AMENDED AND RESTATED
TERM LOAN AGREEMENT
THIS AMENDED AND RESTATED TERM LOAN AGREEMENT, dated as of December 30,
1988 (the "Agreement"), is made by and among KANSALLIS-OSAKE-PANKKI, a bank
organized and existing under the laws of Finland, acting through its New York
branch ("KOP"), CREDIT SUISSE, a bank organized and existing under the laws of
Switzerland, acting through its New York branch ("CS") as lenders (KOP and CS
are hereinafter referred to sometimes as a "Term Lender" and collectively as
"Term Lenders"), POWER RESOURCES, INC., a corporation organized and existing
under the laws of the State of Texas, as borrower ("Borrower"), and CREDIT
SUISSE, a bank organized and existing under the laws of Switzerland, acting
through its New York branch, as agent, ("Agent"), in respect of a term loan in
the maximum principal sum of ONE HUNDRED SIXTY-FIVE MILLION DOLLARS
($165,000,000).
WHEREAS, the Borrower, the Term Lenders and the Agent have entered into
that certain Term Loan Agreement dated as of December 31, 1986 (the "Original
Term Loan Agreement"); and
WHEREAS, the Borrower, the Term Lenders and the Agent desire to amend and
restate the Original Term Loan Agreement as herein provided;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged hereby, the parties hereto agree to amend
and restate the Original Term Loan Agreement as follows:
ARTICLE 1 - DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings assigned to them:
Accounts.
The term "Accounts" means the Additional Collateral Account, the Debt
Protection Account, the Maintenance Reserve Account, the Project Control Account
and the Special Operating Account.
Additional Collateral Account.
The term "Additional Collateral Account" means the account established by
Borrower at the Agent in accordance with Section 4.2 hereof.
Adjusted CD Rate.
The term "Adjusted CD Rate" shall mean, on any day, the sum (rounded
upwards to the nearest 1/100th of 1%) as determined by the Agent of (i) the rate
obtained by dividing (x) the weighted average of the Certificate of Deposit Base
Rate of each of the Co-Managers for such day by (y) an amount equal to 1 minus
the maximum stated reserve requirement (expressed as a decimal) as specified in
Regulation D that would be applicable during the Interest Period to which such
Adjusted CD Rate is to apply to a new U.S. dollar nonpersonal time deposit in
the United States (with a maturity equal to the Interest Period for which an
Adjusted CD Rate is being determined) of a member bank of the Federal Reserve
System in New York City with deposits exceeding one billion dollars (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves applicable to such liability), plus (ii) the then maximum daily net
annual assessment rate as calculated by the Agent for determining the then
current annual assessment payable by a Co-Manager to the Federal Deposit
Insurance Corporation for insuring such U.S. dollar deposits in the United
States.
Adjusted CP Rate.
The term "Adjusted CP Rate" shall mean, on any day, the sum (rounded
upwards to the nearest 1/100th of 1%) as determined by the Agent of (i) the rate
obtained by dividing (x) the weighted average of the Commercial Paper Base Rate
of each of the Co-Managers for such day by (y) an amount equal to 1 minus the
maximum stated reserve requirement (expressed as a decimal) as specified in
Regulation D that would be applicable during the Interest Period to which such
Adjusted CP Rate is to apply to new U.S. dollar commercial paper in the United
States (with a maturity equal to the Interest Period for which an Adjusted CP
Rate is being determined) of a member bank of the Federal Reserve System in New
York City with deposits exceeding one billion dollars (including, without
limitation, any marginal, emergency, supplemental, special or other reserves
applicable to such liability).
Advance
The term "Advance" means (i) a disbursement by Term Lenders of any of the
proceeds of the Term Loan pursuant to the
2
terms of this Agreement or (ii) an issuance of any Letter of Credit by the
Letter of Credit Bank, each of which disbursements or issuances is to be made in
accordance with the terms of this Agreement.
Affidavit of Borrower.
The term "Affidavit of Borrower" means a sworn affidavit of Borrower in the
form attached hereto as part of Exhibit A, to the effect that:
(i) the representations and warranties of Borrower contained in
Article 3 of this Agreement, in the other Loan Instruments and in the Project,
Documents are complete and correct on the date of such Affidavit of Borrower as
though made on and as of such date;
(ii) the covenants of Borrower contained in Article 4 of this
Agreement, in the other Loan Instruments and in the Project Documents required
to be complied with by Borrower on such date have all been fully complied with
by Borrower; and
(iii) no Default or Event of Default, or event which with the giving
of notice or lapse of time, or both, would become such an Event of Default, has
occurred and is continuing or will result from the issuance of the Advance then
being requested.
Agency Fee.
The term "Agency Fee" means the non-refundable annual fee of Fifty Thousand
dollars ($50,000) to be paid in advance by the Borrower to Agent. The annual
Agency Fee shall be paid on the date hereof and on each anniversary of this
Agreement and shall be deemed earned when paid.
Agent.
The term "Agent" means the party named Agent in the first paragraph of this
Agreement, or any successor Agent selected pursuant to Section 6.7, acting as
Agent for the Term Lenders hereunder.
Alternative Financing Proceeds.
The term "Alternative Financing Proceeds" has the meaning set forth in
Section 2.13(b) hereof.
3
Applicable Lending Office.
The term "Applicable Lending Office" means the office of a Term Lender in
which the Term Loan is booked for such Term Lender's record-keeping purposes.
Application for Advance.
The term "Application for Advance" means a written application to Agent,
substantially in the form of Exhibit A hereto, by Borrower and containing an
Affidavit of Borrower and other documents as Agent may reasonably request.
Approved Budget.
The term "Approved Budget" means a budget prepared by Borrower and approved
by Agent and the Independent Engineer covering the entire term of this Agreement
and specifying by principal items for each year of such budget the Projected
Gross Revenues and Projected Operating Costs. The Approved Budget is attached
hereto as Exhibit C and incorporated herein by reference.
Assurance Obligations.
The term "Assurance Obligations" has the meaning set forth in Section 7.14
hereof.
Availability Period.
The term "Availability Period" means the period commencing on the date of
this Agreement and terminating on the day preceding the first anniversary of the
date of this Agreement.
Banking Day.
The term "Banking Day" means any day that is not a Saturday, Sunday or
legal holiday in the State of New York or the State of Texas, or a day on which
banking institutions chartered by the State of New York, the State of Texas or
the United States are legally required or authorized to close, and, when used in
connection with LIBOR, means a day on which deposits in Dollars may be dealt in
on the London interbank market.
Base Requirement.
The term "Base Requirement" has the meaning set forth in Section 2.3(m).
4
Borrower.
The term "Borrower" means the party named Borrower in the first paragraph
of this Agreement.
Calculation Date.
The term "Calculation Date" means the second Term Loan Repayment Date and
each subsequent Term Loan Repayment Date.
Calculation Period.
The term "Calculation Period" has the meaning set forth in Section 4.2
hereof.
Certificate.
The term "Certificate" has the meaning set forth in Section 4.13 hereof.
Certificate of Deposit Base Rate.
The term "Certificate of Deposit Base Rate" shall mean, on any day, the sum
(rounded upward to the nearest 1/100th of 1%) as determined by the Agent to be
the weighted average of the prevailing rates per annum offered at 10:00 a.m.
(New York City time) (or as soon thereafter as practicable) on the first day of
such Interest Period by the Co-Managers for the purchase at face value of
certificates of deposit of the Co-Managers for a period and in an amount
comparable to the Interest Period and Principal Amount of the Advance or the
amount of the Term Loan with respect to which Borrower has chosen the
Certificate of Deposit Rate which shall be made by the Agent and outstanding
during such Interest Period.
Closing Fee.
The term "Closing Fee" means the non-refundable fee equal to 0.375% of the
Term Loan Commitment to be paid by Borrower to the Term Lenders on the date
hereof.
Code.
The term "Code" has the meaning set forth in Section 4.16 hereof.
Co-Managers.
The term "Co-Managers" means KOP and CS.
5
Commercial Code.
The term "Commercial Code" means the Uniform Commercial Code as in force in
the State of Texas.
Commercial Paper Base Rate.
The term "Commercial Paper Base Rate" shall mean, on any day, the sum
(rounded upward to the nearest 1/100th of 1%) as determined by the Agent to be
the weighted average of the prevailing rates per annum offered at 10:00 a.m.
(New York City time) (or as soon thereafter as practicable) on the first day of
such Interest Period by the Co-Managers for the commercial paper of each such
Co-Manager for a period and in an amount comparable to the Interest Period and
Principal Amount of the Advance or the amount of the Term Loan with respect to
which Borrower has chosen the Commercial Paper Base Rate which shall be made by
the Agent and outstanding during such Interest Period.
Commitment Fee.
The term "Commitment Fee" means the commitment fee to be paid by Borrower
for any portion of the Term Loan Commitment which is not advanced, at the rate
of one-quarter of one percent (0.25%) per annum, calculated and payable in
accordance with Section 2.6 hereof.
Construction Lenders.
The term "Construction Lenders" means the "Construction Lenders" as defined
in the Construction Loan Agreement.
Construction Loan Agreement.
The term "Construction Loan Agreement" means that certain Construction Loan
Agreement, dated as of December 31, 1986, by and among KOP and CS as
Construction Lenders, the Borrower and CS as Agent.
Contractor.
The term "Contractor" means Hawker Siddeley Power Engineering, Inc., a
Delaware corporation, as contractor pursuant to the Turnkey Contract.
Debt.
The term "Debt" of any person means at any date, without duplication, (i)
all obligations of such person for
6
borrowed money, (ii) all obligations of such person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligation of such
person to pay the deferred purchase price of property or services, except trade
accounts payable arising in the ordinary course of business, and (iv) all debt
of others guaranteed by such person, whether or not secured by a lien or other
security interest on any asset of such person.
Debt Protection Account.
The term "Debt Protection Account" means the interest bearing account
established by Borrower at KOP in accordance with the terms of Section 4.3 of
this Agreement.
Debt Protection Amount.
The term "Debt Protection Amount" has the meaning set forth in Section
4.3(b) hereof.
Debt Service.
The term "Debt Service" means, for any period, an amount equal to the
aggregate of (i) principal and interest actually due on the Term Loan during
such period pursuant to this Agreement, such amount to be adjusted for any
amounts retained in or application of funds from the Additional Collateral
Account pursuant to Section 4.2 hereof, (ii) LOC Fees actually due and payable
on all Letters of Credit during such period pursuant to this Agreement and any
placement costs (including underwriting, marketing, remarketing and legal fees)
incurred by Borrower in connection with a financing arrangement supported by a
Letter of Credit and (iii) other amounts which Borrower is obligated to pay
during such period to Term Lenders pursuant to this Agreement and the other Loan
Instruments, all as calculated by Agent.
Debt Service Coverage Ratio.
The term "Debt Service Coverage Ratio" means, for any period, the ratio of
(i) Net Revenues during such period to (ii) the Debt Service for such period,
as calculated by Borrower in form and substance reasonably satisfactory to
Agent. A sample calculation of a Debt Service Coverage Ratio is attached hereto
as Exhibit D.
Debtor Relief Laws.
The term "Debtor Relief Laws" means any applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization or similar laws
7
affecting the rights or remedies of creditors generally, as in effect from
time to time.
Default.
The term "Default" means the occurrence of any of the Events of Default in
Section 5.1, and the failure of such Event of Default to be remedied during the
applicable grace period, if any.
Default Interest.
The term "Default Interest" means interest payable pursuant to Section
2.5(b) of this Agreement.
Default Interest Rate.
The term "Default Interest Rate" means the Term Loan Interest Rate then in
effect for each Advance plus one and twenty-five hundredths per cent (1.25%).
Deposit Amount.
The term "Deposit Amount" has the meaning set forth in Section 4.2 hereof.
Discretionary Cash Flow.
The term "Discretionary Cash Flow" means, for any period, Net Revenues for
such period less Debt Service for such period.
ERISA.
The term "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
Event of Default.
The term "Event of Default" means the occurrence of any of the events and
occurrences set forth in Section 5.1 hereof."
Facility.
The term "Facility" means the natural gas fired cogeneration facility
constructed by Contractor for Borrower on property near Big Spring, ▇▇▇▇▇▇
County, Texas, for the purpose of supplying electric energy and capacity to TUEC
and steam to Fina, pursuant to, and as more fully described in, the Turnkey
Contract, the O&M Contract and the other Project Documents.
8
Federal Funds Margin.
The term "Federal Funds Margin" means with respect to interest on the Term
Loan (i) from the date hereof to the day before the fifth anniversary of the
date hereof, ninety-five hundredths per cent (0.95%), (ii) from the fifth
anniversary of the date hereof to the day before the twelfth anniversary of the
date hereof, one and ten hundredths per cent (1.10%), and (iii) on or after the
twelfth anniversary of the date hereof, one and thirty-five hundredths per cent
(1.35%).
Federal Funds Rate.
The term "Federal Funds Rate" means, for each Interest Period, for each
Advance (or, where the context so requires, the aggregate of the Advances then
outstanding), the per annum rate of interest equal to the average of the Term
Federal Funds rates offered to Prime Banks at 11 a.m. New York time two (2)
Banking Days prior to the commencement of such Interest Period, as reported by
Prebon and ▇▇▇▇▇▇ or other reputable sources, for such period chosen by the
Borrower as is available, plus, in the case of each such period of seven (7)
days or less, the Federal Funds Margin or, in the case of each such period in
excess of seven (7) days, the Interest Margin.
FERC Qualifying Facility Certificate.
The term "FERC Qualifying Facility Certificate" means the certification of
the Facility granted by the Federal Energy Regulatory Commission pursuant to 18
C.F.R. Section 292.207(b), (1986), or such self-qualification certificate
pursuant to 18 C.F.R. Section 292.207(a) as may be acceptable in form and
substance to the Agent.
Fina.
The term "Fina" means Fina Oil and Chemical Company, a corporation
organized and existing under the laws of the State of Delaware, owning and
operating an oil refinery near Big Spring, ▇▇▇▇▇▇ County, Texas.
Final Maturity Date.
The term "Final Maturity Date" means the date fifteen (15) years from the
date hereof; provided, however, that if either a firm power sales contract or a
steam sales contract, in each case reasonably satisfactory to the Term Lenders,
is not in effect on or at any time after September 30, 2003, such date shall be
the Final Maturity Date.
9
Financial Statements.
The term "Financial Statements" means the information which Borrower is
required to furnish to Agent pursuant to Section 4.9 hereof and such additional
financial information as shall be reasonably required by Agent from time to time
including, without limitation, operating statements with respect to the Property
and Facility and other reasonable financial information regarding Borrower and
the other parties to the Project Documents as Borrower may reasonably be able to
obtain.
Financing Statements.
The term "Financing Statements" means the Form UCC-1 and UCC-3 financing
statements and such other documents, instruments or certificates required to be
filed with the appropriate offices of Governmental Authorities for the
perfection of the security interests granted hereunder and under the Security
Documents.
First Advance.
The term "First Advance" means the first Advance of the Term Loan made by
the Term Lenders to or for the account of the Borrower pursuant to the terms and
conditions of this Agreement.
Fixed Offered Rate.
The term "Fixed Offered Rate" means, for each Interest Period, for each
Advance (or where the context so requires, the aggregate of the Advances then
outstanding) a rate per annum equal to the weighted average of the rates of
interest paid by CS on a medium-term deposit note, as described in a Supplement
dated July 31, 1987 to an offering circular dated July 31, 1987 or a comparable
succeeding note offering, and by KOP from time to time on a comparable
medium-term deposit note for that period of three hundred sixty-six (366) days
or two through fifteen years (but ending no later than the final Term Loan
Repayment Date) which the Borrower shall determine at a rate which the
Co-Managers would offer to a third party on a medium-term deposit note of like
duration and amount, such weighted average to reflect the proportionate amount
of each Co-Managers Term Loan Commitment, or if such rate is not available or
reasonably satisfactory to the Borrower, such other medium-term or long-term
fixed-rate funding as may be available, for the periods set forth herein, as
selected by Borrower and agreed to by the Co-Managers.
10
FSGC.
The term "FSGC" means Falcon Seaboard Gas Company, a corporation organized
and existing under the laws of the State of Texas.
FSOC.
The term "FSOC" means Falcon Seaboard Oil Company, a corporation organized
and existing under the laws of the State of Texas, and the sole shareholder of
Borrower.
FSOC Guaranty.
The term "FSOC Guaranty" has the meaning set forth in Section 4.3(h)
hereof.
Governmental Authority.
The term "Governmental Authority" means the government of any federal,
state, municipal or other political subdivision in which the Property and the
Facility are located, and any other government or political subdivision thereof
exercising jurisdiction over the Property, the Facility, Borrower or any other
party to any of the Project Documents or other Loan Instruments, including all
agencies and instrumentalities of such governments and political subdivisions.
Governmental Requirements.
The term "Governmental Requirements" means all Laws, ordinances, statutes,
codes, rules, regulations, orders and decrees of any Governmental Authority,
including, without limitation, all authorizations, consents, approvals,
registrations, exemptions, permits and licenses with or from any Governmental
Authority, applicable to the Property, the Facility, Borrower or any other party
to any of the Project Documents or other Loan Instruments.
Gross Revenues.
The term "Gross Revenues" means, for any period, the total amounts actually
received by Borrower from operation of the Facility including, without
limitation, payments made by Fina and TUEC.
Indemnified Part
The term "Indemnified Party" has the meaning set forth in Section 4.31
hereof.
11
Independent Engineer.
The term "Independent Engineer" means (i) with respect to the Facility,
Calpine Corporation or such other engineering firm as is mutually agreed upon by
the Agent and the Borrower or (ii) with respect to the resource and fuel-related
requirements of the Facility, Stone & ▇▇▇▇▇▇▇, Inc. or such other engineering
firm as is mutually agreed upon by the Agent and the Borrower.
Insurance Policies.
The term "Insurance Policies" means the insurance policies specified in
Article XII of the O&M Contract, the insurance policies specified in Article XIV
of the TUEC Agreement, the insurance policies specified in Article XIII of the
Steam Agreement and such other insurance policies as Agent may reasonably
require and are reasonably commercially available for risks and/or contingencies
that are not covered to the reasonable satisfaction of Agent by existing
policies. All Insurance Policies shall (1) conform to the relevant provisions
of the O&M Contract, the TUEC Agreement and/or the Steam Agreement; (2) be
issued by companies and in form and substance reasonably satisfactory to Agent;
(3) have Agent, for the account of the Term Lenders, named as an additional
insured or, if applicable, a lenders' loss payable (provided, however, that
Agent and Term Lenders shall be named as beneficiaries of the worker's
compensation policy); and (4) have a provision giving Agent thirty (30) days'
prior notice of cancellation or of material change in the coverage.
Interest Margin.
