Document:

ex10-1.htm

Exhibit 10.1

 

 

AMENDED AND RESTATED ADVISORY AGREEMENT

 

THIS AMENDED AND RESTATED ADVISORY AGREEMENT is made as of July 26 2010 (the “Effective Date”) by and between NEW YORK MORTGAGE TRUST, INC., a Maryland corporation (the “NYMT” and together with the Subsidiaries, the “Company”), NEW YORK MORTGAGE FUNDING LLC and HYPOTHECA CAPITAL, LLC (each a “Subsidiary” and, together with the Company’s other Subsidiaries, as defined in Section 1(u), the “Subsidiaries”), and HARVEST CAPITAL STRATEGIES LLC, a Delaware limited liability company (together with its permitted assignees, the “Advisor”).

 

WHEREAS, the Company is a corporation that has elected to be taxed as a real estate investment trust for federal income tax purposes; and

 

WHEREAS, the Company, the Subsidiaries and the Advisor are parties to the Prior Advisory Agreement (defined below) and now desire to amend and restate the Prior Advisory Agreement; and

 

WHEREAS, the Company and Subsidiaries desire to retain the Advisor to provide investment advisory services to the Company on the terms and conditions hereinafter set forth, and the Advisor wishes to be retained to provide such services.

 

NOW THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereto agree as follows:

 

SECTION 1. DEFINITIONS.  The following terms have the meanings assigned to them:

 

(a)   “Agency” means a U.S. Government agency (such as the Government National Mortgage Association), or a U.S. Government-sponsored entity (such as the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation).

 

(b)   “Agreement” means this Amended and Restated Advisory Agreement, as amended from time to time.

 

(c)    “Annual Consulting Fee” means the annual consulting and support services fee to be paid by the Company to the Advisor for Consulting and Support Services provided during the term of this Agreement, which shall be $1,000,000 per year, payable in cash quarterly in arrears as follows:  $250,000 payable not later than April 30; $250,000 payable not later than July 31, $250,000 payable not later than October 31; and $250,000 payable not later than January 31.  Such payments shall be made as of the foregoing dates with respect to the preceding period if this Agreement has been terminated subsequent to the end of the preceding period and at or prior to such payment date.

 

(d)   “Base Advisory Fee” means the base advisory fee, calculated and paid quarterly in arrears in an amount equal to the sum of (i) (A) 1/4 of the amortized cost of the Managed Assets as of the end of the quarter multiplied by (B) 2.00%; and (ii) the base advisory fees (if any) with respect to Scheduled Assets as set forth in the applicable Scheduled Asset Addendum.  Such payments shall be made as of the foregoing dates with respect to the preceding period if this Agreement has been terminated subsequent to the end of the preceding period and at or prior to such payment date.

 

  

  

  

 

(e)   “Board of Directors” means the Board of Directors of the Company.

 

(f)   “Code” means the Internal Revenue Code of 1986, as amended.

 

(g)   “Common Share” means a share of stock of the Company now or hereafter authorized as voting common stock of the Company.

 

(h)   “Consulting and Support Services” means consulting and support services related to finance, capital markets, investment and other strategic activities of the Company and Subsidiaries.

 

(i)   “Effective Termination Date” shall have the meaning set forth in Section 13(a).

 

(j)   “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(k)   “Excluded Assets” means all cash, RMBS issued by an Agency, RMBS issued by a non-Agency, legacy Company-sourced collateralized mortgage obligation residuals and Legacy Assets.

 

(l)   “Federal Reserve Board” means the Board of Governors of the Federal Reserve System.

 

(m)   “GAAP” means generally accepted accounting principles, as applied in the United States.

 

(n)   “Governing Instruments” means, with regard to any entity, the articles of incorporation and bylaws in the case of a corporation, certificate of limited partnership (if applicable) and the partnership agreement in the case of a general or limited partnership, the articles of formation and the operating agreement in the case of a limited liability company, the trust instrument in the case of a trust, or similar governing documents, in each case as amended from time to time.

 

(o)   “Guidelines” shall have the meaning set forth in Section 2(b)(i).

 

(p)   “Incentive Compensation” means for each fiscal year during the term of this Agreement, an amount, not less than zero, equal to the sum of (i) 35% of the product of (A) the dollar amount by which (i) GAAP net income attributable to the Managed Assets for the full fiscal year (including paid interest and realized gains), after giving effect to all direct expenses related to the Managed Assets, including but not limited to, the Annual Consulting Fee, Base Advisory Fee, management or advisory fees of a third party, Intex license fees allocable to Cratos CLO I and any future commercial mortgage-backed securities which are Managed Assets, taxes and other direct expenses to be negotiated in good faith by each of the parties hereto, divided by the average equity of the Company invested in Managed Assets for that particular year, exceeds (ii) 13.00%, and (B) the average equity of the Company invested in Managed Assets during that particular year; (ii) the incentive compensation applicable to Scheduled Assets as set forth in the applicable Scheduled Asset Addendum and (iii) the incentive compensation payable with respect to Legacy Assets as set forth in Section 8(f) hereof.

 

  

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(q)   “Incentive Tail Assets” shall have the meaning set forth in Section 17.

 

(r)   “Independent Directors” means the members of the Board of Directors who are not officers or employees of the Company or the Advisor or any Person directly or indirectly controlling or controlled by the Advisor, and who are otherwise “independent” in accordance with the Company’s Governing Instruments and, if applicable, the rules of any national securities exchange on which the Common Shares are listed.

 

(s)   “Investment Company Act” means the Investment Company Act of 1940, as amended.

 

(t)   “Investment Allocation Policy” means any investment allocation policy agreed to from time to time by the Company and the Advisor and included as part of any Scheduled Asset Addendum or otherwise made a part of this Agreement.

 

(u)    “JMP” means JMP Group Inc. and its affiliates.

 

(v)   “JMP Investment Commitment” means the equity investment of JMP (excluding capital stock of the Company beneficially owned by any directors, officers or employees of JMP) in the Company’s capital stock that is equal to the lesser of (A) a market value of $10 million (inclusive of any outstanding Series A Preferred Shares of the Company), or (B) in the event the Company’s Common Share price (as adjusted for any stock splits or similar transactions) quoted on any exchange on which its Common Shares are then-listed, or if non-listed, the OTC Bulletin Board) declines after the Effective Date such that the equity investment of JMP in the Company’s capital stock is less than $10 million (as calculated in clause (A) above), the number of Common Shares that, (i) when multiplied by the market value of the Common Shares at the Effective Time of this Agreement and (ii) combined with the market value of any outstanding Series A Preferred Shares owned by JMP at such time, equals $10 million.  Any Common Shares acquired by JMP subsequent to the Effective Time shall be valued at the higher of the market value or the purchase price paid by JMP for such Common Shares (excluding any dealer or broker commissions or fees).  For purposes of this Agreement, the market value of the Series A Preferred Shares shall be $20.00 per share.

 

(w)    “Key Persons” means James J. Fowler and Joseph Jolson.

 

(x)   “Legacy Assets” means the AAA-rated non-agency RMBS and senior notes issued by Cratos CLO I that are held by the Subsidiaries as of the Effective Date.

 

(y)   “Managed Assets” means those New Program Assets that are not deemed Scheduled Assets by the Company and the Advisor.  For avoidance of confusion, the Excluded Assets shall not be considered Managed Assets.

 

  

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(z)   “Minimum JMP Investment Commitment” means the JMP Investment Commitment, but substituting $5 million for each place that $10 million appears in the definition above.

 

(aa)   “Mortgage Loan Origination Program Agreement” means that certain mortgage loan origination program agreement, dated as of May 14, 2010, by and between Hypotheca Capital, LLC and Bridger Commercial Funding LLC.

 

(bb)   “New Program Assets” means those assets of the Company that were sourced or acquired by the Advisor on the Company’s behalf after the Effective Date and whose acquisition by the Company was approved by each of the Company and the Advisor.  Each New Program Asset shall be deemed a Managed Asset unless specifically deemed a Scheduled Asset that is subject to a Scheduled Asset Addendum, with such final determination subject to the mutual agreement of the Company and the Advisor.

 

(cc)   “Person” means any individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.

 

(dd)   “Prior Advisory Agreement” means that certain Advisory Agreement, by and between the Company, Hypotheca Capital, LLC, New York Mortgage Funding, LLC and JMP Asset Management LLC, dated as of January 18, 2008.

 

(ee)   “REIT” means a “real estate investment trust” as defined under the Code.

 

(ff)   “RMBS” means residential mortgage-backed securities.

 

(gg)   “Scheduled Asset Addendum” means the term sheet or other documentation attached, from time to time, as an addendum to this Agreement, which provides or otherwise sets forth the material terms and conditions of each Scheduled Asset, including the base advisory fee (if any) and/or incentive compensation (if any) payable to the Advisor hereunder if different from the fees applicable to Managed Assets.  For the avoidance of doubt, the Base Advisory Fee and Incentive Compensation payable on Managed Assets shall apply to Scheduled Assets in the absence of agreement to the contrary in a Scheduled Asset Addendum with respect thereto.

 

(hh)   “Scheduled Assets” means (i) those New Program Assets of the Company that are deemed Scheduled Assets by the Company and the Advisor and (ii) any asset acquired pursuant to or in connection with the Securities Purchase Agreement or the Mortgage Loan Origination Program Agreement.  By execution of this Agreement, the parties hereto agree that the terms and conditions of the compensation payable to the Advisor under this Agreement with respect to the assets described in clause (ii) of the preceding sentence will be set forth in a Scheduled Asset Addendum mutually agreed upon by the parties.  For avoidance of confusion, the Excluded Assets shall not be considered Scheduled Assets.  Except as otherwise set forth in a term sheet that will be made an addendum to this Agreement with respect to any Scheduled Assets, references to Managed Assets in Sections 2, 4, 7 and 9 hereof shall also be to Scheduled Assets.

 

  

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(ii)   “Securities Purchase Agreement” means that certain Securities Purchase Agreement by and between Hypotheca Capital, LLC, JMP Capital LLC and New Bridger Holdings LLC, dated as of May 14, 2010.

 

(jj)   “SEC Periodic Reports” means those reports required to be filed under Sections 13 and 15 of the Exchange Act on Form 10-Q and Form 10-K.

 

(kk)   “Series A Preferred Shares” means the Series A Cumulative Convertible Redeemable preferred stock, par value $0.01 per share, of the Company.

 

(ll)   “Subsidiaries” means each direct and indirect subsidiary of the Company that is formed for the purpose of holding assets of the Company including but not limited to Hypotheca Capital, LLC and New York Mortgage Funding LLC.

 

(mm)   “Treasury Regulations” means the regulations promulgated under the Code from time to time, as amended.

 

SECTION 2. APPOINTMENT AND DUTIES OF THE ADVISOR.

 

(a)   The Company, for itself and on behalf of the Subsidiaries, hereby appoints the Advisor to manage the Managed Assets of the Company and the Subsidiaries subject to the terms and conditions set forth in this Agreement and the Advisor hereby agrees to use its commercially reasonable efforts to perform each of the duties set forth herein.  The appointment of the Advisor shall be exclusive to the Advisor except to the extent that the Advisor otherwise agrees, in its sole and absolute discretion, and except to the extent that the Advisor elects, pursuant to the terms of this Agreement, to cause the duties of the Advisor hereunder to be provided by third parties.

 

(b)   The Advisor, in its capacity as investment manager of the Managed Assets of the Company, at all times will be subject to the supervision of the Company and the Company’s Board of Directors and will have only such functions and authority as the Company may delegate to it including, without limitation, the functions and authority identified herein and delegated to the Advisor hereby.  The Advisor will be responsible for the day-to-day portfolio operations of the Company with respect to the Managed Assets and will perform (or cause to be performed) such services and activities relating to the operations of the Company with respect to the Managed Assets as may be appropriate, including, without limitation:

 

(i)   as described in greater detail in clauses (ix) and (x) below, serving as the Company’s and the Subsidiaries’ consultant with respect to the development and periodic review of the investment criteria and parameters for the Managed Assets, borrowings and operations, any modifications to which shall be subject to the approval of a majority of the Independent Directors (such guidelines as initially approved and as may be modified with such approval, the “Guidelines”).  The initial approved Guidelines are attached as Exhibit A to this Agreement.

 

(ii)   investigating, analyzing and selecting possible investment opportunities for the Company;

 

  

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(iii)   with respect to prospective purchases and sales of Managed Assets, conducting negotiations with sellers and purchasers and their respective agents, representatives and investment bankers;

 

(iv)   subject to the approval of Independent Directors, engaging and supervising, on behalf of the Company at the Company’s expense, independent contractors which provide investment banking, mortgage brokerage, securities brokerage and other financial services and such other services as may be required relating to the Managed Assets;

 

(v)   negotiating on behalf of the Company for the sale, exchange or other disposition of any Managed Assets;

 

(vi)   coordinating and managing operations of any joint venture or co-investment interests with respect to the Managed Assets held by the Company and conducting all matters with the joint venture or co-investment partners;

 

(vii)   counseling the Company in connection with policy decisions to be made by the Board of Directors with respect to the Managed Assets;

 

(viii)   evaluating and recommending to the Company hedging strategies;

 

(ix)   assisting the Company in developing criteria for asset purchase commitments that are specifically tailored to the Company’s investment objectives with respect to Managed Assets and making available to the Company its knowledge and experience with respect to mortgage loans, real estate, real estate securities, other real estate-related assets and non-real estate related assets;

 

(x)   representing and making recommendations to the Company in connection with the establishment of investment guidelines for the Company with respect to the purchase and finance of, and commitment to purchase and finance, mortgage loans (including on a portfolio basis), real estate, real estate securities, other real estate-related assets and non-real estate-related assets, and the sale and commitment to sell such assets;

 

(xi)   monitoring the financial performance of the Managed Assets and providing periodic reports with respect thereto to the Company and its Board of Directors, including comparative information with respect to such performance including any reports necessary for the Company to meet its requirements under the Exchange Act and the Public Subsidiary Accounting Reform and Investor Protection Act of 2002 as amended;

 

(xii)   with respect to Managed Assets, using commercially reasonable efforts to cause expenses incurred by or on behalf of the Company to be commercially reasonable or commercially customary and within any budgeted parameters or expense guidelines set by the Company from time to time; and

 

  

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(xiii)   performing such other services as may be required from time to time for advisory and other activities relating to the Managed Assets as the Company’s management and Board of Directors shall reasonably request.

 

Without limiting the foregoing, the Advisor will perform portfolio management services (the “Portfolio Management Services”) on behalf of the Company with respect to the Managed Assets.  Such services will include, but not be limited to, consulting with the Company on the purchase and sale of, and other investment opportunities in connection with, the Company’s portfolio of Managed Assets; to assist with the collection of information and the submission of reports pertaining to the Managed Assets, interest rates and general economic conditions; periodic review and evaluation of the performance of the portfolio of Managed Assets; acting as liaison between the Company and banking, mortgage banking, investment banking and other parties with respect to the purchase, financing and disposition of Managed Assets; and other customary functions related to portfolio management.

 

(c)   The Advisor may enter into agreements with other parties, including its affiliates, to provide such services to the Company as the Advisor shall deem necessary or advisable in connection with the Advisor’s performance of its duties and obligations hereunder pursuant to agreements with terms which are then customary for agreements regarding the provision of such services to companies that have assets similar in type, quality and value to the Managed Assets of the Company; provided that (i) any such agreements entered into with affiliates of the Advisor shall be (A) on terms no more favorable to such affiliate then would be obtained from a third party on an arm’s-length basis and (B) to the extent the same do not fall within the provisions of the Guidelines, approved by a majority of the Independent Directors, (ii) with respect to Portfolio Management Services, (A) any such agreements shall be subject to the Company’s prior written approval and (B) the Advisor shall remain liable for the performance of such Portfolio Management Services, and (iii) the Base Advisory Fee payable to the Advisor shall be reduced by the amount of any fees payable to such other parties, although any out-of-pocket expenses reasonably incurred by such other parties that are otherwise reimbursable to the Advisor shall be reimbursed by the Company.

 

(d)   To the extent that the Advisor deems necessary or advisable, the Advisor may, from time to time, propose to retain one or more additional entities for the provision of sub-advisory services to the Advisor in order to enable the Advisor to perform its services hereunder; provided that any such agreement (i) shall be on terms and conditions substantially identical to or more favorable than the terms and conditions of this Agreement, and (ii) shall not result in an increased Base Advisory Fee or expenses to the Company.

