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File No. 070-10250
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT NO. 1 TO
APPLICATION/DECLARATION ON FORM U-1 UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Portland General Electric Company
121 SW Salmon Street
Portland, Oregon 97204
(Name of company or companies filing this statement and addresses of
principal executive offices)
Enron Corp.
Four Houston Center
1221 Lamar, Suite 1600
Houston, Texas 77010
(Name of top registered holding company of each applicant or declarant)
James J. Piro
Executive Vice President, Finance, Chief Financial Officer and Treasurer
Portland General Electric Company
121 SW Salmon Street
Portland, Oregon 97204
(Name and address of agent for service)
The Commission is also requested to send copies
of any communication in connection with this matter to:
Markian M.W. Melnyk
Roshini Thayaparan
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
1875 Connecticut Avenue, NW Suite 1200
Washington, DC 20009
Tel. (202) 986-8000
Fax (202) 986-8102
TABLE OF CONTENTS
Item 1. Description of Proposed Transaction....................................3
A. Introduction.............................................................3
B. Description of the Parties...............................................3
1. Portland General Electric Company..................................3
C. Description of the Transaction...........................................4
Item 2. Fees, Commissions and Expenses.........................................6
Item 3. Applicable Statutory Provisions........................................6
A. Applicable Provisions....................................................6
B. Legal Analysis...........................................................7
1. Sections 9(a)(1) and 10............................................7
a. Section 10(b)(1)...................................................7
b. Section 10(b)(2)...................................................7
c. Section 10(b)(3)...................................................8
d. Section 10(c)(1)...................................................8
(i) Section 8................................................8
(ii) Section 11..............................................9
e. Section 10(c)(2)...................................................9
f. Section 10(f).....................................................10
Item 4. Regulatory Approval...................................................10
Item 5. Procedure.............................................................10
Item 6. Exhibits and Financial Statements.....................................11
Item 7. Information as to Environmental Effects...............................12
2
AMENDMENT NO. 1 TO APPLICATION/DECLARATION
ON FORM U-1 UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
On September 10, 2004, Portland General Electric Company ("Portland
General") filed an Application/Declaration on Form U-1 under File No. 070-10250
("Application") in connection with the acquisition of the coal handling facility
located at Portland General's Boardman Coal Plant in eastern Oregon. This
Amendment No. 1 to the Application amends and restates the Application.
Item 1. Description of Proposed Transaction.
A. Introduction
In this Application, Portland General Electric Company ("Portland
General"), a wholly owned subsidiary of Enron Corp. ("Enron"), a registered
public utility holding company under the Public Utility Holding Company Act of
1935, as amended (the "Act"), requests authority under Sections 9(a)(1) and 10
of the Act in connection with the acquisition of the coal handling facility
located at its Boardman Coal Plant ("Boardman Plant") in eastern Oregon. The
proposed transaction, more fully described below, is referred hereto as the
"Purchase."
B. Description of the Parties
1. Portland General Electric Company
Portland General, a corporation organized under the laws of Oregon, is a
wholly owned subsidiary of Enron, a registered public utility holding company
under the Act. Portland General, incorporated in 1930, is a single integrated
electric utility engaged in the generation, purchase, transmission,
distribution, and retail sale of electricity in the State of Oregon. Portland
General also sells electricity and natural gas in the wholesale market to
utilities and power marketers located throughout the western United States.
Portland General's service area is located entirely within Oregon and includes
51 incorporated cities, of which Portland and Salem are the largest, within a
state-approved service area allocation of approximately 4,000 square miles.
Portland General estimates that at the end of 2003 its service area population
was approximately 1.5 million, comprising about 43% of the state's population.
At December 31, 2003, Portland General served approximately 754,000 retail
customers. Portland General has approximately 26,085 miles of electric
transmission and distribution lines and owns 1,957 MW of generating capacity.
Portland General also has long-term power purchase contracts for 510 MW from
four hydroelectric projects on the mid-Columbia River and power purchase
contracts of one to twenty-six years for another 740 MW from Bonneville Power
Administration, other Pacific Northwest utilities, and certain Native American
tribes. As of December 31, 2003, Portland General's total firm resource
capacity, including short-term purchase agreements, was approximately 3,883 MW
(net of short-term sales agreements of 3,910 MW). Portland General's peak load
in 2003 was 3,351 MW.
3
On July 2, 1997, Portland General Corporation, the former parent of
Portland General, merged with Enron, with Enron continuing in existence as the
surviving corporation, and Portland General becoming a wholly owned subsidiary
of Enron. Portland General is not a Debtor in the Bankruptcy cases involving
Enron. On July 29, 2004, Enron filed an application under Section 12(d) of the
Act (SEC File No. 070-10239) seeking authorization to sell Portland General to
Oregon Electric Utility Company, LLC. This application is pending.
Portland General is a reporting company under the Securities Exchange Act
of 1934 and it files annual, quarterly and periodic reports with the Commission.
Portland General is regulated by the Oregon Public Utility Commission ("OPUC")
with regard to its rates, terms of service, financings, affiliate transactions
and other aspects of its business. The company is also regulated by the Federal
Energy Regulatory Commission ("FERC") with respect to its activities in the
interstate wholesale power markets.
As of and for the year ended December 31, 2003, Portland General and its
subsidiaries on a consolidated basis had operating revenues of $1,752 million,
net income of $58 million, retained earnings of $545 million, and assets of
$3,372 million.
The Boardman Plant is a coal fueled plant located in Boardman, Oregon with
capacity of 600 MW. Portland General owns a 65% undivided interest in the
Boardman Plant and is the operator of the plant. The remaining 35% is owned by
Idaho Power Company, Pacific Northwest Generating Cooperative, and General
Electric Credit Corporation through Bank of New York (the successor to J Henry
Schroeder Bank & Trust Company) (collectively, "Boardman Plant Co-Owners"), who
are unaffiliated with Portland General.
C. Description of the Transaction
Portland General seeks Commission authorization under Sections 9(a)(1) and
10 of the Act to acquire the coal handling facility located at the Boardman
Plant ("Facility"). The Facility consists of the machinery, equipment,
mechanical and electrical equipment, fixtures, tangible personal property and
other property, real and personal, constructed and installed for the unloading,
transfer, storage, handling and crushing of coal for the Boardman Plant.
Portland General is the sole lessee of the Facility under a Lease Agreement
entered into pursuant to a leverage financing transaction ("Financing
Transaction") entered into in 1979. The Facility is owned by Wells Fargo Bank
N.A. (the successor to First National Bank of Oregon), solely as Owner Trustee/1
under a Trust Agreement between it and ICON/Boardman Facility LLC (the successor
to Western America Financial, Inc.), the beneficial owner and Owner
Participant/2
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1/ "Owner Trustee" is defined in the Omnibus Amendment to the Lease Agreement as
Wells Fargo Bank, N.A., a national banking association, successor to First
Interstate Bank of Oregon, N.A., f/k/a First National Bank of Oregon, not in its
individual capacity but solely as Owner Trustee, together with its successors
and assigns. See Exhibit A-1.9 at 2.
2/ "Owner Participant" is defined in the Omnibus Amendment to the Lease
Agreement as ICON/BOARDMAN Facility LLC, a Delaware limited liability company,
together with its successors and assigns. See Exhibit A-1.9 at 2.
4
in the Financing Transaction. Under the Lease Agreement, Portland General is
responsible for the operation and maintenance of the Facility.
Under the Lease Agreement, which expires in January 2005, Portland General
has an option to renew the Lease, upon advance notice of no less than one year,
for an initial renewal period of 5 years at half the average rent paid during
the basic 25 year lease term ending in January 2005. In January 2004, Portland
General exercised its option to extend the lease to 2010.
Subsequent to the initial renewal period ending in January 2010, Portland
General has the option to renew, at Fair Market Rental Value ("FMRV"),/3 for
rental periods of one or more whole years. The aggregate of all such renewal
periods may not exceed 20 years.
Although Portland General also has the option to purchase the Facility at
certain times at a fair market value purchase price to be determined through
negotiation between Portland General and the Owner Participant, Portland General
has not exercised this option in accordance with the terms of the Lease
Agreement because the option requires one year advance notice. Instead, Portland
General and the Owner Participant have mutually agreed upon terms for the
Purchase notwithstanding the one year notice to exercise the option to purchase
under the Lease Agreement. Portland General and the Owner Participant have
agreed on a fair market purchase price, assuming the purchase closes by October
29, 2004. If the closing is delayed but takes place on or before November 30,
2004, the purchase price will be increased for each day after October 29, 2004
that closing is delayed based on the 90-day London Interbank Offered Rate
("LIBOR") determined two days before the closing. The closing may be delayed
beyond November 30, 2004 only upon mutual agreement, including agreement on a
new purchase price.
The funds to be used to purchase the Facility will come from Portland
General's internally generated cash.
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3 "Fair Market Rental Value" is defined in the Lease Agreement as:
the fair market rental value which would be obtained in an
arm's-length transaction between an informed and willing lessee
and an informed and willing lessor, in either case under no
compulsion to lease, for the lease of the Equipment on the terms
set forth, or referred to, in Section 19 for a Renewal Period,
calculated at the higher of (a) the value for the use of the
Equipment in place at the Site, assuming, in the determination of
such fair market rental value, that (i) such lessee has rights to
use the premises on which the Equipment is situated and necessary
ancillary rights in connection with the operation of the
Equipment which are comparable to those provided to Lessor in the
Facilities Agreement and (ii) the Facility is in the condition
and repair required to be maintained by the terms of this Lease
and the Facilities Agreement (unless such fair market rental
value is being determined for the purposes of Section 17(c), in
which case the assumption described in this clause (ii) shall not
be made), or (b) the value for the use of the Equipment (after
deducting amounts appropriately to reflect the cost of
dismantling, shipment and reconstruction) at any place other than
in place at the Site.
See Exhibit A-1.1 at 4.
5
There are no fees, commissions or other renumeration to be paid by Portland
General to the Owner Trustee, the Owner Participant or any other party in
connection with the purchase of the Facility. The Owner Participant is
responsible for all of its costs and expenses related to the purchase of the
Facility and the termination of the Financing Transaction. Portland General will
pay the usual and customary costs and expenses of the Owner Trustee, the
indenture trustee and the loan participant, the other parties to the Financing
Transaction, incurred by them in connection with termination of the Financing
Transaction. As noted in Item 2, the fees and expenses that Portland General
expects to incur in connection with the Purchase are estimated to be less than
$20,000.
None of the parties to the Financing Transaction, including the Owner
Trustee or the Owner Participant, are affiliated with Portland General, have any
officers or directors in common with Portland General or own any voting
securities of Portland General.
Following the Purchase, Portland General will continue to operate and
maintain the Facility for the benefit of the Boardman Plant Co-Owners. The
Boardman Plant Co-Owners are evaluating a purchase of a percentage interest in
the Facility from Portland General at a later date in the future. At this time,
it is expected that such percentage would be proportional to the Boardman Plant
Co-Owners' current interest in the Boardman Plant. Portland General expects
that, pending any sale, the Boardman Plant Co-Owners will continue to pay their
pro-rata share of current rate (2004 calendar year) lease rental./4 Should
Portland General be subject to the Act at the time of such sale, Portland
General would apply for such authorization as may be required under Section
12(d), and Rule 44 thereunder, prior to effecting the sale.
Item 2. Fees, Commissions and Expenses.
Portland General estimates the fees and expenses associated with the
completion of the Purchase to be less than $4,000 for Trustee administrative
charges related to lease termination and approximately $16,000 for legal and
other expenses associated with the transaction.
Item 3. Applicable Statutory Provisions.
A. Applicable Provisions
Sections 9(a)(1) and 10 of the Act are considered applicable to the
proposed transaction.
To the extent that the proposed transaction is considered by the Commission
to require authorizations, exemption or approval under any section of the Act or
the rules and regulations thereunder other than those set forth above, request
for such authorization, exemption or approval is hereby made.
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4 If the Commission considers the amount Portland General charges the Boardman
Plant Co-Owners as described above to be a partial disposition of the Facility
by lease subject to Section 12(d), Portland General hereby requests
authorization to enter into such transactions with the Boardman Plant Co-Owners.
6
B. Legal Analysis
1. Sections 9(a)(1) and 10
Section 9(a)(1) of the Act makes it unlawful, without approval of the
Commission under Section 10, for the subsidiary company of any registered
holding company to acquire, directly or indirectly, any securities or utility
assets or any other interest in any business. As described below, the Purchase
complies with all of the applicable provisions of Section 10 of the Act.
a. Section 10(b)(1)
The Commission may not approve the Purchase if it determines, pursuant to
Section 10(b)(1), that such acquisition will tend towards interlocking relations
or the concentration of control of public-utility companies, of a kind or to an
extent detrimental to the public interest or the interest of investors or
consumers. For the reasons given below, there is no basis in this case for the
Commission to make either of those negative findings concerning the Purchase.
Section 10(b)(1) was primarily aimed at preventing business combinations
unrelated to operating efficiencies./5 The Purchase is consistent with the
efficient operation of Portland General. The Facility is an asset that is
already integrated into the Boardman Plant; the Facility and Boardman Plant are
located side by side and are physically connected. See Exhibit B. Further, under
the current Lease Agreement, Portland General is already responsible for the
operation and maintenance of the Facility. The proposed transaction simplifies
the ownership and financial structure of the various assets that are necessary
for the operation of the Boardman Plant.
Based on the present circumstances, the change in ownership of the Facility
from the Owner Participant to Portland General will not significantly affect
operations of the Facility and will not be detrimental to the public interest or
the interest of investors or consumers.
b. Section 10(b)(2)
The Commission may not approve the Purchase if it determines, pursuant to
Section 10(b)(2), that the consideration (including the fees and expenses
associated with the transaction) to be paid by Portland General is not
reasonable or does not bear fair relation to the investment in and the earning
capacity of the utility assets being acquired. For the reasons given below,
there is no basis in this case for the Commission to make either of these
negative findings concerning the consideration being offered by Portland
General.
The process by which Portland General and the Owner Participant reached
agreement on the Purchase demonstrates that the requirements of Section 10(b)(2)
have been satisfied. The
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5 See Section 1(b)(4) of the Act (finding that the public interests of consumers
are adversely affected "when the growth and extension of holding companies bears
no relation to economy of management and operation or the integration and
coordination of related operating properties. . . .").
7
negotiation between Portland General and the Owner Participant was at
arms-length; as indicated above, Portland General and the Owner Participant are
not affiliated. Moreover, as the operator of the Facility for many years,
Portland General has extensive experience with the Facility and full knowledge
of its value. The consideration agreed to by the parties reflects arm's-length
negotiation by unaffiliated parties with adequate knowledge of the asset, the
relevant market, and other alternatives to the transaction and, accordingly, it
should be considered fair.
This Commission has previously recognized that, as here, when the
agreed-upon consideration for an acquisition is the result of arms-length
negotiations between the managements of the companies involved, there is
persuasive evidence that the requirements of Section 10(b)(2) have been
satisfied./6
c. Section 10(b)(3)
The Commission may not approve the Purchase if it determines, pursuant to
Section 10(b)(3), that the acquisition will unduly complicate the capital
structure of Portland General or will be detrimental to the public interest or
the interest of investors or consumers or the proper functioning of the
holding-company system. For the reasons given below, there is no basis in this
case for the Commission to make either of these negative findings concerning the
Purchase.
The capital structure of Portland General after the Purchase will not be
unduly complicated and will be substantially unchanged from Portland General's
capital structure prior to the completion of the transaction. See Exhibits C-1
and C-2. Indeed, the termination of the Lease Agreement for the Facility makes
Portland General's capital structure marginally more simple because the lease is
replaced by fee simple ownership of the Facility.
Finally, as set forth more fully in the discussion of the standards of
Section 10(b)(1) above and elsewhere in the Application, the Purchase will be in
the public interest and the interest of investors and consumers, and will not be
detrimental to the proper functioning of the holding company system.
d. Section 10(c)(1)
Section 10(c)(1) requires that the Commission not approve an acquisition of
securities or utility assets, or any other interests, which is unlawful under
the provisions of Section 8 or is detrimental to the carrying out of the
provisions of Section 11.
(i) Section 8
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6 See Progress Energy, Inc. and Piedmont Natural Gas Company, Inc., Holding Co.
Act Release No. 27718 (Sept. 2, 2003); Public Service Company of Oklahoma,
Holding Co. Act Release No. 26044 (Apr. 29, 1994); Entergy Corporation, et al.,
Holding Co. Act Release No. 25952 (Dec. 17, 1993), petition for reconsideration
denied, Holding Co. Act Release No. 26037 (Apr. 28, 1994).
8
Section 8 refers to the requirements of state law as it may relate to
ownership or operation by a single company of the utility assets of an electric
utility company and a gas utility company serving substantially the same service
territory. Since the Purchase does not create such an arrangement, Section 8 is
not applicable to the Purchase.
(ii) Section 11
Section 11(b)(1) generally confines the utility properties of a registered
holding company to a "single integrated public-utility system." An integrated
electric public utility system is defined as "a system consisting of one or more
units of generating plants and/or transmission lines and/or distributing
facilities, whose utility assets, whether owned by one or more electric utility
companies, are physically interconnected or capable of physical interconnection
and which under normal conditions may be economically operated as a single
interconnected and coordinated system confined in its operations to a single
area or region, in one or more States, not so large as to impair (considering
the state of the art and the area or region affected) the advantages of
localized management, efficient operation, and the effectiveness of
regulation."/7
The combined properties will certainly constitute a single integrated
electric utility within the meaning of Section 2(a)(29)(A). As discussed above,
the Purchase involves the acquisition of an asset already integrated into
Portland General's utility business. See Exhibit B. Under the Lease Agreement,
the Facility already functions as an integrated unit of the Boardman Plant,
which is an electric generating facility located in Oregon and operated by
Portland General. Only the ownership of the Facility will change as a result of
the proposed transaction, not any aspect of its operation in connection with the
Boardman Plant.
Further, Section 11(b)(2) of the Act requires that "the corporate structure
or continued existence of any company in the holding-company system does not
unduly or unnecessarily complicate the structure, or unfairly or inequitably
distribute voting power among security holders, of such holding-company system."
Because the Purchase will neither affect the structure of the holding company
system nor the voting rights of Portland General's security holders, Section
11(b)(2) is not implicated by the Purchase.
e. Section 10(c)(2)
Section 10(c)(2) states that the Commission may not approve the acquisition
of securities or utility assets of a public utility or holding company unless
such acquisition will serve the public interest by tending towards the
economical and efficient development of an integrated public utility system.
As discussed in Items 3.b.1.a and 3.b.1.d.ii above, the Purchase is fully
consistent with Portland General's integrated public utility system and the
simplification of Portland General's ownership of the assets associated with the
Boardman Plant.
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7 PUHCA Section 2(a)(29)(A).
9
The Commission has allowed such acquisitions under similar circumstances.
For example, in Public Service Company of Oklahoma,/8 the Commission allowed the
Public Service Company of Oklahoma ("PSO") to acquire certain electric
distribution facilities from the City of Clinton in a cash purchase. The
facilities were, prior to the purchase, leased by PSO from the City of Clinton
under a lease agreement for a term of twenty-five years. PSO had sought
approval, under Sections 9(a) and 10 of the Act, to acquire these facilities
noting, inter alia, that (1) it would not incur a penalty for early termination
of the Lease as a result of the proposed purchase and (2) if it did not purchase
the facilities at that time, PSO had no assurance that the City of Clinton would
sell the facilities to PSO at a later date. The Commission allowed the purchase.
Portland General seeks to purchase the Facility from the Owner Participant
under similar circumstances. Like Public Service Company of Oklahoma, Portland
General will not incur a penalty for early termination of the Lease Agreement as
a result of the Purchase. Although, according to the terms of the Lease
Agreement, Portland General would be given the opportunity to purchase the
Facility at certain times, it is unclear whether Portland General and the Owner
Participant will be able to agree upon the purchase price and other terms in
future negotiations. Accordingly, the Commission should permit the Purchase.
f. Section 10(f)
Section 10(f) prohibits the Commission from approving an acquisition unless
the Commission is satisfied that the acquisition will be undertaken in
compliance with applicable state laws. The Purchase is not subject to the
jurisdiction of the OPUC and all other applicable law will be observed in
connection with effecting the Purchase. See Exhibit D-1. Accordingly, Section
10(f) is satisfied.
Item 4. Regulatory Approval.
No state or federal commission, other than this Commission, has
jurisdiction over the proposed transaction.
Item 5. Procedure.
The Commission is respectfully requested to publish the requisite notice
under Rule 23 with respect to this Application as soon as possible, such notice
to specify a date by which comments must be entered and such date being the date
when an order of the Commission granting and permitting this Application to
become effective may be entered by the Commission. Applicants request that the
Commission's order be issued as soon as the rules allow, and before October 22,
2004, so that the closing of the Purchase may occur before October 29, 2004.
Applicants request that there should not be a 30-day waiting period between
issuance of the Commission's order and the date on which the order is to become
effective. Applicants hereby
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8 Public Service Company of Oklahoma, Holding Co. Release No. 26044 (Apr. 29,
1994).
10
waive a recommended decision by a hearing officer or any other responsible
officer of the Commission and consent that the Division of Investment Management
may assist in the preparation of the Commission's decision and/or order, unless
the Division opposes the matters proposed herein.
Item 6. Exhibits and Financial Statements.
A-1.1 Lease Agreement dated as of September 1, 1979 between Portland General
Electric Company and First National Bank of Oregon.
A-1.2 Lease Supplement No. 1 dated November 7, 1979, between Portland
General Electric Company and First National Bank of Oregon.
A-1.3 Lease Supplement No. 2 dated January 23, 1980, between Portland
General Electric Company and First National Bank of Oregon.
A-1.4 Lease Supplement No. 3, dated as of January 26, 1993, between Portland
General Electric Company and First Interstate Bank of Oregon.
A-1.5 Lease Supplement No. 4, dated as of September 1, 1994, between
Portland General Electric Company and First interstate Bank of Oregon.
A-1.6 Lease Supplement No. 5, dated as of April 30, 2004, by and between
Portland General Electric Company, and Wells Fargo Bank Northwest,
N.A.
A-1.7 Notice of Proposed Transfer of Owner Participant's Interest, dated
November 30, 1998.
A-1.8 Renewal Notice for 5 years: Coal Unloading and Handling Facility,
Boardman, Oregon, dated January 16, 2004.
A-1.9 Omnibus Amendment dated as of April 30, 2004 between and among (a)
ICON/Boardman Facility LLC; (b) Principal Life Insurance Company; (c)
Wells Fargo Bank, N.A.; and (d) U.S. Bank National Association.
A-2 Term Sheet Between ICON Capital Corp. for ICON/Boardman LLC and
Portland General Electric Company signed August 18, 2004 (confidential
treatment requested) (previously filed).
B Map Showing the Interconnection of the Facility with the Properties of
Portland General Electric Company (to be filed under cover of Form
SE).
C-1 Portland General Electric Company's Consolidated Balance Sheet,
Statement of Income and Cash Flows as of December 31, 2003,
incorporated by reference to Portland General Electric Company's 2003
Annual Report on Form 10-K for the fiscal year ended December 31,
2003, filed with the Securities and Exchange Commission on March 22,
2004, SEC File No. 001-05532-99.
11
C-2 Financial Statements, pro forma as of December 31, 2003, of Portland
General Electric Company (confidential treatment requested)
(previously filed).
D-1 Opinion of Counsel.
D-2 Past Tense Opinion of Counsel (to be filed by amendment).
E Proposed Form of Notice (previously filed).
Item 7. Information as to Environmental Effects.
The proposed transaction involves neither a "major federal action" nor
"significantly affects the quality of the human environment" as those terms are
used in Section 102(2)(C) of the National Environmental Policy Act, 42 U.S.C.
Sec. 4321 et seq. No federal agency is preparing an environmental impact
statement with respect to this matter.
12
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this amended
Application-Declaration to be signed on its behalf by the undersigned thereunto
duly authorized.
Portland General Electric Company
By: /s/ James J. Piro
-----------------
James J. Piro
Executive Vice President, Finance,
Chief Financial Officer and Treasurer
Date: September 28, 2004
13
Exhibit Index
- --------------------------------------------------------------------------------
Exhibit Description
- --------------------------------------------------------------------------------
A-1.1 Portland General Electric Company and First National Bank of Oregon.
- --------------------------------------------------------------------------------
A-1.2 Lease Supplement No. 1 dated November 7, 1979, between Portland
General Electric Company and First National Bank of Oregon.
- --------------------------------------------------------------------------------
A-1.3 Lease Supplement No. 2 dated January 23, 1980, between Portland
General Electric Company and First National Bank of Oregon.
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A-1.4 Lease Supplement No. 3, dated as of January 26, 1993, between Portland
General Electric Company and First Interstate Bank of Oregon.
- --------------------------------------------------------------------------------
A-1.5 Lease Supplement No. 4, dated as of September 1, 1994, between
Portland General Electric Company and First interstate Bank of Oregon.
- --------------------------------------------------------------------------------
A-1.6 Lease Supplement No. 5, dated as of April 30, 2004, by and between
Portland General Electric Company, and Wells Fargo Bank Northwest,
N.A.
- --------------------------------------------------------------------------------
A-1.7 Notice of Proposed Transfer of Owner Participant's Interest, dated
November 30, 1998.
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A-1.8 Renewal Notice for 5 years: Coal Unloading and Handling Facility,
Boardman, Oregon, dated January 16, 2004.
- --------------------------------------------------------------------------------
A-1.9 Omnibus Amendment dated as of April 30, 2004 between and among (a)
ICON/Boardman Facility LLC; (b) Principal Life Insurance Company; (c)
Wells Fargo Bank, N.A.; and (d) U.S. Bank National Association.
- --------------------------------------------------------------------------------
D-1 Opinion of Counsel.
- --------------------------------------------------------------------------------
14
EXHIBIT A
TO
PARTICIPATION AGREEMENT
==============================================================================
LEASE AGREEMENT
dated as of September 1, 1979
between
PORTLAND GENERAL ELECTRIC COMPANY, as Lessee,
and
FIRST NATIONAL BANK OF OREGON,
as Lessor and Owner Trustee
__________________
Coal Unloading and Handling Facility
------------------------------------
Boardman, Oregon
----------------
==============================================================================
NOTE: THIS LEASE AGREEMENT HAS BEEN ASSIGNED TO AND IS SUBJECT TO A SECURITY
INTEREST IN FAVOR OF UNITED STATES NATIONAL BANK OF OREGON, INDENTURE TRUSTEE,
UNDER AND TO THE EXTENT SET FORTH IN THE INDENTURE AND FIRST DEED OF TRUST DATED
AS OF SEPTEMBER 1, 1979, BETWEEN FIRST NATIONAL BANK OF OREGON, AS OWNER
TRUSTEE, AND UNITED STATES NATIONAL BANK OF OREGON, AS INDENTURE TRUSTEE, AS
SUCH INDENTURE AND FIRST DEED OF TRUST MAY BE AMENDED, MODIFIED, OR SUPPLEMENTED
FROM TIME TO TIME IN ACCORDANCE WITH THE PROVISIONS THEREOF. THIS LEASE
AGREEMENT HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. ONLY THE ORIGINAL
COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY UNITED STATES NATIONAL
BANK OF OREGON ON THE SIGNATURE PAGE THEREOF EVIDENCES THE MONETARY OBLIGATIONS
OF THE LESSEE HEREUNDER. SEE SECTION 27 HEREOF FOR FURTHER INFORMATION
CONCERNING THE RIGHTS OF THE HOLDERS OF THE OTHER COUNTERPARTS HEREOF.
TABLE OF CONTENTS
(LEASE AGREEMENT)
Page
----
PARTIES................................................................1
RECITAL................................................................1
SECTION 1. Definitions ..............................................1
SECTION 2. Purchase of Equipment by Lessor..........................12
SECTION 3. Lease of Equipment; Lease Term...........................12
SECTION 4. Rent.....................................................13
SECTION 5. Representations, Warranties and
Agreements as to the Equipment;
Claims Against Contractors.............................15
SECTION 6. Liens....................................................17
SECTION 7. Operation; Maintenance; Alterations,
Modifications and Additions............................17
SECTION 8. Identification...........................................22
SECTION 9. Insurance................................................22
SECTION 10. Storage; Maintenance; Return of
Equipment .............................................27
SECTION 11. Financial Information....................................28
SECTION 12. Loss, Destruction, Condemnation or
Damage.................................................30
SECTION 13. No Interest Conveyed to Lessee...........................33
SECTION 14. Assignment and Sublease; Location........................33
SECTION 15. Inspection and Reports...................................34
SECTION 16. Events of Default........................................36
SECTION 17. Remedies.................................................39
SECTION 18. Right To Perform for Lessee..............................42
SECTION 19. Lessee's Options to Renew Lease..........................43
SECTION 20. Lessee's Options to Purchase the
Equipment..............................................44
SECTION 21. Obsolescence Termination; Lessor's
Option.................................................47
SECTION 22. Further Assurances.......................................48
SECTION 23. Successor Trustee; Cotrustee.............................49
SECTION 24. Liabilities of Owner Participant.........................49
SECTION 25. Trust Indenture Estate as Security
for Owner Trustee's Obligations
to Holders of Secured Notes............................50
SECTION 26. Grant of Certain Rights to Lessee........................51
SECTION 27. Counterparts; Uniform Commercial Code....................51
SECTION 28. Notices..................................................51
SECTION 29. Miscellaneous............................................52
TESTIMONIUM...........................................................52
SIGNATURES AND SEALS..................................................53
ii
Page
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ACKNOWLEDGMENTS
SCHEDULE 1. Basic Rent
SCHEDULE 2. Stipulated Loss Values
SCHEDULE 3. Termination Values
EXHIBIT A. Bargain and Sale Deed,
Bill of Sale and Assignment
Schedule 1. Description of Equipment
-----------
Schedule 2. Liens on Equipment
-----------
Schedule 3. List of Contracts
-----------
EXHIBIT B. Form of Lease Supplement
LEASE AGREEMENT
LEASE AGREEMENT dated as of September 1,
1979, between PORTLAND GENERAL ELECTRIC COMPANY, an
Oregon corporation, as Lessee (capitalized terms
being used as hereinafter defined), and FIRST
NATIONAL BANK OF OREGON, a national banking
association, as Lessor.