The term "Interest Margin" means with respect to interest on the Term Loan:
(i) from the date hereof to the day before the fifth anniversary of the date
hereof, eighty-five hundredths per cent (0.85%); (ii) from the fifth anniversary
of the date hereof to the day before the twelfth anniversary of the date hereof,
one per cent (1.00%); and (iii) on or after the twelfth anniversary of the date
hereof, one and twenty-five hundredths per cent (1.25%);.
Interest Payment Date.
The term "Interest Payment Date" means with respect to interest on the Term
Loan and the LOC Fees, each Term Loan Repayment Date and the final date of each
Interest Period.
12
Interest Period.
The term "Interest Period" means, in the first instance, the period
commencing on and including the date of an Advance and, in the case of each
subsequent and successive Interest Period applicable thereto, on the last day of
the immediately preceding Interest Period, and ending
(i) in the case of an Interest Period using LIBOR, on the same day in
the first, third, sixth or twelfth calendar month thereafter,
(ii) in the case of an Interest Period based on the Federal Funds
Rate, on the day selected by the Borrower and as made available by the
Co-Managers,
(iii) in the case of an Interest Period based on the Short Term Rate,
on the day selected by the Borrower in accordance with the provisions of
this Agreement and as made available by the Co-Managers, and
(iv) in the case of an Interest Period based on the Fixed Offered
Rate, on the next day in the first year thereafter, or the same day in the
second through fifteenth year thereafter, or as otherwise available,
in each case counting the first but not the last day of each such Interest
Period. Borrower shall select each Interest Period by giving written notice of
such selection to Agent at least three (3) Banking Days before the first day of
such Interest Period;
provided, however, that
(a) any Interest Period which would otherwise end on a day which is
not a Banking Day shall be extended to the next succeeding Banking Day
unless, in the case of an Interest Period using LIBOR, such Banking Day
falls in another calendar month, in which case such Interest Period shall
end on the next preceding Banking Day;
(b) any Interest Period which begins on the last Banking Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month in which such Interest Period ends) shall end on
the last Banking Day of such calendar month in which the Interest Period
ends;
(c) at no time shall the outstanding principal amount of the Term Loan
accrue interest pursuant to
13
more than twenty (20) Interest Periods (each variation in time or in the
basis upon which interest is calculated constituting an Interest Period)
unless agreed to by the Agent; and
(d) No Interest Period shall extend beyond the Final Maturity Date.
Interest Rate Hedge Agreement.
The term "Interest Rate Hedge Agreement" means an interest rate swap
agreement or an interest rate cap or collar agreement or a fixed offered rate
private placement on terms and conditions acceptable to Agent and which are
reasonably consistent with standard interest rate swap, cap or collar agreements
at the time such agreement is made or the standard terms and provisions
applicable to such a private placement at the time such arrangement is entered
into, for a period which ends no later than the Final Maturity Date.
Law.
The term "Law" means any constitution or treaty, any law, ordinance,
decree, regulation, order, rule, judicial or arbitral decision and any voluntary
restraint, policy or guideline not having the force of law with which such party
must reasonably comply, or any of the provisions of such Laws binding on or
affecting the party referred to in the context in which the term is used.
Letter of Credit.
The term "Letter of Credit" means an irrevocable direct-pay letter of
credit issued pursuant to Section 2.13 hereof.
Letter of Credit Bank.
The term "Letter of Credit Bank" means Credit Suisse or any other financial
institution acceptable to Agent and Borrower, as issuer of Letters of Credit in
accordance with the provisions hereof.
LIBOR.
The term "LIBOR" means, for each Advance (or where the context so requires,
the aggregate of the Advances then outstanding), for Interest Periods of one
(1), three (3), six (6) and twelve (12) months, as selected by Borrower, or such
other period as requested by Borrower and approved by Agent, for the principal
amount of the Term Loan then outstanding, the
14
per annum rate of interest at which dollar deposits in the amount of such
outstanding principal amount are, or would be, offered for such Interest Period
in the London interbank market at 11 a.m. London time two (2) Banking Days prior
to the commencement of such Interest Period, as reported in the ▇▇▇▇▇▇'▇ Monitor
for such date under the page code "LIBOR," and in case of variations in rates,
the arithmetic average thereof rounded upward if necessary to the nearest
one-sixteenth of one percent (1/16%), calculated by Agent; provided, however,
that if such reported rate is unavailable, "LIBOR" shall mean, for each Interest
Period, for each Advance (or, where the context so requires, the aggregate of
Advances then outstanding), the per annum rate of interest at which dollar
deposits in the amount of such Advance are, or would be, offered by KOP and CS
to prime banks in the London interbank market at 11 a.m. London time two (2)
Banking Days prior to the commencement of such Interest Period, and in the case
of variations in rates, the weighted average thereof rounded upward if necessary
to the nearest one-sixteenth of one percent (1/16%) calculated by Agent.
Loan Instruments.
The term "Loan Instruments" means this Agreement, the Security Documents,
the Term Note(s), the Letter(s) of Credit, the Financing Statements and such
other instruments evidencing, securing or pertaining to the Term Loan
Commitment, as shall from time to time be executed and delivered to Term Lenders
or to Agent by Borrower, or any other party, pursuant to this Agreement,
including, without limitation, the Operating Budget.
Loan Obligations.
The term "Loan Obligations" has the meaning set forth in Section 7.14
hereof.
LOC Fee.
The term "LOC Fee" means the Interest Margin.
LOC Fronting Fee.
The term "LOC Fronting Fee" means the letter of credit fronting fee to be
paid by Borrower on the outstanding portion of any Letter of Credit at the rate
of 0.15% per annum, calculated and payable in accordance with Section 2.6
hereof.
LOC Reimbursement Obligation,
The term "LOC Reimbursement Obligation" means the obligation of the
Borrower to reimburse the Term Lenders for
15
any liabilities incurred by such Term Lenders as account parties in connection
with any Letters of Credit issued Pursuant to the provisions of this Agreement.
L/C.
The term "L/C" has the meaning set forth in Section 4.3(g) hereof.
Maintenance Reserve Account.
The term "Maintenance Reserve Account" means the interest bearing account
established by Borrower with the Agent in accordance with the terms of Section
4.4 of this Agreement.
Majority Lenders.
The term "Majority Lenders" means, prior to the date of the First Advance,
Term Lenders whose aggregate Term Loan Commitment percentages exceed seventy
percent (70%) of the total Term Loan Commitment, and after the date of the First
Advance means Term Lenders which have advanced more than seventy percent (70%)
of the outstanding Term Loan.
Mortgage.
The term "Mortgage" means each of (i) the Amended and Restated Deed of
Trust, Security Agreement and Assignment of Rents dated as of December 29, 1988
by Borrower in favor of Agent for the benefit of the Term Lenders, and (ii) the
Deed of Trust, Security Agreement and Assignment of Rents dated as of even date
herewith by Borrower in favor of Agent for the benefit of the Term Lenders,
securing the payment of, inter alia, the Term Note(s), all amounts due in
connection with the Letters of Credit, payment and performance of all
obligations specified in the Mortgage and this Agreement, and evidencing a valid
and enforceable first-priority perfected lien on the Property and the Facility.
Net Revenues.
The term "Net Revenues" means, for any period, the difference between Gross
Revenues of Borrower and Operating Costs of the Facility.
O&M Contract
The term "O&M Contract" means that certain Operation and Maintenance
Agreement, dated December 30, 1988, by and between Borrower and Operator, as
approved by Agent, as the same may be from time to time amended, including all
Exhibits thereto.
16
Operating Budget.
The term "Operating Budget" means an annual budget prepared by Borrower no
later than November 15 of each year and approved by Agent specifying by
principal items, for each month of such budget, the Projected Gross Revenues and
Projected Operating Costs. The Operating Budget shall be subject to review on an
annual basis or at such other times as Borrower or Agent shall reasonably
request.
Operating Costs.
The term "Operating Costs" means, for any period, the amounts actually
expended during such period for operation and maintenance of the Facility,
including, without limitation, taxes (including federal income taxes),
contributions to the Maintenance Reserve Account, premiums for Insurance
Policies, fuel costs and the Operator Fee pursuant to the O&M Contract.
Operating Costs do not include Debt Service.
Operator.
The term "Operator" means Falcon Power Operating Company, a corporation
organized and existing under the laws of the State of Texas, as Operator
pursuant to the O&M Contract.
Original Term Loan Agreement.
The term "Original Term Loan Agreement" means that certain Term Loan
Agreement, dated as of December 31, 1986, by and among KOP and CS, as Term
Lenders, Borrower and CS, as Agent.
Other Collateral.
The term "Other Collateral" has the meaning set forth in Section 7.14
hereof.
Participant.
The term "Participant" has the meaning set forth in Section 4.29 hereof.
Pay-Off Date.
The term "Pay-Off Date" has the meaning set forth in Section 7.14 hereof.
17
Permitted Investments.
The term "Permitted Investments" means with respect to amounts of less than
$100,000, (a) deposit accounts of KOP or CS, as selected by Borrower, bearing
interest at prevailing money market rates, and (b) with respect to the Debt
Protection Account, time deposits or certificates of deposit with KOP or CS, as
determined by Borrower, up to a term not to exceed three (3) months; and for
amounts in excess of $100,000, investments maturing not more than 270 days from
the date made in any of: (a) direct obligations of the United States of America
or of any agency thereof, or obligations guaranteed as to principal and interest
by the United States of America; (b) bankers' acceptances and certificates of
deposit issued by the Agent, or any bank or trust company having capital,
surplus and undivided profits of at least $500,000,000 whose long-term debt is
given one of the two highest ratings by both Standard & Poor's Corporation and
▇▇▇▇▇'▇ Investors Service, Inc.; (c) obligations with the Agent, any bank or
trust company or bank holding company described in clause (b) above, in respect
of the repurchase of obligations of the type described in clause (a) hereof,
provided that such repurchase obligations shall be fully secured by obligations
of the type described in said clause (a) and the possession of such obligations
shall be transferred to, and segregated from other obligations owned by, the
Agent, any such bank or trust company or bank holding company; and (d)
commercial paper given one of the two highest ratings (without giving effect to
pluses or minuses) by both Standard & Poor's Corporation and ▇▇▇▇▇'▇ Investors
Service, Inc., provided that not more than 25% of the Permitted Investments
owned by the Borrower at any time shall consist of commercial paper of the
second highest rating; provided, however, in each case, that an investment shall
be a Permitted Investment only if Agent may maintain the perfected security
interest in favor of the Term Lenders in the funds so invested.
Permitted Liens.
The term "Permitted Liens" has the meaning set forth in Section 4.10
hereof.
Plans.
The term "Plans" means the working drawings and specifications for the
construction of the Facility, including, without limitation, the project designs
constituting Exhibit A to the Turnkey Contract as provided by the Contractor,
the Special Conditions constituting Exhibit B1 to the Turnkey Contract and the
General Conditions constituting Exhibit B2 to the Turnkey Contract.
18
Pledge Agreement.
The term "Pledge Agreement" means that certain Amended, Restated and
Consolidated Pledge Agreement dated as of even date herewith among Term Lenders,
Agent and Borrower, granting Term Lenders a pledge of the money contained in the
Accounts.
Prepayment Fee.
The term "Prepayment Fee" means the fee to be paid by Borrower to Agent for
the account of the Term Lenders, in the amount of three-eighths of one per cent
(0.375%) of the amount of any prepayments of the Term Loan prepaid pursuant to
Section 2.11 hereof on or before December 31, 1991.
Proceeds.
The term "Proceeds" has the meaning set forth in Section 4.13(b) hereof.
Process Agent.
The term "Process Agent" has the meaning set forth in Section 7.11 hereof.
Project Control Account.
The term "Project Control Account" has the meaning provided in Section
4.1(a) of this Agreement.
Project Documents.
The term "Project Documents" means all of the following, as any of them may
be amended from time to time:
(i) Turnkey Contract;
(ii) Compromise and Settlement Agreement, dated September 1, 1988,
between Borrower and Contractor, as amended by that certain First
Amendment to Compromise and Settlement Agreement dated
September ___, 1988;
(iii) O&M Contract;
(iv) Gas Supply Agreement, dated December 11, 1986, between FSOC and
Natural Gas Clearinghouse;
(v) Gas Supply Agreement, dated December 29, 1986, between FSOC and
Borrower;
(vi) Gas Supply Agreement, dated December 30, 1988, between FSGC and
Borrower;
19
(vii) Fuel Purchase and Sale Agreement, dated November 21, 1986, between
Fina and Borrower;
(viii) Other gas supply arrangements and pledges or dedications of
Qualified gas reserves and substitutes therefor;
(ix) Water Supply Agreement, dated _____________________, between the
Colorado River Municipal Water District and Borrower;
(x) Lease Agreement, dated as of November 21, 1986, between Fina, as
lessor, and Borrower, as lessee, as amended by that certain First
Amendment to Lease Agreement dated as of December 29, 1986;
(xi) Steam Agreement;
(xii) TUEC Agreement;
(xiii) Tax Agreement;
(xiv) Confidentiality Agreement dated October 7, 1985, between FSOC and
TUEC;
(xv) Letter dated December 23, 1986 from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group Inc. to
FSOC;
(xvi) Insurance Policies; and
(xvii) Any other agreement executed in connection with the Facility or any
of the Project Documents.
Projected Debt Service.
The term "Projected Debt Service" means, for any period, as of any date of
calculation, an amount equal to the aggregate of (i) principal due on the Term
Loan, computed on the Scheduled Payment Basis, during such period, and interest
due on the Term Loan during such period, such amounts to be adjusted for any
credit or application of funds from the Additional Collateral Account, as the
case may be, pursuant to Section 4.2 hereof, (ii) fees due on the Letters of
Credit during such period pursuant to this Agreement and any placement costs
(including underwriting, marketing, remarketing and legal fees) expected to be
incurred by Borrower in connection with a planned financing arrangement
supported by a Letter of Credit; and (iii) principal, interest and fees which
Borrower is obligated to pay during such period to Term Lenders pursuant to the
Agreement or the other Loan Instruments, all as calculated by Agent. Interest
for purposes of computing Projected Debt
20
Service shall be deemed to accrue at the then-current Term Loan Interest Rate.
Projected Gross revenues.
The term "Projected Gross Revenues" means, for any period, the total
projected amounts to be received from operation of the Facility (including,
without limitation, payments made by Fina and TUEC) based upon the energy,
capacity and steam sales prices projected for such period pursuant to the
Project Documents, the Facility's average availability and performance during
the prior six (6) months, including factors such as routine maintenance, TUEC
outages and other events affecting such availability and performance, and such
other factors as Borrower, Agent or Independent Engineer shall reasonably deem
relevant.
Projected Net Revenues.
The term "Projected Net Revenues" means, for any period, the difference
between Projected Gross Revenues of Borrower and Projected Operating Costs of
the Facility.
Projected Operating Costs.
The term "Projected Operating Costs" means, for any period, the total
amounts projected to be expended during such period for operation and
maintenance of the Facility including, without limitation, taxes (including
federal income taxes), premiums for Insurance Policies, contributions to the
Maintenance Reserve Account, fuel costs projected for such period and the
Operator Fee pursuant to the O&M Contract. Projected Operating Costs does not
include actual Debt Service or Projected Debt Service.
Property.
The term "Property" means the real property described in Exhibit A to the
Lease Agreement dated as of November 21, 1986 between Fina, as lessor, and
Borrower, as lessee, as amended by that certain First Amendment to Lease
Agreement dated December 29, 1986, together with the leasehold interest held in
such Property by Borrower, along with the Facility and all other property
constituting the "Mortgaged Property," as described in the Mortgage.
Regulation D.
The term "Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System and any
21
successor regulation, in each case as in effect from time to time.
Regulation G.
The term "Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System and any successor regulation, in each case as in effect
from time to time.
Regulation U.
The term "Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System and any successor regulation, in each case as in effect
from time to time.
Regulation X.
The term "Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System and any successor regulation, in each case as in effect
from time to time.
Replacement Components.
The term "Replacement Components" has the meaning set forth in Section 4.5
hereof.
Required Alterations.
The term "Required Alterations" has the meaning set forth in Section 4.6
hereof.
Required Maintenance Amount.
The term "Required Maintenance Amount" means the amount described in
Section 4.4(b) hereof.
Revolving Loan Amount.
The term "Revolving Loan Amount" shall mean the portion of the Term Loan
Commitment in excess of One Hundred Ten Million dollars ($110,000,000).
Scheduled Payment Basis.
The term "Scheduled Payment Basis" means the principal of the Term Loan to
be repaid, based upon the principal repayment due pursuant to the schedule set
forth in Exhibit F
22
plus interest due and payable, in accordance with the provisions of this
Agreement, on each Term Loan Repayment Date.
Security Agreement.
The term "Security Agreement" means that certain Amended and Restated
Assignment and Security Agreement, dated of even date herewith, among Term
Lenders, Agent and Borrower, granting to Term Lenders a security interest in the
Collateral, as therein defined.
Security Documents.
The term "Security Documents" means all of the following, as any of them
may be amended from time to time:
(i) Mortgage;
(ii) Security Agreement;
(iii) Pledge Agreement;
(iv) Financing Statements;
(v) Assignment of Insurance Policies;
(vi) Letter dated December 23, 1986 from FSOC to
TUEC; and
(vii) Any other agreement executed in connection with
the financing of the Facility or any of the Loan
Instruments.
Short Term Rate.
The term "Short Term Rate" means, for Interest Periods of up to 270 days,
as selected by the Borrower, for each Advance (or, where the context so
requires, the aggregate of the Advances then outstanding), the per annum
Adjusted CD Rate or Adjusted CP Rate offered by the Co-Managers, as available
and as determined solely by the Agent; provided, however, that if both the
Certificate of Deposit Base Rate and the Commercial Paper Base Rate are offered
by both Co-Managers, the Borrower may choose either such rate as the basis for
the Short Term Rate; provided further, that if only one of the Certificate of
Deposit Base Rate and the Commercial Paper Base Rate is offered by both
Co-Managers, such rate shall be the basis for the Short Term Rate; and provided
further, that if only one of the Co-Managers offers a Certificate of Deposit
Base Rate or a Commercial Paper Base Rate, the Short Term Rate shall be based
upon the weighted average of the rate offered by such
23
Co-Manager and the best alternative comparable rate offered by the other
Co-Manager.
Special Operating Account.
The term "Special Operating Account" means the account of Borrower
specified in Section 4.1(c) of this Agreement.
Steam Agreement.
The Term "Steam Agreement" means that certain Steam Purchase and Sale
Agreement, dated as of November 21, 1986, by and between Borrower and Fina.
Substantial Subcontractors.
Subcontractors, materialmen and other parties who have supplied labor,
materials or services for the design, construction, testing, start-up and
operation of the Facility and whose contract or contracts with Contractor,
Operator or Borrower call for a payment or payments totaling at least $100,000,
or who otherwise might be entitled to claim a contractual or statutory lien
against the Property or the Facility in the amount $100,000 or more.