 

(e)   As frequently as the Advisor may deem necessary or advisable, or at the direction of the Company, the Advisor shall, at the sole cost and expense of the Company, prepare, or cause to be prepared, with respect to any Managed Assets, reports and other information with respect to such Managed Assets as may be reasonably requested by the Company.

 

(f)   The Advisor shall prepare regular reports for the Company to enable it to review, with respect to the Managed Assets, the Company’s acquisitions, portfolio composition and characteristics, credit quality, performance and compliance with the Guidelines and policies approved by the Company’s Board of Directors.  In addition, the Company shall be entitled to inspect and audit records of the Advisor related to the Managed Assets in a reasonable manner and at reasonable times upon providing written notice to the Advisor.

 

  

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(g)   Notwithstanding anything contained in this Agreement to the contrary, except to the extent that the payment of additional moneys is proven by the Company to have been required as a direct result of the Advisor’s acts or omissions which result in the right of the Company to terminate this Agreement pursuant to Section 15 of this Agreement, the Advisor shall not be required to expend money (“Excess Funds”) in connection with any expenses that are required to be paid for or reimbursed by the Company pursuant to Section 9 in excess of that contained in any applicable Company Account (as herein defined) or otherwise made available by the Company to be expended by the Advisor hereunder.  Failure of the Advisor to expend Excess Funds out-of-pocket shall not give rise or be a contributing factor to the right of the Company under Section 13(a) of this Agreement to terminate this Agreement due to the Advisor’s unsatisfactory performance.

 

(h)   In performing its duties under this Section 2, the Advisor shall be entitled to rely reasonably on qualified experts and professionals (including, without limitation, accountants, legal counsel and other professional service providers) hired by the Advisor with the Company’s permission, at the Company’s sole cost and expense (provided such costs and expenses incurred are reasonable).

 

(i)   Notwithstanding anything to the contrary contained herein, to the extent any action by the Advisor requires the approval or consent of the Company or the Board of Directors, or is to be taken at the direction of the Company or the Board of Directors, such approval, consent or direction shall be given only by officers or directors of the Company that are not affiliated with the Advisor or its affiliates.

 

SECTION 3. DEVOTION OF TIME; ADDITIONAL ACTIVITIES.

 

(a)   During the term of this Agreement, James J. Fowler, an employee of the Advisor or, to the extent Mr. Fowler is no longer affiliated with the Advisor or its Affiliates, another individual designated by the Advisor, whose appointment shall be subject to the further approval of the Board of Directors, will serve as the Chief Investment Officer of each of the Subsidiaries.  Subject to compliance with the suitability standards of the Nominating and Corporate Governance Committee of the Company’s Board of Directors, the Board of Directors may appoint such designated representative of the Advisor to serve on the Company’s Board of Directors as its Chairman and to serve as the Chief Investment Officer of each of the Subsidiaries effective as of the date of this Agreement and may recommend such designated representative for election to the Company’s Board of Directors at each annual or special meeting of the Company’s stockholders at which directors are to be elected during the term of this Agreement.  In the event such appointments are approved by the Board of Directors, Advisor agrees that such designated individual will agree to serve in such capacities.

 

(b)   In connection with the Consulting and Support Services to be provided hereunder, the Advisor agrees to use its reasonable best efforts to cause the Key Persons or such other qualified individuals to devote such of their time to Consulting and Support Services as the Advisor, in good faith, deems reasonably necessary and appropriate, commensurate with the level of activity of the Company from time to time.

 

  

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(c)   The Company hereby agrees that the Advisor or any entity controlled by or under common control with the Advisor shall be permitted to raise, advise or sponsor other REITs or other funds that invest primarily in any asset or asset classes that are similar to the Managed Assets, Scheduled Assets, Excluded Assets or Legacy Assets.  Notwithstanding, the foregoing, the Company shall have the benefit of the Advisor’s best judgment and efforts in rendering services and, in furtherance of the foregoing, the Advisor shall not undertake activities which, in the Advisor’s judgment, will substantially and adversely affect the performance of its obligations under this Agreement.  When making investment allocation decisions between the Company, on the one hand, and any other REIT, fund or account managed by the Advisor or any of its affiliates, on the other hand, the Advisor shall adhere to any applicable Investment Allocation Policy pertaining to such Managed Asset or Scheduled Asset.

 

(d)   Officers and employees of the Advisor or its affiliates may serve as officers, employees, agents, nominees or signatories for any Subsidiary, to the extent permitted by such Subsidiary’s Governing Instruments, subject to approval by the Board of Directors of the Company.  When executing documents or otherwise acting in such capacities for the Subsidiaries, such persons shall use their respective titles in the Subsidiaries.

 

SECTION 4. AGENCY.  The Advisor shall act as agent of the Company in making, acquiring, financing and disposing of Managed Assets.

 

SECTION 5. BANK ACCOUNTS.  The Company may establish and maintain one or more bank accounts in the name of any Subsidiary (any such account, a “Subsidiary Account”), and may direct the Advisor to collect and deposit funds into any such Subsidiary Account, and disburse funds from any such Subsidiary Account, under such terms and conditions as the Company may approve; and the Advisor shall from time to time render appropriate accountings of such collections and payments to the Company and the Board of Directors and, upon request, to the auditors of the Company or any Subsidiary.

 

SECTION 6. RECORDS; CONFIDENTIALITY.  The Advisor shall maintain appropriate books of accounts and records relating to services performed under this Agreement, and such books of account and records shall be accessible for inspection by representatives of the Company or any Subsidiary at any time during normal business hours upon one (1) business day’s advance written notice.  The Advisor shall keep confidential any and all information obtained in connection with the services rendered under this Agreement and shall not disclose any such information (or use the same except in furtherance of its duties under this Agreement) to nonaffiliated third parties except (i) with the prior written consent of the Company, (ii) to legal counsel, accountants and other professional advisors; (iii) to appraisers, financing sources and others in the ordinary course of the Company’s business; (iv) to governmental officials having jurisdiction over the Company; (v) in connection with any governmental or regulatory filings of the Company or disclosure or presentations to Company investors; or (vi) as required by law, regulatory requirements or legal process to which the Advisor or any Person to whom disclosure is permitted hereunder is subject.  The foregoing shall not apply to information which has previously become publicly available through the actions of a Person other than the Advisor not resulting from the Advisor’s violation of this Section 6.  The provisions of this Section 6 shall survive the expiration or earlier termination of this Agreement for a period of one year.

 

  

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SECTION 7. OBLIGATIONS OF ADVISOR; RESTRICTIONS.

 

(a)   The Advisor shall require each seller or transferor of Managed Assets to the Company to make such representations and warranties regarding such Managed Assets as are, in the judgment of the Advisor, necessary and appropriate.  In addition, the Advisor shall take such other action as it deems necessary or appropriate with regard to the protection of the Managed Assets.

 

(b)   The Advisor shall refrain from any action that, in its sole judgment made in good faith, (i) is not in compliance with the Guidelines, (ii) would cause the Company’s status as a REIT under the Code to be lost or terminated or (iii) would violate any law, rule or regulation of any governmental body or agency having jurisdiction over the Company or any Subsidiary or that would otherwise not be permitted by the Company’s Governing Instruments.  If the Advisor is ordered to take any such action by the Company or the Board of Directors, the Advisor shall promptly notify the Company and Board of Directors of the Advisor’s judgment that such action would adversely affect such status or violate any such law, rule or regulation or the Governing Instruments.  Notwithstanding the foregoing, the Advisor, its directors, officers, stockholders and employees shall not be liable to the Company or any Subsidiary, the Board of Directors, or the Company’s or any Subsidiary’s stockholders or partners, for any act or omission by the Advisor, its directors, officers, stockholders or employees except as provided in Section 11 of this Agreement.  With respect to sub-clause (ii) of this Section 7(b), the Company acknowledges that it is responsible for monitoring and maintaining the Company’s qualification as a REIT, subject to Section 5.7 of the Company’s Articles of Amendment and Restatement, as amended.

 

(c)   The Advisor shall not (i) consummate any transaction which would involve the acquisition by the Company of a Managed Asset in which the Advisor or any affiliate thereof has an ownership interest or the sale by the Company of a Managed Asset to the Advisor or any affiliate thereof, or (ii) under circumstances where the Advisor is subject to an actual or potential conflict of interest, in the reasonable judgment of the Advisor, because it advises both the Company and another Person (not an affiliate of the Company) with which the Company has a contractual relationship, take any action constituting the granting to such Person of a waiver, forbearance or other relief, or the enforcement against such Person of remedies, under or with respect to the applicable contract, unless such transaction or action, as the case may be and in each case, is approved by a majority of the Independent Directors.

 

(d)   The Board of Directors periodically reviews the Guidelines and the Company’s portfolio of Managed Assets but will not review each proposed investment, except as otherwise provided herein or in the Guidelines.  If a majority of the Independent Directors determines in their periodic review of transactions that a particular transaction does not comply with the Guidelines (including as a result of violation of the provisions of Section 7(c) above), then a majority of the Independent Directors will consider what corrective action, if any, can be taken.  The Advisor shall be permitted to rely upon the direction of the Secretary of the Company to evidence the approval of the Board of Directors or the Independent Directors with respect to a proposed investment in a Managed Asset.

 

  

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(e)   The Advisor shall at all times during the term of this Agreement maintain “errors and omissions” insurance coverage and other insurance coverage which is customarily carried by property, asset and investment Advisors performing functions similar to those of the Advisor under this Agreement with respect to assets similar to the Managed Assets of the Company, in an amount which is comparable to that customarily maintained by other Advisors or servicers of similar assets.

 

SECTION 8. COMPENSATION.

 

(a)   Except as otherwise set forth in a Scheduled Asset Addendum, during the Initial Term (as defined below) and each Renewal Term (as defined below) of this Agreement, as they may be extended from time to time, the Company shall pay the Advisor the Base Advisory Fee quarterly in arrears commencing with the quarter in which this Agreement was executed (with such initial payment pro-rated based on the number of days during such quarter that this Agreement was in effect, with the payment for the balance of the Base Advisory Fee for such quarter similarly prorated and paid in accordance with the Base Advisory Fee as defined in the Prior Advisory Agreement).

 

(b)   Except as otherwise set forth in a Scheduled Asset Addendum, the Company shall compute each installment of the Base Advisory Fee for each quarter with respect to which such installment is payable within two (2) business days after completion by the Company’s registered independent public accountants of (i) with respect to the first three fiscal quarters of each fiscal year, a SAS 100 review of the Company’s consolidated financial statements for each such quarter and (ii) with respect to the fourth fiscal quarter of each fiscal year, an audit of the Company’s consolidated financial statements for such fiscal year.  The Company shall deliver promptly to the Advisor a copy of the computations made by the Company to calculate such installment and, subject to Section 13(a) of this Agreement and any Scheduled Asset Addendum, the Company shall deliver payment of such installment of the Base Advisory Fee shown therein to the Advisor within ten (10) days following the due date of the applicable SEC Periodic Report of the Company.

 

(c)   The Base Advisory Fee is subject to adjustment pursuant to and in accordance with the provisions of Section 13(a) of this Agreement.

 

(d)   In addition to the Base Advisory Fee and the Annual Consulting Fee, the Company shall pay the Advisor annual Incentive Compensation.  Except as otherwise set forth in a Scheduled Asset Addendum, the Company shall compute the annual Incentive Compensation for each fiscal year with respect to which such Incentive Compensation is payable within two (2) business days after completion by the Company’s registered independent public accountants of an audit of the Company’s consolidated financial statements for such fiscal year.  The Company shall deliver promptly to the Advisor a copy of the computations made by the Company to calculate such Incentive Compensation and, subject to Section 13(a) of this Agreement and any Scheduled Asset Addendum, the Company shall deliver payment of such Incentive Compensation shown therein to the Advisor within ten (10) days following the due date of the Company’s Annual Report on Form 10-K.

 

  

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(e)   During the Initial Term and each Renewal Term of this Agreement, as they may be extended from time to time, the Company shall pay the Advisor the Annual Consulting Fee quarterly in arrears commencing with the quarter in which this Agreement was executed (with such initial payment pro-rated based on the number of days during such quarter that this Agreement was in effect).  In the event JMP’s equity investment in the Company’s capital stock fails to equal or exceed (at any time) the JMP Investment Commitment, the Annual Consulting Fee shall be reduced by each whole percentage point that JMP’s equity investment in the Company’s capital stock falls below the JMP Investment Commitment.  Any such reduction to the Annual Consulting Fee shall be calculated on a quarterly basis and will be prorated by the number of days in the quarter that JMP’s equity investment failed to equal or exceed the JMP Investment Commitment (based at all times on a 90-day quarter and 360-day year).  For example, if during any quarter JMP’s equity investment in the Company’s capital stock equals $7 million for a period of 15 days, $8 million for a period of 15 days and $10 million or more for each other day during the quarter, the Advisor would be entitled to receive a quarterly installment of the Annual Consulting Fee of $229,166.85.  For purposes of this Section 8(e), references to JMP “equity investment” shall exclude capital stock of the Company beneficially owned by any directors, officers or employees of JMP.

 

(f)   During the term of this Agreement and subsequent to any termination other than a termination for cause pursuant to Section 15(a)(i), Section 15(a)(ii) or Section 15(a)(iii), for such time as the Legacy Assets are owned by the Company, the Advisor will be entitled to receive Incentive Compensation earned on any Legacy Assets.  For purposes of the compensation payable under this Section 8(f), Incentive Compensation shall be calculated as prescribed in the Prior Advisory Agreement.

 

(g)   With respect to the compensation payable pursuant to Sections 8(a) and 8(e) hereof (unless a Scheduled Asset Addendum relating to a Scheduled Asset provides otherwise), in the event this Agreement is terminated prior to the completion of a fiscal quarter, each of the Base Advisory Fee and Annual Consulting Fee will be prorated based on the number of days in the quarter up to and including the Effective Termination Date.

 

(h)   The Advisor shall be entitled to inspect the Company’s and Subsidiaries’ records in a reasonable manner and at reasonable times upon providing written notice to the Company in order to confirm the accuracy of the Company’s calculations under this Section 8.

 

SECTION 9. EXPENSES OF THE COMPANY.  The Company shall pay all of its expenses and shall reimburse the Advisor for reasonable documented expenses of the Advisor incurred on their behalf in connection with the services contemplated hereby (collectively, the “Expenses”).  At all times the Advisor shall use due care in expending funds on behalf of the Company.  Expenses include all costs and expenses which are expressly designated elsewhere in this Agreement as the Company’s, together with the following:

 

(a)   expenses in connection with issuance and transaction costs incident to the acquisitions, disposition and financing of Managed Assets;

 

(b)   costs of legal, tax, accounting, consulting, auditing, administrative and other similar services rendered for the Company by providers retained by the Advisor or, if provided by the Advisor’s employees, in amounts which are no greater than those which would be payable to outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis;

 

  

12

  

 

(c)   costs associated with the establishment and maintenance of any credit facilities and other indebtedness of the Company (including commitment fees, accounting fees, legal fees, closing and other similar costs) or any securities offerings of the Company;

 

(d)   costs associated with any computer software or hardware, electronic equipment or purchased information technology services from third party vendors that is used solely for the Company and acquired at the direction of the Company;

 

(e)   expenses incurred by officers, employees and agents of the Advisor for travel on the Company’s behalf and other out-of-pocket expenses incurred by officers, employees and agents of the Advisor in connection with the purchase, financing, refinancing, sale or other disposition of a Managed Asset or establishment and maintenance of any credit facilities and other indebtedness or any securities offerings of the Company;

 

(f)   costs and expenses incurred with respect to settlement, clearing and custodial fees and expenses;

 

(g)   the costs of maintaining compliance with all federal, state and local rules and regulations or any other regulatory agency applicable to the Company;

 

(h)   costs and expenses incurred in contracting with third parties, including affiliates of the Advisor, for the servicing and special servicing of Managed Assets;

 

(i)   all other costs and expenses relating to the Company’s business and investment operations, including, without limitation, the costs and expenses of acquiring, owning, protecting, maintaining, developing and disposing of Managed Assets, including appraisal, reporting, audit and legal fees;

 

(j)   all other expenses actually incurred by the Advisor which are reasonably necessary for the performance by the Advisor of its duties and functions under this Agreement.