In consideration of the mutual agreements herein contained and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. Definitions. Unless the context shall otherwise require,
the following terms shall have the following meanings for all purposes hereof
(such definitions to be equally applicable to both the singular and plural forms
of the terms defined):
"Affiliate" shall have the meaning specified in the Participation
Agreement.
"Alterations" shall have the meaning specified in Section 7(d).
"Appraisal Procedure" shall mean the procedure specified in the
succeeding sentences for determining an amount or value. If either party shall
give written notice to the other requesting determination of such amount or
value by appraisal, the parties shall consult for the purpose of appointing a
mutually acceptable qualified independent appraiser. If the parties shall be
unable to agree on an appraiser within 20 days of the giving of such notice,
such amount or value shall be determined by a panel of three independent
appraisers, one of whom shall be selected by Lessee, another of whom shall be
selected by Lessor, and the third of whom shall be selected by the American
Arbitration Association (or its successors) if such other two appraisers shall
be unable to agree upon a third appraiser within 10 days. The appraiser or
appraisers appointed pursuant to the foregoing procedure shall be instructed to
determine such amount or value within 45 days after such appointment and such
determination shall be final and binding upon the parties. If three appraisers
shall be
2
appointed, the determination of the appraiser which shall differ most from the
other two appraisers shall be excluded, the remaining two determinations shall
be averaged and such average shall constitute the determination of the
appraisers. Lessee shall pay all fees and expenses relating to an appraisal for
any purpose under this Lease.
"Assumption Agreement" shall have the meaning specified in the
Participation Agreement.
"Basic Rent" shall mean, for the Basic Term, the rent payable pursuant
to Section 4(b), and, for any Renewal Term, shall mean the rent payable pursuant
to section 19.
"Basic Term" shall mean the period commencing on the Commencement Date
and ending 25 years thereafter (or such shorter period as may result from
earlier termination of this Lease as provided herein).
"Bill of Sale" shall mean a Bargain and Sale Deed, Bill of Sale and
Assignment substantially in the form of Exhibit A.
"Business Day" shall have the meaning specified in the Participation
Agreement.
"Closing Dates" shall have the meaning specified in the Participation
Agreement.
"Code" shall mean the Internal Revenue Code of 1954, as amended, or
any comparable successor law.
"Commencement Date" shall mean the earlier of the Second Closing Date
and July 1, 1980.
"Consents to Assignment of Contract Rights" shall mean the written
consents of Contractors, in form and substance satisfactory to Owner Participant
and Loan Participants, which shall be necessary effectively to assign any of the
Contracts to be assigned to Owner Trustee, as the same may be amended, modified
or supplemented in accordance with the terms hereof and of the Indenture.
"Contractors" shall mean the contractors which are parties to the
Contracts.
"Contracts" for the Equipment shall mean all
3
construction contracts or purchase orders relating to the Equipment, as such
contracts or purchase orders may be amended, modified or supplemented in
accordance with the terms hereof and of the Indenture.
"Default" shall mean an Event of Default or an event or condition
which, with notice or lapse of time or both, would become an Event of Default.
"Descriptive Warranty" shall have the meaning specified in the
Participation Agreement.
"Determination Date" shall have the meaning specified in Section
12(a).
"Easements" shall have the meaning specified in the Facilities
Agreement.
"Equipment" shall mean the equipment described in Schedule 1 of
Exhibit A and any and all Parts which may from time to time be incorporated or
installed or attached to the Equipment, title to which shall have vested in
Lessor pursuant to Section 7(f).
"Equipment Cost" for any Equipment shall mean the sum of (a) the
aggregate amount of the obligations incurred pursuant to the Contracts for such
Equipment and amounts otherwise expended or obligations otherwise incurred with
respect to design, engineering, procurement, construction, erection, assembly,
inspection and testing of such Equipment, (b) the aggregate amount of property,
sales and use taxes incurred with respect to such Equipment, (c) an allowance
for funds used directly in connection with construction of the Equipment and (d)
any other taxes on and costs relating directly to such Equipment incurred during
the period of construction of such Equipment and, in each case, capitalized as
part of the cost of such Equipment.
"Equipment Easement" shall have the meaning specified in the
Facilities Agreement.
"Event of Default" shall have the meaning specified in Section 16.
"Event of Loss" shall mean any of the following events: (a) the
Equipment shall be either totally destroyed or damaged to an extent rendering
repair impracticable or
4
uneconomical, in either case as determined in good faith by the Board of
Directors of Lessee, such determination to be evidenced by a certificate of the
President or any Vice President of Lessee, (b) the Facility shall have been
lost, condemned, confiscated, stolen or seized, or, title thereto or use thereof
shall have been requisitioned, and, in the case of any such requisition, Lessee
shall have lost the use or possession of substantially all the Facility or the
Equipment for a period of 180 consecutive days, or (c) any change shall occur in
the laws or governmental regulations, or in interpretations thereof, or any
final and unappealable administrative or judicial determination with respect to
the use of the Facility which shall render the continued operation of the
Facility or the Equipment by Lessee impracticable or uneconomical, as determined
in good faith by the Board of Directors of Lessee, such determination to be
evidenced by a certificate of the President or any Vice President of Lessee.
"Existing Mortgages" shall have the meaning specified in the
Participation Agreement.
"Facilities Agreement" shall have the meaning specified in the
Participation Agreement.
"Facility" shall have the meaning specified in the Facilities
Agreement.
"Fair Market Rental Value" shall mean the fair market rental value
which would be obtained in an arm's-length transaction between an informed and
willing lessee and an informed and willing lessor, in either case under no
compulsion to lease, for the lease of the Equipment on the terms set forth, or
referred to, in Section 19 for a Renewal Period, calculated at the higher of (a)
the value for the use of the Equipment in place at the Site, assuming, in the
determination of such fair market rental value, that (i) such lessee has rights
to use the premises on which the Equipment is situated and necessary ancillary
rights in connection with the operation of the Equipment which are comparable to
those provided to Lessor in the Facilities Agreement and (ii) the Facility is in
the condition and repair required to be maintained by the terms of this Lease
and the Facilities Agreement (unless such fair market rental value is being
determined for the purposes of Section 17(c), in which case the assumption
described in this clause (ii) shall not be made), or (b) the value for the use
of the Equipment (after deducting amounts appropriately to reflect the cost of
5
dismantling, shipment and reconstruction) at any place other than in place at
the Site.
"Fair Market Sales Value" shall mean the fair market sales value which
would be obtained in an arm's-length transaction between an informed and willing
buyer and an informed and willing seller, under no compulsion, respectively, to
buy or sell, calculated at the higher of (a) the value for the use of the
Equipment in place at the Site, assuming, in the determination of such fair
market sales value, that (i) such buyer has rights to use the premises on which
the Equipment is situated and necessary ancillary rights in connection with the
operation of the Equipment which are comparable to those provided to Lessor in
the Facilities Agreement and (ii) the Facility is in the condition and repair
required to be maintained by the terms of this Lease and the Facilities
Agreement (unless such fair market sales value is being determined for the
purposes of Section 17(c) in which case the assumption described in this clause
(ii) shall not be made), or (b) the value for the Equipment (after deducting
amounts appropriately to reflect the cost of dismantling, shipment and
reconstruction) at any place other than in place at the Site.
"First Closing Date" shall have the meaning specified in the
Participation Agreement.
"Grantors" shall have the meaning specified in the Facilities
Agreement.
"Indenture" shall have the meaning specified in the Participation
Agreement.
"Indenture Trustee" shall mean United States National Bank of Oregon,
a national banking association, in its capacity as trustee under the Indenture,
and its successors and assigns thereunder.
"Interim Lease Periods" shall mean (a) the period commencing on the
First Closing Date and ending on the earlier of January 1, 1980, and the
Commencement Date and (b) if the Commencement Date shall occur after January 1,
1980, the period commencing on January 1, 1980, and ending on the Commencement
Date.
"Interim Rent" shall mean the rent payable pursuant to Section 4(a).
6
"Interim Rent Payment Dates" shall mean the Commencement Date and, if
the Commencement Date shall occur after January 1, 1980, January 1, 1980.
"Interim Term" shall mean the Interim Lease Periods, collectively.
"IPCO" shall have the meaning specified in the Participation
Agreement.
"Lease" shall mean this Lease Agreement, as the same may be amended,
modified, or supplemented from time to time in accordance with the provisions
hereof and of the Indenture.
"Lease Assignment" shall have the meaning specified in the
Participation Agreement.
"Lease Supplement" for any portion of the Equipment shall mean a Lease
Supplement substantially in the form of Exhibit B, to be entered into on the
Closing Date relating to such Equipment.
"Lease Term" shall mean the full term of this Lease, including the
Interim Term, the Basic Term and any Renewal Term.
"Lessee" shall mean Portland General Electric Company, an Oregon
corporation, and its successors and, to the extent permitted by this Lease, its
assigns hereunder.
"Lessor" or "Owner Trustee" shall mean First National Bank of Oregon,
a national banking association, in its capacity as trustee under the Trust
Agreement, and its successors and assigns thereunder.
"Lessor Liens" shall mean any Liens which may result from acts of or
claims against Lessor, in its individual capacity, not related or connected to
the ownership of the Equipment, its status as lessor under this Lease, the
administration of the Trust Estate or any other transaction contemplated by any
of the Operative Documents.
"Lessor's Cost" for any Equipment shall mean the sum of (a) the
Equipment Cost for such Equipment, (b) in the case of the Phase I Equipment, the
Transaction Costs incurred by Owner Participant or Lessor on or prior to the
First
7
Closing Date, (c) in the case of the Phase II Equipment, the Transaction Costs
incurred by Owner Participant or Lessor on or prior to the Second Closing Date
and not included in Lessor's Cost for the Phase I Equipment and (d) any
Transaction Costs paid by Owner Trustee pursuant to Section 8.03 of the
Participation Agreement.
"Lien" shall have the meaning specified in the Participation
Agreement.
"Loan Participants" shall mean and include each of the institutions
listed on Schedule 1 to the Participation Agreement as a Loan Participant and
any other holder of a Secured Note, and their respective successors and assigns.
"Majority in Interest of Secured Note Holders" shall mean as of a
particular date of determination the holders (other than Owner Participant,
Owner Trustee or Lessee or any Affiliates of any thereof) of at least 66-2/3% in
aggregate unpaid principal amount of all Secured Notes then outstanding.
"Net Fair Market Sales Value" as of any date shall mean an amount
equal to (a) Fair Market Sales Value as of such date minus (b) the aggregate
unpaid principal amount of the Secured Notes then outstanding.
"Net Stipulated Loss Value" as of any date shall mean an amount equal
to (a) Stipulated Loss Value as of such date minus (b) the aggregate unpaid
principal amount of the Secured Notes then outstanding.
"Officer's Certificate" shall have the meaning specified in the
Participation Agreement.
"Operative Documents" shall have the meaning specified in the
Participation Agreement.
"Owner Participant" shall mean Western America Financial, Inc., a
Delaware corporation, and its successors and, subject to the provisions of
Article XIII of the Participation Agreement, its assigns.
"Participants" shall mean Owner Participant and Loan Participants,
collectively.
"Participation Agreement" shall mean the Participa-
8
tion Agreement dated as of September 1, 1979, among Lessee, Owner Participant,
Loan Participants listed as such in Schedule 1 thereto, Lessor and Indenture
Trustee, as the same maybe amended, modified or supplemented from time to time
in accordance with the provisions thereof and of the Indenture.
"Parts" shall have the meaning specified in Section 7(c).
"Permitted Liens" shall mean (a) the respective rights and interests
of Lessee, Participants, Owner Trustee, Indenture Trustee and IPCO, as provided
in the Operative Documents, (b) Liens which result from acts of or claims
against any Participant other than (i) any thereof relating to the execution,
delivery and performance of the Participation Agreement or any other Operative
Document and (ii) those required by the express terms hereof to be discharged by
Lessee or by the terms of Articles VIII, IX or X of the Participation Agreement
to be indemnified against by Lessee, (c) Lessor Liens, (d) Liens resulting from
claims against Indenture Trustee not related to the administration of the Trust
Indenture Estate or the performance of its duties under the Indenture, (e) Liens
for taxes either not yet due or being contested in good faith and by appropriate
proceedings so long as such proceedings shall not involve any danger of the
sale, forfeiture or loss of any part of the Facility, title thereto or any
interest therein and shall not interfere with the use of the Facility or the
payment of Rent, (f) construction, materialmen's, mechanics', workers',
repairmen's, employees' or other like Liens arising in the ordinary course of
business for amounts either not yet due or being contested in good faith and by
appropriate proceedings so long as such proceedings shall not involve any danger
of the sale, forfeiture or loss of any part of the Facility, title thereto or
any interest therein and shall not interfere with the use of the Facility or the
payment of Rent, (g) Liens arising out of judgments or awards against Lessee
with respect to which at the time an appeal or proceeding for review is being
prosecuted in good faith and for the payment of which adequate reserves shall
have been provided or other appropriate provision shall have been made and (h)
Liens disclosed in Exhibit E to the Facilities Agreement.
"Person" shall have the meaning specified in the Participation
Agreement.
"Phase I Equipment" shall mean the items described
9
or referred to as the "Phase I Equipment" in Schedule 1 of Exhibit A.
"Phase II Equipment" shall mean the items described or referred to as
the "Phase II Equipment" in Schedule 1 of Exhibit A.
"Plans and Specifications" shall mean the plans and specifications for
the Equipment identified as such and delivered to Owner Participant, Owner
Trustee, Indenture Trustee and Engineer, as the same may be revised from time to
time prior to the First Closing Date (in the case of the Phase I Equipment) or
the Second Closing Date (in the case of the Phase II Equipment).
"Plant" shall have the meaning specified in the Facilities Agreement.
"Renewal Period" shall have the meaning specified in Section 19.
"Renewal Term" shall have the meaning specified in Section 19.
"Rent" shall mean Interim Rent, Basic Rent and Supplemental Rent,
collectively.
"Responsible Officer" shall mean, with respect to the subject matter
of any covenant, agreement or obligation of Lessee contained in the Operative
Documents, the highest ranking corporate officer of Lessee who in the normal
performance of his operational responsibility would have knowledge of such
matter and the requirements with respect thereto.
"Second Closing Date" shall have the meaning specified in the
Participation Agreement.
"Secured Notes" shall have the meaning specified in the Indenture.
"Semiannual Lease Periods" for the Basic Term shall mean consecutive
semiannual periods in the Basic Term, the first such period commencing on the
Commencement Date and successive periods commencing each six months thereafter
in the Basic Term. "Semiannual Lease Periods" for any Renewal Term shall mean
the consecutive semiannual periods in such Renewal Term, the first such period
commencing on the first
10
day of such Renewal Term and successive periods commencing each six months
thereafter in such Renewal Term.
"Semiannual Rent Payment Dates" for the Basic Term or any Renewal Term
shall mean the last day of each Semiannual Lease Period in the Basic Term or
such Renewal Term.
"Significant Subsidiary" shall mean The Boardman Power Company and any
Subsidiary which would constitute a "significant subsidiary" within the meaning
of Regulation S-X of the Securities and Exchange Commission, as in effect on the
date hereof.
"Site" shall have the meaning specified in the Facilities Agreement.
"Special Event of Loss" shall mean the subjection to regulation of
Lessor or Owner Participant or any Affiliate of either thereof under any law
relating to public utilities solely by reason of the holding of an interest in
the Facility by Lessor or the lease of the Equipment to Lessee which regulation,
in the reasonable opinion of Lessor or Owner Participant, shall be deemed
burdensome with respect to the carrying on of its normal business.
"Stipulated Interest Rate" shall mean 11.20% per annum (computed on
the basis of a 360-day year of 12 30-day months).
"Stipulated Loss Value" as of any date shall mean an amount equal to
(a) Lessor's Cost for the Equipment (or if the date of determination thereof
shall be prior to the Second Closing Date, Lessor's Cost for the Phase I
Equipment), multiplied by (b) the percentage set forth in Schedule 2 opposite
such date, plus (c) the premium, if any, payable on the Secured Notes. To the
extent the Owner Participant shall incur a Loss within the meaning of Article X
of the Participation Agreement by reason of an event or condition not fully
taken into account in the computation of Stipulated Loss Value by reason of the
fact that the date as of which such Stipulated Loss Value is computed is later
than the date as of which Owner Participant shall be affected for tax purposes,
Stipulated Loss Value shall be increased in accordance with the manner and based
on the assumptions on which such values were originally computed by Owner
Participant and the assumptions set forth in Section 10.04 of the Participation
Agreement, and shall be final and binding in accordance with the
11
provisions thereof. "Stipulated Loss Value" shall also be adjusted as required
in Sections 3.04 and 10.07 of the Participation Agreement. During any Renewal
Term "Stipulated Loss Value" shall mean an amount determined as provided in
Section 19. Notwithstanding anything in this Lease (including Schedule 2) or in
the Participation Agreement to the contrary, Stipulated Loss Value as of any
such time shall be, under any circumstances and in any event, in an amount at
least sufficient to pay in full the aggregate unpaid principal amount of the
Secured Notes then outstanding plus the premium, if any, payable thereon.
"Storage Period" shall have the meaning specified in Section 10.
"Subsidiary" shall have the meaning specified in the Participation
Agreement.
"Supplemental Rent" shall mean any and all amounts, liabilities and
obligations other than Interim Rent or Basic Rent which Lessee assumes or agrees
to pay under any Operative Document, including, without limitation, damages for
breach of any covenants, representations, warranties or agreements therein, to
Owner Participant, any Loan Participant, Owner Trustee or Indenture Trustee,
including, without limitation, Stipulated Loss Value, Net Stipulated Loss Value,
Fair Market Sales Value and Termination Value payments.
"Termination Date" shall have the meaning specified in Section 21.
"Termination Value" as of any Termination Date shall mean an amount
equal to (a) Lessor's Cost for the Equipment, multiplied by (b) the percentage
set forth in Schedule 3 opposite such Termination Date, plus (c) the premium, if
any, payable on the Secured Notes. Termination Value shall be adjusted as
required by Sections 3.04 and 10.07 of the Participation Agreement. During any
Renewal Term, "Termination Value" shall mean an amount determined as provided in
Section 19. Notwithstanding anything in this Lease (including Schedule 3) or in
the Participation Agreement to the contrary, Termination Value shall be, under
any circumstances and in any event, in an amount at least sufficient to pay in
full, as of the Termination Date, the aggregate unpaid principal amount of the
Secured Notes then outstanding plus the premium, if any, payable thereon.
12
"Transaction Costs" shall have the meaning specified in the
Participation Agreement.
"Trust Agreement" shall have the meaning specified in the
Participation Agreement.
"Trust Estate" shall have the meaning specified in the Trust
Agreement.
"Trust Indenture Estate" shall have the meaning specified in the
Indenture.
SECTION 2. Purchase of Equipment by Lessor.
(a) Action by Lessee. On each Closing Date, Lessee shall (i) assign,
set over and sell all its right, title and interest in and to the Equipment
relating to such Closing Date, and shall assign its rights under the Contracts
relating thereto, by executing and delivering to Lessor a Bill of Sale with
respect to such Equipment and (ii) deliver to Lessor the Consents to Assignment
of Contract Rights relating to such Equipment, duly authorized, executed and
delivered by the appropriate Contractors.
(b) Action by Lessor. Upon receipt of the payment to be made by Owner
Participant and the loans to be made by Loan Participants on each Closing Date,
in accordance with Sections 2.05 and 2.06 of the Participation Agreement, Lessor
shall pay to Lessee in immediately available funds an amount equal to the
Equipment Cost of the Equipment then being purchased and shall pay the amount of
the Transaction Costs included in Lessor's Cost for such Equipment to Lessee
(and Lessee shall, on behalf of Owner Trustee, promptly pay such amount to the
parties entitled to receive the same (or their order)), all as specified in the
Officer's Certificate of Lessee delivered on such Closing Date pursuant to
Section 4.02(j) of the Participation Agreement.
SECTION 3. Lease of Equipment; Lease Term. On each Closing Date,
subject to all the terms and conditions of this Lease and the applicable
conditions set forth in Article IV of the Participation Agreement, Lessor shall
lease, and hereby as of such Closing Date does lease, the Equipment relating to
such Closing Date to Lessee, and Lessee shall lease, and hereby as of such
Closing Date does lease, such Equipment from Lessor, for, in the case of the
Phase I Equipment, the Interim Term and the Basic Term and, in the case of the
Phase II Equipment, the Basic Term. On each
13
Closing Date, Lessee and Lessor shall each execute and deliver to the other a
Lease Supplement in respect of the Equipment relating to such Closing Date.
SECTION 4. Rent. (a) Interim Rent. On each Interim Rent Payment Date,
Lessee shall pay to Lessor Interim Rent for the Phase I Equipment in an amount
equal to .023774% of the amount of Lessor's Cost for such Equipment for each day
during the Interim Lease Period ending on such Interim Rent Payment Date
(subject to adjustment as provided in the Participation Agreement); provided,
however, that the amount of Interim Rent payable on any Interim Rent Payment
Date shall in no event be less than the aggregate amount of interest due and
payable on the Secured Notes on such Interim Rent Payment Date.
(b) Basic Rent. Lessee shall pay to Lessor Basic Rent in 50 semiannual
installments on the Semiannual Rent Payment Dates during the Basic Term, each in
an amount equal to that percentage of Lessor's Cost set opposite the applicable
Semiannual Rent Payment Date in Schedule 1 (subject to adjustment as provided in
the Participation Agreement); provided, however, that the amount of Basic Rent
payable on any Semiannual Rent Payment Date shall in no event be less than the
aggregate amount of the regularly scheduled installments of principal and
interest due and payable on the Secured Notes on such Semiannual Rent Payment
Date.
(c) Supplemental Rent. Lessee shall pay to Lessor, or to whomever
shall be entitled thereto as expressly provided herein or in the Participation
Agreement, any and all Supplemental Rent promptly as the same shall become due
and payable, including any interest payable as provided in Section 4(e).
(d) Method of Payment. Subject to the provisions of Section 25, (i)
Interim Rent, Basic Rent and Supplemental Rent shall be paid to Lessor at its
office at 1300 S.W. Fifth Avenue, Portland, Oregon, Attention of Trust Division,
or at such other place in the State of Oregon or New York, New York, as Lessor
shall specify in writing; provided, however, that, in the case of Supplemental
Rent, payment shall be made to whomever shall be entitled thereto as expressly
provided herein or in the Participation Agreement. Each payment of Rent due
hereunder shall be made by Lessee in immediately available funds prior to 10:00
a.m., local time at the place of payment, on the date when such payment
14
shall be due; provided, however, that if such date shall not be a Business Day,
such payment shall be made on the next preceding Business Day with the same
force and effect as though made on such date and no reduction of Rent shall
occur by reason of such early payment.
(e) Late Payment. In the event any Interim Rent, Basic Rent or
Supplemental Rent shall not be paid when due, Lessee shall pay to Lessor (or, in
the case of Supplemental Rent, to whomever shall be entitled thereto as
expressly provided herein or in the Participation Agreement), as Supplemental
Rent, interest (to the extent permitted by law) on such overdue amount from the
due date thereof to the date of payment thereof at the Stipulated Interest Rate.
(f) Net Lease; No Setoff, Counterclaims, etc. This Lease is a net
lease, and, notwithstanding any other provision of this Lease, it is intended
that Interim Rent, Basic Rent and Supplemental Rent shall be paid without
notice, demand, counterclaim, setoff, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. The obligations and
liabilities of Lessee hereunder shall in no way be released, discharged or
otherwise affected (except as may be expressly provided herein) for any reason,
including, without limitation: (i) any defect in the condition, quality or
fitness for use of the Facility or any part thereof; (ii) any damage to,
removal, abandonment, salvage, loss, scrapping or destruction of or any
requisition or taking of the Facility or any part thereof; (iii) any
restriction, prevention or curtailment of or interference with any use of the
Facility or any part thereof; (iv) any defect in title to the Facility or any
part thereof or any Lien on such title; (v) any change, waiver, extension,
indulgence or other action or omission in respect of any obligation or liability
of Lessor; (vi) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to
Lessee, Lessor, Indenture Trustee or any Participant, or any action taken with
respect to this Lease by any trustee or receiver of Lessee, Lessor, Indenture
Trustee or any Participant, or by any court, in any such proceeding; (vii) any
claim which Lessee has or might have against any Person, including, without
limitation, Lessor, Indenture Trustee or any Participant (but this Section shall
not affect any such claim); (viii) any failure on the part of Lessor to perform
or comply with any of the terms hereof or of any other agreement; (ix) any
invalidity or unenforceability or dis-
15
affirmance of this Lease or any provision hereof or any of the other Operative
Documents or the Secured Notes or any provision thereof; or (x) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, whether
or not Lessee shall have notice or knowledge of any of the foregoing. This Lease
shall be non-cancelable by Lessee and, except as expressly provided herein,
Lessee, to the extent permitted by law, waives all rights now or hereafter
conferred by statute or otherwise to quit, terminate or surrender this Lease or
the Equipment, or to any diminution or reduction of Rent payable by Lessee
hereunder. All payments by Lessee to Lessor made hereunder as required hereby
shall be final, and Lessee shall not seek to recover any such payment or any
part thereof for any reason whatsoever. If for any reason whatsoever this Lease
shall be terminated in whole or in part by operation of law or otherwise except
as expressly provided herein, Lessee shall nonetheless pay to Lessor (or, in the
case of Supplemental Rent, to whomever shall be entitled thereto as expressly
provided herein or in the Participation Agreement) an amount equal to each Rent
payment at the time and in the manner that such payment would have become due
and payable under the terms of this Lease if it had not been terminated in whole
or in part.
SECTION 5. Representations, Warranties and Agreements as to the
Equipment; Claims Against Contractors. (a) Representations, Warranties and
Agreements as to the Equipment. LESSEE REPRESENTS, WARRANTS, ACKNOWLEDGES AND
AGREES THAT (i) THE EQUIPMENT IS OF THE SIZE, DESIGN, CAPACITY AND MANUFACTURE
SELECTED BY LESSEE, (ii) LESSEE IS SATISFIED THAT THE EQUIPMENT IS SUITABLE FOR
ITS PURPOSES, (iii) LESSOR IS NOT A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH
KIND AND (iv) THE EQUIPMENT IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS
AND GOVERNMENTAL REGULATIONS NOW IN EFFECT OR HEREAFTER ADOPTED AND IN THE STATE
AND CONDITION OF EVERY PART THEREOF WHEN THE SAME FIRST BECAME OR BECOMES
SUBJECT TO THIS LEASE, WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND BY ANY
PARTICIPANT, LESSOR OR INDENTURE TRUSTEE, EXPRESS OR IMPLIED, AS TO THE TITLE,
MERCHANTABILITY, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, OPERATION,
FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT, ABSENCE OF LATENT DEFECTS OR
FITNESS FOR USE OF THE EQUIPMENT (OR ANY PART THEREOF), OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE
EQUIPMENT (OR ANY PART THEREOF) except that Lessor hereby represents and
warrants that the Equipment shall be free of Lessor Liens. It is agreed that
except as expressly provided herein all
16
risks incident to the matters discussed in the preceding sentence, as between
any Participant, Lessor or Indenture Trustee, on the one hand, and Lessee, on
the other, are to be borne by Lessee. The provisions of this paragraph have been
negotiated, and, except to the extent otherwise expressly stated, the foregoing
provisions are intended to be a complete exclusion and negation of any
representations or warranties by any Participant, Lessor or Indenture Trustee,
express or implied, with respect to the Equipment, whether arising pursuant to
the Uniform Commercial Code or any similar law now or hereafter in effect, or
otherwise.
(b) Claims Against Contractors. Unless a Default shall have occurred
and be continuing, Lessor agrees that Lessee shall have the benefit of and shall
be entitled to enforce, in its own name, any and all continuing obligations of
the Contractors under the Contracts and any and all claims for damages arising
from warranties (whether express or implied) of the Contractors for the
Equipment subject to this Lease at any time; provided, however, that any amount
recovered by Lessee or Lessor under any such warranty shall first be applied in
its entirety to cure, to the extent possible, or to reimburse Lessee for so
curing, any condition in respect of which such amount was recovered in
accordance with the provisions of this Section 5(b), and any remainder shall be
used by Lessee during the remainder of the Lease Term to pay for maintenance and
repairs of, and for the replacement of Parts in, the Equipment in accordance
with the provisions of Section 7 (except that if an Event of Loss or Special
Event of Loss shall have occurred and be continuing any such amount shall be
applied against the Stipulated Loss Value or Net Stipulated Loss Value payable
under Section 12); provided further, however, that any amounts received under
any warranty involving a claim for damages in excess of $250,000 against any
Contractor shall be retained by Indenture Trustee and, unless a Default shall
have occurred and be continuing, be paid over to Lessee or as it may direct from
time to time to pay (or reimburse Lessee for) expenditures of the aforesaid
types, but only upon the written request of Lessee accompanied by appropriate
evidence reasonably satisfactory to Lessor and Indenture Trustee that the sum
requested is a proper item of expenditure and has been paid or will be applied
to the payment of a sum then due and payable. Lessor agrees to execute and
deliver such further documents and take such further action, at Lessee's
expense, as may be necessary to enable Lessee to obtain such warranty service as
may be furnished for the Equipment by the Contractors for
17
the Equipment. Except as aforesaid, Lessor shall have no obligation or duty with
respect to any of such matters. Lessee shall promptly notify Lessor and
Indenture Trustee of any default by itself or by any Contractor under any
Contract.