Tax Agreement.
The term "Tax Agreement" means that certain Tax Agreement dated as of even
date herewith between FSOC and Borrower.
Tax Benefits.
The term "Tax Benefits" means all those certain tax credits, deductions and
depreciation allowances derived from or in connection with the Facility.
Taxes.
The term "Taxes" means all taxes prescribed under the laws of the United
States or any political subdivision thereof imposed on Term Lenders or Agent or
on payments to be made to or received by any of them, including without
limitation stamp, transfer, withholding and turnover taxes, duties, penalties,
fees and other charges, except for (i) Taxes on or measured by income or assets
imposed by the United States or the jurisdiction of the principal office or the
branch thereof maintaining the Term Loan, (ii) Taxes that would not have been
imposed but for the existence of a connection between the Term Lender or Agent,
or a participant or sub-participant permitted by Section 4.29, and the
jurisdiction imposing such taxes
24
(other than a connection arising solely by reason of this Agreement), and (iii)
any Taxes resulting from a failure of any Term Lender or Agent, or a participant
permitted by Section 4.29, (x) to act for purposes hereof through a branch in
the United States (y) to conduct its business, so that each payment received by
it hereunder is effectively connected with the conduct by it of a trade or
business through such branch, and (z) to provide appropriate documentation
(currently Internal Revenue Service Form 4224) to that effect.
Term Lenders.
The term "Term Lenders" means the Term Lenders named in the first paragraph
of this Agreement. Any subsequent financial institution approved by Borrower
(which approval shall not be unreasonably withheld), signing an addendum to this
Agreement agreeing to be bound by the terms hereof, shall also be considered a
Term Lender under this Agreement, and such Term Lender's proportionate share of
the Term Loan shall be evidenced on a revised Schedule I, which shall be
promptly furnished to Borrower. Any Term Lender may grant participations in the
Term Loan, as provided in Section 4.29 hereof, but the grant of such
participations shall not relieve any Term Lender of its obligations, or impair
the rights of any Term Lender hereunder.
Term Loan.
The term "Term Loan" means the aggregate of all Advances by the Term
Lenders to Borrower under this Agreement not to exceed, in the aggregate, the
Term Loan Commitment.
Term Loan Commitment.
The term "Term Loan Commitment" means the commitment of each Term Lender to
lend sums to Borrower during the Availability Period and to fund Letters of
Credit during the term of this Agreement up to but not exceeding the respective
amounts set forth for each Term Lender in Schedule I attached hereto and made a
part hereof and to maintain such Term Lender's proportionate share thereof,
subject to each of the terms and conditions of this Agreement; or where the
context so requires, the aggregate Term Loan Commitments for all Term Lenders up
to the aggregate amount of One Hundred Sixty-Five Million dollars
($165,000,000), subject to each of the terms and conditions of this Agreement.
25
Term Loan Interest Rate.
The term "Term Loan Interest Rate" means, in the case of any Interest
Period, interest on the principal amount of each Advance, at that rate per annum
equal to:
(i) LIBOR plus the Interest Margin for such Interest Period; or
(ii) the Short Term Rate plus the sum of the Interest Margin plus
twelve and one-half (12.5) basis points for such Interest Period; or
(iii) the Federal Funds Rate for such Interest Period; or
(iv) the Fixed Offered Rate plus the Interest Margin for such Interest
Period;
each as selected by Borrower for each Interest Period, and notified to Agent at
least three (3) Banking Days prior to the commencement of such Interest Period.
In the event Borrower fails to provide such notice to Agent within such time,
the Term Loan Interest Rate for the next succeeding Interest Period shall be
determined by the Agent.
Term Loan Repayment Date.
The term "Term Loan Repayment Date" means, except as otherwise required
pursuant to Section 2.10, the last day of March, June, September and December,
commencing with the first of such dates on or after the date of the First
Advance.
Term Notes.
The term "Term Notes" means one or more negotiable promissory notes in the
form attached hereto as Exhibit B.
Title Company
The term "Title Company" means Southwest Title Company, ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, as agent for Transamerica Title
Insurance Company.
Title Insurance.
The term "Title Insurance" means a title insurance commitment, binder or
policy, as Agent may require, in the amount of One Hundred Sixty-Five Million
dollars ($165,000,000), insuring or committing to insure that the Mortgage
constitutes a valid lien covering the Property having
26
the priority required by Agent and subject only to those exceptions and
encumbrances which Agent has approved, issued by the Title Company.
TUEC.
The term "TUEC" means Texas Utilities Electric Company, a corporation
organized and existing under the laws of the State of Texas.
TUEC Agreement.
The term "TUEC Agreement" means that certain Agreement dated July 30, 1986
between TUEC and FSOC, as amended on December 23, 1986 and May 27, 1988 and that
certain Assignment by FSOC to Borrower, with the consent of TUEC, dated December
23, 1986.
Turnkey Contracts
The term "Turnkey Contract" means the Turnkey Cogeneration Facility
Agreement, dated November 22, 1986, between Borrower and Contractor, as the same
may be from time to time amended, including all Exhibits thereto.
Unadvanced Commitment.
The term "Unadvanced Commitment" has the meaning set forth in Section 2.6
hereof.
ARTICLE 2 - ADVANCES OF THE TERM LOAN AND PAYMENTS
2.1 Term Loan Commitment.
Subject to the terms and conditions hereof, and provided that and Event of
Default, and the expiration of the applicable grace period, if any, has not
occurred, each Term Lender severally commits for its own account to make
Advances, to or for the account of Borrower in accordance with this Agreement,
during the Availability Period, and to fund Letters of Credit during the term of
this Agreement, up to its respective Term Loan Commitment, as set forth on
Schedule I, as the same may be revised from time to time, and totalling in the
aggregate the maximum amount of the total Term Loan Commitment. Subject to the
limitations on the amount of the Term Loan Commitment and to the provisions of
this Agreement, any amounts of the Revolving Loan Amount which Borrower prepays
during the Availability Period pursuant to Section 2.11 of this Agreement may be
reborrowed by Borrower. The Term Lenders
27
shall have no obligations to make any Advance after the Availability Period.
During the Availability Period, the Borrower shall have the right, upon thirty
(30) days irrevocable written notice to the Agent and upon payment in full of
the Commitment Fee accrued through the date of such reduction, to reduce the
amount of the Term Loan Commitment not yet advanced hereunder; provided,
however, that all such reductions shall be in the amount of integral multiples
of One Million dollars ($1,000,000). All reductions of the Term Loan Commitment
pursuant to this provision shall be permanent.
2.2 Procedure for Advances.
(a) From time to time during the Availability Period, but not more
frequently than once per calendar month, Borrower may submit an Application for
Advance to Agent requesting an Advance. Each such Application for Advance shall
be submitted at least five (5) (but no more than thirty (30)) Banking Days prior
to the date on which such Advance is desired. Each Application for Advance shall
be properly executed, and, if signed by Borrower, shall constitute a
representation and warranty by Borrower that it is in compliance with all the
conditions precedent to such Advance specified in this Agreement. An Application
for Advance must request an Advance of at least One Million dollars ($1,000,000)
and must be in an integral multiple of one Million dollars ($1,000,000). An
Affidavit of Borrower shall be received by Agent prior to each Advance. Borrower
acknowledges that if it does not provide all necessary documentation on a timely
basis delays may result in making Advances, and Borrower irrevocably consents to
such delays.
(b) All sums advanced and disbursed hereunder shall be disbursed under and
shall be secured by the Loan Instruments. Subject to the other provisions of
this Agreement, Agent shall make Advances available to Borrower in immediately
available funds not later than 2:00 p.m. (New York time) on the day in question
for credit on such day to the Special Operating Account of Borrower or in the
case of Advances related to the issuance of Letters of Credit, the Letter of
Credit Bank shall issue Letters of Credit in favor of the appropriate party as
described in Section 2.13 hereof. Agent may, in its sole discretion, upon the
occurrence of an Event of Default or an event which with the passage of time,
the giving of notice or both would constitute an Event of Default, make payments
directly to Operator, Fina or any other party to a Project Document.
28
2.3 Conditions to the First Advance.
The obligation of the Term Lenders to make available the First Advance is
subject to the fulfillment, to the satisfaction of Agent and its counsel, not
less than three (3) Banking Days prior to the date thereof, and to the continued
fulfillment of each such condition on the date of such Advance as if made on
each such date, of each of the following:
(a) The documents set forth in Exhibit E to this Agreement shall have been
duly executed and delivered by the party or parties thereto and shall in all
respects be satisfactory in form and substance to Agent;
(b) There shall have been no material adverse change in the condition
(financial or otherwise) of Borrower or any other party to any of the Loan
Instruments or Project Documents, that would materially adversely affect the
ability of Borrower to repay the Term Loan, there shall have been no material
adverse change in the security interests of the Term Lenders in the Collateral
or the Pledged Collateral (as defined in such agreements), and there shall have
been no material adverse change in the financial prospects, likely
profitability, or likely financial performance of the Facility from the date of
this Agreement that would impair the ability of Borrower to meet its obligations
hereunder, all as determined in good faith by Agent;
(c) The representations and warranties contained in Article 3 hereof shall
be true on and as of the date of the First Advance; there shall exist on the
date of the First Advance no Default or Event of Default under this Agreement;
and Borrower shall deliver to Agent a duly executed certificate, satisfactory in
form and substance to Agent, dated the date of the First Advance to both such
effects;
(d) Borrower shall have opened the Debt Protection Account and deposited
One Million dollars ($1,000,000) therein;
(e) Neither the execution and delivery and compliance with the terms of
this Agreement nor Borrower's ownership or operation of the Facility will cause
Borrower, Agent or Term Lenders to become subject to regulation by any
Governmental Authority as a "public utility," an "electric utility," an
"electric utility holding company," a "public utility holding company," or an
"electrical corporation" under any Law or Governmental Requirements (including,
without limitation, the Public Utility Holding Company Act of 1935, the Federal
Power Act and the Public Utility Regulatory Policies Act of 1978, each as
amended);
29
(f) The execution and delivery and compliance with the terms of this
Agreement shall not violate any applicable Law or Governmental Requirement;
(g) The Security Documents and the delivery of the Pledged Collateral, as
defined in such documents, shall have created, as security for the obligations
of Borrower hereunder and under the Term Notes, valid and perfected
first-priority security interests in and liens on the collateral described
therein with priority dating from the date of this Agreement;
(h) The Facility shall be a "Qualifying Cogeneration Facility," as such
term is defined in the Public Utility Regulatory Policies Act of 1978, as
amended, and Borrower shall have self-certified as a Qualifying Cogeneration
Facility or shall have obtained a FERC Qualifying Facility Certificate, in full
force and effect on the date of the First Advance, from the Federal Energy
Regulatory Commission. The Facility, the Property, Borrower and Fina (with
respect to the Property) shall be in full compliance with all Governmental
Requirements including, without limitation, all applicable environmental,
pollution control and ecological laws, ordinances, rules and regulations. The
applicable environmental protection agency, pollution control board and/or other
Governmental Authorities having jurisdiction over the Property and the Facility
shall have issued all permits required to be obtained as of such date for the
operation of the Facility, and there shall be no impediment to procurement of
all other permits when required;
(i) Each of TUEC and Fina shall have executed and delivered to Borrower a
certificate, in form and substance reasonably satisfactory to Agent, not earlier
than fifteen (15) days prior to the date of the First Advance, attesting that
the TUEC Agreement or the Steam Agreement, as the case may be, is in full force
and effect;
(j) Agent shall have received an Operating Budget from Borrower, reasonably
acceptable in form and substance to Agent and Independent Engineer;
(k) Borrower shall have opened the Maintenance Reserve Account and
deposited Four Hundred Thousand dollars ($400,000) therein;
(l) Borrower shall have contracted, in the aggregate, for either (i) a
minimum of 12,800,000 MM BTUs for each year of this Agreement or (ii) such
amount of natural gas as may from time to time be reasonably deemed necessary by
the Co-Managers, after consultation with Borrower, or as Borrower may reasonably
recommend, subject to the reasonable approval of the Co-Managers in consultation
with the Independent Engineer, to
30
meet in a timely manner all of its obligations under the TUEC Agreement and this
Agreement (the "Base Requirement"). The Base Requirement may be provided from
one or more of the following sources:
(i) National Gas Clearinghouse Inc., pursuant to that certain contract,
dated as of December 11, 1986, by and between National Gas Clearinghouse Inc.
and FSOC, as the same has been assigned and may be amended from time to time;
(ii) Certain Qualified gas reserves currently owned or controlled by FSGC
and more fully described on Exhibit G hereto, which, if owned, shall be pledged
or, if controlled, shall be dedicated to the Facility until such time and to the
extent necessary to fulfill the Base Requirement. For purposes of this Section
2.3(m), the term "Qualified" shall mean such natural gas reserves or natural gas
supply arrangements as are reasonably approved by the Independent Engineer and
the Agent; and
(iii) Qualified natural gas reserves or natural gas supply arrangements as
and when the same are acquired and/or entered into by FSGC, a wholly owned
subsidiary thereof or an affiliate thereof, including, without limitation, that
certain Purchase and Sale Agreement, dated November 21, 1986, by and between
Borrower and Fina;
provided, however, that Borrower shall have the right to substitute from time to
time alternative Qualified natural gas reserves or natural gas supply
arrangements.
All arrangements for the supply of natural gas to the Facility shall (i) be
on terms and conditions reasonably satisfactory to the Co-Managers, (ii) be
sufficient to supply the Facility's Base Requirement for a period of fifteen
(15) years commencing on the date hereof; (iii) include the execution and
delivery of transportation agreements as deemed necessary and reasonably
approved by Agent and Independent Engineer; and (iv) during any given year,
provide for the sale of natural gas at a price not in excess of the annual
weighted average price set forth opposite such year as provided on Exhibit H
hereto; and
(n) Borrower shall have prepared and submitted to Agent an Approved Budget
acceptable to Agent and the Independent Engineer.
2.4 Conditions to Subsequent Advances.
The obligation of the Term Lenders to make available any subsequent Advance
is subject to the fulfillment to the
31
reasonable satisfaction of Agent and its counsel not less than three (3) days
prior to such Advance, and to the continued fulfillment of such conditions on
the date of each such Advance, of the following additional conditions precedent
and, if required by Agent, Borrower shall deliver to Agent evidence of such
fulfillment:
(a) All conditions precedent to the First Advance and each subsequent
Advance shall have been and shall remain satisfied (including any conditions
waived for the First Advance);
(b) No material adverse change in the financial condition of the Borrower
or any party to the Project Documents or other Loan Instruments shall have
occurred which (i) would impair the Borrower's ability to meet its obligations
under this Agreement or under the other Loan Instruments; or (ii) impair the
security interests of the Term Lenders in the collateral subject to the Security
Documents;
(c) The representations and warranties contained in Article 3 hereof shall
be true in all material respects on and as of each such date; the covenants
contained in Article 4 hereof shall have been complied with in all material
respects on such date; there shall exist no Event of Default, or an event which
with the passage of time, the giving of notice or both would become an Event of
Default, under this Agreement; and
(d) The Security Documents and the Title Insurance shall have been endorsed
and extended, if required under local rules, to cover each Advance with no
additional title exceptions objectionable to Agent.
2.5 Interest and Fees.
(a) Current Interest and LOC Fees.
Borrower shall be obligated to pay interest (and LOC Fees) to Agent for the
account of the Term Lenders in respect of each Interest Period (computed on the
basis of actual number of days elapsed and a year of 360 days, except with
respect to the Fixed Offered Rate) on the daily principal amount of the Term
Loan outstanding (or in the case of Letters of Credit, on the daily outstanding
portion of any Letters of Credit) during such Interest Period, in arrears, on
each Interest Payment Date, at the rate per annum equal to the Term Loan
Interest Rate(s) in effect on each such day (or in the case of Letters of
Credit, at the LOC Fee then in effect). Interest with respect to an Advance made
during an Interest Period shall be computed only from the date of such Advance.
Borrower hereby authorizes Term Lenders to make an Advance on each Term Loan
Repayment Date which occurs during the Availability Period in
32
the amount of the principal, interest, fees and other amounts due on such date,
and credit the Term Loan balance by such amount, whether or not an Application
for Advance has been submitted by Borrower.
(b) Default Interest.
Upon the occurrence of an Event of Default, Borrower shall pay on demand by
Agent interest on the principal amount of the Term Loan outstanding and due and
payable (and shall pay fees on the outstanding portion of any Letter of Credit)
from and including the date of such event to the date such event is cured (after
as well as before judgment) at the Default Interest Rate (or in the case of
Letters of Credit, at a fee equal to 2.00% per annum), computed on the basis
described in sub-paragraph (a) above, so long as such past due amount remains
unpaid, which interest shall be payable on each Term Loan Repayment Date and
also on demand by Agent. In addition to the payment of such interest, Borrower
shall pay to Agent for the account of the Term Lenders any funding and yield
protection costs, as provided in Section 2.7 of this Agreement, resulting from
the failure of Borrower to pay any amounts under this Agreement when due.
Borrower hereby authorizes the Term Lenders to make an Advance on each Term Loan
Repayment Date which occurs during the Availability Period in the amount of
interest and other costs due on such date, and credit the Term Loan balance by
such amount, whether or not an Application for Advance has been submitted by
Borrower.
2.6 Other Fees.
Borrower shall pay to Agent for the account of the Term Lenders: (i) at the
time of the First Advance, the non-refundable Closing Fee; (ii) on the date of
any prepayment of the Term Loan, the Prepayment Fee(s), if any, in accordance
with the provisions of Section 2.11 hereof; and (iii) the Commitment Fee for any
portion of the Term Loan Commitment which is not advanced. Borrower shall pay to
the Letter of Credit Bank the LOC Fronting Fee for the outstanding portion of
any Letters of Credit and shall pay to the Agent the Agency Fee on the date
hereof and each anniversary thereof. The portion of the Term Loan Commitment
which is not advanced is referred to herein as the "Unadvanced Commitment". The
Commitment Fee shall be computed based upon the average daily balance of the
Unadvanced Commitment during each three (3) month period from the date hereof
payable in arrears on the last day of each such three (3) month periods and on
the last day of the Availability Period. The LOC Fronting Fee shall be computed
based upon the average daily balance of outstanding Letters of Credit during
each three (3) month period from the date hereof payable in arrears on the last
day of each such three (3) month periods
33
and on the last Term Loan Repayment Date. Borrower hereby authorizes Agent to
make an Advance in the amount of the Commitment Fee or LOC Fronting Fee when due
and credit the Term Loan balance by such amount, whether or not an Application
for Advance has been submitted by Borrower.
2.7 Funding and Yield Protection.
(a) Taxes.
