust Indenture Act...........................................................3
Section 1.4 Agency......................................................................................3
Section 1.5 Beneficial Holders..........................................................................3
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 2 THE SECURITIES
<S> <C>
Section 2.1 Authorization, Amount, Terms and Issuance of Securities.....................................3
Section 2.2 Authorization and Terms of the Initial Securities...........................................4
Section 2.3 Additional Securities.......................................................................5
Section 2.4 Record Dates................................................................................9
Section 2.5 Form of Securities..........................................................................9
Section 2.6 Maintenance of Offices and Agencies........................................................11
Section 2.7 Transfer and Exchange of Securities........................................................14
Section 2.8 Execution..................................................................................23
Section 2.9 Authentication and Delivery................................................................23
Section 2.10 Mutilated, Destroyed, Lost or Stolen Securities...........................................24
Section 2.11 Temporary Securities......................................................................25
Section 2.12 Cancellation and Destruction of Surrendered Securities....................................25
Section 2.13 Disposition of Bond Proceeds of Initial Securities........................................25
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 3 REDEMPTION OF SECURITIES
<S> <C>
Section 3.1 Redemption at the Option of Funding Company or the Holders.................................25
Section 3.2 Mandatory Redemption.......................................................................26
Section 3.3 Redemption Account.........................................................................28
Section 3.4 Prepayment of Project Loans................................................................28
Section 3.5 Notice of Redemption.......................................................................28
Section 3.6 Securities Payable on Redemption Date......................................................30
Section 3.7 Selection of Securities to be Redeemed.....................................................30
Section 3.8 Securities Redeemed in Part................................................................30
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 4 COVENANTS
<S> <C>
Section 4.1 Payment of Principal of and Interest on Securities.........................................31
Section 4.2 Reporting Requirements.....................................................................31
Section 4.3 Corporate Existence; Compliance with Applicable Laws.......................................32
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Section 4.4 [Intentionally Omitted.] ..................................................................33
Section 4.5 Payment of Taxes and Claims................................................................33
Section 4.6 Books and Records..........................................................................33
Section 4.7 Right of Inspection........................................................................33
Section 4.8 Use of Proceeds............................................................................33
Section 4.9 Performance of Finance Documents...........................................................33
Section 4.10 Rating....................................................................................34
Section 4.11 Rule 144A Information; Other Information..................................................34
Section 4.12 Auditors..................................................................................34
Section 4.13 Big Spring and Trinidad Construction......................................................34
Section 4.14 Permitted Indebtedness....................................................................35
Section 4.15 Permitted Liens...........................................................................35
Section 4.16 Guarantees................................................................................35
Section 4.17 Business Activities.......................................................................36
Section 4.18 Assignment of Obligations; Additional Agreements..........................................36
Section 4.19 Fundamental Changes; Sale of Assets.......................................................36
Section 4.20 Investments; Transactions with Affiliates.................................................36
Section 4.21 Project Loan Agreements and Project Notes.................................................37
Section 4.22 Restricted Payments.......................................................................37
Section 4.23 Further Assurances........................................................................37
Section 4.24 Taxation..................................................................................37
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 5 EVENTS OF DEFAULT; REMEDIES
<S> <C>
Section 5.1 Events of Default..........................................................................38
Section 5.2 Remedies Upon an Indenture Event of Default................................................41
Section 5.3 Specific Remedies..........................................................................44
Section 5.4 Judicial Proceedings Instituted by Bond Trustee............................................44
Section 5.5 Control by Holders.........................................................................47
Section 5.6 Waiver of Defaults and Events of Default...................................................47
Section 5.7 Limitation on Suits by Holders.............................................................48
Section 5.8 Undertaking to Pay Court Costs.............................................................48
Section 5.9 Unconditional Right to Receive Payment.....................................................49
Section 5.10 Application of Monies Collected by Bond Trustee...........................................49
Section 5.11 Waiver of Appraisal, Valuation, Stay and Right to Marshalling.............................50
Section 5.12 Remedies Cumulative; Delay or Omission Not Waiver.........................................51
Section 5.13 The Intercreditor Agreement...............................................................51
Section 5.14 Limitation on Holders' Bankruptcy Rights..................................................51
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 6 ACTS OF HOLDERS
<S> <C>
Section 6.1 Acts of Holders............................................................................52
Section 6.2 Purposes for Which Holders' Meeting May Be Called..........................................53
Section 6.3 Call of Meetings by Trustee................................................................54
Section 6.4 Funding Company and Holders May Call Meeting...............................................54
Section 6.5 Persons Entitled to Vote at Meeting........................................................54
Section 6.6 Determination of Voting Rights; Conduct and Adjournment of Meeting.........................55
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Section 6.7 Counting Votes and Recording Action of Meeting.............................................56
Section 6.8 Evidence of Action Taken by Holders........................................................56
Section 6.9 Proof of Execution of Instruments and of Holding of Securities.............................56
Section 6.10 Securities Owned by Certain Persons Deemed Not Outstanding................................57
Section 6.11 Right of Revocation of Action Taken; Acts of Holders Binding..............................58
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 7 SUPPLEMENTAL INDENTURES
<S> <C>
Section 7.1 Amendments and Supplements to Indenture Without Consent of Holders.........................59
Section 7.2 Amendments and Supplements to Indenture With Consent of Holders............................59
Section 7.3 Amendment of Project Loan Agreements or Project Notes......................................60
Section 7.4 Bond Trustee Authorized to Join in Amendments and Supplements; Reliance on Counsel.........60
Section 7.5 Effect of Supplemental Indentures..........................................................60
Section 7.6 Conformity with Trust Indenture Act........................................................61
Section 7.7 Reference in Securities to Supplemental Indentures.........................................61
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE 8 SATISFACTION AND DISCHARGE; DEFEASANCE
<S> <C>
Section 8.1 Satisfaction and Discharge of Indenture....................................................61
Section 8.2 Defeasance.................................................................................62
Section 8.3 Survival of Obligations....................................................................64
Section 8.4 Application of Trust Money.................................................................65
Section 8.5 Unclaimed Monies...........................................................................65
Section 8.6 Indemnity for US Government Obligations....................................................65
Section 8.7 Reinstatement..............................................................................65
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 9 THE BOND TRUSTEE
<S> <C>
Section 9.1 Certain Duties and Responsibilities of Bond Trustee........................................66
Section 9.2 Certain Rights of Bond Trustee.............................................................67
Section 9.3 Notice of Defaults.........................................................................68
Section 9.4 Not Responsible for Recitals or Issuance of Securities.....................................69
Section 9.5 May Hold Securities........................................................................69
Section 9.6 Monies Held in Trust.......................................................................69
Section 9.7 Compensation; Reimbursement; Indemnification...............................................70
Section 9.8 Eligibility................................................................................70
Section 9.9 Resignation and Removal; Appointment of Successor..........................................71
Section 9.10 Acceptance of Appointment by Successor Bond Trustee.......................................72
Section 9.11 Merger, Conversion, Consolidation or Succession to Business...............................73
Section 9.12 Authorization.............................................................................73
Section 9.13 Disqualification; Conflicting Interests...................................................73
Section 9.14 Trustee's Application for Instructions from the Company...................................73
Section 9.15 Appointment of Co-Bond Trustee or Separate Bond Trustee...................................74
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 10 HOLDERS' LISTS AND REPORTS BY BOND TRUSTEE
<S> <C>
Section 10.1 Names and Addresses of Holders............................................................75
Section 10.2 Bond Trustee and Funding Company to Furnish Other Information.............................75
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE 11 MISCELLANEOUS PROVISIONS
<S> <C>
Section 11.1 Third Party Beneficiaries.................................................................76
Section 11.2 Severability..............................................................................76
Section 11.3 Substitute Notice.........................................................................76
Section 11.4 Notice to Rating Agencies.................................................................76
Section 11.5 Notices...................................................................................76
Section 11.6 Successors and Assigns....................................................................77
Section 11.7 Section Headings..........................................................................77
Section 11.8 Counterparts..............................................................................77
Section 11.9 Governing Law; Submission to Jurisdiction; Judgment Currency..............................77
Section 11.10 Legal Holidays...........................................................................78
Section 11.11 Limitation of Liability..................................................................78
Section 11.12 English Language.........................................................................79
Section 11.13 Entire Agreement.........................................................................79
Section 11.14 Survival.................................................................................79
Section 11.15 All Payments in US Dollars...............................................................79
Section 11.16 Trust Indenture Act......................................................................79
Section 11.17 Communication Among Holders..............................................................79
Section 11.18 Officers' Certificates and Opinions of Counsel...........................................79
Section 11.19 Form of Certificates and Opinions Delivered to Trustee...................................80
Section 11.20 Delivery of Certificates to Rating Agencies..............................................81
</TABLE>
SCHEDULE I AMORTIZATION OF PRINCIPAL
SCHEDULE II ACCOUNT INFORMATION
SCHEDULE III NOTICE ADDRESSES
APPENDIX A DEFINITIONS
EXHIBIT A FORM OF FACE OF SECURITY
EXHIBIT B FORM OF TERMS AND CONDITIONS OF SECURITIES
EXHIBIT C FORM OF TRANSFER
EXHIBIT D FORM OF TRANSFER RESTRICTION LEGEND
EXHIBIT E FORM OF REGULATION S TRANSFER CERTIFICATE
EXHIBIT F FORM OF RULE 144 TRANSFER CERTIFICATE
EXHIBIT G FORM OF RULE 144A TRANSFER CERTIFICATE
EXHIBIT H [INTENTIONALLY OMITTED]
EXHIBIT I FORM OF REGULATION S EXCHANGE CERTIFICATE
EXHIBIT J FOR M OF RULE 144A EXCHANGE CERTIFICATE
EXHIBIT K [INTENTIONALLY OMITTED]
EXHIBIT L FORM OF [BIG SPRING] [TRINIDAD] COMPLETION
CERTIFICATE
EXHIBIT M FORM OF REQUEST FOR INFORMATION FROM THE BOND TRUSTEE
EXHIBIT N FORM OF SUBORDINATION PROVISIONS
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TRUST INDENTURE
This TRUST INDENTURE, dated as of August 4, 1998 (this "Indenture"), by
and between YORK POWER FUNDING (CAYMAN) LIMITED, a limited liability company
incorporated under the laws of the Cayman Islands ("Funding Company"), and THE
BANK OF NEW YORK, a New York banking corporation, as trustee (in such capacity,
together with its successors in such capacity, the "Bond Trustee").
W I T N E S S E T H:
WHEREAS, Funding Company has been formed for the sole purpose of
issuing securities under this Indenture, as principal and as agent for the U.S.
Guarantors, and for entering into those transactions incident hereto; and
WHEREAS, in furtherance of such purpose, Funding Company has determined
to issue the Securities, initially to be issued in the aggregate principal
amount of $150,000,000;
WHEREAS, Funding Company has entered into the Project Loans pursuant to
which the proceeds of the Securities will be loaned to the Project Borrowers to
be used, among other things, (i) to complete the Big Spring Project, (ii) to
complete the Trinidad Project, (iii) to fund the Debt Service Reserve Account
and (iv) for general corporate purposes;
WHEREAS, the Project Loans shall provide for the payment by the Project
Borrowers of amounts sufficient to enable Funding Company to pay the principal
of, premium (if any), and interest on all Securities at any time issued and
outstanding under this Indenture according to their tenor and to pay other costs
of Funding Company and the Bond Trustee incurred in connection with the
Securities, this Indenture, the Project Loan Agreements and the Security
Documents;
WHEREAS, the Guarantors have guaranteed to the Bond Trustee the payment
of principal, premium (if any), interest and other amounts due from Funding
Company under this Indenture with respect to the Securities; and
WHEREAS, the execution and delivery of the Securities and of this
Indenture have been duly authorized and all things necessary to make the
Securities, when executed by Funding Company and authenticated by the Bond
Trustee, valid and binding legal obligations of Funding Company and to make this
Indenture a valid and binding agreement have been done.
NOW, THEREFORE, for and in consideration of the premises, the covenants
herein contained and the purchase of the Securities by the Holders thereof, it
is mutually covenanted and agreed, for the benefit of the parties hereto and the
equal and proportionate benefit of all Holders, as follows:
ARTICLE 1
DEFINITIONS AND CONSTRUCTION; INDENTURE TO CONSTITUTE
CONTRACT; AGENCY
<PAGE>
Section 1.1 Definitions; Construction. (a) Capitalized terms used in
this Indenture shall have the respective meanings given to such terms in
Appendix A attached hereto, which Appendix A is hereby incorporated by reference
herein.
(b) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP;
(c) all references in this Indenture to designated "Articles,"
"Sections," "Exhibits", and other subdivisions are to the designated Articles,
Sections, Exhibits and other subdivisions of this Indenture;
(d) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(e) unless otherwise expressly specified, any agreement, contract or
document defined or referred to herein shall mean such agreement, contract or
document as in effect as of the date hereof, as the same may thereafter be
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms thereof and of this Indenture and the other Finance
Documents and including any agreement, contract or document in substitution or
replacement of any of the foregoing;
(f) unless the context clearly intends the contrary, pronouns having a
masculine or feminine gender shall be deemed to include the other;
(g) any reference to any Person shall include its successors and
assigns, and in the case of any Governmental Authority, any Person succeeding to
its functions and capacities; and
(h) all other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meaning assigned to them
therein.
Section 1.2 Indenture to Constitute Contract. In consideration of the
purchase and acceptance of any or all of the Securities by those who shall hold
the same from time to time, the provisions of this Indenture shall be part of
the contract of Funding Company with the Holders of the Securities, and shall be
deemed to be and shall constitute contracts between Funding Company, the Bond
Trustee and the Holders from time to time of the Securities. The provisions,
covenants and agreements herein set forth to be performed by or on behalf of
Funding Company shall be for the equal and ratable benefit, protection and
security of the Holders of any and all of the Securities. All of the Securities,
regardless of the time or times of their issuance or maturity, shall be of equal
rank without preference, priority or distinction of any of the Securities over
any other except as expressly provided in or pursuant to this Indenture.
Section 1.3 Conflict with Trust Indenture Act. If any provision hereof,
including without limitation, Section 5.13 (The Intercreditor Agreement) hereof,
limits, qualifies or conflicts with another provision hereof which is required
to be included in this Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control. If any provision of this Indenture
modifies or excludes any provision of the Trust Indenture Act that may be so
modified or excluded, the latter provision shall be deemed to apply in this
Indenture as so modified or to be excluded, as the case may be.
Section 1.4 Agency. In executing the Securities and this Indenture,
Funding Company shall act both as principal and as agent for each U.S. Guarantor
to the extent of such U.S. Guarantor's obligations under the Securities. As used
in this Indenture, references to "Funding Company" shall be interpreted to
include Funding Company in its capacity as principal and Funding Company in its
capacity as agent for
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each U.S. Guarantor pursuant to the Agency Agreement with such U.S. Guarantor
and with respect to such U.S. Guarantor's obligations under this Indenture.
Section 1.5 Beneficial Holders. Each investor that executes and
delivers to the Bond Trustee a "Form of Request for Information from the Bond
Trustee" substantially in the form of Exhibit M hereto shall be deemed a
"Beneficial Holder" of the Securities and shall be treated as a Holder of the
Securities for all purposes hereunder.
ARTICLE 2
THE SECURITIES
Section 2.1 Authorization, Amount, Terms and Issuance of Securities.
(a) Securities may be issued hereunder from time to time. No Securities may be
issued under this Indenture except in accordance with this Article 2. The
maximum principal amount of Securities which may be issued hereunder is not
limited. The Securities shall be issued in denominations of $100,000 or any
amount in excess thereof that is an integral multiple of $1,000.
(b) "CUSIP" numbers (if then generally in use) may be printed on the
Securities and, if so, the Bond Trustee shall use CUSIP numbers in notices of
redemption as a convenience to Holders. Neither Funding Company nor the Bond
Trustee shall have any responsibility for any defect in the CUSIP number that
appears on any bond, check, advice of payment or redemption notice, and any such
document may contain a statement to the effect that CUSIP numbers have been
assigned by an independent service for convenience of reference and that neither
Funding Company nor the Bond Trustee shall be liable for any inaccuracy in such
numbers. Funding Company shall promptly notify the Bond Trustee of any change in
CUSIP numbers with respect to the Securities.
Section 2.2 Authorization and Terms of the Initial Securities. (a) The
Initial Securities to be issued under this Indenture are hereby created and
Funding Company may issue the Initial Securities upon execution of this
Indenture. The Initial Securities shall (i) be known and designated as the "York
Power Funding (Cayman) Limited 12.0% Senior Secured Bonds due 2007", (ii) be
substantially in the form set forth in Exhibit A and (iii) contain substantially
the terms and conditions set forth in Exhibit B. The Bond Trustee shall, at
Funding Company's written request, authenticate the Initial Securities and
deliver them as specified in such request.
(b) The Initial Securities shall be dated as of the Closing Date, shall
be issued in the aggregate principal amount set forth below and shall have a
stated maturity date and bear interest as set forth below. Initial Securities
subsequently issued pursuant to Section 2.7 (Transfer and Exchange of
Securities) shall be dated as of the date of authentication thereof.
<TABLE>
<CAPTION>
Interest Rate Stated Maturity Date Principal Amount
- ----------------------------------- -------------------------------- ---------------------------------
<S> <C> <C>
12.0% October 30, 2007 $150,000,000
</TABLE>
(c) Interest on the Initial Securities shall accrue from the Closing
Date and shall be paid semi-annually in arrears on each April 30 and October 30,
commencing October 30, 1998 and concluding on the Maturity Date for the Initial
Securities. Interest on the Initial Securities shall be computed on the basis of
a three hundred sixty (360) day year consisting of twelve (12) thirty (30) day
months.
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(d) Principal of the Initial Securities shall be paid in an amount, and
on the Scheduled Payment Dates, as set forth on Schedule I hereto.
(e) The principal of, premium (if any) and interest on the Initial
Securities shall be payable in immediately available funds and in such coin or
currency of the United States which, at the respective dates of payment thereof,
is legal tender for the payment of public and private debts. Payment of
principal of, premium (if any) and interest on any Initial Security shall be
made (i) by check or draft drawn on a bank having an office located in the
United States and mailed on the relevant Scheduled Payment Date to the Person in
whose name such Initial Security is registered at the close of business on the
Regular Record Date immediately preceding such Scheduled Payment Date, at such
Person's address as it appears on the Securities Register, or (ii) by wire
transfer to an account maintained by such Person in the continental United
States if a Responsible Officer of the Bond Trustee shall have received written
notice from such Person requesting such wire transfer and providing the
appropriate wire transfer information at least fifteen (15) days prior to the
relevant Regular Record Date; provided, however, that if and to the extent there
shall be a default in the payment of principal, premium (if any) or interest due
with respect to any Initial Security on any Scheduled Payment Date, such
defaulted interest and/or principal shall be paid to the Holder in whose name
such Initial Security is registered at the close of business on the Special
Record Date determined by the Bond Trustee as provided in Section 2.4 (Record
Dates). Funding Company shall pay any administrative costs imposed by banks in
connection with the making of payments by wire transfer.
Section 2.3 Additional Securities. (a) Additional Securities may, upon
satisfaction of the conditions set forth in this Section 2.3, be issued in the
amounts and for the purposes permitted herein. All Additional Securities shall
(i) rank pari passu with the Initial Securities in all respects (including,
without limitation, with respect to allocation of funds received in connection
with any mandatory redemption under Section 3.2 (Mandatory Redemption) or
disposition of the Collateral pursuant to Article V of this Agreement) and (ii)
be secured by the Collateral. All Additional Securities shall bear such date or
dates, bear such interest rate or rates, have such maturity dates, redemption
dates and redemption premiums, be in such form and be issued at such prices as
approved in writing by Funding Company.
(b) Upon (i) satisfaction of the applicable conditions set forth in
this Section 2.3, (ii) the execution and delivery of an appropriate Supplemental
Indenture in compliance with clause (d) of this Section 2.3, (iii) the execution
and delivery of appropriate supplements, amendments or modifications to or of
the Finance Documents (in respect of which the consent of the Bond Trustee and
the Holders shall not be required; provided, however, if such supplements,
amendments or modifications change the rights or obligations of the Bond
Trustee, as determined by the Bond Trustee in its sole discretion, the prior
written consent of the Bond Trustee shall be required in connection with any
such supplements, amendments or modifications), (iv) receipt by a Responsible
Officer of the Bond Trustee of the written consent of each U.S. Guarantor
confirming that such U.S. Guarantor's Guarantee applies to the Outstanding
Securities and the Additional Securities which Funding Company proposes to issue
and (v) receipt by the Depositary Bank of an Officer's Certificate from the
Project Borrowers confirming that moneys on deposit in the Debt Service Reserve
Fund shall, after giving effect to the issuance of such Additional Securities,
be equal to the Debt Service Reserve Required Balance (as such shall be
increased to reflect payments due on the Additional Securities), Funding Company
shall execute Additional Securities and deliver them to a Responsible Officer of
the Bond Trustee, and a Responsible Officer of the Bond Trustee, upon the
written request of Funding Company, shall authenticate such Additional
Securities and deliver them to the purchasers thereof as may be directed by
Funding Company in writing;
4
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provided, however, that, notwithstanding anything to the contrary contained
herein, no Additional Securities shall be issued hereunder:
(A) without the written consent of Funding Company;
(B) except with respect to the issuance of Additional
Securities in accordance with clause (x) of Section 2.3(d), at any time
when a Default or an Event of Default shall have occurred and be
continuing or if such proposed issuance would, upon notice or passage
of time, cause a Default or an Event of Default; or
(C) if such proposed issuance would result in a Ratings
Downgrade.
(c) Upon the issuance of any Additional Securities, Funding Company
shall promptly provide the Bond Trustee with a revised Schedule I to this
Indenture that will provide for the payment of principal and interest on such
Additional Securities.
(d) Additional Securities may be issued by Funding Company; provided
that a Responsible Officer of the Bond Trustee shall receive an Officer's
Certificate from Funding Company certifying (i) that except with respect to
clause (x) below, no Default or Event of Default exists at the time of the
issuance of the Additional Securities and that such issuance shall not cause a
Default or Event of Default and (ii) that the net proceeds of the issuance and
sale of the Additional Securities shall be loaned by Funding Company to one or
more of the Project Borrowers pursuant to the Project Loan Agreements, or
supplement thereto, and such proceeds must be used by the Project Borrowers for
one of the following purposes as certified by an Authorized Officer of each of
the Project Borrowers and subject to the following conditions:
(x) to finance in whole or in part the making of capital
improvements to the Big Spring Project or the Trinidad Project required
to maintain compliance with Applicable Law; provided that the
Independent Engineer shall have certified to the Bond Trustee that
(A)(1) an Officer's Certificate of an Authorized Officer of the Big
Spring Guarantor or Trinidad Obligor, as applicable, certifying that
such Indebtedness is required to make a capital improvement to the Big
Spring Project or the Trinidad Project that is required to maintain
compliance with Applicable Law is reasonable and (2) that the
incurrence of such Indebtedness is the most effective means of
completing the applicable Project (if applicable) or making such
capital expenditure and (B) after giving effect to the issuance of such
Additional Securities, the minimum Projected Debt Service Coverage
Ratio for (1) the next four consecutive fiscal quarters, commencing
with the fiscal quarter in which such Indebtedness is incurred, taken
as one annual period, and (2) each subsequent fiscal year through the
Final Maturity Date, will not be less than 1.2 to 1.0;
(y) to finance in whole or in part the making of capital
improvements in respect of the Big Spring Project or the Trinidad
Project, other than those capital improvements referenced in clause (x)
above; provided that (A) the Independent Engineer certifies to the Bond
Trustee that after giving effect to the incurrence of such Indebtedness
(1) the minimum Projected Debt Service Coverage Ratio for both (i) the
next four consecutive fiscal quarters, commencing with the fiscal
quarter in which such Indebtedness is incurred, taken as one annual
period, and (ii) each fiscal year through the Final Maturity Date, will
not be less than 1.5 to 1.0 and (2) the average Projected Debt Service
Coverage Ratio for (i) the next four consecutive fiscal quarters,
commencing with the fiscal quarter in which such Indebtedness is
incurred, taken as one annual period, (ii) and each fiscal year through
the Final Maturity Date, will not be less than 1.55 to 1.0
5
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and (B) each Rating Agency then rating the Securities provides written
confirmation to the Bond Trustee that no Ratings Downgrade will result
from such issuance; or
(z) to finance in whole or in part the purchase of any loans
made from Edison Mission Energy, or an Affiliate thereof, to B-41 L.P
or BNYCP; provided that (A) the Independent Engineer shall have
certified to the Bond Trustee that after giving effect to the
incurrence of such Indebtedness, (1) the minimum Projected Debt Service
Coverage Ratio for (i) the next four consecutive fiscal quarters
commencing with the quarter in which such Indebtedness is to be
incurred, taken as one annual period and (ii) each subsequent fiscal
year through the Final Maturity Date for the Securities, will not be
less than 1.5 to 1, and (2) the average Projected Debt Service Coverage
Ratio for all succeeding fiscal years until the Final Maturity Date for
the Securities will not be less than 1.55 to 1; and (B) written
confirmation from each Rating Agency then rating the Securities that
the incurrence of such Indebtedness will not result in a Ratings
Downgrade.
(e) Prior to the issuance of Additional Securities hereunder, the
following shall be established in one or more Supplemental Indentures:
(i) the title of the Additional Securities, including CUSIP
numbers, (which shall distinguish the Additional Securities from all
other Securities) and the form or forms of such Securities;
(ii) any limit upon the aggregate principal amount of the
Additional Securities that may be authenticated and delivered under
this Indenture (except for Additional Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Securities and except for Additional Securities that are
deemed never to have been authenticated and delivered hereunder);
(iii) the date or dates on or as of which the Additional
Securities shall be dated;
(iv) the date or dates on which the principal of the
Additional Securities is payable, the amounts of principal payable on
such date or dates and the Regular Record Date for the determination of
Holders to whom principal is payable;
(v) the rate or rates at which the Additional Securities shall
bear interest or the method by which such rate or rates shall be
determined, the date or dates from which such interest shall accrue,
the scheduled payment dates on which such interest shall be payable
(which shall correspond to the Scheduled Payment Dates set forth
herein) and the Regular Record Date for the determination of Holders to
whom interest is payable;
(vi) the place or places where (A) the principal of, premium
(if any), and interest on the Additional Securities shall be payable,
(B) Additional Securities may be surrendered for registration of
transfer or exchange and (C) notices and demands to or upon Funding
Company in respect of the Additional Securities and this Indenture may
be served;
(vii) the price or prices at which, the period or periods
within which and the terms and conditions upon which the Additional
Securities may be redeemed, in whole or in part, at the option of
Funding Company;
6
<PAGE>
(viii) the obligation (if any) of Funding Company to redeem,
purchase or repay Additional Securities pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof and the price
or prices at which, the period or periods within which and the terms
and conditions upon which Additional Securities shall be redeemed,
purchased or repaid, in whole or in part, pursuant to such obligations;
(ix) if other than denominations of $100,000 and any integral
multiple of $1,000 in excess thereof, the denominations in which
Additional Securities shall be issuable;
(x) the restrictions or limitations (if any) on the transfer
or exchange of the Additional Securities;
(xi) the obligation (if any) of Funding Company to file a
registration statement with respect to the Additional Securities or to
exchange the Additional Securities for Securities registered pursuant
to the Securities Act;
(xii) any trustees, authenticating agents, paying agents,
warrant agents, transfer agents or registrars with respect to the
Additional Securities; and
(xiii) any other terms of the Additional Securities (which
terms shall not contravene the provisions of this Indenture).
Section 2.4 Record Dates. The Person in whose name any Security is
registered at the close of business on any Regular Record Date with respect to
any Scheduled Payment Date shall be entitled to receive the principal, premium
(if any) and/or interest payable on such Scheduled Payment Date notwithstanding
the cancellation of such Security upon any transfer or exchange thereof
subsequent to such Regular Record Date and prior to such Scheduled Payment Date;
provided, however, that if and to the extent there is a default in the payment
of the principal, premium (if any) and/or interest due on such Scheduled Payment
Date, such defaulted principal, premium (if any) and/or interest shall be paid
to the Persons in whose names Outstanding Securities are registered at the close
of business on a subsequent date (each such date, a "Special Record Date"),
which shall not be less than five (5) days preceding the date of payment of such
defaulted principal, premium (if any) and/or interest, established by a notice
mailed by the Bond Trustee to the registered owners of the Securities in
accordance with Section 11.5(b) (Notices) not less than fifteen (15) days prior
to the Special Record Date or, if the Special Record Date is less than fifteen
(15) days after the applicable Scheduled Payment Date, such shorter period.
Section 2.5 Form of Securities.
2.5.1 Form Generally. The Initial Securities and the Bond
Trustee's certificate of authentication thereon shall be substantially
in the form set forth in Exhibit A and shall contain substantially the
terms and conditions set forth in Exhibit B, which exhibits are hereby
incorporated in and expressly made a part of this Indenture. The
Initial Securities shall be issued in fully registered form, without
interest coupons. Additional Securities shall be in the form and shall
contain the terms established in one or more Supplemental Indentures.
Any Security may have such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have imprinted or otherwise reproduced thereon such
legends or endorsements, not inconsistent with the provisions of this
Indenture, as may be required to comply with Applicable Law or with any
rules or regulations pursuant thereto, or with any rules of any
securities exchange or to conform to general usage, all as may be
determined by
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the officers executing such Security with the approval of the Bond
Trustee, such determination and approval to be evidenced by the
execution and authentication thereof. The Securities shall be numbered,
lettered or otherwise distinguished in such manner or in accordance
with such plan as the officers executing the Securities may determine
with the approval of the Bond Trustee, as evidenced by the execution
and authentication thereof. Certificated Securities may be printed,
lithographed or engraved on steel engraved borders or may be produced
in any other manner, all as determined by the officers executing such
Certificated Securities with the approval of the Bond Trustee, as
evidenced by the execution and authentication thereof.
2.5.2 Securities Sold Pursuant to Rule 144A. The Securities
offered and sold in their initial distribution in reliance on Rule 144A
to Qualified Institutional Buyers shall be issued in the form of a
permanent global security (the "Restricted Global Security") (which may
be represented by more than one certificate, if so required by the
Depositary's rules regarding the maximum principal amount to be
represented by a single certificate), duly executed by Funding Company
and authenticated by the Bond Trustee as hereinafter provided. The
Restricted Global Security shall be registered in the name of the
Depositary or its nominee and deposited with the Bond Trustee, at its
principal corporate trust office, as custodian for the Depositary.
2.5.3 Securities Sold Pursuant to Regulation S. The Securities
offered and sold in their initial distribution in reliance on
Regulation S shall be issued in the form of a permanent global security
(the "Unrestricted Global Security and together with the Restricted
Global Security, the "Global Securities") (which may be represented by
more than one certificate, if so required by the Depositary's rules
regarding the maximum principal amount to be represented by a single
certificate), duly executed by Funding Company and authenticated by the
Bond Trustee as hereinafter provided. The Unrestricted Global Security
shall be registered in the name of the Depositary or its nominee and
deposited with the Bond Trustee, at its principal corporate trust
office, as custodian for the Depositary, for credit to the respective
accounts of Euroclear. Prior to the termination of the Regulation S
Restricted Period, beneficial interests in the Unrestricted Global
Security may be held only through Euroclear.
2.5.4 Depositary. (a) Funding Company hereby agrees to appoint
DTC to act as depositary (in such capacity, together with its
successors in such capacity, the "Depositary") with respect to the
Global Securities. The Bond Trustee shall act as custodian of each
Global Security for the Depositary. So long as the Depositary or its
nominee is the registered owner of any Global Security, it shall be
considered the Holder of the Securities represented thereby for all
purposes hereunder and under such Global Security, and neither any
members of, or participants in, the Depositary ("Agent Members") nor
any other Persons on whose behalf Agent Members may act or shall have
any rights hereunder with respect to any Global Security or under any
Global Security. Notwithstanding the foregoing, nothing herein shall
prevent Funding Company, the Bond Trustee or any agent of Funding
Company or the Bond Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depositary
or its nominee, as the case may be, or impair, as between the
Depositary, its Agent Members and any other Person on whose behalf an
Agent Member may act, the operation of customary practices of such
Persons governing the exercise of the rights of a Holder of any
Security.
(b) Funding Company may remove or replace DTC or any successor
as Depositary for any reason upon thirty (30) days' notice to DTC or
such successor. The Holders shall have no right to a depositary for the
Securities.
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(c) Notwithstanding any other provision of this Indenture or
the Securities, so long as DTC or its nominee is the registered owner
of the Securities:
(i) the provisions of the DTC Letter of
Representations shall control over the provisions of this
Indenture with respect to the matters covered thereby;
(ii) presentation of Securities to the Bond Trustee
at redemption or at maturity shall be deemed made to the Bond
Trustee when the right to exercise ownership rights in the
Securities through DTC or Agent Members is transferred by DTC
on its books; and
(iii) DTC may present notices, approvals, waivers or
other communications required or permitted to be made by
Holders under this Indenture on a fractionalized basis on
behalf of some or all of those Persons entitled to exercise
ownership rights in the Securities through DTC or Agent
Members.
Section 2.6 Maintenance of Offices and Agencies.
2.6.1 Registrar and Paying Agent. (a) Funding Company shall
maintain in the Borough of Manhattan, the City of New York, an office
or agency (the "Registrar") where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to
or upon Funding Company in respect of the Securities or under this
Indenture may be served. Funding Company shall cause a register for the
registration of the Securities and of their transfer and exchange (the
"Securities Register") to be kept at the office of the Registrar.
Funding Company hereby initially appoints the Bond Trustee at its
principal corporate trust office as Registrar, and the Bond Trustee
hereby accepts such appointment.
(b) There shall at all times be maintained in the Borough of
Manhattan, the City of New York, and in such other places of payment,
if any, as shall be specified for the Securities in a related
Supplemental Indenture, an office or agency (the "Paying Agent") where
Securities may be presented for payment of principal, premium (if any)
and interest. Funding Company hereby initially appoints the Bond
Trustee at its principal corporate trust office as Paying Agent, and
the Bond Trustee hereby accepts such appointment.
(c) Whenever Funding Company shall appoint a Paying Agent
other than the Bond Trustee, it shall cause, prior to such appointment,
each such Paying Agent to execute and deliver to the Bond Trustee an
instrument in which such Paying Agent shall agree with the Bond
Trustee, subject to the provisions of this Section 2.6.1, that such
Paying Agent shall:
(i) hold all sums held by such Paying Agent for the
payment of the principal of, premium (if any) or interest on
the Securities in trust for the benefit of the Holders or the
Bond Trustee;
(ii) give a Responsible Officer of the Bond Trustee
within five (5) days thereafter written notice of any default
by Funding Company (or any other obligor upon the Securities)
in the making of any such payment of principal, premium (if
any) or interest; and
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(iii) at any time during the continuance of any such
default, upon the written request of the Bond Trustee,
forthwith pay to the Bond Trustee all sums so held in trust by
such Paying Agent.
(d) Notwithstanding any other provision of this Indenture, any
payment required to be made to or received or held by the Bond Trustee
may, to the extent authorized by written instructions of the Bond
Trustee, be made to or received or held by any Paying Agent for the
account of the Bond Trustee.
(e) Funding Company shall give prompt written notice to the
Bond Trustee of the location, and any change in the location, of the
Registrar and Paying Agent. If at any time Funding Company shall fail
to maintain a Registrar and/or Paying Agent or shall fail to furnish
the Bond Trustee with the location thereof, presentation or surrender
of Securities for registration of transfer or exchange or for payment
may be made or served at the principal corporate trust office of the
Bond Trustee.
2.6.2 Authenticating Agent. At any time when any Securities
remain Outstanding, the Bond Trustee may appoint an authenticating
agent or agents (each an "Authenticating Agent") which shall be
authorized to act on behalf of the Bond Trustee to authenticate
Securities issued upon original issuance, exchange, registration of
transfer or partial redemption thereof or pursuant to Section 2.10
(Mutilated, Destroyed, Lost or Stolen Securities), and Securities so
authenticated shall be entitled to the benefits of this Indenture and
shall be valid and obligatory for all purposes as if authenticated by
the Bond Trustee hereunder (it being understood that wherever reference
is made in this Indenture to the authentication and delivery of
Securities by the Bond Trustee or the Bond Trustee's certificate of
authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Bond Trustee by an
Authenticating Agent and a certificate of authentication executed on
behalf of the Bond Trustee by an Authenticating Agent). If an
appointment of an Authenticating Agent shall be made pursuant to this
Section 2.6.2, the Securities may have endorsed thereon, in addition to
the Bond Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:
This Security is one of the Securities referred to in
the within-mentioned Indenture.
-----------------------------------
Trustee
Dated:
-----------------------------
By:
--------------------------------
Authorized Signatory
2.6.3 Authorized Agents Generally. (a) Any Registrar, Paying
Agent or Authenticating Agent (each an "Authorized Agent") shall (i) be
a corporation organized and doing business under the laws of the United
States, of any state or territory thereof or of the District of
Columbia, (ii) be authorized under such laws to act as Registrar,
Paying Agent or Authenticating Agent, as the case may be, (iii) be
subject to supervision or examination by federal, state,
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territorial or District of Columbia authority and (iv) either (A) have
a combined capital and surplus of at least $100,000,000 or (B) have a
combined capital and surplus of at least $50,000,000 and be a
wholly-owned subsidiary of a corporation having a combined capital and
surplus of at least $100,000,000. If such corporation publishes reports
of condition at least annually, pursuant to Applicable Law or to the
requirements of said supervising or examining authority, then for
purposes of this Section 2.6.3, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published. If at
any time an Authorized Agent shall cease to be eligible in accordance
with the provisions of this Section 2.6.3, it shall resign immediately
in the manner and with the effect hereinafter specified in clause (c)
of this Section 2.6.3.
(b) Any corporation into which any Authorized Agent may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to
which any Authorized Agent shall be a party, or any corporation
succeeding to all or substantially all of the corporate agency or
corporate trust business of any Authorized Agent, shall be the
successor of such Authorized Agent hereunder, provided such corporation
shall be otherwise qualified and eligible under this Section 2.6.3,
without the execution and filing of any instrument or any further act
on the part of any of the parties hereto or such Authorized Agent or
successor corporation.
(c) Any Authorized Agent may at any time resign by giving
written notice of resignation to the Bond Trustee and Funding Company.
Funding Company may, and at the request of the Bond Trustee shall,
terminate the agency of any Authorized Agent by giving written notice
of such termination to such Authorized Agent and to the Bond Trustee.
Upon the resignation or termination of any Authorized Agent or in case
at any time any Authorized Agent shall cease to be eligible to hold its
position under this Section 2.6.3 (when, in either case, no other
Authorized Agent performing the functions of such former Authorized
Agent shall have been appointed), Funding Company (or the Bond Trustee
in the case of any Authenticating Agent) shall promptly appoint one or
more qualified successor Authorized Agents approved by the Bond Trustee
to perform the functions of the Authorized Agent which has resigned or
whose agency has been terminated or who shall have ceased to be
eligible under this Section 2.6.3. Funding Company (or the Bond Trustee
in the case of any Authenticating Agent) shall give written notice of
any such appointment to all Holders in the manner provided in Section
11.5(b) (Notices).
(d) Funding Company shall pay to each Authorized Agent from
time to time reasonable compensation for its services hereunder, if
applicable.
Section 2.7 Transfer and Exchange of Securities. Unless and until a
Security is transferred or exchanged pursuant to an effective registration
statement under the Securities Act, the provisions set forth in this Section 2.7
shall apply to the transfer and exchange of such Security.
2.7.1 Transfer and Exchange Generally. (a) The Securities are
transferable only upon the surrender thereof for registration of
transfer. When a Security is presented to the Registrar with a duly
executed instrument of assignment and transfer substantially in the
form of Exhibit C, the Registrar shall register the transfer as
requested if such transfer complies with the provisions hereof. Prior
to the due presentation for registration of transfer of any Security,
the Person in whose name such Security is registered shall be treated
as the absolute owner of such Security for the purpose of receiving
payment of principal of, premium (if any) and interest on such Security
(whether or not such payment is overdue) and for all other purposes
whatsoever, notwithstanding
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any notice to the contrary. Registration of transfer of any Security by
the Registrar shall be deemed to be an acknowledgment of such transfer
by Funding Company.
(b) When Securities are presented to the Registrar with a
written request to exchange such Securities for Securities of any
authorized denominations and of a like aggregate principal amount, the
Registrar shall make the exchange as requested if such exchange
complies with the provisions hereof.
(c) Following any request for transfer or exchange of one or
more Securities made in compliance with clause (a) or (b), as the case
may be, of this Section 2.7.1, Funding Company shall execute, and the
Bond Trustee shall authenticate and deliver, one or more new Securities
of a like principal amount and in such authorized denominations as may
be requested. No service charge shall be made for any registration of
transfer or exchange of Securities, but Funding Company may require
payment of a sum sufficient to pay all taxes, assessments or other
governmental charges that may be imposed in connection with any
transfer or exchange of Securities; provided, however, that no such
requirement of payment shall apply to exchanges made pursuant to
Section 2.11 (Temporary Securities) or Section 7.7 (Reference in
Securities to Supplemental Indentures).
(d) Transfers or exchanges of the Global Securities and
beneficial interests therein shall be subject to the provisions of
Section 2.7.2 (Transfers and Exchanges of the Global Securities and
Beneficial Interests Therein) and the rules of the Depositary (and
Euroclear or Cedel, if applicable). Transfers or exchanges of
Certificated Securities shall be subject to the provisions of Section
2.7.3 (Transfers and Exchanges of Certificated Securities).
(e) Except as otherwise provided herein, each Global Security
and each Certificated Security shall bear the Transfer Restriction
Legend. By its acceptance of any Security bearing the Transfer
Restriction Legend, whether upon original issuance or subsequent
transfer, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the
Transfer Restriction Legend and agrees that it will transfer such
Security only as provided in this Indenture. Upon the specific written
request of a Holder to remove the Transfer Restriction Legend, the
Registrar shall authenticate and deliver a Security with an equivalent
principal amount not bearing the Transfer Restriction Legend if there
is provided to Funding Company evidence reasonably satisfactory to
Funding Company (which may, at Funding Company's request, include an
Opinion of Counsel) that neither the Transfer Restriction Legend nor
the restrictions on transfer set forth therein are required to ensure
compliance with the Securities Act. Upon a written request for the
registration of transfer or exchange of a Security bearing the Transfer
Restriction Legend pursuant to an effective registration statement
under the Securities Act and in accordance with any applicable
securities laws of any state of the United States, the Registrar shall
authenticate and deliver a Security with an equivalent principal amount
not bearing the Transfer Restriction Legend. If the Transfer
Restriction Legend has been removed from a Security as provided in this
clause (e), the transfer of such Security shall not be subject to the
restrictions on transfer set forth in the Transfer Restriction Legend,
and no other Security issued in exchange for all or any part of such
Security shall bear the Transfer Restriction Legend unless Funding
Company has reasonable cause to believe that such other Security is a
"restricted security" within the meaning of Rule 144 and instructs the
Registrar in writing to cause the Transfer Restriction Legend to appear
thereon.
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(f) All Securities issued upon any transfer or exchange
pursuant the terms hereof shall be the valid obligations of Funding
Company, evidencing the same debt, and shall be entitled to the same
benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
2.7.2 Transfers and Exchanges of Global Securities and
Beneficial Interests Therein. (a) Transfers of a Global Security shall
be limited to transfers of such Global Security in whole, but not in
part, to the Depositary, its successors or their respective nominees.
So long as any Global Security remains outstanding and is held by or on
behalf of the Depositary, transfers and exchanges of beneficial
interests in such Global Security shall be made in accordance with the
provisions of this Section 2.7.2 and in accordance with the rules and
procedures of the Depositary, Euroclear and Cedel, in each case to the
extent applicable (the "Applicable Procedures").
(b) Any transfer of a beneficial interest in the Restricted
Global Security to a transferee that will take delivery in the form of
a beneficial interest in the Unrestricted Global Security prior to the
termination of the Regulation S Restricted Period shall be registered,
subject to the Applicable Procedures, only in accordance with this
clause (b). At any time prior to the termination of the Regulation S
Restricted Period, upon (i) receipt by the Registrar of (A)
instructions given in accordance with the Applicable Procedures from
the Depositary or its nominee on behalf of an owner of a beneficial
interest in the Restricted Global Security to transfer such beneficial
interest to a Person that will take delivery in the form of a
beneficial interest in the Unrestricted Global Security, (B) a written
order of the Depositary or its nominee given in accordance with the
Applicable Procedures containing account and other information with
respect to such transfer and (C) a certificate of the transferor of the
beneficial interest in the Restricted Global Security substantially in
the form of Exhibit E, and (ii) satisfaction of all other applicable
conditions imposed by this Indenture and the Applicable Procedures, the
Registrar shall (1) reflect in the Securities Register a decrease in
the principal amount of the Restricted Global Security and an increase
in the principal amount of the Unrestricted Global Security, each such
adjustment to equal the principal amount of the beneficial interest
transferred pursuant to this clause (b), and (2) instruct the
Depositary to make the corresponding adjustment to its records and
debit and credit the accounts of the appropriate Agent Members in
accordance with the Applicable Procedures.
(c) Any transfer of a beneficial interest in the Restricted
Global Security to a transferee that will take delivery in the form of
a beneficial interest in the Unrestricted Global Security subsequent to
the termination of the Regulation S Restricted Period shall be
registered, subject to the Applicable Procedures, only in accordance
with this clause (c). At any time subsequent to the termination of the
Regulation S Restricted Period, upon (i) receipt by the Registrar of
(A) instructions given in accordance with the Applicable Procedures
from the Depositary or its nominee on behalf of an owner of a
beneficial interest in the Restricted Global Security to transfer such
beneficial interest to a Person that will take delivery in the form of
a beneficial interest in the Unrestricted Global Security, (B) a
written order of the Depositary or its nominee given in accordance with
the Applicable Procedures containing account and other information with
respect to such transfer and (C) a certificate of the transferor of the
beneficial interest in the Restricted Global Security substantially in
the form of Exhibit E (if transfer is made in reliance on Regulation S)
or Exhibit F (if transfer is made in reliance on Rule 144), and (ii)
satisfaction of all other applicable conditions imposed by this
Indenture and the Applicable Procedures, the Registrar shall (1)
reflect in the Securities Register a decrease in the principal amount
of the Restricted Global Security and an increase in the principal
amount of the Unrestricted Global Security, each such adjustment to
equal the principal amount of the beneficial interest transferred
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pursuant to this clause (c), and (2) instruct the Depositary to make
the corresponding adjustment to its records and debit and credit the
accounts of the appropriate Agent Members in accordance with the
Applicable Procedures.
(d) Any transfer of a beneficial interest in the Unrestricted
Global Security to a transferee that will take delivery in the form of
a beneficial interest in the Restricted Global Security, either prior
or subsequent to the termination of the Regulation S Restricted Period,
shall be registered, subject to the Applicable Procedures, only in
accordance with this clause (d). At any time upon (i) receipt by the
Registrar of (A) instructions given in accordance with the Applicable
Procedures from the Depositary or its nominee on behalf of an owner of
a beneficial interest in the Unrestricted Global Security to transfer
such beneficial interest to a Person that will take delivery in the
form of a beneficial interest in the Restricted Global Security, (B) a
written order of the Depositary or its nominee given in accordance with
the Applicable Procedures containing account and other information with
respect to such transfer and (C) a certificate of the transferor of the
beneficial interest in the Unrestricted Global Security substantially
in the form of Exhibit G, and (ii) satisfaction of all other applicable
conditions imposed by this Indenture and the Applicable Procedures, the
Registrar shall (1) reflect in the Securities Register a decrease in
the principal amount of the Unrestricted Global Security and an
increase in the principal amount of the Restricted Global Security,
each such adjustment to equal the principal amount of the beneficial
interest transferred pursuant to this clause (e), and (2) instruct the
Depositary to make the corresponding adjustment to its records and
debit and credit the accounts of the appropriate Agent Members in
accordance with the Applicable Procedures.
(e) No restrictions shall apply with respect to the transfer
or registration of transfer of (i) a beneficial interest in the
Restricted Global Security to a transferee that takes delivery in the
form of a beneficial interest in the Restricted Global Security. Any
transfer described in this clause (e) shall be made in accordance with
the Applicable Procedures.
(f) Any transfer of a beneficial interest in the Restricted
Global Security to a transferee that will take delivery in the form of
one or more Certificated Securities shall be registered, subject to the
Applicable Procedures, only in accordance with this clause (f). At any
time upon (i) receipt by the Registrar of (A) instructions given in
accordance with the Applicable Procedures from the Depositary or its
nominee on behalf of an owner of a beneficial interest in the
Restricted Global Security to transfer such beneficial interest to a
Person that will take delivery in the form of one or more Certificated
Securities, (B) a written order of the Depositary or its nominee given
in accordance with the Applicable Procedures containing account and
other information with respect to such transfer and (C) a certificate
of the transferor of the beneficial interest in the Restricted Global
Security substantially in the form of Exhibit E (if transfer is made in
reliance on Regulation S), Exhibit F (if transfer is made in reliance
on Rule 144), or Exhibit G (if transfer is made in reliance on Rule
144A), and (ii) satisfaction of all other applicable conditions imposed
by this Indenture and the Applicable Procedures, (1) the Registrar
shall (x) reflect in the Securities Register a decrease in the
principal amount of the Restricted Global Security in an amount equal
to the beneficial interest transferred pursuant to this clause (f) and
(y) instruct the Depositary to make the corresponding adjustment to its
records and debit the account of the appropriate Agent Member in
accordance with the Applicable Procedures, and (2) Funding Company
shall execute and the Bond Trustee shall authenticate and deliver one
or more Certificated Securities of like tenor and amount bearing the
Transfer Restriction Legend.
(g) Any transfer of a beneficial interest in the Unrestricted
Global Security to a transferee that will take delivery in the form of
one or more Certificated Securities prior to the termination
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of the Regulation S Restricted Period shall be registered, subject to
the Applicable Procedures, only in accordance with this clause (g). At
any time prior to the termination of the Regulation S Restricted
Period, upon (i) receipt by the Registrar of (A) instructions given in
accordance with the Applicable Procedures from the Depositary or its
nominee on behalf of an owner of a beneficial interest in the
Unrestricted Global Security to transfer such beneficial interest to a
Person that will take delivery in the form of one or more Certificated
Securities, (B) a written order of the Depositary or its nominee given
in accordance with the Applicable Procedures containing account and
other information with respect to such transfer and (C) a certificate
of the transferor of the beneficial interest in the Unrestricted Global
Security substantially in the form of Exhibit E (if transfer is made in
reliance on Regulation S), Exhibit F (if transfer is made in reliance
on Rule 144) or Exhibit G (if transfer is made in reliance on Rule
144A), and (ii) satisfaction of all other applicable conditions imposed
by this Indenture and the Applicable Procedures, (1) the Registrar
shall (x) reflect in the Securities Register a decrease in the
principal amount of the Unrestricted Global Security in an amount equal
to the beneficial interest transferred pursuant to this clause (g) and
(y) instruct the Depositary to make the corresponding adjustment to its
records and debit the account of the appropriate Agent Member in
accordance with the Applicable Procedures, and (2) Funding Company
shall execute and the Bond Trustee shall authenticate and deliver one
or more Certificated Securities of like tenor and amount bearing the
Transfer Restriction Legend.