SECTION 6. Liens. Lessee shall not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to the Equipment,
the Easements, the Trust Estate or the Trust Indenture Estate, or title thereto
or any interest therein, except (a) Permitted Liens and (b) as provided in
Section 14(a). Lessee further agrees that it shall pay or cause to be paid on or
before the time or times prescribed by law (after giving effect to any
applicable grace period) any taxes, assessments, fees and charges imposed on the
Lessee (or any affiliated or related group, of which the Lessee is a member)
under the laws of any jurisdiction which, if unpaid, would result in any Lien
prohibited by the preceding sentence. Lessee shall promptly, at its own expense,
take such action as may be necessary duly to discharge or eliminate or bond in a
manner satisfactory to Lessor any Lien not excepted above if the same shall
arise at any time. Lessor shall promptly, at its own expense, take such action
as may be necessary duly to discharge or eliminate or bond any Lessor Lien on or
with respect to the Equipment, the Easements, the Trust Estate or the Trust
Indenture Estate, or title thereto or any interest therein.
SECTION 7. Operation; Maintenance; Alterations, Modifications and
Additions. (a) Operation. At all times during the Lease Term, Lessee, at its
expense, shall operate the Equipment in accordance with (i) the same standards
as Lessee would, in the prudent management of its own properties, observe in
operating similar equipment owned by Lessee, (ii) such operating standards as
shall be required to enforce warranty claims against Contractors for the
Equipment, (iii) the terms and conditions of all insurance policies in effect at
any time with respect to the Equipment or any part thereof and (iv) all
applicable requirements of law and of any governmental authority having
jurisdiction, except to the extent Section 7(j) shall apply.
(b) Maintenance. Lessee, at its expense, shall at all times during the
Lease Term maintain, service and repair the Equipment, or cause the same to be
maintained, serviced and repaired, to the same extent as Lessee would, in the
prudent management of its own properties, maintain, service and repair similar
equipment owned by Lessee, and in any event
18
(i) in accordance with all applicable requirements of law and of any
governmental authority having jurisdiction, except to the extent Section 7(j)
shall apply, (ii) to the extent required to maintain the Equipment in good
operating condition and (iii) to cause the Equipment to continue to have the
capacity and functional ability to perform, on a continuing basis (subject to
normal interruption in the ordinary course of business for maintenance, service,
repair and testing), in commercial operation, in accordance with the Descriptive
Warranty, the functions for which it was specifically designed in accordance
with the Plans and Specifications. Lessee shall also comply with such repair
standards and periodic maintenance inspections as shall be required to enforce
warranty claims against Contractors for the Equipment and any standards imposed
by any insurance policies in effect at any time with respect to the Equipment or
any part thereof.
(c) Replacement of Parts. Except after the occurrence of an Event of
Loss, Lessee, at its expense, shall (unless prohibited by applicable law or
regulation) promptly replace all necessary or useful appliances, parts,
instruments, appurtenances, accessories and miscellaneous equipment of whatever
nature (herein collectively referred to as "Parts") which may from time to time
be incorporated or installed in or attached to the Equipment and which may from
time to time fail to function in accordance with the Plans and Specifications
and the Descriptive Warranty or become worn out, destroyed, damaged beyond
repair, lost, condemned, confiscated, stolen or seized for any reason
whatsoever. Lessor hereby authorizes Lessee to order Parts as the agent, and in
the name of Lessor, but at the sole cost and expense of Lessee, and no supplier
or seller of such Parts shall have any claim against Lessor or any Participant
by virtue of such authorization by Lessor. In addition, in the ordinary course
of maintenance, service, repair or testing, Lessee may remove any Parts;
provided, however, that Lessee shall cause such Parts to be replaced as promptly
as practicable. All replacement Parts shall be free and clear of all Liens
except Permitted Liens and shall be in at least as good operating condition as,
and shall have a value and utility at least equal to, the Parts replaced,
assuming such replaced Parts were in the condition and repair required to be
maintained by the terms hereof.
(d) Alterations Required by Law. Lessee, at its own expense, shall
make such alterations, modifications and
19
additions (herein for the purpose of this Section 7 collectively referred to as
"Alterations") to the Equipment as may be required from time to time to meet the
requirements of law or of any governmental authority having jurisdiction as soon
as practicable after any such requirements shall arise, except to the extent
Section 7(j) shall apply.
(e) Optional Alterations. In addition to the foregoing, Lessee, at its
own expense, may from time to time make such Alterations to the Equipment as
Lessee may deem desirable in the proper conduct of its business; provided,
however, that no such alteration shall be made by Lessee without the prior
written consent of Lessor if (i) the cost of such Alteration shall exceed
$500,000, (ii) any Part incorporated or installed in or attached to the
Equipment as a result of such Alteration shall not be "readily removable" within
the meaning of Revenue Procedures 75-21, 1975-1 C.B. 715, and 75-28, 1975-1 C.B.
752, as amended or supplemented from time to time, unless such Alteration
constitutes a "Nonseverable Improvement" which satisfies the conditions
specified in Section 3 of Revenue Procedure 79-48, 1979-39 I.R.B. 27, or (iii)
any such Part could not be removed from the equipment without materially
diminishing or impairing the value, utility or condition which the Equipment
would have had at such time had such Alteration not occurred.
(f) Title to Parts. Title to each Part (including any Alteration)
incorporated or installed in or attached to the Equipment pursuant to this
Section 7 shall without further act vest in Lessor and shall be deemed to
constitute a part of the Equipment and be subject to this Lease in the following
cases:
(A) such Part is in replacement of or in substitution for, and not in
addition to, any Part constituting a part of the Equipment at the time of
the acceptance thereof hereunder or any Part title to which shall have
vested in Lessor pursuant to this Section 7(f);
(B) such Part is required to be incorporated or installed in or
attached to the Equipment pursuant to the terms of Section 7(c) or 7(d); or
(C) such Part cannot be readily removed from the Equipment without
materially diminishing or impairing the value, utility or condition which
the Equipment would have had at such time had such Part not been so
incorporated or installed;
provided, however, that in the event any Part constituting a
20
Part of the Equipment shall be replaced by the Lessee with another Part which
shall restore the value, utility and condition of the Equipment to the value,
utility and condition of the Equipment immediately prior to such replacement
(assuming the Facility was in the condition and repair required to be maintained
by the terms hereof and of the Facilities Agreement) and shall meet the
requirements of Section 7(d), if applicable, then immediately upon such
replacement Part becoming incorporated or installed in or attached to the
Equipment, without further act, title to the replaced Part shall thereupon vest
in such Person as shall be designated by Lessee, free and clear of all rights of
Lessor; provided further, however, that all Parts owned by Lessor removed from
the Equipment shall remain the property of Lessor, no matter where located,
until such time as title to such Parts shall vest in Lessee pursuant to the
foregoing proviso.
(g) Reports of Alterations. On or before February 1 of each calendar
year and on the date on which the Lease Term shall expire, Lessee shall furnish
Lessor with a report describing in reasonable detail all Alterations involving,
in any case, a cost to Lessee in excess of $250,000 which have been made during
the period from the date of this Lease in the case of the first such report or
during the period from the last previous report in the case of all subsequent
reports.
(h) Removal of Parts. All Parts to which Lessee shall have title
pursuant to the provisions of Section 7(f), may, subject to Lessor's right to
use such Parts as provided in the Facilities Agreement and so long as such
removal shall be permitted by the Facilities Agreement and shall not result in
any violation of any law or governmental regulation and so long as no Default
shall have occurred and be continuing, be removed at any time by Lessee and
shall be removed by Lessee prior to the delivery of the Equipment to Lessor in
accordance with the provisions of this Lease, other than upon the termination of
this Lease pursuant to Section 17, and title to such Parts shall at all times
remain in Lessee; provided, however, that Lessor shall have an option to
purchase for cash any such Parts owned by Lessee at the time of delivery of the
Equipment to Lessor in accordance with any of the provisions of this Lease. To
exercise such option, Lessor shall give to Lessee written notice of its election
to purchase within 90 days after such delivery. The purchase price of the Parts
shall be the fair market sales value thereof as of
21
the date of purchase as determined by mutual agreement. If Lessee and Lessor
shall be unable to agree upon the fair market sales value, such fair market
sales value shall be determined by the Appraisal Procedure; provided, however,
that the fees and expenses relating to any appraisal for such purpose shall be
shared equally by Lessor and Lessee.
(i) Parts Free and Clear of Liens; Supplemental Indentures. Any Part
title to which shall vest in Lessor pursuant to Section 7(f), shall be free and
clear of all Liens, except Permitted Liens existing with respect to the
Equipment immediately prior to the installation, incorporation or attachment of
such Part. If while the Indenture shall be in effect, any such Part or related
group of Parts having a cost (including installation) in excess of $250,000
shall so become part of the Equipment then, within 60 days after the completion
of installation thereof, Lessee shall prepare and, after execution thereof by
Lessor and Indenture Trustee, record such supplement to the Indenture and such
other instruments, and make such filings with respect thereto, as may be
necessary to confirm that such Part or Parts shall have become subject to the
Lien of the Indenture, subject only to Permitted Liens then existing with
respect to the Equipment, as additional security thereunder, and shall furnish
to each holder of a Secured Note and Indenture Trustee an opinion of counsel
(who may be regularly employed by Lessee), in form and substance satisfactory to
a Majority in Interest of Secured Note Holders, stating that such Part or Parts
has been duly subjected to the Lien of the Indenture, and that all recordings,
filings or other action required or advisable to establish, perfect, protect and
preserve the Lien of the Indenture as a valid first mortgage lien and first
priority security interest of record in such Part or Parts, subject only to
Permitted Liens existing with respect to the Equipment immediately prior to the
installation, incorporation or attachment of such Part or Parts, have been duly
made or taken (specifying the same) and are in full force and effect, or stating
that no such instruments, recordings, filings or other action, as the case may
be, are required.
(j) Contest of Requirements of Law. If, to the extent and for so long
as (i) a test, challenge, appeal or proceeding for review of any applicable
requirement of law or of a governmental authority relating to the operation or
maintenance of the Equipment shall be prosecuted in good faith by Lessee or (ii)
compliance with such requirement
22
shall have been excused or exempted by a nonconforming use permit, waiver,
extension or forbearance believed in good faith by Lessee to excuse or exempt it
from such requirement, Lessee shall not be required to comply with such
requirement if but only if such test, challenge, appeal, proceeding or
noncompliance shall not involve any danger of (x) foreclosure, sale, forfeiture
or loss of, or imposition of any Lien (other than a Permitted Lien) on, any part
of the Facility or of impairment of the operation of the Facility or the
Equipment in any material respect (y) extending the ultimate imposition of such
requirement beyond the termination of the Basic Term or the Renewal Period then
in effect, as the case may be, or (z) any material liability on the part of
Lessor, Indenture Trustee, any Participant, the Trust Estate or the Trust
Indenture Estate.
SECTION 8. Identification. Lessee shall maintain in a prominent place
on each principal item of the Equipment subject to this Lease throughout the
Lease Term plates bearing the inscription "FIRST NATIONAL BANK OF OREGON, AS
TRUSTEE, OWNER-LESSOR" and, so long as the Equipment shall constitute a part of
the Trust Indenture Estate, the inscription "UNITED STATES NATIONAL BANK OF
OREGON, AS INDENTURE TRUSTEE, SECURED PARTY" in letters not less than one inch
in height. Except as above provided or as otherwise directed by Lessor, Lessee
shall not allow the name of any Person other than that of Lessee to be placed on
any part of the Equipment subject to this Lease as a designation that might
reasonably be interpreted as a claim of ownership or right to possession or use
thereof.
SECTION 9. Insurance. (a) Coverage. Lessee, at its expense, will
maintain with insurers qualified to do business in Oregon and approved as
provided in subsection (b) of this Section:
(i) insurance with respect to the Facility against loss or damage by
fire, lightning and other risks from time to time included under "extended
coverage" policies; provided, however, that the amount of such coverage
shall not in any event be less than the greater of (i) Stipulated Loss
Value or (ii) the aggregate unpaid principal amount of the Secured Notes at
the time outstanding, together with an amount equal to any Rent then due
and unpaid and an amount equal to the Basic Rent due at the next succeeding
Semiannual Rent Payment Date;
23
(ii) public liability, including blanket contractual, personal injury
and property damage, insurance applicable to the Facility in such amounts
as are usually carried by persons operating similar properties in the same
general region but in any event with a combined single limit of not less
than $25,000,000 per occurrence;
(iii) appropriate workers' compensation insurance (including
self-insurance) with respect to any work done or in operation of the
Facility; provided, however, that Lessee will maintain such excess workers'
compensation insurance as is usually carried by others operating similar
businesses and properties; and
(iv) such other insurance with respect to the Facility in such amounts
and against such insurable hazards as Lessor or Indenture Trustee from time
to time may reasonably request.
All the foregoing insurance policies shall be subject to such
deductible amounts and retentions as are usual and customary for companies
similarly situated; provided, however, that such deductible amounts and
retentions shall not exceed the following amounts specified with respect to such
policies:
(1) Fire and Extended Coverage.......................$ 500,000;
(2) Public Liability.................................$ 1,000,000; and
(3) Workers' Compensation Insurance..................$ 500,000;
provided further, however, that each such policy shall be in an amount
sufficient to prevent Lessor, Lessee or the Indenture Trustee from becoming a
coinsurer of any loss under such policy. Lessee agrees that all such insurance
may be maintained in effect for the term thereof by Lessor or Indenture Trustee,
at Lessee's cost and expense, if Lessee shall fail to do so.
(b) Approval of Insurers. On or prior to the First Closing Date,
Lessee shall obtain the approval by Lessor and Indenture Trustee (which approval
shall not be unreasonably withheld) of the insurers with which the insurance
referred to in Section 9(a) shall be maintained. Thereafter, Lessee shall notify
Lessor and Indenture Trustee in writing at least 20 days prior to obtaining
coverage from any additional insurer or new insurer and Lessor and Indenture
Trustee shall
24
have the right to approve (which approval shall not be unreasonably withheld)
any such insurer; provided, however, that, if Lessee shall not have received
notice of disapproval from Lessor or Indenture Trustee within 20 days of receipt
by them of such notice from Lessee, the insurer or insurers named therein shall
be deemed to be approved for purposes of this Section 9.
(c) Policy Provisions. All insurance (other than workers' compensation
insurance) maintained by Lessee pursuant to Section 9(a) shall:
(i) specify Lessor, Owner Participant, Indenture Trustee, Loan
Participants and Lessee, as additional insureds, as their respective
interests may appear;
(ii) provide, except in the case of public liability insurance, that
all insurance proceeds for losses of less than $250,000 shall be adjusted
with and payable to Lessee, and that all insurance proceeds for losses of
$250,000 or more shall be adjusted with Lessor and Lessee jointly, and,
unless the Indenture shall have been satisfied and discharged, subject to
the approval of Indenture Trustee and payable to Indenture Trustee;
(iii) include effective waivers by the insurer of all claims for
insurance premiums against Lessor, Owner Participant, Indenture Trustee and
Loan Participants;
(iv) provide that any losses shall be payable notwithstanding
(1) any act of negligence, including any breach of any condition
or warranty in any policy of insurance, of Lessee, Lessor, Owner
Participant, Indenture Trustee or any Loan Participant,
(2) the occupation or use of the Facility for purposes more
hazardous than permitted by the terms of the policy,
(3) any foreclosure or other proceeding or notice of sale
relating to the Facility, or
(4) any change in the title to or ownership of any of the
Facility;
25
(v) provide that such insurance shall be primary insurance and that
the insurers under such insurance policies shall be liable under such
policies without right of contribution from any other insurance coverage
effected by Lessor or Owner Participant under any other insurance policies
with any other insurance companies covering a loss which is also covered
under the insurance policies maintained by Lessee pursuant to this Section
9;
(vi) provide that no cancelation or material change thereof shall be
effective until at least 30 days after receipt by Lessor and Indenture
Trustee of written notice thereof;
(vii) waive any right of subrogation of the insurers against Lessor,
Owner Participant, Indenture Trustee or any Loan Participant and waive any
right of the insurers to any setoff or counterclaim or any other deduction,
whether by attachment or otherwise, in respect of any liability of Lessor,
Owner Participant, Indenture Trustee or any Loan Participant; and
(viii) be reasonably satisfactory to Lessor and Indenture Trustee in
all other respects.
(d) Delivery of Policies. Lessee shall promptly deliver to Lessor and
Indenture Trustee certified copies of all insurance policies with respect to the
Facility which Lessee is required to maintain pursuant to this Section 9 (or
certificates thereof executed by the insurer or its duly authorized agent),
together with evidence as to the payment of all premiums then due thereon.
(e) Annual Insurance Report. As soon as practicable after the end of
each fiscal year of Lessee commencing with the 1979 fiscal year, and in any
event within 90 days thereafter, Lessee shall deliver to Lessor and Indenture
Trustee a report of a Responsible Officer setting forth the insurance obtained
by Lessee pursuant to this Section 9 and then in effect, and stating whether, in
the opinion of such officer, such insurance policies comply with the
requirements of this Section 9, that all premiums then due thereon have been
paid and that the same are in full force and effect. From time to time (not more
frequently than annually) upon the request of Lessor or Indenture Trustee,
Lessee shall deliver to Lessor and Indenture Trustee a report by an inde-
26
pendent insurance broker or independent insurance consultant reasonably
satisfactory to Lessor and Indenture Trustee, reviewing the most recent report
delivered pursuant to the preceding sentence and setting forth recommendations
of such independent insurance broker or independent insurance consultant as to
additional insurance, if any, reasonably required for the protection of the
respective interests of Lessor, Owner Participant, Indenture Trustee and Loan
Participants in the light of available insurance coverage and practice on
comparable equipment similarly situated.
(f) Payment of Proceeds. All insurance proceeds received by or payable
to Lessor or Indenture Trustee on account of any damage to or destruction of the
Facility or any part thereof (less the actual costs, fees and expenses incurred
in the collection thereof), other than any damage or destruction constituting an
Event of Loss, shall, unless a Default shall have occurred and be continuing, be
paid over to Lessee or as it may direct from time to time as repair and
restoration progresses to pay (or reimburse Lessee for) the cost of repair and
restoration of the Facility, but only upon the written request of Lessee
accompanied by appropriate evidence satisfactory to Lessor and Indenture Trustee
that the sum requested is a proper item for such cost and has been paid or will
be applied to the payment of a sum then due and payable and receipt by Lessor
and Indenture Trustee of evidence satisfactory to them that such proceeds,
together with funds of Lessee available for the purpose, shall be sufficient to
complete repair and restoration of the Facility. Upon receipt by Indenture
Trustee and Lessor of evidence satisfactory to them that repair and restoration
has been completed and the cost thereof paid in full and that there are no
mechanics' or similar Liens for labor or materials supplied in connection
therewith, the balance, if any, of such proceeds shall, unless a Default shall
have occurred and be continuing, be paid over or assigned to Lessee or as it may
direct.
(g) Notice by Insurers. Lessee shall cause the insurers with which it
maintains insurance required by this Section 9 to advise Lessor and Indenture
Trustee in writing promptly of any act or omission on the part of Lessee of
which such insurer has knowledge which may invalidate or render unenforceable,
in whole or in part, any such insurance.
27
SECTION 10. Storage; Maintenance; Return of Equipment. Upon the later
of (a) final termination of the Lease Term (other than pursuant to Section
12(a), 20 or 21(a)) or (b) expiration of the term of the Facilities Agreement,
Lessee shall, if Lessor shall so request, permit the Equipment to remain in
place without charge to Lessor for a period (herein called the "Storage Period")
not to exceed one year following such final termination or expiration, as the
case may be. During the Storage Period, Lessee shall (i) service and maintain
the Equipment to the extent necessary to keep it in good condition and repair
and (ii) maintain insurance with respect to the Equipment requested by Lessor
(but not in excess of the amounts of insurance that would have been required
under Section 9 had it continued to be in effect). During the Storage Period
Lessee shall permit Lessor or its representatives to bring prospective
purchasers or lessees on the premises of the Lessee at reasonable times to
examine the Facility. Upon final termination of the Lease Term (other than
pursuant to Section 12(a), 20 or 21(a)) or upon expiration of the term of the
Facilities Agreement, or during the Storage Period or the term of the Facilities
Agreement subsequent to the Lease Term or upon expiration of the Storage Period,
as the case may be, Lessee shall on a single occasion, upon request of Lessor,
at Lessee's risk and expense, promptly dismantle and remove (with such care as
is consistent with the then condition and contemplated use thereafter of the
Equipment) all or a portion of the Equipment (exclusive of concrete
foundations), and cause such Equipment to be delivered to Lessor and loaded on
railroad cars at the nearest railroad siding, such Equipment to be in the same
condition and repair as when received by Lessee under this Lease, ordinary wear
and tear and dismantling excepted; provided, however, that Lessee shall have no
obligation to dismantle and remove any of the Equipment unless (i) Lessor shall
have first made a good faith effort without success to sell or lease the
Equipment at the Fair Market Sales Value or the Fair Market Rental Value, as the
case may be, and shall have afforded Lessee the opportunity to bid for such sale
or lease or (ii) a Default shall have occurred and be continuing; provided
further, however, that, if (a) the request of Lessor pursuant to this Section 10
to dismantle and deliver such Equipment shall be made to Lessee after the
Equipment shall have been operated by a purchaser or lessee of the Equipment
(other than Lessee or any permitted assignee of Lessee pursuant to Section
14(a)), (b) Lessor or Indenture Trustee shall not have sold or leased the
Equipment pursuant to Section 17 hereof or Section 8 of the
28
Indenture and (c) all sums due and payable by Lessee under this Lease shall have
been paid, Lessor shall reimburse Lessee for the actual costs incurred in
connection with such dismantling, removal and delivery of the Equipment as
herein above provided. Unless Lessor shall otherwise agree, the Equipment shall
not be deemed to have been returned to Lessor until (i) it is surrendered into
the possession of Lessor as provided above and (ii) the provisions of the
preceding sentence shall have been complied with and Lessee shall have given
Lessor written notice of such fact, and, until such time, all of the provisions
of this Lease shall continue in full force and effect.
SECTION 11. Financial Information. Lessee shall furnish to Lessor
(with copies sent by Lessee to each Participant):
(a) within 90 days after the end of each fiscal year of Lessee, a
consolidated balance sheet of Lessee and its consolidated subsidiaries as
at the end of such fiscal year and the related consolidated statements of
income, retained earnings and changes in financial position for such fiscal
year, prepared in conformity with generally accepted accounting principles
consistently applied (except as disclosed in the notes thereto) and
reported on by Arthur Andersen & Co., or other independent public
accountants of national standing,
(b) within 45 days after the end of each quarter (except the last
quarter) of each fiscal year of Lessee, a consolidated balance sheet of
Lessee and its consolidated subsidiaries as at the end of such quarter and
the related consolidated statements of income, retained earnings and
changes in financial position for such quarter and for the period from the
beginning of such fiscal year to the end of such quarter, certified by a
Responsible Officer of Lessee,
(c) concurrently with the delivery each year of the annual audited
financial statements, a certificate of the independent public accountants
who audited such financial statements stating that in making the
examination necessary for the audit of such financial statements, they
obtained no knowledge of any default by Lessee in the observance,
performance or fulfillment of any of the obligations, covenants or
conditions contained herein or in any of the other Operative Documents,
29
or if they shall have obtained knowledge of any such default, specifying
the same,
(d) concurrently with the delivery each year of the annual audited
financial statements and each quarter of the unaudited financial
statements, a certificate of a Responsible Officer of Lessee stating that
such Officer has made or caused to be made under his supervision a review
of the transactions and condition of Lessee during the fiscal year or
quarter covered by such financial statements and that, based upon such
review and to the best of his knowledge, (i) no Default has occurred during
such fiscal year or quarter, as the case may be (or, if any Default shall
have occurred, specifying the nature and status thereof), and (ii) the
Equipment is in existence and in the condition required by this Lease, is
marked as required by Section 8 and is located at the Site,
(e) promptly after the same shall become available, a copy of each
report submitted to Lessee by its independent public accountants in
connection with any annual, interim or special financial audit made by such
accountants of the books of Lessee,
(f) promptly after the same shall become available, copies of all
proxy statements, financial statements and reports of Lessee sent by Lessee
to its shareholders, and all regular or periodic reports and any
prospectuses included in registration statements (other than on Form S-8 or
a similar form) filed by Lessee with the Securities and Exchange Commission
(or any successor agency) or any national securities exchange,
(g) promptly after any officer of Lessee obtains knowledge of the
occurrence of a Default, a certificate of a Responsible Officer of Lessee
specifying the nature of such condition or event, the period of existence
thereof, the action Lessee has taken or proposes to take with respect
thereto and the date, if any, on which it is estimated that such event or
condition shall be remedied or terminated,
(h) promptly after any officer of Lessee shall obtain knowledge that
any Person having the right to do so has given notice to Lessee or taken
any other action with respect to a claimed default or event of default
30
(as defined in the applicable instrument) in respect of any evidence of
indebtedness or other security of Lessee, written notice specifying the
nature of the notice or action taken by such Person and the nature of the
claimed default or event of default and what action Lessee is taking or
proposes to take with respect thereto; provided, however, that such written
notice shall be required only if the aggregate amount of such indebtedness
or other securities relating to a claimed default or event of default shall
exceed $1,000,000, and
(i) with reasonable promptness, such other information relating to
Lessee as any Participant may from time to time reasonably request.
SECTION 12. Loss, Destruction, Condemnation or Damage. (a) Payment of
Stipulated Loss Value or Net Stipulated Loss Value Upon an Event of Loss or
Special Event of Loss. If an Event of Loss or Special Event of Loss shall occur,
Lessee shall give Lessor prompt written notice thereof and shall pay as
compensation for such Event of Loss or Special Event of Loss, as the case may
be, and in addition to Rent for the Interim Lease Period or Semiannual Lease
Period, as the case may be, ending on the date as of which Stipulated Loss Value
(or, in the case of a Special Event of Loss, the Net Stipulated Loss Value) is
determined, the Stipulated Loss Value (or, in the case of a Special Event of
Loss, the Net Stipulated Loss Value), determined (i) if the Event of Loss or
Special Event of Loss, as the case may be, shall have occurred during an Interim
Lease Period, as of the Interim Rent Payment Date on which such Period ends or
(ii) if the Event of Loss or Special Event of Loss, as the case may be, shall
have occurred during a Semiannual Lease Period, as of the Semiannual Rent
Payment Date on which such Period ends (the applicable date of determination
under the foregoing clause (i) or (ii) being hereinafter for the purposes of
this Section 12(a) referred to as the "Determination Date"). The Stipulated Loss
Value (or, in the case of a Special Event of Loss, the Net Stipulated Loss
Value) shall be paid to Lessor on the Determination Date, unless the Event of
Loss or Special Event of Loss, as the case may be, shall have occurred on, or
less than 30 days prior to, the Determination Date, in which case such payment
together with interest at the Stipulated Interest Rate from the Determination
Date, shall be made within 30 days of the date of such occurrence. Upon payment
in full of such Stipulated Loss Value (or, in the case of a Special Event of
Loss, the Net Stipulated Loss
31
Value), together with such interest, if any, and all Rent accrued to the
Determination Date (and, in the case of a Special Event of Loss, upon compliance
with the provisions of Section 12(e)), (i) the Lease Term shall end as of the
date of such payment and the obligations of Lessee hereunder (other than any
such obligations expressed herein as surviving termination of this Lease) shall
terminate as of the Determination Date and (ii) so long as no Default shall have
occurred and be continuing, Lessor shall transfer to Lessee, without recourse or
warranty but free and clear of (x) Lessor Liens and (y) the Lien of the
Indenture (except in the circumstances contemplated by Section 12(e)), all
right, title and interest of the Lessor in and to the Equipment and in and to
any warranties of Contractors for the Equipment.
(b) Application of Other Payments Upon an Event of Loss. Any payments
received at any time by Lessor or by Lessee from any governmental authority or
other person (except Lessee) as a result of the occurrence of an Event of Loss
shall be applied as follows:
(i) all such payments received at any time by Lessee shall be promptly
paid to Lessor for application pursuant to the following provisions of this
Section 12(b), except that so long as no Default shall have occurred and be
continuing, Lessee may retain any amounts which Lessor would at the time be
obligated to pay to Lessee as reimbursement under the provisions of clause
(ii) below;
(ii) so much of such payments as shall not exceed the amount required
to be paid by Lessee pursuant to Section 12(a) shall be applied in
reduction of Lessee's obligation to pay such amount if not already paid by
Lessee, or, if already paid by Lessee, shall be applied to reimburse Lessee
for its payment of such amount, unless a Default shall have occurred and be
continuing; and
(iii) if such payments shall exceed the aggregate of the amounts
payable pursuant to the foregoing clauses (i) and (ii) Lessee shall receive
an amount equal to (x) such excess multiplied by (y) a fraction the
numerator of which shall be the number of whole months remaining in the
Lease Term (without consideration of any extension, renewal or early
termination permitted hereby) as of the date of the Event of Loss and the
denominator of
32
which shall be the total number of whole months in the Lease Term similarly
computed, and Lessor shall receive the remainder of said excess, provided
that no payment shall be made under this clause while a Default shall have
occurred and be continuing.
(c) Application of Payments Not Relating to an Event of Loss. Unless a
Default shall have occurred and be continuing, payments received at any time by
Lessor or Lessee from any governmental authority or other Person with respect to
any loss, condemnation, confiscation, theft or seizure of, or requisition of
title to or use of, or damage to, the Equipment or any part thereof not
constituting an Event of Loss will be paid to or retained by Lessee and will be
applied as follows: first, directly in payment for repairs or replacement of the
Parts in respect of which such payment was received in accordance with the
provisions of Section 7 or 9(f), if not already paid for by Lessee, or, if
already paid for by Lessee, shall be applied to reimburse Lessee for such
payment; second, directly in payment for maintenance and repairs of, and for the
replacement of Parts in, the Equipment during the remainder of the Lease Term in
accordance with the provisions of Section 7; and third, the balance remaining,
if any, at the end of the Lease Term shall be retained by or paid over to Lessee
or as it may direct.