(i) Borrower shall make all payments of all amounts payable hereunder and
under the Term Notes net, free and clear of all Taxes, and shall reimburse each
Term Lender for the cost of any Taxes imposed on such Term Lender or on any
payment under or with respect to any aspect of the Term Loan, the Term Notes or
the Letters of Credit or the making, execution or enforcement thereof. Payments
to KOP or CS, each acting through its respective New York branch, are currently
not subject to any Taxes. Borrower is not obligated to pay any Taxes resulting
from a failure of any Term Lender or Agent to maintain a branch, or the failure
of any permitted participants to have and maintain a branch, in the United
States. If Borrower so requests within ten (10) days of receipt of notice of any
such Taxes, such Term Lender shall (consistent with its internal policies and
legal and regulatory restrictions) attempt to negotiate with Borrower an
assignment of such Term Lender's proportionate share of the Term Loan as further
provided below; provided, however, that Borrower shall promptly pay when due all
reasonable fees and expenses of such Term Lender incurred or to be incurred in
connection with such transfer or assignment; and provided further, that no such
transfer or assignment shall relieve Borrower of liability hereunder for amounts
imposed on such Term Lender or on any payment under or with respect to any
aspect of the Term Loan, the Term Notes or the Letters of Credit or the making,
execution or enforcement thereof.
(ii) If Borrower is prohibited or prevented by Law or otherwise from making
any such payment net, free and clear of any Taxes or from reimbursing any Term
Lender for the cost of any such Taxes (as provided above), then the amount of
such payment to be made by Borrower shall be increased by such additional amount
or amounts as may be necessary to ensure that each Term Lender shall receive a
net amount which after payment of any Taxes imposed shall be equal to the amount
each Term Lender would have received had no such imposition been made.
(iii) Borrower shall provide evidence that all Taxes imposed on all
payments under or with respect to the Term Loan, the Term Notes, the Letters of
Credit or any related instrument shall have been paid in full to the appropriate
authorities by
34
delivery of official receipts or notarized copies thereof to Agent within thirty
(30) days after payment thereof. Borrower shall be entitled to make all filings,
pursue all remedies and appeals and take such other lawful action to prevent or
challenge the imposition of any Taxes, or to procure a refund of any Taxes paid;
provided, however, that Borrower shall indemnify and hold the Term Lenders
harmless, to the reasonable satisfaction of each Term Lender, for such Taxes
(and any penalties, interest or other charges attached thereto) and for any
liabilities, costs or expenses incurred by any Term Lender (including reasonable
fees and expenses of counsel) in connection with any such action by Borrower.
(iv) The Term Lenders and each of the Participants shall provide the
Borrower with the forms prescribed by the Internal Revenue Service of the United
States certifying such party's exemption from United States withholding taxes
with respect to all payments to be made to such party hereunder.
(b) Increased Costs.
If, with respect to this Agreement, the Term Loan or any of the other Loan
Instruments and/or to the making or the maintenance by any Term Lender of its
proportionate share of the Term Loan, including the obligations of any Term
Lender to reimburse the Letter of Credit Bank for such Term Lender's
proportionate share of the Letters of Credit when drawn, compliance by any Term
Lender with any direction, requirement or request from any regulatory authority
whether or not having the force of Law, with which such Term Lender must
reasonably comply, or if any change in the interpretation or application of any
Law or the enactment of any Law after the date hereof imposing or modifying any
reserve, deposit or similar requirement with respect to any class of assets or
liabilities of, deposits with or for the account of, or loans or letter of
credit by any Term Lender (or with respect to any change therein or in the
amount thereof), or any other condition or circumstance with respect to this
Agreement and/or to the maintenance by any Term Lender of its proportionate
share of, or obligations with respect to, the Term Loan or the Letters of Credit
(other than as a result of any tax or similar charge, whether domestic or
foreign, of the type described in Section 2.7(a)), shall result in any increase
in cost to any Term Lender in connection with or arising out of this Agreement,
the Term Loan, the Letters of Credit or any of the other Loan Instruments or in
any reduction in the amount of any payment receivable by such Term Lender
hereunder or thereunder, Borrower shall fully reimburse such Term Lender the
amount of such increase in cost or of such reduction in payment receivable
promptly after written notification thereof to Borrower and Agent by such Term
Lender. Each Term Lender shall
35
(consistent with its internal policies and legal and regulatory restrictions)
use its best efforts to avoid such increased costs by giving Borrower prompt
notice thereof and granting Borrower the opportunity to convert to an
alternative arrangement in accordance with the provisions of this Agreement;
provided, however, that if Borrower so requests within ten (10) days of receipt
of the notification referred to above, such Term Lender shall (consistent with
its internal policies and legal and regulatory restrictions) attempt to
negotiate with Borrower an assignment of such Term Lender's proportionate share
of the Term Loan as further provided below; provided further, that Borrower
shall promptly pay when due all reasonable fees and expenses of such Term Lender
incurred or to be incurred in connection with such transfer or assignment; and
provided further, that no such transfer or assignment shall relieve Borrower of
liability hereunder for amounts incurred by such Term Lender pursuant to this
provision. In the event such Term Lender shall claim any additional amounts
payable pursuant to this Section 2.7 each affected Term Lender shall use its
best efforts (consistent with its internal policy and legal and regulatory
restrictions) to change the location of its Applicable Lending office so as to
eliminate the amount of any such costs or additional amounts which may
thereafter accrue; provided, however, that, without prejudice to the other
provisions of this Section 2.7, including without limitation this subsection
2.7(b), no such change shall be made if, in the reasonable judgment of such
affected Term Lender, such change would be disadvantageous to such Term Lender.
Borrower shall pay promptly when due all reasonable fees and expenses of such
Term Lender as incurred in connection with such alternative arrangement or
change of such Term Lender's Applicable Lending Office.
(c) Change of Law.
After the date hereof, if any change in applicable Law or in the
interpretation thereof by any Governmental Authority makes it unlawful for any
Term Lender to make or continue its proportionate interest in the Term Loan, or
for the Letter of Credit Bank to issue or maintain the Letters of Credit, then
such Term Lender or Letter of Credit Bank shall promptly give notice along with
evidence thereof to Borrower and Agent, and Borrower shall pay forthwith in the
manner set forth below all amounts outstanding, accrued or payable under this
Agreement and the Term Note(s) to such Term Lender or Letter of Credit Bank;
provided, however, that if Borrower so requests within ten (10) days of receipt
of the notice referred to above, such Term Lender shall (consistent with its
internal policies and legal and regulatory restrictions) attempt to negotiate
with Borrower an assignment of such Term Lender's proportionate share of the
Term Loan as further provided below; provided
36
further, however, that Borrower shall promptly pay when due all reasonable fees
and expenses of such Term Lender incurred or to be incurred in connection with
such transfer or assignment. If a transfer or assignment is not agreed to by
Agent, Borrower and the affected Term Lender(s), then Borrower shall pay
forthwith in the manner set forth below all amounts outstanding, accrued or
payable under this Agreement and the Term Note(s) to such Term Lender(s).
(d) Non-Availability.
If at any time dollar deposits in the principal amount of any Term Lender's
proportionate interest in, or obligation under, the Term Loan are not available
for the next Interest Period to any Term Lender in the London interbank market,
such Term Lender shall so notify Agent, who shall so notify Borrower, and the
LIBOR basis for such Term Loan shall be suspended, or, at the Borrower's option,
the obligation of such affected Term Lender to advance or to continue its
proportionate interest in the Term Loan shall be suspended; provided, however,
that if the basis is changed to the Short Term Rate or the Federal Funds Rate,
Borrower shall pay any additional costs to the Term Lenders incurred as a result
of such change.
If at any time the Interest Rate (other than the Fixed Offered Rate) then
in effect does not serve as an accurate reference, in the reasonable judgment of
any Term Lender, for such Term Lender to determine the cost of advancing or
maintaining its respective proportionate interest in the Term Loan during any
Interest Period, then such Term Lender shall notify Agent, who shall so notify
Borrower, and interest on such Term Lender's proportionate share of the Term
Loan shall thereafter accrue at an Interest Rate determined by reference to
another basis (LIBOR, Short Term Rate or Federal Funds Rate); provided, however,
that if such other Interest Rate also does not serve as an accurate reference
for such Term Lender, then such Term Lender shall so notify Agent, who shall so
notify Borrower, and the obligation of such affected Term Lender to advance or
to maintain its proportionate interest in the Term Loan shall be suspended.
Borrower shall upon demand of Agent pay forthwith in the manner set forth
below all amount outstanding, accrued or payable hereunder owing to such
affected Term Lender(s).
(e) LIBOR Funding Costs.
The provisions of this subsection (e) of Section 2.7 shall apply in the
case of interest on the Debt of Borrower hereunder to which a Term Loan Interest
Rate based on LIBOR applies. Together with (i) any early repayment or prepayment
37
of the Term Loan, the Letters of Credit or any portion thereof, or (ii) any
repayment or prepayment of such obligations or a portion thereof on a date other
than an Interest Payment Date or Term Loan Repayment Date, for any reason,
Borrower shall pay all interest accrued on the principal amount so repaid or
prepaid to the date of actual payment, plus all fees, expenses, liabilities and
losses incurred by any Term Lender as a consequence of such early repayment,
prepayment or termination. In the case of payment of any amount made prior to
the last day of the Interest Period applicable to such amount, Borrower shall
pay the amount by which the interest that would have been payable by Borrower to
such Term Lender (minus the Interest Margin) on the amount repaid or prepaid
from the date of repayment or prepayment until such last day of such Interest
Period exceeds the interest payable on a deposit of such amount at the rate as
offered to such Term Lender in the London interbank market or in certificates of
deposit, as the case may be, one (1) Banking Day after receipt for value of such
amount from Borrower for the period from the date two (2) Banking Days after
such receipt to the last day of such Interest Period, plus all other amounts
payable with respect to the Term Loan or the Letters of Credit, as the case may
be.
(f) Other Funding Costs.
The provisions of this subsection (f) of Section 2.7 shall apply in the
case of interest on the Debt of Borrower hereunder to which Term Loan Interest
Rate calculated on any basis other than LIBOR applies. Together with (i) any
early repayment or prepayment of the Term Loan or any portion thereof, or (ii)
any repayment of such obligations or a portion thereof on a date other than an
Interest Payment Date or Term Loan Repayment Date, for any reason, Borrower
shall pay all interest accrued on the principal amount so repaid or prepaid to
the date of actual payment, plus all fees, expenses, liabilities and losses
incurred by any Term Lender as a consequence of such early repayment or
prepayment, including, without limitation, any loss, cost or expense incurred by
such Term Lender by reason of liquidation or re-employment of deposits from
third parties in matching deposits in similar instruments for the remaining term
of the applicable Interest Periods in accordance with such Term Lender's
investment policies with respect to liquidation or re-employment of deposits
from third parties.
2.8 Term Note.
On or prior to the date of the First Advance, Borrower shall execute and
deliver to Agent for the account of the Term Lenders a duly executed Term Note,
with maturities and interest conforming to the Term Loan repayment provisions
set forth in this Agreement, all in the form attached hereto as Exhibit B
38
and made a part hereof. At the reasonable request of Agent, Borrower will
execute and deliver one or more Term Notes, representing in the aggregate the
balance then outstanding of the Term Loan, payable to Agent or Term Lender(s),
in substitution for the Term Note(s) held prior thereto, which shall be
delivered simultaneously to Borrower for cancellation.
2.9 Conditions Precedent for the Benefit of Term Lenders and Agent.
All conditions precedent to the obligation of Term Lenders to make any
Advance are imposed hereby solely for the benefit of Term Lenders and Agent, and
no other party may require satisfaction of any such condition precedent or be
entitled to assume that Term Lenders will make any Advance in the absence of
strict compliance with such conditions precedent.
2.10 Repayment of the Term Loan.
(a) Borrower shall repay the Term Loan, plus accrued and unpaid interest
and fees thereon, to Agent for the pro rata account of the Term Lenders, in
sixty (60) consecutive quarterly installments, commencing on March 31, 1989 and
on each subsequent Term Loan Repayment Date. The amount of principal to be
repaid on each of the first four (4) Term Loan Repayment Dates shall be in an
amount equal to $625,000. The amount of principal to be repaid on each remaining
Term Loan Repayment Date shall be determined by multiplying by 25% the product
of the outstanding amount of the Term Loan immediately following the fourth Term
Loan Repayment Date and the percentage indicated on Exhibit F that corresponds
to the 12-month period from the date of the First Advance in which such Term
Loan Repayment Date occurs.
(b) Notwithstanding the provisions of Section 2.10(a) above, if on
September 30, 2003 the Borrower has not entered into binding agreements in form
and substance reasonably satisfactory to the Term Lenders for the sale of
electricity and steam produced by the Facility throughout the period of the
final Term Loan Repayment Date pursuant to Section 2.10(a), the final Term Loan
Repayment Date shall be September 30, 2003, and all of the then outstanding
principal amount of the Term Loan plus interest accrued and unpaid thereon shall
be due and payable on such date.
(c) In addition to payments pursuant to Section 2.10(a) above, on the final
day of any Interest Period which does not end on a Term Loan Repayment Date,
Borrower shall pay to Agent for the pro rata account of the Term Lenders all
accrued and unpaid interest on the Term Loan attributable to such Interest
Period.
39
(d) All installments shall be rounded down to the nearest whole dollar,
except the final installment, which shall be in an amount equal to the
outstanding principal amount of the Term Loan, plus interest accrued and unpaid
thereon and fees accumulated and unpaid on any Letter of Credit.
2.11 Optional Prepayment of the Term Loan.
By giving irrevocable written notice, which is received by Agent at least
five (5) but not more than forty-five (45) Banking Days in advance, Borrower
may, at its option make prepayments on a Term Loan Repayment Date to Agent for
the account of the Term Lenders of either all the outstanding principal amount
of the Term Loan or from time to time any part thereof equal to One Million
dollars ($1,000,000) or whole number multiples thereof, all partial prepayments
to be applied, upon the direction of Borrower, pro rata against remaining
principal payments to minimize, to the extent reasonably practicable, any
increased costs to the Agent as described in Section 2.7 hereof; provided,
however, that together with all prepayments made prior to January 1, 1992,
except for those prepayments made pursuant to Sections 2.7, 2.10 or 4.2, or the
substitution of a Letter of Credit pursuant to Section 2.13 for all or a portion
of the Term Loan, Borrower shall pay to Agent for the account of the Term
Lenders a prepayment premium equal to three-eighths of one percent (0.375%) of
the amount of such prepayment; and provided, further, that Borrower shall have
no obligation to pay such prepayment premium for any amounts of the Revolving
Loan Amount prepaid by Borrower during the Availability Period; and provided,
further, that Borrower shall pay to Term Lenders all costs (as described in
Section 2.7 hereof), if any, which are incurred by Term Lenders as a result of a
prepayment of a portion of the Term Loan or, as the case may be, Term Lenders
shall pay to Borrower all Gain (as defined below), if any, resulting from such
prepayment. For purposes of this provision, "Gain" shall mean the negative
difference of the following two components: (i) the then present value of the
required principal and interest payments of the Term Loan that are avoided by
such prepayment, discounted at a rate equal to the sum of the yield on U.S.
Treasury obligations having a final maturity equal to the average life of the
principal payments avoided by such prepayment plus the Interest Margin and (ii)
the principal amount of the Term Loan then being prepaid.
2.12 General Terms of Payment.
(a) All sums payable to Agent or the Term Lenders hereunder shall be paid
without deduction, set-off or counterclaim in New York City in immediately
available funds not later than 1:00 p.m. (New York time) on the day in question
40
to the Federal Reserve Bank of New York, for credit to the account of Credit
Suisse, New York Branch, ABA No. ▇▇▇▇-▇▇▇▇-▇ (CR SUISSE NY), Attention: Loan
Department.
(b) Any payments made to Agent for its account or for the benefit of Term
Lenders shall be applied first against costs, expenses and indemnities due
hereunder; then against fees due to Agent and Term Lenders (other than LOC
Fees); then against Default Interest, if any; then against interest on the Term
Loan; then against any LOC Fees; and then against principal of the Term Loan.
(c) Whenever any payment hereunder shall be due, or any calculation shall
be made, on a day which is not a Banking Day, the date for payment or
calculation, as the case may be, shall be extended to the next succeeding
Banking Day, and any interest on any payment shall be payable for such extended
time at the specified rate. In no event shall this Section be deemed to modify
the definitions of Term Loan Repayment Date or Interest Period set forth in this
Agreement.
(d) All calculations of interest, fees, increased costs, funding costs,
gross up costs or other amounts due hereunder calculated by Agent shall be
conclusive as to the amount thereof absent manifest error. Agent shall promptly
provide Borrower with a certificate, as to the basis and amount of any
withholding or increased cost, setting forth the method of calculation of such
amounts, the assumptions made in making such calculation and the reason for such
withholding. At least five (5) Banking Days prior to the date on which a payment
is due from Borrower hereunder, Agent shall provide a notice to Borrower
specifying the amount due and the date on which such amount is due.
(e) If no due date is specified for the payment of any amount payable by
Borrower hereunder, such amount shall be due and payable not later than twenty
(20) days after receipt of written demand by Agent to Borrower for payment
thereof.
2.13 Letters of Credit.
(a) If Borrower obtains commitments, acceptable in form and substance to
Agent, for financing arrangements consisting of commercial paper or privately
placed medium-term or long-term debt, and if no Event of Default (or any event
that with the passage of time, giving of notice or both would constitute an
Event of Default) exists, upon the approval of the Agent the Letter of Credit
Bank shall upon Borrower's request support such arrangements through the
issuance of one or more Letters of Credit in accordance with the terms and
conditions of this Agreement; provided, however, that the
41
Letter of Credit Bank shall be obligated to issue such Letters of Credit only if
and when such Letter of Credit Bank's regulations and lending limits permit the
issuance of such Letters of Credit. The Letter of Credit Bank shall use
reasonable efforts to issue such Letters of Credit within fifteen (15) Banking
Days (or sooner, if practicable) after receiving written notice from Borrower.
The Letter of Credit Bank agrees to cooperate, consistent with its internal
policies and procedures, in providing marketing information and in seeking the
highest possible credit agency rating with respect to any such commercial paper.
The Term Lenders shall be the account parties with respect to such Letters of
Credit, each Term Lender being obligated to reimburse the Letter of Credit Bank
in its proportionate share of such Letters of Credit as set forth on Schedule I
hereto. Borrower shall be unconditionally obligated to reimburse the LOC
Reimbursement Obligation with respect to such Letters of Credit.
(b) Borrower shall pay the proceeds of a financing arrangement supported by
a Letter of Credit (the "Alternative Financing Proceeds") to Agent for the
account of the Term Lenders to reduce all or a portion of the outstanding Term
Loan. Any payment made by Borrower to Agent pursuant to this Section 2.13(b)
shall be made contemporaneously with the issuance of the Letter of Credit.