(h) Any transfer of a beneficial interest in the Unrestricted
Global Security to a transferee that will take delivery in the form of
one or more Certificated Securities subsequent to the termination of
the Regulation S Restricted Period shall be registered, subject to the
Applicable Procedures, only in accordance with this clause (h). At any
time subsequent to the termination of the Regulation S Restricted
Period, upon (i) receipt by the Registrar of (A) instructions given in
accordance with the Applicable Procedures from the Depositary or its
nominee on behalf of an owner of a beneficial interest in the
Unrestricted Global Security to transfer such beneficial interest to a
Person that will take delivery in the form of one or more Certificated
Securities and (B) a written order of the Depositary or its nominee
given in accordance with the Applicable Procedures containing account
and other information with respect to such transfer, and (ii)
satisfaction of all other applicable conditions imposed by this
Indenture and the Applicable Procedures, (1) the Registrar shall (x)
reflect in the Securities Register a decrease in the principal amount
of the Unrestricted Global Security in an amount equal to the
beneficial interest transferred pursuant to this clause (h) and (y)
instruct the Depositary to make the corresponding adjustment to its
records and debit the account of the appropriate Agent Member in
accordance with the Applicable Procedures, and (2) Funding Company
shall execute and the Bond Trustee shall authenticate and deliver one
or more Certificated Securities of like tenor and amount. Unless
determined otherwise in accordance with Applicable Law, Certificated
Securities delivered pursuant to this clause (h) shall not be required
to bear the Transfer Restriction Legend.
(i) Persons holding beneficial interests in the Global
Securities may exchange such beneficial interests for one or more
Certificated Securities upon satisfaction of the conditions set forth
in this clause (i). At any time upon (i) receipt by the Registrar of
(A) instructions given in accordance with the Applicable Procedures
from the Depositary or its nominee on behalf of an owner of a
beneficial interest in a Global Security to exchange such beneficial
interest for one or more Certificated Securities and (B) a written
order of the Depositary or its nominee given in accordance with the
Applicable Procedures containing account and other information with
respect to such exchange, and (ii) satisfaction of all other applicable
conditions imposed by this Indenture and the Applicable Procedures, (1)
the Registrar shall (x) reflect in the Securities
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Register a decrease in the principal amount of the appropriate Global
Security in an amount equal to the beneficial interest exchanged
pursuant to this clause (i) and (y) instruct the Depositary to make the
corresponding adjustment to its records and debit the account of the
appropriate Agent Member in accordance with the Applicable Procedures,
and (2) Funding Company shall execute and the Bond Trustee shall
authenticate and deliver one or more Certificated Securities of like
tenor and amount bearing the Transfer Restriction Legend; provided,
however, that Certificated Securities issued in exchange for a
beneficial interest in the Unrestricted Global Security at any time
subsequent to the termination of the Regulation S Restricted Period
shall not, unless determined otherwise in accordance with Applicable
Law, be required to bear the Transfer Restriction Legend. At such time
as all interests in a Global Security have been exchanged for
Certificated Securities or cancelled, such Global Security shall be
cancelled by the Bond Trustee.
(j) Notwithstanding any contrary provision contained herein,
Certificated Securities shall be issued in exchange for the beneficial
interests in the Global Securities if at any time: (i) Funding Company
advises the Bond Trustee that the Depositary is unwilling or unable to
continue as depositary for the Global Securities or is no longer
eligible to act as such and in each case a successor depositary is not
appointed by Funding Company within ninety (90) days of receipt by
Funding Company of notice of such inability; (ii) Funding Company, at
its option, elects to terminate the book-entry system through the
Depositary with respect to the Global Securities; or (iii) after the
occurrence of an Indenture Event of Default, beneficial owners holding
interests representing an aggregate principal amount of Securities of
not less than fifty-one percent (51%) of the Securities represented by
the Global Securities advise the Bond Trustee through the Depositary
that the continuation of a book-entry system through the Depositary is
no longer in such beneficial owners' best interests. Upon the
occurrence of any of the events set forth in clauses (i) through (iii)
immediately above, the Bond Trustee, upon receipt of written notice
thereof and a list of all Persons that hold a beneficial interest in
the Global Securities, shall notify, through the appropriate Agent
Members at the expense of Funding Company, all Persons that hold a
beneficial interest in the Global Securities of the issuance of
Certificated Securities. Upon surrender by the Bond Trustee, as
custodian for the Depositary, of the Global Securities and receipt from
the Depositary of instructions for re-registration, Funding Company
shall execute and the Bond Trustee, upon the written instructions of
(A) in the case of the events set forth in clauses (i) and (ii)
immediately above, Funding Company, or (B) in the case of the events
set forth in clause (iii) immediately above, beneficial owners holding
interests representing an aggregate principal amount of Securities of
not less than fifty-one percent (51%) of the Securities represented by
the Global Securities, authenticate and deliver Certificated Securities
bearing the Transfer Restriction Legend; provided, however, that
Certificated Securities issued in exchange for beneficial interests in
the Unrestricted Global Security at any time subsequent to the
termination of the Regulation S Restricted Period shall not, unless
determined otherwise in accordance with Applicable Law, be required to
bear the Transfer Restriction Legend. Certificated Securities issued in
exchange for beneficial interests in the Global Securities pursuant to
this clause (j) shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions
from Agent Members or otherwise, shall instruct the Bond Trustee.
2.7.3 Transfers and Exchanges of Certificated Securities. (a)
Any transfer of a Certificated Security bearing the Transfer
Restriction Legend to a transferee that takes delivery in the form of
one or more Certificated Securities shall be registered only in
accordance with this clause (a). Upon (i) surrender of any Certificated
Security bearing the Transfer Restriction Legend at the office of the
Registrar, together with (A) an executed instrument of assignment and
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transfer of such Certificated Security substantially in the form of
Exhibit C and (B) a certificate of the transferor of such Certificated
Security (or of the transferee thereof in the case of a transfer made
to an institutional Accredited Investor) substantially in the form of
Exhibit E (if transfer is made pursuant to Regulation S), Exhibit F (if
such transfer is made pursuant to Rule 144) or Exhibit G (if such
transfer is made pursuant to Rule 144A), and (ii) satisfaction of all
other applicable conditions imposed by this Indenture, (1) the Bond
Trustee shall register such transfer and (2) Funding Company shall
execute and the Bond Trustee shall authenticate and deliver in the name
of the transferee one or more Certificated Securities of any authorized
denomination in the same aggregate principal amount and of the same
maturity as the transferred Certificated Security, each such new
Certificated Security bearing the Transfer Restriction Legend;
provided, however, that Certificated Securities so delivered shall not
be required to bear the Transfer Restriction Legend if there is
provided to Funding Company evidence reasonably satisfactory to Funding
Company (which may, at Funding Company's request, include an Opinion of
Counsel) that neither the Transfer Restriction Legend nor the
restrictions on transfer set forth therein are required to ensure
compliance with the Securities Act.
(b) Any transfer of a Certificated Security not bearing the
Transfer Restriction Legend to a transferee that takes delivery in the
form of one or more Certificated Securities shall be registered only in
accordance with this clause (b). Upon (i) surrender of any Certificated
Security not bearing the Transfer Restriction Legend at the office of
the Registrar, together with an executed instrument of assignment and
transfer of such Certificated Security substantially in the form of
Exhibit C, and (ii) satisfaction of all other applicable conditions
imposed by this Indenture, (A) the Bond Trustee shall register such
transfer and (B) Funding Company shall execute and the Bond Trustee
shall authenticate and deliver in the name of the transferee one or
more Certificated Securities of any authorized denomination in the same
aggregate principal amount and of the same maturity as the transferred
Certificated Security. Each such new Certificated Security may at the
request of the transferee, but shall not be required to, bear the
Transfer Restriction Legend.
(c) Any transfer of a Certificated Security bearing the
Transfer Restriction Legend to a transferee that takes delivery in the
form of a beneficial interest in a Global Security shall be registered
only in accordance with this clause (c). Upon (i) surrender of any
Certificated Security bearing the Transfer Restriction Legend at the
office of the Registrar, together with (A) an executed instrument of
assignment and transfer of such Certificated Security substantially in
the form of Exhibit C, (B) written instructions from the transferor
that such Certificated Security shall be registered in the name of the
Depositary or its nominee and (C) a certificate of the transferor of
such Certificated Security (or of the transferee in the case of a
transfer to an institutional Accredited Investor) substantially in the
form of Exhibit E (if the transferee will take delivery in the form of
a beneficial interest in the Unrestricted Global Security) or Exhibit F
(if the transferee will take delivery in the form of a beneficial
interest in the Restricted Global Security) and (ii) satisfaction of
all other applicable conditions imposed by this Indenture and the
Applicable Procedures, the Registrar shall (x) register such transfer
and cancel such Certificated Security, (y) reflect in the Securities
Register an increase in the appropriate Global Security in an amount
equal to the Certificated Security transferred pursuant to this clause
(c) and (z) instruct the Depositary to make the corresponding
adjustment to its records and credit the account of the appropriate
Agent Member in accordance with the Applicable Procedures.
(d) Any transfer of a Certificated Security not bearing the
Transfer Restriction Legend to a transferee that takes delivery in the
form of a beneficial interest in a Global Security shall be
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registered only in accordance with this clause (d). Upon (i) surrender
of a Certificated Security not bearing the Transfer Restriction Legend
at the office of the Registrar, together with (A) an executed
instrument of assignment and transfer of such Certificated Security
substantially in the form of Exhibit C and (B) written instructions
from the transferor that such Certificated Security shall be registered
in the name of the Depositary or its nominee, and (ii) satisfaction of
all other applicable conditions imposed by this Indenture and the
Applicable Procedures, the Registrar shall (x) register such transfer
and cancel such Certificated Security, (y) reflect in the Securities
Register an increase in the appropriate Global Security in an amount
equal to the Certificated Security transferred pursuant to this clause
(d) and (z) instruct the Depositary to make the corresponding
adjustment to its records and credit the account of the appropriate
Agent Member in accordance with the Applicable Procedures.
(e) Any exchange of a Certificated Security for one or more
Certificated Securities in different authorized denominations shall be
registered only in accordance with this clause (e). Upon (i) surrender
of a Certificated Security at the office of the Registrar, together
with a written request to exchange such Certificated Security for one
or more Certificated Securities in different authorized denominations,
and (ii) satisfaction of all other applicable conditions imposed by
this Indenture, (A) the Registrar shall register such exchange and (B)
Funding Company shall execute and the Bond Trustee shall authenticate
and deliver in the name of the registered owner one or more
Certificated Securities in any authorized denomination with the same
aggregate principal amount and maturity date.
(f) Any exchange of a Certificated Security for a beneficial
interest in a Global Security shall be registered only in accordance
with this clause (f). Upon (i) surrender of a Certificated Security at
the office of the Registrar, together with (A) a written request to
exchange such Certificated Security for a beneficial interest in a
Global Security, (B) written instructions from the registered owner
that such Certificated Security shall be registered in the name of the
Depositary or its nominee and (C) a certificate of the registered owner
of such Certificated Security substantially in the form of Exhibit I
(if the Certificated Security is being exchanged for a beneficial
interest in the Unrestricted Global Security) or Exhibit J (if the
Certificated Security is being exchanged for a beneficial interest in
the Restricted Global Security) and (ii) satisfaction of all other
applicable conditions imposed by this Indenture and the Applicable
Procedures, the Registrar shall (x) register such exchange and cancel
such Certificated Security, (y) reflect in the Securities Register an
increase in the appropriate Global Security in an amount equal to the
Certificated Security exchanged pursuant to this clause (f) and (z)
instruct the Depositary to make the corresponding adjustment to its
records and credit the account of the appropriate Agent Member in
accordance with the Applicable Procedures.
Section 2.8 Execution. (a) The Securities shall be executed by an
Authorized Officer of Funding Company. Typographical and other minor errors or
defects in any signature executing or purporting to execute the Securities shall
not affect the validity or enforceability of any Security that has been duly
authenticated and delivered by the Bond Trustee.
(b) Any Security executed pursuant to clause (a) of this Section 2.8
may be issued and shall be authenticated by the Bond Trustee, notwithstanding
that any officer signing such Security or whose facsimile signature appears
thereon shall have ceased to hold office at the time of issuance or
authentication or shall not have held office at the date of such Security.
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Section 2.9 Authentication and Delivery. A Security, or any exchange,
transfer or replacement thereof, shall not be valid for any purpose until an
Authorized Officer of the Bond Trustee manually signs the certificate of
authentication on such Security substantially in the form set forth in Exhibit
A. Subject to the requirements set forth in this Section 2.9, such
authentication shall be conclusive proof that such Security has been duly
authenticated and delivered under this Indenture and that the Holder thereof is
entitled to the benefit of the trust hereby created. The Bond Trustee shall, in
accordance with a written order of Funding Company signed by two Authorized
Officers, authenticate the Securities at the initial issuance thereof and
deliver them to the purchaser thereof upon payment to the Bond Trustee of the
purchase price therefor. Any Securities subsequently issued under this Indenture
may, in accordance with a written order of Funding Company signed by two
Authorized Officers, be authenticated by the Bond Trustee or any Authenticating
Agent appointed by the Bond Trustee, and such authentication shall, for all
purposes of this Indenture, be deemed to be the authentication of and delivery
by the Bond Trustee.
Section 2.10 Mutilated, Destroyed, Lost or Stolen Securities. (a) If
any Security shall become mutilated, Funding Company shall execute, and the Bond
Trustee shall authenticate and deliver, a new Security of like tenor, maturity
and denomination in exchange and substitution for the Security so mutilated, but
only upon surrender to the Bond Trustee of such mutilated Security for
cancellation, and Funding Company or the Bond Trustee may require indemnity
therefor. If any Security shall be reported lost, stolen or destroyed, evidence
as to the ownership and the loss, theft or destruction thereof shall be
submitted to the Bond Trustee. If such evidence shall be satisfactory to both
the Bond Trustee and Funding Company and indemnity satisfactory to both shall be
given, Funding Company shall execute, and thereupon the Bond Trustee shall
authenticate and deliver, a new Security of like tenor, maturity and
denomination. The cost of providing any substitute Security under the provisions
of this Section 2.10 shall be borne by the Holder for whose benefit such
substitute Security is provided. If any such mutilated, lost, stolen or
destroyed Security shall have matured or be about to mature, Funding Company
may, with the consent of the Bond Trustee, pay to the Holder thereof the
principal amount of such Security upon the maturity thereof and compliance with
the aforesaid conditions by such Holder, without the issuance of a substitute
Security therefor, and likewise pay to the Holder the amount of the unpaid
interest, if any, which would have been paid on a substitute Security had one
been issued.
(b) Every substitute Security issued pursuant to this Section 2.10
shall constitute an additional contractual obligation of Funding Company,
whether or not the Security alleged to have been mutilated, destroyed, lost or
stolen shall be at any time enforceable by anyone, and shall be entitled to all
the benefits of this Indenture equally and proportionally with any and all other
Securities duly issued hereunder.
(c) All Securities shall be held and owned upon the express condition
that the foregoing provisions are, to the extent permitted by Applicable Law,
exclusive with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities, and shall preclude any and all other rights and
remedies with respect thereto.
Section 2.11 Temporary Securities. Pending preparation of definitive
Securities, Funding Company may issue, and upon a written order of Funding
Company signed by two Authorized Officers the Bond Trustee shall authenticate
and deliver, in lieu of definitive Securities, one or more temporary printed or
typewritten Securities in the form recited in this Indenture, in any authorized
denomination. If temporary Securities are issued, Funding Company shall cause
definitive Securities to be prepared without unreasonable delay. The Bond
Trustee shall, in accordance with a written order of Funding Company signed by
two Authorized Officers, authenticate and deliver definitive Securities in
exchange
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for and upon surrender of an equal principal amount of temporary Securities,
without charge to the Holder of such Securities. Until so exchanged, temporary
Securities shall in all respects be entitled to the same rights, remedies,
security and other benefits under this Indenture as definitive Securities.
Section 2.12 Cancellation and Destruction of Surrendered Securities.
All Securities surrendered for payment, redemption or registration of transfer
or exchange shall, if surrendered to any Person other than the Bond Trustee, be
delivered to the Bond Trustee. Funding Company may at any time deliver to the
Bond Trustee for cancellation any Securities previously authenticated and
delivered hereunder which Funding Company may have acquired in any manner
whatsoever. The Bond Trustee (and no one else) shall cancel all Securities
surrendered for payment, redemption or registration of transfer or exchange, and
all Securities surrendered for cancellation by Funding Company. All canceled
Securities held by the Bond Trustee shall be returned to Funding Company. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section 2.12, except as expressly permitted by this
Indenture.
Section 2.13 Disposition of Bond Proceeds of Initial Securities. Upon
receipt of the Bond Proceeds of the Initial Securities, the Bond Trustee shall
apply such proceeds to the account of Funding Company for loan by the Funding
Company to the Project Borrowers pursuant to the applicable Project Loan
Agreement.
ARTICLE 3
REDEMPTION OF SECURITIES
Section 3.1 Redemption at the Option of Funding Company or the Holders.
(a) Funding Company may redeem the Securities, in whole or in part, at any time
on any Business Day, at a price equal to the Redemption Price plus the
Redemption Premium.
(b) The Majority Holders, acting pursuant to Article 6 (Acts of
Holders), may, following the request of Funding Company or upon their own
decision, elect that Funding Company redeem the Securities, in whole or in part,
at a price equal to the Redemption Price, with monies which remain on deposit in
either Distribution Suspense Account for at least eighteen (18) months in
accordance with the applicable Depositary Agreement as a result of relevant
Project Obligors' failure to satisfy the Distribution Conditions.
(c) If Funding Company elects to redeem the Initial Securities pursuant
to clause (a) of this Section 3.1, or is required by the Majority Holders to do
so in accordance with clause (b) of this Section 3.1, it shall deliver to the
Bond Trustee, at least thirty (30) days prior to the date upon which notice of
redemption is required to be given to the Holders pursuant to Section 3.5
(Notice of Redemption) (unless a shorter notice period shall be satisfactory to
the Bond Trustee), an Officer's Certificate specifying the Redemption Date upon
which such redemption shall occur and the principal amount of Initial Securities
to be redeemed.
Section 3.2 Mandatory Redemption. (a) The Initial Securities shall be
redeemed, in whole or in part, at a price equal to the Redemption Price and, in
the case of redemption pursuant to clause (iv) below, at a price equal to the
Redemption Price plus the Redemption Premium, as follows:
(i) if an Event of Loss occurs with respect to the Big Spring
Project or the Trinidad Project and the Big Spring Guarantor (or the
Collateral Agent on its behalf) or the Trinidad
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Obligor receives Loss Proceeds in connection with such Event of Loss in
excess of $2,000,000 and the Project is not or cannot be repaired,
rebuilt or restored in accordance with an Approved Restoration Plan,
such Loss Proceeds shall be used to redeem the Initial Securities in
accordance with this Section 3.2;
(ii) if an Event of Loss occurs with respect to the Big Spring
Project or the Trinidad Project and such Project is repaired, rebuilt
or restored in accordance with an Approved Restoration Plan and the Big
Spring Guarantor or the Trinidad Obligor, as applicable (or the
Collateral Agent on its behalf) receives Loss Proceeds in excess of
$2,000,000 in excess of the cost of such repair, rebuilding or
restoration in connection with such Event of Loss, such excess Loss
Proceeds shall be used to redeem the Initial Securities in accordance
with this Section 3.2;
(iii) if the BNY Guarantor, the Warbasse Guarantor, the
Trinidad Project Borrower or the Trinidad Guarantor receives as Equity
Cash Flows or Note Cash Flows, as applicable, Loss Proceeds in excess
of $2,000,000, in which case such Loss Proceeds received by such
Project Obligor shall be made available for such redemption;
(iv) if a Power Contract Buy-Out occurs with respect to any
Project and the relevant Project Obligor (or the Collateral Agent on
its behalf) receives Power Contract Buy-Out Proceeds (which in the case
of the BNY Guarantor, the Warbasse Guarantor, the Trinidad Project
Borrower or the Trinidad Guarantor is received as Equity Cash Flows or
Note Cash Flows, as applicable) in excess of $2,000,000, such Power
Contract Buy-Out Proceeds shall be used to redeem the Initial
Securities in accordance with this Section 3.2; unless (x) each Rating
Agency confirms that such Power Contract Buy-Out will not result in a
Ratings Downgrade and (y) the Independent Engineer confirms that, after
giving effect to such Power Contract Buy-Out the average and minimum
Projected Debt Service Coverage Ratio for both (1) the next four
consecutive fiscal quarters, commencing with the fiscal quarter in
which such Power Contract Buy-Out occurs, taken as one annual period,
and (2) each fiscal year through the Final Maturity Date, will not be
less than 1.55 to 1.0 and 1.5 to 1.0, respectively, in which case such
Power Contract Buy-Out Proceeds shall not be made available for such
redemption but instead shall be transferred to the applicable Revenue
Account and disbursed in accordance with Article 3 of the applicable
Depositary Agreement;
(v) if either the Big Spring Guarantor or the Trinidad Obligor
(or the Collateral Agent on its behalf) receives liquidated damages
pursuant to the Vestas Agreement, the Trinidad EES Contract or the
Trinidad Turnkey Construction Contract, as applicable, in excess of
$1,000,000, such liquidated damages shall be used to redeem the Initial
Securities in accordance with this Section 3.2; unless (x) each Rating
Agency provides written affirmation of the Ratings or (y) such proceeds
are used by the Big Spring Guarantor or the Trinidad Obligor to (i) pay
construction costs of the Big Spring Project or the Trinidad Project,
respectively, in accordance with the applicable construction schedule
and construction budget, (ii) make interest payments due prior to
Substantial Completion of the Big Spring Project or the Trinidad
Project, respectively, (iii) make payments to T&TEC in accordance with
the Trinidad PPA, or (iv) compensate the Big Spring Guarantor for lost
Tax credits in which case such liquidated damages shall not be made
available for such redemption but instead shall be transferred to the
applicable Revenue Account and disbursed in accordance with Article 3
of the applicable Depositary Agreement;
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(vi) if the Warbasse Guarantor receives proceeds of
Indebtedness incurred by the Warbasse Project Company, or the Trinidad
Project Borrower or the Trinidad Guarantor receives proceeds of
Indebtedness incurred by the Trinidad Project Company other than
proceeds of Permitted Project Indebtedness, such proceeds shall be made
available for such redemption;
(vii) if the BNY Guarantor receives any Equity Cash Flows upon
the dissolution of the BNY Project Company or upon any change in the
relative ownership percentage of the partners thereof, such proceeds
shall be used to redeem the Initial Securities in accordance with this
Section 3.2; or
(viii) if any Project Loan is accelerated and proceeds are
received by Funding Company from such acceleration and from foreclosure
of the Project Collateral securing the Project Loan, such proceeds
shall be used to redeem the Initial Securities in accordance with this
Section 3.2; or
(ix) if proceeds are received by Funding Company from the
foreclosure of Project Collateral following a Guarantee Event of
Default, such proceeds shall be used to redeem the Initial Securities
in accordance with this Section 3.2.
(b) If Funding Company is required to redeem the Initial Securities in
accordance with this Section 3.2, it shall deliver to the Bond Trustee,
immediately upon the occurrence of the event resulting in such obligation to
redeem, an Officer's Certificate specifying the principal amount of Securities
to be redeemed. Upon receipt of such Officer's Certificate, the Bond Trustee
shall determine, as specified in such Officer's Certificate, the Redemption Date
for such redemption, which Redemption Date shall be within ninety (90) days of
the occurrence of the event resulting in Funding Company's obligation to redeem
the Initial Securities in accordance with this Section 3.2.
Section 3.3 Redemption Account. At least one Business Day prior to the
Redemption Date for any redemption of Securities pursuant to this Article 3,
Funding Company shall deposit or cause to be deposited in the applicable
Redemption Account an amount (in immediately available funds) sufficient to
redeem on such Redemption Date the Initial Securities called for redemption in
accordance with this Article 3.
Section 3.4 Prepayment of Project Loans. On or prior to the Redemption
Date for any redemption of Initial Securities pursuant to this Article 3,
Funding Company shall (a) cause (i) in the event of a redemption pursuant to
Section 3.1 (Redemption at the Option of Funding Company or the Holders), each
Project Borrower, on a pro rata basis, or (ii) in the event of a redemption
pursuant to Section 3.2 (Mandatory Redemption), each Project Borrower in respect
of which proceeds are available for such redemption, to prepay its Project Loans
pursuant to Section 2.4(b) (Prepayment) of its Project Loan Agreement and (b)
deposit the monies received from such prepayment into the applicable Redemption
Account pursuant to Section 3.3 (Redemption Account).
Section 3.5 Notice of Redemption. (a) Notice of redemption shall be
given in the manner provided in Section 11.5(b) (Notices) to the Holders of any
Securities to be redeemed pursuant to this Article 3 at least thirty (30) days
but not more than sixty (60) days prior to the Redemption Date for such
redemption. All notices of redemption shall fully identify the Securities and
shall state the following:
(i) the Redemption Date;
(ii) the Redemption Price and any applicable Redemption
Premium;
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(iii) if less than all Outstanding Securities are to be
redeemed, the identification of the particular Securities to be
redeemed and the aggregate principal amount of Securities to be
redeemed;
(iv) in the case of Securities to be redeemed in part, the
principal amount of such Securities to be redeemed and a statement to
the effect that after the Redemption Date, upon surrender of such
Securities, new Securities in the aggregate principal amount equal to
the unredeemed portion thereof will be issued;
(v) the name and address of the Paying Agent;
(vi) that Securities called for redemption must be surrendered
to the Paying Agent to collect the Redemption Price and any applicable
Redemption Premium;
(vii) that on the Redemption Date the Redemption Price and any
applicable Redemption Premium will become due and payable upon each
Security to be redeemed or portion thereof, and that (unless Funding
Company shall default in the payment of the Redemption Price and such
Redemption Premium) interest thereon shall cease to accrue on and after
said date;
(viii) a statement to the effect that the availability in the
Redemption Account on the Redemption Date of an amount of immediately
available funds to pay the Redemption Price and any applicable
Redemption Premium in full is a condition precedent to the redemption;
(ix) the paragraph of the Securities pursuant to which the
Securities are being redeemed; and
(x) the CUSIP number, if any, relating to the Securities
being redeemed.
(b) Notice of redemption of Securities to be redeemed at the election
of Funding Company pursuant to Section 3.1 (Redemption at the Option of Funding
Company) shall be given by Funding Company or, at Funding Company's written
request by the Bond Trustee, by the Bond Trustee in the name and at the expense
of Funding Company. Notice of a mandatory redemption pursuant to Section 3.2
(Mandatory Redemption) shall be given by the Bond Trustee in the name and at the
expense of Funding Company. Any notice of redemption given in accordance with
this Section 3.5 shall be conclusively presumed to have been given whether or
not the Holder receives such notice. In any case, failure to have given such
notice as herein provided or any defect in the notice given to a Holder of any
Security designated for redemption in whole or in part shall not affect the
validity of the proceedings for the redemption of any other Initial Security.
Section 3.6 Securities Payable on Redemption Date. Upon the giving of
notice pursuant to Section 3.5 (Notice of Redemption) and the satisfaction of
the conditions, if any, set forth in such notice, the Securities or portions
thereof called for redemption in such notice shall become due and payable on the
Redemption Date and at the Redemption Price (plus any applicable Redemption
Premium) specified in such notice, and from and after the Redemption Date
(unless Funding Company shall default in the payment of such Securities at the
Redemption Price plus any applicable Redemption Premium) such Securities or
portions thereof shall cease to bear interest. Upon surrender of any such
Security for redemption in accordance with such notice, such Security or
portions thereof shall be paid and redeemed by Funding Company at the Redemption
Price therefor plus any applicable Redemption Premium; provided, however, that
any payment of interest on any Security the Scheduled Payment Date of which is
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on or prior to the Redemption Date shall be payable to the Holder of such
Security registered as such at the close of business on the relevant Regular
Record Date in accordance with the terms of this Indenture and such Security.
Section 3.7 Selection of Securities to be Redeemed. If less than all
the Securities are to be redeemed pursuant to this Article 3, the Bond Trustee
shall redeem the Securities on a pro rata basis among the Outstanding Securities
not previously called for redemption in whole. The Bond Trustee shall notify
Funding Company promptly of the Securities selected for redemption and, in the
case of any Securities selected for partial redemption, the principal amount
thereof to be redeemed.
Section 3.8 Securities Redeemed in Part. (a) For all purposes of this
Indenture, unless the context otherwise requires, all provisions relating to the
redemption of Securities shall relate, in the case of any Securities redeemed or
to be redeemed only in part, to the portion of the principal amount of such
Securities that has or is to be redeemed.
(b) Any Security that is to be redeemed only in part shall be
surrendered at the place of payment therefor and, upon such surrender, Funding
Company shall execute, and the Bond Trustee shall authenticate and make
available for delivery to the Holder of such Security (at the expense of Funding
Company), a new Security, of any authorized denomination requested by such
Holder and of like tenor and in aggregate principal amount equal to and in
exchange for the remaining unpaid principal amount of the surrendered Security.
(c) Upon any partial redemption of Securities in accordance with this
Article 3, the scheduled principal amortization of the Securities as set forth
on Schedule I shall be reduced by an amount equal to the product of (i) the
scheduled principal amortization of the Securities then in effect and (ii) a
fraction, the numerator of which is equal to the principal amount of the
Outstanding Securities to be redeemed and the denominator of which is the
principal amount of the Outstanding Securities immediately prior to such
redemption. In connection with any such partial redemption, the Project
Borrowers, on behalf of Funding Company, shall furnish the Bond Trustee with an
Officer's Certificate setting forth the amortization schedule for the remaining
Initial Securities after giving effect to such redemption. Notwithstanding any
other provision of this Indenture, if any Security called for redemption shall
not be paid upon surrender thereof for redemption, the principal of such Initial
Security shall, until paid or provided for, bear interest from the date fixed
for redemption at the interest rate specified in such Security.
ARTICLE 4
COVENANTS
Section 4.1 Payment of Principal of and Interest on Securities. Funding
Company shall promptly pay or cause to be paid the principal of, premium (if
any) and interest on every Security issued hereunder according to the terms
hereof and thereof.
Section 4.2 Reporting Requirements. Funding Company shall furnish or
cause to be furnished to the Bond Trustee and each Rating Agency and, in the
case of clauses (i), (ii) and (v) below, any Holder, prospective Holder or owner
of a beneficial interest in a Global Security upon written request of such
Holder substantially in the form of Exhibit M hereto, (which request may
indicate that it is a continuing request for such information until further
notice):
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(i) as soon as available and in any event within sixty (60)
days after the end of the first three quarterly accounting periods of
Funding Company's and each Project Obligor's respective fiscal years
(commencing with the quarter ending August 31, 1998) and, with respect
to item (3) herein, the final quarter of each fiscal year, Unaudited
Financial Statements of Funding Company and each Project Obligor for
such period, each accompanied by an Officer's Certificate of Funding
Company (1) to the effect that such Unaudited Financial Statements
fairly present the financial condition and results of operations of
Funding Company on the dates and for the periods indicated in
accordance with GAAP(other than with respect to the notes and normally
recurring year-end adjustments), (2) stating that no Indenture Default
or Indenture Event of Default has occurred and is continuing, or, if an
Indenture Default or Indenture Event of Default has occurred and is
continuing, a statement as to the nature thereof and (3) setting forth
the Debt Service Coverage Ratios for the historical three (3) quarters
and the final quarter of such fiscal year together with a
reconciliation of each quarterly Debt Service Coverage Ratio to the
annual Debt Service Coverage Ratio;
(ii) as soon as available and in any event within one hundred
and twenty (120) days after the end of Funding Company's and each
Project Obligor's respective fiscal year (commencing with the fiscal
year ended February 28, 1999), Annual Audited Financial Statements of
Funding Company, Annual Audited Combined Financial Statements of the
U.S. Guarantors and Annual Audited Consolidated Financial Statements of
the Trinidad Finance Parties for such fiscal year, each accompanied by
an audit opinion thereon by the Auditors, which opinion shall state
that (1) said financial statements of Funding Company, the U.S.
Guarantors and the Trinidad Finance Parties present fairly, in all
material respects, the financial position, results of operations and
cash flows of Funding Company, the U.S. Guarantors and the Trinidad
Finance Parties at the end of, and for, such fiscal year in accordance
with GAAP (2) nothing has come to their attention that any Indenture
Default or Indenture Event of Default, as they relate to accounting
matters, has occurred and is continuing, or, if such event has occurred
and is continuing, a statement as to the nature thereof and (3) the
annual Debt Service Coverage Ratio for such fiscal year;
(iii) promptly and in any event within five (5) days after an
Authorized Officer of Funding Company has knowledge thereof, written
notice of the occurrence of any event or condition which constitutes an
Indenture Default or Indenture Event of Default, specifically stating
that such event or condition has occurred and describing it and any
action being or proposed to be taken with respect thereto;
(iv) promptly and in any event within three (3) days after
delivery to Funding Company of any notice of any Project Default or
Project Event of Default, a copy of such notice; and
(v) promptly upon request, a list of the current balances of
each of the Depositary Accounts.
Delivery of such reports, information and documents to the Bond Trustee
is for informational purposes only and the Bond Trustee's receipt of such shall
not constitute constructive notice of any information contained therein or
determinable from information contained therein, including Funding Company's
compliance with any of its covenants hereunder (as to which the Bond Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 4.3 Corporate Existence; Compliance with Applicable Laws. (a)
Funding Company shall at all times preserve and maintain in full force and
effect (i) its existence as a limited liability
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company in good standing under the laws of the Cayman Islands and (ii) its
qualification to do business in each other jurisdiction in which the character
of properties owned or leased by it or in which the transaction of its business
as conducted or proposed to be conducted makes such qualification necessary,
except where the failure to be so qualified could not reasonably be expected to
have a Material Adverse Effect.
(b) Funding Company shall maintain and renew all of the powers,
rights, privileges and franchises necessary for the transaction of its
business as conducted or proposed to be conducted, except where the failure
to do so could not reasonably be expected to have a Material Adverse Effect.
(c) Funding Company shall comply with all Applicable Laws (including
Environmental Laws) and Governmental Approvals applicable to it, and all other
acts, rules, regulations, permits, orders and requirements of any legislative,
executive, administrative or judicial body relating to the issuance of the
Securities by Funding Company and performance by Funding Company of its
obligations hereunder, except where the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.
Section 4.4 [Intentionally Omitted.]
Section 4.5 Payment of Taxes and Claims. Funding Company shall, prior
to the time penalties shall attach thereto, pay and discharge or cause to be
paid or discharged all Taxes, assessments and governmental charges or levies
imposed upon it or its income or profits; provided that Funding Company shall
not be required to pay any such obligation if (a) such charges are being
diligently contested in good faith by appropriate proceedings, (b) during the
period of such contest the enforcement of any contested item is effectively
stayed and (c) adequate reserves are established with respect to the contested
items (in accordance with GAAP). Funding Company shall promptly pay or cause to
be paid any valid, final non-appealable judgment enforcing any such tax, duty,
fee, assessment, other governmental charge or claim and shall cause the same to
be satisfied of record, as applicable.
Section 4.6 Books and Records. Funding Company shall at all times keep
proper books of record and account truly and fairly reflecting the financial
condition and results of operations of Funding Company in which full, true and
correct entries in conformity with GAAP and all Applicable Laws shall be made of
all dealings and transactions in relation to its business and activities.
Section 4.7 Right of Inspection. Upon five (5) days written notice,
Funding Company shall permit officers and designated representatives of the Bond
Trustee, the Collateral Agent and the Depositary Bank to visit and inspect, in
the presence of representatives of Funding Company, if requested by Funding
Company, any of the properties of Funding Company, and to examine and make
copies of the books of record and accounts of Funding Company and discuss the
affairs, finances and accounts of Funding Company with, and be advised as to the
same by, its officers, all at such reasonable times and intervals and to such
reasonable extent as the Bond Trustee, the Collateral Agent and the Depositary
Bank may request.
Section 4.8 Use of Proceeds. Funding Company shall use all net Bond
Proceeds solely to make loans to the Project Borrowers pursuant to the Project
Loan Agreements or supplements thereto.
Section 4.9 Performance of Finance Documents. Funding Company shall
perform all of its material covenants and agreements contained in any of the
Finance Documents to which it is a party and, except as may otherwise be
permitted in compliance with Section 4.21 (Project Loan Agreements and Project
Notes), shall take all reasonable and necessary action to prevent the
termination or cancellation of
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any such Finance Document, except where such nonperformance or the result of
such termination or cancellation could not reasonably be expected to result in a
Material Adverse Effect.
Section 4.10 Rating. Funding Company shall maintain a rating of the
Securities by each of the Rating Agencies and shall comply with all reasonable
requests from each of the Rating Agencies for information and/or notices related
to the Securities.
Section 4.11 Rule 144A Information; Other Information. (a) Unless a
registration statement shall have previously become effective with respect to
the Securities, at any time when Funding Company is not subject to the reporting
requirements of Section 13 or Section 15(d) of the Exchange Act, upon the
request of any Holder or any owner of a beneficial interest in a Global
Security, Funding Company shall promptly furnish to such Holder or beneficial
owner, to a prospective purchaser of a Security or beneficial interest therein
designated by such Holder or beneficial owner, or to the Bond Trustee for
delivery to such Holder, beneficial owner or prospective purchaser, as the case
may be, all information specified in, and meeting the requirements of, paragraph
(d)(4) of Rule 144A in order to permit compliance by such Holder or beneficial
owner with Rule 144A in connection with a resale of Securities pursuant to Rule
144A.
(b) At any time after a registration statement with respect to the
Securities shall have been filed with and declared effective by the Commission,
and notwithstanding that Funding Company may no longer be required to do so
pursuant to the Exchange Act or the rules and regulations promulgated
thereunder, Funding Company shall provide to the Bond Trustee, each Holder and
each owner of a beneficial interest in a Global Security such periodic and other
reports that Funding Company would be required to file if it were subject to
Section 13 or Section 15(d) of the Exchange Act.
Section 4.12 Auditors. Funding Company shall retain Grant Thornton or
another nationally recognized independent accounting firm in the United States
to act as its auditors and authorize such firm to communicate directly with the
Bond Trustee and the Collateral Agent.
Section 4.13 Big Spring and Trinidad Construction. The Big Spring
Guarantor or the Trinidad Obligor, as applicable, shall deliver to the Bond
Trustee an Officer's Certificate (containing customary assumptions and
qualifications), substantially in the form of Exhibit L attached hereto (which,
in the case of (i) below, will be confirmed as reasonable, based on the material
presented therein (containing customary assumptions and qualifications) by the
Independent Engineer), upon (i) Substantial Completion of each of the Big Spring
Project and the Trinidad Project certifying that Substantial Completion of such
Project has occurred and (ii) abandonment of either the Big Spring Project or
the Trinidad Project, certifying that such Project has been abandoned. The Bond
Trustee may conclusively rely on such Officer's Certificate and confirmation of
the Independent Engineer without further investigation or inquiry.
Section 4.14 Permitted Indebtedness. Funding Company shall not create
or incur or suffer to exist any Indebtedness except the following (collectively,
"Permitted Funding Indebtedness"):
(a) Indebtedness incurred pursuant to this Indenture and the
Initial Securities;
(b) Indebtedness incurred pursuant to Additional Securities
issued in accordance with the provisions of Section 2.3 (Additional
Securities); and
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(c) Indebtedness the proceeds of which shall be used by
Funding Company to provide loans to the Project Borrowers; provided
that such Indebtedness constitutes Permitted Project Indebtedness.
Section 4.15 Permitted Liens. Funding Company shall not create or
suffer to exist or permit any Lien upon or with respect to any of its properties
except the following (collectively, "Permitted Funding Liens"):
(a) Liens specifically permitted or required by, or created
by, any Security Document;
(b) Liens to secure Permitted Funding Indebtedness; provided
that the holder of such Permitted Indebtedness, or a representative
thereof, shall have entered into the Intercreditor Agreement;
(c) Liens for Taxes, assessments or governmental charges which
are either not yet due or which are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves are
established in accordance with GAAP; and
(d) other Liens incidental to the conduct of Funding Company's
business which were not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than Liens arising
by operation of law or statute in the ordinary course of business), and
which do not in the aggregate materially impair the operation of
Funding Company's business.
Section 4.16 Guarantees. Funding Company shall not contingently or
otherwise be or become liable, directly or indirectly, in connection with any
Guarantee Obligation, except for endorsements and similar obligations in the
ordinary course of business.
Section 4.17 Business Activities. Funding Company shall not engage in
any activities other than (a) those contemplated by this Indenture and the other
Finance Documents and (b) activities incidental thereto.
Section 4.18 Assignment of Obligations; Additional Agreements. Funding
Company shall not assign any of its rights or obligations under any Transaction
Document and shall not enter into any additional contract, agreement or
undertaking if the transactions contemplated by such assignment or additional
contract, agreement or undertaking could reasonably be expected to result in a
Material Adverse Effect; provided that Funding Company shall be permitted to
assign any of its rights or obligations hereunder and under the Project Loan
Agreements if such assignment is necessary to avoid any adverse tax consequences
resulting from a change in Applicable Law (or the interpretation thereof) and
(a) no Default or Event of Default shall exist and be continuing at such time,
(b) the Bond Trustee shall receive written confirmation from each Rating Agency
that such assignment shall not result in a Ratings Downgrade and (c) the Bond
Trustee receives satisfactory Opinions of Counsel of Funding Company stating
that (i) such assignment is enforceable and creates a legal, valid and binding
obligation of Funding Company, (ii) such assignment has no adverse consequences
upon the rights and remedies of the Secured Parties with respect to the
Collateral and (iii) such assignment shall have no adverse effects on the tax
structure of the transaction prior to the assignment or upon payments to or from
any Project Obligor or otherwise related to the Securities and each of the
Project Notes.
Section 4.19 Fundamental Changes; Sale of Assets. Funding Company shall
not enter into any transaction of merger or consolidation, change its form of
organization or its business, liquidate, wind-up
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or dissolve itself (or suffer any liquidation or dissolution), discontinue its
business or sell, transfer, assign, hypothecate, pledge, lease, sublease or
otherwise dispose of (in one transaction or in a series of transactions) any of
its assets, except in any such case as is contemplated by the Finance Documents.
Section 4.20 Investments; Transactions with Affiliates. (a) Funding
Company shall not form or have any Subsidiaries, make investments, loans or
advances or acquire the stock, obligations or securities of any Person except
that (i) Funding Company may make loans to each Project Borrower with the funds
borrowed in accordance with Section 4.14 (Permitted Indebtedness), (ii) Funding
Company may invest in Cash Equivalents, and (iii) Funding Company may invest
amounts funded from equity contributions and transaction fees, subject to the
other provisions of this Indenture, in stock, obligations or securities at
Funding Company's discretion.
(b) Funding Company shall not enter into any transaction or series of
related transactions with any Person (including any Affiliate of Funding
Company) other than in the ordinary course of business and on an arm's-length
basis, except that Funding Company may perform its obligations under and engage
in the transactions contemplated by the Transaction Documents.
Section 4.21 Project Loan Agreements and Project Notes. (a) Funding
Company shall not consent to, enter into or grant any amendment, waiver,
consent, change or modification to any Project Loan Agreement or Project Note,
except in accordance with Section 4.18 (Assignment of Obligations; Additional
Agreements) or Section 7.3 (Amendment of Project Loan Agreements or Project
Notes).
(b) Funding Company shall enforce all of its rights under the Project
Loan Agreements, the Guarantees and the Project Notes for the benefit of the
Bond Trustee and the Holders. Funding Company shall exercise all remedies under
the Project Loan Agreements, the Guarantees and the Project Notes (including
acceleration of the Project Notes) as directed in writing by the Collateral
Agent, acting pursuant to the Intercreditor Agreement, and in accordance with
the terms of this Indenture.
Section 4.22 Restricted Payments. Funding Company shall not make any
Restricted Payments or direct any Restricted Payments to be made by or on behalf
of any Project Obligor, except for payments permitted under the Depositary
Agreements.
Section 4.23 Further Assurances. (a) Funding Company shall execute and
deliver, from time to time as reasonably requested by the Bond Trustee or the
Collateral Agent or as necessary, at Funding Company's expense, such other
documents in connection with the rights and remedies of the Bond Trustee and the
Holders granted or provided for by the Finance Documents and to consummate the
transactions contemplated therein.
(b Funding Company shall, at its own expense, take all reasonable
actions necessary to establish, maintain, protect, perfect and continue the
perfection of the Liens created by this Agreement and the Security Documents and
its rights and title and the rights and title of the Bond Trustee and the
Holders to the Funding Company Collateral in such manner and in such places as
in the opinion of counsel to Funding Company, the Bond Trustee or the Collateral
Agent is required by Applicable Law in order to fully preserve and protect the
rights of the Collateral Agent and the Bond Trustee, except where the failure to
do so could not reasonably be expected to result in a Material Adverse Effect.
Section 4.24 Taxation. (a) All payments by Funding Company in respect
of each Security shall be made free and clear of, and without withholding or
deduction for or on account of, any and all Cayman Taxes, Barbados Taxes or
Trinidad Taxes. Funding Company shall pay such additional amounts ("Additional
Amounts") as may be necessary to ensure that the amounts received by the Holders
after
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such withholding or deduction shall equal the respective amounts of principal
and interest that would have been receivable in the absence of such withholding
or deduction; provided that no Additional Amounts shall be payable in respect of
any Security: (i) in the case of payments for which presentation of a Security
is required, presented for payment more than thirty (30) days after the later of
(A) the date on which such payment first became due and (B) if the full amount
payable has not been received in the Borough of Manhattan, The City of New York
by the Bond Trustee on or prior to such due date, the date on which, the full
amount having been so received, notice to that effect shall have been given to
the Holders by the Bond Trustee, except in each case to the extent that a Holder
would have been entitled to such Additional Amounts on presenting such Security
for payment on the last day of the applicable thirty (30) day period; (ii held
by or on behalf of a Holder who is liable for Cayman Taxes, Barbados Taxes or
Trinidad Taxes in respect of such Security by reason of having some connection
to the Cayman Islands, Barbados or Trinidad, as the case may be, or any
political subdivision or governmental authority thereof, other than the mere
holding of such Security or the receipt of principal or interest in respect
thereof; (iii) held by or on behalf of a Holder who would not be liable for or
subject to such withholding or deduction by making a declaration of
non-residence or other similar claim for exemption to the relevant taxing
authority if, after having been requested by Funding Company to make such
declaration or claim, such Holder fails to do so; or (iv) to which any
combination of clauses (i), (ii) and (iii) is applicable.
(b) Funding Company shall promptly pay when due any present or future
stamp, court or documentary Taxes or any other excise or property taxes, charges
or similar levies that arise in any jurisdiction from the execution, delivery or
registration of each Security or any other document or instrument referred to
herein or therein, excluding (i) Taxes imposed on or measured by the net income
or capital of any Holder by any jurisdiction or any political subdivision or
taxing authority thereof and (ii) any such Taxes, charges or similar levies
imposed by any jurisdiction outside of the Cayman Islands, Barbados or Trinidad.
ARTICLE 5
EVENTS OF DEFAULT; REMEDIES
Section 5.1 Events of Default. The term "Indenture Event of Default,"
whenever used herein, shall mean any of the following events (whatever the
reason for such event and whether it shall be voluntary or involuntary or shall
come about or be affected by operation of law, or be pursuant to or in
compliance with any Applicable Law), and any such event shall continue to be an
Indenture Event of Default if and for so long as it shall not have been
remedied:
(a) Funding Company shall fail to pay any principal of, premium (if
any), interest on or any other amounts (including any unscheduled cost or
change) due with respect to any Security when the same becomes due and payable,
whether by scheduled maturity or required prepayment or redemption or by
acceleration or otherwise and such failure continues for ten (10) or more days
following the due date for payment;
(b) a Project Event of Default (other than a Project Event of Default
related to failure to pay amounts owed on a Project Note or any Guarantee) shall
have occurred and be continuing;
(c) any representation or warranty made by Funding Company in the
Purchase Agreement, any other Transaction Document or any representation,
warranty or statement in any certificate or other document furnished to the Bond
Trustee, the Collateral Agent, the Depositary Bank or any Holder by or on behalf
of Funding Company thereunder, shall prove to have been false or misleading in
any material
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respect as of the time made, confirmed or furnished and such fact, event or
circumstance that gave rise to such inaccuracy has resulted in, or could
reasonably be expected to result in, a Material Adverse Effect and such fact,
event or circumstance shall continue uncured for thirty (30) or more days from
the date an Authorized Officer of Funding Company obtains actual knowledge
thereof; provided that if Funding Company commences and diligently pursues
efforts to cure such fact, event or circumstance within such thirty (30) day
period and delivers written notice thereof to the Bond Trustee, Funding Company
may continue to effect such cure and such misrepresentation shall not be deemed
an "Indenture Event of Default" for an additional ninety (90) days so long as
Funding Company is diligently pursuing such cure;
(d) Funding Company shall fail to perform or observe any covenant or
agreement contained in Section 4.3 (Corporate Existence; Compliance with
Applicable Laws (with respect to the maintenance of the corporate existence of
Funding Company only), Section 4.5 (Payment of Taxes and Claims), Section 4.9
(Performance of Finance Documents), Section 4.14 (Permitted Indebtedness),
Section 4.15 (Permitted Liens), Section 4.16 (Guarantees), Section 4.17
(Business Activities), Section 4.19 (Fundamental Changes; Sale of Assets),
Section 4.21 (Project Loan Agreement and Project Note), Section 4.22 (Restricted
Payments), Section 4.23 (Further Assurances), Section 4.24 (Taxation) or Section
7.3 (Amendment of Project Loan Agreements and Project Notes) and such failure
shall continue uncured for thirty (30) or more days from the date an Authorized
Officer of Funding Company obtains actual knowledge of such failure;
(e) Funding Company shall fail to perform or observe any of its
covenants contained in this Indenture (other than those referred to in clause
(d) of this Section 5.1) and such failure shall continue uncured for sixty (60)
or more days from the date an Authorized Officer of Funding Company obtains
actual knowledge of such failure; provided that if Funding Company commences and
diligently pursues efforts to cure such default within such sixty (60) day
period and delivers written notice thereof to the Bond Trustee, Funding Company
may continue to effect such cure of the default and such default shall not be
deemed an "Indenture Event of Default" for an additional thirty (30) days so
long as Funding Company is diligently pursuing such cure;
(f) Funding Company shall (i) apply for or authorize or approve or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or all or a substantial part of its
property, (ii) admit in writing its inability or be generally unable to pay its
debts as such debts become due, (iii) make a general assignment for the benefit
of its creditors, (iv) commence a voluntary case under the Federal Bankruptcy
Code, (v) file a petition seeking to take advantage of any other Debtor Relief
Law, (vi fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
Federal Bankruptcy Code or any other Debtor Relief Law or (vii) take any action
for the purpose of effecting any of the foregoing including, without limitation,
commencing a shareholder vote in connection with any of the foregoing;
(g) a proceeding or case shall be commenced without the application or
consent of Funding Company in any court of competent jurisdiction, seeking (i)
its liquidation, reorganization, dissolution, winding-up or the composition or
readjustment of debts or (ii) the appointment of a trustee, receiver, custodian,
liquidator or the like of Funding Company or all or a substantial part of its
property under any Debtor Relief Law and such proceeding or case shall continue
undismissed, or any order, judgment or decree approving any of the foregoing
shall be entered and continue unstayed and in effect, for a period of sixty (60)
or more consecutive days, or any order for relief against Funding Company shall
be entered in any involuntary case under the Federal Bankruptcy Code or any
other Debtor Relief Law;
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(h) any Security Document related to the Funding Company Collateral or
any Guarantee shall cease to be in full force and effect or any Lien purported
to be granted thereby with respect to any material Funding Collateral shall
cease to be a valid and perfected Lien in favor of the Collateral Agent for the
benefit of the Secured Parties on the Funding Collateral described therein with
the priority purported to be created thereby and such cessation has resulted in
a Material Adverse Effect; provided that Funding Company shall have ten (10)
days from the date an Authorized Officer of Funding Company obtains actual
knowledge thereof to cure such cessation (if curable) or to furnish to the
Collateral Agent all documents or instruments required to cure any such
cessation (if curable);
(i) except as otherwise provided in Finance Documents, (A) the Sponsor
shall fail to maintain direct or indirect beneficial ownership of (i) 51% of the
Trinidad Obligor, provided that (1) any purchaser with respect to the Trinidad
Obligor shall agree to (x) provided a limited recourse guarantee of the Trinidad
Project Loan secured by a pledge of the purchased direct or indirect interests
in the Trinidad Obligor (y) the Sponsor maintains indirect control of the
Trinidad Obligor and (2) such sale shall not result in a Ratings Downgrade; (ii)
25% of the Big Spring Guarantor, provided that any sale with respect to the Big
Spring Guarantor shall not result in (x) a Ratings Downgrade or (y) the
Sponsor's failure to maintain control of the Big Spring Guarantor, (iii) 100% of
the BNY Guarantor, the Trinidad Project Borrower, the Trinidad Guarantor and the
Trinidad U.S. Parent and (iv) 80% of the Trinidad Cayman Parent; provided that
any sale by the Trinidad U.S. Parent of its interest in the Trinidad Cayman
Parent (x) shall be to T&TEC (or its Affiliates, successors or assigns) and/or
other Persons in the private sector on commercially reasonable terms and (y)
such interest shall remain subject to the pledge pursuant to the applicable
Trinidad Pledge Agreement, (B) Cogeneration Technologies, Inc. and York
Cogeneration Partners, L.P. shall fail to maintain direct ownership of 100% of
Walbasse Power I LLC and Warbasse Power II LLC, respectively, and (C) Queensgate
SPV (or such other entity approved by the Bond Trustee) shall fail to maintain
direct or indirect record ownership of 100% of Funding Company and hold such
interest pursuant to the Declaration of Trust or as may otherwise be permitted
thereunder;
(j) Indebtedness of Funding Company in an amount exceeding $5,000,000
(other than any amount due under or pursuant to the Finance Documents) shall be
required to be prepaid, or shall be declared to be due and payable, other than
by scheduled required payment, prior to the stated maturity thereof, as the
result of the acceleration of the stated maturity thereof following an event of
default thereunder; provided that such failure continues unwaived or uncured
beyond any applicable grace period and results in the acceleration of the
maturity of such Indebtedness;
(k) the entry of one or more final and non-appealable judgment or
judgments for the payment of money in excess of $5,000,000 against Funding
Company, which remain unpaid or unstayed for a period of ninety (90) or more
consecutive days; and
(l) Any Project Obligor shall fail to perform or observe any covenant
contained in any Finance Document to which such Project Obligor is a party
(subject to any applicable grace period) and such failure could reasonably be
expected to result in a Material Adverse Effect.