 

The Advisor may, at its option, elect not to seek reimbursement for certain expenses during a given period, which determination shall not be deemed to construe a waiver of reimbursement for similar expenses in future periods.  Except as noted above, the Advisor is responsible for all costs incident to the performance of its duties under this Agreement, including compensation of the Advisor’s officers and employees and other related expenses.

 

The provisions of this Section 9 shall survive the expiration or earlier termination of this Agreement to the extent such expenses has previously been incurred or is incurred in connection with such expiration or termination.

 

  

13

  

 

SECTION 10. CALCULATIONS OF EXPENSES.  The Advisor shall prepare a statement documenting the Expenses reasonably incurred by the Advisor on behalf of the Company during each calendar month, and shall deliver such statement to the Company within 20 days after the end of each calendar month.  Expenses incurred by the Advisor on behalf of the Company shall be reimbursed by the Company to the Advisor not later than the first business day of the month immediately following the date of delivery of such statement; provided, however, that such reimbursements may be offset by the Advisor against amounts due to the Company.  The provisions of this Section 10 shall survive the expiration or earlier termination of this Agreement.

 

SECTION 11. LIMITS OF ADVISOR RESPONSIBILITY; INDEMNIFICATION.

 

(a)   The Advisor assumes no responsibility under this Agreement other than to render the services called for and perform the other obligations required to be performed by the Advisor under this Agreement in good faith and shall not be responsible for any action of the Company or the Board of Directors in following or declining to follow any advice or recommendations of the Advisor, including as set forth in Section 7(b) of this Agreement.  The Advisor, each Person controlling, controlled by or under common control with the Advisor, any entity providing sub-advisory services to the Advisor, and the officers, directors, employees, members, partners and other representatives of any such Person (each an “Indemnified Party” and, collectively, the “Indemnified Parties”) will not be liable to the Company or any Subsidiary, to the Board of Directors, or the Company’s or any Subsidiary’s stockholders, members or partners for any acts or omissions by any such Person, pursuant to or in accordance with this Agreement, except by reason of acts constituting bad faith, willful misconduct, gross negligence or reckless disregard of the Advisor’s duties under this Agreement or acts constituting a material breach or violation by the Advisor of its obligations under this Agreement.  The Company shall, to the full extent lawful, reimburse, indemnify and hold each Indemnified Party harmless of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including attorneys’ fees) in respect of or arising from any acts or omissions of such Indemnified Party made in good faith in the performance of the Advisor’s duties under this Agreement and not constituting such Indemnified Party’s bad faith, willful misconduct, gross negligence or reckless disregard of the Advisor’s duties under this Agreement or a material breach or violation by the Advisor of its obligations under this Agreement.

 

(b)   The Advisor shall, to the full extent lawful, reimburse, indemnify and hold the Company, its stockholders, directors, officers and employees and each other Person, if any, controlling, controlled by or under common control with the Company (each, a “Company Indemnified Party”), harmless of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including attorneys’ fees) in respect of or arising from the Advisor’s bad faith, willful misconduct, gross negligence or reckless disregard of its duties under this Agreement or material breach or violation by the Advisor of its obligations under this Agreement.

 

SECTION 12. NO JOINT VENTURE.  Nothing in this Agreement shall be construed to make the Company and the Advisor partners or joint venturers or impose any liability as such on either of them.

 

  

14

  

 

SECTION 13. TERM; TERMINATION.

 

(a)   Until this Agreement is terminated in accordance with its terms, this Agreement shall be in effect until June 30, 2012 (the “Initial Term”) and shall be automatically renewed for a one-year term each anniversary date thereafter (a “Renewal Term”) unless either of the following occurs: (i) at least a majority of the Independent Directors agree that (A) there has been unsatisfactory performance by the Advisor that is materially detrimental to the Company, or (B) the compensation payable to the Advisor hereunder is “unfair” and an independent arbitrator agrees that such compensation is “unfair” as set forth below; or (ii) the Company elects not to renew this Agreement at the expiration of the Initial Term or any such Renewal Term for any reason.  In the event at least a majority of the independent directors agree that the compensation payable to the Advisor hereunder is “unfair,” each of the Company and the Advisor agree to submit the determination of whether such compensation is “unfair” to a single, qualified and independent arbitrator, whose appointment shall be agreed upon between the parties, or failing agreement within fourteen days, after either party has given to the other a written request to concur in the appointment of an arbitrator, by an arbitrator to be appointed by the President or a Vice President of the Chartered Institute of Arbitrators.  In the event the arbitrator determines that such compensation is “unfair,” the Company shall have the right to terminate the Agreement in the manner prescribed below.  The Company shall bear all reasonable costs and expenses in connection with hiring such arbitrator.  Notwithstanding the foregoing, the Company shall not have the right to terminate this Agreement under clause (B) above if the Advisor agrees to continue to provide the services under this Agreement at a fee that at least a majority of the Independent Directors determines to be fair pursuant to the procedure set forth below.  If the Company elects not to renew this Agreement at the expiration of the Initial Term or any Renewal Term as set forth above, the Company shall deliver to the Advisor prior written notice (the “Termination Notice”) of the Company’s intention not to renew this Agreement based upon the terms set forth in this Section 13(a) not less than 180 days prior to the expiration of the then existing term.  If the Company so elects not to renew this Agreement, the Company shall designate the date (the “Effective Termination Date”), not less than 180 days from the date of the notice, on which the Advisor shall cease to provide services under this Agreement and this Agreement shall terminate on such date; provided, however, that in the event that such Termination Notice is given in connection with a determination that the compensation payable to the Advisor is unfair, the Advisor shall have the right to renegotiate such compensation by delivering to the Company, no fewer than forty-five (45) days prior to the prospective Effective Termination Date, written notice (any such notice, a “Notice of Proposal to Negotiate”) of its intention to renegotiate its compensation under this Agreement.  Thereupon, the Company (represented by the Independent Directors) and the Advisor shall endeavor to negotiate in good faith the revised compensation payable to the Advisor under this Agreement.  Provided that the Advisor and at least a majority of the Independent Directors agree to the terms of the revised compensation to be payable to the Advisor within 45 days following the receipt of the Notice of Proposal to Negotiate, the Termination Notice shall be deemed of no force and effect and this Agreement shall continue in full force and effect on the terms stated in this Agreement, except that the compensation payable to the Advisor hereunder shall be the revised compensation then agreed upon by the parties to this Agreement.  The Company and the Advisor agree to execute and deliver an amendment to this Agreement setting forth such revised compensation promptly upon reaching an agreement regarding same.  In the event that the Company and the Advisor are unable to agree to the terms of the revised compensation to be payable to the Advisor during such 45 day period, this Agreement shall terminate, such termination to be effective on the date which is the later of (A) ten (10) days following the end of such 45 day period and (B) the Effective Termination Date originally set forth in the Termination Notice.

 

  

15

  

 

(b)   In the event that this Agreement is terminated in accordance with the provisions of Section 13(a) of this Agreement, in addition to the post-termination compensation obligations set forth in Section 17 of this Agreement, the Company shall pay to the Advisor, on the Effective Termination Date, a termination fee (the “Termination Fee”) equal to the product of (A) one and one-half (1 1⁄2) and (B) the sum of (i) the average annual Base Advisory Fee earned by the Advisor during the 24-month period immediately preceding the Effective Termination Date, calculated as of the end of the most recently completed fiscal quarter prior to the Effective Termination Date (including amounts paid under the Prior Advisory Agreement if applicable), and (ii) the Annual Consulting Fee.  The obligation of the Company to pay the Termination Fee (and the compensation set forth in Section 17 hereof) shall survive the termination of this Agreement.

 

(c)   No later than 180 days prior to the anniversary date of this Agreement of any year during the Initial Term or Renewal Term, the Advisor may deliver written notice to the Company informing it of the Advisor’s intention to decline to renew this Agreement, whereupon this Agreement shall not be renewed and extended and this Agreement shall terminate effective on the anniversary date of this Agreement next following the delivery of such notice.

 

(d)   If this Agreement is terminated pursuant to this Section 13, such termination shall be without any further liability or obligation of either party to the other, except as provided in Sections 6, 9, 10, 13(b), 16 and 17 of this Agreement.  In addition, Sections 8(f) and 11 of this Agreement shall survive termination of this Agreement.

 

SECTION 14. ASSIGNMENT.

 

(a)   Except as set forth in Section 14(b) of this Agreement, this Agreement shall terminate automatically in the event of its assignment, in whole or in part, by the Advisor, unless such assignment is consented to in writing by the Company with the consent of a majority of the Independent Directors; provided, however, that no such consent shall be required in the case of an assignment by the Advisor to an affiliate of the Advisor.  Any such permitted assignment shall bind the assignee under this Agreement in the same manner as the Advisor is bound, and the Advisor shall be liable to the Company for all errors or omissions of the assignee under any such assignment.  In addition, the assignee shall execute and deliver to the Company a counterpart of this Agreement naming such assignee as Advisor.  This Agreement shall not be assigned by the Company without the prior written consent of the Advisor, except in the case of assignment by the Company to another REIT or other organization which is a successor (by merger, consolidation or purchase of assets) to the Company, in which case such successor organization shall be bound under this Agreement and by the terms of such assignment in the same manner as the Company is bound under this Agreement.

 

  

16

  

 

(b)   Notwithstanding any provision of this Agreement, the Advisor may subcontract and assign any or all of its responsibilities under Sections 2(b), 2(c) and 2(d) of this Agreement to any of its affiliates in accordance with the terms of this Agreement applicable to any such subcontract or assignment, and the Company hereby consents to any such assignment and subcontracting.  In addition, provided that the Advisor provides prior written notice to the Company for informational purposes only, nothing contained in this Agreement shall preclude any pledge, hypothecation or other transfer of any amounts payable to the Advisor under this Agreement.

 

SECTION 15. TERMINATION FOR CAUSE.

 

(a)   The Company may terminate this Agreement effective upon thirty (30) days’ prior written notice of termination from the Company to the Advisor, without payment of any Termination Fee, if (i) the Advisor breaches any material provision of this Agreement and such breach shall continue for a period of 30 days after written notice thereof specifying such breach and requesting that the same be remedied in such 30 day period, (ii) the Advisor engages in any act of fraud, misappropriation of funds, or embezzlement against the Company, (iii) there is an event of any gross negligence on the part of the Advisor in the performance of its duties under this Agreement, (iv) there is a commencement of any proceeding relating to the Advisor’s bankruptcy or insolvency, (v) there is a dissolution of the Advisor, or (vi) each of the Key Persons ceases to be a full-time employee of the Advisor or its affiliates (or any of its or their successors or assigns); provided, however, that in the event each of the Key Persons ceases to be a full-time employee of the Advisor or its affiliates (or any of its or their successors or assigns), the Advisor shall have 60 days from the date of the event described above in sub-clause (vi) to identify and designate those persons (or, in the sole discretion of the Independent Directors, a person) deemed by a majority of the Independent Directors, in the sole discretion of the Independent Directors, to be suitable and qualified to replace such Key Persons under this Agreement, as evidenced by the approval of a majority vote of the Independent Directors.

 

(b)   If at any time the JMP Investment Commitment falls below the Minimum JMP Investment Commitment, subject to the majority approval of the Independent Directors, the Company may terminate this Agreement, without payment of any Termination Fee, effective immediately, upon delivery of a Termination Notice to the Advisor.  In connection with this Section 15(b), the Advisor in good faith undertakes to notify the Company promptly at such time as it becomes knowledgeable that the JMP Investment Commitment falls below the Minimum JMP Investment Commitment.

 

(c)   The Advisor may terminate this Agreement effective upon sixty (60) days’ prior written notice of termination to the Company in the event that the Company shall default in the performance or observance of any material term, condition or covenant contained in this Agreement and such default shall continue for a period of 30 days after written notice thereof specifying such default and requesting that the same be remedied in such 30 day period.

 

SECTION 16. ACTION UPON TERMINATION.  Except as set forth in Section 17 hereof, from and after the Effective Termination Date, the Advisor shall not be entitled to compensation for further services under this Agreement, but shall be paid all compensation accruing to the date of termination and, if terminated pursuant to Section 13(a) or Section 15(c), the applicable Termination Fee.  Upon such termination, the Advisor shall forthwith:

 

  

17

  

 

(i)   after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled, pay over to the Company or a Subsidiary all money collected and held for the account of the Company or a Subsidiary pursuant to this Agreement;

 

(ii)   deliver to the Company a full accounting, including a statement showing all payments collected by it and a statement of all money held by it, covering the period following the date of the last accounting furnished to the Company with respect to the Managed Assets; and

 

(iii)   subject to its regulatory requirements, deliver to the Company all property and documents of the Company or any Subsidiary then in the custody of the Advisor.

 

SECTION 17. POST-TERMINATION COMPENSATION.  In the event this Agreement is terminated for any reason other than a termination for cause pursuant to Section 15(a)(i), Section 15(a)(ii) or Section 15(a)(iii) where such breach, act of fraud, misappropriation of funds, embezzlement, or event of gross negligence is reasonably determined by a majority of the Independent Directors to materially detriment the Company, from and after the Effective Termination Date, the Company will continue to pay Incentive Compensation in accordance with the terms of this Agreement with respect to all Managed Assets, Scheduled Assets (subject to any Scheduled Asset Addendum that provides otherwise) and Legacy Assets held in the Subsidiaries as of the Effective Termination Date (the “Incentive Tail Assets”), until such time as such Incentive Tail Assets are disposed of by the Company or mature.

 

SECTION 18. RELEASE OF MONEY OR OTHER PROPERTY UPON WRITTEN REQUEST.  The Advisor agrees that any money or other property of the Company or Subsidiary held by the Advisor under this Agreement shall be held by the Advisor as custodian for the Company or Subsidiary, and the Advisor’s records shall be appropriately marked clearly to reflect the ownership of such money or other property by the Company or such Subsidiary.  Upon the receipt by the Advisor of a written request signed by a duly authorized officer of the Company requesting the Advisor to release to the Company or any Subsidiary any money or other property then held by the Advisor for the account of the Company or any Subsidiary under this Agreement, the Advisor shall release such money or other property to the Company or any Subsidiary within a reasonable period of time, but in no event later than sixty (60) days following such request.  The Advisor shall not be liable to the Company, any Subsidiary, the Independent Directors, or the Company’s or a Subsidiary’s stockholders, partners or members for any acts performed or omissions to act by the Company or any Subsidiary in connection with the money or other property released to the Company or any Subsidiary in accordance with the second sentence of this Section 18.  The Company and any Subsidiary shall indemnify the Advisor and its members, sub-advisors, officers and employees against any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever, which arise in connection with the Advisor’s release of such money or other property to the Company or any Subsidiary in accordance with the terms of this Section 18.  Indemnification pursuant to this provision shall be in addition to any right of the Advisor to indemnification under Section 11 of this Agreement.

 

  

18

  

 

SECTION 19. CAPITAL MARKETS TRANSACTIONS.  Subject at all times to the approval of the Independent Directors, the Company will offer JMP Securities LLC a right of first refusal with respect to serving as a co-lead managing underwriter with respect to each capital raising transaction proposed to be undertaken by the Company during the term of this Agreement.

 

SECTION 20. CONTINUED COOPERATION.  For so long as JMP Group Inc. is required to include the Company’s financial statements in its SEC Periodic Reports and any filings under the Securities Act of 1933, the Company agrees that it will use its commercially reasonable efforts to continue to cooperate with the Advisor and its affiliates to provide the Company’s financial statements to JMP Group Inc. in a such a manner so as to allow JMP Group Inc. to prepare and file its SEC Periodic Reports or other filings required by law or applicable regulatory requirements on a timely basis; provided, however, that the Company shall have no obligation under this Section 20 unless the Advisor or its affiliates pay the expenses associated with the inclusion of the Company’s financials statements in the SEC Periodic Reports of JMP Group Inc.

 

SECTION 21. NOTICES.  Unless expressly provided otherwise in this Agreement, all notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made and received when delivered against receipt or upon actual receipt of (i) personal delivery, (ii) delivery by reputable overnight courier, (iii) delivery by facsimile transmission with telephonic confirmation or (iv) delivery by registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below:

 

(a)   If to the Company or any Subsidiary:

 

New York Mortgage Trust, Inc.