(c) The stated amount of any Letter of Credit shall equal (i) the
Alternative Financing Proceeds of the financing arrangement associated with such
Letter of Credit (which may not exceed the outstanding principal balance of the
Term Loan), plus (ii) unless otherwise agreed to in writing by Borrower and the
Letter of Credit Bank, an amount representing interest on the proceeds of such
financing arrangement for a period not to exceed 210 days (or, in the case of
proceeds resulting from the issuance of commercial paper, 270 days), at a rate
not to exceed twelve per cent (12%) per annum, calculated on the basis of a year
of 365 days and the actual number of days elapsed.
(d) The agreement or arrangement through which Borrower obtains a financing
described in Section 2.13(a) shall be in a form and substance satisfactory to
Agent and: (i) shall provide that the repayment obligation under such financing
arrangement shall become due and payable on the date the beneficiary of the
related Letter of Credit receives written notice from Agent that an Event of
Default has occurred or that all amounts outstanding under the Term Note(s) are
due, and shall require such beneficiary to call upon the related Letter of
Credit on such date, and (ii) shall require Borrower to repay the LOC
Reimbursement Obligation under such financing arrangement, and require the
beneficiary of the related Letter of Credit to call upon such Letter of Credit,
in such a manner
42
as to ensure that the outstanding balance of the Term Loan on each Term Loan
Repayment Date shall equal or exceed the principal amount which Borrower is
required to repay on the Term Loan on such date in accordance with Exhibit F.
(e) Each Letter of Credit issued by the Letter of Credit Bank shall have a
term of up to five (5) years. The expiration date of any such Letter of Credit
may, at the request of Borrower received by the Letter of Credit Bank at least
six (6) months prior to such expiration date, be extended by the Letter of
Credit Bank on each annual anniversary date of the issuance of such Letter of
Credit until and including December 30, 1998, to an anniversary date of up to
five (5) years succeeding such extension date, by written notice from the Letter
of Credit Bank on such extension date to the Borrower specifying the new
expiration date. Any Letter of Credit issued by the Letter of Credit Bank shall
expire on or before the final Maturity Date.
(f) Upon payment by the Letter of Credit Bank to a beneficiary under a
Letter of Credit: (i) each of the Term Lenders (other than the Letter of Credit
Bank) shall immediately reimburse the Letter of Credit Bank without further
notice or demand of any kind, in an amount equal to such Term Lender's
proportionate share (as set forth on Schedule I hereto) of such payment by the
Letter of Credit Bank to a beneficiary under a Letter of Credit, (ii) the
outstanding principal balance of the Term Loan shall be increased by an amount
equal to the Alternative Financing Proceeds of the financing arrangement
associated with such Letter of Credit, and (iii) Borrower shall immediately pay
Agent for the account of the Term Lenders, without demand or further notice of
any kind, an amount equal to such payment by the Letter of Credit Bank to the
beneficiary less the amount by which the outstanding principal balance of the
Term Loan was increased in connection with such payment; provided, however, if
there is more than one scheduled payment under a Letter of Credit, Agent and
Borrower shall agree before the issuance of such Letter of Credit on the
proportion of each such payment that will be allocated to increase the
outstanding principal balance of the Term Loan and the proportion of each such
payment that Borrower will immediately pay to Agent for the account of the Term
Lenders.
If Borrower fails to pay Agent for the account of the Term Lenders an
amount due under this Section 2.13(f), the amount not reimbursed shall bear
interest to the extent permitted by law, payable upon demand, at the Default
Interest Rate until such amount is paid in full.
43
The obligations of the Term Lenders and Borrower to make each payment due
under the terms of this Section 2.13(f) shall be absolute, unconditional and
irrevocable, and shall not be affected by any condition or event, including,
without limitation: (a) any lack of validity or enforceability of this
Agreement, any Letter of Credit or any of the other Loan Instruments; (b) any
amendment or waiver of, or consent to departure from, all or any of the Loan
Documents, unless expressly agreed to by the Letter of Credit Bank in writing;
(c) the existence of any claim, set-off, defense or other right which Borrower
may have at any time against any beneficiary or any transferee of any Letter of
Credit (or any persons or entities for whom any such beneficiary or any such
transferee may be acting), Agent, the Letter of Credit Bank, the Term Lenders or
any other person or entity, whether in connection with this Agreement, any of
the other the Loan Instruments or any unrelated transactions; (d) any statement
or any other document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect whatsoever, provided that such
presentment shall not have been the result of, or result in a payment due to,
gross negligence or willful misconduct of the Agent, the Letter of Credit Bank
or the Term Lenders; (e) payment by the Letter of Credit Bank under any Letter
of Credit against presentation of a draft or certificate which does not comply
with the terms thereof, provided such payment shall not have constituted gross
negligence or willful misconduct of the Letter of Credit Bank; or (f) any other
circumstances or happening whatsoever, whether or not similar to any of the
foregoing, provided that the same shall not have constituted gross negligence or
willful misconduct of the Letter of Credit Bank.
2.14 Interest Rate Hedge Agreement.
Provided that no Event of Default or event that with the passage of time,
giving of notice or both would constitute an Event of Default exists, upon the
approval of the Co-Managers, the Borrower may enter into one or more Interest
Rate Hedge Agreements with a third party so long as such agreement, in Agent's
reasonable judgment, will not have an adverse effect on the Term Lenders'
security under the Security Documents or Borrower's ability to meet its
obligations hereunder. The Agent agrees to intermediate the swap or hedge and
act as a counterparty for a fee to be determined by mutual agreement of the
Borrower and the Agent at the time the Borrower selects the counterparty. The
Agent's counterparty under such Interest Rate Hedge Agreement shall have at
least an "investment grade" rating and be acceptable to the Term Lenders. If the
swap or hedge is arranged during the twelve (12) month period beginning on the
date of this Agreement, the
44
Agent's annual fee as counterparty shall be twelve and one-half (12.5) basis
points if the Agent's counterparty has an investment rating of at least "AA".
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower hereby represents and warrants and certifies to Agent and to the
Term Lenders that, as of the date of this Agreement, each of the following
representations and warranties is true and correct in all material respects and
does not omit to state any material fact necessary to make the contents thereof
not misleading.
3.1 Good Standing and Power.
Borrower is a corporation duly organized and existing in good standing
under the laws of the State of Texas with the power to own its property and to
carry on its business as now being conducted and is duly qualified to do
business in the State of Texas and in each other jurisdiction in which the
character of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary. The Borrower has
no subsidiaries.
3.2 Authority
Borrower has full power and authority to enter into and perform this
Agreement and each other Loan Instrument and all Project Documents to which it
is a party, and the entering into of this Agreement, each other Loan Instrument
and all Project Documents by Borrower has been duly authorized by all proper and
necessary corporate action.
3.3 Consents.
All authorizations, consents, approvals, registrations, exemptions, permits
and licenses with or from Governmental Authorities which are necessary for the
execution and delivery by Borrower of this Agreement, each other Loan Instrument
and all Project Documents to which Borrower is a party, and the performance by
Borrower of its obligations hereunder and thereunder (except for such items not
obtained, as explained on Exhibit 1, which items Borrower shall obtain as and
when necessary for the operation of the Facility) have been effected or obtained
and are in full force and effect.
45
3.4 Binding Effect.
Assuming due authorization by the other parties hereto and thereto, this
Agreement constitutes, and each other Loan Instrument and Project Document when
executed and delivered will constitute, the valid and legally binding
obligations of Borrower and the other parties thereto, enforceable in accordance
with their respective terms. Enforcement of the Loan Instruments is subject to
no defenses, and, with respect to the First Advance, no basis exists for any
claims against Term Lenders or Agent under the Loan Instruments.
3.5 Financial Statements.
The Financial Statements of Borrower to be provided hereunder are or will
be true, correct and complete as of the dates specified therein and fully and
accurately present the financial condition of Borrower as of the dates and for
the periods specified. To the best of Borrower's knowledge, no material adverse
change has occurred in the financial condition of any of the other parties whose
Financial Statements Borrower is required to deliver hereunder since the date
hereof which would impair the ability of the Borrower to meet its obligations
hereunder.
3.6 Suits and Actions.
Except, as set forth on Exhibit J, there are no conditions, circumstances,
events, agreements, material actions, suits or proceedings pending, or to the
knowledge of Borrower threatened, in any court, at law or in equity, or before
or by any Governmental Authority against or affecting Borrower, the Property or
the Facility, or involving the validity, enforceability or priority of any of
the Loan Instruments or, to the best of Borrower's knowledge, involving any of
the parties to any of the Project Documents which could impair the ability of
such party to perform its obligations under such Project Document. The
consummation of the transactions contemplated hereby, and the performance of any
of the terms and conditions hereof and of the other Loan Instruments, will not
result in a breach of, or constitute a default in, any mortgage, deed of trust,
lease, promissory note, loan agreement, credit agreement, other agreement or any
rule, regulation, statute or judgment to which Borrower, FSGC or Operator is a
party or by which Borrower, FSGC or Operator may be bound or affected. None of
Borrower, FSGC or Operator is in default under any Governmental Requirements,
other than any non-compliance which does not impair (i) the ability of the
Borrower to meet its obligations hereunder or (ii) any of the security interests
granted to Term Lenders under any of the Security Documents.
46
3.7 Disclosure.
There is no fact which Borrower knows or reasonably should have known
that Borrower has not disclosed to Term Lenders in writing that in the
reasonable opinion of Borrower would be reasonably likely to materially
adversely affect the Property, the Facility or the property, business or
financial condition of Borrower or FSGC.
3.8 Inducement to Term Lenders.
The representations and warranties contained in the Loan Instruments are
made by Borrower as an inducement to Term Lenders to make the Term Loan
Commitment hereunder and to advance and maintain the Term Loan, and Borrower
understands that Term Lenders are relying on such representations and warranties
and that such representations and warranties shall remain true and correct so
long as any part of the Term Loan remains outstanding and shall survive any (a)
bankruptcy proceedings involving Borrower or the Facility, (b) foreclosure of
the Mortgage, (c) conveyance of title to the Property (including the Facility)
in lieu of foreclosure of the Mortgage or (d) exercise of any other rights by
Term Lenders pursuant to any of the Security Documents.
3.9 Submissions.
To the best of Borrower's knowledge, the Loan Instruments and all
financial statements, budgets, schedules, opinions, certificates, confirmations,
Operator's statements, Fina statements, TUEC statements, FSOC statements,
agreements, Project Documents, and other materials submitted to the Term Lenders
in connection with or in furtherance of the Loan Instruments by or on behalf of
the Borrower (as of the date made or furnished) fully and fairly state the
matters with which they purport to deal, and neither misstate any material fact,
nor separately or in the aggregate fail to state any material fact necessary to
make the statements made not misleading in light of the circumstances under
which they were made.
3.10 Status of Parties.
None of Borrower, Term Lenders, Agent or Borrower will, solely as a
result of the participation by the parties separately or as a group, in the
transactions contemplated hereby and the ownership, use or operation of the
Facility contemplated hereunder, be deemed by any Governmental Authority to be,
or be subject to regulation as, a "public utility," an "electric utility," an
"electric utility holding company," "a public utility holding company," a
"holding company," or an
47
"electrical corporation" or a subsidiary or affiliate of any of the foregoing
under any Law or Governmental Requirements (including, without limitation, the
Public Utility Holding Company Act of 1935, the Federal Power Act, and the
Public Utility Regulatory Policies Act of 1978, each as amended), and all
consents, orders, approvals, or filings necessary to accomplish this result
shall have been duly obtained or made.
3.11 Security Interests, Filing and Recordings.
On or before the date of the First Advance: (i) Borrower, as trustor,
shall execute and cause the recordation of the Mortgage; and (ii) Borrower, as
debtor, shall execute Financing Statements covering the security interest
transferred to and/or created in favor of Agent for the account of Term Leaders
by the Security Documents. In addition, Borrower shall, at its expense, take all
reasonable actions that have been requested by Agent or that Borrower knows are
necessary to maintain the perfection of the interests of Agent and Term Lenders
and shall furnish timely notice of the necessity of such action, together with
such instruments, in execution form, and such other information as may be
required to enable such person to take such action. Without limiting the
generality of the foregoing, Borrower shall execute or cause to be executed and
shall file or cause to be filed such Financing Statements, continuation
statements, and fixture filings and such Mortgage, deeds of trust, leases or
memoranda of leases in all places necessary or advisable (in the opinion of
counsel for Agent) to perfect and maintain such security interests and in all
other places that Agent shall reasonably request and shall promptly notify Agent
of any change in Borrower's chief executive office.
3.12 Operating Budget.
The Operating Budget attached hereto as Exhibit K is, to the best of
Borrower's knowledge, complete, fair and accurate.
3.13 Regulation U and X.
Neither the Borrower nor any of its subsidiaries is engaged principally,
or as one of its important activities, in the business of extending credit for
the purposes of purchasing or carrying margin stock, as that term is defined by
Regulation U. The execution, delivery and performance of this Agreement, the
Loan Instruments and the Project Documents in accordance with their respective
terms and the making of the Term Loan do not violate the provisions of
Regulation U or X.
48
3.14 Base Requirement.
To the best of Borrower's knowledge, the Base Requirement is sufficient
to satisfy the fuel requirements needed by the Facility to enable Borrower to
meet in a timely manner all of its obligations under the TUEC Agreement and this
Agreement.
3.15 Environmental Issues.
(a) For the purposes of this Section 3.15, all terms used in this Section
3.15 which are not otherwise defined in this Section are used as defined- in
that certain Amended and Restated Deed of Trust, Security Agreement and
Assignment of Rents dated as of December 29, 1988 by Borrower in favor of Agent
for the benefit of the Term Lenders. Unless the context otherwise specifies or
requires, the following terms shall have the meaning herein specified:
(i) "Hazardous Materials" shall mean (a) any "hazardous waste" as
defined by the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
Section 6901 et seq.), as amended from time to time, and regulations
promulgated thereunder; (b) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 (42 U.S.C. Section 9601 et seq.) ("CERCLA"), as amended from time
to time, and regulations promulgated thereunder; (c) asbestos; (d)
polychlorinated biphenyls; (e) any substance the presence of which on
the Land is prohibited by any Legal Requirements; (f) any petroleum-based
products; (g) underground storage tanks for storing any material in
subparagraphs (a) - (f); and (g) any other substance which by any Legal
Requirements requires special handling of any federal, state or local
governmental entity in its collection, storage, treatment, or disposal.
(ii) "Hazardous Materials Contamination" shall mean the
contamination (whether presently existing or hereafter occurring) of the
Improvements, facilities, soil, groundwater, air or other elements on or
of the Land by Hazardous Materials, or the contamination of the
buildings, facilities, soil, groundwater, air or other elements on or of
any other property as a result of Hazardous Materials at any time
(whether before or after the date of this Agreement) emanating from the
Land.
(iii) "Unauthorized" shall mean not in compliance with all Legal
Requirements.
49
(b) Grantor hereby represents and warrants that, to Grantor's knowledge,
no Unauthorized Hazardous Materials are now located on the Land and that Grantor
has never caused or permitted any Hazardous Materials to be disposed of on,
under or at the Land or any part thereof or ever caused or permitted any
Hazardous Materials to be placed, held, or located on the Land in an
Unauthorized manner. Grantor hereby represents and warrants that, to Grantor's
knowledge, no other person has ever caused or permitted any Hazardous Materials
to be placed, held, located or disposed of on, under or at the Land or any part
thereof except as follows:
Based upon a site assessment of the surface conducted by a reputable
environmental engineering consulting company, a portion of the surface of
the Land was found to have Hazardous Materials Contamination thereon.
Such Hazardous Materials Contamination was minor and was subsequently
properly and completely removed prior to construction of the
Improvements. To Grantor's knowledge, the Land is no longer subject
to Hazardous Materials Contamination.
To Grantor's knowledge, no part of the Land is being used for the disposal of
Hazardous Materials, and no part of the Land is affected by any Hazardous
Materials Contamination. To Grantor's knowledge, although the property adjoining
the Land may have been used for the processing, manufacturing or other handling
of Hazardous Materials, Grantor does not have any specific knowledge regarding
the conditions on such properties, except as follows:
Based upon a review of Texas Water Commission records, certain activities
by Ground Lessor, and its predecessor Cosden Oil and Chemical Company,
has caused groundwater contamination underneath the refinery adjacent to
the Land. Such groundwater contamination has apparently resulted from
surface impoundments and landfills located on the refinery site. A copy
of a letter from the attorney for Cosden Oil and Chemical Company to
the Texas Department of Water Resources dated April 23, 1985, summarizes
the position of Cosden Oil and Chemical Company with regard to such
matters. An engineering report entitled "Fina Oil and Chemical Company,
Big Spring Facility Proposal to Assess Ground-Water Quality Along Down-
gradient Property Boundary" dated April, 1988 and a Compliance Plan
between Fina and the Texas Water Commission was issued and was filed
with the Texas Water Commission. Based upon a
50
review of such documents and other documents in the Texas Water
commission files, it appears that any groundwater contamination on the
refinery site is migrating to the South and East rather than the West
where the Land is located and any Hazardous Materials Contamination is
being removed by Fina pursuant to the Compliance Plan. Accordingly,
Grantor has a reasonable basis to believe that the groundwater under the
Land is not contaminated.
Since Grantor is solely a lessee of the surface and Ground Lessor remains
the fee simple owner of the Land, no environmental assessment of the
groundwater underneath the Improvements was conducted, especially since
Texas Water Commission records indicate that any nearby groundwater
contamination would migrate away from rather than toward the Land.
The enforcement action against Ground Lessor also resulted in the
establishment of a baseline which clearly establishes Ground Lessor as
the responsible party with respect to any groundwater contamination in
the event that there is any migration of contaminated groundwater under
the Land.
To Grantor's knowledge, no investigation, administrative order, consent order
and agreement, litigation or settlement with respect to Hazardous Materials or
Hazardous Materials Contamination is proposed, threatened, anticipated or in
existence with respect to the Land. To Grantor's knowledge, the Land is not
currently on, and to Grantor's knowledge, after diligent investigation and
inquiry, has never been on, any federal or state "Superfund" or "Superlien"
list.
(c) The representations and warranties of Borrower contained in this
Section 3.15 are made only as of the date of this Agreement.
ARTICLE 4 - COVENANTS AND AGREEMENTS OF BORROWER
Borrower hereby covenants and agrees that from the date of the First
Advance until all amounts payable or outstanding hereunder or under any of the
other Loan Instruments are paid in full, Borrower shall faithfully observe and
fulfill, and shall cause to be fulfilled and observed each and all of the
following covenants:
51
4.1 Project Control Account.
(a) All Gross Revenues shall be deposited by Borrower in a special
depository account (the "Project Control Account") maintained by Borrower with
Credit Suisse, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (Account No.