(d) Other Dispositions. So long as a Default shall have occurred and
be continuing, any amount payable to or for the account of, or to be retained
by, Lessee pursuant to this Section 12, shall be paid to Indenture Trustee as
security for the obligations of Lessee under this Lease, and, at such time
thereafter as no Default shall be continuing, such amount shall be paid promptly
to Lessee unless Lessor shall have theretofore declared this Lease to be in
default pursuant to Section 17, in which event such amount shall be disposed of
by Indenture Trustee in accordance with the provisions of the Indenture.
(e) Assumption of Secured Notes Upon Special Event of Loss. If a
Special Event of Loss shall occur during the Interim Term or the Basic Term,
Lessee shall assume the obligations of Lessor under the Secured Notes and the
Indenture in accordance with the terms and provisions of Section 2.15 of the
Indenture; provided, however, that the foregoing provisions of this Section
12(e) shall not apply if, in the opinion of counsel satisfactory to a Majority
in Interest of Secured Note Holders, such assumption by Lessee would cause any
33
holder of a Secured Note to become subject to regulation under the Public
Utility Holding Company Act of 1935, as amended, or the Federal Power Act, as
amended, or any other Federal or state law relating to public utilities or the
production, transmission or sale of energy and, in such event, the Special Event
of Loss in question shall be deemed to be and shall be treated as an Event of
Loss.
SECTION 13. No Interest Conveyed to Lessee. This Lease is an agreement
of lease and does not convey to Lessee any right, title or interest in or to the
Equipment except as a lessee. Nothing contained herein shall be construed as an
election by Lessor to treat Lessee as having acquired the Equipment pursuant to
Section 48(d) of the Code, and neither Lessor nor Owner Participant shall make
such an election.
SECTION 14. Assignment and Sublease; Location. (a) Assignment and
Sublease. Except as otherwise provided herein, Lessee shall not, without the
prior written consent of Lessor, sublease the Equipment or any part thereof or
assign any of its rights hereunder or relinquish possession or use of the
Equipment or any part thereof to, or permit the Equipment or any part thereof to
be operated by, any other Person except
(i) a corporation which shall have assumed all the obligations of
Lessee hereunder and under the other Operative Documents and into which or
with which Lessee shall have merged or consolidated or which shall have
acquired all or substantially all the property of Lessee, in each case in
accordance with Article XIV of the Participation Agreement and all
applicable provisions of law; provided, however, that Lessee may, without
the prior written consent of Lessor, sublease the Equipment or relinquish
possession or use of the Equipment or any part thereof to, or permit the
Equipment or any part thereof to be operated by, an Affiliate of Lessee;
(ii) in the case of coal supplies located on the Site and intended to
be burned in the Plant, any field warehouseman or other similar custodian
in connection with financing such coal supplies under arrangements pursuant
to which employees of Lessee are directly (but not necessarily exclusively)
involved in such warehousing or storage operations as agents or employees
of the principals providing such financing;
34
(iii) the owner of the Plant at the time it is placed in service, or
of any undivided interest therein, or any lessee of the Plant at the time
it is placed in service or mortgagee of the Plant, or of any such undivided
interest, if such Person or Persons shall, in the case of any such use,
possession or sublease, agree in writing with Owner Trustee and Indenture
Trustee, in a manner satisfactory to Owner Trustee and Indenture Trustee,
to abide by the provisions of this Lease relating to use, operation,
maintenance and repair of the Equipment and shall further agree that its
rights as sublessee or user are subject and subordinate to this Lease and
the Indenture; and
(iv) PNGC, to the extent that it shall make arrangements with IPCO for
use of the Facility after IPCO shall have exercised its rights under the
Assumption Agreement;
provided, however, that the obligations of Lessee hereunder shall not be
affected in any way by any of the aforesaid arrangements. Lessor shall not
assign or convey any of its right, title and interest in and to this Lease and
the Equipment except as contemplated by or provided in this Lease, the
Participation Agreement, the Trust Agreement, the Indenture, the Lease
Assignment and the Assumption Agreement. The rights and obligations of Lessor
and Lessee hereunder shall inure to the benefit of, and be binding upon, the
permitted successors and assigns of Lessor and Lessee, respectively.
(b) Location. The Lessee shall not remove, or permit to be removed,
the Equipment or any Part, from the Site without the prior written consent of
Lessor, except that Lessee may remove (i) in accordance with the provisions of
Section 7(f) or 7(h), any Part with respect to which title has passed to or
remained with Lessee as provided in Section 7(f), (ii) the Equipment if title
thereto shall have passed to Lessee as provided in Section 12 or 20 or (iii) any
Part in accordance with the terms of Section 7(c).
SECTION 15. Inspection and Reports. (a) Condition and Operation. Any
Participant, Lessor and Indenture Trustee and their authorized representatives
may inspect, at their own expense, the Facility and the books and records of
Lessee relative thereto, and make copies and extracts therefrom, and may discuss
Lessee's affairs, finances and accounts with its officers and, in the presence
of any such officer,
35
with its independent public accountants, and Lessee shall furnish to Lessor
statements accurate in all material respects regarding the condition and state
of repair of the Facility, all at such times and as often as may be reasonably
requested. Neither any Participant, Lessor nor Indenture Trustee shall have any
duty to make any such inspection or inquiry or shall incur any liability or
obligation by reason of not making any such inspection or inquiry. To the extent
permissible, Lessee shall prepare and file in timely fashion, or, where Owner
Participant or Lessor shall be required to file, prepare and deliver to Owner
Participant or Lessor within a reasonable time prior to the date for filing, any
reports with respect to the condition or operation of the Equipment during any
period included in the Lease Term and the Storage Period which are required to
be filed with any Federal, state or other governmental or regulatory authority.
(b) Liability. Lessee shall give prompt written notice to each
Participant, Lessor, and Indenture Trustee of each accident likely to result in
damages, or claims for damages against Lessee, with respect to the Equipment in
excess of applicable insurance coverage and occurring in whole or in part
(whenever asserted) during the Lease Term or the Storage Period, in any way
relating to or arising out of the Operative Documents or the alleged or apparent
improper manufacture, financing, construction, purchase, acceptance, rejection,
ownership, acquisition, delivery, non delivery, lease, sublease, preparation,
installation, storage, maintenance, repair, transportation, transfer of title,
abandonment, possession, rental, use, operation, condition, sale,
transportation, return, importation, exportation or other disposition of the
Equipment or any portion thereof, promptly upon Lessee becoming aware of same,
and on request shall furnish to each Participant, Lessor and Indenture Trustee
information as to the time, place and nature thereof, the names and addresses of
the parties involved, any Persons injured, witnesses and owners of any property
damaged, and such other information as may be known to it, and shall promptly
upon request furnish each Participant, Lessor and Indenture Trustee with copies
of all correspondence, papers, notices and documents whatsoever received by
Lessee in connection therewith.
(c) Liens. Lessee shall promptly (and in no event later than 10
Business Days after it shall have obtained knowledge of the attachment of any
Lien which it shall be obligated to discharge or eliminate pursuant to Section
6)
36
notify each Participant, Lessor and Indenture Trustee of the attachment of such
Lien and the full particulars thereof unless the same shall have been removed or
discharged by Lessee.
(d) Annual Opinion of Counsel. Lessee shall, within 90 days after the
end of each of its fiscal years commencing with the 1979 fiscal year, furnish to
Lessor and Indenture Trustee, at Lessee's expense, an opinion of counsel for
Lessee (which may be regularly employed by Lessee), satisfactory to Lessor and
Indenture Trustee (in such number of counterparts as Lessor and Indenture
Trustee shall reasonably request), stating that all Uniform Commercial Code
financing statements, the Lease, the Indenture, the Facilities Agreement and
other documents (including any other Operative Documents), if any, necessary or
advisable to perfect or continue the perfection of Lessor's right, title and
interest (including any security interest which may be deemed to be created by
the Lease) in and to the Trust Estate, including any Parts incorporated or
installed therein or attached thereto and becoming part of the Equipment
pursuant to Section 7(c) or 7(d), and to perfect or continue the perfection for
the benefit of Indenture Trustee and the holders of the Secured Notes of a valid
first mortgage lien and first priority security interest in the Trust Indenture
Estate provided for in the Indenture, have been duly filed or recorded and
stating the requirements of applicable law with respect to the rerecording or
refiling of such documents in order to continue and preserve such right, title
and interest and such first mortgage lien and first priority security interest.
(e) Contracts. Lessee will keep copies of the Contracts available for
inspection by Owner Trustee at the principal office of Lessee and will promptly
furnish a copy of any thereof to Owner Trustee upon written request therefor.
(f) Notices of Noncompliance with Environmental Laws. Lessee shall
furnish to Lessor, within 30 days after receipt thereof, a copy of any notice or
order of any governmental authority asserting that Lessee is not in compliance
with any law or regulation relating to environmental matters applicable to the
Facility.
SECTION 16. Events of Default. The following events shall constitute
Events of Default (whether any such event shall be voluntary or involuntary or
come about or be
37
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) Lessee shall fail to make any payment of Basic Rent or Interim
Rent within five days after the same shall have become due;
(b) Lessee shall fail to make any payment of Supplemental Rent or any
other amount payable hereunder within 15 days after notice thereof from
Lessor or Indenture Trustee to Lessee;
(c) Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it under Sections 6,
8, 9 (other than a failure to give any notice required by Section 9(b)) and
14; or Lessee shall fail to perform or observe any other covenant,
condition or agreement to be performed or observed by it under any of the
Operative Documents to which it is a party and such failure shall continue
unremedied for a period of 30 days after written notice thereof by Lessor
or Indenture Trustee;
(d) any representation or warranty made by Lessee in any of the
Operative Documents to which it is a party, or in any statement, report,
schedule, notice or other writing furnished by Lessee in connection
therewith, shall prove to have been incorrect in any material respect at
the time made; provided, however, that the foregoing shall not apply to any
engineering or technical reports which shall contain errors made in good
faith and discovered within a reasonable time, if such reports are replaced
by amended reports correcting such errors furnished by Lessee to Lessor
promptly after such errors shall have been discovered;
(e) Lessee or any Significant Subsidiary shall default (i) in the
payment of (A) principal of or interest on any obligation for borrowed
money (including, without limitation, any obligation for the deferred
purchase price of property secured by a purchase money mortgage,
conditional sale agreement, security agreement or title retention agreement
or any unsecured obligation issued or assumed in full or partial payment
for property) if the outstanding amount or amounts payable under
38
or in respect of such obligation shall exceed $50,000, (B) rent or any
similar obligation under any lease calling for annual basic rent payments
aggregating more than $50,000 or (C) any amount due under any guarantee of
any of the obligations referred to in the foregoing clauses (A) and (B) or
(ii) in the performance or observance of any other obligation, covenant or
condition contained in any such obligation or guarantee or in any agreement
relating thereto, if the effect of any such default shall be to cause or
permit the holder or holders of such obligation or guarantee (or any agent
or trustee on behalf of such holder or holders) to cause, either
immediately or after the giving of notice or lapse of time or both, such
obligation or guarantee to become due prior to its stated maturity;
(f) Lessee or any Significant Subsidiary shall consent to the
appointment of, or taking possession by, a receiver, trustee, custodian or
liquidator of itself or of a substantial part of its property, or Lessee or
any such Significant Subsidiary shall fail to pay its debts generally as
they become due, or shall make a general assignment for the benefit of
creditors;
(g) Lessee or any Significant Subsidiary shall file a voluntary
petition in bankruptcy or a voluntary petition or an answer seeking
reorganization in a proceeding under any applicable bankruptcy or
insolvency laws (as now or hereafter in effect) or an answer admitting the
material allegations of a petition filed against Lessee or any such
Significant Subsidiary in any such proceeding, or Lessee or any such
Significant Subsidiary shall by voluntary petition, answer or consent, seek
relief under the provisions of any now existing or future bankruptcy,
insolvency or other similar law providing for the liquidation,
reorganization or winding-up of corporations, or providing for an
agreement, composition, extension or adjustment with its creditors;
(h) a receiver, trustee, liquidator or custodian of Lessee or any
Significant Subsidiary, or of a substantial part of its property shall be
appointed by court order and such order shall remain in effect for more
than 60 days; or any of the property of either shall he sequestered by
court
39
order and such order shall remain in effect for more than 60 days; or
a petition shall be filed against Lessee or any Significant Subsidiary
under any bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, and shall not be dismissed within 60 days after such
filing; or
(i) the Facilities Agreement shall cease to be the legal, valid and
binding obligation of the Grantors, enforceable in accordance with its
terms, or any Grantor shall default in the performance of any of its
obligations or the observance by it of any of the conditions contained in
the Facilities Agreement for a period of 30 days after written notice to
such Grantor by Lessor or Indenture Trustee.
SECTION 17. Remedies. Upon the occurrence of any Event of Default and
at any time thereafter so long as the same shall be continuing, Lessor may, at
its option, by notice to Lessee and the Participants declare this Lease to be in
default, and at any time thereafter Lessor may do one or more of the following
with respect to the Equipment as Lessor in its sole discretion shall determine:
(a) Lessor may (i) demand that Lessee, and Lessee shall upon the
written demand of Lessor, return the Equipment promptly to Lessor in the
manner and condition required by, and otherwise in accordance with all the
provisions of, Sections 7 and 10 as if the Equipment were being returned at
the end of the Lease Term and Lessor shall not be liable for the
reimbursement of Lessee for any costs and expenses incurred by Lessee in
connection therewith and (ii) enter upon the premises where the Equipment
shall be located and take immediate possession of and remove the same by
summary proceedings or otherwise, all without liability to Lessee for or by
reason of such entry or taking of possession, whether for the restoration
of damage to property caused by such taking or otherwise;
(b) Lessor may sell all or any part of the Equipment at public or
private sale, as Lessor may determine, or otherwise dispose of, hold, use,
operate, lease to others or keep idle all or any part of the Equipment, as
Lessor may determine, all free and clear of any rights
40
of Lessee except as hereinafter set forth in this Section 17 and without
any duty to account to Lessee with respect to such action or inaction or
any proceeds with respect thereto; provided, however, that any such sale
of other disposition shall be made in compliance with any mandatory
provisions of applicable law which may not be waived;
(c) Lessor may, whether or not Lessor shall have exercised or shall
thereafter at any time exercise any of its rights under subsection (a) or
(b) of this Section 17 with respect to the Equipment, demand, by written
notice to Lessee specifying a payment date which shall be an Interim Rent
Payment Date or a Semiannual Rent Payment Date not earlier than 10 days
after the date of such notice, that Lessee pay to Lessor, and Lessee shall
pay to Lessor, on the Interim Rent Payment Date or Semiannual Rent Payment
Date, as the case may be, specified in such notice, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Rent for the
Equipment for the balance of the Lease Term remaining after the payment
date specified in such notice), any unpaid Rent for the Equipment due
through the payment date specified in such notice plus whichever of the
following amounts Lessor, in its sole discretion, shall specify in such
notice (together with interest on such amount at the Stipulated Interest
Rate from the payment date specified in such notice to the date of actual
payment): (i) an amount equal to the excess, if any, of the Stipulated Loss
Value, computed as of the payment date specified in such notice, over the
aggregate Fair Market Rental Value for the remainder of the Basic Term or
the Renewal Period, as the case may be, after discounting such aggregate
Fair Market Rental Value to present worth as of the payment date specified
in such notice at a rate of 6% per annum; (ii) an amount equal to the
excess, if any, of the Stipulated Loss Value, computed as of the payment
date specified in such notice, over the Fair Market Sales Value as of such
payment date; or (iii) an amount equal to the excess of the sum of the
present worth, computed as of the payment date specified in such notice at
the rate of 6% per annum, of all Interim Rent and installments of Basic
Rent from the date of such notice to the end of the Basic Term or Renewal
Period, as the case may be, over the discounted aggregate Fair Market
Rental Value for the remainder of the Basic Term or the Renewal Period,
41
as the case may be, computed as provided in clause (i) above;
(d) if Lessor shall have sold the Equipment, pursuant to Section
17(b), Lessor, in lieu of exercising its rights under Section 17(c) with
respect to the Equipment, may, if it shall so elect, demand that Lessee pay
to Lessor, and Lessee shall pay to Lessor, on the date of such sale, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of
the Rent due for the balance of the Lease Term remaining after the date of
such sale), any unpaid Rent for the Equipment due for the portion of the
Lease Term up to and including the Interim Rent Payment Date or the
Semiannual Rent Payment Date, as the case may be, next succeeding the date
of such sale, plus the amount of any deficiency between the net proceeds of
such sale and the Stipulated Loss Value, computed as of the Interim Rent
Payment Date or the Semiannual Rent Payment Date, as the case may be, next
succeeding the date of such sale together with interest at the Stipulated
Interest Rate on the amount of such deficiency from the date as of which
such Stipulated Loss Value is computed until the date of actual payment; or
(e) Lessor may rescind this Lease or may exercise any other right or
remedy which may be available to it under applicable law or proceed by
appropriate court action to enforce the terms hereof or to recover damages
for the breach hereof.
No termination of this Lease, in whole or in part, or repossession of any of the
Equipment or exercise of any remedy under this Section 17 shall, except as
specifically provided herein, relieve Lessee of any of its liabilities and
obligations hereunder, all of which shall survive such termination, repossession
or exercise of remedy. In addition, Lessee shall be liable, except as otherwise
provided above, for any and all unpaid Rent due hereunder before, after or
during the exercise of any of the foregoing remedies, including all reasonable
legal fees and other costs and expenses incurred by Lessor, Indenture Trustee,
or any Participant or any holder of a Secured Note by reason of the occurrence
of any Event of Default or the exercise of Lessor's remedies with respect
thereto, and including all costs and expenses incurred in connection with the
return of the Equipment in the manner and condition required by, and otherwise
in accordance with the
42
provisions of, Section 10 as if such Equipment were being returned at the end of
the Lease Term. At any sale of the Equipment or any part thereof pursuant to
this Section 17, Lessor, Indenture Trustee, any Participant and any holder of a
Secured Note may bid for and purchase such property.
To the extent permitted by, and subject to the mandatory requirements
of, applicable law, each and every right, power and remedy herein specifically
given to Lessor or otherwise in this Lease 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 from time to time and as often and in such order as may be deemed
expedient by Lessor, and the exercise or the beginning of the exercise of any
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. No delay or
omission by Lessor in the exercise of any right, remedy or power or in the
pursuit of any remedy shall impair any such right, remedy or power or be
construed to be a waiver of any default on the part of Lessee or to be an
acquiescence therein. No express or implied waiver by Lessor of any Event of
Default shall in any way be, or be construed to be, a waiver of any future or
subsequent Event of Default. To the extent permitted by applicable law, Lessee
hereby waives any rights now or hereafter conferred by statute or otherwise
which may require Lessor to sell, lease or otherwise use the Equipment or part
thereof in mitigation of Lessor's damages as set forth in this Section 17 or
which may otherwise limit or modify any of Lessor's rights or remedies under
this Section 17.
SECTION 18. Right to Perform for Lessee. If Lessee shall fail to make
any payment of Rent to be made by it hereunder or shall fail to perform or
comply with any of its other agreements contained herein, Owner Participant or
Lessor may (but shall not have any duty to do so) itself make such payment or
perform or comply with such agreement, and the amount of such payment and the
amount of the reasonable expenses of Owner Participant or Lessor incurred in
connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the Stipulated
Interest Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand.
43
SECTION 19. Lessee's Options to Renew Lease. (a) Renewal Options. If
no Default shall have occurred and be continuing, Lessee shall have the option
to renew this Lease for an initial renewal period of 5 years, which shall
commence at the expiration of the Basic Term followed by successive renewal
periods of one or more whole years (such initial renewal period and each such
successive renewal period being hereinafter individually referred to as a
"Renewal Period"; the aggregate of such Renewal Periods elected by Lessee being
herein referred to as the "Renewal Term"); provided, however, that (a) the
aggregate of all such Renewal Periods shall in no event exceed 20 years; (b) in
order to exercise such right to renew this Lease for any Renewal Period, Lessee
shall give Lessor written notice of its election to renew (i) at least one year
(but not more than 18 months) prior to the commencement of any such Renewal
Period if the period during which such right shall be exercised shall be the
Basic Term, the first Renewal Term or any subsequent Renewal Term of 2 years or
longer or (ii) at least 9 months (but not more than 12 months) prior to the
commencement of any such Renewal Period if the period during which such right
shall be exercised shall be a Renewal Period of less than 2 years; and (c) if
Lessee shall fail to exercise its option as to any such Renewal Period it shall
not thereafter have the right to exercise such option as to any subsequent
Renewal Period. The semiannual Rent payable to Lessor by Lessee for any Renewal
Period shall (i) in the case of the first Renewal Period of five whole years, be
equal to one-half of the average of the 50 semiannual installments of Basic Rent
and (ii) in the case of any subsequent Renewal Period, be equal to the Fair
Market Rental Value determined as hereinafter provided. The Fair Market Rental
Value of the Equipment for any Renewal Period after the first Renewal Period
shall be determined by the mutual agreement of Lessor and Lessee within 45 days
after receipt by Lessor of the notice from Lessee of its election to renew the
lease of the Equipment for such Renewal Period or, if they shall fail to agree
within such 45-day period, the Fair Market Rental Value of such Renewal Period
shall be determined by the Appraisal Procedure. All the provisions of the Lease
shall be applicable during the Renewal Term except for the amount of each
installment of Basic Rent, which shall be as hereinabove provided. After the
Fair Market Rental Value for any Renewal Period following the first five years
of the Renewal Term shall have been finally determined as hereinabove provided,
Lessee shall have the right, by notice to Lessor not later than 45 days after
such determination, to rescind its elec-
44
tion to renew the Lease for such Renewal Period.
(b) Stipulated Loss Value and Termination Value During Renewal Term.
The Stipulated Loss Value and Termination Value as of the commencement of each
Renewal Period shall be the Fair Market Sales Value as of the end of the Basic
Term or the next preceding Renewal Period, as the case may be, and on each
Semiannual Rent Payment Date during such Renewal Period shall decline or
increase, as the case may be, on a straight-line basis at a rate per annum equal
to the average annual percentage decline or increase, as the case may be, in the
Fair Market Sales Value as of the Commencement Date (which, for such purpose,
shall be deemed to be equal to Lessor's Cost), based on the Fair Market Sales
Value (determined in the same manner and at the same time as Fair Market Sales
Value shall be determined pursuant to the foregoing subsection (a)) as of the
end of the Basic Term or the next preceding Renewal Period, as the case may be.
SECTION 20. Lessee's Options to Purchase the Equipment. (a) Option to
Purchase at Certain Times. Lessee shall have an option to purchase the Equipment
then under lease (i) on any Semiannual Rent Payment Date during the period
commencing with the 21st Semiannual Rent Payment Date and ending with the 40th
Semiannual Rent Payment Date, (ii) on any Semiannual Rent Payment Date during
the period commencing with the 51st Semiannual Rent Payment Date and ending with
the 56th Semiannual Rent Payment Date, if Lessee shall have renewed this Lease
for the initial five-year Renewal Period pursuant to Section 19 and (iii) on any
Semiannual Rent Payment Date on or after the 71st Semiannual Rent Payment Date
if this Lease shall then be in effect, provided that in each case no Default
shall have occurred and be continuing. To exercise such option, Lessee shall
give to Lessor written notice of its election to purchase at least one year (but
not more than 18 months) before the date of purchase. The purchase price of the
equipment shall be payable in immediately available funds on the date of
purchase and shall be an amount equal to the greater of the Fair Market Sales
Value and Stipulated Loss Value as of the date of purchase. The Fair Market
Sales Value for such purpose shall be determined by the mutual agreement of
Lessor and Lessee within 45 days after receipt by Lessor of the notice from
Lessee of its election to purchase the Equipment pursuant to this subsection or,
if they shall fail to agree within such 45-day period, the Fair Market
Sales Value shall be determined by the Appraisal Procedure. After the Fair
Market
45
Sales Value shall have been finally determined as hereinabove provided, Lessee
shall have the right, by notice to Lessor not later than 45 days after such
determination, to rescind its election to purchase the Equipment pursuant to
this Section.
(b) Option to Purchase by Reason of Burdensome Tax Indemnities. In the
event that at any time the excess of (i) the amounts payable or reasonably
certain to become payable pursuant to Section 10.02(a) of the Participation
Agreement over (ii) the amounts payable or reasonably certain to become payable
under Section 10.02(b) of the Participation Agreement, after discounting such
amounts to present worth at a rate of 6% per annum, shall exceed $5,000,000,
Lessee shall have an option to purchase the Equipment then under lease on an
Interim Rent Payment Date or any Semiannual Rent Payment Date on or prior to the
end of the tenth year of the Basic Term, provided (A) no Default shall have
occurred and be continuing and (B) on or prior to such Interim Rent Payment Date
or Semiannual Rent Payment Date, as the case may be, Lessee shall have assumed,
by an instrument or instruments in form and substance satisfactory to Lessor and
each holder of a Secured Note, the obligations of Lessor under the Secured Notes
and the Indenture in accordance with the terms and provisions of Section 2.15 of
the Indenture. To exercise such option, Lessee shall give to Lessor written
notice of its election to purchase at least 180 days (but not more than 270
days) before the date of purchase. The purchase price of the Equipment shall be
payable in immediately available funds on the date of purchase and shall be an
amount equal to the greater of the Net Fair Market Sales Value and Net
Stipulated Loss Value as of the date of purchase. The Fair Market Sales Value
for the purpose of determining such Net Fair Market Sales Value shall be
determined as provided in the foregoing subsection (a).
(c) Limited Option to Purchase at Certain Times. In the event Lessee
shall be required, at any time (i) after the 40th Semiannual Rental Payment Date
and on or prior to the 50th Semiannual Rent Payment Date or (ii) after the 56th
Semiannual Rent Payment Date and on or prior to the 70th Semiannual Rent Payment
Date (if the Lease shall then be in effect), to make any Alteration pursuant to
Section 7(d) the cost of which, when discounted to present worth as of the
Commencement Date at a rate of 6% per annum, shall exceed $5,000,000, then
Lessee shall have an option to purchase the Equipment then under lease on the
first Semiannual Rent Payment Date occurring not less than 60 days after the
46
imposition of such requirement, provided no Default shall have occurred and be
continuing. To exercise such option, Lessee shall give to Lessor written notice
of its election to purchase within 30 days of the imposition of such
requirement. The purchase price of the Equipment shall be payable in immediately
available funds on the date of purchase and shall be an amount equal to the
greater of the Fair Market Sales Value and Stipulated Loss Value as of the date
of purchase. The Fair Market Sales Value for such purpose shall be determined as
provided in subsection (a) of this Section; provided, however, that for the
purpose of this subsection the Fair Market Sales Value shall be determined on
the assumptions that (i) the requirement of making the Alteration or Alterations
which shall have given rise to the option to purchase under this subsection had
not been (and will never be) imposed and (ii) the Facility is in the condition
and repair that would have been required in the absence of any such requirement.
(d) Option to Purchase in Lieu of Dismantling Equipment. If Lessor
shall have requested Lessee to dismantle, remove and deliver the Equipment
pursuant to Section 10 and Lessee would then otherwise be required to so
dismantle, remove and deliver the Equipment, then Lessee may, in lieu of such
dismantling, removal and delivery, upon giving prompt written notice to Lessor,
purchase the Equipment from Lessor on the date specified in such notice, which
date shall be at least 30 days, but not more than 90 days, after such request by
Lessor. The purchase price of the Equipment shall be payable in immediately
available funds on such date and shall be an amount equal to the Fair Market
Sales Value as of the date of purchase, determined as provided in subsection (a)
of this Section.
(e) Return of Equipment after Purchase. Upon payment by Lessee to
Lessor of the purchase price for the Equipment pursuant to Section 20(a), (b),
(c) or (d) hereof or Section 7.09(d) or (e) of the Participation Agreement, and
upon payment by Lessee of all Rent and any other amounts owing to Lessor under
this Lease, Lessor shall transfer to Lessee, without recourse or warranty, but
free and clear of (i) Lessor Liens and (ii) (unless the purchase is being made
pursuant to Section 20(b) or pursuant to Section 7.09(d) of the Participation
Agreement in a case where Lessee assumes the Secured Notes under such Section
7.09(d)) the Lien of the Indenture, all of Lessor's right, title and interest in
and to the Equipment and in and to any warranties
47
of the Contractors for the Equipment.
SECTION 21. Obsolescence Termination; Lessor's Option. (a)
Obsolescence Termination. So long as no Default shall have occurred and be
continuing, Lessee shall have the right, at its option at any time, on at least
180 days' prior notice to Lessor, to terminate this Lease on any Semiannual Rent
Payment Date (hereinafter for purposes of this Section 21 called the
"Termination Date"), specified in such notice, provided that (i) the Termination
Date shall be after the 20th Semiannual Rent Payment Date and (ii) the Board of
Directors of Lessee shall have made a good faith determination that the
Equipment is obsolete or surplus to Lessee's requirements. During the period
from the giving of such notice until the Termination Date, Lessee, as agent for
Lessor, shall use its best efforts to obtain cash bids for the purchase of the
Equipment. Lessor shall also have the right to obtain cash bids for the purchase
of the Equipment, either directly or through agents other than Lessee. Lessee
shall certify to Lessor in writing the amount and terms of each bid received by
Lessee and the name and address of the party (who shall not be Lessee or any
Affiliate of Lessee) submitting such bid. On the Termination Date, Lessor shall
(subject to receipt of the sale price and all additional payments specified in
the next sentence), without recourse or warranty, sell the Equipment for cash to
the bidder who shall have submitted the highest bid prior to such date. The
total sale price realized at such sale shall be retained by Lessor and, in
addition, on the Termination Date, Lessee shall pay to Lessor (or, in the case
of Supplemental Rent, the Person entitled thereto) (i) the excess, if any, of
the Termination Value over the sale price of the Equipment after deducting all
expenses incurred by Lessor in connection with such sale, (ii) any Basic Rent
accrued and unpaid on the Equipment to and including the Termination Date and
(iii) all Supplemental Rent owing by Lessee under this Lease; provided, however,
that the net sales price received by Lessor shall be, under any circumstances
and in any event, in an amount at least sufficient to pay in full the aggregate
unpaid principal amount of the Secured Notes then outstanding plus the accrued
interest thereon. If no sale shall have occurred on or as of the Termination
Date, this Lease shall continue in full force and effect. In the event of any
such sale and upon compliance by Lessee with the provisions of this Section 21,
the obligation of Lessee to pay Basic Rent hereunder for any Semiannual Lease
Period ending on or after the Termination Date shall cease and the Lease Term
shall end on the Termina-
48
tion Date. Lessor shall be under no duty to solicit bids, to inquire into the
efforts of Lessee to obtain bids or otherwise take any action in connection with
any such sale other than to transfer to the purchaser named in the highest bid
certified by Lessee to Lessor or obtained by Lessor, without recourse or
warranty, but free and clear of (i) Lessor Liens and (ii) the Lien of the
Indenture, all Lessor's right, title and interest in and to the Equipment,
against receipt of the payments provided for herein.