Section 5.2 Remedies Upon an Indenture Event of Default. (a) Subject to
the Intercreditor Agreement, if one or more Indenture Events of Default shall
have occurred and be continuing, then:
(i) in the case of an Indenture Event of Default described in
Sections 5.1(f) or (g), the entire principal amount of the Outstanding
Securities, all interest accrued and unpaid thereon, and all premium
(if any) and other amounts payable under the Securities and this
Indenture, if any,
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shall automatically become due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby waived; or
(ii) in the case of an Indenture Event of Default described in
Section 5.1(b) relating to the bankruptcy, insolvency, receivership or
reorganization of any of the Project Obligors which has resulted in the
automatic acceleration of any Project Note, a principal amount of the
Outstanding Securities which is equal to the principal amount of the
Project Notes automatically accelerated in connection with such
Indenture Event of Default, all interest accrued and unpaid thereon,
and all premium and other amounts payable under the Securities and the
Indenture, if any, will automatically become due and payable without
presentment, demand, protest or notice of any kind, all of which are
hereby waived and the Bond Trustee shall direct the Collateral Agent
(to the extent permitted under the Intercreditor Agreement) to take
possession of all Project Collateral pledged to secure the Project Note
or Project Notes automatically accelerated in connection with such
Indenture Event of Default and, pursuant to the Intercreditor
Agreement, to sell such Project Collateral, as and to the extent
permitted under the Intercreditor Agreement;
(iii) in the case of an Indenture Event of Default described
in Section 5.1(a) hereof, (A) upon the direction of the One-Third
Holders, the Bond Trustee shall, by notice to Funding Company, declare
the entire principal amount of the Outstanding Securities, all interest
accrued and unpaid thereon, and all premium (if any), and other amounts
payable under the Securities and this Indenture, if any, to be due and
payable, whereupon the same shall become immediately due and payable
without presentment, demand, protest or further notice of any kind, all
of which are hereby waived and (B) the Bond Trustee may (as the
One-Third Holders request) direct the Collateral Agent (to the extent
permitted under the Intercreditor Agreement) to take possession of all
Project Collateral pledged to secure the Project Notes to be
accelerated in connection with such Indenture Event of Default and,
pursuant to the Intercreditor Agreement, to sell such Project
Collateral, as and to the extent permitted under the Intercreditor
Agreement, and if an Indenture Event of Default referred to in this
clause (iii) shall have occurred and be continuing, the Bond Trustee
may declare the entire principal amount of the Outstanding Securities,
all interest accrued and unpaid thereon, and all premium (if any) and
other amounts payable under the Securities and this Indenture, if any,
to be due and payable notwithstanding the absence of direction from
One-Third Holders if in the good faith exercise of its discretion the
Bond Trustee determines that such action is necessary to protect the
interests of the Holders; or
(iv) in the case of an Indenture Event of Default described in
Section 5.1 (c), (d), (e), (h), (i), (j), (k) or (l) upon the direction
of the Majority Holders, the Bond Trustee shall, by notice to Funding
Company, declare the entire principal amount of the Outstanding
Securities, all interest accrued and unpaid thereon, and all premium
(if any), and other amounts payable under the Securities and this
Indenture, if any, to be due and payable, whereupon the same shall
become immediately due and payable without presentment, demand, protest
or further notice of any kind, all of which are hereby waived, and if
one or more of the Indenture Events of Default referred to in this
clause (iv) shall have occurred and be continuing, the Bond Trustee may
declare the entire principal amount of the Outstanding Securities, all
interest accrued and unpaid thereon, and all premium (if any) and other
amounts payable under the Securities and this Indenture, if any, to be
due and payable notwithstanding the absence of direction from the
Majority Holders if in the good faith exercise of its discretion the
Bond Trustee determines that such action is necessary to protect the
interests of the Holders;
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(v) except as described in clause (ii) above, in the case of
an Indenture Event of Default described in Section 5.1(b) hereof, (x)
upon the direction of the Majority Holders, the Bond Trustee shall, by
notice to the Funding Company, declare a principal amount of the
Outstanding Securities which is equal to the principal amount of the
Project Notes related to such respective Project Loan Agreement to be
accelerated in connection with such Project Event of Default, and all
interest accrued and unpaid thereon, and all premium (if any), to be
due and payable, whereupon the same shall become due and payable
without presentment, demand, protest or further notice of any kind, all
of which are hereby waived and (y) in case such Indenture Event of
Default has occurred and is continuing and an acceleration has
occurred, the Bond Trustee may (as the Majority Holders request) direct
the Collateral Agent (to the extent permitted under the Intercreditor
Agreement) to take possession of all Project Collateral pledged to
secure the Project Note or Project Notes to be accelerated in
connection with such Indenture Event of Default and, pursuant to the
Intercreditor Agreement, to sell such Project Collateral, as and to the
extent permitted under the Intercreditor Agreement, and if an Indenture
Event of Default referred to in this clause (v) shall have occurred and
be continuing, the Bond Trustee may declare the principal amount of the
Outstanding Securities referred to in this clause to be due and payable
notwithstanding the absence of direction from the Majority Holders if
in the good faith exercise of its discretion the Bond Trustee
determines that such action is necessary to protect the interests of
the Holders; or
(vi) If an Indenture Event of Default other than those
referred to in clauses (ii), (iii) and (v) above has occurred and is
continuing and an acceleration has occurred, upon the direction of
the Majority Holders the Bond Trustee may (as the Majority Holders
requests) direct the Collateral Agent (to the extent permitted under
the Intercreditor Agreement) to take possession of all Collateral
and, pursuant to the Intercreditor Agreement, to sell the
Collateral, as and to the extent permitted under the Intercreditor
Agreement.
(b) If one or more Guarantee Events of Default shall have
occurred and be continuing, the Bond Trustee may upon receipt of a notice to
such effect required to be delivered pursuant to Section 5.4(iv) hereof (as the
Majority Holders request) direct the Collateral Agent (to the extent permitted
under the Intercreditor Agreement) to take possession of all Project Collateral
pledged to secure the obligations of the respective defaulting Guarantor in
connection with such Guarantee Event of Default and, pursuant to the
Intercreditor Agreement, to sell such Project Collateral, as and to the extent
permitted under the Intercreditor Agreement. All monies received by the Bond
Trustee pursuant to such sale shall be made available for redemption of
Securities pursuant to Section 3.2.
(c) Subject to the Intercreditor Agreement, at any time
after the principal of all or a portion of the Securities shall have become
due and payable upon a declared acceleration as provided in this Section 5.2,
and before any judgment or decree for the payment of the money so due, or any
portion thereof, shall be entered, the Majority Holders, by written notice to
the Bond Trustee and Funding Company, may rescind and annul such declaration
and its consequences if:
(i) there shall have been paid to or deposited with the Bond
Trustee a sum sufficient to pay:
(A) all overdue installments of interest on such
Securities;
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(B) the principal of and premium (if any) on the
Securities that have become due other than by such declaration
of acceleration and interest thereon at the respective rates
provided in the Securities for late payments of principal;
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the respective rates
provided in the Securities for late payments of interest; and
(D) all sums paid or advanced by the Bond Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Bond Trustee and its agents
and counsel; and
(ii) all Indenture Events of Default, other than the
nonpayment of principal of the Securities that has become due solely
by such acceleration, have been cured or waived as provided in
Section 5.6 (Waiver of Past Defaults and Events of Default);
provided that no such rescission shall affect any subsequent Indenture Default
or Indenture Event of Default or impair any right consequent thereon.
Section 5.3 Specific Remedies. Subject to Section 9.3 (Notice of
Defaults) hereof, if any Indenture Event of Default shall have occurred and be
continuing or if any Indenture Default referred to in Section 6.1(a) shall have
occurred and be continuing, the Bond Trustee, subject to the provisions of
Sections 6.2, 6.5 and 6.6 hereof, shall enforce the Guarantees and the rights of
the Holders thereunder.
Section 5.4 Judicial Proceedings Instituted by Bond Trustee.
(a) Collection of Indebtedness; Bond Trustee Entitled to Bring Suit.
Subject to the Intercreditor Agreement and Section 5.14 (Limitation on Holders'
Bankruptcy Rights) and Section 11.11 (Limitation on Liability), if an Indenture
Event of Default shall have occurred and be continuing, then the Bond Trustee,
in its own name and as trustee of an express trust, subject to Section 5.2
(Remedies Upon an Indenture Event of Default), shall be entitled and empowered
to institute any suits, actions or other proceedings at law and in equity or
otherwise for the collection of the sums due and unpaid in respect of the
Securities, and may prosecute such claim or proceeding to judgment or final
decree, and may enforce any such judgment or final decree and collect the monies
adjudged or decreed to be payable in any manner provided by Applicable Law,
whether before or after or during the pendency of any proceedings for the
enforcement of any of the Bond Trustee's rights or the rights of the Holders
under this Indenture, and such power of the Bond Trustee shall not be affected
by any sale hereunder or by the exercise of any other right, power or remedy for
the enforcement of the provisions of this Indenture.
(b) Bond Trustee May Recover Unpaid Debt After Sale of Collateral.
Subject to the Intercreditor Agreement and Section 5.14 (Limitation on Holders'
Bankruptcy Rights) and Section 11.11 (Limitation on Liability), in the case of a
sale of the Collateral and the application of the proceeds of such sale to the
payment of Indebtedness under this Indenture, the Bond Trustee, in its own name
and as trustee of an express trust, shall be entitled and empowered to institute
any suits, actions or other proceedings at law and in equity or otherwise to
enforce payment of, and to receive all amounts remaining due and unpaid upon,
all or any of the Securities for the benefit of the Holders thereof, and upon
any other portion of the Securities remaining unpaid, with interest at the rates
specified in the respective Securities on the overdue principal thereof, premium
(if any) and interest thereon (to the extent the payment of such interest is
legally enforceable).
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(c) Recovery of Judgment Does Not Affect Rights. No recovery of any
judgment or final decree by the Bond Trustee and no levy of any execution under
any such judgment upon any of the Collateral, or upon any other property, shall
in any manner or to any extent affect any rights, powers or remedies of the Bond
Trustee, or any Liens, rights, powers or remedies of the Holders, but all such
Liens, rights, powers or remedies shall continue unimpaired as before.
(d) Bond Trustee May File Proofs of Claim; Appointment of Bond Trustee
as Attorney-in-Fact in Judicial Proceedings. (i) Subject to the Intercreditor
Agreement and Section 5.14 (Limitation on Holders' Bankruptcy Rights) and
Section 11.11 (Limitation on Liability), the Bond Trustee, in its own name, as
trustee of an express trust or as attorney-in-fact for the Holders, or in any
one or more of such capacities (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Bond Trustee shall have made any
demand for the payment of overdue principal, premium (if any) or interest),
shall be entitled and empowered to (x) file such proofs of claim and other
papers or documents and take any other actions authorized under the Trust
Indenture Act as necessary or advisable in order to have the claims of the Bond
Trustee and of the Holders (whether such claims be based upon the provisions of
the Securities or of this Indenture) allowed in any judicial proceeding relating
to Funding Company or any other obligor on the Securities (within the meaning of
the Trust Indenture Act), the creditors of Funding Company or any such obligor,
the Collateral or any other property of Funding Company or such obligor (each
such proceeding, for purposes of this clause (d), a "Proceeding") and (y)
collect and receive any monies or other property payable or deliverable on any
such claims and distribute the same. Any receiver, assignee, trustee or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Bond Trustee and, in the event the Bond
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Bond Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Bond Trustee, its agents and
counsel.
(ii) Subject to the Intercreditor Agreement, the Bond Trustee is hereby
irrevocably appointed (and the successive respective Holders of the Securities,
by taking and holding the same, shall be conclusively deemed to have so
appointed the Bond Trustee) the true and lawful Authorized Representative of the
respective Holders, with authority to:
(x) make and file in the names of the Holders (subject to
deduction from any such claims of the amounts of any claims filed by
any of the Holders themselves) any claim, proof of claim or amendment
thereof, debt, proof of debt or amendment thereof, petition or other
document in any Proceeding, and receive payment of any amounts
distributable on account thereof;
(y) execute any and all papers and documents and do and
perform any and all acts and things for and on behalf of the Holders as
may be necessary or advisable in order to have the respective claims of
the Bond Trustee and the Holders against Funding Company or any other
obligor on the Securities (within the meaning of the Trust Indenture
Act), the Collateral or any other property of Funding Company or such
obligor allowed in any Proceeding; and
(z) receive payment of or on account of such claims and debt.
(iii) No provision of this Indenture shall be deemed to give the Bond
Trustee any right to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder, to vote in respect of the
claim of any Holder in any Proceeding or to otherwise change or waive in any way
the
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rights of any Holder in any Proceeding; provided, however, that the Bond Trustee
may, subject to the Intercreditor Agreement and Applicable Law, on behalf of the
Holders, vote for the election of a trustee in bankruptcy or similar official
and be a member of a creditors' or other similar committee.
(iv) Any monies collected by the Bond Trustee under this clause (d)
shall be applied as provided in Section 5.10 (Application of Monies Collected by
Bond Trustee).
(e) Bond Trustee Need Not Have Possession of Securities. Subject to the
Intercreditor Agreement, all proofs of claim, rights of action and rights to
assert claims under this Indenture or under any of the Securities may be
enforced by the Bond Trustee without the possession of the Securities or the
production thereof at any trial or other proceedings instituted by the Bond
Trustee. In any proceedings brought by the Bond Trustee (and any proceedings
involving the interpretation of any provision of this Indenture or the
Securities to which the Bond Trustee shall be a party), the Bond Trustee shall
be held to represent all of the Holders and it shall not be necessary to make
any such Holders parties to such proceedings.
(f) Suit to be Brought for the Ratable Benefit of Holders. Subject to
the other provisions of this Indenture and to the Intercreditor Agreement, any
suit, action or other proceeding at law, in equity or otherwise which shall be
instituted by the Bond Trustee under any of the provisions of this Indenture or
the Securities shall be for the equal, ratable and common benefit of all of the
Holders.
(g) Restoration of Rights and Remedies. In case the Bond Trustee shall
have instituted any proceeding to enforce any right, power or remedy under this
Indenture or the Securities by foreclosure, entry or otherwise and such
proceedings shall have been determined adversely to the Bond Trustee, then and
in every such case Funding Company and the Bond Trustee shall be restored to
their former positions hereunder, and all rights, powers and remedies of the
Bond Trustee and the Holders shall continue as if no such proceeding had been
instituted.
Section 5.5 Control by Holders. (a) Subject to the Intercreditor
Agreement, the Majority Holders shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Bond
Trustee, or exercising any trust or power conferred upon the Bond Trustee, under
this Indenture; provided that such direction shall not be in conflict with any
rule of law or with this Indenture, the Bond Trustee may take any other action
deemed proper by the Bond Trustee which is not inconsistent with such direction
and subject to Section 9.1 (Certain Duties and Responsibilities of Bond
Trustee), the Bond Trustee need not follow any such direction if doing so would
in its reasonable discretion either involve it in personal liability or be
unduly prejudicial to Holders not joining in such direction, it being understood
that, subject to Section 9.1 (Certain Duties and Responsibilities of Bond
Trustee), the Bond Trustee shall have no obligation to make any determination
with respect to any such conflict, personal liability or undue prejudice.
Section 5.6 Waiver of Defaults and Events of Default. Subject to the
Intercreditor Agreement, the Majority Holders may on behalf of the Holders of
all Securities waive any Indenture Default or Indenture Event of Default and its
consequences, except that only the One Hundred Percent Holders may waive an
Indenture Default or Indenture Event of Default in respect of a covenant or
provision hereof that under Section 7.2 (Amendments and Supplements to Indenture
with Consent of Holders) cannot be modified or amended without the consent of
the Holder of each Outstanding Security affected. Upon any waiver of any
Indenture Default pursuant to this Section 5.6, such Indenture Default shall
cease to exist and any Indenture Event of Default arising therefrom shall be
deemed to have been cured for every
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purpose of this Indenture, but no such waiver shall extend to any subsequent or
other Indenture Default or Indenture Event of Default or impair any consequent
right in respect thereof.
Section 5.7 Limitation on Suits by Holders. (a) Subject to the
Intercreditor Agreement and the other provisions of this Article 5, a Holder
shall not have the right to institute any suit, action or proceeding at law or
in equity or otherwise for the appointment of a receiver or for the enforcement
of any other remedy under or upon this Indenture, unless:
(i) such Holder shall have previously given written notice to
the Bond Trustee of a continuing Indenture Event of Default;
(ii) Holders representing the percentage of aggregate
principal amount of Outstanding Securities needed to initiate the
exercise of remedies shall have requested the Bond Trustee in writing
to institute such suit, action or proceeding;
(iii) the Bond Trustee shall have refused or neglected to
institute any such suit, action or proceeding for sixty (60) days after
receipt of such notice by the Bond Trustee; and
(iv) no direction inconsistent with such written request has
been given to the Bond Trustee during such sixty (60) day period by the
Majority Holders.
(b) Subject to the Intercreditor Agreement, it is understood
and intended that one or more of the Holders shall not have any right in any
manner whatsoever hereunder or under the Securities to surrender, impair, waive,
affect, disturb or prejudice the Lien of the Security Documents on any property
subject thereto or the rights of any other Holders, obtain or seek to obtain
priority or preference over any other Holders or enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all of the Holders.
Section 5.8 Undertaking to Pay Court Costs. All parties to this
Indenture, and each Holder by its acceptance of a Security, shall be deemed to
have agreed that any court may in its discretion require, in any suit for the
enforcement of any right or remedy hereunder, or in any suit against the Bond
Trustee for any action taken or omitted by it as Bond Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; provided that the provisions of this Section 5.8
shall not apply to any suit instituted by the Bond Trustee, any suit instituted
by a Holder or group of Holders holding in the aggregate more than ten percent
(10%) in principal amount of the Outstanding Securities or any suit instituted
by a Holder pursuant to Section 5.9 (Unconditional Right to Receive Payment) for
the enforcement of the payment of the principal of, premium (if any) or interest
on any Security on or after the respective due dates expressed in such Security.
Section 5.9 Unconditional Right to Receive Payment. Subject to the
Intercreditor Agreement, but notwithstanding any other provision of this
Indenture (other than Section 5.6(a) (Waiver of Defaults and Events of
Default)), the right of any Holder to receive payment of the principal of,
premium (if any) or interest on any Security on or after the respective due
dates expressed in such Security (or, in the case of redemption, on the
Redemption Date fixed for such Security), or to institute suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
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Section 5.10 Application of Monies Collected by Bond Trustee. Following
the application of funds pursuant to the Intercreditor Agreement, any money
collected by the Bond Trustee pursuant to this Article 5 in respect of the
Securities, together with any other monies which may then be held by the Bond
Trustee under any of the provisions of this Indenture as security for the
Securities (other than monies at the time required to be held for the payment of
specific Securities at their stated maturities or at a time fixed for the
redemption thereof) shall be applied in the following order from time to time,
on the date or dates fixed by the Bond Trustee and, in the case of a
distribution of such monies on account of principal, premium (if any) or
interest, upon presentation of the Outstanding Securities, and stamping thereon
of payment, if only partially paid, or upon surrender thereof, if fully paid:
FIRST: To the payment of all amounts due the Bond Trustee or
any predecessor Bond Trustee under Section 9.7 (Compensation;
Reimbursement; Indemnification);
SECOND: In case the unpaid principal amount of the Outstanding
Securities shall not have become due, to the payment of any interest in
default, in the order of the maturity of the payments thereof, together
with interest (at the rates specified in the Securities in respect of
overdue payments and to the extent that payment of such interest shall
be legally enforceable) on such payments of overdue interest;
THIRD: In case the unpaid principal amount of a portion of the
Outstanding Securities shall have become due, first to the payment of
accrued interest on all Outstanding Securities in the order of the
maturity of the payments thereof, together with interest (at the rates
specified in the respective Securities in respect of overdue payments
and to the extent that payment of such interest shall be legally
enforceable) on such payments of overdue interest, and next to the
payment of the unpaid principal amount of all Securities then due;
FOURTH: In case the unpaid principal amount of all the
Outstanding Securities shall have become due, to the payment of the
whole amount then due and unpaid upon the Outstanding Securities for
principal, premium (if any) and interest, together with interest (at
the rates specified in the respective Securities in respect of overdue
payments and to the extent that payment of such interest shall be
legally enforceable) on such overdue principal, premium (if any) and
interest;
FIFTH: In case the unpaid principal amount of all of the
Outstanding Securities shall have become due, and all of the
Outstanding Securities shall have been indefeasibly paid in full in
cash or cash equivalents, any surplus then remaining shall be paid to
Funding Company or to whomsoever may be lawfully entitled to receive
the same, or as a court of competent jurisdiction may direct;
provided, however, that all payments in respect of the Securities to be made
pursuant to priorities "SECOND" through "FOURTH" of this Section 5.10 shall be
made ratably to the Holders of Securities entitled thereto, without
discrimination or preference, based upon the ratio of (x) the unpaid principal
amount of the Securities in respect of which such payments are to be made that
are held by each such Holder and (y) the unpaid principal amount of all
Outstanding Securities.
Section 5.11 Waiver of Appraisal, Valuation, Stay and Right to
Marshalling. To the full extent it may lawfully do so, Funding Company, for
itself and for any other Person who may claim through or under it, hereby:
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(a) agrees that neither it nor any such Person will set up, plead,
claim or in any manner whatsoever take advantage of any appraisal, valuation,
stay, extension or redemption laws, now or hereafter in force in any
jurisdiction which may delay, prevent or otherwise hinder the performance or
enforcement of this Indenture or the Securities, the foreclosure of the Security
Documents, the sale of any of the Collateral or the putting of the purchaser or
purchasers thereof into possession of the Collateral immediately after the sale
thereof;
(b) waives the benefit or advantage of any appraisal, valuation, stay,
extension or redemption laws, now or hereafter in force in any jurisdiction;
(c) consents and agrees that the Collateral may be sold by the
Collateral Agent, upon instructions from the Collateral Agent, acting pursuant
to the Intercreditor Agreement, as an entirety or in parts; and
(d) waives and releases all rights to have the Collateral marshaled
upon any foreclosure, sale or other enforcement of this Indenture or the
Security Documents.
Section 5.12 Remedies Cumulative; Delay or Omission Not Waiver. Each
and every right, power and remedy herein specifically given to the Bond Trustee
shall be cumulative and shall be in addition to every other right, power and
remedy herein specifically given or now or hereafter existing at law, in equity
or by statute, and each and every right, power and remedy whether specifically
herein given or otherwise existing may be exercised, subject to the
Intercreditor Agreement, from time to time and as often and in such order as may
be deemed expedient by the Bond Trustee, and the exercise or commencement of the
exercise of any right, power or remedy shall not be construed to be a waiver of
the right to exercise at the same time or thereafter any other right, power or
remedy, and no delay or omission by the Bond Trustee in the exercise of any
right, power or remedy or in the pursuance of any remedy shall impair any such
right, power or remedy or be construed to be a waiver of any default on the part
of Funding Company or be an acquiescence therein.
Section 5.13 The Intercreditor Agreement. (a) Simultaneously with the
execution and delivery of this Indenture, the Bond Trustee shall enter into the
Intercreditor Agreement acting for itself and on behalf of all Holders of the
Outstanding Securities and all future Holders of any of the Securities.
(b) Notwithstanding any other provision of this Indenture, all rights,
powers and remedies available to the Bond Trustee and the Holders, and all
future Holders, shall be subject to the Intercreditor Agreement. In the event of
any conflict or inconsistency between the terms and provisions of this Indenture
and the terms and provisions of the Intercreditor Agreement, the terms and
provisions of the Intercreditor Agreement shall govern and control other than
with respect to Section 11.11 (Limitation on Liability) hereof which shall
supercede any conflicting provision of the Intercreditor Agreement.
(c) In the event that the Bond Trustee is called upon by the Collateral
Agent to participate in any intercreditor vote pursuant to the Intercreditor
Agreement, the Bond Trustee shall duly convene a meeting of any Holders in
accordance with Article 6 (Acts of Holders) to canvass the Holders as to the
vote to be cast. The Bond Trustee shall vote in any intercreditor vote only in
accordance with instructions issued by the Holders at such meeting, and shall
cast its vote in accordance with the direction of the Holders of the percentage
of Outstanding Securities required to take action under this Indenture. In the
event of the failure of any Holder to issue voting instructions to the Bond
Trustee prior to the expiration of the decision period in respect of the subject
intercreditor decision, the Bond Trustee shall refrain from voting on such
intercreditor decision with respect to the Securities held by such Holder.
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Section 5.14 Limitation on Holders' Bankruptcy Rights. Each Holder
hereby irrevocably agrees, for itself and any other Person who may claim by,
through or under it, not to file, directly or indirectly, a petition to commence
or join any other Person in the filing or prosecution of a petition to commence
an involuntary filing or prosecution of a petition to commence an involuntary
case under the Federal Bankruptcy Code against Funding Company.
ARTICLE 6
ACTS OF HOLDERS
Section 6.1 Acts of Holders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders (collectively, an "Act" of such Holders, which term
also shall refer to the instruments or record evidencing or embodying the same),
including any Act for which a specified percentage of the principal amount of
the Securities is required, may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing or, alternatively, may be embodied in and
evidenced by the record of Holders of Securities voting in favor thereof, either
in person or by proxies duly appointed in writing, at any meeting of Holders
duly called and held in accordance with the provisions of this Article 6, or a
combination of such instruments and any such record. Except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments or record are delivered to the Bond Trustee and, when specifically
required herein, to Funding Company. Proof of execution of any such instrument
or of a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and conclusive in favor of the Bond Trustee and Funding Company,
if made in the manner provided in this Section 6.1. Any record of any meeting of
Holders shall be proved in the manner set forth in Section 6.7 (Counting Votes
and Recording Action of Meeting).
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any public or other
officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to such execution sworn
to before any such notary or other such officer, and where such execution is by
an officer of a corporation, association or partnership, on behalf of such
corporation, association or partnership, such certificate or affidavit shall
also constitute sufficient proof of such officer's authority. The fact and date
of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner which the Bond
Trustee deems sufficient.
(c) The principal amount and serial numbers of Securities held by any
Person, and the date or dates of holding the same, shall be proved by the
Securities Register and the Bond Trustee shall not be affected by notice to the
contrary.
(d) Any Act by the Holder of any Security (i) shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
transfer thereof or the exchange therefor or in lieu thereof, whether or not
notation of such action is made upon such Security and (ii) shall be valid
notwithstanding that such Act is taken in connection with the transfer of such
Security to any other Person, including Funding Company or any Affiliate
thereof.
(e) Until such time as written instruments shall have been delivered
with respect to the requisite percentage of principal amount of Securities for
the Act contemplated by such instruments, any such
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instrument executed and delivered by or on behalf of a Holder of Securities may
be revoked with respect to any or all of such Securities by written notice by
such Holder (or its duly appointed agent) or any subsequent Holder (or its duly
appointed agent), proven in the manner in which such instrument was proven
unless such instrument is by its terms expressly irrevocable. In determining
whether the requisite percentage or a majority in principal amount of Holders of
Securities has joined in any Act of Holders, (i) the percentage of Holders of
Securities voting and (ii) the manner in which such Holders of Securities have
voted shall be as notified to the Bond Trustee by Funding Company.
(f) Securities authenticated and delivered after any Act of Holders
may, and shall if required by the Bond Trustee, bear a notation in form approved
by the Bond Trustee as to any action taken by such Act of Holders. If Funding
Company shall so determine, new Securities so modified as to conform, in the
opinion of the Bond Trustee and Funding Company, to such action, may be prepared
and executed by Funding Company and authenticated and delivered by the Bond
Trustee in exchange for Outstanding Securities, each at no cost to the Holders
of such Securities.
(g) Funding Company may by a resolution of its Board of Directors, but
shall not be obligated to, fix a record date for the purpose of determining the
Holders entitled to sign any instrument evidencing or embodying an Act of
Holders. Promptly after any record date is set pursuant to this clause (g),
Funding Company, at its own expense, shall cause notice of such record date to
be given to the Bond Trustee in writing and to each Holder of Securities in the
manner set forth in Section 11.5(b) (Notices). If a record date is fixed, those
Persons who were Holders at such record date (or their duly appointed agents),
and only those Persons, shall be entitled to sign any such instrument evidencing
or embodying an Act of Holders or to revoke any such instrument previously
signed, whether or not such Persons continue to be Holders after such record
date. No such instrument shall be valid or effective if signed more than ninety
(90) days after such record date, and may be revoked as provided in clause (e)
of this Section 6.1.
Section 6.2 Purposes for Which Holders' Meeting May Be Called. A
meeting of Holders may be called at any time and from time to time pursuant to
this Article 6 for any of the following purposes:
(a) to give any notice to Funding Company or to the Bond Trustee, or to
give any directions to the Bond Trustee, or to waive or to consent to the
waiving of any default hereunder and its consequences;
(b) to remove the Bond Trustee and appoint a successor Bond Trustee
pursuant to Article 9 (The Bond Trustee);
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to Article 7 (Supplemental Indentures);
(d) to canvass the Holders as to the vote to be cast by the Bond
Trustee in any intercreditor vote pursuant to the Intercreditor Agreement; or
(e) to take any other action authorized to be taken by or on behalf of
the Holders of any specified aggregate principal amount of the Securities under
any other provision of this Indenture or under Applicable Law.
Section 6.3 Call of Meetings by Trustee. The Bond Trustee may at any
time call a meeting of Holders of Securities for any of the purposes set forth
in Section 6.2 (Purposes for Which Holders' Meeting May be Called) to be in the
Borough of Manhattan, the City of New York, as the Bond Trustee shall determine.
Notice of every meeting of Holders, setting forth the time and place of such
meeting and
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in general terms the action proposed to be taken at such meeting, shall be given
by the Bond Trustee, in the manner provided in Section 11.5(b) (Notices), not
less than twenty (20) nor more than one hundred eighty (180) days prior to the
date fixed for the meeting, to the Holders of the Securities.
Section 6.4 Funding Company and Holders May Call Meeting. In case
Funding Company, pursuant to an appropriate action by its members, or the
Holders of at least ten percent (10%) in aggregate of the principal amount of
the Outstanding Securities shall have requested the Bond Trustee to call a
meeting of Holders of Securities, by written request setting forth in general
terms the action proposed to be taken at the meeting, and the Bond Trustee shall
not have mailed notice of such meeting within twenty (20) days after receipt of
such request or shall not thereafter proceed to cause the meeting to be held as
provided herein, then Funding Company or the Holders of Securities in the amount
above specified may determine the time and place in the Borough of Manhattan,
the City of New York, for such meeting and may call such meeting to take any
action authorized in Section 6.2 (Purposes for Which Holders' Meeting May be
Called) by giving notice thereof as provided in Section 11.5(b) (Notices).
Section 6.5 Persons Entitled to Vote at Meeting. To be entitled to vote
at any meeting of Holders, a Person shall be (a) a Holder of one or more
Securities with respect to which such meeting is being held or (b) a Person
appointed by an instrument in writing as proxy for the Holder or Holders of such
Securities by a Holder of one or more such Securities. The only Persons who
shall be entitled to be present or to speak at any meeting of Holders shall be
the Persons entitled to vote at such meeting and their counsel and any
representatives of the Bond Trustee and its counsel and any representatives of
Funding Company and its counsel.
Section 6.6 Determination of Voting Rights; Conduct and Adjournment of
Meeting. (a) Notwithstanding any other provision of this Indenture, the Bond
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders, in regard to proof of the holding of Securities and of the
appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate. Such regulations may
provide that written instruments appointing proxies, regular on their face, may
be presumed valid and genuine without the proof specified in Section 6.1 (Acts
of Holders) or other proof. Except as otherwise permitted or required by any
such regulations, the holding of Securities shall be proved in the manner
specified in Section 6.1 (Acts of Holders) and the appointment of any proxy
shall be proved in the manner specified in said Section 6.1 (Acts of Holders) or
by having the signature of the Person executing the proxy witnessed or
guaranteed by any bank, banker, trust company or firm satisfactory to the Bond
Trustee.
(b) The Bond Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
Funding Company or by Holders as provided in Section 6.4 (Funding Company and
Holders May Call Meeting), in which case Funding Company or the Holders calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the Holders of a majority in principal amount of the
Securities represented at the meeting and entitled to vote.
(c) Subject to the provisions of Section 6.10 (Securities Owned by
Certain Persons Deemed Not Outstanding), at any meeting each Holder of a
Security or a proxy shall be entitled to one vote for each $100,000 principal
amount of Securities held or represented by it; provided, however, that no vote
shall be cast or counted at any meeting in respect of any Security challenged as
not Outstanding and ruled by the chairman of the meeting to be not Outstanding.
The chairman of the meeting shall have no right to
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vote other than by virtue of Securities held by him or instruments in writing as
aforesaid duly designating him as the Person to vote on behalf of other Holders
of Securities. Any meeting of Holders duly called pursuant to Section 6.3 (Call
of Meetings by Trustee) or Section 6.4 (Funding Company and Holders May Call
Meeting) may be adjourned from time to time, and the meeting may be held as so
adjourned without further notice. At any meeting, the presence of Persons
holding or representing Securities with respect to which such meeting is being
held in an aggregate principal amount sufficient to take action upon the
business for the transaction of which such meeting was called shall be necessary
to constitute a quorum; provided, however, that if less than a quorum shall be
present at any meeting, the Persons holding or representing a majority of the
Securities represented at the meeting may adjourn such meeting with the same
effect, for all intents and purposes, as though a quorum had been present.
Section 6.7 Counting Votes and Recording Action of Meeting. The vote
upon any resolution submitted to any meeting of Holders of Securities shall be
by written ballots on which shall be subscribed the signatures of the Holders of
Securities or of their representatives by proxy and the serial numbers and
principal amounts of the Securities held or represented by them. The permanent
chairman of the meeting shall appoint two (2) inspectors of votes who shall
count all votes cast at the meeting for or against any resolution and who shall
make and file with the secretary of the meeting their verified written reports
in duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Holders shall be prepared by the secretary of the
meeting and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken at such meeting and affidavits
by one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was given as provided in
Section 6.3 (Call of Meetings by Trustee). The record shall show the serial
numbers of the Securities voting in favor of or against any resolution. The
record shall be signed and verified by the affidavits of the permanent chairman
and secretary of the meeting and one of the duplicates shall be delivered to
Funding Company and the other to the Bond Trustee to be preserved by the Bond
Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the matters
therein stated.
Section 6.8 Evidence of Action Taken by Holders. Whenever in this
Indenture it is provided that the Holders of a specified percentage or a
majority in aggregate principal amount of the Securities or of any series of
Securities may take any action (including the making of any demand or request,
the giving of any notice, consent or waiver or the taking of any other action)
the fact that at the time of taking any such action the Holders of such
specified percentage or majority have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by Holders in
person or by agent or proxy appointed in writing, (b) by the record of the
Holders of Securities voting in favor thereof at any meeting of Holders duly
called and held in accordance with the provisions of this Article 6, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Holders, and except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments and/or such
record are delivered to the Bond Trustee, and where expressly required, to
Funding Company.
Section 6.9 Proof of Execution of Instruments and of Holding of
Securities. Subject to the provisions of Sections 9.2 (Certain Rights of Bond
Trustee) and 6.6 (Determination of Voting Rights; Conduct and Adjournment of
Meeting) hereof and Section 3.15 of the Trust Indenture Act, proof of the
execution of any instrument by a Holder or his agent or proxy and proof of the
holding by any Person of any of the Securities shall be sufficient if made in
the following manner.
(a) The fact and date of the execution by any such Person of any
instrument may be proved by the certificate of any notary public or other
officer authorized to take acknowledgments of deeds to be
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recorded in any State within the United States, that the person executing such
instrument acknowledged to him the execution thereof, or by an affidavit of a
witness to such execution sworn to before any such notary or other such officer.
Where such execution is by an officer of a corporation or association or a
member of a partnership on behalf of such corporation, association or
partnership, such certificate or affidavit shall also constitute sufficient
proof of his authority. The fact and date of the execution of any such
instrument may also be proved in any other manner which the Trustee may deem
sufficient.
(b) The ownership of Securities may be proved by the Securities
Register or by a certificate of the Registrar.
(c) If Funding Company shall solicit from the Holders of Securities any
request, demand, authorization, direction, notice, consent, waiver or other act,
Funding Company may, at its option, by a resolution of its Board of Directors,
fix in advance a record date for the determination of Holders of Securities
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other act, but Funding Company shall have no obligation to do
so. Any such record date shall be fixed at Funding Company's discretion in
accordance with Section 316(c) of the Trust Indenture Act. If such a record date
is fixed, such request, demand, authorization, direction, notice, consent and
waiver or other act may be sought or given before or after the record date, but
only the Holders of Securities of record at the close of business on such record
date shall be deemed to be the Holders of Securities for the purpose of
determining whether Holders of the requisite proportion of Outstanding
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other act, and for that
purpose the Outstanding Securities shall be computed as of such record date.
(d) The Bond Trustee may require such additional proof, if any, of any
matter referred to in this Section 6.9 hereof as it shall deem necessary.
(e) The record of any Holders' meeting shall be proved as provided in
Section 6.7 (Counting Votes and Recording Action of Meeting) hereof.
Section 6.10 Securities Owned by Certain Persons Deemed Not
Outstanding. In determining whether the Holders of the requisite aggregate
principal amount of Securities have concurred in any request, demand,
authorization, direction, notice, consent, waiver or other act under this
Indenture, Securities which are owned by Funding Company, any Project Obligor,
their members or any of their respective Affiliates shall be disregarded and
deemed not to be Outstanding for the purpose of any such determination except
that for the purposes of determining whether the Bond Trustee shall be protected
in relying on any such direction, consent or waiver, only Securities for which a
Responsible Officer of the Bond Trustee has actually received written notice of
such ownership as conclusively evidenced by the Securities Register shall be so
disregarded. Funding Company shall furnish the Bond Trustee, upon its reasonable
request, with an Officer's Certificate listing and identifying all Securities,
if any, known by Funding Company or any Project Obligor to be owned or held by
or for the account of any of the above-described Persons, and the Bond Trustee
shall be entitled to accept such Officer's Certificate as conclusive evidence of
the facts therein set forth and of the fact that the Securities not listed
therein are Outstanding for the purpose of any such determination. Securities so
owned which have been pledged in good faith may be regarded as Outstanding for
the purposes of this Section 6.10 if the pledgee shall establish to the
satisfaction of the Bond Trustee that the pledgee has the right to vote such
Securities and that the pledgee is not an Affiliate of Funding Company or any
Project Obligor. Subject to the provisions of Section 3.15 of the Trust
Indenture Act, in case of a dispute as to such right, any decision by the Bond
Trustee, taken upon the advice of counsel, shall be full protection to the Bond
Trustee.
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Section 6.11 Right of Revocation of Action Taken; Acts of Holders
Binding. At any time prior to (but not after) the evidencing to the Bond
Trustee, as provided in Section 6.1 (Acts of Holders), of the taking of any
action by the Holders of the percentage in aggregate principal amount of the
Securities specified in this Indenture in connection with such action, any
Holder of a Security the serial number of which is shown by the evidence to be
included in the Securities the Holders of which have consented to such action
may, by filing written notice with the Bond Trustee and upon proof of holding as
provided in Section 6.1 (Acts of Holders), revoke such action so far as concerns
such Security. Except as aforesaid, any such action taken by the Holder of any
Security shall be conclusive and binding upon such Holder and upon all future
Holders and owners of such Security, and of any Security issued in exchange
therefor or in place thereof, irrespective of whether or not any notation in
regard thereto is made upon such Security or any Security issued in exchange
therefor or in place thereof. Any action taken by the Holders of the percentage
in aggregate principal amount of the Securities specified in this Indenture in
connection with such action shall be conclusively binding upon Funding Company,
the Bond Trustee and the Holders of all the Securities affected by such action.
ARTICLE 7
SUPPLEMENTAL INDENTURES
Section 7.1 Amendments and Supplements to Indenture Without Consent of
Holders. Subject to the Intercreditor Agreement, this Indenture may be amended
or supplemented by Funding Company and the Bond Trustee at any time and from
time to time without the consent of the Holders by a Supplemental Indenture
authorized by a resolution of the Board of Directors of Funding Company filed
with, and in form satisfactory to, the Bond Trustee, solely for one or more of
the following purposes:
(a) to add additional covenants of Funding Company, to surrender any
right or power herein conferred upon Funding Company or to confer upon the
Holders any additional rights, remedies, benefits, powers or authorities that
may lawfully be conferred;
(b) to increase the assets securing Funding Company's obligations under
this Indenture;
(c) to provide for the issuance of Additional Securities on the
conditions set forth in Section 2.3 (Additional Securities);
(d) for any purpose not inconsistent with the terms of this Indenture
to cure any ambiguity or to correct or supplement any provision contained herein
or in any Supplemental Indenture which may be defective or inconsistent with any
other provision contained herein or in any Supplemental Indenture;
(e) in connection with, and to reflect, any amendments to the
provisions hereof required by either of the Rating Agencies in circumstances
where confirmation of the Ratings are required under this Indenture in
connection with the issuance of Additional Securities; provided, however, that
such amendments are not, in the judgment of the Bond Trustee, to the prejudice
of the Bond Trustee or the Holders; or
(f) to provide for the issuance of Exchange Securities, as contemplated
by the Registration Rights Agreement.
Section 7.2 Amendments and Supplements to Indenture With Consent of
Holders. Subject to the Intercreditor Agreement, this Indenture may be amended
or supplemented (together with necessary
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conforming amendments to the Intercreditor Agreement, the Depositary Agreement
and any other Finance Document the terms of which affect the rights of the
Holders hereunder or thereunder) by Funding Company and the Bond Trustee at any
time and from time to time, with the consent of the Majority Holders, for the
purpose of adding any mutually agreeable provisions to or changing in any manner
or eliminating any of the provisions of, this Indenture, except with respect to
(a) the principal, premium (if any) or interest payable upon any Securities, (b)
the dates on which interest on or principal of any Securities is paid, (c) the
dates of maturity of any Securities and (d) this Article 7 (Supplemental
Indentures). Subject to the Intercreditor Agreement, the matters of this
Indenture described in clauses (a) through (d) of the preceding sentence may be
amended or supplemented by Funding Company and the Bond Trustee at any time and
from time to time only with the consent of the One Hundred Percent Holders.
Notice of any such amendment shall be given by Funding Company to any Rating
Agency then maintaining a Rating for the Securities.
Section 7.3 Amendment of Project Loan Agreements or Project Notes.
Funding Company and the Bond Trustee may without the consent of or notice to the
Holders consent to any amendment or modification of any Project Loan Agreement
or Project Note (i) to add additional covenants of the Project Obligors party
thereto, to surrender any rights or power therein conferred upon any Project
Obligors or to confer upon Funding Company any additional rights, remedies,
benefits, powers or authorities that may lawfully be conferred; (ii) to increase
the assets securing the Project Obligors' obligations thereunder; (iii) to
provide for the issuance of additional Project Notes in connection with the
issuance of Additional Securities; (iv) for any purpose not inconsistent with
the terms of this Indenture or the Project Loan Agreements or Project Notes, to
cure any ambiguity or to correct or supplement any provision contained in the
Project Loan Agreements or Project Notes which may be defective or inconsistent
with any provision contained therein; or (v) in connection with and to reflect
any amendments to the provisions thereof required by the Rating Agencies in
circumstances where confirmation of the Ratings are required under the Project
Loan Agreements in connection with the incurrence of Permitted Project
Indebtedness or the taking (or refraining from taking) of other actions by the
Project Obligors. Except as otherwise provided in this Section 7.3, neither
Funding Company nor the Bond Trustee shall consent to any other amendment or
modification of any Project Loan Agreement or Project Note or grant any waiver
or consent thereunder without the written approval or consent of the Majority
Holders. Any amendment or change to a Project Loan Agreement or Project Note
which changes (i) the amount of payments due thereunder, (ii) the Person to whom
such payments are to be made or (iii) the dates on which such payments are to be
made shall not be made without the unanimous consent of the Holders.
Section 7.4 Bond Trustee Authorized to Join in Amendments and
Supplements; Reliance on Counsel. The Bond Trustee is authorized to join with
Funding Company in the execution and delivery of any Supplemental Indenture or
amendment permitted by this Article 7 and in so doing shall be entitled to
receive and shall be fully protected in conclusively relying upon an Opinion of
Counsel stating that such Supplemental Indenture or amendment is so permitted
and has been duly authorized by Funding Company and that all things necessary to
make it a valid and binding agreement have been done.
Section 7.5 Effect of Supplemental Indentures. Upon the execution of
any Supplemental Indenture under this Article 7, this Indenture shall be
modified in accordance therewith, and such Supplemental Indenture shall form a
part of this Indenture for all purposes, and every Holder of Securities therefor
or thereafter authenticated and delivered hereunder shall be bound thereby.
Section 7.6 Conformity with Trust Indenture Act. Every Supplemental
Indenture executed pursuant to Article 7 shall conform to the requirements of
the Trust Indenture Act as then in effect.
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Section 7.7 Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any Supplemental
Indenture pursuant to this Article 7 may, and shall if required by Funding
Company or the Bond Trustee, bear a notation in form approved by Funding Company
and the Bond Trustee as to any matter provided for in such Supplemental
Indenture and, in such case, suitable notation may be made upon Outstanding
Securities after proper presentation and demand. If Funding Company or the Bond
Trustee shall so determine, new Securities so modified as to conform, in the
opinion of Funding Company and the Bond Trustee, to any such Supplemental
Indenture may be prepared and executed by Funding Company and authenticated and
delivered by the Bond Trustee in exchange for Outstanding Securities, each at
the expense of Funding Company.
ARTICLE 8
SATISFACTION AND DISCHARGE; DEFEASANCE
Section 8.1 Satisfaction and Discharge of Indenture. Except as set
forth in Section 8.3 (Survival of Obligations), this Indenture shall cease to be
of further effect and the Bond Trustee, on written demand and at the expense of
Funding Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when:
(i) either:
(A) all Securities theretofore authenticated and
delivered (other than Securities which have been destroyed, lost or
stolen and which have been replaced or paid as set forth in Section
2.10 (Mutilated, Destroyed, Lost or Stolen Securities) and Securities
deemed to have been paid in accordance with clause (B) immediately
below) have been delivered to the Bond Trustee for cancellation; or
(B) all Securities not theretofore delivered to the
Bond Trustee for cancellation (x) have become due and payable, (y)
shall become due and payable within one year or (z) are to be called
for redemption within one year under arrangements satisfactory to the
Bond Trustee for the giving of notice of redemption by the Bond Trustee
in the name, and at the expense, of Funding Company and Funding Company
shall have deposited or caused to be deposited with the Bond Trustee as
trust funds in trust an amount sufficient to pay when due at maturity
or upon redemption all principal of, premium (if any), interest on and
other amounts in respect of such Securities not theretofore delivered
to the Bond Trustee for cancellation;
(ii) Funding Company shall have paid or caused to be paid all
other sums due and payable by it hereunder; and
(iii) Funding Company shall have delivered to the Bond Trustee
an Officer's Certificate and an Opinion of Counsel, each stating that
all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with
and the satisfaction and discharge of this Indenture pursuant to this
Section 8.1 shall not be deemed to be, and shall not result in, a
taxable event with respect to the Holders for purposes of United States
federal income taxation.