199605-02), and titled appropriately so as to identify the nature of such
account. Borrower has irrevocably instructed all parties paying Gross Revenues
to Borrower, and shall so instruct all other parties at any time paying Gross
Revenues to Borrower, to make such payments into the Project Control Account,
and all such parties have agreed to make all such payments into the Project
Control Account. The monies in the Project Control Account shall be invested in
Permitted Investments, selected by Borrower considering the timing of projected
withdrawals from such account.
(b) All monies while in the Project Control Account are hereby
irrevocably pledged by Borrower to Agent for the benefit of the Term Lenders.
Borrower hereby irrevocably authorizes Agent to make withdrawals from the
Project Control Account pursuant to the terms of this Agreement.
(c) From and after the date of the First Advance, Agent shall, on each
Term Loan Repayment Date, withdraw from the Project Control Account and pay to
the Letter of Credit Bank the LOC Fronting Fee.
(d) From and after the date of the First Advance, Agent shall, after
making the withdrawal specified in subpart (c) above, withdraw from the Project
Control Account on each anniversary of this Agreement and pay to the Agent the
Agency Fee.
(e) From and after the date of the First Advance, Agent shall, on the
last day of each month, after making the withdrawals specified in subpart (d)
above, or as requested by Borrower and reasonably agreed to by Agent, withdraw
from the Project Control Account, and transfer into a Special Operating Account
maintained by Borrower with the Agent (Account No. ▇▇▇▇▇▇▇▇) (the "Special
Operating Account") or into any other account designated by Borrower, an amount
equal to the following month's Projected Operating Costs, determined by
reference to the Operating Budget; provided, however, that by written request
received by the Agent at least five (5) Banking Days prior to such date, the
Borrower may increase the amount set out in the Operating Budget for such
Projected Operating Costs by up to fifteen percent (15%) of the Operating
Budget, less any portion of such fifteen percent (15%) amount previously so
deposited, plus the amount of any non-discretionary payments.
52
(f) From and after the date of the First Advance, Agent shall on the last
day of each month, after making the withdrawals specified in subpart (e) above,
withdraw from the Project Control Account, and transfer into a Maintenance
Reserve Account maintained by Borrower with the Agent (Account No. ▇▇▇▇▇▇▇▇)
(the "Maintenance Reserve Account"), any deposits due and payable on such date.
(g) From and after the date of the First Advance, Agent shall, after
making the withdrawals specified in subpart (f) above, withdraw from the Project
Control Account on each Term Loan Repayment Date, and apply in accordance with
the terms of this Agreement and in the following order, the Debt Service due and
payable on such date, and, in the following order, any deposits to the
Additional Collateral Account and the Debt Protection Account due and payable on
such date; provided, however, that if any Letters of Credit issued pursuant to
Section 2.13 hereof are outstanding on such Term Loan Repayment Date, the Agent
shall provide for a retainage in the Project Control Account on such Term Loan
Repayment Date of an amount determined by the Agent to be equal to the LOC Fees
accrued as of such date on the borrowing supported by such Letters of Credit.
(h) On the date of the First Advance and on each Term Loan Repayment Date
thereafter, Agent shall, after making the withdrawals in the order specified
above and allocating a working capital balance of at least Seven Hundred Fifty
Thousand dollars ($750,000) or such other amount as mutually agreed by Borrower
and the Term Lenders, transfer as Borrower shall direct all monies in excess of
such allocated amount remaining in the Project Control Account on such date.
(i) From and after the date of the First Advance, Agent shall withdraw
from the Project Control Account on any Interest Payment Date which is not a
Term Loan Repayment Date, and apply in accordance with the terms of this
Agreement, the Debt Service due and payable on such date, and on any other
appropriate date as required, the amount described in Section 2.13(f)(iii).
(j) Borrower shall draw checks against the Special Operating Account only
for payment of Operating Costs in accordance with the Operating Budget and for
payment of Operator payments; provided, however, that Borrower shall be
permitted to increase the amount set out in the Operating Budget for such
Operating Costs by up to fifteen percent (15%) of the Operating Budget, less any
portion of such fifteen percent (15%) amount previously added, plus the amount
of any non-discretionary payments, without the prior written approval of the
Agent and Independent Engineer. All monies at any time in the Special Operating
Account are hereby irrevocably pledged by Borrower for the benefit of the Term
Lenders as additional security to secure the prompt payment to the Term Lenders
of
53
all the Borrower's liabilities to the Term Lenders, and to secure the
performance by Borrower of its obligations to them hereunder and under the other
Loan Instruments. Borrower hereby irrevocably constitutes and appoints Agent as
Borrower's attorney-in-fact, in Borrower's name or in Agent's name, to make
withdrawals from the Special Operating Account upon the occurrence of an Event
of Default in accordance with the provisions of this Agreement. Prior to an
Event of Default, Borrower shall have the right to exercise all its rights
with respect to the Special Operating Account, provided that Borrower shall not
take any action or suffer to be done any act which would impair the security
constituted by this assignment and pledge. Borrower hereby agrees to provide
Agent with the authorization necessary to obtain monthly and other periodic
advises of debits and credits to the Special Operating Account.
(k) At any time when an Event of Default shall have occurred and is
continuing, and the applicable grace period, if any, shall have expired, Agent
may apply any monies in the Project Control Account and any monies in the
Special Operating Account to the payment of Borrower's obligations to the Term
Lenders and Agent in such order of application as the Agent may determine in its
sole discretion. Borrower shall provide Agent with the authorization necessary
to effectuate such transactions. Prompt notification shall be provided by Agent
to Borrower of the exercise of any such rights.
4.2 Debt Service Coverage Ratio.
(a) Borrower shall deliver to Agent on each Calculation Date the Debt
Service Coverage Ratio calculated for the six (6) month period terminating on
the last day of the third month immediately preceding such Calculation Date (the
"Calculation Period"); provided, however, that for purposes of the first
Calculation Date, the Calculation Period shall be the period commencing on the
date hereof and terminating on the last day of the third month immediately
preceding such first Calculation Date; and provided further, that Borrower shall
deliver to Agent all information upon which each such calculation is based five
(5) Banking Days prior to such Calculation Date.
(b) If the Debt Service Coverage Ratio calculated on any Calculation
Date is less than one and one-fifth (1.20), then on such Calculation Date a
percentage of the Discretionary Cash Flow for the three month period ending on
such Calculation Date (the "Deposit Amount") shall be withdrawn from the Project
Control Account and deposited by the Agent, in accordance with Section 4.1
hereof, into the Additional Collateral Account maintained by Borrower at the
Agent (Account No. ▇▇▇▇▇▇▇▇). Monies in the Additional Collateral Account may be
invested in
54
Permitted Investments. So long as no Event of Default has occurred and is
continuing, if the Debt Service Coverage Ratio calculated on the next succeeding
Calculation Date is one and one-fifth (1.20) or greater, then (i) all funds in
the Additional Collateral Account shall be released to Borrower, or to such
other person as the Agent shall be legally required to make such delivery and
(ii) the full amount of Borrower's Discretionary Cash Flow shall be released to
Borrower or as otherwise provided elsewhere in this Agreement, until such time
as a calculation required hereunder yields a Debt Service Coverage Ratio of less
than one and one-fifth (1.20), in which event the mandatory allocation
provisions of this Section 4.2 shall apply. For purposes of this Section 4.2,
the Deposit Amount shall be determined in accordance with the formula set forth
in Exhibit L hereof.
(c) If each Debt Service Coverage Ratio calculated on any two consecutive
Calculation Dates is less than one and one- fifth (1.20), then all funds in the
Additional Collateral Account shall be retained and the required Deposit Amount
shall continue to be deposited by Agent into such account until: (i) such time
as the Debt Service Coverage Ratio, calculated taking into account the amounts
deposited in the Additional Collateral Account, on any three consecutive
Calculation Dates is one and one-fifth (1.20) or greater, at which time all
amounts in excess of those required to meet the one and one-fifth Debt Service
Coverage Ratio shall be released to Borrower or as may be otherwise provided
elsewhere in this Agreement; or (ii) upon the direction of Borrower, applied pro
rata against remaining principal payments to minimize, to the extent reasonably
practicable, any increased costs to the Agent as described in Section 2.7
hereof.
So long as no Event of Default has occurred and is continuing, if the
Debt Service Coverage Ratio, calculated excluding the amounts deposited in the
Additional Collateral Account, on any three consecutive Calculation Dates is one
and one-fifth (1.20) or greater, all amounts in such account shall be released
to Borrower on the third such date. For purposes of this Section 4.2(c), the
amount of the outstanding balance of the Additional Collateral Account on a
Calculation Date shall be divided by the number of remaining Term Loan Repayment
Dates; the resulting dollar amount shall be credited against the Scheduled
Payment plus interest and/or LOC Fees due and payable on the Term Loan Repayment
Dates commencing six months prior to such Calculation Date in order to determine
the Debt Service which shall be the denominator for the calculation of the Debt
Service Coverage Ratio.
55
(d) All monies while in the Additional Collateral Account are hereby
irrevocably pledged by Borrower to Agent for the benefit of the Term Lenders.
Borrower hereby irrevocably authorizes Agent, in Borrower's name or in Agent's
name, to make withdrawals from the Additional Collateral Account pursuant to the
terms of this Agreement.
(e) At any time when an Event of Default shall have occurred and is
continuing, and the applicable grace period, if any shall have expired, Agent
may apply any monies in the Additional Collateral Account to the payment of
Borrower's obligations to the Term Lenders and Agent in such order of
application as the Agent may determine in its sole discretion. Borrower shall
provided Agent with the authorization necessary to effectuate such transactions.
Prompt notification shall be provided by Agent to Borrower of the exercise of
any such rights.
4.3 Debt Protection Account.
(a) Prior to the date hereof, Borrower shall open, and shall thereafter
maintain in accordance with the provisions hereof, an account with KOP, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (Account No. ▇▇▇▇▇▇▇▇) (the "Debt
Protection Account"). Monies in the Debt Protection Account may be invested in
Permitted Investments by Borrower. On or before the date hereof, Borrower shall
deposit into the Debt Protection Account an amount equal to One Million dollars
($1,000,000).
(b) On or prior to the day which is five (5) Banking Days prior to each
Term Loan Repayment Date, Agent shall advise Borrower of the Projected Debt
Service for the three (3) month period commencing on such Term Loan Repayment
Date; such amount, for each such period, is referred to herein as the "Debt
Protection Amount".
(c) If the Debt Protection Account does not contain the Debt Protection
Amount, Agent shall withdraw from the Project Control Account and deposit into
the Debt Protection Account on each Term Loan Repayment Date, in accordance with
Section 4.1 hereof, up to fifty percent (50%) of the Discretionary Cash Flow of
the quarter ending on such Term Loan Repayment Date, until the Debt Protection
Account contains the Debt Protection Amount; provided, however, that if Agent
withdraws any money from the Debt Protection Account to pay Debt Service,
Operating Costs or any other reasonable expense in connection with the Property
or the Facility, Borrower shall thereafter deposit into the Debt Protection
Account, on each Term Loan Repayment Date, eighty percent (80%) of the
Discretionary Cash Flow of the quarter ending on such Term Loan
56
Repayment Date, until an amount has been deposited in the Debt Protection
Account which, together with interest earned on the amount remaining in the Debt
Protection Account, is equal to the withdrawn monies; and thereafter deposit
into the Debt Protection Account on each Term Loan Repayment Date up to fifty
percent (50%) of the Discretionary Cash Flow of the quarter ending on such Term
Loan Repayment Date until the Debt Protection Account contains the full Debt
Protection Amount; provided further, that if any calculation of the Debt Service
Coverage Ratio, as calculated pursuant to Section 4.2 hereof, is below one and
one-fifth (1.20), Borrower's Discretionary Cash Flow shall be utilized as
provided in such Section 4.2 prior to making the withdrawals and transfers
required hereunder.
(d) The monies constituting the Debt Protection Account shall be held by
the Agent until applied by Agent to the payment of Borrower's obligations to
Agent and the Term Lenders under this Agreement. Borrower hereby irrevocably
authorizes Agent, in Borrower's name or in Agent's name, to make withdrawals
from the Debt Protection Account pursuant to the terms of this Agreement. If
Agent determines that the Project Control Account does not contain sufficient
funds to make the payments required hereunder, Agent shall withdraw funds from
the Debt Protection Account to cover such shortfall.
(e) Borrower hereby pledges to Agent and the Term Lenders and grants to
them a security interest in all monies at any time constituting the Debt
Protection Account (including the interest paid on such amount) for the purpose
of securing all of Borrower's obligations to them under this Agreement and under
the other Loan Instruments.
(f) At any time when an Event of Default shall have occurred and is
continuing, and the applicable grace period, if any shall have expired, Agent
may apply any monies in the Debt Protection Account to the payment of Borrower's
obligations to the Term Lenders and Agent in such order of application as the
Agent may determine in its sole discretion. Borrower shall provided by Agent
with the authorization necessary to effectuate such transactions. Prompt
notification shall be provided by Agent to Borrower of the exercise of any such
rights.
(g) If on any Term Loan Repayment Date the Debt Protection Account
(including accrued interest) contains more than the then required Debt
Protection Amount, the Agent shall transfer such excess to the Project Control
Account. Upon payment in full of all obligations of Borrower to Agent and the
Term Lenders under this Agreement and the other Loan Instruments, the monies
constituting the Debt Protection Account, together with the interest paid
thereon, if any, will
57
be released to Borrower, or to such other person as the Agent shall be legally
required to make such delivery.
(h) So long as no Event of Default (or event that with the passage of
time, the giving of notice or both, would constitute an Event of Default) has
occurred and is continuing, Agent shall, within five (5) Banking Days after the
written request of Borrower, transfer all or a requested portion of the funds in
the Debt Protection Account to any account requested by Borrower if all of the
following conditions are met:
(i) Agent is provided with a letter of credit (the "L/C") from a
financial institution acceptable to Agent naming Agent and Term Lenders as
beneficiaries and a party other than Borrower as account party;
(ii) The amount of the L/C shall be in the full amount of the funds
requested to be transferred from the Debt Protection Account; and
(iii) The L/C is in a form and substance acceptable to Agent.
Agent may draw upon the L/C (i) at any time Agent determines in its sole
discretion that funds should be applied from the Debt Protection Account (and
there is no balance in such account), (ii) upon the occurrence of an Event of
Default (if a payment Event of Default, Agent shall draw upon the L/C) or (iii)
the day prior to the date upon which the L/C will expire. Funds drawn under
the L/C shall be transferred to the Debt Protection Account; provided, however,
that if funds are drawn under the L/C pursuant to (ii) above, then Agent may
apply such funds as Agent would have applied funds from the Debt Protection
Account. Under no circumstances shall Borrower be obligated for any
reimbursement obligation with respect to the L/C, whether to the financial
institution issuing the L/C, the account party under the L/C or otherwise.
(i) So long as no Event of Default (or event that with the passage
of time, the giving of notice or both, would constitute an Event of Default) has
occurred and is continuing, Agent may, in its sole and absolute discretion,
transfer, within ten (10) days after the written request of Borrower, all or a
requested portion of the funds in the Debt Protection Account to any account
requested by Borrower if (i) Agent is provided with an irrevocable,
unconditional guaranty executed by FSOC (the "FSOC Guaranty") in form and
substance acceptable to Agent guaranteeing the availability of the monies which
would have otherwise been available in the Debt Protection Account, and (ii) the
amount of the FSOC Guaranty is in the full amount of the funds transferred from
the Debt Protection Account.
58
The Agent may draw upon the FSOC Guaranty (i) at any time Agent
determines in its sole discretion that funds should be applied from the Debt
Protection Account, or (ii) upon the occurrence of an Event of Default. Funds
paid to Agent pursuant to the FSOC Guaranty shall be transferred to the Debt
Protection Account; provided, however, that if funds are drawn on the FSOC
Guaranty pursuant to (ii) above, then Agent shall apply such funds as Agent
would have applied any funds from the Debt Protection Account. Under no
circumstances shall the Borrower be obligated for any reimbursement obligation
to FSOC or any other party with respect to the FSOC Guaranty.
4.4 Maintenance Reserve Account.
(a) Prior to the date hereof, Borrower shall open, and shall thereafter
maintain in accordance with the provisions hereof, an account with the Agent for
the purposes of providing for periodic overhaul, repairs and spare parts, in
accordance with the provisions of the Operating Budget governing long-term
maintenance of the Facility (the "Maintenance Reserve Account"). Monies in the
Maintenance Reserve Account may be invested in Permitted Investments by
Borrower.
(b) The Agent shall deposit and apply funds in the Maintenance Reserve
Account in accordance with this provision. When requested by Borrower, amounts
may be withdrawn from the Maintenance Reserve Account for budgeted and
non-discretionary payments and deposited in the Special Operating Account. So
long as the Maintenance Reserve Account does not contain the "Required
Maintenance Amount" set forth on the schedule for such deposits attached hereto
as Exhibit M, as the same may be amended from time to time by the Borrower with
the consent of the Agent and the Independent Engineer, the Agent shall withdraw
from the Project Control Account and deposit into the Maintenance Reserve
Account on each Term Loan Repayment Date, in accordance with Section 4.1 hereof,
the amount set forth on such schedule for each deposit to such account, until
the Maintenance Reserve Account contains the Required Maintenance Amount;
provided, however, that if Agent withdraws any money from the Maintenance
Reserve Account to pay Operating Costs or any other reasonable expense in
connection with the Property or the Facility, Agent shall thereafter deposit
into the Maintenance Reserve Account, on each Term Loan Repayment Date, amounts
in accordance with the schedule until an amount equal to the Required
Maintenance Amount is on deposit in the Maintenance Reserve Account.
(c) Borrower hereby irrevocably authorizes Agent, in Borrower's name or
in Agent's name, to make withdrawals from the Maintenance Reserve Account
pursuant to the terms of this Agreement. If Agent determines that the Project
Control
59
Account does not contain sufficient funds to make the payments required
hereunder, Agent may withdraw funds from the Maintenance Reserve Account to
cover such shortfall.
(d) Borrower hereby pledges to Agent and the Term Lenders and grants to
them a security interest in all monies at any time constituting the Maintenance
Reserve Account (including the interest paid on such amount) for the purpose of
securing all of Borrower's obligations to them under this Agreement and under
the- other Loan Instruments.
(e) At any time when an Event of Default shall have occurred and is
continuing, and the applicable grace period, if any shall have expired, Agent
may apply any monies in the Maintenance Reserve Account to the payment of
Borrower's obligations to the Term Lenders and Agent in such order of
application as the Agent may determine in its sole discretion. Borrower shall
provided Agent with the authorization necessary to effectuate such transactions.
Prompt notification shall be provided by Agent to Borrower of the exercise of
any such rights.