52 Vanderbilt Avenue, Suite 403

New York, New York  10017

Attention:  President

Facsimile:

 

(b)   If to the Advisor:

 

Harvest Capital Strategies LLC

600 Montgomery Street, Suite 2000

San Francisco, California  94111

Attention:  Janet L. Tarkoff

Facsimile:  415-263-1336

 

Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this Section 21 for the giving of notice.

 

  

19

  

 

SECTION 22. BINDING NATURE OF AGREEMENT; SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns as provided in this Agreement.

 

SECTION 23. ENTIRE AGREEMENT.  This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter of this Agreement, and supersedes all prior and contemporaneous agreements (including the Prior Advisory Agreement), understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter of this Agreement.  The express terms of this Agreement control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms of this Agreement.  This Agreement may not be modified or amended other than by an agreement in writing signed by the parties hereto.

 

SECTION 24. GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

SECTION 25. NO WAIVER; CUMULATIVE REMEDIES.  No failure to exercise and no delay in exercising, on the part of any party hereto, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.  No waiver of any provision hereto shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

 

SECTION 26. HEADINGS.  The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed part of this Agreement.

 

SECTION 27. COUNTERPARTS.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument.  This Agreement shall become binding when one or more counterparts of this Agreement, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

 

SECTION 28. SEVERABILITY.  Any provision of this Agreement that is 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.

 

SECTION 29. GENDER.  Words used herein regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires.

  

20

  

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

	 	NEW YORK MORTGAGE TRUST, INC.	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ Steven R. Mumma	 
	 	 	Name: Steven R. Mumma	 
	 	 	Title:   Chief Executive Officer	 
	 	 	 	 

 

	 	
NEW YORK MORTGAGE FUNDING LLC

	 
	 	 	 	 
	 	By:  NEW YORK MORTGAGE TRUST, INC., its sole member	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ Steven R. Mumma	 
	 	 	Name: Steven R. Mumma	 
	 	 	Title:   Chief Executive Officer	 
	 	 	 	 

 

 

	 	
HYPOTHECA CAPITAL, LLC

 

By:  NEW YORK MORTGAGE TRUST, INC., its sole member

	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ Steven R. Mumma	 
	 	 	Name: Steven R. Mumma	 
	 	 	Title:   Chief Executive Officer	 
	 	 	 	 

 

 

	 	HARVEST CAPITAL STRATEGIES LLC	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ Joseph Jolson	 
	 	 	Name:  Joseph Jolson	 
	 	 	
Title:   Chief Executive Officer

	 
	 	 	 	 

 

 

21ex4-1_29thsuppind.htm

 

 

 

NORTHWESTERN CORPORATION

 

TO

 

THE BANK OF NEW YORK MELLON

(formerly The Bank of New York)

 

AND

 

MING RYAN

 

As Trustees under Mortgage and

 

Deed of Trust, dated as of

 

October 1, 1945, with NorthWestern Corporation

 

TWENTY-NINTH SUPPLEMENTAL INDENTURE

 

Providing, among other things, for First Mortgage Bonds, 5.01% Series due 2025

 

 

Dated as of May 1, 2010

 

 

 

 

 

  

6720512v7

  

TWENTY-NINTH SUPPLEMENTAL INDENTURE

 

THIS TWENTY-NINTH SUPPLEMENTAL INDENTURE, dated as of May 1, 2010, between NORTHWESTERN CORPORATION, a corporation duly incorporated and existing under the laws of the State of Delaware (hereinafter called the “Company”), having its principal office at 3010 West 69th Street, Sioux Falls, South Dakota, 57108, and THE BANK OF NEW YORK MELLON (formerly The Bank of New York) (hereinafter called the “Corporate Trustee”), a corporation of the State of New York, whose principal corporate trust office is located at 101 Barclay Street, New York, New York, 10286 (successor to MORGAN GUARANTY TRUST COMPANY OF NEW YORK (formerly Guaranty Trust Company of New York)), and MING RYAN, whose post office address is c/o The Bank of New York Mellon, 101 Barclay Street, New York, New York, 10286 (successor to Arthur E. Burke, Karl R. Henrich, H.H. Gould, R. Amundsen, P.J. Crowley, W.T. Cunningham, Douglas J. MacInnes and MaryBeth Lewicki) (said Ming Ryan being hereinafter sometimes called the “Co-Trustee”, and the Corporate Trustee and the Co-Trustee being hereinafter together sometimes called the “Trustees”), as Trustees under the Mortgage and Deed of Trust, dated as of October 1, 1945 (hereinafter called the “Mortgage” and, together with any indentures supplemental thereto, the “Indenture”), which Mortgage was executed and delivered by The Montana Power Company, a corporation of the State of New Jersey (hereinafter called the “Company-New Jersey”), as indirect predecessor under the Mortgage to the Company (the Company being successor under the Mortgage to NorthWestern Energy, L.L.C. (hereinafter called “NorthWestern Energy”), formerly known as The Montana Power, L.L.C., a limited liability company of the State of Montana, and NorthWestern Energy being the successor under the Mortgage to The Montana Power Company, a corporation of the State of Montana (hereinafter called the “Company-Montana”)), to Guaranty Trust Company of New York and Arthur E. Burke, as Trustees, to secure the payment of bonds issued or to be issued under and in accordance with the provisions of the Mortgage, reference to which Mortgage is hereby made, this instrument (hereinafter called the “Twenty-ninth Supplemental Indenture”) being supplemental thereto;

 

WHEREAS, by the Mortgage, the Company-New Jersey covenanted that it would execute and deliver such supplemental indenture or indentures and such further instruments and do such further acts as might be necessary or proper to carry out more effectually the purposes of the Indenture and to make subject to the lien of the Indenture any property thereafter acquired, made or constructed and intended to be subject to the lien thereof; and

 

WHEREAS, the Company-New Jersey executed and delivered to the Trustees its First Supplemental Indenture, dated as of May 1, 1954 (hereinafter called the “First Supplemental Indenture”), and its Second Supplemental Indenture, dated as of April 1, 1959 (hereinafter called the “Second Supplemental Indenture”); and

 

WHEREAS, the Company-New Jersey was merged into the Company-Montana on November 30, 1961, and to evidence the succession of the Company-Montana to the Company-New Jersey for purposes of the bonds and the Indenture and the assumption by the Company-Montana of the covenants and conditions of the Company-New Jersey in the bonds and in the Indenture contained and to enable the Company-Montana to have and exercise the powers and rights of the Company-New Jersey under the Indenture in accordance with the terms thereof, the Company-Montana executed and delivered to the Trustees its Third Supplemental Indenture, dated as of November 30, 1961 (hereinafter called the “Third Supplemental Indenture”); and

 

  

6720512v7

  

 

WHEREAS, the Company-Montana executed and delivered to the Trustees its Fourth Supplemental Indenture, dated as of April 1, 1970 (hereinafter called the “Fourth Supplemental Indenture”); its Fifth Supplemental Indenture, dated as of April 1, 1971 (hereinafter called the “Fifth Supplemental Indenture”); its Sixth Supplemental Indenture, dated as of March 1, 1974 (hereinafter called the “Sixth Supplemental Indenture”); its Seventh Supplemental Indenture, dated as of December 1, 1974 (hereinafter called the “Seventh Supplemental Indenture”); its Eighth Supplemental Indenture, dated as of July 1, 1975 (hereinafter called the “Eighth Supplemental Indenture”); its Ninth Supplemental Indenture, dated as of December 1, 1975 (hereinafter called the “Ninth Supplemental Indenture”); its Tenth Supplemental Indenture, dated as of January 1, 1979 (hereinafter called the “Tenth Supplemental Indenture”); its Eleventh Supplemental Indenture, dated as of October 1, 1983 (hereinafter called the “Eleventh Supplemental Indenture”); its Twelfth Supplemental Indenture, dated as of January 1, 1984 (hereinafter called the “Twelfth Supplemental Indenture”); its Thirteenth Supplemental Indenture, dated as of December 1, 1991 (hereinafter called the “Thirteenth Supplemental Indenture”); its Fourteenth Supplemental Indenture, dated as of January 1, 1993 (hereinafter called the “Fourteenth Supplemental Indenture”); its Fifteenth Supplemental Indenture, dated as of March 1, 1993 (hereinafter called the “Fifteenth Supplemental Indenture”); its Sixteenth Supplemental Indenture, dated as of May 1, 1993 (hereinafter called the “Sixteenth Supplemental Indenture”); its Seventeenth Supplemental Indenture, dated as of December 1, 1993 (hereinafter called the “Seventeenth Supplemental Indenture”); its Eighteenth Supplemental Indenture, dated as of August 5, 1994 (hereinafter called the “Eighteenth Supplemental Indenture”); its Nineteenth Supplemental Indenture, dated as of December 16, 1999 (hereinafter called the “Nineteenth Supplemental Indenture”); and its Twentieth Supplemental Indenture, dated as of November 1, 2001 (hereinafter called the “Twentieth Supplemental Indenture”); and

 

WHEREAS, the Company-Montana was merged into NorthWestern Energy (under its then name, The Montana Power, L.L.C.) on February 13, 2002; and to evidence the succession of NorthWestern Energy (under its then name, The Montana Power, L.L.C.) to the Company-Montana for purposes of the bonds and the Indenture and the assumption by NorthWestern Energy (under its then name, The Montana Power, L.L.C.) of the covenants and conditions of the Company-Montana in the bonds and in the Indenture contained and to enable NorthWestern Energy (under its then name, The Montana Power, L.L.C.) to have and exercise the powers and rights of the Company-Montana under the Indenture in accordance with the terms thereof, NorthWestern Energy (under its then name, The Montana Power, L.L.C.) executed and delivered to the Trustees its Twenty-first Supplemental Indenture, dated as of February 13, 2002 (hereinafter called the “Twenty-first Supplemental Indenture”); and

 

WHEREAS, NorthWestern Energy changed its name from The Montana Power, L.L.C. to NorthWestern Energy, L.L.C. on March 19, 2002; and

 

WHEREAS, NorthWestern Energy transferred, subject to the Lien of the Indenture, substantially all of the Mortgaged and Pledged Property as an entirety to the Company on November 20, 2002 (the “Transfer Date”), and to evidence the succession of the Company to NorthWestern Energy for purposes of the bonds and the Indenture and the assumption by the Company of the covenants and conditions of NorthWestern Energy in the bonds and in the Indenture contained and to enable the Company to have and exercise the powers and rights of NorthWestern Energy under the Indenture in accordance with the terms thereof, the Company executed and delivered to the Trustees its Twenty-second Supplemental Indenture, dated as of November 15, 2002 (hereinafter called the “Twenty-second Supplemental Indenture”); and

 

  

6720512v7                             2

  

 

WHEREAS, the Company executed and delivered to the Trustees its Twenty-third Supplemental Indenture, dated as of February 1, 2003 (hereinafter called the “Twenty-third Supplemental Indenture”); its Twenty-fourth Supplemental Indenture, dated as of November 1, 2004 (hereinafter called the “Twenty-fourth Supplemental Indenture”); its Twenty-fifth Supplemental Indenture, dated as of April 1, 2006 (hereinafter called the “Twenty-fifth Supplemental Indenture”); its Twenty-sixth Supplemental Indenture, dated as of September 1, 2006 (hereinafter called the “Twenty-sixth Supplemental Indenture”); its Twenty-seventh Supplemental Indenture, dated as of March 1, 2009 (hereinafter called the “Twenty-seventh Supplemental Indenture”); and its Twenty-eighth Supplemental Indenture, dated as of October 1, 2009 (hereinafter called the “Twenty-eighth Supplemental Indenture”); and

 

WHEREAS, the Mortgage and the First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-first, Twenty-second, Twenty-third, Twenty-fourth, Twenty-fifth, Twenty-sixth, Twenty-seventh and Twenty-eighth Supplemental Indentures were recorded in the official records of various counties and states as required by the Indenture; and

 

WHEREAS, the Company expects to record this Twenty-ninth Supplemental Indenture in the official records of various counties and states as required by the Indenture;

 

WHEREAS, an instrument dated March 15, 1955 was executed by the Company-New Jersey appointing Karl R. Henrich as Co-Trustee in succession to said Arthur E. Burke, resigned, under the Mortgage and by Karl R. Henrich accepting the appointment as Co-Trustee under the Mortgage in succession to said Arthur E. Burke, which instrument was recorded in various counties in the states of Montana, Idaho and Wyoming; and

 

WHEREAS, an instrument dated June 29, 1962 was executed by the Company-Montana appointing H.H. Gould as Co-Trustee in succession to said Karl R. Henrich, resigned, under the Mortgage and by H.H. Gould accepting the appointment as Co-Trustee under the Mortgage in succession to said Karl R. Henrich, which instrument was recorded in various counties in the states of Montana, Idaho and Wyoming; and

 

WHEREAS, an instrument dated June 22, 1973 was executed by the Company-Montana appointing R. Amundsen as Co-Trustee in succession to said H.H. Gould, resigned, under the Mortgage and by R. Amundsen accepting the appointment as Co-Trustee under the Mortgage in succession to said H.H. Gould, which instrument was recorded in various counties in the states of Montana, Idaho and Wyoming; and

 

WHEREAS, an instrument dated July 1, 1986 was executed by the Company-Montana appointing P.J. Crowley as Co-Trustee in succession to said R. Amundsen, resigned, under the Mortgage and by P.J Crowley accepting the appointment as Co-Trustee under the Mortgage in succession to said R. Amundsen, which instrument was recorded in various counties in the states of Montana, Idaho and Wyoming; and

 

  

6720512v7                           3

  

 

WHEREAS, by the Eighteenth Supplemental Indenture, the Company-Montana appointed (i) W.T. Cunningham as Co-Trustee in succession to said P.J. Crowley, resigned, under the Mortgage and W.T. Cunningham accepted the appointment as Co-Trustee under the Mortgage in succession to said P.J. Crowley, and (ii) The Bank of New York Mellon as Corporate Trustee in succession to Morgan Guaranty Trust Company of New York, resigned, under the Mortgage and The Bank of New York Mellon accepted the appointment as Corporate Trustee under the Mortgage in succession to said Morgan Guaranty Trust Company of New York, which supplemental indenture was recorded in various counties in the states of Montana, Idaho and Wyoming; and

 

WHEREAS, an instrument dated March 29, 1999 was executed by the Company-Montana appointing Douglas J. MacInnes as Co-Trustee in succession to said W.T. Cunningham, resigned, under the Mortgage and by Douglas J. MacInnes accepting the appointment as Co-Trustee under the Mortgage in succession to said W.T. Cunningham, which instrument was recorded in various counties in the states of Montana, Idaho and Wyoming; and

 

WHEREAS, by the Twenty-third Supplemental Indenture, the Company appointed MaryBeth Lewicki as Co-Trustee in succession to said Douglas J. MacInnes, removed, under the Mortgage and MaryBeth Lewicki accepted the appointment as Co-Trustee under the Mortgage in succession to said Douglas J. MacInnes; and

 

WHEREAS, by the Twenty-fifth Supplemental Indenture, the Company appointed Ming Ryan as Co-Trustee in succession to said MaryBeth Lewicki, removed, under the Mortgage and Ming Ryan accepted the appointment as Co-Trustee under the Mortgage in succession to said Mary Beth Lewicki; and

 

WHEREAS, the Company-New Jersey, the Company-Montana or the Company has heretofore issued, in accordance with the provisions of the Mortgage, the following series of First Mortgage Bonds:

 

	
Series

	
Principal

Amount

Issued

	
Principal Amount

Outstanding

	
2-7/8% Series due 1975                                                                       

	
$40,000,000

	
NONE

	
3-1/8% Series due 1984                                                                       

	
6,000,000

	
NONE

	
4-1/2% Series due 1989                                                                       

	
15,000,000

	
NONE

	
8-1/4% Series due 1974                                                                       

	
30,000,000

	
NONE

	
7-1/2% Series due 2001                                                                       

	
25,000,000

	
NONE

	
8-5/8% Series due 2004                                                                       

	
60,000,000

	
NONE

	
8-3/4% Series due 1981                                                                       

	
30,000,000

	
NONE

	
9.60% Series due 2005                                                                       

	
35,000,000

	
NONE

	
9.70% Series due 2005                                                                       

	
65,000,000

	
NONE

 

  

6720512v7                            4

  

 

	
9-7/8% Series due 2009                                                                       

	
50,000,000

	
NONE

	
11-3/4% Series due 1993                                                                       

	
75,000,000

	
NONE

	
10/10-1/8% Series due 2004/2014                                                                       

	
80,000,000

	
NONE

	
8-1/8% Series due 2014                                                                       

	
41,200,000

	
NONE

	
7.70% Series due 1999                                                                       

	
55,000,000

	
NONE

	
8-1/4% Series due 2007                                                                       

	
55,000,000

	
NONE

	
8.95% Series 2022                                                                       

	
50,000,000

	
NONE

	
Secured Medium-Term Notes                                                                       

	
68,000,000

	
NONE

	
7% Series due 2005                                                                       

	
50,000,000

	
NONE

	
6-1/8% Series due 2023                                                                       

	
90,205,000

	
NONE

	
5.90% Series due 2023                                                                       

	
80,000,000

	
NONE

	
0% Series due 1999                                                                       

	
210,321,007

	
NONE

	
7.30% Series due 2006                                                                       

	
150,000,000

	
NONE

	
Collateral (2002) Series due 2006                                                                       

	
280,000,000

	
NONE

	
Collateral (2004) Series A due 2009                                                                       

	
90,000,000

	
NONE

	
Collateral (2004) Series B due 2011                                                                       

	
72,000,000

	
NONE

	
Collateral (2004) Series C due 2014 (Twenty-sixth)

	
161,000,000

	
161,000,000

	
4.65% Series due 2023 (Twenty-seventh)..........