Section 8.2 Defeasance. (a) Subject to clause (d) of this Section 8.2,
Section 8.3 (Survival of Obligations) and Section 8.7 (Reinstatement), Funding
Company may at any time terminate:
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(i) all of its obligations under the Securities and this
Indenture (the "Legal Defeasance Option"); or
(ii) its obligations under any provision of Article 4
(Covenants) (except with respect to Section 4.3(a) (Corporate Existence;
Compliance with Applicable Laws)) and the operation of clauses (d) (except with
respect to Section 4.3(a) (Corporate Existence; Compliance with Applicable
Laws)), (e) and (i) of Section 5.1 (Events of Default Defined) (the "Covenant
Defeasance Option");
provided that Funding Company may exercise the Legal Defeasance Option
notwithstanding the prior exercise of the Covenant Defeasance Option.
(b) If Funding Company elects to exercise the Legal Defeasance Option
and all applicable conditions set forth in clause (d) of this Section 8.2 are
satisfied, payment of the Securities may not be accelerated because of any
Indenture Event of Default. If Funding Company elects to exercise the Covenant
Defeasance Option and all applicable conditions set forth in clause (d) of this
Section 8.2 are satisfied, payment of the Securities may not be accelerated
because of an Event of Default specified in clause (d) (except with respect to
Section 4.3(a) (Corporate Existence; Compliance with Applicable Laws)), (e), and
(i) of Section 5.1 (Events of Default).
(c) If Funding Company elects to exercise the Legal Defeasance Option
or the Covenant Defeasance Option and all applicable conditions set forth in
clause (d) of this Section 8.2 are satisfied, the Bond Trustee shall, upon
request of Funding Company, acknowledge in writing the discharge of such
obligations that Funding Company terminates pursuant to this Section 8.2.
(d) Funding Company may exercise its Legal Defeasance Option or its
Covenant Defeasance Option only if the following conditions are satisfied:
(i) Funding Company irrevocably deposits (such deposit, the
"Defeasance Deposit") in trust with the Bond Trustee monies or US Government
Obligations for the payment of principal of, premium (if any) and interest on
the Securities to the Final Maturity Date thereof or the Redemption Date
therefor, as the case may be;
(ii) Funding Company delivers to the Bond Trustee a
certificate from a nationally recognized firm of independent
accountants expressing their opinion that the payments of principal and
interest when due and without reinvestment of the deposited US
Government Obligations plus any deposited monies without investment
will provide cash at such times and in such amounts as will be
sufficient to pay principal, premium (if any) and interest when due on
all the Securities to the Final Maturity Date thereof or the Redemption
Date therefor, as the case may be;
(iii) ninety one (91) days pass after the Defeasance Deposit
is made and no Indenture Default or Indenture Event of Default
described in clause (f) or (g) of Section 5.1 (Events of Default) shall
occur during the ninety one (91) day period and be continuing at the
end of such period; provided, however, that the foregoing condition
need not be satisfied if at the time of the Defeasance Deposit, Funding
Company delivers to the Bond Trustee an Opinion of Counsel to the
effect that, or a court should hold that, such deposit would not
constitute a preference that could be avoided under Section 547 of the
Federal Bankruptcy Code, notwithstanding that ninety one (91) days have
not passed since the date of the Defeasance Deposit;
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(iv) no Indenture Default or Indenture Event of Default (other
than an Indenture Default or Indenture Event of Default resulting from
the incurrence of Indebtedness all or a portion of the proceeds of
which will be used to defease the Securities) shall have occurred and
be continuing on the date of and after giving effect to the Defeasance
Deposit;
(v) the Defeasance Deposit does not constitute a default under
any other agreement binding on Funding Company;
(vi) Funding Company delivers to the Bond Trustee an Opinion
of Counsel to the effect that, or a court should hold that, the trust
resulting from the Defeasance Deposit does not constitute, or is
qualified as, a regulated investment company under the Investment
Company Act of 1940, as amended from time to time;
(vii) in the case of the Legal Defeasance Option, Funding
Company shall have delivered to the Bond Trustee an Opinion of Counsel
to the effect that, or a court should hold that, the Holders will not
recognize income, gain or loss for United States federal income tax
purposes as a result of such defeasance and will be subject to United
States federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance had
not occurred, which Opinion of Counsel shall be based upon an Internal
Revenue Service ruling or a change in the applicable United States
federal income tax law or United States Treasury regulations since the
Closing Date;
(viii) in the case of the Covenant Defeasance Option, Funding
Company shall have delivered to the Bond Trustee an Opinion of Counsel
to the effect that the Holders will not recognize income, gain or loss
for United States federal income tax purposes as a result of such
defeasance and will be subject to United States federal income tax
purposes on the same amounts, in the same manner and at the same times
as would have been the case if such defeasance had not occurred; and
(ix) Funding Company delivers to the Bond Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated in this Section 8.2 have been complied with;
provided, however, that, notwithstanding the foregoing provisions of this
Section 8.2, the conditions set forth in clauses (ii), (iii), (iv), (v), (vi),
(vii) and (viii) need not be satisfied so long as, at the time Funding Company
makes the Defeasance Deposit, (1) no Indenture Default under clause (a), (f) or
(g) of Section 5.1 (Events of Default) shall have occurred and be continuing on
the date of and after giving effect to the Defeasance Deposit and either (x) a
notice of redemption has been mailed pursuant to Section 3.4 (Notice of
Redemption) providing for redemption of all the Securities not more than forty
(40) days after such mailing and the provisions of Article 3 (Redemption of
Securities) with respect to such redemption shall have been complied with or (y)
the Final Maturity Date of the Securities will occur within forty (40) days. If
the conditions set forth in the foregoing proviso are satisfied, Funding Company
shall be deemed to have exercised the Covenant Defeasance Option.
Section 8.3 Survival of Obligations. Notwithstanding the satisfaction
and discharge of this Indenture pursuant to Section 8.1 (Satisfaction and
Discharge of Indenture) or any defeasance pursuant to Section 8.2 (Defeasance),
the obligations of Funding Company and the Bond Trustee under this Article 8 and
under Section 2.5 (Form of Securities), Section 2.6 (Maintenance of Offices and
Agencies), Section
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2.7 (Transfer and Exchange of Securities), Section 2.10 (Mutilated, Destroyed,
Lost or Stolen Securities), Article 9 (The Bond Trustee), Section 10.1 (Names
and Addresses of Holders) and Section 11.11 (Limitation of Liability) shall
survive such satisfaction and discharge.
Section 8.4 Application of Trust Money. (a) The Bond Trustee shall hold
in trust all monies and US Government Obligations deposited with it pursuant to
this Article 8 and shall apply such deposited monies and the monies derived from
such US Government Obligations through the Paying Agent and in accordance with
this Indenture to the payment of the principal of, premium (if any) and interest
on the Securities.
(b) The Bond Trustee and the Paying Agent shall deliver or pay to
Funding Company from time to time upon request by Funding Company any monies or
US Government Obligations deposited with it pursuant to this Article 8 which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Bond Trustee, are
in excess of the amount thereof required to effect defeasance pursuant to this
Article 8 with respect to the Outstanding Securities.
Section 8.5 Unclaimed Monies. Monies deposited with the Bond Trustee
pursuant to this Article 8 which remain unclaimed two years following the date
payment thereof becomes due shall, at the request of Funding Company, if at such
time no Indenture Event of Default shall have occurred and be continuing, be
paid to Funding Company, and the Holders of the Securities for which such
deposit was made shall thereafter be limited to a claim against Funding Company;
provided, however, that the Bond Trustee, prior to making payment to Funding
Company pursuant to this Section 8.5, may, at the expense of Funding Company,
cause a notice to be published once in a newspaper or financial journal of
general circulation in the Borough of Manhattan, the City of New York, stating
that the monies remaining unclaimed will be returned to Funding Company after a
specified date.
Section 8.6 Indemnity for US Government Obligations. Funding Company
shall pay and shall fully indemnify the Bond Trustee against any tax, fee or
other charge imposed or assessed against US Government Obligations deposited
pursuant to this Article 8 or the principal and interest received with respect
to such US Government Obligations, other than any such tax, fee or other charge
that by law is for the account of the Holders of the Outstanding Securities.
Section 8.7 Reinstatement. If the Bond Trustee or the Paying Agent is
unable to apply any monies or US Government Obligations in accordance with this
Article 8 by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application,
Funding Company's obligations under this Indenture and the Securities shall be
revived and reinstated as though no deposit of monies or US Government
Obligations shall have occurred pursuant to this Article 8 until such time as
the Bond Trustee or the Paying Agent is permitted to apply such monies or US
Government Obligations in accordance with this Article 8; provided, however,
that, if Funding Company has made any payment of principal of, premium or
interest on any Securities following the reinstatement of its obligations,
Funding Company shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the monies or US Government Obligations
held by the Bond Trustee or the Paying Agent.
ARTICLE 9
THE BOND TRUSTEE
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Section 9.1 Certain Duties and Responsibilities of Bond Trustee. (a)
Except during the continuance of an Indenture Event of Default:
(i) the Bond Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture, and
no implied covenants or obligations shall be read into this Indenture
against the Bond Trustee; and
(ii) in the absence of bad faith on its part, the Bond Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Bond Trustee and conforming to the
requirements of this Indenture; provided, however, that, in the case of
any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Bond Trustee, the Bond
Trustee shall be under a duty to examine the same to determine whether
they conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of any mathematical calculations or
other facts stated therein).
(b) Subject to the Intercreditor Agreement, in case an Indenture Event
of Default has occurred and is continuing, the Bond Trustee shall exercise such
of the rights and powers vested in it by this Indenture, and use the same degree
of care and skill in their exercise, as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Bond Trustee from liability for its own negligent action, its own grossly
negligent acts or omissions, or its own willful misconduct, except that:
(i) this clause (c) shall not be construed to limit the effect
of clause (a) of this Section 9.1;
(ii) the Bond Trustee shall not be liable for any error of
judgment made in good faith by one or more Responsible Officers of the
Bond Trustee, unless it shall be proved that the Bond Trustee was
grossly negligent in ascertaining the pertinent facts;
(iii) the Bond Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the Intercreditor Agreement or the direction of the Majority
Holders relating to the time, method and place of conducting any
proceeding for any remedy available to the Bond Trustee, or exercising
any trust or power conferred upon the Bond Trustee, under this
Indenture; and
(iv) no provision of this Indenture shall require the Bond
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
reasonable indemnity against such risk or liability is not assured to
it.
(d) Whether or not herein or therein expressly so provided, every
provision of this Indenture and the other Finance Documents to which it is a
party relating to the conduct or affecting the liability of or affording
protection to the Bond Trustee (and its officers, directors, employees, agents,
successors and assigns) shall be subject to the provisions of this Section 9.1
and, notwithstanding anything to the contrary, the Intercreditor Agreement.
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(e) The Bond Trustee shall not be responsible for insuring the Project
or for collecting any insurance monies and shall have no responsibility for the
financial, physical or other condition of the Project.
(f) Promptly upon request, the Bond Trustee shall comply with all
requests for information from any Holder or from the Initial Purchaser.
Section 9.2 Certain Rights of Bond Trustee. (a) The Bond Trustee may
conclusively rely and shall be fully protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, notice, other
evidence of Indebtedness or other paper or document (whether in its original or
facsimile form) believed by it to be genuine and to have been signed or
presented by the proper party or parties.
(b) Any request or direction of Funding Company shall be sufficiently
evidenced by a written instrument signed by an Authorized Officer of Funding
Company and any resolution of the Board of Directors of Funding Company shall be
sufficiently evidenced by a copy thereof certified by the secretary of such
Board of Directors.
(c) Whenever in the administration of this Indenture the Bond Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting to take any action hereunder, the Bond Trustee (unless
other evidence is herein specifically prescribed to be relied upon) may, in the
absence of willful misconduct on its part, rely upon an Officer's Certificate.
(d) The Bond Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon.
(e) The Bond Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Bond Trustee security or indemnity (reasonably satisfactory to
the Bond Trustee) against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
(f) The Bond Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, notice, other evidence of Indebtedness or other paper or document.
(g) The Bond Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by agents or attorneys and
the Bond Trustee shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed in good faith by it hereunder.
(h) The Bond Trustee shall be under no obligation to take any action
pursuant to any request or direction, if it shall receive conflicting requests
or directions from any party so authorized; provided that the Bond Trustee
informs such parties as to the existence of such conflicting requests or
directions.
(i) The Bond Trustee shall be under no obligation to take any action
which is discretionary with the Bond Trustee under this Indenture or any other
Finance Document.
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(j) The Bond Trustee shall have no responsibility with respect to the
recording, re-recording, filing or re-filing under the laws of any jurisdiction
of this Indenture or any other Security Document, or any document or statement
that may be recorded, re-recorded, filed or re-filed under any such laws to
perfect or protect the security interests created by or pursuant to this
Indenture, any other Security Document or any other document or to the payment
of fees, charges, or Taxes in connection therewith or to give any notice
thereof.
Section 9.3 Notice of Defaults. (a) If payment on any Security is not
made when it becomes due and payable, the Bond Trustee shall promptly notify
Funding Company that it has failed to make such payment. Subject to the
Intercreditor Agreement, within thirty (30) days after the occurrence of any
Indenture Event of Default of which a Responsible Officer of the Bond Trustee
has actual knowledge, the Bond Trustee shall give to all Holders, in the manner
provided for in Section 11.5(b) (Notices), notice of such Indenture Event of
Default, unless such Event of Default shall have been cured or waived; provided,
however, that, except in the case of an Indenture Event of Default in respect of
payment of the principal of, premium (if any) or interest on any Security, the
Bond Trustee shall be protected in withholding such notice if and so long as the
Board of Directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Bond Trustee in good faith determine that the
withholding of such notice is in the interests of the Holders.
(b) Except as otherwise expressly provided herein, the Bond Trustee
shall not be bound to ascertain or inquire as to the performance or observance
of any of the terms, conditions, covenants or agreements herein, or of any other
documents executed in connection with the Securities, or as to the existence of
an event of default thereunder, and shall not be deemed to have notice of an
Indenture Event of Default unless and until a Responsible Officer of the Bond
Trustee shall have (i) been notified in writing in accordance with the terms
hereof or (ii) shall have received notice thereof from the Collateral Agent
pursuant to Section 2.2 (Rights of the Collateral Agent) of the Intercreditor
Agreement. The occurrence of either clause (i) or clause (ii) shall constitute
for purposes of this Indenture "actual knowledge" on behalf of the Bond Trustee.
(c) The Bond Trustee shall give to all Holders any notices received by
it pursuant to the Intercreditor Agreement (other than those specifically for
the Bond Trustee only and those which the Bond Trustee determines should not, in
the interests of the Holders, be given to the Holders).
Section 9.4 Not Responsible for Recitals or Issuance of Securities. The
recitals, representations, warranties, and other statements contained herein, in
the other Finance Documents, and in the Securities, except the Bond Trustee's
certificate of authentication, shall be taken as the statements of Funding
Company, and the Bond Trustee assumes no responsibility for their correctness.
The Bond Trustee makes no representations as to the validity or sufficiency of
this Indenture or any of the other Finance Documents or of the Securities. The
Bond Trustee shall not be accountable for the use or application by Funding
Company of the Securities or the proceeds of the issuance and sale thereof.
Section 9.5 May Hold Securities. The Bond Trustee or any other agent of
Funding Company, in its individual or any other capacity, may become the owner
or pledgee of Securities and may deal with Funding Company with the same rights
it would have if it were not Bond Trustee or such other agent.
Section 9.6 Monies Held in Trust. Money held by the Bond Trustee in
trust hereunder need not be segregated from other funds except to the extent
required by Applicable Law. The Bond Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed with
Funding Company.
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Section 9.7 Compensation; Reimbursement; Indemnification. (a) Funding
Company hereby agrees:
(i) to pay to the Bond Trustee as agreed upon from time to
time in writing compensation for all services rendered by it hereunder
or in connection with the Finance Documents (which compensation shall
not be limited by any provision of law in regard to the compensation of
a trustee of an express trust);
(ii) except as otherwise expressly provided herein, to
reimburse the Bond Trustee upon its request for all expenses,
disbursements and advances incurred or made by the Bond Trustee in
accordance with any provision of this Indenture or in connection with
the Finance Documents (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its gross
negligence or bad faith; and
(iii) to indemnify each of the Bond Trustee and any
predecessor Bond Trustee for, and to hold it harmless against, any and
all loss, liability, claim, damage, or expense (including Taxes other
than Taxes based on the income of the Bond Trustee) incurred without
gross negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder.
(b) The rights, privileges, protections, immunities and benefits given
to the Bond Trustee, including, without limitation, its right to be indemnified,
are extended to and shall be enforceable by, the Bond Trustee in each of its
capacities hereunder (including as Paying Agent and Registrar) and to each
agent, custodian and other Person employed to act hereunder. All
indemnifications and releases from liability granted hereunder to the Bond
Trustee shall extend to its officers, directors, employees, agents, successors
and assigns.
Section 9.8 Eligibility. There shall at all times be a Bond Trustee
hereunder which shall (a) be a corporation organized and doing business under
the laws of the United States, of any state or territory thereof or of the
District of Columbia, (b) be authorized under such laws to exercise corporate
trust powers, (c) be subject to supervision or examination by federal, state,
territorial or District of Columbia authority, (d) either (i) have a combined
capital and surplus of at least $100,000,000 or (ii) have a combined capital and
surplus of at least $50,000,000 and be a wholly-owned subsidiary of a
corporation having a combined capital and surplus of at least $100,000,000 and
(e) have a corporate trust office in the Borough of Manhattan, the City of New
York, to the extent there is such an institution eligible and willing to serve.
If such corporation publishes reports of condition at least annually, pursuant
to Applicable Law or to the requirements of said supervising or examining
authority, then for purposes of this Section 9.8, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Bond Trustee shall cease to be eligible in accordance with the
provisions of this Section 9.8, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article 9. None of Funding
Company, any other obligor upon the Securities or any Affiliate of any of the
foregoing shall serve as Bond Trustee hereunder.
Section 9.9 Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Bond Trustee and no appointment of a successor
Bond Trustee pursuant to this Article 9
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shall become effective until the acceptance of appointment by the successor Bond
Trustee in accordance with the applicable requirements of Section 9.10
(Acceptance of Appointment by Successor Bond Trustee).
(b) The Bond Trustee may resign at any time by giving written notice
thereof to Funding Company. If the instrument of acceptance by a successor Bond
Trustee required by Section 9.10 (Acceptance of Appointment by Successor Bond
Trustee) shall not have been delivered to the Bond Trustee within thirty (30)
days after the giving of such notice of resignation, the resigning Bond Trustee
may petition, at the expense of Funding Company, any court of competent
jurisdiction for the appointment of a successor Bond Trustee.
(c) The Bond Trustee may be removed at any time by Act of the Majority
Holders, delivered to the Bond Trustee and Funding Company. If the instrument of
acceptance by a successor Bond Trustee required by Section 9.10 (Acceptance of
Appointment by Successor Bond Trustee) shall not have been delivered to the Bond
Trustee within thirty (30) days after such removal, the removed Bond Trustee may
petition, at the expense of Funding Company, any court of competent jurisdiction
for the appointment of a successor Bond Trustee.
(d) If at any time any of the following shall occur:
(i) the Bond Trustee shall cease to be eligible under Section
9.8 (Eligibility) and shall fail to resign after written request
therefor by Funding Company or by any Holder of a Security; or
(ii) the Bond Trustee shall be adjudged a bankrupt or
insolvent or a receiver of the Bond Trustee or of its property shall be
appointed or any public officer shall take charge or control of the
Bond Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (A) Funding Company by a resolution of its Board of
Directors may remove the Bond Trustee, or (B) subject to the requirements of
Section 315(e) of the Trust Indenture Act, any Holder who has been a bona fide
Holder of a Security for at least six (6) Months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Bond Trustee and the appointment of a successor Bond Trustee.
(e) If the Bond Trustee shall resign, be removed or become incapable of
action, or if a vacancy shall occur in the office of Bond Trustee for any
reason, Funding Company, by a resolution of its Board of Directors, shall
promptly appoint a successor Bond Trustee and shall comply with the applicable
requirements of Section 9.10 (Acceptance of Appointment by Successor Bond
Trustee). If, within thirty (30) days after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Bond Trustee is
appointed by Act of the Majority Holders delivered to Funding Company and the
retiring Bond Trustee, the successor Bond Trustee so appointed shall, forthwith
upon its acceptance of such appointment in accordance with the applicable
requirements of Section 9.10 (Acceptance of Appointment by Successor Bond
Trustee), become the successor Bond Trustee with respect to the Securities and
to that extent supersede the successor Bond Trustee appointed by Funding
Company. If no successor Bond Trustee shall have been so appointed by Funding
Company or the Holders and have accepted appointment in the manner required by
Section 9.10 (Acceptance of Appointment by Successor Bond Trustee), subject to
the requirements of Section 315(e) of the Trust Indenture Act, any Holder who
has been a bona fide Holder of a Security for at least six (6) months may, on
behalf of itself and all others
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similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Bond Trustee.
(f) Funding Company shall, at its own expense, give notice of each
resignation and each removal of the Bond Trustee and each appointment of a
successor Bond Trustee to all Holders in the manner provided in Section 11.5(b)
(Notices) and shall give such notice to each of the Rating Agencies. Each notice
required to be given pursuant to this Section 9.9(f) shall include the name of
the successor Bond Trustee and the address of its principal corporate trust
office.
Section 9.10 Acceptance of Appointment by Successor Bond Trustee. (a)
In case of the appointment hereunder of a successor Bond Trustee, every such
successor Bond Trustee so appointed shall execute, acknowledge and deliver to
Funding Company and to the retiring Bond Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Bond
Trustee shall become effective and such successor Bond Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Bond Trustee; provided that, on the
request of Funding Company or the successor Bond Trustee, such retiring Bond
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Bond Trustee all the rights, powers and trusts of
the retiring Bond Trustee and shall duly assign, transfer and deliver to such
successor Bond Trustee all property and money held by such retiring Bond Trustee
hereunder.
(b) Upon request of the Collateral Agent, the Collateral Agent or
Funding Company, any successor Bond Trustee shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Bond Trustee all such rights, powers and trusts under the other
Finance Documents to which the Bond Trustee is a party.
(c) Upon request of any successor Bond Trustee, Funding Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Bond Trustee all such rights, powers and trusts
referred to in clause (a) of this Section 9.10.
(d) No successor Bond Trustee shall accept its appointment unless at
the time of such acceptance such successor Bond Trustee shall be qualified and
eligible under this Article 9.
Section 9.11 Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Bond Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Bond Trustee shall be a party,
or any corporation succeeding to all or substantially all the corporate trust
business of the Bond Trustee, shall be the successor of the Bond Trustee
hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article 9, without the execution and filing of any instrument or any
further act on the part of any of the parties hereto. In case any Securities
shall have been authenticated, but not delivered, by the Bond Trustee then in
office, any successor by merger, conversion or consolidation to such
authenticating Bond Trustee may adopt such authentication and deliver the
Securities so authenticated with the same effect as if such successor Bond
Trustee had itself authenticated such Securities.
Section 9.12 Authorization. The Bond Trustee is hereby authorized to
execute, deliver and perform on behalf of the Holders the Intercreditor
Agreement and each of the other Finance Documents to which the Bond Trustee is
or is intended to be a party, and each Holder agrees to be bound by all of the
agreements of the Bond Trustee contained therein.
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Section 9.13 Disqualification; Conflicting Interests. If the Bond
Trustee has or shall acquire a conflicting interest within the meaning of
Section 310(b) of the Trust Indenture Act, the Bond Trustee shall either
eliminate such interest or resign, to the extent, within the time periods, and
in the manner provided by, and subject to the provisions of, the Trust Indenture
Act and this Indenture.
Section 9.14 Trustee's Application for Instructions from the Company.
Any application by the Bond Trustee for written instructions from Funding
Company may, at the option of the Bond Trustee, set forth in writing any action
proposed to be taken or omitted by the Bond Trustee under this Indenture and the
date on and/or after which such action shall be taken or such omission shall be
effective. The Bond Trustee shall not be liable for any action taken by, or
omission of, the Bond Trustee in accordance with a proposal included in such
application on or after the date specified in such application (which date shall
not be less than five (5) Business Days after the date any officer of Funding
Company actually receives such application, unless any such officer shall have
consented in writing to any earlier date) unless prior to taking any such action
(or the effective date in the case of an omission), the Bond Trustee shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
Section 9.15 Appointment of Co-Bond Trustee or Separate Bond Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Collateral may at the time be located or for any other reason, the Bond
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-bond trustee or co-bond trustees, or
separate bond trustee or separate bond trustees, of all or any part of the
Collateral, and to vest in such Person or Persons, in such capacity and for the
benefit of the Noteholders, such title to the Collateral, or any part hereof,
and subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Bond Trustee may consider necessary or
desirable. No co-bond trustee or separate bond trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
9.8 (Eligibility) and no notice to Holders of the appointment of any co-bond
trustee or separate bond trustee shall be required.
(b) Every separate bond trustee and co-bond trustee shall, to
the extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all rights and powers, conferred or imposed upon the Bond
Trustee shall be conferred or imposed upon and may be exercised or
performed by such separate bond trustee or co-bond trustee; and
(ii) No bond trustee hereunder shall be personally liable by
reason of any act or omission of any other bond trustee hereunder.
(c) Any notice, request or other writing given to the Bond
Trustee shall be deemed to have been given to each of the then separate bond
trustees and co-bond trustees, as effectively as if given to each of them. Every
instrument appointing any separate bond trustee or co-bond trustee shall refer
to this Indenture and the conditions of this Article 9.
Any separate bond trustee or co-bond trustee may at any time
appoint the Bond Trustee as its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Indenture on its behalf and in its name. If any separate bond
trustee or co-bond trustee shall die, become incapable of acting, resign or be
removed, all of its estates,
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properties, rights, remedies and trusts shall vest in and be exercised by the
Bond trustee, to the extent permitted by law, without the appointment of a new
or successor bond trustee.
ARTICLE 10
HOLDERS' LISTS AND REPORTS BY BOND TRUSTEE
Section 10.1 Names and Addresses of Holders. If the Bond Trustee is at
any time not the Registrar, Funding Company shall furnish or cause to be
furnished to the Bond Trustee:
(i) Semi-annually, not more than fifteen (15) days after each
Regular Record Date, a list, in such form as the Bond Trustee may
reasonably require, of the names and addresses of the Holders as of
such Regular Record Date; and
(ii) at such other times as the Bond Trustee may request in
writing, within thirty (30) days after the receipt by Funding Company
of any such request, a list of similar form and content as of a date
not more than fifteen (15) days prior to the time such list is
furnished.
(iii) The Bond Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of Holders contained
in the most recent list furnished to the Bond Trustee as provided in
clause (a) of this Section 10.1 and the names and addresses of Holders
received by the Bond Trustee in its capacity as Registrar. The Bond
Trustee may destroy any list furnished to it as provided in clause (a)
of this Section 10.1 upon receipt of a new list so furnished.
Section 10.2 Bond Trustee and Funding Company to Furnish Other
Information. On or before March 15 in every year, so long as any Securities are
Outstanding hereunder, the Bond Trustee shall transmit to the Holders a brief
report, dated as of the preceding December 31, to the extent required by Section
313 of the Trust Indenture Act in accordance with the procedures set forth in
said Section. A copy of such report at the time of its mailing to Holders shall
be filed with the Commission and each stock exchange, if any, on which the
Securities are traded.
ARTICLE 11
MISCELLANEOUS PROVISIONS
Section 11.1 Third Party Beneficiaries. Except as provided in Section
11.6 (Successors and Assigns), nothing in this Indenture or in the Securities,
express or implied, shall give or be construed to give any Person, other than
the parties hereto and the Holders of the Securities, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
Section 11.2 Severability. In case any provision in or obligation under
this Indenture or the Securities shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any
jurisdiction, shall not in any way be affected or impaired thereby.
Section 11.3 Substitute Notice. If for any reason it shall be
impossible to make publication of any notice required hereby in a newspaper or
financial journal of general circulation in the Borough of
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Manhattan, the City of New York, then such publication or other notice in lieu
thereof as shall be made with the approval of the Bond Trustee shall constitute
a giving of such notice.
Section 11.4 Notice to Rating Agencies. Upon the occurrence of any
Indenture Event of Default of which a Responsible Officer of the Bond Trustee
has actual knowledge hereunder, the Bond Trustee shall promptly given notice
thereof to each of the Rating Agencies.
Section 11.5 Notices. (a) Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be
sufficiently given and shall be deemed given when delivered or mailed by
registered or certified mail, postage prepaid, or sent by overnight delivery or
telecopy, addressed to Funding Company, the Bond Trustee, the Collateral Agent
and the Rating Agencies at their respective addresses specified on Schedule III
hereto, or at such other address as shall be designated by such Person in a
written notice to the other parties hereto.
(b) Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder,
at its address as it appears in the Securities Register, not later than the
latest date (if any) and not earlier than the earliest date (if any) prescribed
for the giving of such notice. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Bond Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders, and any notice that is
mailed in the matter herein provided shall be conclusively presumed to have been
duly given.
Section 11.6 Successors and Assigns. All of the covenants, promises and
agreements in this Indenture by or on behalf of Funding Company or the Bond
Trustee shall bind and inure to the benefit of their respective successors and
assigns, regardless of whether so expressed.
Section 11.7 Section Headings. Captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Indenture.
Section 11.8 Counterparts. This Indenture may be executed in any number
of counterparts, all of which, taken together, shall constitute one and the same
instrument and any of the parties hereto may execute this Indenture by signing
any such counterpart.
Section 11.9 Governing Law; Submission to Jurisdiction; Judgment
Currency. (a) This Indenture is a contract made under the laws of the State of
New York of the United States and shall for all purposes be governed by and
construed in accordance with the laws of such State without regard to the
conflict of law rules thereof (other than Section 5-1401 of the New York General
Obligations Law).
(b) Any legal action or proceeding against Funding Company with respect
to this Indenture may be brought in the courts of the State of New York in the
County of New York or of the United States for the Southern District of New York
and, by execution and delivery of this Indenture, Funding Company hereby
irrevocably submits and accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Funding
Company agrees that a judgment, after
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exhaustion of all available appeals, in any such action or proceeding shall be
conclusive and binding upon Funding Company, and may be enforced in any other
jurisdiction, by a suit upon such judgment, a certified copy of which shall be
conclusive evidence of the judgment. Funding Company hereby irrevocably
designates, appoints and empowers Corporation Service Company with offices on
the date hereof at 375 Hudson Street, New York, New York 10014-3686, as its
designee, appointee and agent to receive, accept and acknowledge for and on its
behalf, and in respect of its property, service of any and all legal process,
summons, notice and documents which may be served in any such action or
proceeding. If for any reason such designee, appointee and agent shall cease to
be available to act as such agent, Funding Company agrees to designate a new
designee, appointee and agent in New York City on the terms and for the purposes
of this provision satisfactory to the Bond Trustee. Funding Company further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to Funding Company, at its
address referred to in Section 11.5(a) (Notices), such service to become
effective thirty (30) days after such mailing. Nothing herein shall affect the
right of the Bond Trustee or any other Person to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against Funding Company in any other jurisdiction.
(c) Funding Company hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Indenture in the courts
referred to in clause (b) above and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
(d) Funding Company shall, to the maximum extent permitted by
Applicable Law, in the case of any judgment or order against it for the payment
of any amount in respect of any Security in a currency (the "judgment currency")
other than the currency (the "denomination currency") in which such Security is
denominated or in which amounts due thereunder are payable, indemnify the Holder
of such Security against any deficiency arising from any variation in the rates
of exchange between the date as of which the amount in the denomination currency
is notionally converted into the equivalent amount in the judgement currency for
the purpose of such judgment or order and the date of actual payment thereof.
Section 11.10 Legal Holidays. If any date for the payment of principal
of, premium (if any) or interest on the Securities is not a Business Day, such
payment shall be due on the first Business Day thereafter.
Section 11.11 Limitation of Liability. (a) The obligations of Funding
Company hereunder are solely the obligations of Funding Company and payable
from, and recourse solely to, the Funding Company's interest in the Funding
Collateral. Neither the Bond Trustee nor the Holders nor any other Person
(including, without limitation, any predecessor Bond Trustee) shall be entitled
to take further steps in respect of any claim against Funding Company to recover
amounts due to the Bond Trustee or the Holders by Funding Company following the
application of the monies obtained from the realization of the assets of Funding
Company save as aforementioned. No recourse shall be had against the Sponsor or
any employee, officer, director, Affiliate, agent or servant of Funding Company
or the Sponsor (each a "Non-Recourse Person") with respect to the Securities or
this Indenture, any of the obligations of Funding Company hereunder or any
obligation of Funding Company for the payment of any amount payable hereunder
for any claim based on, arising out of or relating to the Securities or this
Indenture; provided, however, that nothing in this Section 11.11 shall be deemed
to affect or diminish (a) the obligations of any such Non-Recourse Person under
any Transaction Document to which it is party, (b) the rights and remedies of
the Bond Trustee and the Holders against any such Non-Recourse Person under any
61
<PAGE>
Transaction Document to which any such Non-Recourse Person is a party, (c) the
rights and remedies of the Bond Trustee and the Holders with respect to the
Collateral or (d) the obligations of any such Non-Recourse Person under any
Transaction Document as a result of such Person's fraud or willful misconduct.
(b) Anything in this Indenture to the contrary notwithstanding, in no
event shall the Bond Trustee (or its officers, directors, employees, agents,
successors and assigns) be liable under or in connection with this Indenture for
any special, indirect or consequential loss or damage of any kind whatsoever,
including lost profits, whether or not the likelihood of such loss or damage was
known to the Bond Trustee and regardless of the form of action.
Section 11.12 English Language. All documents to be furnished or
communications to be given or made under this Indenture shall be in the English
language or, if in another language, shall be accompanied by a certified
translation into English, which translation shall be the governing version among
the parties hereto.
Section 11.13 Entire Agreement. This Indenture, together with any other
agreements executed in connection herewith, is intended by the parties hereto as
a final expression of their agreement as to the matters covered hereby and is
intended as a complete and exclusive statement of the terms and conditions
hereof.
Section 11.14 Survival. The representations and warranties of Funding
Company contained herein shall survive the execution and delivery of this
Indenture.
Section 11.15 All Payments in US Dollars. All payments under this
Indenture or the Securities shall be made exclusively in United States dollars.
Section 11.16 Trust Indenture Act. Whenever this Indenture refers to a
provision of the Trust Indenture Act, such provision is incorporated by
reference in and made a part of this Indenture. If any provision of this
Indenture limits, qualifies or conflicts with another provision hereof which is
required to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control. If any provision of this
Indenture modifies or excludes any provision of the Trust Indenture Act that may
be so modified or excluded, the provision of the Trust Indenture Act shall be
deemed to apply in this Indenture as so modified or shall be excluded, as the
case may be.
Section 11.17 Communication Among Holders. Holders may communicate with
other Holders with respect to their rights under this Indenture or the
Securities in accordance with Section 312(b) of the Trust Indenture Act. Funding
Company, the Bond Trustee and all other Persons shall have the protection of
Section 312(c) of the Trust Indenture Act.
Section 11.18 Officers' Certificates and Opinions of Counsel. (a)
Except as otherwise expressly provided in this Indenture, upon any application
or request by Funding Company to the Bond Trustee that the Bond Trustee take any
action under any provision of this Indenture, Funding Company shall furnish to
the Bond Trustee an Officer's Certificate of Funding Company stating that all
conditions precedent (if any) provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent (if any) have been
complied with; provided, however, that, in the case of any particular
application or request as to which the furnishing of documents, certificates or
opinions is specifically required by any provision of
62
<PAGE>
this Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
(b) Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each Authorized Representative signing
such certificate or opinion has read such covenant or condition;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such Authorized
Representative, such examination or investigation has been made as is
necessary to enable each such individual to express an informed opinion
as to whether such covenant or condition has been complied with;
(iv) a statement as to whether, in the opinion of each such
Authorized Representative, such condition or covenant has been complied
with; and
(v) in the case of an Officer's Certificate of Funding
Company, a statement that no Default or Event of Default has occurred
and is continuing (unless such Officer's Certificate relates to a
Default or Event of Default).
Section 11.19 Form of Certificates and Opinions Delivered to Trustee.
(a) In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified by only one document, but one such Person
may certify or give an opinion with respect to some matters and one or more
other such Persons may certify or give an opinion as to other matters, and any
such Person may certify or give an opinion as to such matters in one or several
documents. Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but shall not be required to, be
consolidated and form one instrument.
(b) Any Officer's Certificate or opinion of an Authorized
Representative of Funding Company may be based, insofar as it relates to legal
matters, upon a certificate or opinion of, or representations by, counsel,
unless such officer knows or has reason to believe that the certificate or
opinion of or representations by such counsel with respect to the matters upon
which such Officer's Certificate or opinion of such officer is based are
erroneous.
(c) Any certificate of counsel or Opinion of Counsel may be based,
insofar as it relates to factual matters or information which is in the
possession of Funding Company, upon a certificate or opinion of, or
representations by, an Authorized Representative of Funding Company, unless such
counsel knows or in the exercise of reasonable care should know that the
certificate or opinion of or representations by such Authorized Representative
with respect to the matters upon which such certificate or such Opinion of
Counsel is based are erroneous. Any Opinion of Counsel stated to be based on
another Opinion of Counsel shall be accompanied by such other Opinion of
Counsel.
Section 11.20 Delivery of Certificates to Rating Agencies. The Bond
Trustee shall deliver to the Rating Agencies copies of all certificates and
opinions delivered to the Bond Trustee by Funding
63
<PAGE>
Company pursuant to this Indenture; provided that the Bond Trustee shall have no
liability with respect to any information contained therein or omitted
therefrom.
64
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as a deed as of the date first above written.
YORK POWER FUNDING (CAYMAN)
LIMITED
By:
-------------------------------------------------
Name: Martin Couch
Title: Director
In the presence of:
----------------------------------------------------
Name:
THE BANK OF NEW YORK
as Bond Trustee
By:
-------------------------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
AMORTIZATION OF PRINCIPAL
<TABLE>
<CAPTION>
Percentage of Principal
Scheduled Payment Date Amounts Payable
----------------------- -----------------------
<S> <C>
April 30, 2000 0.90%
October 30, 2000 0.89%
April 30, 2001 1.10%
October 30, 2001 1.07%
April 30, 2002 0.50%
October 30, 2002 0.48%
April 30, 2003 0.36%
October 30, 2003 0.35%
April 30, 2004 0.77%
October 30, 2004 0.72%
April 30, 2005 1.26%
October 30, 2005 1.15%
April 30, 2006 0.50%
October 30, 2006 0.45%
April 30, 2007 0.44%
October 30, 2007 89.06%
</TABLE>
Schedule I-1
<PAGE>
SCHEDULE II
ACCOUNT INFORMATION
<TABLE>
<CAPTION>
ACCOUNT NAME ACCOUNT NO.
---------------- -----------
<S> <C>
U.S. Revenue Account 800000
U.S. Interest Account 800001
U.S. Principal Account 800002
U.S. Distribution Account 800003
U.S. Distribution Suspense Account 800004
U.S. Loss Proceeds Account 800006
U.S. Redemption Account 800007
Big Spring Operating Account 800008
Big Spring Construction Account 800009
Contingency Reserve Account 800005
Big Spring Maintenance Reserve Account 8000010
Debt Service Reserve Account 8000012
BNY Supplemental Reserve Account 8000013
U.S. Additional Reserve Account 8000011
Trinidad Revenue Account 8000014
Trinidad Interest Account 8000015
Trinidad Principal Account 8000016
Trinidad Distribution Account 8000017
Trinidad Distribution Suspense Account 8000018
Trinidad Loss Proceeds Account 8000019
Trinidad Redemption Account 8000020
Trinidad Operating Account 8000021
Trinidad Construction Account 8000022
Trinidad Maintenance Reserve Account 8000023
Trinidad Additional Reserve Account 8000024
</TABLE>
Schedule II-1
<PAGE>
SCHEDULE III
NOTICE ADDRESSES
1. York Power Funding (Cayman) Limited
_ Queensgate SPV Services, Limited
P.O. Box 1093 GT,
Compass Center
2nd Floor
Crewe Road
Grand Cayman, Cayman Islands
2. InnCOGEN, Limited
#10 Marine Villas
Columbus Boulevard
West Moorings by the Sea
Trinidad, W.I.
3. York Ex International SRL
The Ernst & Young Building
Bush Hill, Bay Street
St. Michael, Barbados
4. York Holdings (Barbados) SRL
The Ernst & Young Building
Bush Hill, Bay Street
St. Michael, Barbados
5. York Holdings (Caymans) LLC
_ Maples and Calder
P.O. Box 309
George Town, Grand Cayman
Cayman Islands
British West Indies
6. York T&T Holdings, Inc.
c/o York Research Corporation
280 Park Avenue, Suite 2700W
New York, NY 10017
7. Warbasse Power I LLC
c/o York Research Corporation
280 Park Avenue, Suite 2700W
New York, NY 10017
Schedule III-1
<PAGE>
8. Warbasse Power II LLC
c/o York Research Corporation
280 Park Avenue, Suite 2700W
New York, NY 10017
9. Brooklyn Navy Yard Power LP
c/o York Research Corporation
280 Park Avenue, Suite 2700W
New York, NY 10017
10. New World Power Texas Renewable Energy Limited Partnership
3300 South Moss Lake Road
Big Spring, Texas 79720
11. The Bank of New York, as Bond Trustee
101 Barclay Street
New York, New York 10286
Facsimile: (212) 815-5544
Attention: International and Structured Finance
12. The Bank of New York, as Collateral Agent
101 Barclay Street
New York, New York 10286
Facsimile: (212) 815-5544
Attention: International and Structured Finance
13. Moody's Investor Service
99 Church Street
New York, New York
Attention:
14. Standard & Poor's
25 Broadway
New York, New York 10004
Attention: Corporate Ratings
15. Ernst & Young Trust Corporation
Ernst & Young Building
Bush Hill, Bay Street
Bridgetown, Barbados
Schedule III-2
<PAGE>
APPENDIX A
"Act" when used with respect to any Holder, shall have the meaning given
that term in Section 6.1 (Acts of Holders).
"Additional Project Document" shall mean (i) any contract or undertaking
relating to the purchase or sale of electricity from the Projects entered into
by any of the Project Obligors after the Closing Date (b) any consent or
security instrument entered into by Funding Company, any Project Obligor or any
other relevant party in connection with an Additional Project Document or (c)
any contract or undertaking to which Funding Company or any Project Obligor is a
party entered into after the Closing Date relating to the capital improvements,
operation or maintenance of the Project, in each case which is material to the
applicable Project.
"Additional Securities" shall mean any Securities issued pursuant to
Section 2.3 (Additional Securities).
"Affiliate" shall mean, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such first Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agency Agreements" means the separate Agency Agreements, each dated as of
the Closing Date, between Funding Company and each of the Project Borrowers, as
amended or supplemented.
"Agent Members" shall have the meaning given to that term in Section
2.5.4(a) (Depositary).
"Annual Audited Financial Statements" shall mean audited financial
statements prepared in accordance with GAAP.
"Annual Audited Combined Financial Statements" shall mean audited combined
financial statements prepared in accordance with GAAP.
"Annual Audited Consolidated Financial Statements" shall mean audited
consolidated financial statements prepared in accordance with GAAP.
"Applicable Law" shall mean, with respect to any Person, property or
matter, any of the following applicable thereto: any statute, law, regulation,
ordinance, rule, judgment, rule of common law, order, decree, Governmental
Approval, approval, concession, grant, franchise, license, agreement, directive,
guideline, policy, requirement, or other governmental restriction or any similar
form of decision of, or determination by, or any interpretation or
administration of any of the foregoing, by any Governmental Authority, whether
in effect as of the date of this Indenture or thereafter and in each case as
amended (including, without limitation, any pertaining to land use or zoning
restrictions).
"Applicable Procedures" shall have the meaning given to that term in
Section 2.7.2(a) (Transfers and Exchanges of Global Securities and Beneficial
Interests Therein).
"Approved Restoration Plan" shall mean a plan submitted to and approved by
the Independent Engineer which provides for the repair or rebuilding of all or
any portion of the Big Spring Project or the Trinidad Project and which is
accompanied by a certificate (a) of the Independent Engineer certifying that (i)
such plan is reasonable and technically feasible and will restore the Big Spring
Project or the Trinidad Project to at least as good condition or state of repair
as it was in prior to such Event of Loss, (ii) the
Appendix A-1
<PAGE>
repair or restoration of the Big Spring Project or the Trinidad Project in
accordance with the plan or the operation of the Big Spring Project or the
Trinidad Project following such repair will not violate (x) the terms of any
other Transaction Document or (y) any of the Big Spring Project's or the
Trinidad Project's Governmental Approvals, (iii) after taking into consideration
the availability of Loss Proceeds and such other proceeds available for the
repair or restoration of the Big Spring Project or the Trinidad Project, there
will be adequate cash flow during the period of repair or restoration to pay all
ongoing expenses, including Debt Service due on the Securities, and the Big
Spring Guarantor's or the Trinidad Obligor's ability to pay such expenses will
not be materially adversely affected following such repair and (iv) the repair
or restoration in accordance with the plan will not materially adversely affect
the construction budget or construction schedule of the Big Spring Project or
the Trinidad Project and (b) of an Authorized Officer of the Big Spring
Guarantor or Trinidad Obligor, as applicable, certifying that (i) such plan is
reasonable and technically feasible and will restore the Big Spring Project or
the Trinidad Project to at least a good condition or state of repair as it was
in prior to such Event of Loss and (ii) the repair or restoration of the Big
Spring Project or the Trinidad Project in accordance with the plan or the
operation of the Big Spring Project or the Trinidad Project following such
repair will not violate Applicable Law.
"Auditors" shall mean Grant Thornton LLP or such other firm of independent
public accountants as Funding Company and each Project Obligor may, with the
consent of the Bond Trustee, from time to time appoint as auditors of such
Person.
"Authenticating Agent" shall have the meaning given to that term in Section
2.6.2 (Authenticating Agent).
"Authorized Agent" shall have the meaning given to that term in Section
2.6.3(a) (Authorized Agents Generally).
"Authorized Officer" or "Authorized Representative" shall mean (a) in the
case of any corporation or limited liability company, the chief executive
officer, the president, the chief financial officer, a vice president, the
treasurer or an assistant treasurer or any director of such corporation or
limited liability company; (b) in the case of any general or limited
partnership, any Person authorized by the general partner (or such other Person
that is responsible for the management of such partnership) to take the
applicable action on behalf of such partnership or any officer (with a title
specified in clause (a) above) or Authorized Officer of such partnership's
managing general partner (or such other Person that is responsible for the
management of such managing general partner) and (c) with respect to the
Holders, the Bond Trustee pursuant to Section 5.2 of the Indenture.
"Barbados Taxes" shall mean any Taxes imposed by any Governmental Authority
of Barbados.
"Big Spring Collateral" shall mean (i) the Big Spring Security Agreement
Collateral, (ii) a pledge of the general and limited partnership interests in
the Big Spring Guarantor and (iii) any other collateral set forth in the Big
Spring Security Agreement or the Big Spring Pledge Agreement.
"Big Spring Completion Certificate" shall mean a certificate substantially
in the form of Exhibit L hereto.
"Big Spring Construction Account" shall mean the account described in
Section 2.2 (Establishment of Depositary Accounts and Sub-accounts) of the
Depositary Agreement.
Appendix A-2
<PAGE>
"Big Spring Construction Expenses" shall have the meaning given to that
term in Section 3.1 (Big Spring Construction Account) of the U.S. Depositary
Agreement.
"Big Spring Construction Requisition" shall mean a requisition certificate
in the form of Exhibit A to the U.S. Depositary Agreement.
"Big Spring Deed of Trust" shall mean the Deed of Trust , dated as of the
Closing Date, between the Big Spring Guarantor and the Collateral Agent.
"Big Spring EPA" shall mean the Renewable Resource Energy Purchase
Agreement, dated as of September 13, 1994, between the Big Spring Guarantor and
TU Electric, as amended.
"Big Spring Guarantee" shall mean the Guarantee, dated as of the Closing
Date, between the Big Spring Guarantor and the Bond Trustee and the Collateral
Agent for the benefit of the Secured Parties.
"Big Spring Guarantor" shall mean New World Power Texas Renewable Energy
Limited Partnership, a Delaware limited partnership.
"Big Spring Maintenance Reserve Account" shall mean the account described
in Section 2.2(a) (Establishment of U.S. Depositary Accounts and Sub-accounts)
of the U.S. Depositary Agreement.
"Big Spring Maintenance Requirement" shall mean the amount specified by the
Independent Engineer to be the maintenance requirement for the applicable year
with respect to the Big Spring Project.
"Big Spring Partners" shall mean Big Springs Texas Energy Management, Inc.,
as a general partner and Big Spring Holdings, Inc. as a limited partner.
"Big Spring Partnership Agreement" shall mean the Second Amended and
Restated Agreement of Limited Partnership, dated as of June 26, 1998 among the
Big Spring Partners.
"Big Spring Pledge Agreement" shall mean the Pledge Agreement, dated as of
the Closing Date, between Big Springs Texas Energy Management, Inc., Big Springs
Holdings, Inc. and the Collateral Agent for the benefit of the Secured Parties
with respect to the general partnership interests in the Big Spring Guarantor.
"Big Spring Project" shall mean the 34 MW wind energy project to be
constructed in Big Spring, Texas by the Big Spring Guarantor.
"Big Spring Project Documents" shall mean the Big Spring Partnership
Agreement, the Big Spring EPA, the Vestas Agreement, all Third Party Consents
related to any other Big Spring Project Document and all other energy sales and
power contracts, construction contracts, operation and maintenance agreements,
leases, insurance policies and other agreements related to the Big Spring
Project.
"Big Spring Security Agreement" shall mean the Assignment and Security
Agreement, dated of the Closing Date, between the Big Spring Guarantor and the
Collateral Agent.
"Big Spring Security Agreement Collateral" shall have the meaning given to
that term in Section 2.1 of the Big Spring Security Agreement.
Appendix A-3
<PAGE>
"Big Spring Security Documents" shall mean the Big Spring Security
Agreement, the Big Spring Pledge Agreement, the Big Spring Deed of Trust and all
other Security Documents securing the obligations of the Big Spring Guarantors
under the Big Spring Guarantee and the U.S. Project Note.
"BNY Collateral" shall mean (i) BNY Security Agreement Collateral, (ii) a
pledge of the equity interests in the BNY Guarantor and (iii) any other
collateral set forth in the BNY Security Agreement or the BNY Pledge Agreement.
"BNY Guarantee" shall mean the Guarantee, dated as of the Closing Date,
between the BNY Guarantor and the Bond Trustee and the Collateral Agent for the
benefit of the Secured Parties.
"BNY Guarantor" shall mean Brooklyn Navy Yard Power LLC, a Delaware limited
liability company.
"BNY Indemnity Agreement" shall mean the York Partners Reimbursement
Agreement (PMNC), dated as of November 1, 1997, among B-41 L.P., the BNY Project
Company and Edison Mission Energy.
"BNY Indemnity Amount: shall mean 50% of the amount which B-41 L.P. is
required to pay to Edison Mission Energy upon the occurrence of a BNY Indemnity
Event.
"BNY Indemnity Event" shall mean the occurrence of an event which triggers
B-41 L.P.'s obligations pursuant to Section 2.01 of the BNY Indemnity Agreement.