(f) Upon payment in full of all obligations of Borrower to Agent and the
Term Lenders under this Agreement and the other Loan Instruments, the monies
constituting the Maintenance Reserve Account, together with the interest paid
thereon, if any, will be released to Borrower, or to such other person as the
Agent shall be legally required to make such delivery.
4.5 Replacement of Components.
Borrower, at its sole cost and expense, shall, with reasonable
promptness, replace all necessary and advisable components of the Facility that
may from time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for use for any
reason whatsoever, to the extent that replacement of such components is not the
responsibility of Contractor or Operator under the Turnkey Contract or O&M
Contract, respectively (such replacements by Borrower being referred to herein
as "Replacement Components"). Except as otherwise permitted herein, all
Replacement Components shall be free and clear of all liens and rights of others
and shall be in as good operating condition as, and shall have a productive
capacity, value, utility and remaining useful life at least equal to, the
components replaced and shall be in the condition and repair required to be
maintained by the terms hereof.
60
4.6 Required Alterations.
Borrower, at its sole cost and expense, shall make such alterations to
the Facility and the Property as may be required from time to time, subject to
the reasonable review and approval of Agent or Independent Engineer, to meet the
requirements of any Governmental Requirements ("Required Alterations"). Borrower
shall install any Required Alterations promptly; provided, however, that
Borrower may at its sole cost and expense contest the applicability of any
Governmental Requirements as may entail the installation of any Required
Alterations, if and so long as adequate reserves are maintained in accordance
with applicable accounting principles with respect to such Required Alterations,
and if in Agent's and Independent Engineer's reasonable opinion failure to make
such Required Alteration does not impair the productive capacity, value, utility
or remaining useful life of the Facility. Subject to the foregoing, all such
alterations shall comply with all Governmental Requirements, unless such
non-compliance would not impair (i) the ability of the Borrower to meet its
obligations under this Agreement or (ii) any of the security interests granted
to the Term Lenders under any of the Security Documents.
4.7 Operating Logs.
Borrower shall, at its sole cost and expense, (i) maintain at the
Property daily operating logs showing, among other things, the electrical and
useful steam output of the Facility, (ii) keep maintenance and repair reports in
sufficient detail to indicate the nature and date of all work done, (iii)
maintain a current operating manual and a complete set of plans, accounting
records, and specifications reflecting all alterations and (iv) maintain all
other records, logs, and other materials required by the O&M Contract or any
Governmental Requirements.
4.8 Resist Regulatory Change.
If any Governmental Authority shall issue any order, judgment, regulation
or decision the effect of which is to rescind, terminate, repeal, invalidate,
suspend, enjoin, amend or modify the TUEC Agreement, the Steam Agreement or any
part thereof, then Borrower shall so notify Agent and if, as a result of such
regulatory change, there shall exist in the opinion of Agent a reasonable
possibility that such regulatory change will have a material and adverse effect
on any of the Loan Instruments, Project Documents or the operations or economics
of the Facility, Agent shall give Borrower notice thereof and Borrower shall
diligently and in a timely fashion (i) make all filings, (ii) pursue all
remedies and appeals, and
61
(iii) take such other lawful action, in each case as shall be necessary or, in
the reasonable opinion of Agent after such notice, desirable to prevent such
regulatory change from becoming final and nonappealable or otherwise
irrevocable, to postpone the effectiveness of such regulatory change and to
cause such regulatory change to be revoked or amended or modified so as to
eliminate the reasonable possibility of such material adverse effect.
4.9 Information.
Borrower will deliver to Agent the following information:
(a) as soon as available after a best efforts attempt by Borrower to
obtain such information, a balance sheet of Borrower, TUEC, Fina, Operator and
FSGC, as of the end of such fiscal year, the related statements of income,
equity and changes in financial position for such fiscal year and related
consolidated statements, if any, setting forth in each case in comparative form
the figures for the previous fiscal year, the foregoing financial statements to
be consolidated, if such party has subsidiaries, to be prepared in accordance
with generally accepted accounting principles in the country of such party's
principal place of business, consistently applied, and to be audited by, and to
carry the unqualified report (or qualified report reasonably acceptable to the
Agent) of independent public accountants of nationally recognized standing;
(b) as soon as available after a best efforts attempt by Borrower to
obtain such information, a balance sheet of Borrower, TUEC, Fina, Operator and
FSGC, consolidated, if such party has subsidiaries, as of the end of the first
three quarters of each fiscal year of each such party, the related statements of
income and changes in financial position for such quarter and for the portion of
such party's fiscal year ended at the end of such quarter and the related
consolidated statements, if any, setting forth in each case in comparative form
the figures for the corresponding portion of such party's previous fiscal year,
all certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles in the country of such
party's principal place of business and consistency by the chief financial
officer, treasurer or chief accounting officer of such party;
(c) simultaneously with the delivery of each set of financial statements
of Borrower referred to in paragraphs (a) and (b) above, a certificate of the
chief financial officer, treasurer or chief accounting officer of Borrower
stating that, to the best of such officer's knowledge, no Default or Event of
62
Default exists on the date of such certificate, or if any Default or Event of
Default has occurred, setting forth the details thereof and the action which
Borrower is taking or proposes to take with respect thereto;
(d) forthwith upon the occurrence of any Default or Event of Default
reasonably known to Borrower, a certificate of the chief financial officer,
treasurer or chief accounting officer of Borrower setting forth the details
thereof and the action which Borrower is taking or proposes to take with respect
thereto;
(e) promptly, upon notice from TUEC, Fina, FSGC or Operator, as the case
may be, of any development in such party's affairs, financial or otherwise,
which may, in the reasonable judgment of such party, have a material adverse
effect on the business, properties, condition (financial or otherwise) or
operations, present or prospective, of such party, a copy of such notice (or if
oral, a written summary thereof) for delivery to the Agent on the same or on the
next Banking Day;
(f) forthwith upon the filing by Borrower, and/or promptly upon receipt
by Borrower of knowledge of the filing by TUEC, Fina or FSOC of any information
or report with any Governmental Authority regarding the Facility, the Property,
any of the Loan Instruments or Project Documents, or any of such party's
obligations thereunder or regarding any material adverse change in the condition
("financial or otherwise) of such party, a copy of such information or report as
may be reasonably obtainable by Borrower;
(g) not less than forty-five (45) days prior to the commencement of each
Operating Year, as defined in the O&M Contract, the Operating Budget proposed by
Borrower for such Operating Year with a copy to the Independent Engineer; and
(h) within a reasonable time after request therefor, such additional
information regarding the business, properties, condition (financial or
otherwise) and operations, present or prospective, of Borrower, TUEC, Fina, FSGC
or Operator, as Agent may reasonably request and as may be reasonably obtainable
by Borrower.
4.10 Liens.
Other than as provided in this Agreement and in the Project Documents and
other Loan Instruments, Borrower shall not create, assume or suffer to exist any
lien on any asset now owned or hereafter acquired by it except (i) liens which,
when aggregated with all Debt incurred in accordance with Section
63
4.17 and all voluntarily-incurred contingent liabilities not incurred in the
ordinary course of business (and excluding all contractual obligations incurred
in accordance with Section 4.18), do not exceed Five Hundred Thousand dollars
($500,000) in the aggregate at any one time outstanding, (ii) liens approved in
advance by the Agent, such approval not to be unreasonably withheld or (iii) the
following liens (collectively, the "Permitted Liens"):
(a) liens for current taxes, assessments and governmental charges which
are not delinquent and remain payable without penalty or are being contested in
good faith by appropriate proceedings and for which adequate reserves, bonds or
other security reasonably satisfactory to Agent has been provided;
(b) purchase money security interests in real or personal property when
the obligation secured is incurred for the purchase of such property and does
not exceed one hundred percent (100%) of the lesser of cost or fair market value
thereof at the time of acquisition, and the security interest does not extend
beyond the property involved;
(c) mechanics', materialmen's and similar liens which do not individually
or in the aggregate materially interfere with the conduct of Borrower's business
or which are contested in good faith by Borrower in appropriate proceedings and
for which adequate reserves, bonds or security reasonably satisfactory to Agent
has been provided; and
(d) deposits or pledges to secure statutory obligations, or appeals;
release of attachment, stay of execution or injunction; performance of bids,
tenders, contracts (other than for the repayment of borrowed money) or leases;
or for purposes of like general nature in the ordinary course of its business.
4.11 Maintenance of Records; Inspection.
(a) At all times Borrower shall maintain financial records in accordance
with generally accepted United States accounting principles consistently applied
(except as disclosed therein) with those reflected in the Financial Statements
referred to in Section 4.9 hereof and, at all reasonable times during normal
business hours and as often as the Independent Engineer or Agent may reasonably
request, permit any authorized representative designated by the Independent
Engineer or Agent to visit and inspect the Property and the Facility, including
Borrower's books, and to make extracts from such books and to discuss Borrower's
affairs, finances and accounts with its officers and, upon reasonable notice and
in the presence of an
64
officer of other authorized representative of the Borrower, its independent
certified public accountants or other parties preparing statements for or on
behalf of Borrower.
(b) At Agent's request, Borrower shall permit the Independent Engineer to
conduct an annual audit and review of the operation and maintenance of the
Facility. Borrower agrees that the audit and review shall include all fuel
requirements and gas supply arrangements relating to the Facility. Borrower
agrees to pay all reasonable costs of Agent and Independent Engineer incurred as
a result of such annual audits and reviews.
4.12 Consolidations, Mergers, Sales of Assets; Permitted Activities.
(a) Borrower shall not dissolve, consolidate or merge with or into any
other person, materially amend its charter or bylaws, sell, lease or otherwise
transfer all or substantially all of its assets to any other person or form any
subsidiary without the prior consent of the Agent. Borrower shall permit the
transfer (by assignment, sale or otherwise) of any shares only upon prior notice
to the Agent and upon prior approval by the Agent of all transferees (such
approval not to be unreasonably withheld); provided, however, that Borrower
shall not permit any such transfer if such transfer would violate any Law
concerning the transfer of securities; provided further, that prior to such
transfer Borrower shall deliver to Agent an opinion of counsel satisfactory to
Agent to the effect that such shares are exempt from registration under all Laws
applicable to such transfer or that such shares have been registered in
compliance with such Laws; and provided further, that FSOC shall agree to
indemnify the Term Lenders from any loss or liability incurred by Borrower or
Term Lenders in connection with any violation of such Laws caused by such
transfer. FSOC shall retain majority ownership of and controlling interest in
the Borrower. Borrower shall not issue any new shares or warrants unless the
Agent has provided its approval of the purchaser or other holder (which approval
shall not be unreasonably withheld) and FSOC retains majority ownership of and a
controlling interest in the Borrower.
(b) Borrower shall not change its chief executive office nor adopt or
change any trade name or fictitious business name without ninety (90) days'
written notice to Agent. Borrower shall execute and deliver to Agent any
additional documents or certificates necessary or advisable to reflect any
permitted adoption of or change in principal place of business, trade name or
fictitious business name.
65
4.13 Insurance.
(a) Borrower shall maintain or cause to be maintained the required
Insurance Policies. At Agent's request, Borrower shall cause Agent to be named
as an additional insured or, if applicable, a lenders' loss payable (provided,
however, that Agent shall be named as beneficiary of the worker's compensation
policy), for the account of the Term Lenders, as their interest may appear,
under said policies. Such insurance policies shall provide for at least thirty
(30) days' written notice to Agent of cancellation, reduction in amount or
material change in coverage. Evidence of payment of premiums for such policies
shall be delivered to Agent at least thirty (30) days prior to the expiration
thereof.
(b) In the event of a casualty loss affecting the Facility or a
condemnation of the Facility or the Property, if the restoration of the Facility
or Property is feasible, in the reasonable opinion of the Independent Engineer,
after deducting from any such insurance or condemnation proceeds (the
"Proceeds") the reasonable expenses incurred by Agent in collecting and
disbursing such Proceeds or otherwise in connection therewith, the Proceeds
shall be released to Borrower from time to time in installments sufficient to
pay for restoration as it progresses upon the following conditions:
i. All payments required to be made hereunder in connection
with the Term Loan continue to be made by Borrower in a timely manner.
ii. Agent, prior to the initial release of Proceeds, receives
evidence satisfactory to it that:
a. The Proceeds are sufficient to complete the restoration of
the Facility or the Property to the condition that existed
immediately prior to the casualty, or Borrower deposits with
Agent the amount of any deficiency or otherwise insures, in
a manner reasonably acceptable to Agent, that such
deficiency will be deposited in a timely manner;
b. The value of the Property or the Facility after restoration
will not be materially less than the value of the Property
immediately prior to the casualty; and
c. A restoration budget and work plan satisfactory in the
reasonable judgment of the Agent has been prepared for the
complete restoration of the Facility and/or the Property.
66
iii. Agent for all releases of Proceeds in addition to those
required by sections (ii) and (iv) of this Section 4.13 receives:
a. A certificate (the "Certificate") of Borrower approved by
Agent dated not more than ten days prior to the application
for such release, certifying that:
1. The sum then requested to be released either has been
paid by Borrower and/or is justly due to contractors,
subcontractors, materialmen, engineers, architects, or
other persons (whose names and addresses shall be
stated) who have rendered services or furnished
materials in connection with the approved restoration
budget and work plan, and stating the progress of the
work up to the date of the Certificate;
2. The sum then requested to be released, plus all sums
previously withdrawn, does not exceed the cost of the
work insofar as actually accomplished up to the date of
the Certificate, and that the remainder of the funds
then held by Agent will be sufficient to pay in full
for the completion of the work or Borrower deposits
with Agent the amount of such deficiency or otherwise
insures the availability of the deficient amount as
aforesaid;
3. No part of the cost of the services and materials
described in subsection 1 of this subsection has been
or is being made the basis for the release of any part
of the funds in any previous or then pending
application; and
4. All materials and all property described in the
Certificate are free and clear of all mortgages, liens,
charges, or encumbrances, except those securing
indebtedness due to persons (whose names and addresses
and the several amounts due them shall be stated)
specified in such certificate, which encumbrances will
be discharged upon payment of such indebtedness,
67
except for the liens and security interest created in
the Security Documents or except for mechanic's liens
reserved or bonded;
5. There is no outstanding indebtedness known, after due
inquiry, which is then due and payable for work, labor,
services or materials in connection with the work which
if unpaid, might become the basis of a vendors,
mechanic's, laborer's, or materialman's statutory or
other similar lien upon the Facility, the Property or
any part thereof unless such indebtedness is reserved
for;
b. Borrower fulfills such additional conditions as Agent may
reasonably impose to provide assurance that the Proceeds
will be used to restore the Facility or the Property to the
same condition as existed prior to the damage, including,
without limitation, Agent's prior approval of plans and
specifications for restoration, construction contracts for
such restoration and Agent's requirements concerning
periodic inspections of such restoration work as it
progresses.
C. If Agent receives an application by the fifth (5th) day of
the month, the release of Proceeds shall be made on the last
day of such month.
iv. Agent receives, prior to the final release (in addition to
that which is required by section iii of this Section 4.13):
a. Evidence satisfactory to Agent that the restoration has been
completed and the Facility and the Property conform to all
applicable Governmental Requirements, unless such non-
conformity would not impair the ability of the Borrower to
meet its obligations under this Agreement or any of the
security interests granted to the Term Lenders under any of
the Security Documents; and
b. A certification by the Independent Engineer that the
restoration is complete to its reasonable satisfaction.
68
V. If the amount of Proceeds exceeds the amount necessary to
effect restoration and reimburse Agent for its expenses, then such excess
shall be paid over to Borrower after such restoration is completed as
follows:
a. Upon compliance with the foregoing provisions, Agent shall
at Borrower's request, pay out of the funds held by it, to
the persons named in the Certificate, the amounts stated in
such Certificate to be due to them and/or shall pay to
Borrower the amount stated in said Certificate to have been
paid by Borrower.
b. All business interruption insurance proceeds, to the extent
paid, shall be jointly payable to Borrower and Agent and
shall be deposited in the Project Control Account.
4.14 Taxes.
Borrower shall pay and discharge all taxes, assessments and governmental
charges upon it, its income and its properties prior to the date on which
penalties are attached thereto, unless and to the extent only that (i) such
taxes, assessments and governmental charges shall be contested in good faith and
by appropriate proceedings by Borrower and (ii) adequate reserves are maintained
by Borrower with respect, thereto.
4.15 Compliance with Laws.
Borrower shall ensure that the Facility is operated and administered in
accordance with all applicable Governmental Requirements, including without
limitation all regulations and statutes governing environmental matters, unless
such non-compliance would not impair (i) the ability of the Borrower to meet its
obligations under this Agreement or (ii) any of the security interests granted
to the Term Lenders under any of the Security Documents, and shall ensure that
the FERC Qualifying Facility Certificate is maintained for the Facility.
Borrower shall timely comply with all applicable Governmental Requirements
unless such non-compliance would not impair (i) the ability of the Borrower to
meet its obligations under this Agreement or (ii) any of the security interests
granted to the Term Lenders under any of the Security Documents, and if
available, deliver to Agent evidence thereof, and if not available, certify to
Agent that Borrower is in such compliance. Borrower assumes full responsibility
for the
69
compliance of the Plans and the Facility with all applicable Governmental
Requirements and with sound and reasonable engineering practices and,
notwithstanding any approvals by Term Lenders, they shall have no obligation or
responsibility whatsoever for the Plans or any other matter incident to the
Property or the design construction, testing, start-up or operation of the
Facility.
4.16 Compliance with ERISA.
Borrower shall not permit, with respect to any employee pension benefit
plan which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Internal Revenue Code of 1986, as amended
(the "Code") and which is maintained by Borrower for the benefit of employees of
Borrower: (i) any prohibited transaction or prohibited transactions under ERISA
or the Code resulting in liability of Borrower exceeding in the aggregate Fifty
Thousand Dollars ($50,000), (ii) any reportable event under ERISA, if upon
termination of the plan or plans with respect to which one or more such
reportable events shall have occurred there is or would be any liability of
Borrower to the Pension Benefit Guaranty Corporation.
4.17 Other Debt.
Borrower shall not incur any Debt, other than the Debt contemplated in
this Agreement or in the O&M Contract, which, when aggregated with liens
permitted pursuant to Section 4.10(i) and voluntarily-incurred contingent
liabilities not incurred in the ordinary course of business (and excluding all
contractual obligations incurred in accordance with Section 4.18), exceeds Five
Hundred Thousand dollars ($500,000) in the aggregate at any one time
outstanding, without the prior written consent of Agent; provided, that no such
debt may be incurred unless such debt is fully subordinated to all of Borrower's
obligations under this Agreement and the other Loan Instruments; and provided
further, additional subordinated indebtedness shall be approved by the Agent if
such indebtedness would be incurred on terms and conditions approved by the
Agent, such approval not to be unreasonably withheld or delayed, and such
indebtedness, when aggregated with all other such subordinated indebtedness of
Borrower, would not, in the reasonable opinion of Agent, impair the ability of
the Borrower to perform its obligations under this Agreement, the other Loan
Instruments and the Project Documents.