(b) Lessor's Option. Notwithstanding anything contained herein to the
contrary, and provided that the Indenture shall have been satisfied and
discharged by the payment in full of all principal of and premium, if any, and
interest on the Secured Notes and all other amounts then due and payable to the
holders of Secured Notes or the Indenture Trustee under the Indenture or
otherwise, Lessor may, at its option, upon written notice to Lessee given at
least 10 (but not more than 30) days prior to the Termination Date, refuse to
sell its interest in the Equipment pursuant to the procedures set forth in
Section 21(a), in which case the Lease Term for the Equipment shall end.
SECTION 22. Further Assurances. Lessee shall cause the Operative
Documents and any amendments and supplements to any of them (together with any
other instruments, financing statements, continuation statements, records or
papers necessary in connection therewith) to be recorded and/or filed and
rerecorded and/or refiled in each jurisdiction as and to the extent required by
law in order to, and shall take such other actions as may from time to time be
necessary to establish, perfect and maintain (i) Lessor's right, title and
interest in and to the Equipment and the Trust Estate, subject to no Liens other
than Permitted Liens, (ii) for the benefit of Indenture Trustee, the first
mortgage lien and first priority security interest in the Trust Indenture Estate
provided for in the Indenture and (iii) each of the other rights and interests
created by the Indenture or by any other Operative Document in any Participant,
Lessor or Indenture Trustee. Lessee will promptly and duly execute and deliver
to each of the Participants, Lessor and Indenture Trustee such documents and
assurances and take such further action as Lessor may from time to time
reasonably request in order to carry out more effectively the intent and purpose
of this Lease and to establish and protect the rights and remedies created or
intended to be created in favor of Lessor, to establish and perfect and maintain
Lessor's right, title and
49
interest in and to the Equipment and the Trust Estate and, for the benefit of
Indenture Trustee, the first mortgage lien and first priority security interest
in the Trust Indenture Estate provided for in the Indenture, including, without
limitation, if requested by any Participant, Lessor or Indenture Trustee, at the
expense of the Lessee, the recording or filing of counterparts or appropriate
memoranda hereof, or of such financing statements or other documents with
respect hereto as any Participant, Lessor or Indenture Trustee may from time to
time reasonably request, and Lessor agrees promptly to execute and deliver such
of the foregoing financing statements or other documents as may require
execution by Lessor.
SECTION 23. Successor Trustee; Cotrustee. In the case of the
appointment of any successor trustee pursuant to the terms of the Trust
Agreement, such successor trustee shall, upon written notice by such successor
trustee to Lessee, succeed to all the rights, duties, powers and title of Owner
Trustee hereunder and under the other Operative Documents and shall be deemed to
be Lessor and the legal owner of the Equipment for all purposes hereof. Owner
Trustee or any successor trustee from time to time serving as Owner Trustee
hereunder may from time to time appoint one or more cotrustees or separate
trustees pursuant to the terms of the Trust Agreement to exercise or hold any or
all of the rights, powers and title of Owner Trustee hereunder. No such
appointment of any successor trustee, cotrustee or separate trustee shall
require any consent or approval by Lessee or shall in any way alter the terms of
this Lease or Lessee's or Lessor's obligations hereunder. The appointment of one
successor trustee, cotrustee or separate trustee shall not exhaust the right to
appoint further successor trustees, cotrustees and separate trustees pursuant to
the Trust Agreement, but such right may be exercised repeatedly so long as this
Lease may be in effect.
SECTION 24. Liabilities of Owner Participant. Owner Participant shall
not have any obligation or duty to Lessee with respect to the transactions
contemplated hereby except as specifically provided in the Operative Documents.
Without limiting the generality of the foregoing, under no circumstances
whatsoever shall Owner Participant as such be liable to Lessee for any action or
inaction on the part of Owner Trustee in connection with the Operative
Documents, the beneficial ownership of the Equipment, the administration of the
Trust Estate or otherwise, whether or not such action or
50
inaction shall be caused by the wilful misconduct or ordinary or gross
negligence of Owner Trustee.
Lessee agrees that neither Owner Trustee in its individual capacity
nor Owner Participant shall have any personal liability whatsoever to the Lessee
for any claim based hereon or otherwise in respect hereof or based on or in
respect of any of the other Operative Documents or any other agreement or
instrument; it being expressly understood that all obligations of Owner Trustee
and Owner Participant to the Lessee are solely nonrecourse obligations and that
all such personal liability of Owner Trustee and Owner Participant are expressly
waived and released as a condition of, and as consideration for, the execution
and delivery of this Lease by Owner Trustee; provided, however, that (subject to
Section 4(f) hereof and the Indenture) nothing herein shall be deemed to prevent
recourse to and the enforcement against the Trust Estate for performance of
covenants of Owner Trustee contained in this Lease or shall be deemed to excuse
the Owner Trustee for liability for its own willful misconduct or its gross
negligence or shall be deemed to prevent recourse to and enforcement against
Owner Participant for any of its obligations on its part specifically set forth
in Article X of the Participation Agreement.
SECTION 25. Trust Indenture Estate as Security for Owner Trustee's
Obligations to Holders of Secured Notes. In order to secure the indebtedness
evidenced by the Secured Notes, Lessor provides (a) in the Indenture, among
other things, for the creation of a first mortgage lien and first priority
security interest in favor of Indenture Trustee for the benefit of the holders
of the Secured Notes in and to the Trust Indenture Estate as described in the
Granting Clause of the Indenture and (b) in the Lease Assignment for the
assignment by Lessor to the Indenture Trustee of its right, title and interest
in and to this Lease. Lessee hereby (a) consents to such assignment pursuant to
the terms of the Indenture and the Lease Assignment, (b) agrees to pay directly
to Indenture Trustee (or, after receipt of notice from Indenture Trustee stating
that the Indenture has been satisfied and discharged, to Lessor) all amounts of
Interim Rent, Basic Rent and any other payments due or to become due to Lessor
hereunder or under the Participation Agreement which shall be required to be
paid to Indenture Trustee pursuant to the Indenture and the Lease Assignment and
(c) agrees that the right of Indenture Trustee to such payments hereunder shall
be absolute and unconditional and shall not
51
be affected by any circumstances whatsoever, including, without limitation,
those circumstances set forth in clauses (i) through (x) of Section 4(f).
SECTION 26. Grant of Certain Rights to Lessee. So long as this Lease
shall remain in effect and no Default shall have occurred and be continuing,
Lessor hereby gives to Lessee the exclusive right to use the Easements and other
rights granted to Lessor pursuant to the Facilities Agreement (other than the
rights included in the Equipment Easement to locate the Equipment on the Site
and to own and lease the Equipment as provided in this Lease) to the extent and
in the manner contemplated by this Lease.
SECTION 27. Counterparts; Uniform Commercial Code. This Lease and each
Lease Supplement may be executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument. Each
counterpart of this Lease which has been executed by the parties hereto shall be
prominently marked to identify the party to whom originally delivered. Only the
counterpart of this Lease and each Lease Supplement marked "Lessor's Copy" and
containing the receipt therefor executed by Indenture Trustee on the signature
page thereof shall evidence the monetary obligations of Lessee hereunder and
thereunder. To the extent, if any, that this Lease constitutes chattel paper (as
such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction), no security interest in this Lease may be created by
the transfer or possession of any counterpart hereof other than the counterpart
marked "Lessor's Copy" and containing the receipt therefor executed by the
Indenture Trustee on or immediately following the signature page thereof.
SECTION 28. Notices. Any notice, request or other communications
hereunder shall be in writing and, if mailed, shall be deemed to be given or
made when sent by registered or certified mail, postage prepaid, and addressed:
(a) if to Lessee, at 121 S.W. Salmon Street, Portland, Oregon 97204, Attention
of Chief Financial Officer; (b) if to Lessor, at P.O. Box 2971, Portland, Oregon
97208 (with copies to Owner Participant, at its address hereinafter referred
to); (c) if to Owner Participant, at 555 California Street, San Francisco,
California 94104, Attention of Leveraged Leasing Section; (d) if to Indenture
Trustee, at 225 S.W. Broadway, Portland, Oregon 97205; (e) if to any Loan
Participant, at its address
52
set forth in the Participation Agreement or (f) if to any other holder of a
Secured Note, at its address as it appears in the register of Secured Notes
maintained by Indenture Trustee or as otherwise provided in writing by such
holder to Indenture Trustee. From time to time, Lessee, Lessor, Owner
Participant, Indenture Trustee or any Loan Participant may designate a new
address for purposes of notice hereunder by giving notice to each of the others.
SECTION 29. Miscellaneous. (a) Severability. Any provision of this
Lease which shall be prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, Lessee hereby waives any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.
(b) Amendment. Neither this Lease nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought and, unless
and until Lessee shall have received written notice from Indenture Trustee that
the Lien of the Indenture on the Trust Indenture Estate has been released,
Indenture Trustee.
(c) Headings, etc. The Table of Contents and headings of the various
Sections of this Lease are for convenience of reference only and shall not
modify, define or limit any of the terms or provisions hereof.
(d) Governing Law. This Lease has been delivered in, and shall in all
respects be governed by, and construed in accordance with, the laws of the State
of Oregon applicable to agreements made and to be performed entirely within such
State, including all matters of construction, validity and performance.
IN WITNESS WHEREOF, the undersigned Lessee and Lessor have each caused
this Lease Agreement to be duly executed and delivered and their corporate seals
to be hereunto
53
affixed and attested by their respective officers thereunto duly authorized as
of the day and year first above written.
PORTLAND GENERAL ELECTRIC
COMPANY, as Lessee,
by /s/ Gavin F. Fale
---------------------------
Title: Asst. Vice President
[Seal]
Attest:
/s/ Dallas A. Marckx
- ---------------------------
Title: Asst. Sec.
FIRST NATIONAL BANK OF OREGON,
as Lessor and Owner Trustee,
by /s/ Jerry D. Sands
----------------------------
Title: Trust Officer
[Seal]
Attest:
/s/ James F. Light, Jr.
- ----------------------------
Title: Asst. Secy.
* Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this 7th day of November ____ 1979.
UNITED STATES NATIONAL BANK OF
OREGON, as Indenture Trustee,
by /s/ F. R. Rusche
-----------------------------
Title: Trust Officer
[Seal]
Attest:
/s/ V. H. Diem
- ---------------------------
Title: Senior Trust Officer
* This language in the original counterpart only.
ACKNOWLEDGMENTS TO LEASE AGREEMENT
STATE OF OREGON, )
)ss
COUNTY OF MULTNOMAH,) November 6, 1979.
Personally appeared before me Gavin F. Fale and Dallas A. Marckx, who
being duly sworn did say that they are the Asst. Vice President and Asst.
Secretary, respectively, of PORTLAND GENERAL ELECTRIC COMPANY, a corporation,
and that the seal affixed to the foregoing instrument is the corporate seal of
said corporation and that said instrument was signed and sealed in behalf of
said corporation by authority of its Board of Directors and said instrument was
acknowledged to be its voluntary act and deed.
Shirley A. Kushner
-------------------------------
Notary Public for Oregon
My Commission Expires: 9/27/80
-------
STATE OF OREGON, )
)ss
COUNTY OF MULTNOMAH,) November 6, 1979.
Personally appeared before me Jerry D. Sands, who being duly sworn did
say that he is the Trust Officer, of FIRST NATIONAL BANK OF OREGON, a national
banking association, and that the seal affixed to the foregoing instrument is
the seal of said association and that said instrument was signed and sealed in
behalf of said association by authority of its Board of Directors and said
instrument was acknowledged to be its voluntary act and deed.
Shirley A. Kushner
-------------------------------
Notary Public for Oregon
My Commission Expires: 9/27/80
--------
SCHEDULE 1
TO
LEASE AGREEMENT
BASIC RENT*
Semiannual Percentage of Semiannual Percentage of
Rent Payment Date Lessor's Cost Rent Payment Date Lessor's Cost
- ----------------- ------------- ----------------- -------------
June 15, 1980 3.851571% December 15, 1992 4.707116%
December 15, 1980 3.851571 June 15, 1993 4.707116
June 15, 1981 3.851571 December 15, 1993 4.707116
December 15, 1981 3.851571 June 15, 1994 4.707116
June 15, 1982 3.851571 December 15, 1994 4.707116
December 15, 1982 3.851571 June 15, 1995 4.707116
June 15, 1983 3.851571 December 15, 1995 4.707116
December 15, 1983 3.851571 June 15, 1996 4.707116
June 15, 1984 3.851571 December 15, 1996 4.707116
December 15, 1984 3.851571 June 15, 1997 4.707116
June 15, 1985 3.851571 December 15, 1997 4.707116
December 15, 1985 3.851571 June 15, 1998 4.707116
June 15, 1986 3.851571 December 15, 1998 4.707116
December 15, 1986 3.851571 June 15, 1999 4.707116
June 15, 1987 3.851571 December 15, 1999 4.707116
December 15, 1987 3.851571 June 15, 2000 4.707116
June 15, 1988 3.851571 December 15, 2000 4.707116
December 15, 1988 3.851571 June 15, 2001 4.707116
June 15, 1989 3.851571 December 15, 2001 4.707116
December 15, 1989 3.851571 June 15, 2002 4.707116
June 15, 1990 3.851571 December 15, 2002 4.707116
December 15, 1990 3.851571 June 15, 2003 4.707166
June 15, 1991 3.851571 December 15, 2003 4.707116
December 15, 1991 3.851571 June 15, 2004 4.707116
June 15, 1992 3.851571 December 15, 2004 4.707116
*Based on a Commencement date of December 15, 1979.
SCHEDULE 2
TO
LEASE AGREEMENT
STIPULATED LOSS VALUES*
The Stipulated Loss Value of the Equipment as of any Interim Rent
Payment Date or any Semiannual Rent Payment Date shall mean the product derived
from multiplying (i) the percentage figure opposite such Interim Rent Payment
Date or Semiannual Rent Payment Date set forth in the table appearing below by
(ii) Lessor's Cost for the Equipment (or the Phase I Equipment in the event
Stipulated Loss Value is being determined as of an Interim Rent Payment Date).
Percentage of Percentage of
Rent Payment Date Lessor's Cost Rent Payment Date Lessor's Cost
December 15, 1979 105.855848% June 15, 1992 91.632290%
June 15, 1980 107.299900 December 15, 1992 89.845528
December 15, 1980 108.632207 June 15, 1993 87.950610
June 15, 1981 109.875196 December 15, 1993 85.966717
December 15, 1981 111.011169 June 15, 1994 83.893945
June 15, 1982 112.059534 December 15, 1994 81.732390
December 15, 1982 108.660415 June 15, 1995 79.482157
June 15, 1983 107.328300 December 15, 1995 77.143349
December 15, 1983 108.077900 June 15, 1996 74.716079
June 15, 1984 108.739394 December 15, 1996 72.200460
December 15, 1984 104.955838 June 15, 1997 69.596615
June 15, 1985 103.239026 December 15, 1997 66.904664
December 15, 1985 103.606676 June 15, 1998 64.124740
June 15, 1986 103.886240 December 15, 1998 61.256998
December 15, 1986 99.723860 June 15, 1999 58.301628
June 15, 1987 97.628565 December 15, 1999 55.258869
December 15, 1987 97.621254 June 15, 2000 52.128702
June 15, 1988 97.526569 December 15, 2000 48.911538
December 15, 1988 97.335423 June 15, 2001 45.607208
June 15, 1989 97.057590 December 15, 2001 42.216300
December 15, 1989 96.685709 June 15, 2002 38.738491
June 15, 1990 96.228092 December 15, 2002 35.174553
December 15, 1990 95.679170 June 15, 2003 31.521930
June 15, 1991 95.045765 December 15, 2003 27.779408
December 15, 1991 94.324174 June 15, 2004 23.940916
December 15, 2004 20.000000
*Based on a Commencement Date of December 15, 1979.
SCHEDULE 3
TO
LEASE AGREEMENT
TERMINATION VALUES*
The Termination Value as of a particular Semiannual Rent Payment Date
shall mean the product derived from multiplying (i) the percentage figure
opposite such Semiannual Rent Payment Date set forth in the table appearing
below and (ii) Lessor's Cost for the Equipment.
Semiannual Percentage of
Rent Payment Date Lessor's Cost
----------------- -------------
June 15, 1990 86.151435%
December 15, 1990 85.296409
June 15, 1991 84.347601
December 15, 1991 83.301026
June 15, 1992 82.167288
December 15, 1992 80.093003
June 15, 1993 77.901827
December 15, 1993 75.612676
June 15, 1994 73.225375
December 15; 1994 70.739735
June 15, 1995 68.155572
December 15, 1995 65.472691
June 15, 1996 62.690896
December 15, 1996 59.809982
June 15, 1997 56.829745
December 15, 1997 53.749968
June 15, 1998 50.570437
December 15, 1998 47.290949
June 15, 1999 43.911326
December 15, 1999 40.431425
June 15, 2000 36.850837
December 15, 2000 33.169570
June 15, 2001 29.387038
December 15, 2001 25.503402
June 15, 2002 21.517896
December 15, 2002 17.430840
June 15, 2003 13.239207
December 15, 2003 8.941301
June 15, 2004 4.530554
December 15, 2004 0.000000
*Based on a Commencement Date of December 15, 1979.
EXHIBIT A
TO
LEASE AGREEMENT
BARGAIN AND SALE DEED, BILL OF SALE
AND ASSIGNMENT
BARGAIN AND SALE DEED, BILL OF SALE AND ASSIGNMENT dated , 19 ,
between PORTLAND GENERAL ELECTRIC COMPANY, an Oregon corporation (herein,
together with its permitted successors and assigns referred to as "Seller"), and
FIRST NATIONAL BANK OF OREGON, a national banking association, as Owner Trustee
under the Trust Agreement dated as of September 1, 1979 (herein, in such
capacity, together with its permitted successors and assigns referred to as
"Buyer"), between it and Western America Financial, Inc.
INTRODUCTION
Seller and Buyer have entered into a Lease Agreement dated as of
September 1, 1979 (herein, as the same may be amended, modified or supplemented
in accordance with the terms thereof, referred to as the "Lease"), providing for
the purchase of the Phase I [II] Equipment (as such term is defined below) and
the leasing of the Phase I [II] Equipment by Buyer to Seller for use by Seller.
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, that Seller for and in
consideration of the foregoing recital and of the payment to it or for its
account by Buyer for the Phase I [II] Equipment in the amount of $ and other
good and valuable consideration and other property, the receipt of which is
hereby acknowledged, has sold, granted, bargained, conveyed, assigned,
transferred and delivered, pursuant to the Lease, and by these presents, sells,
grants, bargains, conveys, assigns, transfers and delivers to Buyer, its
successors and assigns, all its estate, right, title and interest in and to the
property described in Schedule 1 hereto (such property being hereinafter called
the "Phase I [II] Equipment").
TO HAVE AND TO HOLD the same unto Buyer, its successors and assigns
forever.
Seller hereby warrants that it is the lawful owner of the Phase I [II]
Equipment and that its title to said equipment is free and clear of all liens,
security interests, charges, claims and encumbrances of every kind whatsoever
except for any thereof described in Schedule 2 hereto; and that Seller will
warrant and defend such title forever against all claims and demands whatsoever.
Seller also hereby assigns, conveys, transfers and sets over to and
for the benefit of Buyer all right, title and interest of Seller in, to and
under the contracts (the "Contracts") set forth in Schedule 3 hereto insofar as
the same relate to the Phase I [II] Equipment including, without limitation, all
claims for damages arising under the representations, indemnities, warranties,
guarantees and agreements made to or for the benefit of Seller by the
contractors (the "Contractors") referred to in Schedule 3 hereto, and the right
to compel performance of the terms of the Contracts; provided, however, that (a)
Seller shall at all times remain liable to Contractors under the Contracts to
perform all of the duties and obligations of Seller thereunder as if this
Bargain and Sale Deed, Bill of Sale and Assignment had not been executed, (b)
Buyer shall not be liable for any of the obligations or duties of Seller under
the Contracts, nor shall this Bargain and Sale Deed, Bill of Sale and Assignment
give rise to any duties or obligations whatsoever on the part of Buyer owing to
any of the Contractors, (c) Buyer shall not be obligated to make any payment or
to make any inquiry as to the sufficiency of any payment received by any
Contractor or to present or file any claim or to take any other action to
collect or enforce any claim under the Contracts, (d) Seller shall have the
right to enforce the Contracts to the extent provided in Section 5(b) of the
Lease and (e) unless a Default shall have occurred and be continuing, Seller may
enter into any change order or other amendment, modification or supplement to
the Contracts without the written consent or countersignature of Buyer but only
if such change order, amendment, modification or supplement would not result in
any rescission, cancelation or termination of any Contract.
Seller acknowledges, as stated above, that the payment to it for the
Phase I [II] Equipment has been made and, accordingly, that this is a fully
executed Bargain and Sale Deed, Bill of Sale and Assignment and that Buyer's
title to said Equipment is in no way subject to defeasance or forfeiture by
reason of any alleged failure of consideration to be received by Seller
hereunder.
IN WITNESS WHEREOF, the undersigned Seller and
Buyer have each caused this Bargain and Sale Deed, Bill of Sale and Assignment
to be duly executed and their corporate seals to be hereunto affixed and
attested by their respective officers thereunto duly authorized the day and year
first above written.
PORTLAND GENERAL ELECTRIC COMPANY,
[SEAL] by:_______________________________
Title:
ATTEST:
_____________________________________
Title:
FIRST NATIONAL BANK OF OREGON,
as Owner Trustee
[SEAL] by:_______________________________
Title:
ATTEST:
____________________________________
Title:
ACKNOWLEDGMENTS TO BARGAIN AND SALE DEED,
BILL OF SALE AND ASSIGNMENT
STATE OF OREGON, )
)ss.:
COUNTY OF MULTNOMAH, ) ________________, 19 .
Personally appeared before me _________________________ and
______________________, who being duly sworn did say that they are the
_____________________ and _______________________, respectively, of PORTLAND
GENERAL ELECTRIC COMPANY, a corporation, and that the seal affixed to the
foregoing instrument is the corporate seal of said corporation and that said
instrument was signed and sealed in behalf of said corporation by authority of
its Board of Directors and said instrument was acknowledged to be its voluntary
act and deed.
_____________________________
Notary Public for Oregon
My Commission Expires: ________________
STATE OF OREGON, )
)ss.:
COUNTY OF MULTNOMAH, ) ________________, 19 .
Personally appeared before me ________________________
and ____________________, who being duly sworn did say that they are the
________________________ and _________________________, respectively, of FIRST
NATIONAL BANK OF OREGON, a national banking association, and that the seal
affixed to the foregoing instrument is the seal of said association and that
said instrument was signed and sealed in behalf of said association by authority
of its ___________ and said instrument was acknowledged to be its voluntary act
and deed.
_____________________________
Notary Public for Oregon
My Commission Expires: ________________
Schedule 1
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Bill of Sale
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DESCRIPTION OF EQUIPMENT
Description of Phase I Equipment
- --------------------------------
A11 the machinery, equipment, mechanical and electrical equipment,
fixtures, tangible personal property of every kind and character and other
property, real and personal, comprising that portion of a certain coal
unloading, transfer, storage, handling and crushing facility, constructed or
installed on the Site described in Annex A and designated as the "Phase I
Equipment" in the drawings referred to in Annex B (which drawings were recorded
on October 22, 1979, at Microfilm No. M-16252, Pages 1 through 50, of the Morrow
County, Oregon, Miscellaneous Records), including, without limitation:
(1) thaw shed, consisting of concrete footings, a steel frame,
corrugated steel roofing and siding, and radiant heating elements;
(2) unloading structure, consisting of a concrete foundation, steel
framing, floors, platforms, stairways, a rotary car dumper, chutes, a
receiving hopper, vibratory feeders, conveyor pulleys, control panels and
electrical equipment, but excluding the car dumper enclosure above grade,
consisting of corrugated steel roofing and siding, and further excluding
the car dumper and positioner control building, consisting of a concrete
foundation, steel framing, concrete block masonry walls and corrugated
steel roofing;
(3) train positioner and rail car wash facility, consisting of a
concrete foundation and positioning and car washing machinery;
(4) Transfer Point Nos. 1, 2, 3 and 4, consisting of concrete
foundations, steel framing, corrugated steel siding and roofing, floors,
platforms, stairways, conveyor motors, drives, pulleys, take-ups and
chutes;
(5) Conveyor Nos. U-1, U-2, U-3, U-4 and Y-1, consisting of 72-inch
wide belts, U-1 being approximately 300 feet in length, U-2 being
approximately 230 feet in length, U-3 being approximately 1,060 feet in
length, U-4 being approximately 270 feet in length and Y-1 being
approximately 1,725 feet in length, and further consisting of footings,
trusses, supports, idlers and pulleys, and U-2 further consist-
ing of a tunnelway, and U-4 further consisting of a 12-foot diameter steel
support tube;
(6) lowering well, consisting of a concrete foundation, a 12-foot
diameter steel tower approximately 64 feet in height, pulleys, supports and
chutes;
(7) Reclaim Pit No. 1, consisting of an underground concrete support
structure, steel framing and stairways;
(8) Stacker/Reclaimer No. 2, consisting of a combination stacker and
bucket wheel reclaimer, together with rails and ties;
(9) unloading electrical distribution and control systems, consisting
of underground ducts, overhead lines, batteries, transformers,
motor-control centers, switchgear, unit substations, grounding,
communications systems and wiring;
(10) a fire protection system, consisting of yard mains and hydrants;
(11) a rectangular railroad track loop with corners rounded to a
5.5(degree) curvature, including rails, ties, switches and a spare car
storage track; and
(12) an unloading dust suppression system, consisting of pipes,
valves, pumps, drains and tanks.
Description of Phase II Equipment
- ---------------------------------
All the machinery, equipment, mechanical and electrical equipment,
fixtures, tangible personal property of every kind and character and other
property, real and personal, comprising that portion of a certain coal
unloading, transfer, storage, handling and crushing facility, constructed or
installed on the Site described in Annex A and designated as the "Phase II
Equipment" in the drawings referred to in Annex B, including without limitation:
(1) Conveyor Nos. R-1, R-2, R-3, R-4, R-5, R-6, R-7 and R-8,
consisting of belts, R-1 being 72 inches in width and approximately 1,100
feet in length, R-2 being 72 inches in width and approximately 450 feet in
length,
R-3 being 42 inches in width and approximately 130 feet in length,
R-4 being 42 inches in width and approximately 130 feet in length, R-5
being 42 inches in width and approximately 900 feet in length, R-6 being 42
inches in width and approximately 900 feet in length, R-7 being 42 inches
in width and approximately 160 feet in length and R-8 being 42 inches in
width and approximately 400 feet in length, and further consisting of
footings, trusses, supports, idlers and pulleys, and R-2 and R-8 further
consisting of a structural steel support tower, and R-7 further consisting
of a tunnelway, and R-2, R-5. R-6 and R-7 further consisting of 12-foot
diameter steel support tubes;
(2) Transfer Point No. 5, consisting of a concrete foundation, steel
framing, corrugated steel siding and roofing, floors, platforms, stairways,
conveyor motors, drives, pulleys, take-ups and chutes;
(3) Stacker/Reclaimer No. 3, consisting of a combination stacker and
bucket wheel trench-type reclaimer, together win rails and ties;
(4) Reclaim Pit No. 2, consisting of an underground concrete support
structure, steel framing and stairways;
(5) a crusher structure, consisting of a concrete foundation, steel
framing, corrugated steel siding and roofing, concrete and grating floors,
platforms, stairways, support tubes, conveyor motors, drives, pulleys,
take-ups and chutes, magnetic separators, control bin, vibratory feeders
and crushers;
(6) reclaim electrical distribution and control systems, consisting of
underground ducts, overhead lines, batteries, transformers, motor-control
centers, switchgear, unit substations, grounding, communications systems
and wiring; and
(7) a reclaim dust suppression system, consisting of pipes, valves,
pumps, drains, a settling basin, a sludge drying bed and tanks.