	
170,205,000

	
170,205,000

	
6.04% Series due 2016 (Twenty-eighth)............

	
150,000,000

	
150,000,000

	
6.34% Series due 2019 (Twenty-ninth) .............

	
250,000,000

	
250,000,000

	
5.71% Series due 2039 (Thirtieth) .............

	
55,000,000

	
55,000,000

 

which bonds are also hereinafter sometimes called “Bonds of the First through Thirtieth Series”, respectively; and

 

WHEREAS, Section 8 of the Mortgage provides that the form of each series of bonds (other than the First Series) issued thereunder and of the coupons to be attached to coupon bonds of such series shall be established by Resolution of the Board of Directors of the Company and that the form of such series, as established by said Board of Directors, shall specify the descriptive title of the bonds and various other terms thereof, and may also contain such provisions not inconsistent with the provisions of the Indenture as the Board of Directors may, in its discretion, cause to be inserted therein expressing or referring to the terms and conditions upon which such bonds are to be issued and/or secured under the Indenture; and

 

WHEREAS, Section 120 of the Mortgage provides, among other things, that any power, privilege or right expressly or impliedly reserved to or in any way conferred upon the Company by any provision of the Indenture, whether such power, privilege or right is in any way restricted or is unrestricted, may be in whole or in part waived or surrendered or subjected to any restriction if at the time unrestricted or to additional restriction if already restricted, and the Company may enter into any further covenants, limitations or restrictions for the benefit of any one or more series of bonds issued thereunder, or the Company may cure any ambiguity contained therein or in any supplemental indenture or may (in lieu of establishment by Resolution as provided in Section 8 of the Mortgage) establish the terms and provisions of any series of bonds other than the First Series, by an instrument in writing executed and acknowledged by the Company in such manner as would be necessary to entitle a conveyance of real estate to record in all of the states in which any property at the time subject to the lien of the Indenture shall be situated; and

 

  

6720512v7                            5

  

 

WHEREAS, the Company now desires to create a new series of bonds (the “Bonds of the Thirty-first Series”) and (pursuant to the provisions of Section 120 of the Mortgage) to add to its covenants and agreements contained in the Mortgage certain other covenants and agreements to be observed by it and to alter and amend in certain respects the covenants and provisions contained in the Indenture; and

 

WHEREAS, the execution and delivery by the Company of this Twenty-ninth Supplemental Indenture, and the terms of the Bonds of the Thirty-first Series, hereinafter referred to, have been duly authorized by the Board of Directors of the Company by appropriate Resolutions of said Board of Directors.

 

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

 

That the Company, in consideration of the premises and of $1.00 to it duly paid by the Trustees at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, and in further evidence of assurance of the estate, title and rights of the Trustees and in order further to secure the payment of both the principal of and interest and premium, if any, on the bonds from time to time issued under the Indenture, according to their tenor and effect and the performance of all the provisions of the Indenture (including any modification made as in the Mortgage provided) and of said bonds, and to confirm the lien of the Mortgage, as heretofore supplemented, on certain after-acquired property, hereby grants, bargains, sells, releases, conveys, assigns, transfers, mortgages, pledges, sets over and confirms (subject, however, to Excepted Encumbrances as defined in Section 6 of the Mortgage, as heretofore supplemented) unto Ming Ryan, Co-Trustee, and (to the extent of its legal capacity to hold the same for the purposes hereof) to The Bank of New York Mellon, the Corporate Trustee, as Trustees under the Indenture, and to their successor or successors in said trust, and to said Trustees and their successors and assigns forever, all the following described properties of the Company located in the State of Montana, namely:

 

STEAM ELECTRIC GENERATING STATION

Colstrip Steam Plan Unit 4

Rosebud County

All of the Company’s undivided interest, as tenant in common, in and to that certain steam electric generating station, Unit 4, located near Colstrip, Montana, on the following described real property:

	
Tract A.

	
A tract of land situated in the SE1⁄4NE1⁄4 and the NE1⁄4SE1⁄4 of Section 34, T2N, R41E, P.M.M., lying within the boundary lines of Parcel 4, Certificate of Survey No. 29931 Amended, filed for record in the office of the Clerk and Recorder of Rosebud County as Document No. 37265 and described as follows:

 

  

6720512v7                            6

  

 

Beginning at the northeast corner of the tract herein described, which point lies 2.00 feet North of the centerline of Column Line A and 2.00 feet East of the centerline of Column Line 37 of the Colstrip Unit No. 4 Generation Building, from which point the South 1⁄4 corner of said Section 34 bears South 31o30’59” West, 3,605.61 feet;

 

Thence, from said point of beginning, West a distance of 219.50 feet along the North line of said Generation Building to the intersection with the Centerline of building Column Line 29 projected North;

 

Thence, South a distance of 102.75 feet along the centerline of Column Line 29 to the intersection with the centerline of Column Line Az;

 

Thence, West a distance of 2.50 feet along the centerline of Column Line Az to the intersection with the centerline of Column Line 28.9;

 

Thence, South a distance of 320.75 feet along the centerline of Column Line 28.9 to the North building line of the Colstrip Unit No. 4 Scrubber Building, said point being 2.00 feet North of the centerline of Column Line P;

 

Thence, West a distance of 0.33 feet along said North building line to the northwest corner of said Scrubber Building, said point being 2.00 feet North of the centerline of Column Line P and 2.00 feet West of the centerline of Column Line 28.95;

 

Thence, South a distance of 330.00 feet along the West building line of said Scrubber Building to the centerline of Column Line X, said point lying 2.00 feet West of the centerline of Column Line 28.95;

 

Thence, East a distance of 88.40 feet along the centerline of Column Line X to the intersection with the centerline of Column Line 32.31;

 

Thence, South a distance of 18.50 feet along the centerline of Column Line 32.31 to the most southerly boundary of the herein described tract;

 

Thence, East a distance of 91.21 feet along said southerly boundary to the intersection with the centerline of Column Line 35.81;

 

Thence, North a distance of 18.50 feet along the centerline of said Column Line 35.81 to the centerline of said Column Line X;

 

Thence, East a distance of 88.40 feet along the centerline of Column Line X to the southeast corner of the tract herein described, said point being 2.00 feet East of the centerline of Column Line 37.8;

 

Thence, North a distance of 330.00 feet along the East building line of said Scrubber Building to the northeast corner thereof, said point being 2.00 feet East of the centerline of Column Line 37.8 and 2.00 feet North of the centerline of Column Line P;

 

  

6720512v7                            7

  

 

Thence, West a distance of 45.68 feet along the northerly building line of said Scrubber Building to the East building line of the said Generation Building projected South;

 

Thence, North a distance of 423.50 feet along the said East building line to the point of beginning

 

Containing in all 4.22 acres and more particularly shown on Plat 1 attached hereto and by this reference made a part hereof;

 

together with a non-exclusive easement for the construction, maintenance, repair, replacement and removal of pipelines, water lines, electrical lines and similar facilities presently located upon, over or under or specified in the plans for Unit 4 as located upon, over or under that portion of the Unit 3 Site described in Tract V Schedule 8;

 

and reserving a non-exclusive easement for the construction, maintenance, repair, replacement and removal of pipelines, water lines, electrical lines and similar facilities presently located upon, over or under the above described property for the benefit of that portion of the Unit 3 Site described in Tract V Schedule 8;

 

	
Tract B.

	
A tract of land situated in the NE1⁄4 of Section 34 and the NW1⁄4 of Section 35, Township 2 North, Range 41 East, M.P.M. lying within the boundary lines of Parcel 2 of Certificate of Survey No. 34153, filed for record in the office of the Clerk and Recorder of Rosebud County, Montana, as Document No. 34153 and described as follows:

 

Beginning at the southwest corner of the tract herein described, which point is a point on the East boundary line of the Circulating Water Pump Structure Building for Colstrip Units 3 and 4, from which point the South 1⁄4 corner said Section 34 bears South 30o35’13” West, 4,378.96 feet;

 

Thence from said point of beginning, North along the said East boundary line a distance of 45.58 feet to the centerline lying between the Unit No. 3 and Unit No. 4 Cooling Tower Channels;

 

Thence, along said centerline, North 89o58’17” East, a distance of 597.96 feet to the intersection of said centerline projected easterly with the radius of the Unit No. 4 Cooling Tower Tract;

 

Thence, along the said Unit No. 4 radius along a curve to the right, having a radius of 145.50 feet and a central angle of 332o56’56” for an arc distance of 845.51 feet;

 

  

6720512v7                            8

  

 

Thence, North 48o16’31” West, 19.80 feet;

 

Thence, North 79o28’30” West, 26.77 feet;

 

Thence, South 89o56’53” West, 532.29 feet to the point of beginning and containing in all 2.14 acres, more or less.

 

and more particularly shown on Plat 2 attached hereto and by this reference made a part hereof.

 

	
Tract C.

	
Parcel 3 of Certificate of Survey No. 34152, filed for record in the office of the Clerk and Recorder of Rosebud County, Montana, as Document No. 34152.

 

	
Tract D.

	
The W1⁄2 of Lot 2, All of Lots 3 and 4, and the S1⁄2N1⁄2 of Section 2, Township 1 North, Range 41 East, M.P.M., Rosebud County, Montana, and two tracts in the S1⁄2 of Section 35, Township 2 North, Range 41 East, M.P.M., described as follows:

 

 

	
  

	
Parcel 1:

 

Beginning at the common corner of Sections 34 and 35, Township 2 North, Range 41 East, and Sections 2 and 3, Township 1 North, Range 41 East, which is the true point of beginning; thence N 02o 06’ 11” W along the common line between Sections 34 and 35, a distance of 632.34 feet; thence N 41o 52’ 20” E a distance of 2,126.31 feet; thence S 65o 04’ 46” E a distance of 1,493.70 feet; thence S 05o 36’ 54” E a distance of 1,581.65 feet; to the common lines between Sections 2 and 35; thence S 89o 44’ 06” W a distance of 260.76 feet along the common line between Sections 2 and 35, to the quarter section corner common to Sections 2 and 35; thence S 89o 46’ 14” W a distance of 2,644.79 feet along the common line between Sections 2 and 35 to the true point of beginning.

 

	
  

	
Parcel 2:

 

Beginning at the common corner of Sections 35 and 36; Township 2 North, Range 41 East, and Sections 1 and 2, Township 1 North, Range 41 East; thence S 89o 44’ 06” W along the common line of Sections 2 and 35 a distance of 723.39 feet to a point on the southwesterly boundary of the Burlington Northern Railroad Right of Way, which point is the true point of beginning; thence S 89o 44’ 06” W along the common line of Sections 2 and 35 a distance of 599.14 feet; thence N 02o 22’ 02” W a distance of 1,640.32 feet to a point on the southwesterly boundary of the Burlington Northern Railroad Right of Way; thence S 22o 10’ 32” E along the southwesterly boundary of the Burlington Northern Railroad Right of Way to the true point of beginning.

 

	
Tract E.

	
Land located in Lot 1, and the SE1⁄4NE1⁄4 of Section 3, Township 1 North, Range 41 East, M.P.M., Rosebud County, Montana, described as follows:

 

  

6720512v7                            9

  

 

Beginning at the common corner of Sections 34 and 35, Township 2 North, Range 41 East, and Sections 2 and 3, Township 1 North, Range 41 East, which is the true point of beginning; thence S 89o 43’ 02” W along the common lines between Sections 34 and 3, a distance of 776.23 feet; thence S 01o 31’ 17” W a distance of 2,782.94 feet to the east-west mid-section line of Section 3; thence N 89o 57’ 01” E along the mid-section line a distance of 864.60 feet to the quarter section corner common to sections 2 and 3; thence N 00o 17’ 53” W along the common line between Sections 2 and 3 a distance of 2,785.08 feet to the true point, of beginning..

 

	
Tract F.

	
Township 1 North, Range 42 East, P.M.M.

 

Section 5:                      All

Section 6:                      Lots 1, 2, 3, 4, 5, 6, SE1⁄4, S1⁄2NE1⁄4, E1⁄2SW1⁄4, SE1⁄4NW1⁄4

Section 7:                      NE1⁄4NW1⁄4 and N1⁄2NE1⁄4

Section 8:                      N1⁄2NW1⁄4

 

Township 2 North, Range 42 East, P.M.M.

 

Section 31:                      S1⁄2

Section 32:                      S1⁄2

 

	
Tract G.

	
Parcel 4 of Certificate of Survey No. 29931 Amended, filed for record in the office of the Clerk and Recorder of Rosebud County as Document No. 37265, excluding therefrom the land described in Tract A and in Tract V Schedule 8.

 

	
Tract H.

	
Parcel 2 of Certificate of Survey No. 34153 filed for record in the office of the Clerk and Recorder of Rosebud County, Montana, as Document No. 34153, excluding therefrom Tract B and Tract W Schedule 8.

 

	
Tract I.

	
Easements and rights of way more particularly described in documents recorded in the office of the Clerk and Recorder of Rosebud County, under the following Book and Page Numbers which documents are incorporated herein by this reference and made a part hereof:

 

Book 79 Deeds, page 270

Book 79 Deeds, page 3

Book 79 Deeds, page 688

Book 81 Deeds, page 648

Book 79 Deeds, page 599

Book 79 Deeds, page 582

 

	
Tract J.

	
Parcel A-1 of Certificate of Survey No. 34998 Amended, filed for record in the office of the Clerk and Recorder of Rosebud County, Montana, as Document No. 42209.

 

	
Tract K.

	
Parcel C of Certificate of Survey No. 34153, filed for record in the office of the Clerk and Recorder of Rosebud County, Montana, as Document No. 34153.

 

  

6720512v7                            10

  

 

	
Tract L.

	
Parcel G of Certificate of Survey No. 34996, filed for record in the office of the Clerk and Recorder of Rosebud County, Montana, as Document No. 34996.

 

	
Tract M.

	
Parcel A of Certificate of Survey No. 34994, filed for record in the office of the Clerk and Recorder of Rosebud County, Montana, as Document No. 34994.

 

	
Tract N.

	
Parcel B of Certificate of Survey No. 34152, filed for record in the office of the Clerk and Recorder of Rosebud County, Montana, as Document No. 34152.

 

	
Tract O.

	
Parcels H-1, H-2 and H-3 of Certificate of Survey No. 34995, filed for record in the office of the Clerk and Recorder of Rosebud County, Montana, as Document No. 34995.

 

	
Tract P.

	
Parcels F-1 and F-2 of Certificate of Survey No. 34997, filed for record in the office of the Clerk and Recorder of Rosebud County, Montana, as Document No. 34997.

 

	
Tract Q.