"BNY Partnership Agreement" shall mean the Amended and Restated Limited
Partnership Agreement, dated as of November 1, 1997, by and between Mission
Energy New York, Inc. and B-41, L.P.
"BNY Pledge Agreement" shall mean the Pledge Agreement, dated as of the
Closing Date, between B-41, L.P. and the Collateral Agent for the benefit of the
Secured Parties with respect to the equity interests in the BNY Guarantor.
"BNY PPA" shall mean, individually and collectively, (i) the Energy Sales
Agreement, dated as of October 31, 1996, between the BNY Power Company and
Consolidated Edison Company of New York, (ii) the Amended and Restated Energy
Services Agreement, dated as of April 29, 1994, between the BNY Project Company
and the Brooklyn Navy Yard Development Corporation, and (iii) the Energy and
Services Exchange Agreement, dated as of January 31, 1995, between the BNY
Project Company and The City of New York, New York, on behalf of the Red Hook
Water Pollution Control Facility.
"BNY Project" shall mean the 286 MW operating natural gas fired
cogeneration project located in Brooklyn, New York and owned by the BNY Project
Company.
"BNY Project Company" shall mean Brooklyn Navy Yard Cogeneration Partners,
L.P.
"BNY Project Documents" shall mean the BNY Partnership Agreement, the BNY
PPA, all Third Party Consents related to any other BNY Project Document, the BNY
Indemnity Agreement and all other energy sales and power contracts, fuel
agreements, operation and maintenance agreements, construction contracts, barge
agreements, pooling agreements, leases, insurance policies and fuel supply
agreements related to the BNY Project.
Appendix A-4
<PAGE>
"BNY Security Agreement" shall mean the Assignment and Security Agreement,
dated as of the Closing Date, between the BNY Guarantor and the Collateral
Agent.
"BNY Security Agreement Collateral" shall have the meaning given to that
term in Section 2.1 of the BNY Security Agreement.
"BNY Security Documents" shall mean the BNY Security Agreement, the BNY
Pledge Agreement and all other Security Documents securing the obligations of
the BNY Guarantors under the BNY Guarantee and the U.S. Project Note.
"BNY Supplemental Reserve Account" shall mean the account described in
Section 2.2(a) (Establishment of U.S. Depositary Accounts and Sub-accounts) of
the U.S. Depositary Agreement.
"Board of Directors" shall mean, with respect to any corporation, either
the board of directors of such corporation or any committee of such board of
directors duly authorized to act therefor.
"Bond Proceeds" shall mean all net proceeds received from the issuance of
Securities.
"Bond Trustee" shall mean The Bank of New York, its successors and assigns,
in its capacity as trustee under this Indenture.
"Business Day" shall mean any day that is not a Saturday, Sunday or legal
holiday in the State of New York, or a day on which banking institutions
chartered by the State of New York, or the United States, are legally required
or authorized to close.
"Cash Equivalents" shall mean, as to any Person: (a) direct obligations of
the United States, or any agency thereof, (b) obligations fully guaranteed by
the United States or any agency thereof, (c) certificates of deposit or bankers
acceptances issued by commercial banks (including the Bond Trustee or any of its
Affiliates) organized under the laws of the United States or of any political
subdivision thereof or under the laws of Canada, Japan, Switzerland or any
country that is a member of the European Economic Community having a combined
capital and surplus of at least $250,000,000 and having long-term unsecured debt
securities then rated "A" or better by S&P or "A-2" or better by Moody's (but at
the time of investment not more than $25,000,000 may be invested in such
certificates of deposit from one bank), (d) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clauses (a) and (b) above, entered into with any financial institution meeting
the qualifications specified in clause (c) above, (e) open market commercial
paper of any corporation incorporated or doing business under the laws of the
United States or of any political subdivision thereof having a rating of at
least "A-1" from S&P and "P-1" from Moody's (but at the time of investment not
more than $25,000,000 may be invested in such commercial paper from any one
company), (f) auction rate securities or money market preferred stock having one
of the two highest ratings obtainable from either S&P or Moody's (or, if at any
time neither S&P nor Moody's may be rating such obligations, then from another
nationally recognized rating service acceptable to the Bond Trustee) or (g)
investments in money market funds or money market mutual funds sponsored by any
securities broker dealer of recognized national standing for an Affiliate
thereof), having an investment policy that requires substantially all the
invested assets of such fund to be invested in investments described in any one
or more of the following clauses having a rating of "A" or better by S&P or
"A-2" or better by Moody's (including money market funds for which the
Depositary Bank in its individual capacity or any of its Affiliates is
investment manager or adviser); provided that with respect to amounts on deposit
in the
Appendix A-5
<PAGE>
Trinidad Local Account, "Cash Equivalents" shall mean time deposits and
certificates of deposit, with maturities of not more than three (3) months from
the date of acquisition by such Person.
"Cash Flows" shall mean all Project Revenues, Equity Cash Flows and Note
Cash Flows.
"Cash Flow Available for Debt Service" shall mean the sum of all Cash Flows
less the sum of all Operating and Maintenance Expenses.
"Cayman Taxes" shall mean any Taxes imposed by any Governmental Authority
of the Cayman Islands.
"Certificated Securities" shall mean a Security issued in certificated form
to a Person other than the Depositary.
"Closing Date" shall mean the date of issuance and delivery of the Initial
Securities.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute and all rules and regulations promulgated
thereunder.
"Collateral" shall mean the Funding Collateral and the Project Collateral.
"Collateral Agent" shall mean The Bank of New York, its successors and
assigns in its capacity as collateral agent under the Intercreditor Agreement
and the other Finance Documents to which it is a party.
"Commission" shall mean the United States Securities and Exchange
Commission or, if at any time after the date of this Indenture such Commission
is not existing and performing the duties now assigned to under Applicable Law,
the body performing such duties at such time.
"Construction Expenses" shall mean, individually and collectively, Big
Spring Construction Expenses and Trinidad Construction Expenses.
"Construction Account" shall mean, individually and collectively, the Big
Spring Construction Account and the Trinidad Construction Account.
"Contingency Reserve Subaccount" shall mean the subaccount described in
Section 2.2 of the U.S. Depositary Agreement.
"Covenant Defeasance Option" shall have the meaning given to that term in
Section 8.2(a)(ii) (Defeasance).
"Debt Service" shall mean, without duplication, all principal, interest,
premium (if any) and other amounts due with respect to the Securities and all
other Permitted Indebtedness.
"Debt Service Coverage Ratio" shall mean for any period the ratio of (i)
Cash Flow Available for Debt Service for such period to (ii) the aggregate of
all Debt Service due during such period.
"Debt Service Reserve Account" shall mean the account described in Section
2.2(a) (Establishment of Depositary Accounts and Sub-accounts) of each
Depositary Agreement.
Appendix A-6
<PAGE>
"Debt Service Reserve Required Balance" shall mean $15,000,000 from the
Closing Date through the Final Maturity Date.
"Debt Termination Date" shall have the meaning given to that term in
Section 1.1 of the Intercreditor Agreement.
"Debtor Relief Law" shall mean any applicable liquidation, dissolution,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization, readjustment of debt or similar law affecting the rights or
remedies of creditors generally, as in effect from time to time.
"Declaration of Trust" shall mean the Declaration of Trust Relating to
Issued Share Capital of York Power Funding (Cayman) Limited, dated July 23,
1998, made by Queensgate SPV, as trustee.
"Default" shall mean, individually and collectively, an Indenture Default
and a Project Default.
"Defeasance Deposit" shall have the meaning given to that term in Section
8.2(d) (Defeasance).
"Depositary" shall have the meaning given to that term in Section 2.5.4(a)
(Depositary).
"Depositary Accounts" shall mean, individually and collectively, the U.S.
Depositary Accounts and the Trinidad Depositary Accounts.
"Depositary Agreement" shall mean, individually and collectively, the U.S.
Depositary Agreement and the Trinidad Depositary Agreement.
"Depositary Bank" shall mean The Bank of New York, as depositary bank under
the Depositary Agreement or any successor thereto pursuant to the terms thereof.
"Disbursement Date" shall have the meaning provided in Exhibit A, Exhibit B
or Exhibit C (as applicable) to each Depositary Agreement.
"Distribution Account" shall mean, individually and collectively, the U.S.
Distribution Account and the Trinidad Distribution Account.
"Distribution Date" shall mean each October 30, January 30, April 30 and
July 30.
"Distribution Suspense Account" shall mean, individually and collectively,
the U.S. Distribution Suspense Account and the Trinidad Distribution Suspense
Account.
"DTC" shall mean The Depository Trust Company, having a principal office at
55 Water Street, New York, New York, 10041-0099, together with any Person
succeeding thereto by merger, consolidation or acquisition of all or
substantially all of its assets, including substantially all of its securities
payment and transfer operations.
"DTC Letter of Representations" shall mean the Letter of Representations,
dated the date hereof, among Funding Company, DTC and the Bond Trustee.
"Duke/Fluor Daniel International" shall mean Duke/Fluor Daniel
International, a general partnership organized and existing under the laws of
the State of Nevada.
Appendix A-7
<PAGE>
"Environmental Claim" shall mean any written complaint, order, citation,
decree, demand, judgment or written notice actually received by Funding Company
or any Project Obligor from any Person relating to any matters of Environmental
Law affecting or relating to any activity or operations at any time conducted by
Funding Company or any Project Obligor, including, without limitation:
(1) the existence of any Environmentally Regulated Materials at any
Project site in violation of any Environmental Law;
(2) the release or threatened release of any Environmentally Regulated
Materials generated at any Project site in violation of any Environmental
Law;
(3) remediation of any such release of any Project site; and
(4) any violation of any relevant Environmental Law in connection with
any Project site.
"Environmental Laws" shall mean any and all Laws (as well as obligations,
duties and requirements relating thereto under common law) relating to: (i)
noise, emissions, discharges, spills, releases or threatened releases of
pollutants, contaminants, Environmentally Regulated Materials, materials
containing Environmentally Regulated Materials, or hazardous or toxic materials
or wastes into ambient air, surface water, groundwater, watercourses, publicly
or privately-owned treatment works, drains, sewer systems, wetlands, septic
systems or onto land surface or subsurface strata; (ii) the use, treatment,
storage, disposal, handling, manufacture, processing, distribution,
transportation, or shipment of Environmentally Regulated Materials, materials
containing Environmentally Regulated Materials or hazardous and/or toxic wastes,
material, products or by-products (or of equipment or apparatus containing
Environmentally Regulated Materials); (iii) pollution or the protection of human
health, the environment or natural resources; or (iv) zoning and land use.
"Environmentally Regulated Materials" shall mean (i) hazardous materials,
hazardous wastes, hazardous substances, extremely hazardous wastes, restricted
hazardous wastes, toxic substances, toxic pollutants, contaminants, pollutants
or words of similar import, as used under Environmental Laws, including but not
limited to the following: the Hazardous Materials Transportation Act, 49 U.S.C.
1801 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et
seq., the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, 42 U.S.C. 9601 et seq., the Clean Water Act, 33 U.S.C. 1231 et seq.,
the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Toxic Substances Control
Act, 15 U.S.C. 2601 et seq., the Safe Drinking Water Act, 42 U.S.C. Section 3808
et seq., and the Oil Pollution Act, 33 U.S.C. Section 2701 et seq., and their
State and local counterparts or equivalents; (ii) petroleum and petroleum
products including crude oil and any fractions thereof; (iii) natural gas,
synthetic gas and any mixtures thereof; (iv) radon; (v) any other hazardous,
radioactive, toxic or noxious substance, material, pollutant, or solid, liquid
or gaseous waste; and (vi) any substance that, whether by its nature or its use,
is now or hereafter subject to regulation under any Environmental Law or with
respect to which any Federal, State or local Environmental Law or governmental
agency requires environmental investigation, monitoring or remediation.
"Equity Cash Flow" shall mean, with respect to the BNY Guarantor or any
Trinidad Finance Party Borrower, the cash flow available to such Person from
equity distributions made by the BNY Project Company or any other Trinidad
Finance Party, respectively, other than, with respect to the Trinidad Project
Borrower, such cash flows otherwise required to be used for Maintenance Expenses
and
Appendix A-8
<PAGE>
Operating and Maintenance Expenses or otherwise pursuant to the Finance
Documents or the Trinidad Project Documents.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" shall mean (i) a corporation which is a member of a
controlled group of corporations with Funding Company or any Project Obligor
within the meaning of Section 414(b) of the Code, (ii) a trade or business
(including a sole proprietorship, partnership, trust, estate or corporation)
which is under common control with Funding Company or any Project Obligor within
the meaning of Section 414(c) of the Code or Section 4001(b)(1) of ERISA, (iii)
a member of an affiliated service group with Funding Company or any Project
Obligor within the meaning of Section 414(m) of the Code or (iv) an entity
described in Section 414(o) of the Code.
"Euroclear" shall mean Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System, or any successor thereto, as
operator thereof.
"Event of Default" shall mean, individually and collectively, an Indenture
Event of Default and a Project Event of Default.
"Event of Loss" shall mean any event of damage, destruction, condemnation,
seizure or appropriation of all or any part of the Project.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Expropriation Proceeds" shall mean all amounts and proceeds (including
instruments) received in respect of any action to condemn, seize or appropriate
all or any part of any Project, after deducting all reasonable expenses incurred
in litigating, arbitrating, compromising, settling or consenting to the
settlement of any claims against the appropriate Governmental Authority.
"Federal Bankruptcy Code" shall mean Title 11 of the United States Code, as
amended from time to time.
"FERC" shall mean the United States Federal Energy Regulatory Commission,
or any successor thereto.
"Final Maturity Date" shall mean October 30, 2007.
"Final Offering Circular" shall mean the confidential offering circular of
Funding Company, dated July 30, 1998, issued with respect to the Securities.
"Finance Documents" shall mean, collectively, the Indenture, the Project
Loan Agreements, the Guarantees, the Intercreditor Agreement, the Purchase
Agreement, the Securities, the Project Notes, the Subscription Agreements and
the Security Documents and all other documents related to any of the foregoing
or otherwise related to the issuance of the Securities.
"FPA" shall mean the Federal Power Act of the United States, as amended.
Appendix A-9
<PAGE>
"Funding Collateral" shall mean (i) the Funding Company Security Agreement
Collateral (ii) the right, on the terms set forth in the Declaration of Trust,
to direct the voting of the share capital of Funding Company, (iii) the U.S.
Guarantees, (iv) a pledge of 79.0% of the value of the equity interests in the
Trinidad U.S. Parent including 65.0% of the voting stock and (v) any other
collateral set forth in the Funding Security Agreement.
"Funding Company" shall mean York Power Funding (Cayman) Limited, a limited
liability company incorporated and existing under the laws of the Cayman
Islands.
"Funding Company Security Agreement" shall mean the Assignment and Security
Agreement, dated of the Closing Date, between Funding Company and the Collateral
Agent.
"Funding Company Security Agreement Collateral" shall have the meaning
given to that term in Section 2.1 of the Funding Company Security Agreement.
"Funding Date" shall mean the twentieth (20th) day of each Month, or if
such day is not a Business Day, the next succeeding Business Day.
"Funding Period" shall mean a period commencing on a Funding Date and
ending on the day preceding the next succeeding Funding Date.
"GAAP" shall mean generally accepted accounting principles as in effect in
the United States from time to time.
"Global Securities" shall have the meaning given to such term in Section
2.5.3 (Securities Sold Pursuant to Regulation S).
"Governmental Approvals" means all governmental approvals, authorizations,
consents, decrees, licenses, permits, waivers, privileges, filings, with all
Governmental Authorities.
"Governmental Authority" means the government of any federal, state,
municipal or other political subdivision in which any Project is located (or of
any other relevant jurisdiction as required by the Finance Documents), and any
other government or political subdivision thereof exercising jurisdiction over
any Project or any party to any of the Project Documents, including all agencies
and instrumentalities of such governments and political subdivisions.
"Guarantee" shall mean, individually and collectively, the BNY Guarantee,
the Warbasse Guarantee, the Big Spring Guarantee and the Trinidad Guarantee.
"Guarantee Default" shall mean an event or condition that, with the giving
of notice, lapse of time or failure to satisfy certain specified conditions, or
any combination thereof, would become a Guarantee Event of Default.
"Guarantee Event of Default" shall mean an event of default under any
Guarantee.
"Guarantee Obligation" shall mean, with respect to any Person, any
obligation, contingent or otherwise, of such Person directly or indirectly
guaranteeing in any manner any Indebtedness or similar obligation of any other
Person.
Appendix A-10
<PAGE>
"Guarantor" shall mean, individually and collectively, the BNY Guarantor,
the Warbasse Guarantor, the Big Spring Guarantor and the Trinidad Guarantor.
"Holder" shall mean, with respect to any Security, the Person in whose name
such Security is registered in the Securities Register; provided that Funding
Company or any Affiliate thereof shall not be deemed a Holder with respect to
any matter herein or any other Finance Document requiring a vote of the Holders.
"Indebtedness" of any Person means, at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments
(excluding "deposit only" endorsements on checks payable to the order of such
Person), (iii) all obligations of such Person to pay the deferred purchase price
of property or services (except accounts payable and similar obligations arising
in the ordinary course of business shall not be included as Indebtedness), (iv)
all obligations of such Person as lessee under capital leases to the extent
required to be capitalized on the books of such Person in accordance with GAAP
and (v) all obligations of others of the type referred to in clause (i) through
(iv) above guaranteed by such Person (other than performance guarantees pursuant
to the Power Purchase Agreements), whether or not secured by a lien or other
security interest on any asset of such Person.
"Indenture" shall mean this Trust Indenture, dated as of the Closing Date,
between Funding Company and the Bond Trustee.
"Indenture Default" shall mean an event or condition that, with the giving
of notice, lapse of time or failure to satisfy certain specified conditions, or
any combination thereof, would become an Indenture Event of Default.
"Indenture Event of Default" shall have the meaning given that term in
Section 5.1 of the Indenture.
"Independent Engineer" shall mean Stone & Webster Management Consultants,
Inc., its successors and assigns or such other independent engineer as the Bond
Trustee may engage who is reasonably acceptable to Funding Company.
"Independent Insurance Consultant" shall mean Lockton Insurance, its
successors and assigns or such other independent insurance consultant as the
Bond Trustee may engage who is reasonably acceptable to Funding Company.
"Independent Wind Consultant" shall mean Richard L. Simon, its successors
and assigns or such other independent wind consultant as the Bond Trustee may
engage who is reasonably acceptable to Funding Company.
"Initial Purchaser" shall mean Credit Suisse First Boston.
"Initial Security" or "Initial Securities" shall mean any of the
$150,000,000 York Power Funding (Cayman) Limited 12.0% Senior Secured Bonds due
October 30, 2007, issued by Funding Company.
"Insurance Proceeds" shall mean all proceeds in respect of any property
insurance policy (other than proceeds of business interruption insurance or
delayed opening insurance) covering Funding Company or any Project.
Appendix A-11
<PAGE>
"Intercreditor Agreement" shall mean the Collateral Agency and
Intercreditor Agreement, dated as of the Closing Date, among the Bond Trustee,
the Collateral Agent, the Depositary Bank, the Project Obligors and Funding
Company.
"Interest Account" shall mean, individually and collectively, the U.S.
Interest Account and the Trinidad Interest Account.
"Legal Defeasance Option" shall have the meaning given to that term in
Section 8.2(a)(i) (Defeasance).
"Lien" shall mean any mortgage debenture, mortgage, deed of trust, pledge,
charge, hypothecation, assignment, mandatory deposit arrangement with any Person
owning Indebtedness of such Person, encumbrance, lien (statutory or other),
preference, priority or other security agreement of any kind or nature
whatsoever which has the substantial effect of constituting a security interest,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same effect as any of
the foregoing and the filing of any financing statement or similar instrument
under the Uniform Commercial Code or comparable law of any jurisdiction,
domestic or foreign.
"Loss Proceeds" shall mean all Insurance Proceeds, Expropriation Proceeds
or other amounts actually received on account of an event which causes all or a
substantial portion of the relevant Project to be damaged, destroyed or rendered
unfit for normal use.
"Loss Proceeds Account" shall mean, individually and collectively, the U.S.
Loss Proceeds Account and the Trinidad Loss Proceeds Account.
"Maintenance Expense" shall mean all expenditures by the Big Spring
Guarantor or the Trinidad Obligor on regularly scheduled (or reasonably
anticipated) maintenance of the Big Spring Project or the Trinidad Project,
respectively, in accordance with good utility practice and vendor and supplier
requirements constituting major maintenance (including, without limitation,
teardowns, overhauls, capital improvements, replacements and/or refurbishments
of major components of such Project).
"Maintenance Reserve Account" shall mean, individually and collectively,
the Big Spring Maintenance Reserve Account and the Trinidad Maintenance Reserve
Account.
"Majority Holders" shall mean Holders holding greater than fifty percent
(50%) in aggregate principal amount of the Outstanding Securities.
"Material Adverse Effect" shall mean a material adverse effect on (i) the
financial condition, results of operation, business or prospects of Funding
Company or any Project Obligor, (ii) the validity or priority of the Liens on
the Collateral, (iii) the ability of Funding Company to perform its material
obligations under the Indenture, the Securities or any of the other Finance
Documents, (iv) the ability of any Project Obligor to perform its material
obligations under its Project Loan Agreement, Project Note, Guarantee or any of
the other Finance Documents or (v) the ability of any Project Obligor to perform
its material obligations under any Project Document.
Appendix A-12
<PAGE>
"Maturity Date" shall mean, with respect to any Security, the date on which
the principal of such Security or an installment of principal becomes due and
payable as herein or therein provided, whether at stated maturity, acceleration,
redemption or otherwise.
"Month" shall mean a calendar month.
"Moody's" shall mean Moody's Investors Service, Inc., a corporation
organized and existing under the laws of the State of Delaware, its successors
and assigns.
"Multiemployer Plan" shall mean a plan that is a multiemployer plan within
the meaning of Section 4001(a)(3) of ERISA to which either Funding Company or
any Guarantor or any ERISA Affiliate is making, or has an obligation to make,
contributions or had made, or has been obligated to make, contributions since
the Closing Date.
"Note Cash Flow" shall mean, with respect to the Warbasse Guarantor and the
Trinidad Guarantor, the cash flow available to such Person from repayments,
whether scheduled or otherwise, on the Warbasse Notes and the Trinidad Loan,
respectively.
"Non-Budget Operating and Maintenance Expense Certificate" shall mean a
certificate substantially in the from of Exhibit B to the Depositary Agreement.
"Non-Recourse Person" shall have the meaning given to that term in Section
11.11 (Limitation of Liability).
"Officer's Certificate" shall mean, with respect to any Person, a
certificate executed by an Authorized Representative of such Person.
"One Hundred Percent Holders" shall mean Holders holding one hundred
percent (100%) in aggregate principal amount of the Outstanding Securities.
"One-Third Holders" shall mean Holders holding no less than thirty-three
and one-third percent (33_%) in aggregate principal amount of the Outstanding
Securities.
"Operating Budget" shall mean a budget of Operating and Maintenance
Expenses, and a long-term maintenance program with respect to the applicable
Project for any given fiscal year , or part thereof, and prepared on the basis
of estimated requirements, showing such costs by category for such fiscal year.
"Operating and Maintenance Expenses" shall mean all amounts disbursed by or
on behalf of the Big Spring Guarantor or the Trinidad Obligor for operation,
maintenance, repair, or improvement of the Big Spring Project or the Trinidad
Project, respectively, including, without limitation, premiums on insurance
policies, property and other Taxes, and payments under the relevant operating
and maintenance agreements, leases, royalty and other land use agreements, and
any other payments required under the applicable Project Documents; provided
that "Operating and Maintenance Expenses" shall exclude all maintenance and
other capital expenditures funded from the applicable Maintenance Reserve
Account.
"Opinion of Counsel" shall mean a written opinion of counsel for any Person
either expressly referred to herein or otherwise reasonably satisfactory to the
Bond Trustee, which may include, without
Appendix A-13
<PAGE>
limitation, counsel for Funding Company, whether or not such counsel is an
employee of Funding Company.
"Outstanding Securities" or "Outstanding" when used in connection with any
Securities shall mean, as of the time in question, all Securities authenticated
and delivered under this Indenture, except (i) Securities theretofore cancelled
or required to be cancelled under Section 2.12 (Cancellation and Destruction of
Surrendered Securities) and (ii) Securities for which provision for payment
shall have been made pursuant to this Indenture and (iii) Securities in
substitution for which other Securities have been authenticated and delivered
pursuant to this Indenture.
"Pay-Off Date" shall have the meaning given to that term in Section 5.3(b)
of each Project Loan Agreement.
"Paying Agent" shall have the meaning given to that term in Section
2.6.1(b) (Registrar and Paying Agent).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" shall mean any pension plan within the meaning of Section
3(2) of ERISA, including any multiemployer pension plan which is subject to the
provisions of Title I and IV of ERISA or Section 412 of the Code and which (i)
is established, sponsored, maintained or administered by Funding Company or any
Project Obligor or any ERISA Affiliate or for which Funding Company or any
Project Obligor or any ERISA Affiliate has an obligation to contribute or any
liability or in which Funding Company or any Project Obligor or any ERISA
Affiliate participates, or (ii) has at any time since the Closing Date been
established, sponsored, maintained, or administered on behalf of employees of
Funding Company or any Project Obligor or any of its current or former ERISA
Affiliates or for which Funding Company or any Project Obligor or any of its
current or former ERISA Affiliates had an obligation to contribute or any
liability or in which Funding Company or any Project Obligor or any of its
current or former ERISA Affiliates participated.
"Permitted Contract Buy-Out" shall mean a Power Contract Buy-Out with
respect to the Big Spring Project or the Trinidad Project which satisfies the
following conditions: (i) the Big Spring Guarantor or the Trinidad Obligor, as
applicable, delivers an Officer's Certificate to the Bond Trustee certifying
that such Power Contract Buy-Out will not result in a Material Adverse Effect
nor will it materially adversely affect such Project throughout the life of the
Big Spring PPA or the Trinidad PPA, respectively, (ii) each Rating Agency then
rating the securities provides written confirmation to the Bond Trustee that
such Power Contract Buy-Out will not result in a Ratings Downgrade and (iii) the
Independent Engineer certifies to the Bond Trustee that the minimum and average
Projected Debt Service Coverage Ratio and, if such Power Contract Buy-Out is
with respect to a U.S. Project Document, the minimum and average U.S. Projected
Debt Service Coverage Ratio for both (x) the next four consecutive fiscal
quarters, commencing with the fiscal quarter in which such Power Contract
Buy-Out occurs, taken as one annual period and (y) each fiscal year through the
Final Maturity Date, will not be less than 1.5 to 1.0 to 1.55 to 1.0,
respectively.
"Permitted Funding Indebtedness" shall have the meaning given to that term
in Section 4.14 of the Indenture.
Appendix A-14
<PAGE>
"Permitted Funding Liens" shall have the meaning given to that term in
Section 4.15 of the Indenture.
"Permitted Indebtedness" shall mean, individually and collectively,
Permitted Funding Indebtedness and Permitted Project Indebtedness.
"Permitted Liens" shall mean, individually and collectively, Permitted
Funding Liens and Permitted Project Liens.
"Permitted Project Indebtedness" shall mean, individually and collectively,
U.S. Permitted Project Indebtedness and Trinidad Permitted Project Indebtedness.
"Permitted Project Liens" shall mean, individually and collectively, U.S.
Permitted Project Liens and Trinidad Permitted Project Liens.
"Person" shall mean any individual, sole proprietorship, corporation,
partnership, joint venture, limited liability partnership, limited liability
company, trust, unincorporated association, institution, Governmental Authority
or any other entity; wherever organized.
"Plan" shall mean any employee benefit plan within the meaning of Section
3(3) of ERISA, subject to Title I of ERISA, which (i) is established, sponsored,
maintained or administered by Funding Company or any Project Obligor or any
ERISA Affiliate, or for which Funding Company or any Project Obligor or any
ERISA Affiliate has an obligation to contribute or any liability or in which
Funding Company or any Project Obligor or any ERISA Affiliate participates, or
(ii) has since the Closing Date been established, sponsored, maintained or
administered for employees of Funding Company or any Project Obligor or any of
its current or former ERISA Affiliates or for which Funding Company or any
Project Obligor or any of its current or former ERISA Affiliates had an
obligation to contribute or any liability or in which Funding Company or any
Project Obligor or any of its current or former ERISA Affiliates participated.
"Pledge Agreements" shall mean the Trinidad U.S. Pledge Agreement, the BNY
Pledge Agreement, each Warbasse Pledge Agreement, the Big Spring Pledge
Agreement and each Trinidad Pledge Agreement.
"Power Contract Buy-Out" shall mean any cash payment by an electricity
purchaser or steam purchaser, the effect of which is to result in the
termination or cancellation of, reduce future payments under, or change the term
of, the electricity or steam purchase contract between such purchaser and the
relevant Project Obligor.
"Power Contract Buy-Out Proceeds" shall mean all amounts and proceeds
actually received as a result of an Power Contract Buy-Out.
"Power Purchase Agreement" shall mean, individually and collectively, the
BNY PPA, the Warbasse PPA, the Big Spring PPA and the Trinidad PPA.
"Preliminary Offering Circular" shall mean the confidential preliminary
offering circular of Funding Company, dated July 2, 1998, issued with respect to
the Securities.
Appendix A-15
<PAGE>
"Principal Account" shall mean, individually and collectively, the U.S.
Principal Account and the Trinidad Principal Account.
"Project" shall mean, individually and collectively, the BNY Project, the
Warbasse Project, the Big Spring Project and the Trinidad Project
"Project Borrowers" shall mean, individually and collectively, the BNY
Guarantor, the Warbasse Guarantor, the Big Spring Guarantor and the Trinidad
Project Borrower.
"Project Collateral" shall mean, individually and collectively, the BNY
Collateral, the Warbasse Collateral, the Big Spring Collateral and the Trinidad
Collateral.
"Project Company" shall mean, individually and collectively, the BNY
Project Company, Warbasse Project Company, the Big Springs Guarantor and the
Trinidad Obligor.
"Project Default" shall mean, individually and collectively, a Project Loan
Default and a Guarantee Default.
"Project Documents" shall mean, individually and collectively, the BNY
Project Documents, the Warbasse Project Documents, the Big Spring Project
Documents and the Trinidad Project Documents
"Project Event of Default" shall mean, individually and collectively, a
Project Loan Event of Default and a Guarantee Event of Default.
"Project Loan" shall mean, individually and collectively, the U.S. Project
Loan, the Trinidad Project Loan and the Trinidad Loan.
"Project Loan Agreement" shall mean, individually and collectively, the
U.S. Project Loan Agreement, the Trinidad Project Loan Agreement and the
Trinidad Loan Agreement.
"Project Loan Default" shall mean, individually and collectively, a U.S.
Project Loan Default, a Trinidad Project Loan Default and a Trinidad Default.
"Project Loan Event of Default" shall mean, individually and collectively,
a U.S. Project Loan Event of Default and a Trinidad Event of Default.
"Project Notes" shall mean, individually and collectively, the U.S. Project
Notes and the Trinidad Project Notes.
"Project Obligors" shall mean, individually and collectively, the BNY
Guarantor, the Warbasse Guarantor, the Big Spring Guarantor, the Trinidad
Project Borrower, the Trinidad Guarantor and the Trinidad Obligor.
"Project Revenues" shall mean the net revenues or net income calculated on
a cash basis and recognized pursuant to the terms of the relevant Project
Documents, including, without limitation, proceeds of any Power Contract Buy-Out
not required to be used to redeem the Securities, the proceeds of any draws with
respect to any working capital facility and refunds or returns of any amounts
previously paid for Operation and Maintenance Expenses; provided that for
purposes of calculating any Debt Service Coverage Ratio, "Project Revenues"
shall not include draws with respect to any working
Appendix A-16
<PAGE>
capital facility draws, from either Maintenance Reserve Account or any proceeds
of any Power Contract Buy-Out.
"Projected Debt Service Coverage Ratio" shall mean for any period, on any
date of determination, a projection of the Debt Service Coverage Ratio for the
applicable time period.
"PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
amended.
"Purchase Agreement" shall mean the Purchase Agreement dated July 30, 1998
between the Initial Purchaser and Funding Company.
"PURPA" shall mean the Public Utility Power Regulatory Policies Act of
1978, as amended.
"QF" or "Qualifying Facility" shall mean a "qualifying small power
production facility" or a "qualifying cogeneration facility" in accordance with
PURPA and the rules and regulations of FERC under PURPA relating thereto.
"Qualified Institutional Buyer" shall mean a "qualified institutional
buyer" within the meaning of Rule 144A.
"Queensgate SPV" means Queensgate SPV Services Limited.
"Ratings" shall mean the credit ratings assigned to the Securities by the
Rating Agencies.
"Rating Agency" shall mean either of Moody's or S&P or if either shall
cease to rate securities of the type equivalent to the Securities, another
nationally recognized rating agency.
"Ratings Downgrade" shall mean a lowering or withdrawal by a Rating Agency
of the then current Ratings of the Securities.
"Redemption Account" shall mean, individually and collectively, the U.S.
Redemption Account and the Trinidad Redemption Account.
"Redemption Date" shall mean any date for redemption of Securities
established pursuant to Article 3 (Redemption of Securities).
"Redemption Premium" shall mean an amount equal to the Discounted Present
Value calculated for any Initial Security subject to redemption pursuant to
Article 3 (Redemption of Securities) less the unpaid principal amount of such
Initial Security; provided that the Redemption Premium shall not be less than
zero. For purposes of this definition, the "Discounted Present Value" of any
Initial Security subject to redemption pursuant to Article 3 (Redemption of
Securities) shall be equal to the discounted present value of all principal and
interest payments scheduled to become due in respect of such Initial Security
after the date of such redemption, calculated using a discount rate equal to the
sum of (i) the yield to maturity on the United States treasury security having
an average life equal to the remaining average life of such Initial Security and
trading in the secondary market at the price closest to par and (ii) 75 basis
points; provided, however, that if there is no United States treasury security
having an average life equal to the remaining average life of such Initial
Security, such discount rate shall be calculated using a yield to maturity
interpolated or extrapolated on a straight-line basis (rounding to the nearest
Month, if necessary) from the yields to maturity for two (2) United States
treasury securities having average lives
Appendix A-17
<PAGE>
most closely corresponding to the remaining average life of such Initial
Security and trading in the secondary market at the price closest to par.
"Redemption Price" shall mean an amount equal to the sum of (i) the
principal amount of Securities being redeemed pursuant to Article 3 (Redemption
of Securities) and (ii) all interest accrued thereon through the Redemption
Date.
"Registrar" shall have the meaning given to that term in Section 2.6.1(a)
(Registrar and Paying Agent).
"Regular Record Date" shall mean, (i) with respect to each Scheduled
Payment Date except a Scheduled Payment Date in connection with an optional or
mandatory redemption, the fifteenth (15th) day of the Month, whether or not a
Business Day, immediately preceding such Scheduled Payment Date, and (ii) with
respect to each Scheduled Payment Date in connection with an optional or
mandatory redemption, the fifteenth (15th) day, whether or not a Business Day,
preceding such Scheduled Payment Date.
"Regulation D" shall mean Regulation D under the Securities Act.
"Regulation S" shall mean Regulation S under the Securities Act.
"Regulation S Restricted Period" shall mean, with respect to any Security,
the period of forty (40) consecutive days beginning on and including the first
day after the later of (i) the day on which such Security is first offered to
Persons other than distributors (as defined in Regulation S) in reliance on
Regulation S and (ii) the closing date of the offering of such Security.
"Responsible Officer" shall mean, when used with respect to the Bond
Trustee, any officer within the corporate assistant vice president, assistant
secretary, assistant treasurer, trust officer or any other officer of the Bond
Trustee who customarily performs functions similar to those performed by the
Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of such Person's knowledge of and
familiarity with the particular subject and who shall have direct responsibility
for the administration of this Indenture..
"Restoration Requisition" shall mean a requisition certificate in the form
of Exhibit C to the Depositary Agreement.
"Restricted Global Security" shall have the meaning given to that term in
Section 2.5.2 (Securities Sold Pursuant to Rule 144A).
"Restricted Payment" shall mean, with respect to any Person, (a) the
declaration or payment of distributions, dividends or any other payment made in
cash, property, obligations or other securities, (b) any payment of the
principal of or interest on any Subordinated Indebtedness or (c) the making of
any loans or advances to any Affiliate (other than Permitted Indebtedness); in
each case from cash, investments, securities or other funds from time to time in
the applicable Distribution Account.
"Revenue Account" shall mean, individually and collectively, the U.S.
Revenue Account and the Trinidad Revenue Account.
"Revised UCC" shall mean Uniform Commercial Code, Revised Article 8,
Investment Securities (with Conforming and Miscellaneous Amendments to Articles
1, 3, 4, 5, 9 and 10), 1994 Official Text, as
Appendix A-18
<PAGE>
adopted by the American Law Institute and the National Conference of
Commissioners on Uniform State Laws and approved by the American Bar Association
on February 15, 1995, as currently in effect in the State of New York.
"Rule 144" shall mean Rule 144 under the Securities Act.
"Rule 144A" shall mean Rule 144A under the Securities Act.
"S&P" shall mean Standard & Poor's Ratings Services, a division of
McGraw-Hill Companies Inc., its successors and assigns.
"Scheduled Payment Date" shall mean, any April 30 or October 30.
"Secured Obligations" shall mean all amounts owing to any Secured Party
pursuant to the terms of any Finance Document, including, without limitation,
(i) the principal of and interest on the Securities (and any and all renewals,
extensions and refinancing thereof) and all other obligations and liabilities
(including, without limitation, indemnities and interest on all of the
foregoing) owed to the Secured Parties incurred under, arising under out of or
in connection with the Securities (and any and all renewals, extensions and
refinancing thereof) or any Finance Document; (ii) any and all sums advanced by
the Collateral Agent in order to preserve the Collateral or preserve the
security interests in the Collateral in accordance with the terms of the
Security Documents; and (iii) in the event of any proceeding for the collection
or enforcement of the Secured Obligations, after an Event of Default shall have
occurred and be continuing, the reasonable expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
the Collateral, or of any exercise by any Secured Party or its rights under any
of the Finance Documents, together with reasonable attorneys' fees and court
costs.
"Secured Parties" shall mean, collectively, the Bond Trustee, the
Collateral Agent, the Depositary Bank, the Holders and, with respect to the
Project Loans, Funding Company, and, with respect to the Trinidad Loans, the
Trinidad Guarantor, and any holder of senior indebtedness other than the
Securities or the Project Loans and any other Person that becomes a secured
party under any Finance Document.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Securities Register" shall have the meaning given to that term in Section
2.6.1(a) (Registrar and Paying Agent).
"Security" or "Securities" shall mean any of the Initial Securities and,
when issued, any of the Additional Securities issued pursuant to this Indenture.
"Security Documents" shall mean, collectively, the Intercreditor Agreement,
the Pledge Agreements, the Depositary Agreements, the BNY Security Documents,
the Warbasse Security Documents, the Big Spring Security Documents, the Trinidad
Security Documents, the U.S. Project Note Pledge Agreement and any other
document providing for any lien, pledge, encumbrance, mortgage or security
interest on any or all of the Collateral.
"Special Record Date" shall have the meaning given to that term in Section
2.4 (Record Dates).
"Sponsor" shall mean York Research Corporation, a Delaware corporation.
Appendix A-19
<PAGE>
"Subordinated Indebtedness" shall mean Indebtedness of a Trinidad Finance
Party to another Trinidad Finance Party which by its terms is incurred for the
sole purpose of permitting such Trinidad Finance Party to distribute all its
cash flow to another Trinidad Finance Party in order to make payments on the
Trinidad Project Loan or the Trinidad Loan and which is unsecured, unassignable,
subordinated to the Secured Obligations and all other unsubordinated
Indebtedness of such Trinidad Finance Party, payable only from distributions
permitted in accordance with the Trinidad Depositary Agreement and contains
other subordination provisions substantially in the form of Exhibit N hereto.
"Subscription Agreements" shall mean, individually and collectively, (i)
the Subscription Agreement, dated as of the Closing Date, between the Trinidad
U.S. Parent and the Trinidad Cayman Parent, (ii) the Subscription Agreement,
dated as of the Closing Date, between the Trinidad Cayman Parent and the
Trinidad Project Borrower and (iii) the Subscription Agreement, dated as of the
Closing Date, between the Trinidad Project Borrower and the Trinidad Guarantor.
"Subsidiary" shall mean, as to any Person, (i) any corporation more than
fifty percent (50%) of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person and/or one
or more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a fifty percent (50%) equity interest at the time.
"Substantial Completion" shall mean substantial completion and commercial
operation of the Big Spring Project or the Trinidad Project, as applicable, as
evidenced by the delivery to the Bond Trustee of an Officer's Certificate from
an Authorized Officer of the Big Spring Guarantor or the Trinidad Obligor, as
applicable, and the Independent Engineer substantially in the form of Exhibit L
hereto.
"Supplemental Indenture" shall mean an indenture supplemental to this
Indenture entered into by Funding Company and the Bond Trustee for the purpose
of establishing, in accordance with this Indenture, the title, form and terms of
the Securities.
"T&TEC" shall mean the Trinidad and Tobago Electricity Commission.
"Tax" and "Taxes" shall include all taxes, including without limitation,
income, windfall, profits, gains, franchise, gross receipts, transfer, license,
environmental, customs duty, capital stock, severance, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with interest, penalties and additions imposed with
respect to such amounts and any interest in respect of such penalties and
additions.
"Tax Returns" shall include all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to a Governmental Authority relating to Taxes.
"Termination Event" shall mean: (i) any "Reportable Event" described in
Section 4043(b) of ERISA, other than an event for which the 30 day notice
requirement is met under Section .13, .14, .18, .19 or .20 of PBGC Regulation
Section 2615; (ii) the withdrawal of Funding Company, DPC, PPC or any ERISA
Affiliate from a Pension Plan during a plan year in which it was a "substantial
employer" within the meaning of Section 4001(a)(2) of ERISA; (iii) the filing of
intent to terminate a Pension Plan, the
Appendix A-20
<PAGE>
treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA, the appointment of a trustee with respect thereto, or the termination of
a Pension Plan; (iv) the institution of proceedings to terminate a Pension Plan
or to appoint a trustee with respect to a Pension Plan by the PBGC; (v) any
other event or condition which would constitute grounds under Section 4042(a) of
ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (vi) the imposition of a lien pursuant to Section 412 of the Code
or Section 302 or 4068 of ERISA; (vii) the complete or partial withdrawal under
Section 4201 or 4204 of ERISA from a Multiemployer Plan; (viii) any event or
condition which results in the reorganization or insolvency of a Multiemployer
Plan under Section 4241 or 4245 of ERISA; or (ix) any event or condition which
results in the termination of a Multiemployer Plan under Section 4041A of ERISA
or the institution by the PBGC of proceedings to terminate a Multiemployer Plan
under Section 4042 of ERISA.
"Third Party Consent" shall mean each consent entered into by a party
(other than Funding Company) with respect to any Project Document.
"Transaction Documents" shall mean the Project Documents and the Finance
Documents.
"Transfer Restriction Legend" shall mean a legend substantially in the form
of Exhibit D.
"Trigger Event" shall have the meaning given to that term in Section 1.1 of
the Intercreditor Agreement.
"Trinidad" shall mean the Republic of Trinidad and Tobago.
"Trinidad Additional Reserve Account" shall mean the account described in
Section 2.2 of the Trinidad Depositary Agreement.
"Trinidad Cayman Parent" shall mean York Holdings (Caymans) LLC, an exempt
limited liability company incorporated under the laws of the Cayman Islands.
"Trinidad Charge and Security Agreement" shall mean the Charge and Security
Agreement, dated as of the Closing Date, among the Trinidad Guarantor, Ernst &
Young Trust Corporation, the Trinidad Obligor and the Collateral Agent.
"Trinidad Charge and Security Agreement Collateral" shall have the meaning
given to that term in Section 2.1 of the Trinidad Charge and Security Agreement.
"Trinidad Collateral" shall mean (i) the Trinidad Security Agreements
Collateral, (ii) the Trinidad Charge and Security Agreement Collateral, (ii) a
pledge of the equity interest in each of the Trinidad Cayman Parent, the
Trinidad Project Borrower and the Trinidad Guarantor and (iii) any other
collateral set forth in the Trinidad Security Documents.
"Trinidad Completion Certificate" shall mean a certificate substantially in
the form of Exhibit L hereto.
"Trinidad Construction Account" shall mean the account described in Section
2.2 of the Trinidad Depositary Agreement.
"Trinidad Construction Expenses" shall have the meaning given to that term
in Section 3.1 (Trinidad Construction Account) of the Trinidad Depositary
Agreement.
Appendix A-21
<PAGE>
"Trinidad Construction Requisition" shall mean a requisition certificate in
the form of Exhibit A to the Trinidad Depositary Agreement.
"Trinidad CPI" shall mean the Index of Real Prices, commonly referred to as
the "consumer price index," published by the Central Statistical Office, a
department of the Ministry of Finance or any successor Ministry of Finance of
Trinidad.
"Trinidad Default" shall mean an event or condition that, with the giving
of notice, lapse of time or failure to satisfy certain specified conditions, or
any combination thereof, would become a Trinidad Event of Default.
"Trinidad Depositary Accounts" shall have the meaning given to that term in
Section 2.2 of the Trinidad Depositary Agreement.
"Trinidad Depositary Agreement" shall mean the Trinidad Deposit and
Disbursement Agreement, dated as of the Closing Date, among Funding Company, the
Trinidad Project Borrower, the Trinidad Guarantor, the Trinidad Obligor, the
Collateral Agent and the Depositary Bank.
"Trinidad Distribution Account" shall mean the account described in Section
2.2 of the Trinidad Depositary Agreement.
"Trinidad Distribution Conditions" shall mean:
(1) Substantial Completion of the Big Spring Project and the Trinidad
Project shall have occurred;
(2) delivery to the Bond Trustee of an Officer's Certificate from an
Authorized Officer of each of the each of the Trinidad Finance Parties
certifying that no Default or Event of Default shall have occurred and be
continuing and that Funding Company and each Project Obligor shall have
fully complied with each of the reporting and information covenants set
forth herein or in the applicable Project Loan Agreement;
(3) delivery to the Bond Trustee of an Officer's Certificate from an
Authorized Officer of each of the Trinidad Finance Parties and the
Independent Engineer certifying that the (x) Debt Service Coverage Ratio
for the historical four quarters measured as one annual period, or in the
case of the first three Distribution Dates following Substantial Completion
of the Big Spring Project and the Trinidad Project, the preceding fiscal
quarters after Substantial Completion and (y) Projected Debt Service
Coverage Ratio for the succeeding four fiscal quarters taken as a whole
each equals or exceeds 1.25 to 1.0;
(4) the balance in the Debt Service Reserve Account equals or exceeds
the Debt Service Reserve Required Balance;
(5) the balances of all other Depositary Accounts and sub-accounts are
at least equal to their minimum required amounts in accordance with the
terms and provisions of the Depositary Agreement; provided that with
respect to the first distribution following Substantial Completion of each
of the Big Spring Project and the Trinidad Project, the balance in the
applicable Interest
Appendix A-22
<PAGE>
Account and Principal Account shall be equal to the amount required to be
on deposit in such account on the next Scheduled Payment Date; and
(6) neither Funding Company nor any Guarantor is insolvent and would
not be rendered insolvent by such distribution.
"Trinidad Distribution Suspense Account" shall mean the account described
in Section 2.2 of the Trinidad Depositary Agreement.
"Trinidad EES Contract" shall mean each of the Engineering and Equipment
Supply Agreements, dated as of June 26, 1998 between the Trinidad Obligor and
Duke/Fluor Daniel International.
"Trinidad Event of Default" shall have the meaning given to that term in
Section 5.1 (Event of Default) of each of the Trinidad Project Loan Agreement
and the Trinidad Loan Agreement.
"Trinidad Finance Parties" shall mean the Trinidad Project Borrower, the
Trinidad Guarantor and the Trinidad Obligor.
"Trinidad Government Agreement" shall mean the Government Agreement, dated
as of February 12, 1998 between the government of Trinidad and the Trinidad
Obligor.
"Trinidad Guarantee" shall mean the Guarantee, dated as of the Closing
Date, between the Trinidad Guarantor and the Bond Trustee and the Collateral
Agent for the benefit of Funding Company.
"Trinidad Guarantor" shall mean York Holdings (Barbados) SRL, a Barbados
society with restricted liability.
"Trinidad Guarantor Account" shall mean the account described in Section
2.2 of the Trinidad Depositary Agreement.
"Trinidad Interest Account" shall mean the account described in Section 2.2
of the Trinidad Depositary Agreement.
"Trinidad Loan" shall have the meaning given to that term in Section 2.1 of
the Trinidad Loan Agreement.
"Trinidad Loan Agreement" shall mean the Loan Agreement, dated as of the
Closing Date, between the Trinidad Guarantor and the Trinidad Obligor.
"Trinidad Local Account" shall have the meaning given to that term in
Section 2.2 of the Trinidad Depositary Agreement.
"Trinidad Loss Proceeds Account" shall mean the account described in
Section 2.2 of the Trinidad Depositary Agreement.
"Trinidad Maintenance Requirement" shall mean the amount specified by the
Independent Engineer to be the maintenance requirement for the applicable year
with respect to the Trinidad Project.
"Trinidad Maintenance Reserve Account" shall mean the account described in
Section 2.2 of the Trinidad Depositary Agreement.
Appendix A-23
<PAGE>
"Trinidad Mortgage Debenture" shall mean the Mortgage Debenture, dated as
of the Closing Date, between the Trinidad Obligor and the Trinidad Collateral
Agent.
"Trinidad Obligor" means InnCOGEN, Limited, a limited liability company
incorporated under the laws of Trinidad.
"Trinidad Permitted Project Indebtedness" shall have the meaning given to
that term in Section 4.14 (Permitted Indebtedness) of the Trinidad Project Loan
Agreement and Section 4.15 (Permitted Indebtedness) of the Trinidad Loan
Agreement.
"Trinidad Permitted Project Lien" shall have the meaning given to that term
in Section 4.15 (Permitted Liens) of each of the Trinidad Project Loan Agreement
and Section 4.16 (Permitted Liens) of the Trinidad Loan Agreement.
"Trinidad Pledge Agreement" shall mean each of (i) the Pledge Agreement,
dated as of the Closing Date, between the Trinidad U.S. Parent and the
Collateral Agent for the benefit of the Secured Parties with respect to the
equity interests in the Trinidad Cayman Parent, (ii) the Pledge Agreement, dated
as of the Closing Date, between the Trinidad Cayman Parent and the Collateral
Agent for the benefit of the Secured Parties with respect to the equity
interests in the Trinidad Project Borrower and (iii) the Pledge Agreement, dated
as of the Closing Date, between the Trinidad Project Borrower and the Collateral
Agent for the benefit of the Secured Parties with respect to the equity
interests in the Trinidad Guarantor.
"Trinidad PPA" shall mean the License Agreement and Agreement for Sale and
Purchase of Power, dated as of February 12, 1998, between the Trinidad Obligor
and T&TEC, including all amendments, supplements and modifications thereto.