(ATTACHMENT TO ANNEX A)
[Graphic omitted]
Annex B
-------
(Schedule 1 to
--------------
Bill of Sale)
-------------
List of Engineering Drawings
----------------------------
The following is a list of drawings prepared by or for Swan Wooster
Engineering Inc., which describe the Equipment:
Drawing Number Items Described
- -------------- ---------------
E7470-12-001 Site--General Arrangement
E7470-12-002 Site--Profiles & Cross Sections
E7470-12-003 Site Flow Diagram
E7470-12-004 Water Flow Diagram
E7470-12-104 Site Roadways Plan
E7470-12-400 Grounding Layout
E7470-12-401 Load Distribution & Switching
Diagram--7.2 kV & 2.4 kV
E7470-12-402 Load Distribution Diagram
E7470-12-403 Low-Voltage Panel Boards
Site Control System
E7470-12-405 Underground Duct Plan
E7470-12-406 Underground Duct Plan
E7470-12-407 Underground Duct Plan
E7470-12-420 Pole Line Plan
E7470-14-100 Fire Main Loop Plan
E7470-17-001 Settling Basin--General Arrangement
E7470-18-100 Rail Car Wash Facility Concrete
Pit--Plan & Sections
E7470-20-001 Unloading Electrical Building--General Arrangement
E7470-21-001 Rotary Car Dumper & Positioner--General Arrangement
E7470-21-002 Rotary Car Dumper & Positioner--Rail Car Clearances
E7470-21-003 Dumper Pit--General Arrangement
E7470-22-001 Conveyor U-1--General Arrangement
E7470-23-001 Transfer Point No. 1--General Arrangement
E7470-24-001 Conveyor U-2--General Arrangement
E7470-25-001 Transfer Point No. 2--General Arrangement
E7470-26-001 Conveyor U-3--General Arrangement
E7470-26-002 Reclaim Pit No. 1--General Arrangement
E7470-28-001 Conveyor U-4--General Arrangement
E7470-28-500 Conveyor U-4--Architectural Elevations
E7470-29-500 Thaw Shed--Architectural Elevations
E7470-30-001 Transfer Point No. 3--General Arrangement
Drawing Number Items Described
- -------------- ---------------
E7470-31-001 Conveyor Y-1--General Arrangement
E7470-33-001 Transfer Point No. 4--General Arrangement
E7470-40-001 Reclaim Electrical Building--General Arrangement
E7470-41-001 Conveyor R-1--General Arrangement
E7470-43-001 Transfer Point No. 5--General Arrangement
E7470-44-001 Conveyor R-2--General Arrangement
E7470-45-001 Conveyor R-8--General Arrangement
E7470-46-001 Crusher Building--General Arrangement Sheet 1
E7470-46-002 Crusher Building--General Arrangement, Sheet 2
E7470-47-001 Conveyor R-3 and R-4--General Arrangement
E7470-48-001 Conveyor R-5 and R-6--General Arrangement
E7470-49-001 Conveyor R-7--General Arrangement
E7470-49-002 Reclaim Pit No. 2--General Arrangement
E7470-70-400 One Line Diagram
E7470-00-300 Conveyors Component Requirements
7470-1-001-604-3 Train Positioner--General Arrangement
7470-1-001-634-3 Rotary Car Dumper--General Arrangement
7470-1-002-600-5 Stacker Reclaimer No. 2--General Arrangement
7470-1-002-724-4 Stacker Reclaimer No. 3--General Arrangement
Schedule 2
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Bill of Sale
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LIENS ON EQUIPMENT
1. Right to receive electric power and telephone services over the existing
systems or replacements thereof as reserved in the deed from the United
States of America to the State of Oregon, Department of Veteran's Affairs,
recorded December 13, 1963, in Book 70, Pages 91 to 94, of Deeds, Morrow
County Records. Affects only that portion of the Equipment constituting
real property.
2. Lease, including the terms and provisions thereof, dated July 2, 1963,
recorded January 28, 1964, in Deed Book 70, Page 241, between the State of
Oregon, acting by and through the State Land Board and the Boeing Company,
a Delaware corporation.
Supplement to Lease, including the terms and provisions thereof, dated
December 13, 1963, recorded January 28, 1964, in Deed Book 70, Page
251, between the Boeing Company, a Delaware corporation and the State
of Oregon, by and through its Director of Veterans' Affairs.
Assignment of Lease, including the terms and provisions thereof, dated
January 1, 1974, recorded July 16, 1974, in Deed Book "M" Microfilm
No. 7049 between the Boeing Company, a Delaware corporation, and
Boeing Agri-Industrial Company, an Oregon corporation.
Affects only that portion of the Equipment constituting real property.
3. An easement for power lines as conveyed to Pacific Power and Light Company
by the Boeing Company over all lands leased by the Boeing Company in the
Lease recorded January 28, 1964, in Book 70, Page 241, of Deed Records and
supplement thereto by instrument recorded January 14, 1966, in Book 73,
Pages 75 to 79, of Deeds, Morrow County Records. Affects only that portion
of the Equipment constituting real property.
4. Construction Lien for the amount herein stated including costs.
2
Recorded: March 28, 1978, on Microfilm No. "M" 12992.
Amount: $19,991.46.
Claimant: Steel Products Co. of Oregon, Inc.
Note: Under Circuit Court No. 6045 filed August 24, 1978, entered May 31,
1979, judgment was entered in favor of Portland General Electric
Company; said judgment was appealed June 28, 1979, with bond posted,
and is now pending in the Court of Appeals, State of Oregon.
5. A nonexclusive easement to construct, install, operate and maintain in
place certain leased equipment in favor of the Port of Morrow, Oregon, and
Portland General Electric Company, created by instrument recorded April 10,
1978, in Book "M" Microfilm No. 13071. Affects only that portion of the
Equipment constituting real property.
6. Construction Lien for the amount herein stated including costs.
Recorded: April 24, 1978, on Microfilm No. "M" 13137.
Rerecorded: May 3, 1978, on Microfilm "M" 13207.
Amount: $18,081.88.
Claimant: Schnitzer Steel Products Products Co.
Note: Proceedings pending in the Circuit Court for Morrow County, under
Suit No. 6077, entitled Schnitzer Steel Products Company of Oregon,
Inc., Plaintiff, v. Portland General Electric Company, et al.,
Defendant, being an action for foreclosure of Construction Lien.
7. Construction Lien for the amount herein stated including costs.
Recorded: May 19, 1978, on Microfilm No. "M" 13338.
Amount: $78,224.77.
Claimant: Ace Electric Company.
3
Note: Proceedings pending in the Circuit Court for Morrow County, under
Suit No. 6090, entitled Ace Electric Company, Plaintiff, v. Portland
General Electric Co., et al., Defendant, being an action for
foreclosure of Construction Lien.
8. Construction Lien for the amount herein stated including costs.
Recorded: October 5, 1978 on Microfilm No. "M" 14166.
Amount: $141,441.07.
Claimant: U.S. Tank and Construction.
Note: Proceedings pending in the Circuit Court for Morrow County, under
Suit No. 6202, entitled U.S. Tank and Construction, Plaintiff, v.
Portland General Electric, et al., Defendant, being an action for
foreclosure of Construction Lien.
9. [Additional, specifically described Construction Liens, if any, existing at
the time of execution of this Bargain and Sale Deed, Bill of Sale and
Assignment, for an aggregate amount not in excess of $150,000.]
Schedule 3
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Bill of Sale
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LIST OF CONTRACTS
[ILLEGIBLE CHART]
EXHIBIT B
TO
LEASE AGREEMENT
LEASE SUPPLEMENT NO.
LEASE SUPPLEMENT NO. dated , 19 , between Portland General Electric
Company, an Oregon corporation (herein, together with its permitted successors
and assigns, "Lessee") and FIRST NATIONAL BANK OF OREGON, a national banking
association, as trustee (herein, together with its permitted successors and
assigns, "Lessor") under a Trust Agreement dated as of September 1, 1979,
between it and the Owner Participant named therein.
INTRODUCTION
Lessee and Lessor have heretofore entered into a Lease Agreement dated
as of September 1, 1979 (herein, as the same may be amended, modified or
supplemented in accordance with the provisions thereof, the "Lease"), providing
for the execution and delivery of a Lease Supplement substantially in the form
hereof (capitalized terms defined in the Lease being used herein as so defined)
for the purpose of confirming the leasing of the Phase I [II] Equipment under
the Lease.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, and pursuant to Section 3 of the Lease, Lessor and
Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee, and Lessee hereby
leases from Lessor under the Lease, all of its estate, right, title and interest
in and to the property described or referred to as the "Phase I [II] Equipment"
in Schedule 1 of Exhibit A to the Lease.
2. Lessee hereby acknowledges and confirms that such Equipment is
leased under the Lease and that such Equipment is located on the real property
described in Annex A of Schedule 1 of Exhibit A to the Lease.
3. Lessee hereby acknowledges and confirms that such Equipment (a) has
been duly marked as showing the title of Lessor thereto in accordance with the
terms of Section 8 of the Lease, (b) has been accepted by it for all purposes
hereof and of the Lease, (c) conforms to the Plans and Specifications and the
Descriptive Warranty and (d) is in good
working order and repair and without defect or vice in title, condition, design,
operation or fitness for use, whether or not discoverable by Lessee as of the
date hereof, and free and clear of all Liens except Liens set forth in Schedule
2 to the Bill of Sale for such Equipment and the Lien in favor of Indenture
Trustee created pursuant to the Indenture; provided, however, that nothing
contained herein or in the Lease shall in any way diminish or otherwise affect
any right Lessee or Lessor may have with respect to such Equipment against any
Contractor.
4. Lessor's Cost for such Equipment is $ .
5. Lessee acknowledges and confirms its agreement (set forth in
Section 4 of the Lease) to pay Interim Rent, Basic Rent and Supplemental Rent
for such Equipment as provided in the Lease.
6. No Default has occurred or is continuing.
7. This Lease Supplement is supplemental to the Lease. As supplemented
by this Lease Supplement, the Lease is in all respects ratified, approved and
confirmed, and the Lease and this Lease Supplement shall together constitute one
and the same instrument.
8. This Lease Supplement is being executed in more than one
counterpart, each of which shall be deemed original, but all such counterparts
shall together constitute but one and the same instrument. Each counterpart has
been prominently marked to identify the party to whom originally delivered. Only
the counterpart marked "Lessor's Copy" and containing the receipt therefor
executed by Indenture Trustee on the signature page thereof shall evidence the
monetary obligations of Lessee hereunder and thereunder. To the extent, if any,
that this Lease Supplement constitutes chattel paper (as such term is defined in
the Uniform Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease Supplement may be created by the transfer or
possession of any counterpart thereof other than the counterpart marked
"Lessor's Copy" and containing the receipt therefor executed by Indenture
Trustee on or immediately following the signature page thereof.
IN WITNESS WHEREOF, Lessee and Lessor have caused this Lease
Supplement to be duly executed and their corporate
seals to be hereunto affixed and attested by their respective officers thereunto
duly authorized the day and year first above written.
PORTLAND GENERAL ELECTRIC COMPANY,
as Lessee,
[SEAL] by______________________________
Title:
ATTEST:
__________________________________
Title:
FIRST NATIONAL BANK OF OREGON,
as Owner Trustee and Lessor,
[SEAL] by______________________________
Title:
ATTEST:
__________________________________
Title:
*Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this day of 19 .
UNITED STATES NATIONAL BANK OF
OREGON, as Indenture Trustee,
by_______________________________
[Seal] Title:
Attest:
________________________________
Title:
___________________
* This language in the original counterpart only.
ACKNOWLEDGMENTS TO LEASE SUPPLEMENT
STATE OF OREGON, )
)ss.:
COUNTY OF MULTNOMAH, ) ________________, 19 .
Personally appeared before me ________________________ and
____________________, who being duly sworn did say that they are the
________________________ and _________________________, respectively, of
PORTLAND GENERAL ELECTRIC COMPANY, a corporation, and that the seal affixed to
the foregoing instrument is the corporate seal of said corporation and that said
instrument was signed and sealed in behalf of said corporation by authority of
its Board of Directors and said instrument was acknowledged to be its voluntary
act and deed.
_____________________________
Notary Public for Oregon
My Commission Expires: ________________
STATE OF OREGON, )
)ss.:
COUNTY OF MULTNOMAH, ) ________________, 19 .
Personally appeared before me ________________________ and
____________________, who being duly sworn did say that they are the
________________________ and _________________________, respectively, of FIRST
NATIONAL BANK OF OREGON, a national banking association, and that the seal
affixed to the foregoing instrument is the seal of said association and that
said instrument was signed and sealed in behalf of said association by authority
of its ___________ and said instrument was acknowledged to be its voluntary act
and deed.
_____________________________
Notary Public for Oregon
My Commission Expires: ________________
LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. 1 dated November 7, 1979, between Portland
General Electric Company, an Oregon corporation (herein, together with its
permitted successors and assigns, "Lessee") and FIRST NATIONAL BANK OF OREGON, a
national banking association, as trustee (herein, together with its permitted
successors and assigns, "Lessor") under a Trust Agreement dated as of September
1, 1979, between it and the Owner Participant named therein.
INTRODUCTION
Lessee and Lessor have heretofore entered into a Lease
Agreement dated as of September 1, 1979 (herein, as the same may be amended,
modified or supplemented in accordance with the provisions thereof, the
"Lease"), providing for the execution and delivery of a Lease Supplement
substantially in the form hereof (capitalized terms defined in the Lease being
used herein as so defined) for the purpose of confirming the leasing of the
Phase I Equipment under the Lease.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, and pursuant to Section 3 of the Lease, Lessor and
Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee, and Lessee hereby
leases from Lessor under the Lease, all of its estate, right, title and interest
in and to the property described or referred to as the "Phase I Equipment" in
Schedule 1 of Exhibit A to the Lease.
2. Lessee hereby acknowledges and confirms that such Equipment is
leased under the Lease and that such Equipment is located on the real property
described in Annex A of Schedule 1 of Exhibit A to the Lease.
3. Lessee hereby acknowledges and confirms that such Equipment (a) has
been duly marked as showing the title of Lessor thereto in accordance with the
terms of Section 8 of the Lease, (b) has been accepted by it for all purposes
hereof and of the Lease, (c) conforms to the Plans and Specifications and the
Descriptive Warranty and (d) is in good
2
working order and repair and without defect or vice in title, condition, design,
operation or fitness for use, whether or not discoverable by Lessee as of the
date hereof, and free and clear of all Liens except Liens set forth in Schedule
2 to the Bill of Sale for such Equipment and the Lien in favor of Indenture
Trustee created pursuant to the Indenture; provided, however, that nothing
contained herein or in the Lease shall in any way diminish or otherwise affect
any right Lessee or Lessor may have with respect to such Equipment against any
Contractor.
4. Lessor's Cost for such Equipment is $26,207,800.
5. Lessee acknowledges and confirms its agreement (set forth in
Section 4 of the Lease) to pay Interim Rent, Basic Rent and Supplemental Rent
for such Equipment as provided in the Lease.
6. No default has occurred or is continuing.
7. This Lease Supplement is supplemental to the Lease. As supplemented
by this Lease Supplement, the Lease is in all respects ratified, approved and
confirmed, and the Lease and this Lease Supplement shall together constitute one
and the same instrument.
8. This Lease Supplement is being executed in more than one
counterpart, each of which shall be deemed original, but all such counterparts
shall together constitute but one and the same instrument. Each counterpart has
been prominently marked to identify the party to whom originally delivered. Only
the counterpart marked "Lessor's Copy" and containing the receipt therefor
executed by Indenture Trustee on the signature page thereof shall evidence the
monetary obligations of Lessee hereunder and thereunder. To the extent, if any,
that this Lease Supplement constitutes chattel paper (as such term is defined in
the Uniform Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease Supplement may be created by the transfer or
possession of any counterpart thereof other than the counterpart marked
"Lessor's Copy" and containing the receipt therefor executed by Indenture
Trustee on or immediately following the signature thereof.
IN WITNESS WHEREOF, Lessee and Lessor have caused this Lease
Supplement to be duly executed and their corporate
seals to be hereunto affixed and attested by their respective officers thereunto
duly authorized the day and year first above written.
PORTLAND GENERAL ELECTRIC COMPANY,
as Lessee
by /s/
----------------------------------
[Seal] Title: Vice President
Attest:
/s/
- -------------------------
Title: Asst. Secy.
FIRST NATIONAL BANK OF OREGON,
as Owner Trustee and Lessor,
by/s/
----------------------------------
Title: Trust officer
[Seal]
Attest:
/s/
- -------------------------
Title: Asst. Secy.
ACKNOWLEDGEMENTS TO LEASE SUPPLEMENT
STATE OF OREGON, )
) ss.:
COUNTY OF MULTNOMAH, ) _______________, 19 .
Personally appeared before me ________________________________ and
__________________________________, who being duly sworn did say that they are
the ______________ and ____________________, respectively, of PORTLAND GENERAL
ELECTRIC COMPANY, a corporation, and that the seal affixed to the foregoing
instrument is the corporate seal of said corporation and that said instrument
was signed and sealed in behalf of said corporation by authority of its Board of
Directors and said instrument was acknowledged to be its voluntary act and deed.
___________________________
Notary Public for Oregon
My Commission Expires: __________________
STATE OF OREGON, )
) ss.:
COUNTY OF MULTNOMAH, ) _______________, 1979.
Personally appeared before me ________________________________ and
__________________________________, who being duly sworn did say that they are
the ______________ and ____________________, respectively, of PORTLAND GENERAL
ELECTRIC COMPANY, a corporation, and that the seal affixed to the foregoing
instrument is the corporate seal of said corporation and that said instrument
was signed and sealed in behalf of said corporation by authority of its Board of
Directors and said instrument was acknowledged to be its voluntary act and deed.
___________________________
Notary Public for Oregon
My Commission Expires: __________________
LEASE SUPPLEMENT NO. 2
LEASE SUPPLEMENT NO. 2 dated January 23, 1980, between Portland
General Electric Company, an Oregon corporation (herein, together with its
permitted successors and assigns, "Lessee") and FIRST NATIONAL BANK OF OREGON, a
national banking association, as trustee (herein, together with its permitted
successors and assigns, "Lessor") under a Trust Agreement dated as of September
1, 1979, between it and the Owner Participant named therein.
INTRODUCTION
Lessee and Lessor have heretofore entered into a Lease Agreement dated
as of September 1, 1979 (herein, as the same may be amended, modified or
supplemented in accordance with the provisions thereof, the "Lease"), providing
for the execution and delivery of a Lease Supplement substantially in the form
hereof (capitalized terms defined in the Lease being used herein as so defined)
for the purpose of confirming the leasing of the Phase II Equipment under the
Lease.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, and pursuant to Section 3 of the Lease, Lessor and
Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee, and Lessee hereby
leases from Lessor under the Lease, all of its estate, right, title and interest
in and to the property described or referred to as the "Phase II Equipment" in
Schedule 1 of Exhibit A to the Lease.
2. Lessee hereby acknowledges and confirms that such Equipment is
leased under the Lease and that such Equipment is located on the real property
described in Annex A of Schedule 1 of Exhibit A to the Lease.
3. Lessee hereby acknowledges and confirms that such Equipment (a) has
been duly marked as showing the title of Lessor thereto in accordance with the
terms of Section 8 of the Lease, (b) has been accepted by it for all purposes
hereof and of the Lease, (c) conforms to the Plans and Specifications and the
Descriptive Warranty and (d) is in good
working order and repair and without defect or vice in title, condition, design,
operation or fitness for use, whether or not discoverable by Lessee as of the
date hereof, and free and clear of all Liens except Liens set forth in Schedule
2 to the Bill of Sale for such Equipment and the Lien in favor of Indenture
Trustee created pursuant to the Indenture; provided, however, that nothing
contained herein or in the Lease shall in any way diminish or otherwise affect
any right Lessee or Lessor may have with respect to such Equipment against any
Contractor.
4. Lessor's Cost for such Equipment is $13,091,800.
5. Lessee acknowledges and confirms its agreement (set forth in
Section 4 of the Lease) to pay Interim Rent, Basic Rent and Supplemental Rent
for such Equipment as provided in the Lease.
6. No Default has occurred or is continuing.
7. Section 4 of the Lease is hereby amended by changing the percentage
specified therein for calculating Interim Rent from .023774% to .024050%.
8. Schedules 1, 2 and 3 of the Lease, showing the amounts of Basic
Rent, Stipulated Loss Value and Termination Value, are hereby amended to read in
their entirety as set forth in Exhibits A, B and C, respectively, hereto.
9. This Lease Supplement is supplemental to the Lease. As supplemented
by this Lease Supplement, the Lease is in all respects ratified, approved and
confirmed, and the Lease and this Lease Supplement shall together constitute one
and the same instrument.
10. This Lease Supplement is being executed in more than one
counterpart, each of which shall be deemed original, but all such counterparts
shall together constitute but one and the same instrument. Each counterpart has
been prominently marked to identify the party to whom originally delivered. Only
the counterpart marked "Lessor's Copy" and containing the receipt therefor
executed by Indenture Trustee on the signature page thereof shall evidence the
monetary obligations of Lessee hereunder and thereunder. To the extent, if any,
that this Lease Supplement constitutes chattel paper (as such term is defined in
the Uniform Commer-
cial Code as in effect in any applicable jurisdiction), no security interest in
this Lease Supplement may be created by the transfer or possession of any
counterpart thereof other than the counterpart marked "Lessor's Copy" and
containing the receipt therefor executed by Indenture Trustee on or immediately
following the signature page thereof.
IN WITNESS WHEREOF, Lessee and Lessor have caused this Lease
Supplement to be duly executed and their corporate seals to be hereunto affixed
and attested by their respective officers thereunto duly authorized the day and
year first above written.
PORTLAND GENERAL ELECTRIC COMPANY,
as Lessee,
by /s/
-----------------------------
Title: Asst. Vice President
[Seal]
Attest:
/s/
- ---------------------------------
Title: Asst. Secretary
FIRST NATIONAL BANK OF OREGON,
as Owner Trustee and Lessor
by/s/
-----------------------------
Title: Trust Officer
[Seal]
Attest:
/s/
- ---------------------------------
Title: Asst. Secretary
*Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this 23rd day of January 1980.
UNITED STATES NATIONAL BANK OF
OREGON, as Indenture Trustee,
by_____________________________
Title:
[Seal]
Attest:
_________________________________
Title:
_________________________
* This language in the original counterpart only.
ACKNOWLEDGMENTS TO LEASE SUPPLEMENT
STATE OF OREGON, )
) ss.:
COUNTY OF MULTNOMAH, )
Personally appeared before me _______________ and ______________ who
being duly sworn did say that they are the ________________ and
__________________ respectively, of PORTLAND GENERAL ELECTRIC COMPANY, a
corporation, and that the seal affixed to the foregoing instrument is the
corporate seal of said corporation and that said instrument was signed and
sealed in behalf of said corporation by authority of its Board of Directors and
said instrument was acknowledged to be its voluntary act and deed.
___________________________________
Notary Public for Oregon
My Commission Expires:______________________
STATE OF OREGON, )
) ss.:
COUNTY OF MULTNOMAH, )
Personally appeared before me ____________ and _________________, who
being duly sworn did say that they are the _________________ and ____________,
respectively, of FIRST NATIONAL BANK OF OREGON, a national banking association,
and that the seal affixed to the foregoing instrument is the seal of said
association and that said instrument was signed and sealed in behalf of said
association by authority of its Board of Directors andd said instrument was
acknowledged to be its voluntary act and deed.
_____________________________________
Notary Public for Oregon
My Commission Expires:____________________
EXHIBIT A
BASIC RENT*
Semiannual Percentage of Semiannual Percentage of
Rent Payment Date Lessor's Cost Rent Payment Date Lessor's Cost
----------------- ------------- ----------------- -------------
July 23, 1980 3.896298% January 23, 1993 4.761778%
January 23, 1981 3.896298 July 23, 1993 4.761778
July 23, 1981 3.896298 January 23, 1994 4.761778
January 23, 1982 3.896298 July 23, 1994 4.761778
July 23, 1982 3.896298 January 23, 1995 4.761778
January 23, 1983 3.896298 July 23, 1995 4.761778
July 23, 1983 3.896298 January 23, 1996 4.761778
January 23, 1984 3.896298 July 23, 1996 4.761778
July 23, 1984 3.896298 January 23, 1997 4.761778
January 23, 1985 3.896298 July 23, 1997 4.761778
July 23, 1985 3.896298 January 23, 1998 4.761778
January 23, 1986 3.896298 July 23, 1998 4.761778
July 23, 1986 3.896298 January 23, 1999 4.761778
January 23, 1987 3.896298 July 23, 1999 4.761778
July 23, 1987 3.896298 January 23, 2000 4.761778
January 23, 1988 3.896298 July 23, 2000 4.761778
July 23, 1988 3.896298 January 23, 2001 4.761778
January 23, 1989 3.896298 July 23, 2001 4.761778
July 23, 1989 3.896298 January 23, 2002 4.761778
January 23, 1990 3.896293 July 23, 2002 4.761778
July 23, 1990 3.896298 January 23, 2003 4.761778
January 23, 1991 3.896298 July 23, 2003 4.761778
July 23, 1991 3.896298 January 23, 2004 4.761778
January 23, 1992 3.896298 July 23, 2004 4.761778
July 23, 1992 3.896298 January 23, 2005 4.761778
_____________________________
* Based on a Commencement Date of January 23, 1980.
EXHIBIT B
STIPULATED LOSS VALUES*
The Stipulated Loss Value of the Equipment as of any Interim Rent
Payment Date or any Semiannual Rent Payment Date shall mean the product derived
from multiplying (i) the percentage figure opposite such Interim Rent Payment
Date or Semiannual Rent Payment Date set forth in the table appearing below by
(ii) Lessor's Cost for the Equipment (or the Phase I Equipment in the event
Stipulated Loss Value is being determined as of an Interim Rent Payment Date).
Rent Percentage of Lessor's Percentage of
Payment Date Cost Rent Payment Date Lessor's Cost
------------ ---- ----------------- -------------
January 23, 1980 105.525511 July 23, 1992 92.976877
July 23, 1980 107.174939 January 23, 1993 91.157531
January 23, 1981 108.600842 July 23, 1993 89.213979
July 23, 1981 109.893790 January 23, 1994 87.178318
January 1, 1982 111.075475 July 23, 1994 85.052640
July 23, 1982 112.168066 January 23, 1995 82.836837
January 23, 1983 108.810069 July 23, 1995 80.532239
July 23, 1983 107.517928 January 23, 1996 78.138769
January 23, 1984 108.304218 July 23, 1996 75.656838
July 23, 1984 109.001067 January 23, 1997 73.086557
January 23, 1985 105.249383 July 23, 1997 70.428050
July 23, 1985 103.562907 January 23, 1998 67.681437
January 23, 1986 103.957196 July 23, 1998 64.846851
July 23, 1986 104.261645 January 23, 1999 61.924424
January 23, 1987 100.120221 July 23, 1999 58.914299
July 23, 1987 98.043898 January 23, 2000 55.816617
January 23, 1988 98.051374 July 23, 2000 52.631534
July 23,1988 97.969246 January 23, 2001 49.359202
January 23, 1989 97.786196 July 23, 2001 45.999790
July 23, 1989 97.513964 January 23, 2002 42.553463
January 23, 1990 97.142925 July 23, 2002 39.020400
July 23, 1990 96.683370 January 23, 2003 35.400782
January 23, 1991 96.127428 July 23, 2003 31.692729
July 23, 1991 95.483920 January 23, 2004 27.894258
January 23, 1992 94.746796 July 23, 2004 24.000440
January 23, 2005 20.000011
* Based on a Commencement Date of January 23, 1980.
EXHIBIT C
TERMINATION VALUES*
The Termination Value as of a particular Semiannual Rent Payment Date
shall mean the product derived from multiplying (i) the percentage figure
opposite such Semiannual Rent Payment Date set forth in the table appearing
below and (ii) Lessor's Cost for the Equipment.
Semiannual Rent Payment Date Percentage of Lessor's Cost
- ---------------------------- ---------------------------
July 23, 1990 87.446434
January 23, 1991 86.609897
July 23, 1991 85.677270
January 23, 1992 84.642244
July 23, 1992 83.511875
January 23, 1993 81.405006
July 23, 1993 79.165196
January 23, 1994 76.824278
July 23, 1994 74.384070
January 23, 1995 71.844183
July 23, 1995 69.205654
January 23, 1996 66.468111
July 23, 1996 63.631655
January 23, 1997 60.696079
July 23, 1997 57.661180
January 23, 1998 54.526741
July 23, 1998 51.292549
January 23, 1999 47.958376
July 23, 1999 44.523996
January 23, 2000 40.989173
July 23, 2000 37.353669
January 23, 2001 33.617234
July 23, 2001 29.779620
January 23, 2002 25.840564
July 23, 2002 21.799805
January 23, 2003 17.657069
July 23, 2003 13.410006
January 23, 2004 9.056151
July 23, 2004 4.590079
January 23, 2005 0.000000
_____________________________
* Based on a Commencement Date of January 23, 1980.
LEASE SUPPLEMENT NO. 3
LEASE SUPPLEMENT NO. 3, dated as of January 26, 1993, between PORTLAND
GENERAL ELECTRIC COMPANY, an Oregon corporation (herein, together with its
permitted successors and assigns, "Lessee") and FIRST INTERSTATE BANK OF OREGON,
N.A. (formerly known as First National Bank of Oregon), a national banking
association, as trustee (herein, together with its permitted successors and
assigns, "Lessor") under a Trust Agreement dated as of September 1, 1979,
between it and the Owner Participant named therein.
INTRODUCTION
Lessee and Lessor have heretofore entered into a Lease Agreement dated
as of September 1, 1979, as supplemented by Lease Supplement No. 1 dated
November 7, 1979 and Lease Supplement No. 2 dated January 23, 1980 (herein, as
heretofore supplemented in accordance with the provisions thereof, the "Lease").
Capitalized terms not otherwise defined herein have the meanings ascribed to
them in the Lease.
The Owner Participant is refinancing the indebtedness originally
incurred to finance a portion of Lessor's Cost of the Equipment subject to the
Lease and, in connection therewith, the Lessor and Lessee desire to amend the
Lease as herein provided.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, and pursuant to Section 3 of the Lease, Lessor and
Lessee hereby agree as follows:
1. The following terms defined in Section 1 of the Lease are amended
as follows:
(a) Each of the following terms is amended by changing the reference
to "Participation Agreement" in the definition thereof to "Note Agreement":
"Indenture" "Operative Documents"
"Lease Assignment" "Participants"
"Loan Participants" "Secured Notes"
(b) The term "Descriptive Warranty" is amended to read in its entirety
as follows:
"Descriptive Warranty" shall have the meaning specified in either the
Participation Agreement or Note Agreement as appropriate.
(c) The term "Stipulated Loss Value" is amended by changing the
reference to "premium" in the first and last sentences of the definition thereof
to "Make-Whole Amount."