	
Parcels D-1 and D-2 of Certificate of Survey No. 42210, filed for record in the office of the Clerk and Recorder of Rosebud County, Montana, as Document No. 42210.

 

	
Tract R.

	
Tract A and Tract C of Certificate of Survey No. 6100, filed for record in the office of the Clerk and Recorder of Rosebud County, Montana, as Document No. 6100.

 

	
Tract S.

	
A tract of land in Section 13, Township 6 North, Range 39 East, M.P.M., described as follows:

 

That tract of land commencing at the section corner common to Sections 13,14,23, and 24, Township 6 North, Range 39 East, M.P.M.; running thence Northerly along the section line common to Sections 14 and 13 to the Yellowstone River; running thence southeasterly along the Yellowstone River to a point where the south boundary line of section 13 meets the Yellowstone River; thence westerly along the south boundary line of said Section 13 to the point of beginning.

 

	
Tract T.

	
Easements and rights-of-way more particularly described in documents recorded in the office of the Clerk and Recorder of Rosebud County, Montana, under the following Book and Page numbers; which documents are incorporated herein by this reference and made a part hereof:

 

Book 77 Deeds, Page 29

Book 75 Deeds, Page 306

Book 73 Deeds, Page 430

Book 73 Deeds, Page 466

Book 74 Deeds, Page 245

Book 78 Deeds, Page 782

Book 78 Deeds, Page 838

 

  

  

6720512v7                            11

  

 

 

Book 74 Deeds, Page 169

Book 74 Deeds, Page 110

Book 74 Deeds, Page 70

Book 77 Deeds, Page 941

Book 78 Deeds, Page 134

Book 79 Deeds, Page 238

Book 74 Deeds, Page 65

Book 74 Deeds, Page 112

Book 79 Deeds, Page 240

Book 74 Deeds, Page 62

Book 74 Deeds, Page 67

Book 74 Deeds, Page 242

Book 73 Deeds, Page 891

Book 73 Deeds, Page 893

Book 73 Deeds, Page 284

Book 78 Deeds, Page 131,

Book 32 Misc., Page 476;

 

together with all easements and other rights benefiting or appurtenant to any of the foregoing (the “Colstrip Property”);

 

Together with all other property, real, personal and mixed, of the kind or nature specifically mentioned in the Mortgage, as heretofore supplemented, or of any other kind or nature (whether or not located in the State of Montana), acquired by the Company after the date of the execution and delivery of the Mortgage, as heretofore supplemented (except any herein or in the Mortgage, as heretofore supplemented, expressly excepted), now owned or, subject to the provisions of subsection (I) of Section 87 of the Mortgage, as heretofore supplemented, hereafter acquired by the Company (by purchase, consolidation, merger, donation, construction, erection or in any other way) and wheresoever situated, including (without in anywise limiting or impairing by the enumeration of the same the scope and intent of the foregoing, or of any general description contained in the Indenture) all lands, power sites, flowage rights, water rights, water locations, water appropriations, ditches, flumes, reservoirs, reservoir sites, canals, raceways, dams, dam sites, aqueducts and all other rights or means for appropriating, conveying, storing and supplying water; all rights of way and roads; all plants for the generation of electricity by steam, water and/or other power; all powerhouses, gas plants, street lighting systems, standards and other equipment incidental thereto, telephone, radio and television systems, air-conditioning systems and equipment incidental thereto, water works, water systems, steam heat and hot water plants, substations, lines, service and supply systems, bridges, culverts, tracks, ice or refrigeration plants and equipment, offices, buildings and other structures and the equipment thereof, all machinery, engines, boilers, dynamos, electric, gas and other machines, regulators, meters, transformers, generators, motors, electrical, gas and mechanical appliances, conduits, cables, water, steam heat, gas or other pipes, gas mains and pipes, service pipes, fittings, valves and connections, pole and transmission lines, wires, cables, tools, implements, apparatus, furniture and chattels; all franchises, consents or permits, all lines for the transmission and distribution of electric current, gas, steam heat or water for any purpose including towers, poles, wires, cables, pipes, conduits, ducts and all apparatus for use in connection therewith; all real estate, lands, easements, servitudes, licenses, permits, franchises, privileges, rights of way and other rights in or relating to real estate or the occupancy of the same and (except as herein or in the Mortgage, as heretofore supplemented, expressly excepted) all the right, title and interest of the Company in and to all other property of any kind or nature appertaining to and/or used and/or occupied and/or enjoyed in connection with any property hereinbefore or in the Mortgage, as heretofore supplemented, described.

 

  

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TOGETHER with all and singular the tenements, hereditaments, prescriptions, servitudes and appurtenances belonging or in anywise appertaining to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders and (subject to the provisions of Section 57 of the Mortgage) the tolls, rents, revenues, issues, earnings, income, product and profits thereof, and all the estate, right, title and interest and claim whatsoever, at law as well as in equity, which the Company now has or may hereafter acquire in and to the aforesaid property and franchises and every part and parcel thereof.

 

IT IS HEREBY AGREED by the Company that, subject to the provisions of subsection (I) of Section 87 of the Mortgage, as heretofore supplemented, all the property, rights and franchises acquired by the Company (by purchase, consolidation, merger, donation, construction, erection or in any other way) after the date hereof, except any herein or in the Mortgage, as heretofore supplemented, expressly excepted, shall be and are as fully granted and conveyed hereby and as fully embraced within the lien hereof and the lien of the Mortgage, as heretofore supplemented, as if such property, rights and franchises were now owned by the Company and were specifically described herein and conveyed hereby.

 

PROVIDED that the following are not and are not intended to be now or hereafter granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, hypothecated, affected, pledged, set over or confirmed hereunder and are hereby expressly excepted from the lien and operation of the Mortgage, as supplemented, viz:  (1) cash, shares of stock, bonds, notes and other obligations and other securities not specifically pledged, paid, deposited, delivered or held under the Mortgage, as supplemented, or covenanted so to be; (2) merchandise, equipment, apparatus, materials or supplies held for the purpose of sale or other disposition in the usual course of business; fuel, oil and similar materials and supplies consumable in the operation of any of the properties of the Company; all aircraft, tractors, rolling stock, trolley coaches, buses, motor coaches, automobiles, motor trucks, and other vehicles and materials and supplies held for the purpose of repairing or replacing (in whole or part) any of the same; (3) bills, notes and accounts receivable, judgments, demands and choses in action, and all contracts, leases and operating agreements not specifically pledged under the Mortgage, as supplemented, or covenanted so to be; the Company’s contractual rights or other interest in or with respect to tires not owned by the Company; (4) the last day of the term of any lease or leasehold which may be or become subject to the lien of the Mortgage, as supplemented; (5) electric energy, gas, steam, water, ice, and other materials or products generated, manufactured, produced, purchased or acquired by the Company for sale, distribution or use in the ordinary course of its business; all timber, minerals, mineral rights and royalties and all Gas and Oil Production Property, as defined in Section 4 of the Mortgage, as supplemented; (6) the Company’s franchise to be a corporation; and (7) any property heretofore released pursuant to any provisions of the Indenture and not heretofore disposed of by the Company-New Jersey, the Company-Montana, NorthWestern Energy or the Company; provided, however, that the property and rights expressly excepted from the lien and operation of the Mortgage, as supplemented, in the above subdivisions (2) and (3) shall (to the extent permitted by law) cease to be so excepted in the event and as of the date that either or both of the Trustees or a receiver or trustee shall enter upon and take possession of the Mortgaged and Pledged Property in the manner provided in Article XIII of the Mortgage by reason of the occurrence of a Default as defined in Section 65 thereof.

 

  

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TO HAVE AND TO HOLD all such properties, real, personal and mixed, granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed by the Company as aforesaid, or intended so to be, unto the Co-Trustee and (to the extent of its legal capacity to hold the same for the purposes hereto) unto the Corporate Trustee, as Trustees, and their successors and assigns forever.

 

IN TRUST NEVERTHELESS, for the same purposes and upon the same terms, trusts and conditions and subject to and with the same provisos and covenants as are set forth in the Mortgage, as supplemented, this Twenty-ninth Supplemental Indenture being supplemental thereto.

 

AND IT IS HEREBY COVENANTED by the Company that all the terms, conditions, provisos, covenants and provisions contained in the Mortgage, as supplemented, shall affect and apply to the property hereinbefore described and conveyed and to the estate, rights, obligations and duties of the Company and the Trustees and the beneficiaries of the trust with respect to said property, and to the Trustees and their successors as Trustees of said property in the same manner and with the same effect as if the said property had been owned by the Company-New Jersey at the time of the execution of the Mortgage, and had been specifically and at length described in and conveyed to the Trustees, by the Mortgage as a part of the property therein stated to be conveyed.

 

SUBJECT NEVERTHELESS, to the limitation permitted by subsection (I) of Section 87 of the Mortgage, as supplemented, namely, that notwithstanding the foregoing, the Mortgage, as supplemented, shall not become or be or be required to become or be a lien upon any of the properties or franchises owned by the Company on the Transfer Date or thereafter acquired by the Company (by purchase, consolidation, merger, donation, construction, erection or in any other way) except (a) those acquired by it from NorthWestern Energy, and improvements, extensions and additions thereto and renewals and replacements thereof, (b) the property made and used by the Company as the basis under any of the provisions of the Indenture for the authentication and delivery of additional bonds or the withdrawal of cash or the release of property or a credit under Section 39 or Section 40 of the Indenture, and (c) such franchises, repairs and additional property as may be acquired, made or constructed by the Company (1) to maintain, renew and preserve the franchises covered by the Indenture, or (2) to maintain the property mortgaged and intended to be mortgaged under the Indenture as an operating system or systems in good repair, working order and condition, or (3) in rebuilding or renewal of property, subject to the Lien under the Indenture, damaged or destroyed, or (4) in replacement of or substitution for machinery, apparatus, equipment, frames, towers, poles, wire, pipe, tools, implements and furniture, subject to the Lien thereunder, which shall have become old, inadequate, obsolete, worn out, unfit, unadapted, unserviceable, undesirable or unnecessary for use in the operation of the property mortgaged and intended to be mortgaged thereunder; provided, however, that said limitation permitted by subsection (I) of Section 87 of the Mortgage, as supplemented, shall not apply to the Colstrip Property, and the Colstrip Property is by this Twenty-ninth Supplemental Indenture expressly made subject to the Lien of the Mortgage, as supplemented, as hereinbefore provided and shall constitute Mortgaged and Pledged Property.

 

  

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The Company further covenants and agrees to and with the Trustees and their successors in said trust under the Indenture, as follows:

 

ARTICLE I

Thirty-first Series of Bonds

 

Section 1.01.                      General Terms of Bonds to be Issued.

 

(a)           There is hereby created a series of bonds designated: “5.01% Series due 2025” (herein sometimes referred to as the Thirty-first Series; and the bonds of such Thirty-first Series are sometimes hereinafter referred to as the “Bonds”), each of which shall bear the descriptive title “First Mortgage Bond.” Bonds of the Thirty-first Series shall mature on May 1, 2025 and shall be issued as fully registered bonds in denominations of $1,000 and in integral multiples of $1,000; they shall bear interest at the rate of 5.01% per annum, payable in arrears, the first interest payment to be made on November 1, 2010 and shall be for the period from the date of first authentication of the Bonds through October 31, 2010, with subsequent interest payments payable semiannually on May 1 and November 1 of each year (each such payment date, an “Interest Payment Date”) until the principal of the Bonds is paid or made available for payment; subject to Article V hereof, the principal of and interest on each Bond to be payable at the office or agency of the Company in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for public and private debts.  The Bonds shall be dated as in Section 10 of the Mortgage provided.

 

The Bonds shall be issued substantially in the form of Exhibit A hereto.

 

At the option of the registered owner, any Bonds, upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City of New York, shall be exchangeable for a like aggregate principal amount of bonds of the same series of other authorized denominations.

 

The Bonds shall be transferable upon the surrender thereof for cancellation, together with a written instrument of transfer in form approved by the Registrar, duly executed by the registered owner or by his duly authorized attorney, at the office or agency of the Company in the Borough of Manhattan, The City of New York.

 

Upon any exchange or transfer of Bonds, the Company may make a charge therefor sufficient to reimburse it for any tax or taxes or other governmental charge, as provided in Section 12 of the Mortgage, but the Company hereby waives any right to make a charge in addition thereto for any exchange or transfer of Bonds.

 

(b)           Upon the delivery of this Twenty-ninth Supplemental Indenture, Bonds of the Thirty-first Series in the aggregate principal amount of $161,000,000 are to be issued and delivered, pursuant to Article V of the Mortgage, forthwith and will be Outstanding in addition to $161,000,000 aggregate principal amount of Bonds of the Twenty-sixth Series Outstanding $170,205,000 aggregate principal amount of Bonds of the Twenty-seventh Series Outstanding, $150,000,000 aggregate principal amount of Bonds of the Twenty-eighth Series Outstanding, $250,000,000 aggregate principal amount of Bonds of the Twenty-ninth Series Outstanding and $55,000,000 aggregate principal amount of Bonds of the Thirtieth Series Outstanding at the date of delivery of this Twenty-ninth Supplemental Indenture.

 

  

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Section 1.02.                      Redemption.

 

(a)           Except upon the occurrence of a Default as in the Indenture provided, the Bonds will not be subject to any mandatory redemption, sinking fund or other obligation of the Company to amortize, redeem or retire the Bonds prior to maturity and, in any case, the Bonds shall not be redeemable prior to maturity at the option of any holder of Bonds.

 

(b)(i)           Bonds of the Thirty-first Series shall be redeemable, however, at the option of the Company subject to the requirements of the Indenture in whole or in part at any time and from time to time, prior to maturity, upon notice to the Holders of such Bonds at his, her or its address last appearing in the Bond Register by first class mail, mailed not less than 30 days but not more than 60 days prior to the date on which such Bonds are fixed to be redeemed (such date fixed for redemption, the “Redemption Date”), in cash at a redemption price (the “Redemption Price”) equal to (i) the greater of: (A) one hundred per centum (100%) of the principal amount of Bonds to be redeemed then Outstanding, and (B) the Make-Whole Amount, if any, plus (ii) accrued and unpaid interest to the Redemption Date.  In the case of each partial redemption of the Bonds pursuant to this Section 1.02(b)(i), the principal amount of the Bonds to be redeemed shall be allocated by the Company among all of the Bonds at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for redemption.  Any notice of intention to redeem need not specify the Redemption Price but shall be sufficient if it sets forth in brief terms the manner in which the Redemption Price is to be calculated.  Each such notice shall specify the Redemption Date (which shall be a Business Day), the aggregate principal amount of the Bonds to be redeemed on such date, the principal amount of each Bond held by such Holder to be redeemed, and the interest to be paid on the Redemption Date with respect to such principal amount being redeemed, and shall be accompanied by a certificate of an officer of the Company as to the estimated Make-Whole Amount due in connection with such redemption (calculated as if the date of such notice were the Redemption Date), setting forth the details of such computation.  Two Business Days prior to the Redemption Date, the Company shall deliver to each Holder of such Bonds a certificate of an officer specifying the calculation of such Make-Whole Amount as of the specified Redemption Date.

 

(ii)           The Company shall not be required to make transfers or exchanges of Bonds for a period of ten (10) days next preceding any Interest Payment Date, or next preceding any designation of Bonds to be redeemed.  The Company shall not be required to make transfers or exchanges of any Bonds designated in whole or in part for redemption.  Unless the Company defaults in payment of the Redemption Price, on and after the Redemption Date interest will cease to accrue on the Bonds or portions thereof called for redemption.

 

  

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(c)           For purposes of this Section 1.02:

 

 

The term “Make-Whole Amount” means, with respect to any Bond, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Bond over the amount of such Called Principal; provided that the Make-Whole Amount may in no event be less than zero.  For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

 

“Called Principal” means, with respect to any Bond, the principal of such Bond that is to be prepaid pursuant to Section 1.02(b)(i).

 

“Discounted Value” means, with respect to the Called Principal of any Bond, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Bonds is payable) equal to the Reinvestment Yield with respect to such Called Principal.