"Trinidad Principal Account" shall mean the account described in Section
2.2 of the Trinidad Depositary Agreement.
"Trinidad Project" shall mean the 215 MW natural gas-fueled combustion
turbine electric generation facility to be constructed in Trinidad and owned by
the Trinidad Obligor.
"Trinidad Project Borrower" shall mean York Ex International SRL, a
Barbados exempt society with restricted liability.
"Trinidad Project Borrower Account" shall mean the account described in
Section 2.2 of the Trinidad Depositary Agreement.
"Trinidad Project Documents" shall mean the Trinidad PPA, the Trinidad
Government Agreement, the Trinidad EES Contract, the Trinidad Turnkey
Construction Contract, all Third Party Consents related to any other Trinidad
Project Document and all other energy sales and power contracts, steam supply
agreements, water supply agreements, construction contracts, operation and
maintenance agreement, leases, sub-leases, licenses, insurance policies and fuel
supply agreements related to the Trinidad Project.
"Trinidad Project Loan" shall have the meaning given to that term in
Section 2.1 of the Trinidad Project Loan Agreement.
Appendix A-24
<PAGE>
"Trinidad Project Loan Agreement" shall mean the Project Loan Agreement,
dated as of the Closing Date, between Funding Company and the Trinidad Project
Borrower.
"Trinidad Project Note" shall mean the promissory note or notes issued by
the Trinidad Project Borrower in favor of the Funding Company under the Trinidad
Project Loan Agreement.
"Trinidad Project Note Pledge Agreement" shall mean the Note Pledge
Agreement, dated as of the Closing Date, between Funding Company and the
Collateral Agent.
"Trinidad Redemption Account" shall mean the account described in Section
2.2 of the Trinidad Depositary Agreement.
"Trinidad Revenue Account" shall mean the account described in Section 2.2
of the Trinidad Depositary Agreement.
"Trinidad Security Agreement" shall mean (i) the Assignment and Security
Agreement, dated as of the Closing Date, between the Trinidad Project Borrower
and the Collateral Agent and (ii) the Assignment and Security Agreement, dated
of the Closing Date, between the Trinidad Obligor and the Collateral Agent.
"Trinidad Security Agreement Collateral" shall have the meaning given to
that term in Section 2.1 of each of the Trinidad Security Agreements.
"Trinidad Security Documents" shall mean each Trinidad Security Agreement,
each Trinidad Pledge Agreement, the Trinidad Charge and Security Agreement, the
Trinidad Mortgage Debenture, the Trinidad Project Note Pledge Agreement and all
other Security Documents securing the obligations of the Trinidad Project
Borrower, the Trinidad Guarantor and the Trinidad Obligor under the Trinidad
Guarantee, the Trinidad Project Note and the Trinidad Loan Agreement.
"Trinidad Taxes" shall mean any Taxes imposed by any Governmental Authority
of Trinidad.
"Trinidad Turnkey Construction Contract" shall mean the Turnkey
Construction Contract, dated June 26, 1998, between the Trinidad Obligor and
Duke/Fluor Daniel International.
"Trinidad U.S. Parent" shall mean York T&T Holdings, Inc., a Delaware
corporation.
"Trinidad U.S. Pledge Agreement" shall mean the Pledge Agreement, dated as
of the Closing Date, between the Sponsor and the Collateral Agent for the
benefit of the Secured Parties with respect to the equity interests of the
Trinidad U.S. Parent.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"TU Electric" shall mean Texas Utilities Electric Company, a Texas
corporation.
"Unaudited Financial Statements" shall mean, for any Person, with respect
to any fiscal period, the unaudited balance sheet of such Person as of the last
day of such fiscal period, the related statements of income and cash flows for
such period and (in the case of any period which does not terminate on the last
day of a fiscal year) for the portion of the fiscal year ending with the last
day of such period, setting forth, in each case, in comparative form,
corresponding unaudited figures from the preceding fiscal year.
Appendix A-25
<PAGE>
"Uniform Commercial Code" or "UCC" shall mean the Uniform Commercial Code
as the same may, from time to time, be in effect in the State of New York.
"Unrestricted Global Security" shall have the meaning given to such term in
Section 2.5.3 (Securities Sold Pursuant to Regulation S).
"U.S. Additional Reserve Account" shall mean the account described in
Section 2.2 of the U.S. Depositary Agreement .
"U.S. Debt Service Coverage Ratio" shall mean for any period the ratio of
(i) Cash Flow Available for Debt Service for such period generated or earned
with respect to any of the U.S. Projects and (ii) the aggregate of all Debt
Service due with respect to the U.S. Project Loan.
"U.S. Depositary Accounts" shall have the meaning given to that term in
Section 2.2 of the U.S. Depositary Agreement.
"U.S. Depositary Agreement" shall mean the U.S. Deposit and Disbursement
Agreement, dated as of the Closing Date, among Funding Company, the BNY
Guarantor, the Big Springs Guarantor, the Warbasse Guarantor, the Collateral
Agent and the Depositary Bank.
"U.S. Distribution Account" shall mean the account described in Section 2.2
of the U.S. Depositary Agreement.
"U.S. Distribution Conditions" shall mean:
(1) Substantial Completion of the Big Spring Project and the Trinidad
Project shall have occurred;
(2) delivery to the Bond Trustee of an Officer's Certificate from an
Authorized Officer of each of the U.S. Guarantors certifying that no
Default or Event of Default shall have occurred and be continuing and that
Funding Company and each Project Obligor shall have fully complied with
each of the reporting and information covenants set forth herein or in the
applicable Project Loan Agreement;
(3) delivery to the Bond Trustee of an Officer's Certificate from an
Authorized Officer of each of the U.S. Guarantors and the Independent
Engineer certifying that the (x) Debt Service Coverage Ratio and the U.S.
Debt Service Coverage Ratio for the historical four quarters, or in the
case of the first three Distribution Dates following Substantial Completion
of the Big Spring Project and the Trinidad Project, the preceding fiscal
quarters after Substantial Completion and (y) Projected Debt Service
Coverage Ratio and the U.S. Project Debt Service Coverage Ratio for the
succeeding four fiscal quarters taken as a whole each equals or exceeds
1.25 to 1.0;
(4) the balance in the Debt Service Reserve Account equals or exceeds
the Debt Service Reserve Required Balance;
(5) the balances of all other Depositary Accounts and sub-accounts are
at least equal to their minimum required amounts in accordance with the
terms and provisions of the Depositary Agreement; provided that with
respect to the first distribution following Substantial Completion
Appendix A-26
<PAGE>
of each of the Big Spring Project and the Trinidad Project, the balance in
the applicable Interest Account and Principal Account shall be equal to the
amount required to be on deposit in such account on the next Scheduled
Payment Date; and
(6) neither Funding Company nor any Guarantor is insolvent and would
not be rendered insolvent by such distribution.
"U.S. Distribution Suspense Account" shall mean the account described in
Section 2.2 of the U.S. Depositary Agreement.
"U.S. Government Obligations" shall mean direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States (including any agency or instrumentality thereof) for the payment
of which the full faith and credit of the United States is pledged and which are
not callable at the issuer's option.
"U.S. Guarantees" shall mean, individually and collectively, the BNY
Guarantee, the Warbasse Guarantee and the Big Spring Guarantee.
"U.S. Guarantors" shall mean, individually and collectively, the BNY
Guarantor, the Warbasse Guarantor and the Big Springs Guarantor.
"U.S. Interest Account" shall mean the account described in Section 2.2 of
the U.S. Depositary Agreement.
"U.S. Loss Proceeds Account" shall mean the account described in Section
2.2 of the U.S. Depositary Agreement.
"U.S. Major Maintenance Account" shall mean the account described in
Section 2.2 of the U.S. Depositary Agreement.
"U.S. Permitted Project Indebtedness" shall have the meaning given to that
term in Section 4.16 of the U.S. Project Loan Agreement.
"U.S. Permitted Project Liens" shall have the meaning given to that term in
Section 4.17 of the U.S. Project Loan Agreement.
"U.S. Principal Account" shall mean the account described in Section 2.2 of
the U.S. Depositary Agreement.
"U.S. Project Loan" shall have the meaning given to that term in Section
2.1 of the U.S. Project Loan Agreement.
"U.S. Project Loan Agreement" shall mean the Project Loan Agreement, dated
as of the Closing Date, between Funding Company, the BNY Guarantor, the Warbasse
Guarantor and the Big Spring Guarantor.
"U.S. Project Loan Default" shall mean an event or condition that, with the
giving of notice, lapse of time or failure to satisfy the specified conditions,
or any combination thereof, would become a U.S. Project Loan Event of Default.
Appendix A-27
<PAGE>
"U.S. Project Loan Event of Default" shall have the meaning given to that
term in Section 5.1 of the U.S. Project Loan Agreement.
"U.S. Project Note" shall have the meaning given to that term in Section
2.1 of the U.S. Project Loan Agreement.
"U.S. Project Note Pledge Agreement" shall mean the Note Pledge Agreement,
dated as of the Closing Date, between the Collateral Agent and Funding Company.
"U.S. Projects" shall mean, individually and collectively, the BNY Project,
the Warbasse Project and the Big Springs Project.
"U.S. Project Documents" shall mean, individually and collectively, the BNY
Project Documents, the Warbasse Project Documents and the Big Springs Project
Documents.
"U.S. Projected Debt Service Coverage Ratio" shall mean for any period, on
any date of determination, a projection of the U.S. Debt Service Coverage Ratio
for the applicable period.
"U.S. Redemption Account" shall mean the account described in Section 2.2
of the U.S. Depositary Agreement.
"U.S. Revenue Account" shall mean the account described in Section 2.2 of
the U.S. Depositary Agreement.
"Vestas" shall mean Vestas-American Wind Technology, Inc., a corporation
organized and existing under the laws of the State of California.
"Vestas Agreement" shall mean the Wind Turbine Equipment Sales and
Installation Contract, dated as of March 31, 1998, between the Big Spring
Guarantor and Vestas.
"Warbasse Collateral" shall mean (i) the Warbasse Security Agreement
Collateral, (ii) a pledge of the equity interests in each of the Warbasse
Guarantors, (iii) an assignment of the Warbasse Notes and (iv) any other
collateral set forth in the Warbasse Security Agreement and the Warbasse Pledge
Agreement.
"Warbasse Guarantee" shall mean the Guarantee, dated as of the Closing
Date, between the Warbasse Guarantor and the Bond Trustee and the Collateral
Agent for the benefit of the Secured Parties.
"Warbasse Guarantor" shall mean, individually and collectively, Warbasse
Power I LLC and Warbasse Power II LLC.
"Warbasse Notes" shall mean (i) the promissory note, dated as of November
17, 1994, executed by the Warbasse Project Company in favor of Cogeneration
Technologies, Inc., as such note has been assigned to Warbasse Power I, LLC and
(ii) the promissory note, dated as of June 8, 1989, executed by the Warbasse
Project Company in favor of Sanwa Business Credit Corporation, as amended and
assigned pursuant to the Amendment and Consent, dated as of November 17, 1994,
between the Warbasse Project Company and B-41 L.P., as such note has been
assigned to Warbasse Power II, LLC.
Appendix A-28
<PAGE>
"Warbasse Pledge Agreements" shall mean the (i) Pledge Agreement, dated as
of the Closing Date, between Cogeneration Technologies, Inc. and the Collateral
Agent for the benefit of the Secured Parties with respect to the membership
interests in Warbasse I and (ii) the Pledge Agreement, dated as of the Closing
Date, between York Cogen Partners, L.P. and the Collateral Agent for the benefit
of the Secured Parties with respect to the membership interests in Warbasse II.
"Warbasse PPA" shall mean, individually and collectively, (i) the Energy
Purchase and Sale Agreement, dated as of July 15, 1987, between the Warbasse
Project Company and Amalgamated Warbasse Houses, Inc. and (ii) the Power
Purchase Agreement, dated as of April 14, 1989, between the Warbasse Project
Company and Consolidated Edison Company of New York, Inc..
"Warbasse Project" shall mean the 28 MW operating natural gas fueled
cogeneration project located in Brooklyn, New York and owned by the Warbasse
Project Company.
"Warbasse Project Company" shall mean Warbasse Cogeneration Technologies
Partners, L.P.
"Warbasse Project Documents" shall mean the Warbasse PPA, all Third Party
Consents related to any other Warbasse Project Document, the Warbasse Notes and
all other energy sales and power contracts, fuel agreements, construction
contracts, operation and maintenance agreement, leases, insurance policies and
fuel supply agreements related to the Warbasse Project.
"Warbasse Security Agreement" shall mean the Assignment and Security
Agreement, dated of the Closing Date, between the Warbasse Guarantor and the
Collateral Agent.
"Warbasse Security Agreement Collateral" shall have the meaning given to
that term in Section 2.1 of the Warbasse Security Agreement.
"Warbasse Security Documents" shall mean the Warbasse Security Agreement,
the Warbasse Pledge Agreement and all other Security Documents securing the
obligations of the Warbasse Guarantors under the Warbasse Guarantee and the U.S.
Project Note.
Appendix A-29
<PAGE>
EXHIBIT A
FORM OF FACE OF SECURITY
THIS SECURITY IS A RESTRICTED GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS HELD BY THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION ("DTC"), OR A NOMINEE OF DTC. THIS SECURITY IS EXCHANGEABLE
FOR SECURITIES HELD BY A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE
OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY) MAY BE MADE EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS RESTRICTED GLOBAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC TO FUNDING COMPANY OR ITS AGENT FOR EXCHANGE OR PAYMENT,
AND ANY DEFINITIVE SECURITY IS ISSUED IN THE NAME OR NAMES AS DIRECTED IN
WRITING BY DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE BEARER HEREOF, DTC, HAS AN
INTEREST HEREIN.
THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
("SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND SUCH SECURITIES OR ANY
INTEREST OR PARTICIPATION THEREIN MAY NOT BE REOFFERED, SOLD PLEDGED, ASSIGNED,
TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
RESELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE ("RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH FUNDING COMPANY OR
ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY), ONLY (A) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (B)
FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON THE HOLDER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, (C) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, OR (D) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE).
Exhibit A-1
<PAGE>
York Power Funding (Cayman) Limited
12.0% Senior Secured Bonds Due 2007
CUSIP Number: [ ]
------------------
Principal Amount: $150,000,000
Maturity Date: October 30, 2007
Issue Date: August 4, 1998
Interest Rate: 12.0%
Registered Holder: Cede & Co.
York Power Funding (Cayman) Limited, an exempted limited liability
company incorporated under the laws of the Cayman Islands (the "Funding
Company"), which term includes any successor or assign under the Indenture
referred to below), for value received hereby promises to pay to Cede & Co., or
its registered assigns, on each date (each a "Scheduled Payment Date") the
principal sum corresponding to such Scheduled Payment Date set forth on the
Schedule I of the Indenture, or on such earlier date as the entire principal
hereof may become due in accordance with the provisions hereof, and to pay
interest in arrears on each April 30 and October 30 (each an "Interest Payment
Date"), commencing October 30, 1998, on said principal sum at the rate of 12.0%
per annum. Interest shall accrue from and including the most recent date to
which interest has been paid or duly provided for, from October 30, 1998 until
payment of said principal sum has been made or duly provided for. The interest
payable on any such Interest Payment Date will, subject to certain conditions
set forth herein, be paid to the person in whose name this Security is
registered at the end of the fifteenth day next preceding each Interest Payment
Date. Such payments shall be made exclusively in such coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
The statements in the legend set forth above, if any, are an integral
part of the terms of this Security and by acceptance hereof the holder of this
Security agrees to be subject to and bound by the terms and provisions set forth
in such legend, if any.
REFERENCE IS MADE TO THE FURTHER PROVISIONS SET FORTH UNDER THE TERMS
AND CONDITIONS OF THE SECURITIES ENDORSED ON THE REVERSE HEREOF. SUCH FURTHER
PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH
AT THIS PLACE.
Unless the certificate of authentication hereon has been executed by
the Bond Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, Funding Company has caused this instrument to be
duly executed.
Dated: [ ]
Exhibit A-2
<PAGE>
YORK POWER FUNDING (CAYMAN) LIMITED
By:
--------------------------------
Name:
Title:
This is one of the Securities described in the within-mentioned
Indenture.
THE BANK OF NEW YORK
as Bond Trustee
By:
--------------------------------
Authorized Signatory
Exhibit A-3
<PAGE>
EXHIBIT B
FORM OF TERMS AND CONDITIONS OF SECURITIES
Principal Amount: $150,000,000
Interest Rate: 12.0%
Payment Dates: April 30 and October 30
(commencing October 30, 1998)
Minimum Denominations: US$100,000 and integral multiples of
$1,000 in excess thereof.
Other Terms:
1. General. This Security is one of a duly authorized issue of debt
securities (the "Securities") of York Power Funding (Cayman) Limited (the
"Funding Company") issued pursuant to an Indenture (the "Indenture") dated as of
August 4, 1998, between Funding Company and The Bank of New York, as Bond
Trustee. All capitalized terms used but not otherwise defined herein shall have
the meanings given to such terms in Appendix A of the Indenture. The holders of
the Securities will be entitled to the benefits of, be bound by, and be deemed
to have notice of, all of the provisions of the Indenture. A copy of the
Indenture is on file and may be inspected at the corporate trust office of the
Bond Trustee in The City of New York, at the offices of the paying agents listed
at the foot of this Security and at the principal office of Funding Company set
forth in Section 18 (Indentures) hereto.
2. Payments and Paying Agencies. (a) All payments on this Security
shall be made exclusively in immediately available funds and in such coin or
currency of the United States of America which, at the time of payment, is legal
tender for the payment of public and private debts.
(b) The Person in whose name any Security is registered at the close of
business on any Regular Record Date with respect to any Scheduled Payment Date
shall be entitled to receive the principal, premium (if any) and/or interest
payable on such Scheduled Payment Date notwithstanding the cancellation of such
Security upon any transfer or exchange thereof subsequent to such Regular Record
Date and prior to such Scheduled Payment Date; provided, however, that if and to
the extent there is a default in the payment of the principal, premium (if any)
and/or interest due on such Scheduled Payment Date, such defaulted principal,
premium (if any) and/or interest shall be paid to the Persons in whose names
Outstanding Securities are registered at the close of business on a subsequent
date (each such date, a "Special Record Date"), which shall not be less than
five (5) days preceding the date of payment of such defaulted principal, premium
(if any) and/or interest, established by a notice mailed by the Bond Trustee to
the registered owners of the Securities in accordance with Section 11.5(b)
(Notices) of the Indenture not less than fifteen (15) days prior to the Special
Record Date.
(c) If any date for the payment of principal of, premium (if any) or
interest on the Securities is not a Business Day, such payment shall be due on
the first Business Day thereafter. Any payment made on such next succeeding
business day shall have the same force and effect as if made on the date on
which such payment is due, and no interest shall accrue for the period after
such date.
(d) Interest shall be calculated on the basis of a 360-day year of
twelve 30-day months.
Exhibit B-1
<PAGE>
3. Amendments and Supplements to Indenture.
(a) Without Consent of Holders.
Subject to the Intercreditor Agreement, the Indenture may be amended or
supplemented by Funding Company and the Bond Trustee at any time and from time
to time, without the consent of the Holders by a Supplemental Indenture
authorized by a resolution of the Board of Directors of Funding Company filed
with, and in form satisfactory to, the Bond Trustee, solely for one or more of
the following purposes:
(i) to add additional covenants of Funding Company, to surrender any
right or power herein conferred upon Funding Company or to confer upon the
Holders any additional rights, remedies, benefits, powers or authorities
that may lawfully be conferred;
(ii) to increase the assets securing Funding Company's obligations
under the Indenture;
(iii) to provide for the issuance of Additional Securities on the
conditions set forth in Section 2.3 (Additional Securities) of the
Indenture;
(iv) for any purpose not inconsistent with the terms of the Indenture
to cure any ambiguity or to correct or supplement any provision contained
herein or in any Supplemental Indenture which may be defective or
inconsistent with any other provision contained herein or in any
Supplemental Indenture; or
(v) in connection with, and to reflect, any amendments to the
provisions hereof required by the Rating Agencies in circumstances where
confirmation of the Ratings are required under the Indenture in connection
with the issuance of Additional Securities or the taking of other actions
by Funding Company; provided, however, that such amendments are not, in the
judgment of the Bond Trustee, to the prejudice of the Bond Trustee or the
Holders.
(b) With Consent of Holders.
Subject to the Intercreditor Agreement, the Indenture may be
amended or supplemented by Funding Company and the Bond Trustee at any time and
from time to time, with the consent of the Majority Holders, for the purpose of
adding any mutually agreeable provisions to or changing in any manner or
eliminating any of the provisions of, the Indenture, except with respect to (a)
the principal, premium (if any) or interest payable upon any Securities, (b) the
dates on which interest on or principal of any Securities is paid, (c) the dates
of maturity of any Securities and (d) Article 7 (Supplemental Indentures) of the
Indenture. Subject to the Intercreditor Agreement, the matters of the Indenture
described in clauses (a) through (d) of the preceding sentence may be amended or
supplemented by Funding Company and the Bond Trustee at any time and from time
to time only with the consent of the One Hundred Percent Holders. Notice of any
such amendment shall be given by Funding Company to any Rating Agency then
maintaining a Rating for the Securities.
4. Replacement, Exchange and Transfer of Securities. (a) If any
Security shall become mutilated, Funding Company shall execute, and the Bond
Trustee shall authenticate and deliver, a new Security of like tenor, maturity
and denomination in exchange and substitution for the Security so mutilated, but
only upon surrender to the Bond Trustee of such mutilated Security for
cancellation, and Funding Company or the Bond Trustee may require reasonable
indemnity therefor. If any Security shall
Exhibit B-2
<PAGE>
be reported lost, stolen or destroyed, evidence as to the ownership and the
loss, theft or destruction thereof shall be submitted to the Bond Trustee. If
such evidence shall be satisfactory to both the Bond Trustee and Funding Company
and indemnity satisfactory to both shall be given, Funding Company shall
execute, and thereupon the Bond Trustee shall authenticate and deliver, a new
Security of like tenor, maturity and denomination. The cost of providing any
substitute Security under the provisions of Section 2.10 (Mutilated, Destroyed,
Lost or Stolen Securities) of the Indenture shall be borne by the Holder for
whose benefit such substitute Security is provided. If any such mutilated, lost,
stolen or destroyed Security shall have matured or be about to mature, Funding
Company may, with the consent of the Bond Trustee, pay to the Holder thereof the
principal amount of such Security upon the maturity thereof and compliance with
the aforesaid conditions by such Holder, without the issuance of a substitute
Security therefor, and likewise pay to the Holder the amount of the unpaid
interest, if any, which would have been paid on a substitute Security had one
been issued.
(b) Every substitute Security issued pursuant to Section 2.10
(Mutilated, Destroyed, Lost or Stolen Securities) of the Indenture shall
constitute an additional contractual obligation of Funding Company, whether or
not the Security alleged to have been mutilated, destroyed, lost or stolen shall
be at any time enforceable by anyone, and shall be entitled to all the benefits
of this Indenture equally and proportionally with any and all other Securities
duly issued hereunder.
(c) All Securities shall be held and owned upon the express condition
that the foregoing provisions are, to the extent permitted by Applicable Law,
exclusive with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities, and shall preclude any and all other rights and
remedies with respect thereto.
5. Bond Trustee. For a description of the duties and the immunities and
rights of the Bond Trustee under the Indenture, reference is made to the
Indenture, and the obligations of the Bond Trustee to the holder hereof are
subject to such immunities and rights.
6. Paying Agents; Authenticating Agents; Registrars. Funding Company
has initially appointed the Bond Trustee as Paying Agent, Authenticating Agent
and Registrar. Funding Company may, subject to the terms of the Indenture, at
any time appoint additional or other paying agents, transfer agents and
registrars and terminate the appointment thereof, provided, that while the
Securities are Outstanding, Funding Company will maintain offices or agencies
for payment of principal of and interest on this Security as herein provided in
the Borough of Manhattan, The City of New York. Notice of any such termination
or appointment and of any change in the office through which any paying agent,
transfer agent or registrar will act will be promptly given in the manner
described in Section 8 (Notices) hereof.
7. Enforcement. (a) Subject to the Intercreditor Agreement and the
other provisions of Article 5 (Events of Default; Remedies) of the Indenture, a
Holder shall not have the right to institute any suit, action or proceeding at
law or in equity or otherwise for the appointment of a receiver or for the
enforcement of any other remedy under or upon this Indenture, unless:
(i) such Holder shall have previously given written notice to the Bond
Trustee of a continuing Event of Default;
(ii) Holders representing the percentage of aggregate principal amount
of Outstanding Securities needed to initiate the exercise of remedies shall
have requested the Bond Trustee in writing to institute such suit, action
or proceeding;
Exhibit B-3
<PAGE>
(iii) the Bond Trustee shall have refused or neglected to institute any
such suit, action or proceeding for sixty (60) days after receipt of such
notice by the Bond Trustee; and
(iv) no direction inconsistent with such written request has been given
to the Bond Trustee during such sixty (60) day period by the Majority
Holders.
(b) Subject to the Intercreditor Agreement, it is understood and
intended that one or more of the Holders shall not have any right in any manner
whatsoever hereunder or under the Securities to (i) surrender, impair, waive,
affect, disturb or prejudice the Lien of the Security Documents on any property
subject thereto or the rights of any other Holders, (ii) obtain or seek to
obtain priority or preference over any other Holders or (iii) enforce any right
under the Indenture, except in the manner provided herein or in the Indenture
and for the equal, ratable and common benefit of all of the Holders.
8. Notices. Notices will be mailed to Holders at their registered
addresses. Notice sent by first class mail, postage prepaid, shall be deemed to
have been given on the date of such mailing. In addition, Funding Company will
cause all such other publications of such notices as may be required from time
to time by Applicable Law.
9. Redemption at the Option of Funding Company. The Securities are,
under certain conditions, subject to redemption at the option of Funding Company
as set forth in Section 3.1 (Redemption at the Option of Funding Company or the
Holders) of the Indenture.
10. Redemption at the Option of the Holders. The Securities are, under
certain conditions, subject to redemption at the option of the Holders as set
forth in Section 3.1 (Redemption at the Option of Funding Company or the
Holders) of the Indenture.
11. Mandatory Redemption. The Securities are subject to mandatory
redemption under certain circumstances as set forth in Section 3.2 (Mandatory
Redemption) of the Indenture.
12. Authentication. This Security shall not be valid for any purpose
until an Authorized Representative of the Bond Trustee manually signs the
certificate of authentication hereon substantially in the form set forth in
Exhibit A to the Indenture.
13. Governing Law. This Security is a contract made under the laws of
the State of New York of the United States and shall for all purposes be
governed by and construed in accordance with the laws of such State without
regard to the conflict of law rules thereof (other than Section 5-1401 of the
New York General Obligations Law).
14. Warranty by Issuer. Subject to Section 12 (Authentication), Funding
Company hereby certifies and warrants that all acts, conditions and things
required to be done and performed and to have happened precedent to the creation
and issuance of this Security, and to constitute the same a legal, valid and
binding obligation of Funding Company enforceable in accordance with its terms,
have been done and performed and have happened in due and strict compliance with
all Applicable Laws.
15. Bond Trustee Dealings with Funding Company. Subject to certain
limitations imposed by the Act, the Bond Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Securities
and may otherwise deal with and collect obligations owed to it by Funding
Company or its Affiliates and may otherwise deal with Funding Company or its
Affiliates with the same rights it would have it if were not Bond Trustee.
Exhibit B-4
<PAGE>
16. No Recourse Against Others. A director, officer, employee, partner,
affiliate, agent, servant or stockholder, as such, of Funding Company or the
Bond Trustee shall not have any liability for any obligations of Funding Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. The Securities shall be
payable from, and recourse solely to, the assets of Funding Company other than
its paid-up share capital, transaction fees and monies derived therefrom. By
accepting a Security, each Holder waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the
Securities.
17. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, Funding Company has
caused CUSIP numbers to be printed on the Securities and has directed the Bond
Trustee to use CUSIP numbers in notices of redemption as a convenience to
Security holders. No representation is made as to the accuracy of such numbers
either as printed on the Securities or as contained in any notice of redemption
and reliance may be placed only on the other identification number placed
thereon. Funding Company will promptly notify the Bond Trustee of any change in
the CUSIP numbers.
18. Indentures. Funding Company will furnish to any Holder upon written
request and without charge a copy of the Indenture. Requests may be made to:
York Power Funding (Cayman) Limited, c/o Queensgate SPV Services, Limited, P.O.
Box 1093 GT, Compass Center, 2nd Floor, Crewe Road, Grand Cayman, Cayman
Islands.
19. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as TEN COM (Tenants in Common), TEN ENT (Tenants by
the Entireties), JT TEN (Joint Tenants with Rights of Survivorship and not as
Tenants in Common), CUST (Custodian), and U/G/M/A (Uniform Gift to Minors Act).
20. Descriptive Headings. The descriptive headings appearing in these
Terms and Conditions are for convenience of reference only and shall not alter,
limit or define the provisions thereof.
Exhibit B-5
<PAGE>
EXHIBIT C
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby transfers to
- --------------------------------------------------------------------------------
(PRINT NAME AND ADDRESS OF TRANSFEREE)
U.S. $___________ principal amount of this Security, and all rights with respect
thereto, and irrevocably constitutes and appoints _____________________ as
attorney to transfer this Security on the books kept for registration thereof,
with full power of substitution.
Dated
-------------------------- ---------------------
Signed
-------------------------
Note:
(i) The signature on this transfer form must correspond to the name as
it appears on the face of this Security.
(ii) A representative of the Holder should state the capacity in which
he or she signs (e.g., executor).
(iii) The signature of the person effecting the transfer shall conform
to any list of duly authorized specimen signatures supplied by the
registered holder or shall be certified by a bank which is a member of the
Medallion Program or in such other manner as the Paying Agent, acting in
its capacity as transfer agent or the Bond trustee, acting in its capacity
as Registrar, may require.
Exhibit C-1
<PAGE>
EXHIBIT D
FORM OF TRANSFER RESTRICTION LEGEND
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
RESELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE ("RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY), ONLY (A) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO OFFERS AND
SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, OR (D) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE).
Exhibit D-1
<PAGE>
EXHIBIT E
FORM OF REGULATION S TRANSFER CERTIFICATE
[date]
[Name of Registrar]
[Address of Registrar]
Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of [__________],
between York Power Funding (Cayman) Limited, as Issuer and The Bank of New York,
as Bond Trustee. Capitalized terms used but not defined herein shall have the
respective meanings given to such terms in the Indenture or Regulation S, as the
case may be.
[Insert the following paragraph for any transfer made pursuant to Section
2.7.2(b) (Transfers and Exchanges of Global Securities and Beneficial Interests
Therein):
This certificate relates to US$__________ principal amount of
Securities which are held in the form of a beneficial interest in the Restricted
Global Security (CUSIP No.__________) with the Depositary in the name of [insert
name of transferor] (the "Transferor"). The Transferor has requested a transfer
of such beneficial interest for a beneficial interest in the Unrestricted Global
Security (CUSIP No.__________) to be held with [Euroclear] [Cedel] (Common Code
No.__________) through the Depositary in the name of [insert name of transferee]
(the "Transferee").]
[Insert the following paragraph for any transfer made pursuant to Section
2.7.2(c) (Transfers and Exchanges of Global Securities and Beneficial Interests
Therein):
This certificate relates to US$__________ principal amount of
Securities which are held in the form of a beneficial interest in the
Restricted Global Security (CUSIP No.__________) with the Depositary in the
name of [insert name of transferor] (the "Transferor"). The Transferor has
requested a transfer of such beneficial interest for a beneficial interest in
the Unrestricted Global Security (CUSIP No.__________) to be held
[with [Euroclear] [Cedel]] through the Depositary in the name of
[insert name of transferee] (the "Transferee").]
[Insert the following paragraph for any transfer made pursuant to Section
2.7.2(f) (Transfers and Exchanges of Global Securities and Beneficial
Interests Therein):
This certificate relates to US$__________ principal amount of
Securities which are held in the form of a beneficial interest in the
Restricted Global Security (CUSIP No.__________) with the Depositary in
the name of [insert name of transferor] (the "Transferor"). The
Transferor has requested a transfer of such beneficial interest for one
or more Certificated Securities to be registered in the name of
[insert name of transferee] (the "Transferee").]
[Insert the following paragraph for any transfer made pursuant to
Section 2.7.2(g) (Transfers and Exchanges of Global Securities and
Beneficial Interests Therein):
Exhibit E-1
<PAGE>
This certificate relates to US$________________ principal amount of
Securities which are held in the form of a beneficial interest in the IAI Global
Security (CUSIP No. ______________) with the Depositary in the name of [insert
name of transferor] (the "Transferor"). The Transferor has requested a transfer
of such beneficial interest for one or more Certificated Securities to be
registered in the name of [insert name of transferee] (the "Transferee").]
[Insert the following paragraph for any transfer made pursuant to Section
2.7.3(a) (Transfers and Exchanges of Certificated Securities):
This certificate relates to US$__________ principal amount of
Securities which are held in the form of one or more Certificated Securities
registered in the name of [insert name of transferor] (the "Transferor"). The
Transferor has requested a transfer of such Certificated Securities for one or
more Certificated Securities to be registered in the name of [insert name of
transferee] (the "Transferee").]
[Insert the following paragraph for any transfer made pursuant to Section
2.7.3(c) (Transfers and Exchanges of Certificated Securities):
This certificate relates to US$__________ principal amount of
Securities which are held in the form of one or more Certificated Securities
registered in the name of [insert name of transferor] (the "Transferor"). The
Transferor has requested a transfer of such Certificated Securities for a
beneficial interest in the Unrestricted Global Security (CUSIP No.__________) to
be held [with [Euroclear] [Cedel]] through the Depositary in the name of [insert
name of transferee] (the "Transferee").]
In connection with such request for transfer and in respect of such
Securities, the Transferor does hereby certify that such transfer is being
effected in accordance with the transfer restrictions set forth in the Indenture
and the Securities and pursuant to and in accordance with Regulation S, and
accordingly the Transferor does hereby certify:
(1) the offer of such Securities was not made to a person in the
United States;
(2) either (a) at the time the buy order for such Securities was
originated, the Transferee was outside the United States or the Transferor
and any person acting on its behalf reasonably believed that the Transferee
was outside the United States or (b) the transaction was executed in, or
through the facilities of, a designated offshore securities market and
neither the Transferor nor any person acting on its behalf knew that the
transaction was pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or 904(b) of the
Securities Act, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
[Add the following for transfers made during the Regulation S Restricted Period:
In addition, (A) if the provisions of Rule 903(c)(3) or Rule 904(c)(1)
of the Securities Act are applicable to the transaction, the Transferor hereby
certifies that the transfer is being made in accordance with the requirements of
Rule 903(c)(3) or Rule 904(c)(1), as the case may be, and (B) upon completion of
the transaction, the Transferee will hold the transferred beneficial interest
through Euroclear or Cedel.]
Exhibit E-2
<PAGE>
You and Funding Company are entitled to rely upon this certificate and
are irrevocably authorized to produce this certificate or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
[Name of Transferor]
By:
------------------------------------------
Name:
Title:
Exhibit E-3
<PAGE>
EXHIBIT F
FORM OF RULE 144 TRANSFER CERTIFICATE
[date]
[Name of Registrar]
[Address of Registrar]
Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of [__________],
between York Power Funding (Cayman) Limited, as Issuer, and The Bank of New
York, as Bond Trustee. Capitalized terms used but not defined herein shall have
the respective meanings given to such terms in the Indenture or Rule 144, as the
case may be.
[Insert the following paragraph for any transfer made pursuant to Section
2.7.2(c) (Transfers and Exchanges of Global Securities and Beneficial Interests
Therein):
This certificate relates to US$__________ principal amount of
Securities which are held in the form of a beneficial interest in the Restricted
Global Security (CUSIP No.__________) with the Depositary in the name of [insert
name of transferor] (the "Transferor"). The Transferor has requested a transfer
of such beneficial interest for a beneficial interest in the Unrestricted Global
Security (CUSIP No.__________) to be held with the Depositary in the name of
[insert name of transferee] (the "Transferee").]
[Insert the following paragraph for any transfer made pursuant to Section
2.7.2(f) (Transfers and Exchanges of Global Securities and Beneficial Interests
Therein):
This certificate relates to US$__________ principal amount of
Securities which are held in the form of a beneficial interest in the Restricted
Global Security (CUSIP No.__________) with the Depositary in the name of [insert
name of transferor] (the "Transferor"). The Transferor has requested a transfer
of such beneficial interest for one or more Certificated Securities to be
registered in the name of [insert name of transferee] (the "Transferee").]
[Insert the following paragraph for any transfer made pursuant to Section
2.7.2(g) (Transfers and Exchanges of Global Securities and Beneficial Interests
Therein):
This certificate relates to US$__________ principal amount of
Securities which are held in the form of a beneficial interest in the
Unrestricted Global Security (CUSIP No.__________) with the Depositary in
the name of [insert name of transferor] (the "Transferor"). The Transferor
has requested a transfer of such beneficial interest for one or more
Certificated Securities to be registered in the name of [insert name of
transferee] (the "Transferee").]
[Insert the following paragraph for any transfer made pursuant to Section
2.7.3(a) (Transfers and Exchanges of Certificated Securities):
Exhibit F-1
<PAGE>
This certificate relates to US$__________ principal amount of
Securities which are held in the form of one or more Certificated Securities
registered in the name of [insert name of transferor] (the "Transferor"). The
Transferor has requested a transfer of such Certificated Securities for one or
more Certificated Securities to be registered in the name of [insert name of
transferee] (the "Transferee").]
In connection with such request for transfer and in respect of such
Securities, the Transferor does hereby certify that such transfer has been
effected in accordance with the transfer restrictions set forth in the Indenture
and the Securities, and that the Securities are being transferred in a
transaction permitted by Rule 144 under the Securities Act.
You and Funding Company are entitled to rely upon this certificate and
are irrevocably authorized to produce this certificate or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
[Name of Transferor]
By:
------------------------------------------
Name:
Title:
Exhibit F-2
<PAGE>
EXHIBIT G
FORM OF RULE 144A TRANSFER CERTIFICATE
[date]
[Name of Registrar]
[Address of Registrar]
Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of [__________],
between York Power Funding (Cayman) Limited, as Issuer, and The Bank of New
York, as Bond Trustee. Capitalized terms used but not defined herein shall have
the respective meanings given to such terms in the Indenture or Rule 144A, as
the case may be.
[Insert the following paragraph for any transfer made pursuant to Section
2.7.2(d) (Transfers and Exchanges of Global Securities and Beneficial Interests
Therein):
This certificate relates to US$__________ principal amount of
Securities which are held in the form of a beneficial interest in the
Unrestricted Global Security (CUSIP No.__________) with the Depositary in the
name of [insert name of transferor] (the "Transferor"). The Transferor has
requested a transfer of such beneficial interest for a beneficial interest in
the Restricted Global Security (CUSIP No.__________) to be held with the
Depositary in the name of [insert name of transferee] (the "Transferee").]
[Insert the following paragraph for any transfer made pursuant to Section
2.7.2(f) (Transfers and Exchanges of Global Securities and Beneficial Interests
Therein):
This certificate relates to US$__________ principal amount of
Securities which are held in the form of a beneficial interest in the Restricted
Global Security (CUSIP No.__________) with the Depositary in the name of [insert
name of transferor] (the "Transferor"). The Transferor has requested a transfer
of such beneficial interest for one or more Certificated Securities to be
registered in the name of [insert name of transferee] (the "Transferee").]
[Insert the following paragraph for any transfer made pursuant to Section
2.7.2(g) (Transfers and Exchanges of Global Securities and Beneficial Interests
Therein):
This certificate relates to US$__________ principal amount of
Securities which are held in the form of a beneficial interest in the
Unrestricted Global Security (CUSIP No.__________) with the Depositary in
the name of [insert name of transferor] (the "Transferor"). The Transferor
has requested a transfer of such beneficial interest for one or more
Certificated Securities to be registered in the name of [insert name of
transferee] (the "Transferee").]
[Insert the following paragraph for any transfer made pursuant to Section
2.7.3(a) (Transfers and Exchanges of Certificated Securities):
Exhibit G-1
<PAGE>
This certificate relates to US$__________ principal amount of
Securities which are held in the form of one or more Certificated Securities
registered in the name of [insert name of transferor] (the "Transferor"). The
Transferor has requested a transfer of such Certificated Securities for one or
more Certificated Securities to be registered in the name of [insert name of
transferee] (the "Transferee").]
[Insert the following paragraph for any transfer made pursuant to Section
2.7.3(c) (Transfers and Exchanges of Certificated Securities):
This certificate relates to US$__________ principal amount of
Securities which are held in the form of one or more Certificated Securities
registered in the name of [insert name of transferor] (the "Transferor"). The
Transferor has requested a transfer of such Certificated Securities for a
beneficial interest in the Unrestricted Global Security (CUSIP No.__________) to
be held [with [Euroclear] [Cedel]] through the Depositary in the name of [insert
name of transferee] (the "Transferee").]
In connection with such request for transfer and in respect of such
Securities, the Transferor does hereby certify that such transfer is being
effected in accordance with the transfer restrictions set forth in the Indenture
and the Securities and pursuant to and in accordance with Rule 144A, and
accordingly the Transferor does hereby certify:
(1) the Transferee is a person that the Transferor and any person
acting on behalf of the Transferor reasonably believe is purchasing such
Securities for its own account, or for one or more accounts with respect to
which the Transferee exercises sole investment discretion, and the
Transferee and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A; and
(2) the Transferor and any person acting on its behalf has taken
reasonable steps to ensure that the Transferee is aware that the Transferor
may be relying on Rule 144A in connection with the transaction;
(3) the transaction satisfies all other requirements of Rule 144A and
of any applicable securities laws of any state of the United States or any
other jurisdiction.
You and Funding Company are entitled to rely upon this certificate and
are irrevocably authorized to produce this certificate or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
[Name of Transferor]
By:
----------------------------------------------
Name:
Title:
Exhibit G-2
<PAGE>
EXHIBIT H
[INTENTIONALLY OMITTED]
Exhibit H-1
<PAGE>
EXHIBIT I
FORM OF REGULATION S EXCHANGE CERTIFICATE
[date]
[Name of Registrar]
[Address of Registrar]
Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of [__________],
between York Power Funding (Cayman) Limited, as Issuer, and The Bank of New
York, as Bond Trustee. Capitalized terms used but not defined herein shall have
the respective meanings given to such terms in the Indenture or Regulation S, as
the case may be.
This certificate relates to US$__________ principal amount of
Securities which are held in the form of Certificated Securities in the name of
[insert name of holder] (the "Holder"). The Holder has requested an exchange of
such Certificated Securities for a beneficial interest in the Unrestricted
Global Security (CUSIP No.__________) to be held with [[Euroclear] [Cedel]
through] the Depositary in the name of the Holder.
In connection with such request for exchange and in respect of such
Securities, the Holder does hereby certify that it acquired such Securities in
accordance with the transfer restrictions set forth in the Indenture and the
Securities and pursuant to and in accordance with Regulation S under the
Securities Act.
You and Funding Company are entitled to rely upon this certificate and
are irrevocably authorized to produce this certificate or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
[Name of Transferor]
By:
-----------------------------------------------
Name:
Title:
Exhibit I-1
<PAGE>
EXHIBIT J
FORM OF RULE 144A EXCHANGE CERTIFICATE
[date]
[Name of Registrar]
[Address of Registrar]
Ladies and Gentlemen:
Reference is hereby made to the Indenture, dated as of [__________],
between York Power Funding (Cayman) Limited, as Issuer, and The Bank of New
York, as Bond Trustee. Capitalized terms used but not defined herein shall have
the respective meanings given to such terms in the Indenture or Rule 144A, as
the case may be.
This certificate relates to US$__________ principal amount of
Securities which are held in the form of Certificated Securities in the name of
[insert name of holder] (the "Holder"). The Holder has requested an exchange of
such Certificated Securities for a beneficial interest in the Restricted Global
Security (CUSIP No.__________) to be held with the Depositary in the name of the
Holder.
In connection with such request for exchange and in respect of such
Securities, the Holder does hereby certify that it is a "qualified institutional
buyer" within the meaning of Rule 144A under the Securities Act.
You and Funding Company are entitled to rely upon this certificate and
are irrevocably authorized to produce this certificate or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
[Name of Transferor]
By:
-----------------------------------------
Name:
Title:
Exhibit J-1
<PAGE>
EXHIBIT K
[INTENTIONALLY OMITTED]
Exhibit K-1
<PAGE>
EXHIBIT L
[BIG SPRING] [TRINIDAD] COMPLETION CERTIFICATE
[Date]
The Bank of New York,
as Bond Trustee
[ ]
Attention: [ ]
Ladies and Gentlemen:
This certificate (the "[Big Spring] [Trinidad] Completion
Certificate") is delivered to you pursuant to Section 4.13 of the Indenture,
dated as of August , 1998 (the "Indenture"), by and between York Power Funding
(Cayman) Limited ("Funding Company") and The Bank of New York, as Bond Trustee.
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned thereto in the Indenture.
The [Big Spring Guarantor] [Trinidad Obligor] hereby certifies
to the Bond Trustee of the benefit of the Holders as of the date hereof that:
On and as of the date hereof, Substantial Completion of the [Big
Spring] [Trinidad] Project has occurred and the [Big Spring Guarantor] [Trinidad
Obligor] has received a ["Certificate of Readiness for Commercial Operation"
from TU Electric pursuant to the terms of the Big Spring EPA] [a certificate
from T&TEC confirming that the Commercial Operation Date (as defined in the
Trinidad PPA) for the Trinidad Project has occurred].
[ALTERNATE VERSION. On and as of the date hereof, the [Big Spring]
[Trinidad] Project has been abandoned.]
IN WITNESS WHEREOF, the undersigned has executed this
Officer's Certificate this __ day of ____________, 199_.
[NEW WORLD POWER TEXAS RENEWABLE
ENERGY LIMITED PARTNERSHIP]
[INNCOGEN LIMITED]
By:
------------------------------------------------
Name:
Title:
Exhibit L-1
<PAGE>
APPENDIX I TO EXHIBIT L
INDEPENDENT ENGINEER'S CERTIFICATE
[Date]
The Bank of New York,
as Bond Trustee
[ ]
--------------------
Attention: [ ]
---------------
[New World Power Texas Renewable
Energy Limited Partnership
[ ]
-------------------------
Attention: [ ]]
-----------------------
[InnCOGEN, Limited]
[ ]
-------------------------
Attention: [ ]]
-----------------------
Ladies and Gentlemen:
This certificate is delivered to you pursuant to (a) Section
4.13 of the Indenture, dated as of August , 1998 (the "Indenture"), by and
between York Power Funding (Cayman) Limited ("Funding Company") and The Bank of
New York, as Bond Trustee and (b) the certificate to which this Certificate is
attached as Appendix I (the "[Big Spring] [Trinidad] Completion Certificate")
delivered by the Funding Company to the Bond Trustee. Capitalized terms used and
not otherwise defined herein shall have the meanings assigned thereto in the
Indenture.
We hereby certify to the Bond Trustee for the benefit of the
Holders as of the date hereof that:
(4).0.1 We have reviewed the material and data made available to us by
the [Big Spring Guarantor with respect to the Big Spring Project]
[the Trinidad Obligor with respect to the Trinidad Project] [and
have performed such other investigation as is referenced in the
attachment hereto] (the "Review"). Our Review was performed in
accordance with generally accepted engineering and construction
practices and included such investigation and review as we in our
professional capacity deemed necessary or appropriate in the
circumstances and within the scope of our appointment and [insert
customary assumptions and qualifications].
(4).0.2 We have discussed matters believed pertinent to this Certificate
with Funding Company and the [Big Spring Guarantor] [Trinidad
Obligor].
(4).0.3 On the basis of the foregoing Review and on the understanding and
assumption that we have been provided true, correct and complete
information from such other parties as to
Exhibit L-2
<PAGE>
the matters covered by this Certificate, and [insert customary
assumptions and qualifications] we confirm that (a) the
statements set forth by the [Big Spring Guarantor] [Trinidad
Obligor] in the [Big Spring] [Trinidad] Completion Certificate
are true and correct and (b)(i) [Vestas] [Duke/Fluor Daniel
International] will be liable for any items required to be
completed pursuant to the [Vestas Agreement] [Trinidad EPC
Contract] which have not been completed as of the date hereof and
that all amounts owed by [Vestas] [Duke/Fluor Daniel
International][Duke/Fluor Daniel International Services] pursuant
to the [Vestas Agreement] [Trinidad EES Contract] [Trinidad
Turnkey Construction Contract] will be sufficient to complete
such items and (ii) the failure to complete such items will not
materially adversely affect the performance of the [Big Spring
Project] [Trinidad Project] during the term of the [Big Spring
PPA] [Trinidad PPA].
The person signing this Certificate is a duly qualified
representative of the Independent Engineer and as such is authorized to execute
and deliver this Certificate on behalf of the Independent Engineer.
[NAME OF INDEPENDENT ENGINEER]
By:
------------------------------------------
Name:
Title:
Exhibit L-4
<PAGE>
SCHEDULE I TO APPENDIX I TO THE
[BIG SPRING] [TRINIDAD] COMPLETION CERTIFICATE
Exhibit L-5
<PAGE>
EXHIBIT M
FORM OF REQUEST FOR INFORMATION FROM THE BOND TRUSTEE
The Bank of New York
One Wall Street
New York, NY 10286
Attention: [______________]
Pursuant to Section 1.5 of the Trust Indenture dated as of August
__, 1998 (the "Indenture"), among York Power Funding (Cayman) Limited, as issuer
and the Bank of New York, a New York banking corporation, as Bond Trustee, [name
of holder], as beneficial holder, hereby requests, which request is a continuing
request until further notice to the contrary, that you deliver to us at [address
of holder, Attention:] all information and copies of all documents that the
Company is required to deliver to you pursuant to Rule 144A(d) under the
Securities Act or pursuant to the Indenture, [name of holder] hereby certifies
that it is a beneficial holder of 12.0% Senior Secured Bonds due 2007.
[Name of Holder]
- -------------------------- --------------------
Authorized Signature Date
Exhibit M-1
<PAGE>
FORM OF REQUEST FOR FINANCIAL INFORMATION FROM
A PROJECT OBLIGOR
York Power Funding (Cayman) Limited
[------------]
Attention: [__________]
Pursuant to Section 4.2 of the Trust Indenture dated as of August
__, 1998 (the "Indenture"), among York Power Funding (Cayman) Limited, as issuer
and The Bank of New York, as Bond Trustee, , as beneficial Holder, hereby
requests, which request is a continuing request until further notice to the
contrary, that you deliver all financial information required to be delivered
pursuant to the Indenture directly to us as [address of holder, Attention:].
[Name of holder] hereby certifies that it is a beneficial holder of 12.0% Senior
Secured Bonds due 2007.
[Name of Holder]
- -------------------------- --------------------
Authorized Signature Date
Exhibit M-2
<PAGE>
EXHIBIT N
FORM OF SUBORDINATION PROVISIONS
All capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture.