(d) The term "Termination Value" is amended by changing the reference
to "premium" in the first and third sentences of the definition thereof to
"Make-Whole Amount."
(e) The definition of the term "Stipulated Interest Rate" is hereby
amended in its entirety to read as follows:
"Stipulated Interest Rate" shall mean (i) at all times prior
to the Purchase Date (as defined in the Note Agreement), 11.20% per
annum and (ii) on and after the Purchase Date, 8.49%, in each case
computed on the basis of a 360-day year of 12 30-day months.
(f) The following additional terms in appropriate alphabetical order:
"Make-Whole Amount" shall have the meaning specified in the
Indenture.
"Note Agreement" shall mean the Note Purchase Agreement dated as
of January 26, 1993 among the Lessee, the Owner Participant, the Loan
Participant, the Lessor and the Indenture Trustee, as the same may be
amended, modified or supplemented from time to time in accordance with
the provisions thereof and of the Indenture.
2. Section 4(b) of the Lease is amended to read in its entirety as
follows:
(b) On the date hereof Lessee shall pay to Lessor $17,885.69,
representing Basic Rent for the period from January 23, 1993 to and
including the date hereof. Lessee shall pay to Lessor Basic Rent in 24
semiannual installments on the Semiannual Rent Payment Dates during
the Basic Term, commencing on July 23, 1993, each in an amount equal
to that percentage of Lessor's Cost set opposite the applicable
Semiannual Rent Payment Date in Schedule 1 (subject to adjustment as
provided in the Participation Agreement and the Note Agreement);
provided, however, that the amount of Basic Rent payable on any
Semiannual Rent Payment Date shall in no event be less than the
aggregate amount of the regularly scheduled installments of principal
and interest due and payable on the Secured Notes on such Semiannual
Rent Payment Date.
-2-
3. Sections 4(c), 4(d), 4(e), 4(f) and 25 of the Lease are amended by
inserting immediately following the words "Participation Agreement" wherever
they occur the phrase "or the Note Agreement."
4. Section 14(a)(i) of the Lease is amended by inserting immediately
following the words "Participation Agreement" the phrase ", Article XII of the
Note Agreement."
5. Section 28 of the Lease is amended by deleting the word
"Participation" in clause (e) thereof and inserting the word "Note" therefor.
6. Schedules 1, 2 and 3 to the Lease are amended to read in their
entirety as set forth in Schedules 1, 2 and 3 to this Lease Supplement No. 3.
7. No Default has occurred or is continuing.
8. This Lease Supplement is supplemental to the Lease. As supplemented
and amended by this Lease Supplement, the Lease is in all respects ratified,
approved and confirmed, and the Lease and this Lease Supplement shall together
constitute one and the same instrument.
9. CONCURRENTLY WITH THE EXECUTION OF THIS LEASE SUPPLEMENT, THE LEASE
AS AMENDED HEREBY HAS BEEN ASSIGNED TO AND IS SUBJECT TO A SECURITY INTEREST IN
FAVOR OF UNITED STATES NATIONAL BANK OF OREGON, INDENTURE TRUSTEE, UNDER AND TO
THE EXTENT SET FORTH IN THE INDENTURE AND FIRST DEED OF TRUST DATED AS OF
JANUARY 26, 1993, BETWEEN FIRST INTERSTATE BANK OF OREGON, AS OWNER TRUSTEE, AND
UNITED STATES NATIONAL BANK OF OREGON, AS INDENTURE TRUSTEE, AS SUCH INDENTURE
AND FIRST DEED OF TRUST MAY BE AMENDED, MODIFIED, OR SUPPLEMENTED FROM TIME TO
TIME IN ACCORDANCE WITH THE PROVISIONS THEREOF. THE LEASE HAS BEEN EXECUTED IN
SEVERAL COUNTERPARTS. ONLY THE ORIGINAL COUNTERPART CONTAINING THE RECEIPT
THEREFOR EXECUTED BY UNITED STATES NATIONAL BANK OF OREGON ON THE SIGNATURE PAGE
THEREOF EVIDENCES THE MONETARY OBLIGATIONS OF THE LESSEE THEREUNDER. SEE SECTION
27 OF THE LEASE FOR FURTHER INFORMATION CONCERNING THE RIGHTS OF THE HOLDERS OF
THE OTHER COUNTERPARTS HEREOF.
10. This Lease Supplement is being executed in more than one
counterpart, each of which shall be deemed original, but all such counterparts
shall together constitute but one and the same instrument. Each counterpart has
been prominently marked to identify the party to whom originally delivered. Only
the counterpart marked "Lessor's Copy" and containing the receipt therefor
executed by Indenture Trustee on the signature page thereof shall evidence the
monetary obligations of Lessee hereunder and thereunder. To the extent, if any,
that this Lease
-3-
Supplement constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease Supplement may be created by the transfer or possession
of any counterpart thereof other than the counterpart marked "Lessor's Copy" and
containing the receipt therefor executed by Indenture Trustee on or immediately
following the signature page thereof.
11. Owner Trustee is entering into this Lease Supplement No. 3 in its
fiduciary capacity under the Trust Agreement and shall have no personal
liability hereunder except as expressly provided in the Lease or the Trust
Agreement.
-4-
IN WITNESS WHEREOF, Lessee and Lessor have caused this Lease
Supplement to be duly executed and their corporate seals to be hereunto affixed
and attested by their respective officers thereunto duly authorized the day and
year first above written.
PORTLAND GENERAL ELECTRIC COMPANY,
as Lessee,
By: /s/ Steven N. Elliott
--------------------------
Title: Assistant Treasurer
[Seal]
Attest:
/s/ Steven F. McCarrel
- ---------------------------------
Title: Assistant Secretary
FIRST INTERSTATE BANK OF OREGON, N.A.
as Owner Trustee and Lessor,
By: /s/ C. Plouf
--------------------------
Title: Trust Officer
By: /s/ George Beeman
--------------------------
Title: Assistant Vice President
*Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this 26th day of January, 1993.
UNITED STATES NATIONAL BANK OF
OREGON, as Indenture Trustee,
By: /s/ B. Carrick
--------------------------
Title: Trust Officer
*This language in the original counterpart only.
ACKNOWLEDGEMENTS TO LEASE SUPPLEMENT NO. 3
STATE OF OREGON )
) ss.:
COUNTY OF MULTNOMAH, )
The foregoing instrument was acknowledged before me this 25th day of
January, 1993, by Steven N. Elliott, an Assistant Treasurer of Portland General
Electric Company, an Oregon corporation on behalf of the corporation.
/s/ Marlea M. Barnes
--------------------------
Notary Public
(Official Seal)
STATE OF OREGON )
) ss.:
COUNTY OF MULTNOMAH, )
The foregoing instrument was acknowledged before me this 25th day of
January, 1993, by C. Plouf and George Beeman, a Trust Officer and Assistant Vice
President, respectively, of First Interstate Bank of Oregon, N.A., a national
banking association, on behalf of the association.
/s/ Marlea M. Barnes
--------------------------
Notary Public
(Official Seal)
SCHEDULE 1
TO
LEASE AGREEMENT
BASIC RENT
Rental Date Rent Amount % of Cost
----------- ----------- ---------
July 23, 1993 749652.81 1.90753293
January 23, 1994 2467039.59 6.27751833
July 23, 1994 698518.49 1.77741884
January 23, 1995 2530879.89 6.43996348
July 23, 1995 632074.44 1.60834827
January 23, 1996 2597323.95 6.60903405
July 23, 1996 573419.53 1.45909764
January 23, 1997 2655987.85 6.75828468
July 23, 1997 515421.54 1.31151854
January 23, 1998 2713976.84 6.90586378
July 23, 1998 457965.30 1.16531798
January 23, 1999 2772429.81 7.05460057
July 23, 1999 401040.54 1.02046976
January 23, 2000 3546001.93 9.02299752
July 23, 2000 324690.48 0.82619285
January 23, 2001 3622351.98 9.21727443
July 23, 2001 254758.93 0.64824814
January 23, 2002 3692283.54 9.39521914
July 23, 2002 185045.09 0.47085743
January 23, 2003 3761997.38 9.57260985
July 23, 2003 114620.36 0.29165782
January 23, 2004 3832422.11 9.75180946
July 23, 2004 550256.91 1.40015906
January 23, 2005 3385821.55 8.61540970
-7-
SCHEDULE 2
TO
LEASE AGREEMENT
STIPULATED LOSS VALUES
The Stipulated Loss Value of the Equipment as of any Semiannual Rent
Payment Date shall mean the product derived from multiplying (i) the percentage
figure opposite such Semiannual Rent Payment Date set forth in the table
appearing below by (ii) Lessor's Cost for the Equipment.
Semiannual Rent Payment Date Percentage of Lessor's Cost
- ---------------------------- ---------------------------
January 23, 1993 91.44643827
July 23, 1993 91.76955339
January 23, 1994 87.73287740
July 23, 1994 88.03468599
January 23, 1995 83.71119552
July 23, 1995 84.07722636
January 23, 1996 79.49944474
July 23, 1996 79.88920055
January 23, 1997 75.05479610
July 23, 1997 75.47153923
January 23, 1998 70.38627077
July 23, 1998 70.83296751
January 23, 1999 65.50007049
July 23, 1999 65.97990512
January 23, 2000 58.58439148
July 23, 2000 59.07289152
January 23, 2001 51.35902936
July 23, 2001 51.88527709
January 23, 2002 43.87329155
July 23, 2002 44.44174308
January 23, 2003 36.13658475
July 23, 2003 36.75494320
January 23, 2004 28.15559565
July 23, 2004 27.59925144
January 23, 2005 20.00000000
-8-
SCHEDULE 3
TO
LEASE AGREEMENT
TERMINATION VALUES
The Termination Value as of a particular Semiannual Rent Payment Date
shall mean the product derived from multiplying (i) the percentage figure
opposite such Semiannual Rent Payment Date set forth in the table appearing
below and (ii) Lessor's Cost for the Equipment.
Semiannual Rent Payment Date Percentage of Lessor's Cost
- ---------------------------- ---------------------------
January 23, 1993 83.87284472
July 23, 1993 83.87284472
January 24, 1994 79.53519038
July 23, 1994 79.53519038
January 23, 1995 74.87264573
July 23, 1995 74.87264573
January 23, 1996 69.88565472
July 23, 1996 69.88565472
January 23, 1997 64.60592135
July 23, 1997 64.60592135
January 23, 1998 59.03645502
July 23, 1998 59.03645502
January 23, 1999 53.17744861
July 23, 1999 53.17744861
January 23, 2000 45.21059248
July 23, 2000 45.21059248
January 23, 2001 36.87577458
July 23, 2001 36.87577458
January 23, 2002 28.19124512
July 23, 2002 28.19124512
January 23, 2003 19.15783909
July 23, 2003 19.15783909
January 23, 2004 9.77010606
July 23, 2004 8.45788033
January 23, 2005 0.00000000
-9-
LEASE SUPPLEMENT NO. 4
LEASE SUPPLEMENT NO. 4, dated as of September 1, 1994, between PORTLAND
GENERAL ELECTRIC COMPANY, an Oregon corporation (herein, together with its
permitted successors and assigns, "Lessee") and FIRST INTERSTATE BANK OF OREGON,
N.A. (formerly known as First National Bank of Oregon), a national banking
association, as trustee (herein, together with its permitted successors and
assigns, "Lessor") under a Trust Agreement dated as of September 1, 1979,
between it and the Owner Participant named therein.
WHEREAS, Lessee and Lessor have heretofore entered into a Lease Agreement
dated as of September 1, 1979, as supplemented by Lease Supplement No. 1 dated
November 7, 1979, Lease Supplement No. 2 dated January 23, 1980 and Lease
Supplement No. 3 dated January 26, 1993 (herein, as heretofore supplemented in
accordance with the provisions thereof, the "Lease"). Capitalized terms not
otherwise defined herein have the meanings ascribed to them in the Lease.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, and pursuant to Section 29(b) of the Lease, Lessor and
Lessee hereby agree as follows:
1. The last paragraph of Section 9(a) of the Lease is amended to read in
its entirety as follows:
"All the foregoing insurance policies shall be subject to such
deductible amounts and retentions as are usual and customary for companies
similarly situated; provided, however, that such deductible amounts and
retentions shall not exceed the following amounts specified with respect to
such policies:
(1) Fire and Extended Coverage.......................... $ 2,000,000;
(2) Public Liability ................................... $ 5,000,000;
(3) Workers' Compensation Insurance..................... $ 2,000,000;
provided further, however, that each such policy shall be in an amount
sufficient to prevent Lessor, Lessee or the Indenture Trustee from becoming
a coinsurer of any loss under such policy. Lessee agrees that all such
insurance may be maintained in effect for the term thereof by Lessor or
Indenture Trustee, at Lessee's cost and expense, if Lessee shall fail to do
so."
2. No Default has occurred or is continuing.
3. This Lease Supplement is supplemental to the Lease. As supplemented and
amended by this Lease Supplement, the Lease is in all respects ratified,
approved and confirmed, and the Lease
and this Lease Supplement shall together constitute one and the same instrument.
4. This Lease Supplement may be executed in more than one counterpart, each
of which shall be deemed original, but all such counterparts shall together
constitute but one and the same instrument.
5. Owner Trustee is entering into this Lease Supplement No. 4 in its
fiduciary capacity under the Trust Agreement and shall have no personal
liability hereunder except as expressly provided in the Lease or the Trust
Agreement.
IN WITNESS WHEREOF, Lessee and Lessor have caused this Lease Supplement to
be to be duly executed by their respective officers thereunto duly authorized.
PORTLAND GENERAL ELECTRIC COMPANY,
as Lessee,
By: /s/
----------------------------------
Title: Assistant Treasurer
FIRST INTERSTATE BANK OF OREGON, N.A.
as Owner Trustee and Lessor,
By: /s/
----------------------------------
Title: Trust Officer
By: /s/
----------------------------------
Title: Vice President
ACKNOWLEDGMENTS TO LEASE SUPPLEMENT NO. 4
STATE OF OREGON )
) ss.:
COUNTY OF MULTNOMAH, )
The foregoing instrument was acknowledged before me this 20th day of Sept.,
1994, by Steven N. Elliott, an Assistant Treasurer of Portland General Electric
Company, an Oregon corporation on behalf of the corporation.
OFFICIAL SEAL /s/ Bonnie D. Rushing
BONNIE D. RUSHING --------------------------------
NOTARY PUBLIC-OREGON Notary Public
COMMISSION NO. A011356
MY COMMISSION EXPIRES DEC. 10, 1995 (Official Seal)
STATE OF OREGON )
) ss.:
COUNTY OF MULTNOMAH, )
The foregoing instrument was acknowledged before me this 23 day of Sept.,
1994 by C.P. Plouf and E. Beeman, a Trust Officer and Assistant Vice President,
respectively, of First Interstate Bank of Oregon, N.A., a national banking
association, on behalf of the association.
/s/ Dattie I. Endicott
--------------------------------
Notary Public
(Official Seal)
OFFICIAL SEAL
BONNIE D. RUSHING
NOTARY PUBLIC-OREGON
COMMISSION NO. 868549
MY COMMISSION EXPIRES AUG. 03, 1995
Consented:
FIRST BANK NATIONAL ASSOCIATION
DBA First Trust Oregon, as Indenture Trustee,
By:___________________________
Title: Trust Officer
WESTERN AMERICAN FINANCIAL, INC.,
as Owner Participant
By:___________________________
Title:________________________
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY, as Loan Participant
By:___________________________
Title:________________________
the Principal
Financial Principal Mutual
Group Life Insurance Company
October 4, 1994
Mr. Mahendra Shah
Portland General Electric
121 SW Salmon Street, 1WTC-0403
Portland, Oregon 97204
RE Boardman Coal Handling Equipment Lease
Dear Mr. Shah
Per your request, please find the enclosed signature pages for Lease Supplement
No. 4.
Sincerely
/s/ Scott A. Bennett
Scott A. Bennett
Investment Manager
Investment-Securities
(515) 248-3129
SAB:mlw
cc Sonia Delen
Bruce Carrick
Colleen Plouf
Enclosure
Consented:
FIRST BANK NATIONAL ASSOCIATION
DBA First Trust Oregon, as Indenture Trustee,
By:___________________________
Title: Trust Officer
WESTERN AMERICAN FINANCIAL, INC.,
as Owner Participant
By:___________________________
Title:________________________
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY, as Loan Participant
By: /s/ James K. Hovey
----------------------------------
Title: Director-Securities Investment
-------------------------------
By: /s/ Christopher J. Henderson
----------------------------------
Title: Counsel
-------------------------------
BA
Bank of America
October 21, 1994
Mr. Mahendra Shah
Portland General Electric
121 S. W. Slamon STreet, 1WTC-0403
Portland, Oregon 97204
Subject: Boardman Coal Handling Equipment Lease
Dear Mr. Shah:
Per your request, enclosed is the executed signature page for Lease Supplement
No. 4.
Sincerely,
WESTERN AMERICAN FINANCIAL, INC.
/s/ Sonia T. Delen
Sonia T. Delen
Assistant Vice President
cc: Scott Bennett
Bruce A. Carrick
Colleen Plouf
Enclosure
Consented:
FIRST BANK NATIONAL ASSOCIATION
DBA First Trust Oregon, as Indenture Trustee,
By:___________________________
Title: Trust Officer
WESTERN AMERICAN FINANCIAL, INC.,
as Owner Participant
By: /s/
----------------------------
Title: Assistant Vice President
------------------------
By: /s/
----------------------------
Title: Assistant Vice President
------------------------
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY, as Loan Participant
By:___________________________
Title:________________________
First Trust Oregon
1000 S.W. Broadway
Suite 1750
Portland, OR 97205
October 17, 1994
Mr. Mahendra Shah
Portland General Electric
121 S.W. Salmon Street, 1WTC-0403
Portland, Oregon 97204
RE Boardman Coal Handling Equipment Lease
Dear Mr. Shah:
Per your request, please find the enclosed signature page for Lease Supplement
No. 4.
Sincerely,
/s/ Bruce A. Carrick
Bruce A. Carrick, CCTS
Trust Officer
cc Scott A. Bennett
Coleen Plouf
Sonia Delen
Enclosure
Consented:
FIRST BANK NATIONAL ASSOCIATION
DBA First Trust Oregon, as Indenture Trustee,
By: /s/
---------------------------
Title: Trust Officer
WESTERN AMERICAN FINANCIAL, INC.,
as Owner Participant
By:___________________________
Title:________________________
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY, as Loan Participant
By:___________________________
Title:________________________
LEASE SUPPLEMENT NO. 5
THIS LEASE SUPPLEMENT NO. 5, dated as of April 30, 2004, is by and between
Portland General Electric Company, an Oregon corporation (herein, together with
its permitted successors and assigns, "Lessee"), and Wells Fargo Bank Northwest,
N.A. (successor to First Interstate Bank of Oregon, N.A., formerly known as
First National Bank of Oregon), a national banking association, not in its
individual capacity but solely as trustee (herein, together with its permitted
successors and assigns "Lessor"), under a Trust Agreement dated as of September
1, 1979 between Lessor and the Owner Participant named therein (as amended from
time to time, the "Trust Agreement").
WHEREAS, Lessee and Lessor entered into a Lease Agreement dated as of
September 1, 1979, as supplemented by Lease Supplement No. 1 dated November 7,
1979, Lease Supplement No. 2 dated January 23, 1980, Lease Supplement No. 3
dated January 26, 1993, Lease Supplement No. 4 dated as of September 1, 1994 and
as supplemented by this Lease Supplement No. 5 (the "Lease"). Capitalized terms
not otherwise defined herein have the meanings ascribed to them in the Lease;
and
WHEREAS, pursuant to Section 19 and 28 of the Lease Lessee has exercised
its option to renew the Lease for an initial renewal period of five years
commencing upon expiration of the Basic Term.
WHEREAS, Lessee and Lessor desire to memorialize such renewal of the Lease.
NOW, THEREFORE, in consideration of the promises set forth herein, the
parties hereby agree as follows:
1. Pursuant to Section 19 of the Lease, the Lease shall be renewed for an
additional five years (the "Initial Renewal Period") which Initial Renewal
Period shall commence at the expiration of the Basic Term.
2. Basic Rent during the Initial Renewal Period shall be as set forth
below, and Lessee agrees to pay such Basic Rent on the dates set forth opposite
each payment of Basic Rent:
Date Basic Rent
---- ----------
July 23, 2005 $831,790.74
January 23, 2006 $831,790.74
July 23, 2006 $831,790.74
January 23, 2007 $831,790.74
July 23, 2007 $831,790.74
January 23, 2008 $831,790.74
July 23, 2008 $831,790.74
January 23, 2009 $831,790.74
July 23, 2009 $831,790.74
January 23, 2010 $831,790.74
3. Lessee and Lessor agree to the following amounts as the Stipulated Loss
Value during the Initial Renewal Period on the dates set forth opposite each
amount of the Stipulated Loss Value:
Stipulated
----------
Date Loss Value
---- ----------
July 23, 2005 $7,859,920
January 23, 2006 $7,859,920
July 23, 2006 $7,859,920
January 23, 2007 $7,859,920
July 23, 2007 $7,859,920
January 23, 2008 $7,859,920
July 23, 2008 $7,859,920
January 23, 2009 $7,859,920
July 23, 2009 $7,859,920
January 23, 2010 $7,859,920
4. No Default has occurred or is continuing.
5. This instrument is supplemental to the Lease. As supplemented and
amended by this instrument, the Lease is in all respects ratified, approved and
confirmed, and the Lease and this instrument shall together constitute one and
the same instrument.
6. This instrument is being executed in more than one counterpart, each of
which shall be deemed an original, but all such counterparts shall together
constitute but one and the same instrument. Each counterpart has been
prominently marked to identify the party to whom originally delivered. Only the
counterpart marked "Lessor's Copy" and containing the receipt therefore executed
by Indenture Trustee on the signature page thereof shall evidence the monetary
obligations of Lessee hereunder and thereunder. To the extent, if any, that this
instrument constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this instrument may be created by the transfer or possession of any
counterpart thereof other than the counterpart marked "Lessor's Copy" and
containing the receipt therefore executed by Indenture Trustee on or immediately
following the signature page thereof.
7. Lessor is entering into this instrument in its fiduciary capacity under
the Trust Agreement and shall have no personal liability hereunder except as
expressly provided in the Lease or the Trust Agreement.
8. This instrument shall be governed by and construed in accordance with
the laws of the State of Oregon, without principles of conflicts of laws.
[SIGNATURES ON FOLLOWING PAGE]
2
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed under seal by their respective officers thereunto duly authorized.
PORTLAND GENERAL, ELECTRIC
COMPANY, as Lessee
By /s/ James L. Piro
-----------------------------------------------
Title: EVP & CFO
--------------------------------------------
WELLS FARGO BANK NORTHWEST, N.A.,
not in its individual capacity but solely as trustee
and as Lessor
By
-----------------------------------------------
Title:
--------------------------------------------
[Signature Page to Lease Supplement No. 5]
3
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed under seal by their respective officers thereunto duly authorized.
PORTLAND GENERAL, ELECTRIC
COMPANY, as Lessee
By
-----------------------------------------------
Title:
--------------------------------------------
WELLS FARGO BANK NORTHWEST, N.A.,
not in its individual capacity but solely as trustee
and as Lessor
By /s/ Michael D. Hoggan
-----------------------------------------------
Title: MICHAEL D. HOGGAN
--------------------------------------------
VICE PRESIDENT
[Signature Page to Lease Supplement No. 5]
3
IN WITNESS WHEREOF, the parties hereto have consented to this instrument.
U.S. BANK NATIONAL ASSOCIATION, not
in its individual capacity but
solely as Indenture Trustee
By /s/ Linda A. McConkey
---------------------------------------
Title: Vice President
------------------------------------
ICON/BOARDMAN FACILITY LLC, as Owner
Participant
By: ICON Cash Flow Partners L.P. Seven
XCON Cash Flow Partners L.P. Six
ICON Cash Flow Partners L.P. Series C
ICON Income Fund Eight A L.P.,
its sole members
By: ICON Capital Corp, each such entity's
general partner
By
---------------------------------------
Title:
------------------------------------
PRINCIPAL LIFE INSURANCE COMPANY,
as Loan Participant
By: Principal Global Investors, LLC
a Delaware limited liability company,
its authorized signatory
By
---------------------------------------
Title:
------------------------------------
By
---------------------------------------
Title:
------------------------------------
[Signature Page to Lease Supplement No. 5]
4
IN WITNESS WHEREOF, the parties hereto have consented to this instrument.
U.S. BANK NATIONAL ASSOCIATION, not
in its individual capacity but
solely as Indenture Trustee
By
---------------------------------------
Title:
------------------------------------
ICON/BOARDMAN FACILITY LLC, as Owner
Participant
By: ICON Cash Flow Partners L.P. Seven
ICON Cash Flow Partners L.P. Six
ICON Cash Flow Partners L.P. Series C
ICON Income Fund Eight A L.P.,
its sole members
By: ICON Capital Corp, each such entity's
general partner
By /s/ Paul B. Weiss
---------------------------------------
Title: President
------------------------------------
PRINCIPAL LIFE INSURANCE COMPANY,
as Loan Participant
By
---------------------------------------
Title:
------------------------------------
By
---------------------------------------
Title:
------------------------------------
[Signature Page to Lease Supplement No. 5]
4
IN WITNESS WHEREOF, the parties hereto have consented to this instrument.
U.S. BANK NATIONAL ASSOCIATION, not
in its individual capacity but
solely as Indenture Trustee
By
---------------------------------------
Title:
------------------------------------
ICON/BOARDMAN FACILITY LLC, as Owner
Participant
By: ICON Cash Flow Partners L.P. Seven
ICON Cash Flow Partners L.P. Six
ICON Cash Flow Partners L.P. Series C
ICON Income Fund Eight A L.P.,
its sole members
By ICON Capital Corp, each such entity's
general partner
By
---------------------------------------
Title:
------------------------------------
PRINCIPAL LIFE INSURANCE COMPANY,
as Loan Participant
By: Principal Global Investors, LLC
a Delaware limited liability company,
its authorized signatory
By /s/ Jon G. Heiny
---------------------------------------
Title: JON G. HEINY, COUNSEL
------------------------------------
By /s/ Stephen G. Skrivanek
---------------------------------------
Title: STEPHEN G. SKRIVANEK, COUNSEL
------------------------------------
[Signature Page to Lease Supplement No. 5]
4
CONSENT AND ACKNOWLEDGEMENT
Reference is hereby made to (i) that certain Facilities Agreement dated as
of September 1, 1979 by and among Portland General Electric Company, an Oregon
corporation ("Lessee"), Power Resources Cooperative (then known as Pacific
Northwest Generating Company), an Oregon cooperative corporation, Idaho Power
Company, a Maine corporation ("IPC"), The Boardman Power Company, an Oregon
corporation, and First National Bank of Oregon, a national banking association,
as owner trustee (the "1979 Facilities Agreement"), as amended by a First
Amendment to Facilities Agreement dated as of January 26, 1993 (the "Facilities
Amendment") by and among the same parties (or their successors and assigns) (the
1979 Facilities Agreement as so amended, the "Facilities Agreement"), and (ii)
an Assumption and Option Agreement dated as of September 1, 1979 by and among
Lessee, Western America Financial, Inc., a Delaware corporation, as the owner
participant, certain financial institutions listed on Schedule I thereto, as the
loan participants, First National Bank of Oregon, a national banking
association, as owner trustee, United States National Bank of Oregon, a national
banking association, as indenture trustee and IPC (the "1979 Assumption
Agreement"), as amended by a First Amendment to Assumption and Option Agreement
dated as of January 26, 1993 (the "Assumption Amendment") by and among the same
parties (or their successors and assigns) (the 1979 Assumption Agreement as so
amended, the "Assumption Agreement"; and together with the Facilities Agreement
the "Agreements"). Capitalized terms used but not defined herein shall have the
meanings as set forth in the Agreements.
WHEREAS, Lessee has exercised its option to extend the Lease for an
additional five years (the "Lease Renewal") and Owner Trustee and ICON/Boardman
Facility LLC, the current owner participant ("Owner Participant"), have elected
to finance the proceeds of such Lease Renewal with Loan Participant by selling
to Principal Life Insurance Company ("Loan Participant") new secured notes (the
"2004 Secured Notes") pursuant to a new Note Purchase Agreement dated April 30,
2004 (the "2004 Note Purchase Agreement") among Owner Participant, Loan
Participant, Wells Fargo Bank Northwest, N.A., successor to First Interstate
Bank of Oregon, N.A. (f/k/a First National Bank of Oregon) ("Owner Trustee") and
U.S. Bank National Association, Indenture Trustee, which will be used to repay
the Secured Notes issued pursuant to the Note Agreement; and
WHEREAS, in order to secure the 2004 Secured Notes, Owner Trustee and
Indenture Trustee have executed and delivered an Amended and Restated Indenture
and First Deed of Trust dated as of April 30, 2004 (the "2004 Indenture")
pursuant to which Owner Trustee has assigned and mortgaged its interests under
the Facilities Agreement in the same manner as was done under and in accordance
with the Indenture (the "2004 Assignment");
NOW, THEREFORE, based on the foregoing and the mutual agreements set forth
below:
1. Portland General Electric Company, Idaho Power Company, an Idaho
corporation (successor to Idaho Power Company, a Maine corporation), and Power
Resources Cooperative (formerly known as Pacific Northwest Generating Company)
("Grantors") hereby (i) consent to the 2004 Assignment, (ii) waive any provision
of Section 10(F) of the Facilities Agreement to the extent that any such
provision would prohibit the Assignment, (iii) agree that the Agreements
-2-
may be amended so as to give effect to the 2004 Assignment mutatis mutandis, and
(iv) agree that the Agreements are otherwise ratified, approved and confirmed.