 

“Reinvestment Yield” means, with respect to the Called Principal of any Bond, .50% (50 basis points) over the yield to maturity implied by (i) the yields reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on the run U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date.  In the case of each determination under clause (i) or clause (ii), as the case may be, of the preceding paragraph, such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the applicable U.S. Treasury security with the maturity closest to and greater than such Remaining Average Life and (2) the applicable U.S. Treasury security with the maturity closest to and less than such Remaining Average Life.  The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Bond.

 

“Remaining Average Life” means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (a) such Called Principal into (b) the sum of the products obtained by multiplying (i) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (ii) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.

 

  

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“Remaining Scheduled Payments” means, with respect to the Called Principal of any Bond, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date; provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Bonds, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 1.02(b)(i).

 

“Settlement Date” means, with respect to the Called Principal of any Bond, the date on which such Called Principal is to be prepaid pursuant to Section 1.02(b)(i).

The Corporate Trustee shall be under no duty to inquire into, may conclusively presume the correctness of, and shall be fully protected in acting upon the calculation by the Company of any Redemption Price of the Bonds.

 

Section 1.03.                      Interest.

 

The Bonds shall bear interest for each Interest Period (as hereinafter defined) at a rate per annum of 5.01%.

 

The period commencing on an Interest Payment Date and ending on the day preceding the next succeeding Interest Payment Date shall be an “Interest Period”; provided that the first Interest Period shall begin on the date of the first authentication of the Bonds and extend through October 31, 2010, the day preceding the first Interest Payment Date.

 

Interest payments for the Bonds will be computed on the basis of a 360-day year consisting of twelve 30-day months.  If an Interest Payment Date or Redemption Date falls on a day that is not a Business Day, such Interest Payment Date or Redemption Date, as the case may be, will be the immediately succeeding Business Day with the same force and effect as if made on the original Interest Payment Date or Redemption Date, as the case may be, and no interest shall accrue for the period from and after such original Interest Payment Date or Redemption Date, as the case may be. All dollar amounts resulting from such calculation will be rounded, if necessary, to the nearest cent with one-half cent rounded upward.

 

Interest on any Bond which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Bond (or one or more Predecessor Bonds) is registered at the close of business on the Record Date for such interest; provided, however, that interest payable at maturity (whether the stated maturity or maturity resulting from declaration of acceleration, call for redemption or otherwise) shall be payable to the Person to whom the principal of such Bond shall be payable.

 

  

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ARTICLE II

Definitions

Section 2.01.                      Definitions.

 

The following terms shall have the meanings provided herein for all purposes of this Supplemental Indenture, unless the context clearly requires otherwise (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

 

“Bond Purchase Agreement” means that certain Bond Purchase Agreement dated April 26, 2010 between the Company and the Purchasers of the Bonds listed in Schedule A thereto.

 

“Business Day” means any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law or executive order to close in The City of New York.

 

“Holder” means a Person in whose name a Bond is registered.

 

“Person” means an individual, partnership, corporation, limited liability company, unincorporated organization, association, joint-stock company, trust, joint venture, government, or any agency or political subdivision thereof or any other entity.

 

“Predecessor Bond” of any particular Bond means every previous Bond evidencing all or a portion of the same debt as that evidenced by such particular Bond; and, for the purposes of this definition, any Bond authenticated and delivered under Section 16 of the Indenture in exchange for or in lieu of a mutilated, destroyed, lost or stolen Bond shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Bond.

 

“Record Date” means, with respect to any Interest Payment Date, the April 15 or October 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date.

 

“Registrar” means the Person appointed by the Company to maintain the Bond register, in which register, subject to such reasonable regulations as the Company may prescribe, the Company shall provide for the registration of Bonds and for the exchange and transfer of Bonds.

 

ARTICLE III

Reservation of Right to Make Amendments

 

Section 3.01.                      The Company reserves the right, without any consent or other action by holders of Bonds of the Thirty-first Series, or bonds of any subsequent series, to make such amendments to the Mortgage (as supplemented) as shall be necessary in order to cause there to be excluded from the Mortgaged and Pledged Property and the Lien of the Mortgage (as supplemented) at all times, including, without limitation, in the event and following the date that either or both of the Trustees or a receiver of trustee shall enter upon and take possession of the Mortgaged and Pledged Property in the manner provided in Article XIII of the Mortgage (as supplemented) by reason of the occurrence of a Default as defined in Section 65 thereof, all of the Company’s right, title and interest, whenever arising or acquired, in, to and under all accounts (as defined in the Uniform Commercial Code as in effect from time to time in the State of New York), all accounts receivable, all payments for goods sold or leased or for services rendered (whether or not they have been earned by performance), all rights in any merchandise or goods which any of the foregoing may represent, all rights, title, security and guaranties with respect to any or all of the foregoing, and all proceeds (as defined in the Uniform Commercial Code as in effect from time to time in the State of New York) of, and all collections from or with respect to, any or all of the foregoing.

 

  

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Section 3.02                      The Company reserves the right, without any consent or other action by holders of Bonds of the Thirty-first Series, or holders of bonds of any subsequent series, to make the following amendments to Section 120 of the Mortgage (as supplemented): (i) to substitute for the words “adversely affecting any bonds then Outstanding hereunder”, which appear at the end of the last sentence of such Section, the words “which adversely affects the interests of the Holders of any of the bonds then Outstanding in any material respect”; and (ii) to add at the end of the first sentence of such Section the following:

 

; or the Company may correct or supplement any provision herein or in any supplemental indenture which may be defective or inconsistent with any other provision herein or in any supplemental indenture; or the Company may make other changes to the provisions hereof or of any supplemental indenture or add new provisions hereto or to any supplemental indenture or eliminate provisions here from or from any supplemental indenture, provided that the same does not adversely affect the interests of the Holders of any of the bonds then Outstanding in any material respect.

 

ARTICLE IV

 

Amendments to Mortgage

 

Section 4.01.                      So long as any of the Bonds of the Thirty-first Series remain Outstanding, Section 7 of the Mortgage is amended by adding at the end thereof the following additional paragraphs:

 

If any bonds Outstanding at the date of a Net Earning Certificate (except any for the refunding of which the bonds applied for are to be issued) or any bonds then applied for in pending applications (including the application in connection with which such Net Earning Certificate is made) bear or are to bear interest at a variable rate or variable rates such that the interest requirements with respect to such bonds for any twelve (12) month period prior to the stated maturity date of such bonds are not determinable at the date of such Net Earning Certificate (any such bonds being referred to as “Variable Rate Bonds”), then (in lieu of setting forth the Annual Interest Requirements (as otherwise prescribed by this Section 7), such Net Earning Certificate shall (A) set forth (i) the sum of the amounts required by clauses (i) through (iv) of paragraph (B) of this Section 7 (in the case of such clauses (i) and (ii), excluding the interest requirements in respect of the Variable 

 

  

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Rate  Bonds) (the sum of such amounts being referred to herein and to be referred to in such Net Earning Certificate as the “Fixed Rate Interest Amount”), and (ii) the amount (referred to herein and to be referred to in such Net Earning Certificate as the “Maximum Permitted Variable Rate Interest Amount”) by which (x) one-half of the Adjusted Net Earnings of the Company set forth in such Net Earning Certificate, exceeds (y) the Fixed Rate Interest Amount set forth in such Net Earning Certificate, and (ii) if such Net Earning Certificate is accompanied by a certificate of an independent (as hereinafter defined) investment banking firm, signed by a managing director or officer thereof, to the effect that, based upon historical fluctuations in the indices upon which the variable rate or variable rates home by the Variable Rate Bonds are based, and taking into account the margins to be added to or subtracted from such indices and/or any other adjustments to be made in determining such variable rate or variable rates and prevailing and projected conditions in the markets influencing such indices, such independent (as hereinafter defined) investment banking firm believes (or is of the view), as of the date of such certificate, that the aggregate amount of interest to be payable on all of the Variable Rate Bonds during any period of twelve (12) months prior to the stated maturity date last to occur of any of the Variable Rate Bonds will not exceed the Maximum Permitted Variable Rate Interest Amount (as calculated by the Company in such Net Earning Certificate without any responsibility on the part of such independent (as hereinafter defined) investment banking firm for the calculation thereof), such Net Earning Certificate shall be deemed for all purposes of the Mortgage (including, without limitation, Sections 26, 28 and 29 of the Mortgage) to show Adjusted Net Earnings of the Company to be as required by Section 27 of the Mortgage. As used in this Section 7, “independent” means, with respect to an investment banking firm that provides a certificate pursuant to this Section 7, that: (i) such investment banking firm is competent to provide such certificate (and such investment banking firm shall be conclusively presumed to be competent to provide such certificate if such investment banking firm is an investment banking firm of nationally recognized standing and engages in interest rate swap transactions in the ordinary course of its business); (ii) such investment banking firm does not have any direct or indirect investment in the Company or in any bonds that, as of the date of such certificate, are Outstanding or the subject of a pending application for authentication and delivery under the Mortgage (including, without limitation, any bonds that are subject of the Net Earning Certificate to which such certificate relates) or in any affiliate of the Company (other than de minimus amounts of loans or securities of the Company or affiliates of the Company held in its or its affiliates’ accounts and any investment in, or ownership of, additional securities or loans of the Company or affiliates of the Company resulting from its market making activities in the ordinary course of its business); (iii) such investment banking firm is not, and none of its officers or directors is, an affiliate of the Company; and (iv) such investment banking firm is not acting as an underwriter with respect to any bonds that are the subject of the Net Earning Certificate to which such certificate relates or as an arranger or provider of the loans, extensions of credit or other securities (if any) for which such bonds are collateral security.

 

  

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If the Company is a successor corporation (within the meaning of Section 86 of this Indenture), the “Adjusted Net Earnings of the Company” as set forth in each Net Earning Certificate shall be calculated as described in the last two sentences of Section 86 of this Indenture.

 

Section 4.02.                      So long as any of the Bonds of the Thirty-first Series remain Outstanding, Section 27 of the Mortgage is amended by adding at the end thereof the following additional sentence:

 

As described in the penultimate paragraph of Section 7 hereof, and subject to the conditions therein specified, a Net Earning Certificate shall be deemed to show Adjusted Net Earnings of the Company to be as required by this Section 27 (without any necessity for such Net Earning Certificate to specify Annual Interest Requirements).

 

Section 4.03.                      So long as any of the Bonds of the Thirty-first Series are Outstanding, Section 86 of the Mortgage is amended by adding at the end thereof the following additional sentences:

 

For the avoidance of any doubt, it is expressly stated that in the event that a successor corporation (having succeeded to and having been substituted for the Company in accordance with this Section 86) shall exercise any right under this Indenture (whether as to the issuance of additional bonds (including, without limitation, the Bonds of the Thirty-first Series), the withdrawal of cash, the release of property, the taking of credit under Section 39 or Section 40 hereof, or otherwise) and a Net Earning Certificate shall be required by the terms of this Indenture in connection therewith, the “Adjusted Net Earnings of the Company” shall be, and shall be stated in such Net Earning Certificate to be, the lesser of (A) the amount (for the applicable period selected in accordance with paragraph (A) of Section 7 of this Indenture) determined in accordance with paragraph (A) of Section 7 of this Indenture (and the other provisions of such Section 7 that are relevant to such paragraph) on the basis of (i) the items set forth in clauses (1), (2), (4) and (6) of paragraph (A) of such Section 7 being such portions of such items of such successor corporation as are reasonably allocated by such successor corporation to or from the Mortgaged and Pledged Property as a plant or plants and an operating system or operating systems (and if, on the date of a Net Earning Certificate, such successor corporation shall be a party to any other general or first mortgage indenture and deed of trust relating to property other than the Mortgaged and Pledged Property and the lien of such other mortgage indenture and deed of trust shall not have been discharged, such reasonable allocation shall be in a manner consistent with the manner of allocation utilized and/or to be utilized by such successor corporation in making 

 

 

  

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calculations of the “Adjusted Net Earnings of the Company” (or other comparable term) under and as defined in such other mortgage indenture and deed of trust), (ii) the item set forth in clause (8) of paragraph (A) of such Section 7 being calculated without regard to income (net) derived from any electric and/or gas utility business of the successor corporation in which the Mortgaged and Pledged Property is not utilized (but otherwise in accordance with such Section 7), and (iii) the item set forth in clause (10) of paragraph (A) of such Section 7 being calculated without regard to sub-clause (b) of such clause and without regard to the proviso to such clause (but otherwise in accordance with such clause), and (B) the amount (for the applicable period selected in accordance with paragraph (A) of Section 7 of this Indenture) determined in accordance with paragraph (A) of Section 7 of this Indenture (and the other provisions of such Section 7 that are relevant to such paragraph) (without any allocation or distinction as to the derivation of the items set forth in any of the clauses of paragraph (A) of such Section 7, other than allocation or distinction between (i) the electric and/or gas utility business or businesses in which such successor corporation is engaged (whether or not the Mortgaged and Pledged Property is utilized in connection therewith), and (ii) the other business or businesses in which such successor corporation is engaged (with such other business or businesses being given effect under the items set forth in clauses (8) and (10) of paragraph (A) of such Section 7)). Each such Net Earning Certificate shall contain a statement of the signers of such Net Earning Certificate that, in the opinion of such signers, the allocations made in the calculations of “Adjusted Net Earnings of the Company” as set forth in such Net Earning Certificate are in accordance with the requirements of the preceding sentence of this Section 86.

 

Section 4.04                      For so long as any Bonds of the Thirty-first Series are Outstanding, the Company shall not subject, or permit to be subjected, any Mortgaged and Pledged Property under the Mortgage to the lien of the Company’s General Mortgage Indenture and Deed of Trust dated as of August 1, 1993, as amended and supplemented.

 

ARTICLE V

 

Home Office Payment

 

So long as any Purchaser (as such term is defined in the Bond Purchase Agreement) or its nominee shall be the Holder of any Bond of the Thirty-first Series, and notwithstanding anything contained in the Indenture or in such Bond of the Thirty-first Series to the contrary, the Company will pay all sums becoming due on such Bond of the Thirty-first Series for principal or premium, if any, and interest by the method and at the address specified for such purpose below such Holder’s name in Schedule A to the Bond Purchase Agreement, as certified to the Corporate Trustee by the Company, or by such other method or at such other address as such Holder shall have from time to time specified to the Company and the Trustee in writing for such purpose, without the presentation or surrender of such Bond of the Thirty-first Series unless such Bond is to be paid or redeemed in full, in which case, as a condition to such payment, such Bond shall be presented and surrendered at the place of payment most recently designated by the Company pursuant to Section 13 of the Indenture.  Prior to any sale or other disposition of any Bond of the Thirty-first Series held by any such Holder, such Holder, by its acceptance of a Bond, agrees that it will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Bond of the Thirty-first Series to the Trustee in exchange for a new Bond of the Thirty-first Series or Bonds of the Thirty-first Series  in a principal amount giving effect to such payments of principal and interest pursuant to Section 13 of the Indenture, and in either case shall promptly notify the Company and the Trustee of the name and address of the transferee of any such Bond so sold or disposed of.  The Company will afford the benefits of this Article V to any Institutional Investor (as such term is defined in the Bond Purchase Agreement) that is the direct or indirect transferee of any Bond of the Thirty-first Series purchased by any such Purchaser or its nominee and that has made the same agreement relating to such Bond of the Thirty-first Series as such Purchasers have made in this Article V.

 

  

6720512v7                           23

  

 

 

ARTICLE VI

Miscellaneous Provisions

Section 6.01. Subject to the amendments provided for in this Twenty-ninth Supplemental Indenture, the terms defined in the Mortgage, as heretofore supplemented, shall, for all purposes of this Twenty-ninth Supplemental Indenture, have the meanings specified in the Mortgage, as heretofore supplemented.

 

Section 6.02. The Trustees hereby accept the trusts herein declared, provided, created or supplemented and agree to perform the same upon the terms and conditions herein and in the Mortgage, as heretofore supplemented, set forth and upon the following terms and conditions:

 

The Trustees shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Twenty-ninth Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely. In general, each and every term and condition contained in Article XVII of the Mortgage shall apply to and form part of this Twenty-ninth Supplemental Indenture with the same force and effect as if the same were herein set forth in full with such omissions, variations and insertions, if any, as may be appropriate to make the same conform to the provisions of this Twenty-ninth Supplemental Indenture.