[NAME OF SUBORDINATED LENDER] (together with its successors and
assigns, the "Subordinated Lender") hereby agrees for the benefit of the Secured
Parties that all [DESCRIBE SUBORDINATED LIABILITIES] (the "Subordinated
Obligations") are and shall be junior and subordinate, to the extent and in the
manner set forth hereinafter, in right of payment to the prior infeasible
payment or satisfaction in full of all secured obligations. In furtherance
thereof, each of the Secured Parties, the Collateral Agent and the Subordinated
Lender further agrees that:
(a) For all purposes of these subordination provisions, the Trinidad
Guarantor hereby waives all rights it may otherwise have as a Secured
Party pursuant to the terms of the Finance Documents.
(b) (i) The Subordinated Lender shall not ask, demand, sue for, take or
receive from Funding Company, any Guarantor or any other Project
Obligor, directly or indirectly, in cash or other property or by
set-off or in any other manner (including, without limitation, from or
by way of the Collateral), payment of all or any of the Subordinated
Obligations unless and until the Secured Obligations shall have been
indefeasibly paid or otherwise satisfied in full and except to the
extent of distributions from the Distribution Suspense Accounts under
the Depositary Agreements. For the purposes of these provisions, the
Secured Obligations shall not be deemed to have been paid or satisfied
in full until those Secured Obligations shall have been indefeasibly so
paid to the Secured Parties or so otherwise satisfied (after the
passage of any relevant preference periods).
(ii) Upon any distribution of all or any of the assets of
Funding Company, any Guarantor or any other Project Obligor to
creditors of Funding Company, any Guarantor or any other Project
Obligor upon the dissolution, winding up, liquidation,
arrangement, reorganization or composition of Funding Company, any
Guarantor or any other Project Obligor, whether in any bankruptcy,
insolvency, arrangement, reorganization, receivership or similar
proceedings or upon as assignment for the benefit of creditors or
any other marshalling of the assets and liabilities of Funding
Company, any Guarantor or any other Project Obligor or otherwise
any payment or distribution of any kind (whether in cash, property
or securities) which otherwise would be payable or deliverable
upon or with respect to the Subordinated Obligations shall be paid
or delivered directly to the Collateral Agent for application (in
the case of cash) to, or as collateral (in the case on non-cash)
to, or as collateral (in the case of non-cash property or
securities) for, the payment or prepayment of the Secured
Obligations until the Secured Obligations have been otherwise
satisfied in full.
(iii) Each of the Secured Parties may demand specific
performance of these terms of subordination, whether or not
Funding Company, any Guarantor or any other Project Obligor shall
have complied with any of the provisions hereof applicable to them
at any time when the Subordinated Lender shall have failed to
comply with any of such provisions applicable to it. The
Subordinated Lender hereby irrevocably waives any defense based on
the
Exhibit N-1
<PAGE>
adequacy of a remedy at law, which might be asserted as a bar to
such remedy of specific performance.
(iv) So long as any of the Secured Obligations shall
remain unpaid or otherwise unsatisfied, the Subordinated Lender
shall not commence or join with any creditor other than the
Collateral Agent in commencing any proceeding referred to in
subsection (ii) above for the payment of amounts which otherwise
would be payable or deliverable upon or with respect to the
Subordinated Obligations.
(v) Subject to the indefeasible payment or satisfaction in
full of all of the Secured Obligations, the Subordinated Lender
shall be subrogated to the rights of the Secured Parties to
receive payments or distribution of assets of Funding Company, any
Guarantor or any other Project Obligor on the Finance Liabilities
until the subordinated Obligations have been satisfied in full.
The foregoing provisions regarding subordination are for the
benefit of the Secured Parties and shall be enforceable by them directly against
the Subordinated Lender, and no Secured Party shall be prejudiced in its right
to enforce subordination of any of the Subordinated Obligations by any act or
failure to act by either Funding Company, any Guarantor or any other Project
Obligor or anyone in custody of any of their respective assets or property.
Notwithstanding anything to the contrary contained in the foregoing provisions,
the Subordinated Lender may receive distributions in respect of the Subordinated
Obligations from Funding Company, any Guarantor or any other Project Obligor to
the extent that such distributions are permitted pursuant to the Finance
Documents.
(c) So long as any Secured Obligations remain outstanding, the
following provisions shall apply:
(i) If a Trigger Event shall have occurred and be
continuing, the Collateral Agent, on behalf of the Secured
Parties, shall be permitted and is hereby authorized to take any
and all actions to exercise any and all rights, remedies and
options which it may have under the Security Documents or the
Intercreditor Agreement.
(ii) The Subordinated Lender hereby waives: (x)
notice of the existence, creation or non-payment of all or any of
the Secured Obligations and (y) to the fullest extent permitted
by law, any right it may have to require the Collateral Agent to
Marshall assets.
(d) Subject to the terms of the Intercreditor Agreement, the
Secured Parties may, at any time and from time to time, without
any consent or notice to the Subordinated Lender and without
impairing or releasing the obligations of the Subordinated Lender:
(i) amend in any manner any agreement under which any of the
Finance Liabilities is outstanding in accordance with the terms
thereof; (ii) sell, exchange, release, not perfect and otherwise
deal with any Collateral or other property at any time pledged,
assigned or mortgaged to secure the Finance Liabilities in
accordance with the Security Documents; (iii) release anyone
liable in any manner under or in respect of the Finance
Liabilities; (iv) exercise or refrain from exercising any rights
against Funding Company, any Guarantor or any other Project
Obligor and others; and (v) apply any sums from time to time
received to payment or satisfaction of the Finance Liabilities.
Exhibit N-2
<PAGE>
Exhibit 4.4
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
------------------------------------------
YORK POWER FUNDING (CAYMAN) LIMITED
$150,000,000 12.0 % Senior Secured Bonds
Due October 30, 2007
August 4, 1998
CREDIT SUISSE FIRST BOSTON CORPORATION
11 Madison Avenue
New York, New York 10010
Ladies and Gentlemen:
In connection with the issue and sale of $150,000,000 principal amount
of 12.0% Senior Secured Bonds Due October 30, 2007 (the "Initial Securities")
issued by York Power Funding (Cayman) Limited, a limited liability company
incorporated under the laws of the Cayman Islands (the "Funding Company")
pursuant to the terms of the Trust Indenture dated August 4, 1998 (the
"Indenture") between Funding Company and The Bank of New York, as Bond Trustee,
and as an inducement to Credit Suisse First Boston Corporation (the "Initial
Purchaser") to enter into the Purchase Agreement dated July 30, 1998 (the
"Purchase Agreement") among Funding Company, New World Power Texas Renewable
Energy L.P., Brooklyn Navy Yard Power LLC, York Holdings (Barbados) SRL,
Warbasse Power I LLC, Warbasse II LLC, and the Initial Purchaser, Funding
Company hereby agrees to provide the exchange and registration rights set forth
in this Exchange and Registration Rights Agreement (this "Agreement") for the
benefit of the holders of the Initial Securities. The execution of this
Agreement is a condition to the purchase of the Initial Securities under the
Purchase Agreement.
<PAGE>
SECTION 1. Definitions. Capitalized terms used herein without
definition shall have the respective meanings ascribed thereto, whether
expressly or by reference to another agreement or document, in the Indenture.
The definitions set forth in this Agreement shall equally apply to both the
singular and plural forms of the terms defined. As used in this Agreement, the
following terms shall have the following meanings:
"Advice" shall have the meaning set forth in the last paragraph of
Section 5 of this Agreement.
"Affiliate", with respect to any Person, shall mean any other Person
that directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such first Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities or by contract or otherwise. For
purposes of Section 2, an "Affiliate" of Funding Company shall mean and include,
in addition, any Person deemed an affiliate thereof under the Securities Act or
the Exchange Act in connection with the Exchange Offer.
"Cure Date" shall have the meaning set forth in Section 4(a) of this
Agreement.
"Effective Date" shall mean the date which is 180 days after the
Closing Date.
"Effective Period" shall have the meaning set forth in Section 3(a) of
this Agreement.
"Exchange Offer" shall have the meaning set forth in Section 2(a) of
this Agreement.
"Exchange Offer Registration Statement" shall have the meaning set
forth in Section 2(a) of this Agreement.
"Exchange Period" shall have the meaning set forth in Section 2(a) of
this Agreement.
"Exchange Securities" shall have the meaning set forth in Section 2(a)
of this Agreement.
A "holder" of Registrable Securities shall mean the registered holder
of such securities or any beneficial owner thereof.
"Holder Indemnified Party" shall have the meaning set forth in Section
8(a) of this Agreement.
"Holder Information" shall have the meaning set forth in Section 8(a)
of this Agreement.
"Illiquidity Event" with respect to the Initial Securities which
constitute Registrable Securities shall mean any of the following events:
(a) as of the Effective Date, both (i) an Exchange Offer Registration
Statement (which, if applicable pursuant to Section 2(a), covers resales of
such Exchange Securities) has not become effective and (ii) the Registrable
Securities are not the subject of an Initial Shelf Registration Statement
which has become effective; or
(b) the Exchange Securities offered in exchange for the Registrable
Securities are the subject of an Exchange Offer Registration Statement
which was effective (and which, if
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applicable pursuant to Section 2(a), covered resales of such Exchange
Securities) but which ceased to be effective for any reason prior to the
end of the Exchange Period and an Initial Registration Statement covering
such Registrable Securities has not become effective; or
(c) the Registrable Securities are the subject of an Initial Shelf
Registration Statement or Subsequent Shelf Registration Statement which was
effective but which has ceased to be effective for any reason prior to the
end of the Effective Period.
An Illiquidity Event shall be deemed to cease to exist on the date
subsequent to the occurrence of such Illiquidity Event on which:
(i) in the case of an Illiquidity Event described in clause (a) above
either (i) an Exchange Offer Registration Statement (which, if applicable
pursuant to Section 2(a), covers resales of the Exchange Securities
exchanged for such Registrable Securities) shall become effective and an
Exchange Offer for such Registrable Securities shall have commenced or (ii)
an Initial Shelf Registration Statement covering such Registrable
Securities shall become effective; or
(ii) in the case of an Illiquidity Event described in clause (b)
above, either (i) an Exchange Offer Registration Statement (which, if
applicable pursuant to Section 2(a), covers resales of the Exchange
Securities offered in exchange for such Initial Securities) shall become
effective and an Exchange Offer for such Registrable Securities shall have
commenced pursuant to an Exchange Offer Registration Statement or (ii) an
Initial Shelf Registration Statement covering such Registrable Securities
shall become effective; or
(iii) in the case of an Illiquidity Event described in clause (c)
above, a Subsequent Shelf Registration Statement covering such Registrable
Securities shall become effective.
"Initial Shelf Registration Statement" shall have the meaning set
forth in Section 3(a) of this Agreement.
"Inspectors" shall have the meaning set forth in Section 5(m) of this
Agreement.
"Managing Underwriters" shall mean the investment banker or investment
bankers and manager or managers that shall administer an Underwritten Offering.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Prospectus" shall mean the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments and all material incorporated by reference into such prospectus.
"Records" shall have the meaning set forth in Section 5(m) of this
Agreement.
"Registrable Securities" shall mean the Initial Securities upon
original issuance thereof and at all times subsequent thereto until, in the case
of any such Initial Security, (i) a Registration Statement covering such Initial
Security, or the Exchange Security to be exchanged for such Initial Security
(and, in the case of any Resale Security, any resale thereof), has been declared
effective and such
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Initial Security has been disposed of or exchanged (or, in any case where such
Registration Statement covers the resale of Resale Securities, such Initial
Security has been exchanged and the Resale Security received therefor has been
resold), as the case may be, in accordance with such effective Registration
Statement, (ii) it is sold in compliance with Rule 144 or would be permitted to
be sold pursuant to Rule 144(k), (iii) it shall have been otherwise transferred
and a new certificate for any such Initial Security not bearing a legend
restricting further transfer shall have been delivered by or on behalf of
Funding Company and such Initial Security shall be tradeable by each holder
thereof without restriction under the Securities Act or the Exchange Act and
without material restriction under the applicable Blue Sky or state securities
laws or (iv) it ceases to be outstanding.
"Registration Statement" shall mean any registration statement
(including any Shelf Registration Statement or other Registration Statement
available to Funding Company under the Securities Act as a foreign private
issuer) of Funding Company that covers any of the Registrable Securities or the
Exchange Securities, as the case may be, pursuant to the provisions of this
Agreement, including the Prospectus which is part of such Registration
Statement, amendments (including post-effective amendments) and supplements to
such Registration Statement and all exhibits and appendices to any of the
foregoing. For purposes of the foregoing, unless the context requires otherwise,
a Registration Statement for an Exchange Offer shall not be deemed to cover
Registrable Securities held by a Restricted Person unless such Registration
Statement covers the resale of Resale Securities to be received by such
Restricted Person pursuant to such Exchange Offer and any such Initial
Securities shall continue to be Registrable Securities.
"Resale Initial Purchaser" shall have the meaning set forth in Section
8(a) of this Agreement.
"Resale Securities" shall mean any Exchange Security received by a
Restricted Person pursuant to an Exchange Offer, and at all times subsequent
thereto, until, subject to the time periods set forth herein, such Exchange
Security has been resold by such Restricted Person.
"Restricted Person" shall mean (a) any Affiliate of Funding Company,
(b) the Initial Purchaser or (c) any Affiliate of the Initial Purchaser (other
than Affiliates of the Initial Purchaser that (i) are acquiring Exchange
Securities in the ordinary course of business and do not have an arrangement
with any Person to distribute Exchange Securities and (ii) may trade such
Exchange Securities without restriction under the Securities Act).
"Rule 415" shall mean Rule 415 under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Shelf Notice" shall have the meaning set forth in Section 2(b) of
this Agreement.
"Shelf Registration Statement" shall have the meaning set forth in
Section 3(b) of this Agreement.
"Special Counsel" shall mean Skadden, Arps, Slate, Meagher & Flom LLP,
special counsel to the Initial Purchaser, or any other firm acceptable to
Funding Company, acting as special counsel to the holders of Registrable
Securities or Exchange Securities.
"Subsequent Shelf Registration Statement" shall have the meaning set
forth in Section 3(b) of this Agreement.
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"Underwritten Registration" or "Underwritten Offering" shall mean a
registration in which securities are sold to an underwriter or group of
underwriters for reoffering to the public.
SECTION 2. Exchange Offer.
(a) Unless Funding Company determines in good faith that the Exchange
Offer shall not be permissible under Applicable Law or Commission policy,
Funding Company shall prepare and cause to be filed with the Commission as soon
as reasonably practicable after the Closing Date, subject to Sections 2(b) and
2(c) of this Agreement, a Registration Statement (an "Exchange Offer
Registration Statement") for an offer to exchange (an "Exchange Offer") the
Registrable Securities (subject to Section 2(c)) for a like aggregate principal
amount of debt securities of Funding Company that are in all material respects
substantially identical to the Initial Securities (the "Exchange Securities")
(and which are entitled to the benefits of the Indenture, which shall be
qualified under the Trust Indenture Act in connection with such registration or
a trust indenture which is substantially identical in all material respects to
the Indenture), other than (i) such changes to the Indenture or any such
substantially identical indenture as the Bond Trustee and Funding Company may
deem necessary in connection with the Bond Trustee's rights and duties or to
comply with any requirements of the Commission to effect or maintain the
qualification thereof under the Trust Indenture Act and (ii) such changes
relating to restrictions on transfer set forth in the Indenture. The Exchange
Offer shall be registered under the Securities Act on the appropriate form of
Registration Statement and shall comply with all applicable tender offer rules
and regulations under the Exchange Act and with all other Applicable Laws.
Subject to the terms and limitations of Section 2(c), such Exchange Offer
Registration Statement may also cover any resales of Exchange Securities by any
Restricted Person, in the manner or manners designated by them which, in any
event, is reasonably acceptable to Funding Company.
Funding Company shall use its reasonable best efforts to (i) cause the
Exchange Offer Registration Statement to become effective under the Securities
Act on or prior to the Effective Date, (ii) keep the Exchange Offer open for a
period of not less than the shorter of (A) the period ending when the last
remaining Initial Security is tendered into the Exchange Offer and (B) 30 days
from the date notice is mailed to the holders of Initial Securities (provided
that in no event shall such period be less than the period required under
applicable Federal and state securities laws), and (iii) maintain such Exchange
Offer Registration Statement continuously effective for a period (the "Exchange
Period") of not less than the longer of (A) the period until the consummation of
the Exchange Offer and (B) 120 days after effectiveness of the Exchange Offer
Registration Statement, provided however, that in the event that all resales of
Exchange Securities (including, subject to the time periods set forth herein,
any Resale Securities and including, subject to the time periods set forth
herein, any resales by broker-dealers that receive Exchange Securities for their
own account pursuant to the Exchange Offer) covered by such Exchange Offer
Registration Statement have been made, the Exchange Offer Registration Statement
need not remain continuously effective for the period set forth in clause (B)
above. Upon consummation of the Exchange Offer, Funding Company shall deliver to
the Bond Trustee under the Indenture for cancellation all Initial Securities
tendered by the holders thereof pursuant to the Exchange Offer and not withdrawn
prior to the Consummation Date. Each Restricted Person shall notify Funding
Company promptly after reselling all Resale Securities held by such Restricted
Person which are covered by any such Registration Statement.
Each holder of Registrable Securities to be exchanged in the Exchange
Offer (other than any Restricted Person) shall be required as a condition to
participating in the Exchange Offer to represent that (i) it is not an Affiliate
of Funding Company, (ii) any Exchange Securities to be received by it shall be
acquired in the ordinary course of its business and (iii) that at the time of
the consummation of the Exchange Offer it shall have no arrangement with any
person to participate in the distribution (within the
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meaning of the Securities Act) of the Exchange Securities. Upon consummation of
an Exchange Offer in accordance with this Section 2 and compliance with the
other provisions of this Section 2, Funding Company shall, subject to Sections
2(b) and 2(c), have no further obligation to register Registrable Securities
pursuant to Section 3(a) of this Agreement; provided that the other provisions
of this Agreement shall continue to apply as set forth in such provisions.
(b) In the event that Funding Company reasonably determines in good
faith that (i) the Exchange Securities would not, upon receipt in the Exchange
Offer by any holder of Registrable Securities (other than any Restricted Person
and other than any holder who is not acquiring such Exchange Securities in the
ordinary course of business or who has an arrangement with any person to
participate in the distribution of such Exchange Securities) be tradeable by
each holder thereof without restriction under the Securities Act and the
Exchange Act and without restriction under applicable Blue Sky or state
securities laws, (ii) after conferring with counsel, the Commission is unlikely
to permit the Exchange Offer Registration Statement to become effective prior to
the Effective Date (except in the circumstances set forth in Section 2(c)) or
(iii) the Exchange Offer may not be made in compliance with Applicable Laws,
then Funding Company shall promptly deliver notice thereof (the "Shelf Notice")
to the holders of the Registrable Securities and the Bond Trustee and shall
thereafter file an Initial Shelf Registration Statement pursuant to, and
otherwise comply with, the provisions of Section 3(a). Following the delivery of
a Shelf Notice in accordance with this Section 2(b) and compliance with Section
3(a), Funding Company shall not have any further obligation under this Section
2.
(c) In the event that Funding Company reasonably determines in good
faith that (i) the Exchange Securities would not, upon consummation of any
resale thereof by a Restricted Person to any Person other than another
Restricted Person, be tradeable by each holder thereof without restriction under
the Securities Act (other than applicable prospectus requirements) and the
Exchange Act and without restriction under applicable Blue Sky or state
securities laws or (ii) the Commission is unlikely to permit the Exchange Offer
Registration Statement to become effective prior to the Effective Date solely
because such Registration Statement covers resales of the Exchange Securities by
Restricted Persons, then Funding Company shall promptly deliver a Shelf Notice
to the Restricted Persons who are holders of Registrable Securities and the Bond
Trustee, and Funding Company shall thereafter file an Initial Shelf Registration
Statement with respect to any such Registrable Securities pursuant to, and
otherwise comply with, the provisions of Section 3(a); provided that such
Initial Shelf Registration Statement shall only cover resales of Registrable
Securities by Restricted Persons if a Shelf Notice is not then otherwise
required to be delivered pursuant to Section 2(b) and provided further that such
Initial Shelf Registration Statement covering Registrable Securities held by
Restricted Persons shall be kept effective for at least a period of 120 days and
is not required to remain effective with respect to such Registrable Securities
held by Restricted Persons thereafter. Following the delivery of a Shelf Notice
in accordance with this Section 2(c) and compliance with Section 3(a), Funding
Company shall not have any further obligation under this Section 2 with respect
to the filing of an offer to exchange the Registrable Securities held by the
Restricted Persons (including, without limitation, any obligation to provide
that an Exchange Offer Registration Statement filed pursuant to Section 2(a)
cover resales of Exchange Securities by Restricted Persons); provided that the
provisions of this Section 2 shall otherwise remain in full force and effect
with respect to Registrable Securities held by any person other than a
Restricted Person.
SECTION 3. Shelf Registration; Registrable Securities. With respect to
the Registrable Securities, if a Shelf Notice is delivered in accordance with
Section 2(b) or (c) of this Agreement, then Funding Company shall comply with
the following provisions of this Section 3:
(a) Initial Shelf Registration. Funding Company shall prepare and
cause to be filed with the Commission a Registration Statement for an offering
to be made on a continuous basis other than
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pursuant to an Underwritten Offer pursuant to Rule 415 covering all of the
Registrable Securities (or, if a Shelf Notice is delivered solely pursuant to
Section 2(c), all of the Registrable Securities held by any Restricted Persons)
(the "Initial Shelf Registration Statement"); provided, however, that no holder
shall be entitled to have its Registrable Securities covered by such Initial
Shelf Registration Statement unless such holder agrees in writing, within 10
Business Days after actual receipt of a request therefrom, to be bound by all
the provisions of this Agreement applicable to such a holder. No holder shall be
entitled to the benefits of Section 4 of this Agreement unless and until such
Holder shall have provided all information reasonably requested by Funding
Company (after conferring with counsel), and such holder shall not be entitled
to such benefits with respect to any period during which such information was
not provided. Each holder to which any Shelf Registration Statement is being
effected agrees to furnish promptly to Funding Company all information required
to be disclosed in order to make the information previously furnished to Funding
Company by such holder not materially misleading. The Initial Shelf Registration
Statement shall be an appropriate form permitting registration of such
Registrable Securities for resale by the holders thereof in the manner or
manners reasonably designated by them (but excluding any Underwritten
Offerings). Funding Company shall use its reasonable best efforts to (A) cause
the Initial Shelf Registration Statement to be declared effective under the
Securities Act on or prior to the Effective Date and (B) keep the Initial Shelf
Registration Statement continuously effective under the Securities Act for a
period of two years after the Closing Date (subject to extension pursuant to the
last paragraph of Section 5 and subject, with respect to Registrable Securities
held by Restricted Persons, to the limitations set forth in Section 2(c)) (such
two-year period, as it may be extended, being the "Effective Period"), or such
shorter period ending when (1) all Registrable Securities covered by the Initial
Shelf Registration Statement have been sold or (2) a Subsequent Shelf
Registration Statement covering all of such Registrable Securities remaining
unsold has been declared effective under the Securities Act, (3) all Registrable
Securities may be sold pursuant to subsection (k) of Rule 144 or (4) all
Registrable Securities cease to be outstanding.
Notwithstanding any other provision hereof, Funding Company may
postpone or suspend the filing or the effectiveness of a Registration Statement
(or any amendments or supplements thereto), if (1) such action is required by
Applicable Law, or (2) such action is taken by Funding Company in good faith and
for valid business reasons (not including avoidance of Funding Company's
obligations hereunder), including the acquisition or divestiture of assets,
other pending corporate developments, public filings with the Commission or
other similar events, so long as Funding Company promptly thereafter complies
with the requirements of Section 5(b) hereof, if applicable. Notwithstanding the
occurrence of any event referred to in the immediate preceding sentence (a
"Suspension"), such event shall not suspend, postpone or in any other manner
affect the running of the time period after which an Illiquidity Event shall be
deemed to occur and, if the filing or effectiveness of the Registration
Statement is postponed or suspended as a result of a Suspension, an Illiquidity
Event shall nonetheless exist if all other requirements set forth for the
occurrence of an Illiquidity Event shall be satisfied, and the provisions of
Section 4 requiring the accrual payment of additional interest, as set forth in
such Section 4, on the Registrable Securities, shall be applicable.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
Statement or any Subsequent Shelf Registration Statement ceases to be effective
for any reason at any time during the Effective Period after the Effective Date,
Funding Company may attempt to obtain the withdrawal of any order suspending the
effectiveness thereof, and may amend such Initial Shelf Registration Statement
or Subsequent Shelf Registration Statement in a manner reasonably expected to
obtain the withdrawal of the order suspending the effectiveness thereof, or file
an additional "shelf" Registration Statement applicable to the Initial
Securities pursuant to Rule 415 covering all of such Registrable Securities
remaining unsold (a "Subsequent Shelf Registration Statement"). If a Subsequent
Shelf Registration Statement is declared effective, Funding Company shall use
its reasonable best efforts to keep such Shelf Registration
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Statement continuously effective for a period after the date of such
effectiveness equal in length to the length of the Effective Period plus the
aggregate number of days from the date of the order suspending the effectiveness
of the Initial Shelf Registration Statement or any Subsequent Shelf Registration
Statement to the date of the effectiveness of the Subsequent Shelf Registration
Statement. As used herein, the term "Shelf Registration Statement" means the
Initial Shelf Registration Statement and any Subsequent Shelf Registration
Statement.
SECTION 4. Additional Interest for Illiquidity.
(a) Funding Company acknowledges and agrees that the Initial Purchaser
(and any subsequent holders of the Initial Securities) has acquired Initial
Securities in reliance on Funding Company's covenant to use its reasonable best
efforts to (i) cause to become effective on or prior to the Effective Date (A)
the Exchange Offer Registration Statement or (B) an Initial Shelf Registration
Statement, and (ii) maintain the respective effectiveness of such Registration
Statements as described herein. Funding Company further acknowledges and agrees
that the failure of Funding Company to fulfill such covenants will have an
adverse effect on the holders of the Initial Securities. Therefore, Funding
Company agrees that from and after the date on which any Illiquidity Event
occurs, additional interest (in addition to the interest otherwise payable with
respect to the Registrable Securities) shall accrue with respect to the Initial
Securities until but not including the date on which such Illiquidity Event
shall cease to exist (and provided no other Illiquidity Event with respect to
Initial Securities shall then be continuing), at the rate of one half of one
percent (0.50%) per annum, which additional interest shall be payable by Funding
Company to the holders of all Initial Securities at the times, in the manner and
subject to the same terms and conditions set forth in the Indenture, as nearly
as may be, as though the interest rates provided in such Initial Securities had
been increased by one half of one percent (0.50%) per annum. Notwithstanding
that the Illiquidity Event may cease to exist, in the event that an Exchange
Offer Registration Statement or an Initial Shelf Registration Statement has not
become effective within two years after the Closing Date, the interest rates on
the Initial Securities otherwise payable as provided in the Indenture shall
permanently remain increased by such one half of one percent (0.50%) per annum.
Subject to the provisions of this Section 4, Funding Company agrees that it
shall be liable to the holders of all Initial Securities for the payment of any
and all additional interest on the Initial Securities that shall accrue pursuant
to this Section 4.
Any such additional interest accrued on any such Initial Securities
but unpaid on the date on which such interest ceases to accrue (the "Cure Date")
shall be due and payable on the first interest payment date following the next
record date following such Cure Date (or the record date occurring on such Cure
Date, if such Cure Date is a record date) to the holders of record of such
Initial Securities on such record date.
(b) Funding Company shall promptly notify the holders of the Initial
Securities and the Bond Trustee of the occurrence of any Illiquidity Event of
which it has knowledge.
Notwithstanding the foregoing, Funding Company shall not be required
to pay the additional interest described in clause (a) of this Section 4 to a
holder with respect to the Registrable Securities held by such holder if the
applicable Illiquidity Event arises by reason of the failure of such holder to
provide such information that (i) Funding Company may reasonably request, with
reasonable prior written notice, for use in the Shelf Registration Statement or
any Prospectus included therein to the extent Funding Company reasonably
determines that such information is required to be included therein by
Applicable Law, (ii) the NASD or the Commission may request in connection with
such Shelf Registration Statement, or (iii) is required to comply with the
agreements of such holder contained in
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clause (a) of Section 3 to the extent compliance thereof is necessary for the
Shelf Registration Statement to be declared effective.
SECTION 5. Registration Procedures. In connection with the
registration of any Registrable Securities or Exchange Securities pursuant to
Sections 2 and 3 hereof, Funding Company shall use its reasonable best efforts
to effect such registration to permit the sale of such Registrable Securities or
Exchange Securities in accordance with any permitted intended method or methods
of disposition thereof, and pursuant thereto Funding Company shall:
(a) prepare and cause to be filed with the Commission a Registration
Statement or Registration Statements as prescribed by Sections 2 and 3 of this
Agreement, and use its best efforts to cause each such Registration Statement to
become effective and remain effective for the applicable period as provided
herein; provided, however, that (i) during the period in which the Initial
Registration Statement is open for the Restricted Persons, Funding Company shall
afford any Restricted Person which is a holder of Registrable Securities or
Exchange Securities and the Special Counsel, upon such holder's written request
to Funding Company, an opportunity to review copies of all such documents
proposed to be filed, and (ii) if such filing is pursuant to Section 3, before
filing any Registration Statement or Prospectus or any amendments or supplements
thereto (including documents that would be incorporated therein by reference
after the initial filing of the Registration Statement), Funding Company shall
afford the Special Counsel for all holders of the Registrable Securities covered
by such Registration Statement an opportunity to review copies of all such
documents proposed to be filed;
(b) prepare and cause to be filed with the Commission such amendments
and post-effective amendments to each Shelf Registration Statement as may be
necessary to keep such Registration Statement continuously effective for the
Effective Period as provided herein; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder with respect to the disposition of all securities covered by such
Registration Statement as so amended or in such Prospectus as so supplemented in
accordance with the intended methods of disposition by the sellers of
Registrable Securities covered thereby set forth therein;
(c) if a Shelf Registration Statement is filed pursuant to Section 3
hereof, notify the selling holders of Registrable Securities promptly after
Funding Company becomes aware, and confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the
Commission for amendments or supplements to the Registration Statement or the
Prospectus, or for additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus or Prospectus or the initiation of any proceedings for that purpose,
(iv) of the receipt by Funding Company of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Securities for offer or sale in
any jurisdiction, or the initiation of any proceeding for such purpose, (v) of
the existence of any fact known to Funding Company which results in such
Registration Statement or related Prospectus or any document incorporated
therein by reference containing any untrue statement of a material fact or
omitting to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading (which notice may be accompanied by an instruction
that such notice constitutes material non-public information and to suspend the
use of the prospectus until the requisite changes have been made, and which
instruction shall require that such holders shall not communicate such material
non-public
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information to any third party and shall not sell or purchase, or
offer to sell or purchase, any securities of Funding Company after receipt of
such notice), and (vi) if Funding Company reasonably determines that the filing
of a post-effective amendment to such Registration Statement would be
appropriate;
(d) if a Shelf Registration Statement is filed pursuant to Section 3,
use its reasonable efforts to prevent the issuance of any order suspending the
effectiveness of a Registration Statement or of any order preventing or
suspending the use of a Prospectus or suspending the qualification (or exemption
from qualification) of any of the Registrable Securities for sale in any
jurisdiction and, if any such order is issued, to obtain the withdrawal of any
such order at the earliest possible moment;
(e) if a Shelf Registration Statement is filed pursuant to Section 3,
furnish to each selling holder of Registrable Securities who so requests (at
such holder's address set forth in the Securities Register) without charge, one
conformed copy of the Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including
those incorporated by reference);
(f) if a Shelf Registration Statement is filed pursuant to Section 3,
deliver to each selling holder of Registrable Securities without charge, as many
copies of the Prospectus (including each preliminary prospectus) and each
amendment or supplement thereto as such persons may reasonably request; and,
subject to the last paragraph of this Section 5, Funding Company hereby consents
to the use of such Prospectus and each amendment or supplement thereto by each
of the selling holders of Registrable Securities and the underwriters, if any,
in connection with the offering and sale of the Registrable Securities covered
by such Prospectus and any amendment or supplement thereto;
(g) prior to any public offering of Registrable Securities, register
or qualify, or cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
the underwriters, if any, may reasonably request in writing (provided that, if
Registrable Securities are offered other than through an Underwritten Offering,
Funding Company agrees to cause its counsel to perform Blue Sky investigations
and file registrations and qualifications required to be filed pursuant to this
Section 5(g)); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be kept effective; and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the applicable Registration Statement; provided, however,
that Funding Company will not be required to qualify as a foreign corporation,
or to do business, to file a general consent or take any action which would
subject it to service of process in any jurisdiction or take any action which
would subject itself to taxation in any such jurisdiction;
(h) if a Shelf Registration Statement is filed pursuant to Section 3,
cooperate with the Bond Trustee, and the selling holders of Registrable
Securities to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which certificates shall not
bear any restrictive legends and shall be in a form eligible for deposit with
DTC, and enable such Registrable Securities to be in such authorized
denominations and registered in such names as the holders may reasonably request
at least three business days prior to any such sale;
(i) if a Shelf Registration Statement is filed pursuant to Section 3,
upon the occurrence of any event contemplated by Section 5(c), prepare a
supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the
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Registrable Securities, such Prospectus will not contain an untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If Funding Company so notifies the holders to suspend the use of
the Prospectus after the occurrence of such an event, the holders shall suspend
use of the Prospectus, and not communicate such material non-public information
to any third party, and not sell or purchase, or offer to sell or purchase, any
securities of Funding Company, until Funding Company has amended or supplemented
the Prospectus to correct such misstatement or omission;
(j) use its reasonable best efforts to cause the Registrable
Securities covered by the Registration Statement to continue to be rated by the
rating agencies that initially rated the Initial Securities during the period
that the Registration Statement is required hereunder to remain effective (it
being acknowledged, however, that the foregoing shall not be deemed to require
Funding Company to maintain the rating of such Registrable Securities at the
rating given the Initial Securities);
(k) prior to the effective date of the first Registration Statement
relating to the Registrable Securities or the Exchange Securities, as the case
may be, (i) provide the Bond Trustee with printed certificates for such
securities in definitive form or in a global form eligible for deposit with DTC
and (ii) provide a CUSIP number for such Registrable Securities or Exchange
Securities represented by such certificates;
(l) if a Shelf Registration Statement is filed pursuant to Section 3,
enter into such reasonably required agreements and take all other appropriate
actions in order to expedite or facilitate the registration or the disposition
of such Registrable Securities;
(m) in the event of any Underwritten Offering (which shall only be
undertaken at the option of Funding Company), if a Shelf Registration Statement
is filed pursuant to Section 3, make available prior to the filing thereof for
inspection by a representative of the holders of a majority in aggregate
principal amount of the Registrable Securities being sold, and the Special
Counsel, on the one hand, or underwriter on the other hand (collectively, the
"Inspectors"), during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of Funding Company and its
subsidiaries (collectively, the "Records"), and cause the officers, directors
and employees of Funding Company and its subsidiaries to supply all relevant
information as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities; provided, however, that, as a
condition to supplying such information, Funding Company shall receive an
agreement in writing from the Special Counsel agreeing that any information that
is designated in writing by Funding Company, in good faith, as confidential at
the time of delivery of such information shall be kept confidential by such
Inspector (other than as to holders of Registrable Securities) and by any
holders of Registrable Securities receiving such information, unless (i)
disclosure of such information is required pursuant to Applicable Law or by
court or administrative order, (ii) disclosure of such information is, in the
reasonable opinion of counsel to Funding Company, necessary to avoid or correct
a misstatement or omission of a material fact in the Registration Statement,
Prospectus, or any supplement or post-effective amendment thereto or disclosure
is otherwise required by law, (iii) such information becomes generally available
to the public other than as a result of a disclosure by any Inspector or any
such holder of Registrable Securities in violation of this Section 5(m), or (iv)
such information is approved for release by Funding Company, in writing;
(n) use its best efforts to cause the Indenture or the trust indenture
provided for in Section 2, as the case may be, to be qualified under the Trust
Indenture Act not later than the effective date of such Registration Statement;
and, in connection therewith, cooperate with the Bond Trustee under such
Indenture and the holders of the Registrable Securities to effect such changes
to the Indenture as may be required for the Indenture to be so qualified in
accordance with the terms of the Trust Indenture
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Act and execute, and use its best efforts to cause such Bond Trustee to execute
all documents as may be required to effect such changes, and all other forms and
documents required to be filed with the Commission to enable the Indenture to be
so qualified in a timely manner;
(o) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission.
For purposes of the covenants set forth in this Section 5, references
to a Shelf Registration Statement, including a Shelf Registration Statement
filed pursuant to Section 3, shall be deemed to include any Registration
Statement, filed pursuant to Section 2, which covers, for the period set forth
therein, resales of Exchange Securities held by Restricted Persons as provided
in Section 2, and, in connection with such resales such Restricted Persons shall
be entitled to exercise all rights, receive all notices and copies of documents,
and otherwise receive all benefits afforded to sellers or holders of Registrable
Securities under this Section 5 in connection with a Shelf Registration
Statement. Without limiting the generality of the foregoing, Funding Company
agrees to fulfill its obligations set forth in Sections 5(a), (b), (c), (d),
(e), (f), (h), (i), (l), and (m) with respect to any such Registration Statement
filed pursuant to Section 2 insofar as it covers such resales.
Funding Company may require each seller of Registrable Securities as
to which any registration is being effected, as a condition thereto, to furnish
to Funding Company such information regarding the holder and the distribution of
such Registrable Securities as Funding Company may, from time to time, request
in writing, including without limitation stating that (i) it is not an Affiliate
of Funding Company, (ii) the amount of Registrable Securities held by such
holder prior to the Exchange Offer, (iii) the amount of Registrable Securities
owned by such holder to be exchanged in the Exchange Offer and representing that
such holder is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any Person to participate in, a distribution
of the Exchange Securities to be issued, and (iv) it is acquiring the Exchange
Securities in its ordinary course of business and to covenant and agree to
promptly notify Funding Company if any such information so provided by such
seller ceases to be true and correct and will promptly thereafter furnish
Funding Company with corrected information. Funding Company may exclude from
such registration the Registrable Securities of any Person who fails to furnish
such information within a reasonable time after receiving such request.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from Funding Company of
the happening of any event of the kind described in Section 5(c)(ii), 5(c)(iii),
5(c)(iv) (with respect to the jurisdiction in question), 5(c)(v) or 5(c)(vi)
hereof, such holder shall forthwith discontinue disposition of such Registrable
Securities covered by such Registration Statement or Prospectus until such
holder is advised in writing (the "Advice") by Funding Company that the use of
the applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto and, if so directed by Funding Company, such
holder will deliver to Funding Company (at its expense) all copies in its
possession, other than permanent file copies then in such holder's possession,
of the prospectus covering such Registrable Securities current at the time of
receipt of such notice, or certify in writing as to the destruction thereof. In
the event Funding Company shall give any such notice, the length of the
Effective Period shall be extended by the number of days during such period from
and including the date of the giving of such notice to and including the date
when each seller of Registrable Securities covered by such Registration
Statement shall have received (x) the copies of the supplemented or amended
Prospectus contemplated by Section 5(i) or (y) the Advice.
SECTION 6. Delivery of Prospectus; Notification Upon Resale. The
Initial Purchaser acknowledges that it is the position of the staff of the
Commission that any broker-dealer that receives Exchange Securities for its own
account in exchange for Registrable Securities pursuant to the Exchange
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Offer must deliver a Prospectus in connection with any resale of such Resale
Securities. By so acknowledging, such Initial Purchaser shall not be deemed to
admit that, by delivering a Prospectus, it is an underwriter within the meaning
of the Securities Act.
The Initial Purchaser shall notify Funding Company promptly upon the
completion of the resale of the Resale Securities received by such Initial
Purchaser pursuant to the Exchange Offer.
SECTION 7. Registration Expenses.
Funding Company shall bear all expenses incurred in connection with
the performance of its obligations under Sections 2, 3 and 4; provided, however,
that Funding Company shall bear or reimburse the holders for the reasonable fees
and disbursements of only one counsel, the Special Counsel, in accordance with
the terms of the Purchase Agreement; provided, further, however, that if Funding
Company permits an Underwritten Offering, Funding Company shall not be
responsible for any fees and expenses of any underwriter including any
underwriting discounts and commissions or any legal fees and expenses of counsel
to the underwriters.
SECTION 8. Indemnification and Contribution.
(a) Funding Company agrees to (i) indemnify and hold harmless each
holder of Registrable Securities (including the Initial Purchaser) which holds
Registrable Securities, including Resale Securities, for its own account (each,
a "Resale Initial Purchaser") and each person, if any, who controls any such
person within the meaning of either the Securities Act or the Exchange Act and
each director, officer, employee or agent of each such Person (each a "Holder
Indemnified Party") against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them are subject under the Securities
Act, the Exchange Act, or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof,) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement covering Registrable Securities held by such person
or any Prospectus relating to any such Registration Statement, or any amendment
thereof or supplement thereto and all documents incorporated by reference
therein, or arise out of or are based upon the omission or alleged omission to
state therein a material fact necessary in order to make the statements therein,
in light of the circumstances in which they were made, not misleading, and (ii)
reimburse each such Holder Indemnified Party for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that Funding Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement or Prospectus, or in any
amendment thereof or supplement thereto, in reliance upon and in conformity with
written information relating to such holder provided by such holder to Funding
Company specifically for use therein (collectively, the "Holder Information");
provided, further, however, that the indemnity obligations arising out of this
Section 8 with respect to any untrue statement or alleged untrue statement or
omission or alleged omission made in any preliminary Prospectus shall not inure
to the benefit of any holder or any controlling Person of such holder if such
holder failed to send or deliver to the Person asserting any such losses a copy
of the final Prospectus with or prior to the delivery of the written
confirmation of the sale of the Registrable Securities or the Exchange
Securities, as the case may be, and such final Prospectus would have cured the
untrue statement or omission giving rise to such losses. This indemnity
agreement will be in addition to any liability which Funding Company may
otherwise have.
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(b) As a condition to the inclusion of a holder's Registrable
Securities in a Registration Statement, such holder shall agree to (i) indemnify
and hold harmless Funding Company and each person who controls Funding Company
within the meaning of either the Securities Act or the Exchange Act, and each
director, officer, employee or agent of each such person, against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them are subject under the Securities Act, the Exchange Act, or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in a Registration Statement covering
Registrable Securities held by such holder or any Prospectus relating to any
such Registration Statement or in any amendment thereof or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
light of the circumstances in which they were made, not misleading, and (ii)
reimburse each such indemnified party for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred; in each and
every case under clause (i) and (ii) above to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in such Registration Statement or Prospectus or in any
amendment thereof or supplement thereto, in reliance upon and in conformity with
the Holder Information. This indemnity agreement will be in addition to any
liability which any such holder may otherwise have. In no event shall the
liability of any selling holder of Registrable Securities hereunder be greater
in amount than the dollar amount of the proceeds (net of payment of all
expenses) received by such holder upon the sale (or, in the case of Resale
Securities, the resale) of the Registrable Securities giving rise to such
indemnification obligation.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof
(enclosing a copy of all papers served); but the omission to so notify the
indemnifying party (i) shall not relieve it from liability under paragraph (a)
or (b) above unless and to the extent it did not otherwise learn of such action
and such omission results in the forfeiture by the indemnifying party or
material impairment of rights and defenses and (ii) shall not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligations provided in paragraph (a) or (b)
above. In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party. After notice from the indemnifying party to such indemnified party of its
election to so assume the defense of such claim or action, the indemnifying
party will not be liable to such indemnified party under this Section 8 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than costs of investigation; provided
that if (i) the defendants in any such action include both the indemnified party
and the indemnifying party, the indemnified party shall have received the
written opinion of counsel reasonably acceptable to the indemnifying party that
representation of both parties by the same counsel would be inappropriate due to
actual or likely conflicts of interest between them, or (ii) the indemnifying
party shall not have employed counsel for the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action, then the indemnified party or parties shall have the right to
select one firm of separate counsel to assert any separate legal defenses and to
otherwise defend such action on behalf of such indemnified party or parties. No
indemnifying party shall be liable for any settlement of any action or claim for
monetary damages which an indemnified party may effect without the written
consent of the indemnifying party, which consent shall not be unreasonably
withheld.
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(d) If the indemnification provided for in Section 8(a) or (b) hereof
is for any reason, other than as specified in such provisions, unavailable to or
insufficient to hold harmless an indemnified party, then each indemnifying party
shall contribute to the aggregate losses, claims, damages or liabilities (or
actions in respect thereof) referred to in Section 8(a) or (b) hereof in such
proportion as is appropriate to reflect the relative fault and benefits to
Funding Company on the one hand and such holders on the other hand in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of Funding Company and such holders
shall be determined by reference to, among other things, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
any untrue statement or omission. The obligations of the holders in this Section
8(d) are several in proportion to their respective obligations hereunder and not
joint. Notwithstanding the provisions of this Section 8(d), in no event shall
any holder of Registrable Securities be required to contribute any amount which
is in excess of (i) the aggregate principal amount of Initial Securities sold or
exchanged by such holder less (ii) the amount of any damages that such person
has otherwise been required to pay by reason of such alleged untrue statement or
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 8, each Holder Indemnified Party shall have the same rights to
contribution as a holder, and each person who controls Funding Company within
the meaning of either the Securities Act or the Exchange Act and each officer,
director, employee and agent of such person, shall have the same rights to
contribution as Funding Company, subject in each case to the applicable terms
and conditions of this Section 8(d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 8(d), notify such
party or parties from whom contribution may be sought; but the omission to so
notify such party or parties (x) shall not relieve the party or parties from
whom contribution may be sought from any liability under this Section 8(d)
unless and to the extent it did not otherwise learn of such action and such
omission results in the forfeiture by the party or parties from whom
contribution may be sought or material impairment of substantial rights and
defenses and (y) shall not, in any event, relieve such party or parties from any
obligations other than under this Section 8(d).
(e) The provisions of this Section 8 will remain in full force and
effect, regardless of any investigation made by or on behalf of any holder of
Registrable Securities, the Initial Purchaser, Funding Company or any of the
officers, directors or controlling persons referred to in this Section 8 and
will survive the sale (or, in the case of Resale Securities, the resale) by a
holder of Registrable Securities of such Registrable Securities.
SECTION 9. Underwritten Registrations (If Any). No holder may
participate in any Underwritten Registration, which Underwritten Registration
shall only be undertaken at the option of Funding Company, unless such holder
(a) agrees to sell such holder's Initial Securities on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
SECTION 10. Termination. In the event that no Initial Securities are
sold to the Initial Purchaser pursuant to the Purchase Agreement or the
Registrable Securities have been paid in full and are no longer outstanding,
this Agreement shall automatically terminate, without liability on the part of
any party. Upon the fulfillment of all obligations on the part of Funding
Company to register the Initial Securities as set forth herein (including
maintaining the effectiveness of any applicable Registration
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Statements), this Agreement shall terminate; provided, that the provisions of
Sections 7 and 8 hereof shall survive any termination and remain in full force
and effect.
SECTION 11. Limitation of Liability. Notwithstanding anything to the
contrary contained herein, the obligations of Funding Company hereunder are
solely the obligations of Funding Company and payable from, and recourse solely
to, the Funding Company's interest in the Funding Collateral following
application of the Funding Company Collateral in or towards the discharge of the
Secured Obligations and the obligations of Funding Company under each other
Transaction Document. No recourse shall be had against any Non-Recourse Person
subject to the exceptions set forth in Section 11.11 (Limitation of Liability)
of the Indenture.
SECTION 12. Miscellaneous.
(a) No Inconsistent Agreements. Funding Company has not, as of the
date hereof, entered into, and shall not, on or after the date hereof, enter
into, any agreement with respect to its securities that is inconsistent with the
rights granted to the holders of Registrable Securities herein or otherwise
conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless Funding Company has obtained the written consent of
holders of at least a majority of the then outstanding aggregate principal
amount of the Registrable Securities (or, after the consummation of any Exchange
Offer in accordance with Section 2, of Exchange Securities); provided that, with
respect to any matter that directly or indirectly affects the rights of any
Restricted Person hereunder occurring within the period in which the Initial
Registration Statement is open for the Restricted Persons, Funding Company shall
obtain the written consent of each such Restricted Person against which such
amendment, modification, supplement, waiver or consent is to be effective.
Notwithstanding the foregoing (except for the foregoing proviso), a waiver or
consent to departure from the provisions hereof with respect to a matter that
relates exclusively to the rights of holders of Registrable Securities whose
securities are being sold or exchanged pursuant to a Registration Statement and
that does not directly or indirectly affect the rights of other holders of
Registrable Securities may be given by holders of at least a majority of
aggregate principal amount of the Registrable Securities being sold or exchanged
by such holders pursuant to such Registration Statement; provided, however, that
the provisions of this sentence may not be amended, modified or supplemented
except in accordance with the provision of the immediately preceding sentence.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Resale Initial Purchasers and that does not directly or indirectly
affect the rights of holders of Registrable Securities or Exchange Securities
may be given by each of the Resale Initial Purchasers affected thereby.
(c) Notices. All notices and other communications (including, without
limitation, any notices or other communications to the Bond Trustee) provided
for or permitted hereunder shall be made in writing and delivered by hand
delivery, registered first-class mail, next-day air courier or telecopier:
(i) if to a holder of Registrable Securities, at the most current
address given by such holder to Funding Company in accordance with the
provisions of this Section 12(c), which address initially is, with respect
to the Initial Purchaser, at the address set forth in the Purchase
Agreement and thereafter at the address for such holders of Registrable
Securities set forth in the Security Register applicable to such
Registrable Securities; and
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(ii) if to Funding Company, initially at the address set forth in the
Purchase Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 12(c).
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier; and when received, if
telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Bond Trustee at the
address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment or
any consent by Funding Company thereto, subsequent holders of Registrable
Securities.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principles of conflicts of laws (other than Section 5-1401 of the New York
General Obligations Law). Each of the parties hereto hereby submits to the
non-exclusive jurisdiction of the Federal and State Courts of the Borough of
Manhattan in the City of New York in any suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
(i) Entire Agreement. This Agreement, together with the Purchase
Agreement, is intended by the parties as a final expression of their agreement,
and is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement, together with the Purchase Agreement, supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
(j) Securities Held by Funding Company, etc. Whenever the consent or
approval of holders of a specified percentage of principal amount of Registrable
Securities is required hereunder, Registrable Securities held by Funding Company
or any of its Affiliates (other than subsequent holders of Registrable
Securities if such subsequent holders are deemed to be Affiliates solely by
reason of their
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holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the holders of such required
percentage.
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Please confirm that the foregoing correctly sets forth this agreement
between Funding Company and you.