2. Indenture Trustee and Loan Participant hereby agree that (i) they
benefit from the rights and are bound by the obligations of the "Indenture
Trustee" and the "Loan Participant" under the Agreements and (ii) the Agreements
and rights, interests and estate of the Grantors as set forth in the Agreements
shall remain in full force and effect at the date hereof and following any
amendments thereof, except as waived hereby.
This instrument may be executed in one or more 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 instrument.
[SIGNATURES ON FOLLOWING PAGE]
-3-
PORTLAND GENERAL ELECTRIC IDAHO POWER COMPANY
COMPANY
By: /s/ James L. Piro By:
----------------------------- -----------------------------
Its: EVP & CFO Its:
---------------------------- -----------------------------
POWER RESOURCES COOPERATIVE U.S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee
By: By:
----------------------------- -----------------------------
Its: Its:
---------------------------- -----------------------------
PRINCIPAL LIFE INSURANCE COMPANY
By: Principal Global Investors, LLC
a Delaware limited liability company,
its authorized signatory
By:
-----------------------------
Its:
-----------------------------
By:
-----------------------------
Its:
-----------------------------
[Signature Page to Consent and Acknowledgment]
-3-
PORTLAND GENERAL ELECTRIC IDAHO POWER COMPANY
COMPANY
By: By: /s/
----------------------------- -----------------------------
Its: Its: VP Power Supply
---------------------------- -----------------------------
POWER RESOURCES COOPERATIVE U.S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee
By: By:
----------------------------- -----------------------------
Its: Its:
---------------------------- -----------------------------
PRINCIPAL LIFE INSURANCE COMPANY
By: Principal Global Investors, LLC
a Delaware limited liability company,
its authorized signatory
By:
-----------------------------
Its:
-----------------------------
By:
-----------------------------
Its:
-----------------------------
[Signature Page to Consent and Acknowledgment]
-3-
PORTLAND GENERAL ELECTRIC IDAHO POWER COMPANY
COMPANY
By: By:
----------------------------- -----------------------------
Its: Its:
---------------------------- -----------------------------
POWER RESOURCES COOPERATIVE U.S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee
By: /s/ By:
----------------------------- -----------------------------
Its: Exec VP & General Manager Its:
---------------------------- -----------------------------
PRINCIPAL LIFE INSURANCE COMPANY
By: Principal Global Investors, LLC
a Delaware limited liability company,
its authorized signatory
By:
-----------------------------
Its:
-----------------------------
By:
-----------------------------
Its:
-----------------------------
[Signature Page to Consent and Acknowledgment]
-3-
PORTLAND GENERAL ELECTRIC IDAHO POWER COMPANY
COMPANY
By: By:
----------------------------- -----------------------------
Its: Its:
---------------------------- -----------------------------
POWER RESOURCES COOPERATIVE U.S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee
By: By: Linda A. McConkey
----------------------------- -----------------------------
Its: Its: Vice President
---------------------------- -----------------------------
PRINCIPAL LIFE INSURANCE COMPANY
By: Principal Global Investors, LLC
a Delaware limited liability company,
its authorized signatory
By:
-----------------------------
Its:
-----------------------------
By:
-----------------------------
Its:
-----------------------------
[Signature Page to Consent and Acknowledgment]
-3-
PORTLAND GENERAL ELECTRIC IDAHO POWER COMPANY
COMPANY
By: By:
----------------------------- -----------------------------
Its: Its:
---------------------------- -----------------------------
POWER RESOURCES COOPERATIVE U.S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee
By: By:
----------------------------- -----------------------------
Its: Its:
---------------------------- -----------------------------
PRINCIPAL LIFE INSURANCE COMPANY
By: Principal Global Investors, LLC
a Delaware limited liability company,
its authorized signatory
By: Jon G. Heiny
-----------------------------
Its: JON G. HEINY, COUNSEL
-----------------------------
By: /s/ Stephen G. Skrivanek
-----------------------------
Its: STEPHEN G. SKRIVANEK, Counsel
-----------------------------
[Signature Page to Consent and Acknowledgment]
Western America Financial, Inc.
c/o BankAmerica Leasing & Capital Group
555 California Street - Fourth Floor
San Francisco, California 94104
November 30, 1998
VIA FAX 503-220-0012
- --------------------
To each of the Addressees on Schedule 1:
Re: Notice of Proposed Transfer of Owner Participant's Interest
Gentlepersons:
Reference is made to that certain Note Purchase Agreement dated as of
January 26, 1993 (the "Note Purchase Agreement") among Portland General Electric
Company, as Lessee, Western America Financial, Inc., as Owner Participant,
Principal Life Insurance Company (f/k/a Principal Mutual Life Insurance
Company), as Loan Participant, Wells Fargo Bank National Association, as
successor to First National Bank of Oregon and First Interstate Bank of Oregon,
as Owner Trustee, and U.S. Bank Trust National Association (f/k/a United States
National Bank of Oregon), as Indenture Trustee. Unless otherwise indicated
herein, capitalized terms used herein have the meanings specified in the Note
Purchase Agreement.
Notice is hereby given, pursuant to Article XI of the Note Purchase
Agreement, Article XIII of the Participation Agreement, Article XII of the Trust
Agreement, and Section 10 of the Facilities Agreement, that Owner Participant
proposes to sell and transfer one hundred percent (100%) of its right, title and
interest in and to the Trust Estate, the properties of Owner Participant
mortgaged as part of the Trust Indenture Estate, and under the Participation
Agreement and all other Operative Documents to ICON/Boardman Facility LLC
("ICON"), a Delaware limited liability company consisting of the following four
members: ICON Income Fund Eight A L.P., ICON Cash Flow Partners L.P. Seven, ICON
Cash Flow Partners L.P. Six, and ICON Cash Flow Partners L.P. Series C
(collectively, the "Members"). The Members will jointly and severally guaranty
the obligations assumed by ICON under the Operative Documents. The aggregate
capital and surplus of the Members exceeds the $100,000,000 amount required
under Section 13.02(a) of the Participation Agreement.
The proposed transfer to ICON is anticipated to close effective on or
after November 20, 1998. ICON's address is c/o ICON Capital Corp., 600
Mamaroneck Avenue, Harrison, New York 10528.
As required under Section 11.01 of the Note Purchase Agreement,
Section 12.01 of the Trust Agreement, Section 13.02 of the Participation
Agreement, and Section 10(D) and (E) of the Facilities Agreement, effective upon
the transfer ICON will agree to be bound by all of the terms of, and to assume
all of the obligations of Owner Participant arising under, each of the Operative
Documents from and after such effective date, and will have satisfied the other
requirements of a transferee under those sections.
Please acknowledge your receipt of the foregoing Notice and your
consent to the proposed transfer (subject to your review of the actual transfer
documents) by signing the enclosed copy of this Notice where indicated below,
and returning it via fax to Tom McCart at BankAmerica Leasing & Capital Group
(fax #: 415-765-1817) and returning a copy to the undersigned in the enclosed
return envelope. If you have any questions, you may call Tom McCart at (415)
765-1828.
Very truly yours,
Western America Financial, Inc.
By:
Name: Terri L. Kwiatek
Title: Senior Vice President
Acknowledged and Consented to:
Portland General Electric Company, as Lessee
By:_______________________________
Its_______________________________
Wells Fargo Bank National Association, as successor to First National Bank of
Oregon and First Interstate Bank of Oregon, as Owner Trustee
By:_______________________________
Its_______________________________
U.S. Bank Trust National Association (f/k/a United States National Bank of
Oregon, as Indenture Trustee
By:_______________________________
Its_______________________________
Principal Life Insurance Company (f/k/a Principal Mutual Life Insurance
Company), as Loan Participant
By:_______________________________
Its_______________________________
SCHEDULE 1
TO
NOTICE OF PROPOSED TRANSFER BY OWNER PARTICIPANT
Mahendra Shah
Portland General Electric Company
121 S.W. Salmon Street
Portland, OR 97204
Phone #: 503-464-7087
Fax #: 503-464-2236
Kevin Gasper
Wells Fargo Bank National Association, as successor to First National Bank of
Oregon and First Interstate Bank of Oregon
999 Third Avenue-Sixth Floor
Seattle, WA 98104
Phone #: 206-343-6459
Fax #: 206-292-3682
Linda McConkey
Assistant Vice President
U.S. Bank Trust National Association (f/k/a United States National Bank of
Oregon) 555 SW Oak Street, PL-6
Portland, OR 97204
Phone #: 503-220-0007
Fax #: 503-220-0012
Jon Heiny
Counsel
Principal Life Insurance Company (f/k/a Principal Mutual Life Insurance Company)
711 High Street
Des Moines, Iowa 50392-0800
Phone #: 515-246-7522
Fax #: 515-248-0483
As required under Section 11.01 of the Note Purchase Agreement,
Section 12.01 of the Trust Agreement, Section 13.02 of the Participation
Agreement, and Section 10(D) and (E) of the Facilities Agreement, effective upon
the transfer ICON will agree to be bound by all of the terms of, and to assume
all of the obligations of Owner Participant arising under, each of the Operative
Documents from and after such effective date, and will have satisfied the other
requirements of a transferee under those sections.
Please acknowledge your receipt of the foregoing Notice and your
consent to the proposed transfer (subject to your review of the actual transfer
documents) by signing the enclosed copy of this Notice where indicated below,
and returning it via fax to Tom McCart at BankAmerica Leasing & Capital Group
(fax #: 415-765-1817) and returning a copy to the undersigned in the enclosed
return envelope. If you have any questions, you may call Tom McCart at (415)
765-1828.
Very truly yours,
Western America Financial, Inc.
By: /s/ Terri L. Kwiatek
-------------------------------
Name: Terri L. Kwiatek
Title: SENIOR VICE PRESIDENT
Acknowledged and Consented to:
Portland General Electric Company
By:_______________________________________
Its_______________________________________
First National Bank of Oregon, as Owner Trustee
By:_______________________________________
Its_______________________________________
United States National Bank of Oregon, as Indenture Trustee
By:_______________________________________
Its_______________________________________
Principal Mutual Life Insurance Company
By:_______________________________________
By:_______________________________________
As required under Section 11.01 of the Note Purchase Agreement,
Section 12.01 of the Trust Agreement, Section 13.02 of the Participation
Agreement, and Section 10(D) and (E) of the Facilities Agreement, effective upon
the transfer ICON will agree to be bound by all of the terms of, and to assume
all of the obligations of Owner Participant arising under, each of the Operative
Documents from and after such effective date, and will have satisfied the other
requirements of a transferee under those sections.
Please acknowledge your receipt of the foregoing Notice and your
consent to the proposed transfer (subject to your review of the actual transfer
documents) by signing the enclosed copy of this Notice where indicated below,
and returning it via fax to Tom McCart at BankAmerica Leasing & Capital Group
(fax #: 415-765-1817) and returning a copy to the undersigned in the enclosed
return envelope. If you have any questions, you may call Tom McCart at (415)
765-1828.
Very truly yours,
Western America Financial, Inc.
By:_____________________________
Name: Terri L. Kwiatek
Title:__________________________
Acknowledged and Consented to:
Portland General Electric Company
By: /s/
--------------------------------------
Its Vice President, CFO and Treasurer
--------------------------------------
First National Bank of Oregon, as Owner Trustee
By:______________________________________
Its______________________________________
United States National Bank of Oregon, as Indenture Trustee
By:______________________________________
Its______________________________________
Principal Mutual Life Insurance Company
By:______________________________________
Its______________________________________
As required under Section 11.01 of the Note Purchase Agreement,
Section 12.01 of the Trust Agreement, Section 13.02 of the Participation
Agreement, and Section 10(D) and (E) of the Facilities Agreement, effective upon
the transfer ICON will agree to be bound by all of the terms of, and to assume
all of the obligations of Owner Participant arising under, each of the Operative
Documents from and after such effective date, and will have satisfied the other
requirements of a transferee under those sections.
Please acknowledge your receipt of the foregoing Notice and your
consent to the proposed transfer (subject to your review of the actual transfer
documents) by signing the enclosed copy of this Notice where indicated below,
and returning it via fax to Tom McCart at BankAmerica Leasing & Capital Group
(fax #: 415-765-1817) and returning a copy to the undersigned in the enclosed
return envelope. If you have any questions, you may call Tom McCart at (415)
765-1828.
Very truly yours,
Western America Financial, Inc.
By: /s/ Terri L. Kwiatek
-----------------------------
Name: Terri L. Kwiatek
Title: Senior Vice President
Acknowledged and Consented to:
Portland General Electric Company, as Lessee
By:_____________________________________
Its_____________________________________
Wells Fargo Bank National Association, as successor to First National Bank of
Oregon and First Interstate Bank of Oregon, as Owner Trustee
By: /s/
--------------------------------------
Its Senior Trust Associate
--------------------------------------
U.S. Bank Trust National Association (f/k/a United States National Bank of
Oregon, as Indenture Trustee
By:_____________________________________
Its_____________________________________
Principal Life Insurance Company (f/k/a Principal Mutual Life Insurance
Company), as Loan Participant
By:____________________________________
Its____________________________________
As required under Section 11.01 of the Note Purchase Agreement,
Section 12.01 of the Trust Agreement, Section 13.02 of the Participation
Agreement, and Section 10(D) and (E) of the Facilities Agreement, effective upon
the transfer ICON will agree to be bound by all of the terms of, and to assume
all of the obligations of Owner Participant arising under, each of the Operative
Documents from and after such effective date, and will have satisfied the other
requirements of a transferee under those sections.
Please acknowledge your receipt of the foregoing Notice and your
consent to the proposed transfer (subject to your review of the actual transfer
documents) by signing the enclosed copy of this Notice where indicated below,
and returning it via fax to Tom McCart at BankAmerica Leasing & Capital Group
(fax #: 415-765-1817) and returning a copy to the undersigned in the enclosed
return envelope. If you have any questions, you may call Tom McCart at (415)
765-1828.
Very truly yours,
Western America Financial, Inc.
By: /s/
----------------------------
Name: Terri L. Kwiatek
Title: Senior Vice President
Acknowledged and Consented to:
Portland General Electric Company, as Lessee
By:___________________________________
Its___________________________________
Wells Fargo Bank National Association, as successor to First National Bank of
Oregon and First Interstate Bank of Oregon, as Owner Trustee
By:___________________________________
Its___________________________________
Acknowledged Conditional Consent, Subject to review and approval of the transfer
documents and opinions of counsel.
U.S. Bank Trust National Association (f/k/a United States National Bank of
Oregon, as Indenture Trustee
By: /s/ Linda A. McConkey
-----------------------------------
Its Assistant Vice President
-----------------------------------
Prinicpal Life Insurance Company (f/k/a Principal Mutual Life Insurance
Company), as Loan Participant
By:___________________________________
Its___________________________________
Portland General Electric Company
121 SW Salmon Street Portland, Oregon 97204
Via Certified Mail
- ------------------
January 16, 2004
Wells Fargo Bank Northwest NA
Attn: Necia Stevens
Corporate Trust, 12th Floor
299 South Main
Salt Lake city, Utah 84111
Subject: Renewal Notice for 5 years: Coal Unloading and Handling Facility,
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Boardman, Oregon
----------------
Dear Ms. Stevens:
Portland General Electric Company, ("PGE"), is the Lessee under the Lease
Agreement dated as of September 1, 1979, as amended and restated, for the coal
handing facility referenced above. Attached, is a Notice of PGE regarding the
option to renew the lease, commencing January 23, 2005 for a period of 5 years
pursuant to the provisions of Sections 19 and 28 of the Lease Agreement.
If you have any questions about this notice, please call Mahendra Shah at (503)
464 7087, or me at (503) 464 7395.
Sincerely,
/s/ William Valach
William Valach
Assistant Treasurer
c. ICON/Boardman Facility LLC US Bank
c/o ICON Capital Corp. Corporate Trust Services
Attn: Paul Weiss Attn: Cora Gruenberg
260 California Street, 7th Floor 555 SW Oak Street, PL-6
San Francisco, CA 94111 Portland, OR 97204
- Page 1 -
c. US Bank Principal Life Insurance Company
Corporate Trust Services, Compliance Attn: Rob Stiles
Attn: Glendy Yuen 801 Grand Avenue
1420 Fifth Avenue, 7th Floor Des Moines, Iowa 50392-0800
Seattle, WA 98101
ICON/Boardman Facility LLC
Attn: Matt Laszyk
100 5th Avenue, 10th Floor
New York, NY 10011
- Page 2 -
COAL UNLOADING AND HANDLING FACILITY
BOARDMAN, OREGON
PORTLAND GENERAL ELECTRIC COMPANY
DATED: JANUARY 16, 2004
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NOTICE OF PORTLAND GENERAL ELECTRIC COMPANY
REGARDING OPTION TO RENEW LEASE
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NOTICE IS HEREBY GIVEN by Portland General Electric Company (the "Company") to
Wells Fargo Bank Northwest NA Corporate Trust, 12th Floor 299 South Main Salt
Lake City, Utah 84111, Lessor under the Lease Agreement dated as of September 1,
1979, as amended and supplemented, between the Company and Lessor ("Lease
Agreement"), that, pursuant to the provisions of Sections 19 and 28 of the Lease
Agreement, the Company, as Lessee under the Lease Agreement, hereby elects to
renew the Lease for an initial renewal period of five (5) years.
The Company hereby certifies that a copy of this Notice has been
mailed to the Owner Participant as required by Section 28 of the Lease
Agreement.
All words and terms used in this Notice not otherwise defined herein
shall have the meanings specified in the Lease Agreement.
DATED as of the day and year first above written.
PORTLAND GENERAL ELECTRIC COMPANY
/s/ James J. Piro
---------------------------
Name: James J. Piro
Title: Executive VP and CFO
OMNIBUS AMENDMENT
This Omnibus Amendment dated as of April 30, 2004 (this "Omnibus
Amendment"), is among (a) ICON/BOARDMAN FACILITY LLC, a Delaware limited
liability company, as Owner Participant (capitalized terms being used as
hereinafter defined); (b) PRINCIPAL LIFE INSURANCE COMPANY, an Iowa corporation,
as Loan Participant; (c) WELLS FARGO BANK, N.A., a national banking association,
successor to First Interstate Bank of Oregon, N.A. ("First Interstate Bank"),
f/k/a First National Bank of Oregon, not in its individual capacity but solely
as Owner Trustee under the Trust Agreement; and (c) U.S. BANK NATIONAL
ASSOCIATION, f/k/a U.S. Bank Trust National Association, successor to United
States National Bank of Oregon, a national banking association, not in its
individual capacity but solely as Indenture Trustee.
First Interstate Bank previously issued 10.20% Secured Notes (the "1979
Secured Notes") pursuant to an Indenture and First Deed of Trust dated as of
September 1, 1979 (the "1979 Indenture") between First Interstate Bank and
United States National Bank of Oregon, as indenture trustee, and used the
proceeds of the sale of the 1979 Secured Notes to acquire the Equipment.
First Interstate Bank subsequently issued 7.49% Secured Notes (the "1993
Secured Notes") pursuant to an Indenture and First Deed of Trust dated as of
January 26, 1993, between First Interstate Bank and United States National Bank
of Oregon, as indenture trustee, and used the proceeds of the sale of the 1993
Secured Notes to pay in full the 1979 Secured Notes in accordance with the terms
of the 1979 Indenture.
Concurrent with the execution and delivery hereof, Owner Trustee will enter
into an Amended and Restated Indenture and First Deed of Trust dated as of April
30, 2004 (the "2004 Indenture") between Owner Trustee and U.S. Bank National
Association, f/k/a U.S. Bank Trust National Association, successor to United
States National Bank of Oregon, as Indenture Trustee pursuant to which Owner
Trustee will issue 3.65% Secured Notes (the "2004 Secured Notes"), to be
purchased by Principal Life Insurance Company pursuant to a Note Purchase
Agreement dated as of April 30, 2004 (the "2004 Note Agreement") among Owner
Trustee, Indenture Trustee, Owner Participant and Loan Participant. In
connection with the execution of the 2004 Note Agreement, certain amendments to
the Operative Documents (as defined in the 2004 Indenture) will be required. In
order to effect such amendments in an efficient manner, the parties hereto have
elected to execute this Omnibus Amendment. Capitalized terms used and not
otherwise defined herein shall have the respective meanings set forth in the
2004 Indenture or the Lease.
NOW THEREFORE, in consideration of the mutual agreements contained herein,
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Amendments to Operative Documents.
1.01. Except where the context otherwise clearly requires, each of the
following terms is hereby amended and restated as of the date hereof in each of
the Operative Documents to read as follows:
"Indenture" shall mean the Amended and Restated Indenture and First Deed of
Trust, dated as of April 30, 2004, between Owner Trustee and Indenture Trustee,
as the same may be amended, restated, supplemented or otherwise modified from
time to time in accordance with the provisions thereof.
"Indenture Trustee" shall mean U.S. BANK NATIONAL ASSOCIATION, f/k/a U.S.
Bank Trust National Association, successor to United States National Bank of
Oregon, a national banking association, not in its individual capacity but
solely as Indenture Trustee, together with its successors and assigns.
"Loan Participant" shall mean and include Principal Life Insurance Company
and any other holder of a Secured Note, and their respective successors and
assigns.
"Note Agreement" in each of the Operative Documents shall mean and include
that certain Note Purchase Agreement dated as of April 30, 2004, by and among
ICON/BOARDMAN Facility LLC, a Delaware limited liability company, as Owner
Participant; Principal Life Insurance Company, an Iowa corporation, as Loan
Participant; Wells Fargo Bank, N.A., a national banking association, successor
to First Interstate Bank of Oregon, N.A., f/k/a First National Bank of Oregon,
not in its individual capacity but solely as Owner Trustee; and U.S. Bank
National Association, f/k/a U.S. Bank Trust National Association, successor to
United States National Bank of Oregon, a national banking association, not in
its individual capacity but solely as Indenture Trustee, as the same may be
amended, restated, supplemented or otherwise modified from time to time in
accordance with the provisions thereof.
"Owner Participant" means ICON/BOARDMAN Facility LLC, a Delaware limited
liability company, together with its successors and assigns.
"Owner Trustee" means Wells Fargo Bank, N.A., a national banking
association, successor to First Interstate Bank of Oregon, N.A., f/k/a First
National Bank of Oregon, not in its individual capacity but solely as Owner
Trustee, together with its successors and assigns.
"Secured Note" means each of the secured notes issued pursuant to the
Indenture, and any secured note issued in exchange therefor or replacement
thereof.
SECTION 2. Authority of Owner Trustee to Execute Documents and Perform
Obligations. Owner Participant hereby authorizes and directs Owner Trustee to,
and Owner Trustee hereby agrees for the benefit of Owner Participant that it
will, (a) execute and deliver the 2004 Note Agreement and this Omnibus
Amendment, as contemplated by the 2004 Note Agreement, (b) sign and deliver
amendments to Uniform Commercial Code financing and continuation statements with
respect to the security interests created by the Lease and the Indenture, if
any, and (c) exercise its rights and perform its duties under each of such
instruments as set forth herein and therein.
SECTION 3. Issuance of Secured Notes. Owner Participant hereby authorizes
and directs Owner Trustee to, and Owner Trustee agrees for the benefit of Owner
Participant and Loan Participant that it will on the Purchase Date (as defined
in the 2004 Note Agreement), and subject to the fulfillment of the conditions
set forth in Article III of the 2004 Note Agreement:
2
(a) Upon the payment of the applicable purchase price by Loan Participant
to Owner Trustee on the Purchase Date pursuant to the terms of the 2004
Note Agreement, issue to Loan Participant one or more Secured Notes, all as
provided in the 2004 Note Agreement and the Indenture;
(b) apply the proceeds of the Secured Notes as provided in Section 2.4 of
the 2004 Note Agreement; and
(c) execute and deliver the agreements, documents, instruments and
certificates and perform all such other acts (i) which Owner Trustee shall
be obligated to execute, deliver or perform on the Purchase Date pursuant
to any of the Operative Documents or (ii) in accordance with written
instructions from Owner Participant, that are necessary or advisable in
connection with the transactions contemplated by the Operative Documents
and consistent therewith.
SECTION 4. Ratification. Each of the Operative Documents, as amended
hereby, shall remain in full force and effect and is hereby ratified, approved
and confirmed in all respects.
SECTION 5. Execution in Counterparts. This Omnibus Amendment may be
executed in one or more 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.
SECTION 6. Terms Subject to Applicable Law; Governing Law. All rights,
powers and remedies provided herein may be exercised only to the extent that the
exercise thereof does not violate any applicable law, and are intended to be
limited to the extent necessary so that they will not render this Omnibus
Amendment invalid or unenforceable under any applicable law. If any term of this
Omnibus Amendment or any application thereof shall be held to be invalid,
illegal or unenforceable under any applicable law, the validity of other terms
of this Omnibus Amendment or any other application of such term shall in no way
be affected thereby. Where, however, the provisions of such applicable law may
be waived, they are hereby waived by the parties hereto to the full extent
permitted by law, to the end that this Omnibus Amendment shall be a valid and
binding agreement enforceable in accordance with its terms. This Omnibus
Amendment shall be governed by the laws of the State of New York without regard
to principles of conflicts of laws.
3
IN WITNESS WHEREOF, the parties hereto have caused this Omnibus Amendment
to be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
ICON/BOARDMAN FACILITY LLC
By: ICON Cash Flow Partners L.P. Seven
ICON Cash Flow Partners L.P. Six
ICON Income Fund Eight A L.P.
Its sole members
By: ICON Capital Corp.,
each such entity's general partner
By: /s/ Paul b. Weiss
---------------------------------------
Name: Paul B. Weiss
-------------------------------------
Title: President
------------------------------------
PRINCIPAL LIFE INSURANCE COMPANY
By: Principal Global Investors, LLC
a Delaware limited liability company,
Its authorized signatory
By:
---------------------------------------
Title:
------------------------------------
By:
---------------------------------------
Title:
------------------------------------
IN WITNESS WHEREOF, the parties hereto have caused this Omnibus Amendment
to be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
ICON/BOARDMAN FACILITY LLC
By: ICON Cash Flow Partners L.P. Seven
ICON Cash Flow Partners L.P. Six
ICON Income Fund Eight A L.P.
its sole members
By: ICON Capital Corp.,
each such entity's general partner
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
PRINCIPAL LIFE INSURANCE COMPANY
By: Principal Global Investors, LLC
a Delaware limited liability company,
its authorized signatory
By: /s/ Jon G. Heiny
---------------------------------------
Title: JON G. HEINY, COUNSEL
------------------------------------
By: /s/ James O. Fifield
---------------------------------------
Title: JAMES O. FIFIELD, COUNSEL
------------------------------------
WELLS FARGO BANK NORTHWEST, N.A.,
as Owner Trustee
By: /s/ Michael D. Hoggan
---------------------------------------
Title: MICHAEL D. HOGGAN
------------------------------------
VICE PRESIDENT
U.S. BANK NATIONAL ASSOCIATION, as
Indenture Trustee,
By:
---------------------------------------
Title:
------------------------------------
WELLS FARGO BANK NORTHWEST, N.A.,
as Owner Trustee
By:
---------------------------------------
Title:
------------------------------------
U.S. BANK NATIONAL ASSOCIATION, as
Indenture Trustee,
By: /s/ Linda A. McConkey
---------------------------------------
Title: Vice President
------------------------------------
Exhibit D-1
September 28, 2004
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Portland General Electric Company,
Application/Declaration on Form U-1 (File No. 070-10250)
Ladies and Gentlemen:
This opinion is furnished to the Securities and Exchange Commission (the
"Commission") in connection with the Application on Form U-1 (File No.
070-10250) (the "Application") of Portland General Electric Company ("Portland
General") under the Public Utility Holding Company Act of 1935, as amended (the
"Act"). The Application seeks the authorization and approval of the Commission
for the acquisition of the coal handling facility located at Portland General's
Boardman Coal Plant in eastern Oregon (the "Acquisition").
Portland General requests the Commission grant authority for the
Acquisition under Sections 9(a)(1) and 10 of Act. The transaction proposed by
the Application is described in detail in the Application. Any terms used in
this opinion have the same meanings assigned to them in the Application.
I am authorized to practice law in the state of Oregon, and I do not hold
myself out as an expert in the laws of other states. For purposes of this
opinion, to the extent necessary, I have relied on advice from counsel employed
or retained by Portland General, including the firm LeBoeuf, Lamb, Greene &
MacRae, L.L.P. with respect to matters under the Act.
In connection with this opinion, I or attorneys in whom I have confidence,
have examined originals or copies, certified or otherwise identified to my
satisfaction, of such records and such other documents, certificates and
corporate or other records as I have deemed necessary or appropriate as a basis
for the opinions expressed in this letter. In my examination, I have assumed the
genuineness of all signatures, the legal capacity of all persons and the
authenticity of all documents submitted to me as originals, the conformity to
the original documents of all documents submitted to me as certified or
photostatic copies and the authenticity of the originals of such copies.
The opinions expressed below are subject to the condition that the
Commission will duly enter an appropriate order permitting the Application to
become effective under the Act and the rules and regulations thereunder. This
opinion speaks solely as of the date hereof and I have assumed that no act or
event other than as described herein shall have occurred subsequent to the date
hereof which would change the opinions expressed below.
Based on the foregoing and subject to the assumptions, qualifications,
limitations, conditions and exceptions set forth herein, I am of the opinion
that:
1. All state laws applicable to Portland General in respect to the
proposed transactions will have been complied with;
2. Portland General is an entity validly organized, duly existing and in
good standing under the laws of the state of Oregon;
3. The agreement for Acquisition will be a valid and binding obligation
of Portland General in accordance with its terms; and
4. The consummation of the Acquisition as proposed in the Application
will not violate the legal rights of the holders of any securities
issued by Portland General.
This opinion is solely for the use of the Commission in connection its
review of the above-referenced Application, it may not be relied upon by the
Commission for any other purpose and it may not be relied upon by others for any
purpose. I hereby consent to the use of this opinion in connection with the
above-referenced application.
Very truly yours,
/s/ Douglas R. Nichols
Douglas R. Nichols,
General Counsel, Secretary