 

Section 6.03. Whenever in this Twenty-ninth Supplemental Indenture any of the parties hereto is named or referred to, this shall, subject to the provisions of Articles XVI and XVII of the Mortgage, be deemed to include the successors and assigns of such party, and all the covenants and agreements in this Twenty-ninth Supplemental Indenture contained by or on behalf of the Company, or by or on behalf of the Trustees shall, subject as aforesaid, bind and inure to the respective benefit of the respective successors and assigns of such parties, whether so expressed or not.

 

Section 6.04. Nothing in this Twenty-ninth Supplemental Indenture, expressed or implied, is intended, or shall be construed, to confer upon, or to give to, any person, firm or corporation, other than the parties hereto and the holders of the bonds and coupons Outstanding under the Indenture, any right, remedy or claim under or by reason of this Twenty-ninth Supplemental Indenture or any covenant, condition, stipulation, promise or agreement hereof, and all the covenants, conditions, stipulations, promises and agreements in this Twenty-ninth Supplemental Indenture contained by or on behalf of the Company shall be for the sole and exclusive benefit of the parties hereto, and of the holders of the bonds and coupons Outstanding under the Indenture.

 

  

6720512v7                           24

  

 

Section 6.05. This Twenty-ninth Supplemental Indenture shall be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

 

  

6720512v7                           25

  

 

IN WITNESS WHEREOF, NORTHWESTERN CORPORATION has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by one of its Vice Presidents, and its seal to be attested by its Corporate Secretary or one of its Assistant Corporate Secretaries for and in its behalf, and THE BANK OF NEW YORK MELLON, in token of its acceptance of the trust hereby created, has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by one of its Vice Presidents or one of its Assistant Vice Presidents, and its corporate seal to be attested by one of its Assistant Vice Presidents, Assistant Secretaries or Assistant Treasurers, and Ming Ryan, for all like purposes, has hereunto set her hand and affixed her seal, as of the day and year first above written.

 

                NORTHWESTERN CORPORATION

 

 

                By: _________________________________

                Vice President

[SEAL]

 

Attest:

 

_____________________________

Assistant Corporate Secretary

 

Executed, sealed and delivered by

 

NORTHWESTERN CORPORATION

in the presence of:

 

_______________________________________

 

_______________________________________

 

 

 

 

[Signature Page to the Twenty-ninth Supplemental Indenture]

 

  

6720512v7                             26

  

STATE OF __________________ )

) ss.

COUNTY OF  ________________ )

 

This instrument was acknowledged before me on this ___ day of ________, 2010, by ___________________________, Vice President, of NORTHWESTERN CORPORATION, a Delaware corporation.

 

                ________________________________

                Notary Public

 

[SEAL]

 

 

 

 

 

 

 

 

 

[Acknowledgment to the Twenty-ninth Supplemental Indenture]

 

 

  

6720512v7                           27

  

 

                THE BANK OF NEW YORK MELLON,

                   as Corporate Trustee

                By: _________________________________

                Name:

                Title:

[SEAL]

 

Attest:

 

_______________________________

Name:

Title:

 

                                   ____________________________________L.S..

                Ming Ryan, as Co-Trustee

 

Executed, sealed and delivered by

THE BANK OF NEW YORK MELLON and

Ming Ryan in the presence of:

 

_________________________________

 

_________________________________

 

 

 

 

 

 

[Signature Page to the Twenty-ninth Supplemental Indenture]

 

  

6720512v7                           28

  

STATE OF NEW YORK                                           )

) ss.

COUNTY OF NEW YORK                                                      )

 

This instrument was acknowledged before me on this ___ day of _________, 2010, by ___________________________, ____________________ of THE BANK OF NEW YORK MELLON, a New York corporation.

 

                ________________________________

                Notary Public

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Acknowledgment to the Twenty-ninth Supplemental Indenture]

 

  

6720512v7                           29

  

STATE OF NEW YORK                                           )

) ss.

COUNTY OF NEW YORK                                                      )

 

This instrument was acknowledged before me on this ___ day of __________, 2010, by MING RYAN.

 

                ________________________________

                Notary Public

 

 

 

 

 

 

 

 

 

 

[Acknowledgment Page to the Twenty-ninth Supplemental Indenture]

 

  

6720512v7                                     30

  

EXHIBIT A

 

FORM OF BOND

 

(FACE OF BOND)

 

THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) AND MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED OR PLEDGED UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF SUCH ACT OR AN EXEMPTION THEREFROM IS AVAILABLE, EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH AN EXEMPTION IS REQUIRED BY LAW.

 

 

NORTHWESTERN CORPORATION

FIRST MORTGAGE BOND, 5.01% SERIES DUE 2025

	
No. TR-[______]

	
CUSIP: _____________

$______________

	  	  

NORTHWESTERN CORPORATION, a corporation organized and existing under the laws of the State of Delaware (hereinafter called the Company), for value received, hereby promises to pay to ______________________ or its registered assigns, on May 1, 2025, at the office or agency of the Company in the Borough of Manhattan, The City of New York, $______________ dollars in such coin or currency of the United States of America as at the time of payment is legal tender for public and private debts, and to pay to the registered owner hereof interest thereon from the date of first authentication of Bonds of the series herein designated, at the rate per annum of 5.01% (computed on the basis of a 360-day year of twelve 30-day months), in like coin or currency at such office or agency on May 1 and November 1 in each year, until the Company’s obligation with respect to the payment of such principal shall have been discharged.

 

This Bond is issued by the Company pursuant to the Twenty-ninth Supplemental Indenture (as hereinafter defined). The terms of this Bond shall be those specified herein and pursuant to the Mortgage (as hereinafter defined), as heretofore amended and supplemented, including by the Twenty-ninth Supplemental Indenture.

 

The provisions of this Bond are continued on the reverse hereof and such continued provisions shall for all purposes have the same effect as though set fully forth at this place.

 

This Bond shall not become obligatory until The Bank of New York Mellon, the Corporate Trustee under the Mortgage, or its successor thereunder, shall have signed the form of authentication certificate endorsed hereon.

 

  

6720512v7

  

IN WITNESS WHEREOF, NORTHWESTERN CORPORATION has caused this instrument to be signed in its corporate name by its Chairman of the Board or its President or one of its Vice-Presidents by his signature or a facsimile thereof, and its corporate seal to be impressed or imprinted hereon and attested by its Secretary or one of its Assistant Secretaries by his/her signature or a facsimile thereof.

 

Dated: _____________________.

 

                 NORTHWESTERN CORPORATION

 

                 By ____________________________

 

 

 

Attest: ____________________________

 

  

6720512v7

  

CORPORATE TRUSTEE’S AUTHENTICATION CERTIFICATE

 

This Bond is one of the Bonds, of the series herein designated, described or provided for in the within-mentioned Mortgage.

 

                 THE BANK OF NEW YORK MELLON,

                     as Corporate Trustee

   

 

                 By ____________________________

                       Authorized Signatory

 

  

6720512v7

  

(REVERSE OF BOND)

 

General

 

This Bond is one of an issue of Bonds of the Company issuable in series and is one of a series known as its First Mortgage Bonds, 5.01% Series due 2025, all Bonds of all series issued and to be issued under and equally secured (except in so far as any sinking or other fund, established in accordance with the provisions of the Mortgage hereinafter mentioned, may afford additional security for the Bonds of any particular series) by a Mortgage and Deed of Trust (herein, together with any indenture supplemental thereto, called the Mortgage), dated as of October 1, 1945, executed by the Company to Guaranty Trust Company of New York (The Bank of New York Mellon, successor) and Arthur E. Burke (Ming Ryan, successor), as Trustees. Reference is made to the Mortgage for a description of the property mortgaged and pledged, the nature and extent of the security, the rights of the holders of the Bonds and of the Trustees in respect thereof, the duties and immunities of the Trustees and the terms and conditions upon which the Bonds are and are to be secured and the circumstances under which additional Bonds may be issued. With the consent of the Company and to the extent permitted by and as provided in the Mortgage, the rights and obligations of the Company and/or the rights of the holders of the Bonds and/or coupons and/or the terms and provisions of the Mortgage may be modified or altered by affirmative vote of the holders of at least 66 2/3% in principal amount of the Bonds then outstanding under the Mortgage and, if the rights of the holders of one or more, but less than all, series of Bonds then outstanding are to be affected, then also by affirmative vote of the holders of at least 66 2/3% in principal amount of the Bonds then outstanding of each series of Bonds so to be affected (excluding in any case Bonds disqualified from voting by reason of the Company’s interest therein as provided in the Mortgage); provided that, without the consent of the holder hereof, no such modification or alteration shall, among other things, impair or affect the right of the holder to receive payment of the principal of (and premium, if any) and interest on this Bond, on or after the respective due dates expressed herein, or permit the creation of any lien equal or prior to the lien of the Mortgage or deprive the holder of the benefit of a lien on the mortgaged and pledged property.

 

The principal hereof may be declared or may become due prior to the maturity date hereinbefore named on the conditions, in the manner and at the time set forth in the Mortgage, upon the occurrence of a Default as in the Mortgage provided.

 

This Bond is transferable as prescribed in the Mortgage by the registered owner hereof in person, or by his duly authorized attorney, at the office or agency of the Company in the Borough of Manhattan, The City of New York, upon surrender and cancellation of this Bond, and upon payment, if the Company shall require it, of the transfer charges provided for in the Twenty-ninth Supplemental Indenture hereinafter referred to, and, thereupon, a new fully registered Bond of the same series for a like principal amount will be issued to the transferee in exchange herefor as provided in the Mortgage; provided that, this Bond shall also be subject to the restrictions on transfer and exchange that appear above. The Company and the Trustees may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment and for all other purposes and neither the Company nor the Trustees shall be affected by any notice to the contrary.

 

  

6720512v7

  

In the manner prescribed in the Mortgage, any Bonds of this series, upon surrender thereof, for cancellation, at the office or agency of the Company in the Borough of Manhattan, The City of New York, are exchangeable for a like aggregate principal amount of registered Bonds of the same series of other authorized denominations.

 

No recourse shall be had for the payment of the principal of or interest on this Bond against any incorporator or any past, present or future subscriber to the capital stock, stockholder, officer or director of the Company or of any predecessor or successor corporation, as such, either directly or through the Company or any predecessor or successor corporation, under any rule of law, statute or constitution or by the enforcement of any assessment or otherwise, all such liability of incorporators, subscribers, stockholders, officers and directors being released by the holder or owner hereof by the acceptance of this Bond and being likewise waived and released by the terms of the Mortgage.

 

Capitalized terms used in this Bond shall have the meanings ascribed to them in the Twenty-ninth Supplemental Indenture hereinafter referred to.

 

Interest

 

The Bonds shall bear interest for each Interest Period (as hereinafter defined) at a rate per annum of 5.01% (the “Interest Rate”), as set forth in Section 1.01 of the Twenty-ninth Supplemental Indenture, dated as of May 1, 2010, between the Company and the Trustees (such supplemental indenture, the “Twenty-ninth Supplemental Indenture”).

 

The period commencing on an Interest Payment Date and ending on the day preceding the next succeeding Interest Payment Date shall be an “Interest Period,” provided that the first Interest Period shall begin on the date of the first authentication of the Bonds and extend through October 31, 2010, the day preceding the first Interest Payment Date.  Interest on this Bond shall accrue from the date of the first authentication of the Bonds to the first Interest Payment Date and, thereafter, shall accrue from the most recent Interest Payment Date to which interest has been paid or duly provided for.

 

Interest payments for the Bonds will be computed on the basis of a 360-day year consisting of twelve 30-day months. If an Interest Payment Date or Redemption Date falls on a day that is not a Business Day, such Interest Payment Date or Redemption Date, as the case may be, will be the immediately succeeding Business Day with the same force and effect as if made on the original Interest Payment Date or Redemption Date, as the case may be, and no interest shall accrue for the period from and after such original Interest Payment Date or Redemption Date, as the case may be. All dollar amounts resulting from such calculation will be rounded, if necessary, to the nearest cent with one-half cent rounded upward.

 

Interest on any Bond which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Bond (or one or more Predecessor Bonds) is registered at the close of business on the Record Date for such interest; provided, however, that interest payable at maturity (whether the stated maturity or maturity resulting from declaration of acceleration, call for redemption or otherwise) shall be payable to the Person to whom the principal of such Bond shall be payable.

 

  

6720512v7

  

Redemption

 

The Bonds shall be redeemable at the option of the Company in whole or in part at any time and from time to time, prior to maturity, upon notice to the Holders of such Bonds at his, her or its address last appearing in the Bond Register by first class mail, mailed not less than 30 days but not more than 60 days prior to the date on which such Bonds are fixed to be redeemed (such date fixed for redemption, the “Redemption Date”), in cash at a redemption price (the “Redemption Price”) equal to (i) the greater of: (A) one hundred per centum (100%) of the principal amount of Bonds to be redeemed then Outstanding, and (B) the Make-Whole Amount, if any, plus (ii) accrued and unpaid interest to the Redemption Date.  Any notice of intention to redeem need not specify the Redemption Price but shall be sufficient if it sets forth in brief terms the manner in which the Redemption Price is to be calculated.  Each such notice shall specify the Redemption Date (which shall be a Business Day), the aggregate principal amount of the Bonds to be redeemed on such date, the principal amount of each Bond held by such Holder to be redeemed, and the interest to be paid on the Redemption Date with respect to such principal amount being redeemed, and shall be accompanied by a certificate of an officer of the Company as to the estimated Make-Whole Amount due in connection with such redemption (calculated as if the date of such notice were the Redemption Date), setting forth the details of such computation.  Two Business Days prior to the Redemption Date, the Company shall deliver to each Holder of such Bonds a certificate of an officer specifying the calculation of such Make-Whole Amount as of the specified Redemption Date.

 

 

The term “Make-Whole Amount” means, with respect to any Bond, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Bond over the amount of such Called Principal; provided that the Make-Whole Amount may in no event be less than zero.  For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

 

“Called Principal” means, with respect to any Bond, the principal of such Bond that is to be prepaid pursuant to Section 1.02(b)(i).

 

“Discounted Value” means, with respect to the Called Principal of any Bond, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Bonds is payable) equal to the Reinvestment Yield with respect to such Called Principal.

 

“Reinvestment Yield” means, with respect to the Called Principal of any Bond, .50% (50 basis points) over the yield to maturity implied by (i) the yields reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on the run U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date.  In the case of each determination under clause (i) or clause (ii), as the case may be, of the preceding paragraph, such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the applicable U.S. Treasury security with the maturity closest to and greater than such Remaining Average Life and (2) the applicable U.S. Treasury security with the maturity closest to and less than such Remaining Average Life.  The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Bond.

 

  

6720512v7

  

“Remaining Average Life” means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (a) such Called Principal into (b) the sum of the products obtained by multiplying (i) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (ii) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.

 

“Remaining Scheduled Payments” means, with respect to the Called Principal of any Bond, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date; provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Bonds, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 1.02(b)(i).

 

“Settlement Date” means, with respect to the Called Principal of any Bond, the date on which such Called Principal is to be prepaid pursuant to Section 1.02(b)(i).

The Corporate Trustee shall be under no duty to inquire into, may conclusively presume the correctness of, and shall be fully protected in acting upon the calculation by the Company of any Redemption Price of the Bonds.

 

The Company shall not be required to make transfers or exchanges of Bonds for a period of ten (10) days next preceding any Interest Payment Date, or next preceding any designation of Bonds to be redeemed.  The Company shall not be required to make transfers or exchanges of any Bonds designated in whole or in part for redemption.

 

 

  

6720512v7

  

INSTRUMENT OF ASSIGNMENT AND TRANSFER

 

FOR VALUE-RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s) unto

 

Identifying Number of Assignee _________________________________________________

 

__________________________________________________________________________________

 

__________________________________________________________________________________

 

__________________________________________________________________________________

 

(Please print or typewrite name and address,

 

including zip code of Assignee)

 

the within Bond and all rights thereunder, hereby irrevocably constituting and appointing _____  attorney to transfer said Bond on the books of the Company, with full power of substitution in the premises.

 

Dated:  ____________________________

 

 

 

                 ___________________________________

                 Name:

 

	
NOTICE:

	
The signature to this assignment must correspond with the name as written upon the first page of the within instrument in every particular, without alteration or enlargement or any change whatsoever.

 

__________________________

Signature Guarantee

 

SIGNATURE GUARANTEE

 

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

  

6720512v7

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