Very truly yours,
YORK POWER FUNDING (CAYMAN) LIMITED
By:
-----------------------------
Name: Martin Couch
Title: Director
Accepted in New York, New York
, 1998
CREDIT SUISSE FIRST BOSTON CORPORATION
By:
-----------------------------------
Name:
Title:
19
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Exhibit 99.2
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
------------------------------------------
YORK POWER FUNDING (CAYMAN) LIMITED
$150,000,000 12.0 % Senior Secured Bonds
Due October 30, 2007
August 4, 1998
CREDIT SUISSE FIRST BOSTON CORPORATION
11 Madison Avenue
New York, New York 10010
Ladies and Gentlemen:
In connection with the issue and sale of $150,000,000 principal amount
of 12.0% Senior Secured Bonds Due October 30, 2007 (the "Initial Securities")
issued by York Power Funding (Cayman) Limited, a limited liability company
incorporated under the laws of the Cayman Islands (the "Funding Company")
pursuant to the terms of the Trust Indenture dated August 4, 1998 (the
"Indenture") between Funding Company and The Bank of New York, as Bond Trustee,
and as an inducement to Credit Suisse First Boston Corporation (the "Initial
Purchaser") to enter into the Purchase Agreement dated July 30, 1998 (the
"Purchase Agreement") among Funding Company, New World Power Texas Renewable
Energy L.P., Brooklyn Navy Yard Power LLC, York Holdings (Barbados) SRL,
Warbasse Power I LLC, Warbasse II LLC, and the Initial Purchaser, Funding
Company hereby agrees to provide the exchange and registration rights set forth
in this Exchange and Registration Rights Agreement (this "Agreement") for the
benefit of the holders of the Initial Securities. The execution of this
Agreement is a condition to the purchase of the Initial Securities under the
Purchase Agreement.
<PAGE>
SECTION 1. Definitions. Capitalized terms used herein without
definition shall have the respective meanings ascribed thereto, whether
expressly or by reference to another agreement or document, in the Indenture.
The definitions set forth in this Agreement shall equally apply to both the
singular and plural forms of the terms defined. As used in this Agreement, the
following terms shall have the following meanings:
"Advice" shall have the meaning set forth in the last paragraph of
Section 5 of this Agreement.
"Affiliate", with respect to any Person, shall mean any other Person
that directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such first Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities or by contract or otherwise. For
purposes of Section 2, an "Affiliate" of Funding Company shall mean and include,
in addition, any Person deemed an affiliate thereof under the Securities Act or
the Exchange Act in connection with the Exchange Offer.
"Cure Date" shall have the meaning set forth in Section 4(a) of this
Agreement.
"Effective Date" shall mean the date which is 180 days after the
Closing Date.
"Effective Period" shall have the meaning set forth in Section 3(a) of
this Agreement.
"Exchange Offer" shall have the meaning set forth in Section 2(a) of
this Agreement.
"Exchange Offer Registration Statement" shall have the meaning set
forth in Section 2(a) of this Agreement.
"Exchange Period" shall have the meaning set forth in Section 2(a) of
this Agreement.
"Exchange Securities" shall have the meaning set forth in Section 2(a)
of this Agreement.
A "holder" of Registrable Securities shall mean the registered holder
of such securities or any beneficial owner thereof.
"Holder Indemnified Party" shall have the meaning set forth in Section
8(a) of this Agreement.
"Holder Information" shall have the meaning set forth in Section 8(a)
of this Agreement.
"Illiquidity Event" with respect to the Initial Securities which
constitute Registrable Securities shall mean any of the following events:
(a) as of the Effective Date, both (i) an Exchange Offer Registration
Statement (which, if applicable pursuant to Section 2(a), covers resales of
such Exchange Securities) has not become effective and (ii) the Registrable
Securities are not the subject of an Initial Shelf Registration Statement
which has become effective; or
(b) the Exchange Securities offered in exchange for the Registrable
Securities are the subject of an Exchange Offer Registration Statement
which was effective (and which, if
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applicable pursuant to Section 2(a), covered resales of such Exchange
Securities) but which ceased to be effective for any reason prior to the
end of the Exchange Period and an Initial Registration Statement covering
such Registrable Securities has not become effective; or
(c) the Registrable Securities are the subject of an Initial Shelf
Registration Statement or Subsequent Shelf Registration Statement which was
effective but which has ceased to be effective for any reason prior to the
end of the Effective Period.
An Illiquidity Event shall be deemed to cease to exist on the date
subsequent to the occurrence of such Illiquidity Event on which:
(i) in the case of an Illiquidity Event described in clause (a) above
either (i) an Exchange Offer Registration Statement (which, if applicable
pursuant to Section 2(a), covers resales of the Exchange Securities
exchanged for such Registrable Securities) shall become effective and an
Exchange Offer for such Registrable Securities shall have commenced or (ii)
an Initial Shelf Registration Statement covering such Registrable
Securities shall become effective; or
(ii) in the case of an Illiquidity Event described in clause (b)
above, either (i) an Exchange Offer Registration Statement (which, if
applicable pursuant to Section 2(a), covers resales of the Exchange
Securities offered in exchange for such Initial Securities) shall become
effective and an Exchange Offer for such Registrable Securities shall have
commenced pursuant to an Exchange Offer Registration Statement or (ii) an
Initial Shelf Registration Statement covering such Registrable Securities
shall become effective; or
(iii) in the case of an Illiquidity Event described in clause (c)
above, a Subsequent Shelf Registration Statement covering such Registrable
Securities shall become effective.
"Initial Shelf Registration Statement" shall have the meaning set
forth in Section 3(a) of this Agreement.
"Inspectors" shall have the meaning set forth in Section 5(m) of this
Agreement.
"Managing Underwriters" shall mean the investment banker or investment
bankers and manager or managers that shall administer an Underwritten Offering.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Prospectus" shall mean the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments and all material incorporated by reference into such prospectus.
"Records" shall have the meaning set forth in Section 5(m) of this
Agreement.
"Registrable Securities" shall mean the Initial Securities upon
original issuance thereof and at all times subsequent thereto until, in the case
of any such Initial Security, (i) a Registration Statement covering such Initial
Security, or the Exchange Security to be exchanged for such Initial Security
(and, in the case of any Resale Security, any resale thereof), has been declared
effective and such
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Initial Security has been disposed of or exchanged (or, in any case where such
Registration Statement covers the resale of Resale Securities, such Initial
Security has been exchanged and the Resale Security received therefor has been
resold), as the case may be, in accordance with such effective Registration
Statement, (ii) it is sold in compliance with Rule 144 or would be permitted to
be sold pursuant to Rule 144(k), (iii) it shall have been otherwise transferred
and a new certificate for any such Initial Security not bearing a legend
restricting further transfer shall have been delivered by or on behalf of
Funding Company and such Initial Security shall be tradeable by each holder
thereof without restriction under the Securities Act or the Exchange Act and
without material restriction under the applicable Blue Sky or state securities
laws or (iv) it ceases to be outstanding.
"Registration Statement" shall mean any registration statement
(including any Shelf Registration Statement or other Registration Statement
available to Funding Company under the Securities Act as a foreign private
issuer) of Funding Company that covers any of the Registrable Securities or the
Exchange Securities, as the case may be, pursuant to the provisions of this
Agreement, including the Prospectus which is part of such Registration
Statement, amendments (including post-effective amendments) and supplements to
such Registration Statement and all exhibits and appendices to any of the
foregoing. For purposes of the foregoing, unless the context requires otherwise,
a Registration Statement for an Exchange Offer shall not be deemed to cover
Registrable Securities held by a Restricted Person unless such Registration
Statement covers the resale of Resale Securities to be received by such
Restricted Person pursuant to such Exchange Offer and any such Initial
Securities shall continue to be Registrable Securities.
"Resale Initial Purchaser" shall have the meaning set forth in Section
8(a) of this Agreement.
"Resale Securities" shall mean any Exchange Security received by a
Restricted Person pursuant to an Exchange Offer, and at all times subsequent
thereto, until, subject to the time periods set forth herein, such Exchange
Security has been resold by such Restricted Person.
"Restricted Person" shall mean (a) any Affiliate of Funding Company,
(b) the Initial Purchaser or (c) any Affiliate of the Initial Purchaser (other
than Affiliates of the Initial Purchaser that (i) are acquiring Exchange
Securities in the ordinary course of business and do not have an arrangement
with any Person to distribute Exchange Securities and (ii) may trade such
Exchange Securities without restriction under the Securities Act).
"Rule 415" shall mean Rule 415 under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Shelf Notice" shall have the meaning set forth in Section 2(b) of
this Agreement.
"Shelf Registration Statement" shall have the meaning set forth in
Section 3(b) of this Agreement.
"Special Counsel" shall mean Skadden, Arps, Slate, Meagher & Flom LLP,
special counsel to the Initial Purchaser, or any other firm acceptable to
Funding Company, acting as special counsel to the holders of Registrable
Securities or Exchange Securities.
"Subsequent Shelf Registration Statement" shall have the meaning set
forth in Section 3(b) of this Agreement.
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"Underwritten Registration" or "Underwritten Offering" shall mean a
registration in which securities are sold to an underwriter or group of
underwriters for reoffering to the public.
SECTION 2. Exchange Offer.
(a) Unless Funding Company determines in good faith that the Exchange
Offer shall not be permissible under Applicable Law or Commission policy,
Funding Company shall prepare and cause to be filed with the Commission as soon
as reasonably practicable after the Closing Date, subject to Sections 2(b) and
2(c) of this Agreement, a Registration Statement (an "Exchange Offer
Registration Statement") for an offer to exchange (an "Exchange Offer") the
Registrable Securities (subject to Section 2(c)) for a like aggregate principal
amount of debt securities of Funding Company that are in all material respects
substantially identical to the Initial Securities (the "Exchange Securities")
(and which are entitled to the benefits of the Indenture, which shall be
qualified under the Trust Indenture Act in connection with such registration or
a trust indenture which is substantially identical in all material respects to
the Indenture), other than (i) such changes to the Indenture or any such
substantially identical indenture as the Bond Trustee and Funding Company may
deem necessary in connection with the Bond Trustee's rights and duties or to
comply with any requirements of the Commission to effect or maintain the
qualification thereof under the Trust Indenture Act and (ii) such changes
relating to restrictions on transfer set forth in the Indenture. The Exchange
Offer shall be registered under the Securities Act on the appropriate form of
Registration Statement and shall comply with all applicable tender offer rules
and regulations under the Exchange Act and with all other Applicable Laws.
Subject to the terms and limitations of Section 2(c), such Exchange Offer
Registration Statement may also cover any resales of Exchange Securities by any
Restricted Person, in the manner or manners designated by them which, in any
event, is reasonably acceptable to Funding Company.
Funding Company shall use its reasonable best efforts to (i) cause the
Exchange Offer Registration Statement to become effective under the Securities
Act on or prior to the Effective Date, (ii) keep the Exchange Offer open for a
period of not less than the shorter of (A) the period ending when the last
remaining Initial Security is tendered into the Exchange Offer and (B) 30 days
from the date notice is mailed to the holders of Initial Securities (provided
that in no event shall such period be less than the period required under
applicable Federal and state securities laws), and (iii) maintain such Exchange
Offer Registration Statement continuously effective for a period (the "Exchange
Period") of not less than the longer of (A) the period until the consummation of
the Exchange Offer and (B) 120 days after effectiveness of the Exchange Offer
Registration Statement, provided however, that in the event that all resales of
Exchange Securities (including, subject to the time periods set forth herein,
any Resale Securities and including, subject to the time periods set forth
herein, any resales by broker-dealers that receive Exchange Securities for their
own account pursuant to the Exchange Offer) covered by such Exchange Offer
Registration Statement have been made, the Exchange Offer Registration Statement
need not remain continuously effective for the period set forth in clause (B)
above. Upon consummation of the Exchange Offer, Funding Company shall deliver to
the Bond Trustee under the Indenture for cancellation all Initial Securities
tendered by the holders thereof pursuant to the Exchange Offer and not withdrawn
prior to the Consummation Date. Each Restricted Person shall notify Funding
Company promptly after reselling all Resale Securities held by such Restricted
Person which are covered by any such Registration Statement.
Each holder of Registrable Securities to be exchanged in the Exchange
Offer (other than any Restricted Person) shall be required as a condition to
participating in the Exchange Offer to represent that (i) it is not an Affiliate
of Funding Company, (ii) any Exchange Securities to be received by it shall be
acquired in the ordinary course of its business and (iii) that at the time of
the consummation of the Exchange Offer it shall have no arrangement with any
person to participate in the distribution (within the
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meaning of the Securities Act) of the Exchange Securities. Upon consummation of
an Exchange Offer in accordance with this Section 2 and compliance with the
other provisions of this Section 2, Funding Company shall, subject to Sections
2(b) and 2(c), have no further obligation to register Registrable Securities
pursuant to Section 3(a) of this Agreement; provided that the other provisions
of this Agreement shall continue to apply as set forth in such provisions.
(b) In the event that Funding Company reasonably determines in good
faith that (i) the Exchange Securities would not, upon receipt in the Exchange
Offer by any holder of Registrable Securities (other than any Restricted Person
and other than any holder who is not acquiring such Exchange Securities in the
ordinary course of business or who has an arrangement with any person to
participate in the distribution of such Exchange Securities) be tradeable by
each holder thereof without restriction under the Securities Act and the
Exchange Act and without restriction under applicable Blue Sky or state
securities laws, (ii) after conferring with counsel, the Commission is unlikely
to permit the Exchange Offer Registration Statement to become effective prior to
the Effective Date (except in the circumstances set forth in Section 2(c)) or
(iii) the Exchange Offer may not be made in compliance with Applicable Laws,
then Funding Company shall promptly deliver notice thereof (the "Shelf Notice")
to the holders of the Registrable Securities and the Bond Trustee and shall
thereafter file an Initial Shelf Registration Statement pursuant to, and
otherwise comply with, the provisions of Section 3(a). Following the delivery of
a Shelf Notice in accordance with this Section 2(b) and compliance with Section
3(a), Funding Company shall not have any further obligation under this Section
2.
(c) In the event that Funding Company reasonably determines in good
faith that (i) the Exchange Securities would not, upon consummation of any
resale thereof by a Restricted Person to any Person other than another
Restricted Person, be tradeable by each holder thereof without restriction under
the Securities Act (other than applicable prospectus requirements) and the
Exchange Act and without restriction under applicable Blue Sky or state
securities laws or (ii) the Commission is unlikely to permit the Exchange Offer
Registration Statement to become effective prior to the Effective Date solely
because such Registration Statement covers resales of the Exchange Securities by
Restricted Persons, then Funding Company shall promptly deliver a Shelf Notice
to the Restricted Persons who are holders of Registrable Securities and the Bond
Trustee, and Funding Company shall thereafter file an Initial Shelf Registration
Statement with respect to any such Registrable Securities pursuant to, and
otherwise comply with, the provisions of Section 3(a); provided that such
Initial Shelf Registration Statement shall only cover resales of Registrable
Securities by Restricted Persons if a Shelf Notice is not then otherwise
required to be delivered pursuant to Section 2(b) and provided further that such
Initial Shelf Registration Statement covering Registrable Securities held by
Restricted Persons shall be kept effective for at least a period of 120 days and
is not required to remain effective with respect to such Registrable Securities
held by Restricted Persons thereafter. Following the delivery of a Shelf Notice
in accordance with this Section 2(c) and compliance with Section 3(a), Funding
Company shall not have any further obligation under this Section 2 with respect
to the filing of an offer to exchange the Registrable Securities held by the
Restricted Persons (including, without limitation, any obligation to provide
that an Exchange Offer Registration Statement filed pursuant to Section 2(a)
cover resales of Exchange Securities by Restricted Persons); provided that the
provisions of this Section 2 shall otherwise remain in full force and effect
with respect to Registrable Securities held by any person other than a
Restricted Person.
SECTION 3. Shelf Registration; Registrable Securities. With respect to
the Registrable Securities, if a Shelf Notice is delivered in accordance with
Section 2(b) or (c) of this Agreement, then Funding Company shall comply with
the following provisions of this Section 3:
(a) Initial Shelf Registration. Funding Company shall prepare and
cause to be filed with the Commission a Registration Statement for an offering
to be made on a continuous basis other than
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pursuant to an Underwritten Offer pursuant to Rule 415 covering all of the
Registrable Securities (or, if a Shelf Notice is delivered solely pursuant to
Section 2(c), all of the Registrable Securities held by any Restricted Persons)
(the "Initial Shelf Registration Statement"); provided, however, that no holder
shall be entitled to have its Registrable Securities covered by such Initial
Shelf Registration Statement unless such holder agrees in writing, within 10
Business Days after actual receipt of a request therefrom, to be bound by all
the provisions of this Agreement applicable to such a holder. No holder shall be
entitled to the benefits of Section 4 of this Agreement unless and until such
Holder shall have provided all information reasonably requested by Funding
Company (after conferring with counsel), and such holder shall not be entitled
to such benefits with respect to any period during which such information was
not provided. Each holder to which any Shelf Registration Statement is being
effected agrees to furnish promptly to Funding Company all information required
to be disclosed in order to make the information previously furnished to Funding
Company by such holder not materially misleading. The Initial Shelf Registration
Statement shall be an appropriate form permitting registration of such
Registrable Securities for resale by the holders thereof in the manner or
manners reasonably designated by them (but excluding any Underwritten
Offerings). Funding Company shall use its reasonable best efforts to (A) cause
the Initial Shelf Registration Statement to be declared effective under the
Securities Act on or prior to the Effective Date and (B) keep the Initial Shelf
Registration Statement continuously effective under the Securities Act for a
period of two years after the Closing Date (subject to extension pursuant to the
last paragraph of Section 5 and subject, with respect to Registrable Securities
held by Restricted Persons, to the limitations set forth in Section 2(c)) (such
two-year period, as it may be extended, being the "Effective Period"), or such
shorter period ending when (1) all Registrable Securities covered by the Initial
Shelf Registration Statement have been sold or (2) a Subsequent Shelf
Registration Statement covering all of such Registrable Securities remaining
unsold has been declared effective under the Securities Act, (3) all Registrable
Securities may be sold pursuant to subsection (k) of Rule 144 or (4) all
Registrable Securities cease to be outstanding.
Notwithstanding any other provision hereof, Funding Company may
postpone or suspend the filing or the effectiveness of a Registration Statement
(or any amendments or supplements thereto), if (1) such action is required by
Applicable Law, or (2) such action is taken by Funding Company in good faith and
for valid business reasons (not including avoidance of Funding Company's
obligations hereunder), including the acquisition or divestiture of assets,
other pending corporate developments, public filings with the Commission or
other similar events, so long as Funding Company promptly thereafter complies
with the requirements of Section 5(b) hereof, if applicable. Notwithstanding the
occurrence of any event referred to in the immediate preceding sentence (a
"Suspension"), such event shall not suspend, postpone or in any other manner
affect the running of the time period after which an Illiquidity Event shall be
deemed to occur and, if the filing or effectiveness of the Registration
Statement is postponed or suspended as a result of a Suspension, an Illiquidity
Event shall nonetheless exist if all other requirements set forth for the
occurrence of an Illiquidity Event shall be satisfied, and the provisions of
Section 4 requiring the accrual payment of additional interest, as set forth in
such Section 4, on the Registrable Securities, shall be applicable.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
Statement or any Subsequent Shelf Registration Statement ceases to be effective
for any reason at any time during the Effective Period after the Effective Date,
Funding Company may attempt to obtain the withdrawal of any order suspending the
effectiveness thereof, and may amend such Initial Shelf Registration Statement
or Subsequent Shelf Registration Statement in a manner reasonably expected to
obtain the withdrawal of the order suspending the effectiveness thereof, or file
an additional "shelf" Registration Statement applicable to the Initial
Securities pursuant to Rule 415 covering all of such Registrable Securities
remaining unsold (a "Subsequent Shelf Registration Statement"). If a Subsequent
Shelf Registration Statement is declared effective, Funding Company shall use
its reasonable best efforts to keep such Shelf Registration
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Statement continuously effective for a period after the date of such
effectiveness equal in length to the length of the Effective Period plus the
aggregate number of days from the date of the order suspending the effectiveness
of the Initial Shelf Registration Statement or any Subsequent Shelf Registration
Statement to the date of the effectiveness of the Subsequent Shelf Registration
Statement. As used herein, the term "Shelf Registration Statement" means the
Initial Shelf Registration Statement and any Subsequent Shelf Registration
Statement.
SECTION 4. Additional Interest for Illiquidity.
(a) Funding Company acknowledges and agrees that the Initial Purchaser
(and any subsequent holders of the Initial Securities) has acquired Initial
Securities in reliance on Funding Company's covenant to use its reasonable best
efforts to (i) cause to become effective on or prior to the Effective Date (A)
the Exchange Offer Registration Statement or (B) an Initial Shelf Registration
Statement, and (ii) maintain the respective effectiveness of such Registration
Statements as described herein. Funding Company further acknowledges and agrees
that the failure of Funding Company to fulfill such covenants will have an
adverse effect on the holders of the Initial Securities. Therefore, Funding
Company agrees that from and after the date on which any Illiquidity Event
occurs, additional interest (in addition to the interest otherwise payable with
respect to the Registrable Securities) shall accrue with respect to the Initial
Securities until but not including the date on which such Illiquidity Event
shall cease to exist (and provided no other Illiquidity Event with respect to
Initial Securities shall then be continuing), at the rate of one half of one
percent (0.50%) per annum, which additional interest shall be payable by Funding
Company to the holders of all Initial Securities at the times, in the manner and
subject to the same terms and conditions set forth in the Indenture, as nearly
as may be, as though the interest rates provided in such Initial Securities had
been increased by one half of one percent (0.50%) per annum. Notwithstanding
that the Illiquidity Event may cease to exist, in the event that an Exchange
Offer Registration Statement or an Initial Shelf Registration Statement has not
become effective within two years after the Closing Date, the interest rates on
the Initial Securities otherwise payable as provided in the Indenture shall
permanently remain increased by such one half of one percent (0.50%) per annum.
Subject to the provisions of this Section 4, Funding Company agrees that it
shall be liable to the holders of all Initial Securities for the payment of any
and all additional interest on the Initial Securities that shall accrue pursuant
to this Section 4.
Any such additional interest accrued on any such Initial Securities
but unpaid on the date on which such interest ceases to accrue (the "Cure Date")
shall be due and payable on the first interest payment date following the next
record date following such Cure Date (or the record date occurring on such Cure
Date, if such Cure Date is a record date) to the holders of record of such
Initial Securities on such record date.
(b) Funding Company shall promptly notify the holders of the Initial
Securities and the Bond Trustee of the occurrence of any Illiquidity Event of
which it has knowledge.
Notwithstanding the foregoing, Funding Company shall not be required
to pay the additional interest described in clause (a) of this Section 4 to a
holder with respect to the Registrable Securities held by such holder if the
applicable Illiquidity Event arises by reason of the failure of such holder to
provide such information that (i) Funding Company may reasonably request, with
reasonable prior written notice, for use in the Shelf Registration Statement or
any Prospectus included therein to the extent Funding Company reasonably
determines that such information is required to be included therein by
Applicable Law, (ii) the NASD or the Commission may request in connection with
such Shelf Registration Statement, or (iii) is required to comply with the
agreements of such holder contained in
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clause (a) of Section 3 to the extent compliance thereof is necessary for the
Shelf Registration Statement to be declared effective.
SECTION 5. Registration Procedures. In connection with the
registration of any Registrable Securities or Exchange Securities pursuant to
Sections 2 and 3 hereof, Funding Company shall use its reasonable best efforts
to effect such registration to permit the sale of such Registrable Securities or
Exchange Securities in accordance with any permitted intended method or methods
of disposition thereof, and pursuant thereto Funding Company shall:
(a) prepare and cause to be filed with the Commission a Registration
Statement or Registration Statements as prescribed by Sections 2 and 3 of this
Agreement, and use its best efforts to cause each such Registration Statement to
become effective and remain effective for the applicable period as provided
herein; provided, however, that (i) during the period in which the Initial
Registration Statement is open for the Restricted Persons, Funding Company shall
afford any Restricted Person which is a holder of Registrable Securities or
Exchange Securities and the Special Counsel, upon such holder's written request
to Funding Company, an opportunity to review copies of all such documents
proposed to be filed, and (ii) if such filing is pursuant to Section 3, before
filing any Registration Statement or Prospectus or any amendments or supplements
thereto (including documents that would be incorporated therein by reference
after the initial filing of the Registration Statement), Funding Company shall
afford the Special Counsel for all holders of the Registrable Securities covered
by such Registration Statement an opportunity to review copies of all such
documents proposed to be filed;
(b) prepare and cause to be filed with the Commission such amendments
and post-effective amendments to each Shelf Registration Statement as may be
necessary to keep such Registration Statement continuously effective for the
Effective Period as provided herein; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder with respect to the disposition of all securities covered by such
Registration Statement as so amended or in such Prospectus as so supplemented in
accordance with the intended methods of disposition by the sellers of
Registrable Securities covered thereby set forth therein;
(c) if a Shelf Registration Statement is filed pursuant to Section 3
hereof, notify the selling holders of Registrable Securities promptly after
Funding Company becomes aware, and confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the
Commission for amendments or supplements to the Registration Statement or the
Prospectus, or for additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus or Prospectus or the initiation of any proceedings for that purpose,
(iv) of the receipt by Funding Company of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Securities for offer or sale in
any jurisdiction, or the initiation of any proceeding for such purpose, (v) of
the existence of any fact known to Funding Company which results in such
Registration Statement or related Prospectus or any document incorporated
therein by reference containing any untrue statement of a material fact or
omitting to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading (which notice may be accompanied by an instruction
that such notice constitutes material non-public information and to suspend the
use of the prospectus until the requisite changes have been made, and which
instruction shall require that such holders shall not communicate such material
non-public
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information to any third party and shall not sell or purchase, or
offer to sell or purchase, any securities of Funding Company after receipt of
such notice), and (vi) if Funding Company reasonably determines that the filing
of a post-effective amendment to such Registration Statement would be
appropriate;
(d) if a Shelf Registration Statement is filed pursuant to Section 3,
use its reasonable efforts to prevent the issuance of any order suspending the
effectiveness of a Registration Statement or of any order preventing or
suspending the use of a Prospectus or suspending the qualification (or exemption
from qualification) of any of the Registrable Securities for sale in any
jurisdiction and, if any such order is issued, to obtain the withdrawal of any
such order at the earliest possible moment;
(e) if a Shelf Registration Statement is filed pursuant to Section 3,
furnish to each selling holder of Registrable Securities who so requests (at
such holder's address set forth in the Securities Register) without charge, one
conformed copy of the Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including
those incorporated by reference);
(f) if a Shelf Registration Statement is filed pursuant to Section 3,
deliver to each selling holder of Registrable Securities without charge, as many
copies of the Prospectus (including each preliminary prospectus) and each
amendment or supplement thereto as such persons may reasonably request; and,
subject to the last paragraph of this Section 5, Funding Company hereby consents
to the use of such Prospectus and each amendment or supplement thereto by each
of the selling holders of Registrable Securities and the underwriters, if any,
in connection with the offering and sale of the Registrable Securities covered
by such Prospectus and any amendment or supplement thereto;
(g) prior to any public offering of Registrable Securities, register
or qualify, or cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
the underwriters, if any, may reasonably request in writing (provided that, if
Registrable Securities are offered other than through an Underwritten Offering,
Funding Company agrees to cause its counsel to perform Blue Sky investigations
and file registrations and qualifications required to be filed pursuant to this
Section 5(g)); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be kept effective; and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the applicable Registration Statement; provided, however,
that Funding Company will not be required to qualify as a foreign corporation,
or to do business, to file a general consent or take any action which would
subject it to service of process in any jurisdiction or take any action which
would subject itself to taxation in any such jurisdiction;
(h) if a Shelf Registration Statement is filed pursuant to Section 3,
cooperate with the Bond Trustee, and the selling holders of Registrable
Securities to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which certificates shall not
bear any restrictive legends and shall be in a form eligible for deposit with
DTC, and enable such Registrable Securities to be in such authorized
denominations and registered in such names as the holders may reasonably request
at least three business days prior to any such sale;
(i) if a Shelf Registration Statement is filed pursuant to Section 3,
upon the occurrence of any event contemplated by Section 5(c), prepare a
supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the
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Registrable Securities, such Prospectus will not contain an untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If Funding Company so notifies the holders to suspend the use of
the Prospectus after the occurrence of such an event, the holders shall suspend
use of the Prospectus, and not communicate such material non-public information
to any third party, and not sell or purchase, or offer to sell or purchase, any
securities of Funding Company, until Funding Company has amended or supplemented
the Prospectus to correct such misstatement or omission;
(j) use its reasonable best efforts to cause the Registrable
Securities covered by the Registration Statement to continue to be rated by the
rating agencies that initially rated the Initial Securities during the period
that the Registration Statement is required hereunder to remain effective (it
being acknowledged, however, that the foregoing shall not be deemed to require
Funding Company to maintain the rating of such Registrable Securities at the
rating given the Initial Securities);
(k) prior to the effective date of the first Registration Statement
relating to the Registrable Securities or the Exchange Securities, as the case
may be, (i) provide the Bond Trustee with printed certificates for such
securities in definitive form or in a global form eligible for deposit with DTC
and (ii) provide a CUSIP number for such Registrable Securities or Exchange
Securities represented by such certificates;
(l) if a Shelf Registration Statement is filed pursuant to Section 3,
enter into such reasonably required agreements and take all other appropriate
actions in order to expedite or facilitate the registration or the disposition
of such Registrable Securities;
(m) in the event of any Underwritten Offering (which shall only be
undertaken at the option of Funding Company), if a Shelf Registration Statement
is filed pursuant to Section 3, make available prior to the filing thereof for
inspection by a representative of the holders of a majority in aggregate
principal amount of the Registrable Securities being sold, and the Special
Counsel, on the one hand, or underwriter on the other hand (collectively, the
"Inspectors"), during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of Funding Company and its
subsidiaries (collectively, the "Records"), and cause the officers, directors
and employees of Funding Company and its subsidiaries to supply all relevant
information as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities; provided, however, that, as a
condition to supplying such information, Funding Company shall receive an
agreement in writing from the Special Counsel agreeing that any information that
is designated in writing by Funding Company, in good faith, as confidential at
the time of delivery of such information shall be kept confidential by such
Inspector (other than as to holders of Registrable Securities) and by any
holders of Registrable Securities receiving such information, unless (i)
disclosure of such information is required pursuant to Applicable Law or by
court or administrative order, (ii) disclosure of such information is, in the
reasonable opinion of counsel to Funding Company, necessary to avoid or correct
a misstatement or omission of a material fact in the Registration Statement,
Prospectus, or any supplement or post-effective amendment thereto or disclosure
is otherwise required by law, (iii) such information becomes generally available
to the public other than as a result of a disclosure by any Inspector or any
such holder of Registrable Securities in violation of this Section 5(m), or (iv)
such information is approved for release by Funding Company, in writing;
(n) use its best efforts to cause the Indenture or the trust indenture
provided for in Section 2, as the case may be, to be qualified under the Trust
Indenture Act not later than the effective date of such Registration Statement;
and, in connection therewith, cooperate with the Bond Trustee under such
Indenture and the holders of the Registrable Securities to effect such changes
to the Indenture as may be required for the Indenture to be so qualified in
accordance with the terms of the Trust Indenture
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Act and execute, and use its best efforts to cause such Bond Trustee to execute
all documents as may be required to effect such changes, and all other forms and
documents required to be filed with the Commission to enable the Indenture to be
so qualified in a timely manner;
(o) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission.
For purposes of the covenants set forth in this Section 5, references
to a Shelf Registration Statement, including a Shelf Registration Statement
filed pursuant to Section 3, shall be deemed to include any Registration
Statement, filed pursuant to Section 2, which covers, for the period set forth
therein, resales of Exchange Securities held by Restricted Persons as provided
in Section 2, and, in connection with such resales such Restricted Persons shall
be entitled to exercise all rights, receive all notices and copies of documents,
and otherwise receive all benefits afforded to sellers or holders of Registrable
Securities under this Section 5 in connection with a Shelf Registration
Statement. Without limiting the generality of the foregoing, Funding Company
agrees to fulfill its obligations set forth in Sections 5(a), (b), (c), (d),
(e), (f), (h), (i), (l), and (m) with respect to any such Registration Statement
filed pursuant to Section 2 insofar as it covers such resales.
Funding Company may require each seller of Registrable Securities as
to which any registration is being effected, as a condition thereto, to furnish
to Funding Company such information regarding the holder and the distribution of
such Registrable Securities as Funding Company may, from time to time, request
in writing, including without limitation stating that (i) it is not an Affiliate
of Funding Company, (ii) the amount of Registrable Securities held by such
holder prior to the Exchange Offer, (iii) the amount of Registrable Securities
owned by such holder to be exchanged in the Exchange Offer and representing that
such holder is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any Person to participate in, a distribution
of the Exchange Securities to be issued, and (iv) it is acquiring the Exchange
Securities in its ordinary course of business and to covenant and agree to
promptly notify Funding Company if any such information so provided by such
seller ceases to be true and correct and will promptly thereafter furnish
Funding Company with corrected information. Funding Company may exclude from
such registration the Registrable Securities of any Person who fails to furnish
such information within a reasonable time after receiving such request.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from Funding Company of
the happening of any event of the kind described in Section 5(c)(ii), 5(c)(iii),
5(c)(iv) (with respect to the jurisdiction in question), 5(c)(v) or 5(c)(vi)
hereof, such holder shall forthwith discontinue disposition of such Registrable
Securities covered by such Registration Statement or Prospectus until such
holder is advised in writing (the "Advice") by Funding Company that the use of
the applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto and, if so directed by Funding Company, such
holder will deliver to Funding Company (at its expense) all copies in its
possession, other than permanent file copies then in such holder's possession,
of the prospectus covering such Registrable Securities current at the time of
receipt of such notice, or certify in writing as to the destruction thereof. In
the event Funding Company shall give any such notice, the length of the
Effective Period shall be extended by the number of days during such period from
and including the date of the giving of such notice to and including the date
when each seller of Registrable Securities covered by such Registration
Statement shall have received (x) the copies of the supplemented or amended
Prospectus contemplated by Section 5(i) or (y) the Advice.
SECTION 6. Delivery of Prospectus; Notification Upon Resale. The
Initial Purchaser acknowledges that it is the position of the staff of the
Commission that any broker-dealer that receives Exchange Securities for its own
account in exchange for Registrable Securities pursuant to the Exchange
12
<PAGE>
Offer must deliver a Prospectus in connection with any resale of such Resale
Securities. By so acknowledging, such Initial Purchaser shall not be deemed to
admit that, by delivering a Prospectus, it is an underwriter within the meaning
of the Securities Act.
The Initial Purchaser shall notify Funding Company promptly upon the
completion of the resale of the Resale Securities received by such Initial
Purchaser pursuant to the Exchange Offer.
SECTION 7. Registration Expenses.
Funding Company shall bear all expenses incurred in connection with
the performance of its obligations under Sections 2, 3 and 4; provided, however,
that Funding Company shall bear or reimburse the holders for the reasonable fees
and disbursements of only one counsel, the Special Counsel, in accordance with
the terms of the Purchase Agreement; provided, further, however, that if Funding
Company permits an Underwritten Offering, Funding Company shall not be
responsible for any fees and expenses of any underwriter including any
underwriting discounts and commissions or any legal fees and expenses of counsel
to the underwriters.
SECTION 8. Indemnification and Contribution.
(a) Funding Company agrees to (i) indemnify and hold harmless each
holder of Registrable Securities (including the Initial Purchaser) which holds
Registrable Securities, including Resale Securities, for its own account (each,
a "Resale Initial Purchaser") and each person, if any, who controls any such
person within the meaning of either the Securities Act or the Exchange Act and
each director, officer, employee or agent of each such Person (each a "Holder
Indemnified Party") against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them are subject under the Securities
Act, the Exchange Act, or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof,) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement covering Registrable Securities held by such person
or any Prospectus relating to any such Registration Statement, or any amendment
thereof or supplement thereto and all documents incorporated by reference
therein, or arise out of or are based upon the omission or alleged omission to
state therein a material fact necessary in order to make the statements therein,
in light of the circumstances in which they were made, not misleading, and (ii)
reimburse each such Holder Indemnified Party for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that Funding Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement or Prospectus, or in any
amendment thereof or supplement thereto, in reliance upon and in conformity with
written information relating to such holder provided by such holder to Funding
Company specifically for use therein (collectively, the "Holder Information");
provided, further, however, that the indemnity obligations arising out of this
Section 8 with respect to any untrue statement or alleged untrue statement or
omission or alleged omission made in any preliminary Prospectus shall not inure
to the benefit of any holder or any controlling Person of such holder if such
holder failed to send or deliver to the Person asserting any such losses a copy
of the final Prospectus with or prior to the delivery of the written
confirmation of the sale of the Registrable Securities or the Exchange
Securities, as the case may be, and such final Prospectus would have cured the
untrue statement or omission giving rise to such losses. This indemnity
agreement will be in addition to any liability which Funding Company may
otherwise have.
13
<PAGE>
(b) As a condition to the inclusion of a holder's Registrable
Securities in a Registration Statement, such holder shall agree to (i) indemnify
and hold harmless Funding Company and each person who controls Funding Company
within the meaning of either the Securities Act or the Exchange Act, and each
director, officer, employee or agent of each such person, against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them are subject under the Securities Act, the Exchange Act, or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in a Registration Statement covering
Registrable Securities held by such holder or any Prospectus relating to any
such Registration Statement or in any amendment thereof or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
light of the circumstances in which they were made, not misleading, and (ii)
reimburse each such indemnified party for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred; in each and
every case under clause (i) and (ii) above to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in such Registration Statement or Prospectus or in any
amendment thereof or supplement thereto, in reliance upon and in conformity with
the Holder Information. This indemnity agreement will be in addition to any
liability which any such holder may otherwise have. In no event shall the
liability of any selling holder of Registrable Securities hereunder be greater
in amount than the dollar amount of the proceeds (net of payment of all
expenses) received by such holder upon the sale (or, in the case of Resale
Securities, the resale) of the Registrable Securities giving rise to such
indemnification obligation.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof
(enclosing a copy of all papers served); but the omission to so notify the
indemnifying party (i) shall not relieve it from liability under paragraph (a)
or (b) above unless and to the extent it did not otherwise learn of such action
and such omission results in the forfeiture by the indemnifying party or
material impairment of rights and defenses and (ii) shall not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligations provided in paragraph (a) or (b)
above. In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party. After notice from the indemnifying party to such indemnified party of its
election to so assume the defense of such claim or action, the indemnifying
party will not be liable to such indemnified party under this Section 8 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than costs of investigation; provided
that if (i) the defendants in any such action include both the indemnified party
and the indemnifying party, the indemnified party shall have received the
written opinion of counsel reasonably acceptable to the indemnifying party that
representation of both parties by the same counsel would be inappropriate due to
actual or likely conflicts of interest between them, or (ii) the indemnifying
party shall not have employed counsel for the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action, then the indemnified party or parties shall have the right to
select one firm of separate counsel to assert any separate legal defenses and to
otherwise defend such action on behalf of such indemnified party or parties. No
indemnifying party shall be liable for any settlement of any action or claim for
monetary damages which an indemnified party may effect without the written
consent of the indemnifying party, which consent shall not be unreasonably
withheld.
14
<PAGE>
(d) If the indemnification provided for in Section 8(a) or (b) hereof
is for any reason, other than as specified in such provisions, unavailable to or
insufficient to hold harmless an indemnified party, then each indemnifying party
shall contribute to the aggregate losses, claims, damages or liabilities (or
actions in respect thereof) referred to in Section 8(a) or (b) hereof in such
proportion as is appropriate to reflect the relative fault and benefits to
Funding Company on the one hand and such holders on the other hand in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of Funding Company and such holders
shall be determined by reference to, among other things, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
any untrue statement or omission. The obligations of the holders in this Section
8(d) are several in proportion to their respective obligations hereunder and not
joint. Notwithstanding the provisions of this Section 8(d), in no event shall
any holder of Registrable Securities be required to contribute any amount which
is in excess of (i) the aggregate principal amount of Initial Securities sold or
exchanged by such holder less (ii) the amount of any damages that such person
has otherwise been required to pay by reason of such alleged untrue statement or
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 8, each Holder Indemnified Party shall have the same rights to
contribution as a holder, and each person who controls Funding Company within
the meaning of either the Securities Act or the Exchange Act and each officer,
director, employee and agent of such person, shall have the same rights to
contribution as Funding Company, subject in each case to the applicable terms
and conditions of this Section 8(d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 8(d), notify such
party or parties from whom contribution may be sought; but the omission to so
notify such party or parties (x) shall not relieve the party or parties from
whom contribution may be sought from any liability under this Section 8(d)
unless and to the extent it did not otherwise learn of such action and such
omission results in the forfeiture by the party or parties from whom
contribution may be sought or material impairment of substantial rights and
defenses and (y) shall not, in any event, relieve such party or parties from any
obligations other than under this Section 8(d).
(e) The provisions of this Section 8 will remain in full force and
effect, regardless of any investigation made by or on behalf of any holder of
Registrable Securities, the Initial Purchaser, Funding Company or any of the
officers, directors or controlling persons referred to in this Section 8 and
will survive the sale (or, in the case of Resale Securities, the resale) by a
holder of Registrable Securities of such Registrable Securities.
SECTION 9. Underwritten Registrations (If Any). No holder may
participate in any Underwritten Registration, which Underwritten Registration
shall only be undertaken at the option of Funding Company, unless such holder
(a) agrees to sell such holder's Initial Securities on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
SECTION 10. Termination. In the event that no Initial Securities are
sold to the Initial Purchaser pursuant to the Purchase Agreement or the
Registrable Securities have been paid in full and are no longer outstanding,
this Agreement shall automatically terminate, without liability on the part of
any party. Upon the fulfillment of all obligations on the part of Funding
Company to register the Initial Securities as set forth herein (including
maintaining the effectiveness of any applicable Registration
15
<PAGE>
Statements), this Agreement shall terminate; provided, that the provisions of
Sections 7 and 8 hereof shall survive any termination and remain in full force
and effect.
SECTION 11. Limitation of Liability. Notwithstanding anything to the
contrary contained herein, the obligations of Funding Company hereunder are
solely the obligations of Funding Company and payable from, and recourse solely
to, the Funding Company's interest in the Funding Collateral following
application of the Funding Company Collateral in or towards the discharge of the
Secured Obligations and the obligations of Funding Company under each other
Transaction Document. No recourse shall be had against any Non-Recourse Person
subject to the exceptions set forth in Section 11.11 (Limitation of Liability)
of the Indenture.
SECTION 12. Miscellaneous.
(a) No Inconsistent Agreements. Funding Company has not, as of the
date hereof, entered into, and shall not, on or after the date hereof, enter
into, any agreement with respect to its securities that is inconsistent with the
rights granted to the holders of Registrable Securities herein or otherwise
conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless Funding Company has obtained the written consent of
holders of at least a majority of the then outstanding aggregate principal
amount of the Registrable Securities (or, after the consummation of any Exchange
Offer in accordance with Section 2, of Exchange Securities); provided that, with
respect to any matter that directly or indirectly affects the rights of any
Restricted Person hereunder occurring within the period in which the Initial
Registration Statement is open for the Restricted Persons, Funding Company shall
obtain the written consent of each such Restricted Person against which such
amendment, modification, supplement, waiver or consent is to be effective.
Notwithstanding the foregoing (except for the foregoing proviso), a waiver or
consent to departure from the provisions hereof with respect to a matter that
relates exclusively to the rights of holders of Registrable Securities whose
securities are being sold or exchanged pursuant to a Registration Statement and
that does not directly or indirectly affect the rights of other holders of
Registrable Securities may be given by holders of at least a majority of
aggregate principal amount of the Registrable Securities being sold or exchanged
by such holders pursuant to such Registration Statement; provided, however, that
the provisions of this sentence may not be amended, modified or supplemented
except in accordance with the provision of the immediately preceding sentence.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Resale Initial Purchasers and that does not directly or indirectly
affect the rights of holders of Registrable Securities or Exchange Securities
may be given by each of the Resale Initial Purchasers affected thereby.
(c) Notices. All notices and other communications (including, without
limitation, any notices or other communications to the Bond Trustee) provided
for or permitted hereunder shall be made in writing and delivered by hand
delivery, registered first-class mail, next-day air courier or telecopier:
(i) if to a holder of Registrable Securities, at the most current
address given by such holder to Funding Company in accordance with the
provisions of this Section 12(c), which address initially is, with respect
to the Initial Purchaser, at the address set forth in the Purchase
Agreement and thereafter at the address for such holders of Registrable
Securities set forth in the Security Register applicable to such
Registrable Securities; and
16
<PAGE>
(ii) if to Funding Company, initially at the address set forth in the
Purchase Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 12(c).
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier; and when received, if
telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Bond Trustee at the
address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment or
any consent by Funding Company thereto, subsequent holders of Registrable
Securities.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principles of conflicts of laws (other than Section 5-1401 of the New York
General Obligations Law). Each of the parties hereto hereby submits to the
non-exclusive jurisdiction of the Federal and State Courts of the Borough of
Manhattan in the City of New York in any suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
(i) Entire Agreement. This Agreement, together with the Purchase
Agreement, is intended by the parties as a final expression of their agreement,
and is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement, together with the Purchase Agreement, supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
(j) Securities Held by Funding Company, etc. Whenever the consent or
approval of holders of a specified percentage of principal amount of Registrable
Securities is required hereunder, Registrable Securities held by Funding Company
or any of its Affiliates (other than subsequent holders of Registrable
Securities if such subsequent holders are deemed to be Affiliates solely by
reason of their
17
<PAGE>
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the holders of such required
percentage.
18
<PAGE>
Please confirm that the foregoing correctly sets forth this agreement
between Funding Company and you.
Very truly yours,
YORK POWER FUNDING (CAYMAN) LIMITED
By:
-----------------------------
Name: Martin Couch
Title: Director
Accepted in New York, New York
, 1998
CREDIT SUISSE FIRST BOSTON CORPORATION
By:
-----------------------------------
Name:
Title:
19
<PAGE>
EXHIBIT 23.1
CONSENT OF GRANT THORNTON LLP
We have issued our reports dated June 26, 1998, June 17, 1998 and June 17,
1998, relating to the balance sheet of York Power Funding (Cayman) Limited as of
June 12, 1998, the consolidated balance sheet of York Ex International SRL and
Subsidiaries as of May 31, 1998, and the combined balance sheet of the U.S.
Guarantors as of June 2, 1998, respectively, contained in the Registration
Statement and Prospectus. We consent to the use of the aforementioned reports in
the Registration Statement and Prospectus, and to the use of our name as it
appears under the caption "Experts."
/s/ GRANT THORNTON LLP
-----------------------------
New York, New York
December 7, 1998
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
FORM T-1
WASHINGTON, D.C. 20549
------------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) / /
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
NEW YORK 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification
no.)
ONE WALL STREET, NEW YORK, 10286
N.Y.
(Address of principal (Zip code)
executive offices)
</TABLE>
YORK POWER FUNDING (CAYMAN) LIMITED
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
CAYMAN ISLANDS 98-0190707
(State or other jurisdiction (I.R.S. employer
of identification
incorporation or organization) no.)
</TABLE>
------------------------
YORK POWER FUNDING (CAYMAN) LIMITED
c/o Queensgate SPV Services Limited
P.O. Box 1093 GT, Compass Center, 2(nd) Floor
Crewe Road
Grand Cayman, Cayman Islands
(Address of principal executive offices)
(Zip code)
------------------------
12% Series A Secured Bonds due October 30, 2007
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
1. GENERAL INFORMATION, FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) Name and address of each examining or supervising authority to which it is
subject.
<TABLE>
<CAPTION>
- ---------------------------------------------
<S> <C>
NAME ADDRESS
<CAPTION>
- ---------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29
under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with
Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
1
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 9th day of December, 1998.
<TABLE>
<S> <C> <C>
THE BANK OF NEW YORK
By: /S/ THOMAS C. KNIGHT
-----------------------------------------
Name: Thomas C. Knight
Title: Assistant Vice President
</TABLE>
2
<PAGE>
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939 in connection with the proposed issue of 12% Series A Senior Secured Bonds
due 2007 by York Power Funding (Cayman) Limited, we hereby consent that reports
of examinations by Federal, State, Territorial, or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
<TABLE>
<S> <C> <C>
THE BANK OF NEW YORK
By: /s/ THOMAS C. KNIGHT
-----------------------------------------
Name: Thomas C. Knight
Title: Assistant Vice President
</TABLE>
Dated: December 7, 1998
<PAGE>
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION OF
THE BANK OF NEW YORK
OF 48 WALL STREET, NEW YORK, N.Y. 10286
AND FOREIGN AND DOMESTIC SUBSIDIARIES,
a member of the Federal Reserve System, at the close of business June 30, 1998,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
IN THOUSANDS
--------------
<S> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.............................................. $ 7,301,241
Interest-bearing balances....................................................................... 1,385,944
Securities:
Held-to-maturity securities..................................................................... 1,000,737
Available-for-sale securities................................................................... 4,240,655
Federal funds sold and Securities purchased under agreements to resell............................ 971,453
Loans and lease financing receivables:
Loans and leases, net of unearned income........................................................ 38,788.269
LESS: Allowance for loan and lease losses....................................................... 632,875
LESS: Allocated transfer risk reserve........................................................... 0
Loans and leases, net of unearned income, allowance, and reserve................................ 38,155,394
Assets held in trading accounts................................................................... 1,307,562
Premises and fixed assets (including capitalized leases).......................................... 670,445
Other real estate owned........................................................................... 13,598
Investments in unconsolidated subsidiaries and associated companies............................... 215,024
Customers' liability to this bank on acceptances outstanding...................................... 974,237
Intangible assets................................................................................. 1,102,625
Other assets...................................................................................... 1,944,777
--------------
Total assets...................................................................................... $ 59,283,692
--------------
--------------
LIABILITIES
Deposits:
In domestic offices............................................................................. $ 26,930,258
Noninterest-bearing............................................................................. 11,579.390
Interest-bearing................................................................................ 15,350,868
In foreign offices, Edge and Agreement subsidiaries, and IBFs................................... 16,117,854
Noninterest-bearing............................................................................. 187,464
Interest-bearing................................................................................ 15,930,390
Federal funds purchased and Securities sold under agreements to repurchase........................ 2,170,238
Demand notes issued to the U.S.Treasury........................................................... 300,000
Trading liabilities............................................................................... 1,310,867
Other borrowed money:
With remaining maturity of one year or less..................................................... 2,549,479
With remaining maturity of more than one year through three years............................... 0
With remaining maturity of more than three years................................................ 46,654
Bank's liability on acceptances executed and outstanding.......................................... 983,398
Subordinated notes and debentures................................................................. 1,314,000
Other liabilities................................................................................. 2,295,520
--------------
Total liabilities................................................................................. 54,018,268
--------------
--------------<PAGE>
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
DOLLAR AMOUNTS
IN THOUSANDS
--------------
EQUITY CAPITAL
Common stock...................................................................................... 1,135,284
Surplus........................................................................................... 731,319
Undivided profits and capital reserves............................................................ 3,385,227
Net unrealized holding gains (losses) on available-for-sale securities............................ 51,233
Cumulative foreign currency translation adjustments............................................... (37,639)
--------------
Total equity capital.............................................................................. 5,265,424
--------------
Total liabilities and equity capital.............................................................. $ 59,283,692
--------------
--------------
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
<TABLE>
<S> <C> <C>
J. Carter Bacot
Thomas A. Renyi Directors
Alan R. Griffith ]
</TABLE>