70
4.18 Other Contracts.
(a) Borrower shall become party to no contract or capital lease other
than the Project Documents for the performance of any work on the Property or
for the supplying of any labor, materials, equipment or services for the design,
construction, testing, start-up or operation of the Facility except upon such
terms and with such parties as shall be approved in writing by the Independent
Engineer and Agent which consent shall not be unreasonably withheld or delayed;
provided, however, that such approval shall not be required for contracts in
connection with which all other parties to such contracts execute written
consents in form and substance acceptable to Agent consenting to the assignment
of such contracts to Agent as security and which:
(i) are included in the Annual Budget and are to be performed
within one year; or
(ii) if not capable of performance within one year, involve payment
by Borrower of less than Two Hundred Fifty Thousand dollars ($250,000) or
which, when aggregated with all such contracts, involve payments of less
than Seven Hundred Fifty Thousand dollars ($750,000).
(b) Borrower will not suffer or permit any breach or default to occur in
any of the obligations of Borrower under the Project Documents nor suffer or
permit the termination, cancellation, modification (other than, in the case of
gas supply arrangements only, any modification that does not or would not have
an adverse impact on the commitment, deliverability, maturity, or pricing or
other financial or economic terms of such arrangements) or, in the case of
Insurance Policies, non-renewal of any of such documents by reason of any
failure of Borrower to meet any requirement or, in the case of Insurance
Policies, exercise any renewal option. Borrower will promptly notify Agent of
any default by Borrower or by any other party to any of the Project Documents,
upon reasonable knowledge of such default. Borrower will comply with all
conditions of the Project Documents and will execute all documents necessary for
the consummation of the transactions contemplated thereby.
4.19 Costs and Expenses.
Borrower shall pay to Agent for the account of Term Lenders when due the
Agency Fee and the LOC Fronting Fee, all costs and expenses in connection with
the advance, the negotiation, preparation, execution and closing of this
Agreement and related documents, the issuance of the Term
71
Notes, the exercise of any right, power or remedy, the enforcement of payment
and other terms, including, without limitation, (a) all fees for filing or
recording the Loan Instruments, (b) all reasonable fees and expenses of counsel
to Co-Managers and to Agent, (c) all title insurance and title examination
charges, including premiums for the Title Insurance, (d) all survey costs and
expenses, (e) all premiums for the Insurance Policies, (f) all reasonable fees
and expenses of the Independent Engineer, and (g) all other reasonable costs and
expenses payable to third parties incurred by the Co-Managers, the Letter of
Credit Bank and/or Agent and necessary in connection with the consummation of
the transactions contemplated by this Agreement, including, without limitation,
all renewals, extensions or modifications thereof.
4.20 Additional Documents.
Borrower shall execute and deliver to Agent, from time to time as requested
by Term Lenders, such other documents as shall reasonably be necessary to
provide the rights and remedies to Term Lenders granted or provided for by the
Loan Instruments or the Project Documents and to consummate the transactions
contemplated therein.
4.21 No Liability of Term Lenders or Agent.
Term Lenders, the Letter of Credit Bank and Agent shall have no liability,
obligation or responsibility whatsoever, jointly or severally, with respect to
the Property or the design, construction testing, startup or operation of the
Facility except to advance and maintain the Term Loan pursuant to this Agreement
and to issue and maintain Letters of Credit. Except as provided in the
immediately preceding sentence, Term Lenders and Agent shall not be obligated to
inspect the Property or the construction of the Facility, nor be liable for the
performance or default of Borrower, FSOC, Fina, TUEC, Contractor, Operator or
any other party, or for any failure to construct, complete, protect or insure
the Property, the Facility or any other property of any other person, or for the
payment of costs of labor, materials or services supplied for the design,
construction, testing, start-up and operation of the Facility, or for the
performance of any obligation of Borrower or of any other party to any of the
Project Documents. Nothing, including without limitation the advancing and
maintenance of the Term Loan or acceptance of any document or instrument, shall
be construed as a representation or warranty, express or implied, to any party
by Agent, the Letter of Credit Bank or by Term Lenders.
72
4.22 No Conditional Sale Contract, Etc.
Except as otherwise provided in this Agreement, no materials, equipment or
fixtures shall be supplied or purchased for the operation of the Facility
pursuant to security agreements, conditional sale contracts, lease agreements or
other arrangements or understandings whereby a security interest or title is
retained by any party or the right is reserved or accrues to any party to remove
or repossess any materials, equipment or fixtures intended to be utilized in the
construction or operation of the Facility.
4.23 Defense of Actions.
Upon the occurrence of an Event of Default, or upon the reasonable
determination of Agent that an Event of Default is imminent, or with Borrower's
prior approval, Agent may (but shall not be obligated to) commence, appear in or
defend any action or proceeding purporting to affect the Term Loan, the Letters
of Credit, the Property, the Facility or the respective rights and obligations
of Term Lenders, Agent and any other person pursuant to this Agreement, any of
the other Loan Instruments or any of the Project Documents. Term Lenders and/or
Agent may (but shall not be obligated to) pay all necessary expenses, including
reasonable attorneys' fees and expenses, incurred in connection with such
proceedings or actions, which expenses Borrower hereby agrees to repay to Agent
and Term Lenders promptly upon demand.
4.24 Assignment of Project Documents.
As additional security for the payment of the Term Loan, Borrower hereby
transfers and assigns to Agent for the account of Term Lenders all of Borrower's
rights and interest, but not its obligations, in, under and to the Project
Documents upon the following terms and conditions:
(a) Neither this assignment nor any action by Agent or Term Lenders shall
constitute an assumption by Agent or Term Lenders of any obligations under the
Project Documents, and Borrower shall continue to be liable for all obligations
of Borrower thereunder. Borrower hereby agrees to perform all of its obligations
under the Project Documents and to indemnify and hold harmless Agent and Term
Lenders against and from any loss, cost, liability or expense (including, but
not limited to, reasonable attorneys' fees and expenses) resulting from any
failure of Borrower to so perform.
(b) Agent, upon the occurrence and continuation of an Event of Default, and
expiration of the applicable grace period, if any, or upon the occurence of an
event which with
73
the passage of time, the giving of notice or both would constitute an Event of
Default, shall have the right at any time, but shall not be obligated, to take
in its name or in the name of Borrower such reasonable action as Agent may
determine to be necessary or advisable to cure any default under any Project
Document or to protect the rights of Borrower or Term Lenders thereunder. Term
Lenders and Agent shall incur no liability if any such reasonable action so
taken by Agent or on its or their behalf shall prove to be inadequate or
invalid, and Borrower agrees to hold harmless Agent and Term Lenders, should
such action prove to be inadequate or invalid, against and from any loss, cost,
liability or expense (including, but not limited to, reasonable attorneys' fees
and expenses) incurred in connection with any such action.
(c) Borrower hereby irrevocably constitutes and appoints Agent, upon an
Event of Default, and the expiration of the applicable grace period, if any,
with full power of substitution, as Borrower's attorney-in-fact, in Borrower's
name or in Agent's name, to enforce all rights of Borrower under the Project
Documents; provided, however, that Borrower shall not cancel or amend any
Project Document or do or suffer to be done any act which would impair the
security constituted by this assignment without the prior written consent of
Agent.
(d) This assignment shall inure to the benefit of Agent, Term Lenders,
their respective successors and assigns, including any purchaser upon
foreclosure of the Mortgage or other collateral, any receiver in possession of
the Property or other collateral, and any corporation formed by or on behalf of
Agent or Term Lenders which assumes Agent's and/or Term Lenders' rights and
obligations under this Agreement.
4.25 Prohibition on Assignment of Borrower's Interest.
Borrower shall not assign or encumber any interest of Borrower hereunder,
under any other Loan Instrument, any of the Project Documents, the Facility or
the Property, without the prior written consent of Agent.
4.26 Payment of Expenses
Borrower shall promptly pay or cause to be paid when due all costs and
expenses (except for such costs and expenses as are challenged by Borrower in
good faith, the nonpayment of which, is the reasonable judgment of Agent and
Independent Engineer, would not have a materially adverse effect on the
Property, the Facility or on the operation thereof) incurred in connection with
the Property and the Facility, including, without limitation, the reasonable
fees and expenses of the Independent Engineer, and Borrower shall keep the
Property, the
74
Facility and any funds due to Borrower free and clear of any liens, charges or
claims other than the liens of the Mortgage and of the other Security Documents,
the "Permitted Liens," as defined in Section 4.10, and other liens approved in
writing by Agent, except for such liens, charges and claims as are contested by
Borrower in good faith in appropriate proceedings and for which adequate
reserves, bonds or other security reasonably satisfactory to Agent has been
provided.
4.27 Restrictions and Annexation.
Neither Borrower nor Fina shall impose any restrictive covenants or
encumbrances upon the Property or execute or file any plat adversely affecting
the Property.
4.28 Advertising by Agent, Term Lenders and Borrower.
Borrower and Agent agree that none of Agent, Term Lenders nor Borrower
shall refer to the financing of the Facility by Term Lenders, in any of Agent's,
Term Lenders' or Borrower's advertising, without the consent of the other
parties hereto.
4.29 Loan Participations.
Borrower acknowledges and agrees that Term Lenders may, from time to time,
sell or offer to sell on a pro rata basis interests in the Term Loan, the
Letters of Credit and the Loan Instruments to one or more participants
acceptable to Borrower (each a "Participant"); provided, however, that Borrower
shall not unreasonably withhold such approval. Borrower hereby expressly
approves as a Participant hereunder any participant under the Original
Agreement; provided that any such participant which does not waive its right to
receive a prepayment penalty as provided in Section 2.10 of the Original
Agreement is hereby disapproved. Borrower authorizes Agent and Term Lenders,
subject to the confidentiality obligations set forth in Section 7.16 hereof, to
disseminate to any such Participant or prospective Participant any information
Term Lenders or Agent possess pertaining to the Property, the Facility, the Loan
Instruments and the Project Documents, including, without limitation, complete
and current credit information on Borrower and on any of the other parties to
any Loan Instrument or Project Document, without the consent of or notice to the
Borrower. Borrower agrees that each Participant shall have all the rights
granted to the Term Lenders hereunder, including, without limitation, those
granted in Section 2.7 hereof. Borrower agrees to supply certain reasonably
requested information, and to execute and deliver all such instruments and take
all such further action as the Agent or Term Lenders may from time to time
reasonably request
75
in connection with such participation arrangements. Agent shall notify Borrower
of the name and address for notice of each new Participant, and of such
Participant's proportionate interest in the Term Loan Commitment.
4.30 Notice of Litigation, Claims and Financial Change.
Borrower shall timely respond to and inform Agent promptly, but no later
than within five (5) Banking Days of receipt, of: (i) any litigation against
Borrower or affecting the Property or Facility, or any such litigation known to
Borrower involving any other party to any of the Loan Instruments or Project
Documents which could have a material adverse effect upon the condition of
Borrower or upon the Property or Facility or affect the ability of any other
party to any of the Loan Instruments or Project Documents to perform its
obligations thereunder or could cause an Event of Default; (ii) any claim or
controversy which could become the subject of such litigation; (iii) any
official notice or claim by any Governmental Authority received by Borrower or
known to Borrower pertaining to the Property, the Facility, any of the Project
Documents or any of the Loan Instruments having a material or substantial effect
on any of the foregoing; (iv) any fire or other casualty or any notice of taking
or eminent domain action or similar proceeding affecting the Property or
Facility; and (v) any material adverse change in the financial condition of
Borrower or, as soon as known by Borrower, of any other party to any of the Loan
Instruments or Project Documents.
4.31 Indemnification.
Borrower hereby indemnifies and holds harmless each Term Lender, the Letter
of Credit Bank and Agent (each an "Indemnified Party") from and against any and
all claims, damages, losses, liabilities, costs or expenses whatsoever which any
Indemnified Party may incur (or which may be claimed against any Indemnified
Party by any person or entity whatsoever) by reason of, in connection with or in
any way relating to this Agreement, any other Loan Instrument or any of the
Project Documents, except for costs or expenses arising from commercially
unreasonable, illegal or grossly negligent actions by such Indemnified Party.
Borrower further agrees that, upon demand by any Indemnified Party, it will pay
to such Indemnified Party any and all reasonable expenses incurred by such
Indemnified Party in enforcing any rights under this Agreement, any other Loan
Instrument or any of the Project Documents, including reasonable fees of
counsel. Any Indemnified Party shall, as soon as possible after the receipt by
it of notice of the actual or threatened commencement of any action in respect
to which indemnity may be sought from
76
Borrower on account of the indemnity agreement contained herein, notify Borrower
thereof, and Borrower shall have the right (but not the obligation) to
participate in the defense of such action. Each Indemnified Party shall use its
best efforts to cooperate as reasonably requested by Borrower in the defense of
any such action. No Indemnified Party shall compromise or settle any action for
which indemnification is or may be sought hereunder without the prior consent of
Borrower, which consent shall not be unreasonably withheld. Nothing in this
Section is intended to limit the Borrower's other obligations contained in this
Agreement, the other Loan Instruments and the Project Documents. The provisions
of this Section shall survive the payment in full of the Term Loan, the
termination of all Letters of Credit, the release of the Mortgage and of all
other collateral under the other Security Documents.
4.32 Right of Set-off, Liens.
Upon the occurrence and upon the expiration of the applicable grace period,
if any, and during the continuance of any Event of Default, Borrower hereby
authorizes Agent and each Term Lender at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by Agent or such Term Lender to or for the
credit or the account of Borrower against any and all of the obligations of
Borrower under any Loan Instrument irrespective of whether or not Agent or such
Term Lender shall have made any demand hereunder and although such obligations
may be contingent or unmatured. In the event that any Term Lender shall at any
time receive any monies through exercise of its set-off rights as provided
herein, such Term Lender shall be deemed to have received such payment as agent
for and on behalf of all the Term Lenders and shall immediately advise Agent of
the receipt of such funds and promptly transmit the full amount thereof to the
Agent for prompt distribution to all the Term Lenders in accordance with their
respective interests, as provided in this Agreement; provided, however, that
such Term Lender shall be deemed not to have received, and Borrower shall be
deemed not to have made to such Term Lender, any payment transmitted to Agent by
such Term Lender pursuant to this Section. Prompt notification shall be provided
to Borrower of the exercise of any rights under this Section 4.32.
4.33 Operating Budget.
As of the time submitted, all future Operating Budgets submitted by
Borrower shall contain complete, fair and accurate projections of the Projected
Gross Revenues and Projected Operating Costs for each month of such Operating
Budget.
77
4.34 Tax Benefits.
Borrower shall remain at all times the beneficial owner of the Facility for
purposes of the Code and applicable state and local tax Laws, and, as such,
Borrower, either directly or through a subsidiary formed with the prior approval
of Agent, shall retain all Borrower's Tax Benefits. Without limiting the
foregoing, Borrower, as the beneficial owner of the Facility, will be entitled
to the following deductions and credits provided by the Code to an owner of
property: (i) deductions for cost recovery with respect to the Facility computed
in accordance with Section 168(b) of the Code with the Facility having a basis
at least equal to (A) the sum of the Borrower's cost with respect to the
Facility, and such expenses incurred by the Borrower with respect to the
transaction which are properly includible in the basis of the Facility, reduced
by (B) the percentage set forth in Section 48(q) of the Code, (ii) deductions
for interest paid or accrued with respect to the Term Loan as authorized by
Section 163 of the Code, and (iii) deductions for such expenses of the
transaction with respect to the Facility incurred by the Borrower which are
deductible currently or amortized.
Borrower agrees that neither it, nor any entity directly or indirectly
controlled by, in control of, or under common control with Borrower, nor any
officer, employee or agent of any of the above, will at any time take any action
or file any returns, certificates or other documents inconsistent with
Borrower's being treated as the beneficial owner of the Facility, and that each
of such entities or persons will file such returns, take such actions and
execute such documents as may be reasonable and necessary to facilitate
accomplishment of the intent of this Agreement. Within thirty (30) days of the
filing of each tax return of Borrower, Borrower shall deliver to Agent a
certificate as to its compliance with the terms of this provision.
4.35 Fixed Rate Arrangement.
As soon as is reasonably practicable, but in no event later than one (1)
year from the date of this Agreement, Borrower shall select a Fixed Rate
Interest arrangement for either (i) a portion of the Term Loan then outstanding
equal to the greater of One Hundred Ten Million dollars ($110,000,000) or the
amount of the First Advance; or (ii) exercise it rights pursuant to Section 2.14
to enter into an Interest Rate Hedge Agreement with respect to such amount.
78
4.36 Gas Supply Contracts.
All gas supply arrangements entered into by Borrower in accordance with
Section 2.3(l) of this Agreement, shall satisfy the Base Requirement set forth
therein throughout the term hereof.
4.37 Use of Proceeds.
The Borrower shall not, and shall not permit any subsidiary to, use the
proceeds of any Advance (a) for any purpose which violates the provisions of
Regulation G, U or X or (b) in connection with any acquisition of the common
stock of any company (or securities convertible into or any options, warrants or
other rights to acquire such common stock) constituting over five percent of
such common stock or $15,000,000 in value, whichever is less, unless the board
of directors of such company has approved such acquisition or has disclosed that
it expresses no opinion and is remaining neutral toward such acquisition.
4.38 Tax Payments.
Borrower shall not pay, and Agent shall not be required to release from the
Accounts, any amounts for payment of income, franchise or similar taxes imposed
by any federal, state or local taxing jurisdiction to any taxing authority or
any affiliate of Borrower in excess of the amount of such taxes Borrower would
be required to pay to the applicable taxing authority if such taxes were
determined as if the Borrower were a company which did not join in the filing of
a consolidated, combined or similar return with any affiliate of Borrower.
4.39 Environmental Issues.
(a) For the purposes of this Section 4.39, all terms used in this Section
4.39 which are not otherwise defined in this Section are used as defined in that
certain Amended and Restated Deed of Trust, Security Agreement and Assignment of
Rents dated as of December 29, 1988 by Borrower in favor of Agent for the
benefit of the Term Lenders. Unless the context otherwise specifies or requires,
the following terms shall have the meaning herein specified:
(i) "Hazardous Materials" shall mean (a) any "hazardous waste" as
defined by the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
Section 6901 et seq.), as amended from time to time, and regulations
promulgated thereunder; (b) any "hazardous substance" as defined by the
Comprehensive Environmental Response,
79
Compensation and Liability Act of 1980 (42 U.S.C. Section 9601 et
seq.) ("CERCLA"), as amended from time to time, and regulations promulgated
thereunder; (c) asbestos; (d) polychlorinated biphenyls; (e) any substance
the presence of which on the Land is prohibited by any Legal Requirements;
(f) any petroleum-based products; (q) underground storage tanks for storing
any material in subparagraphs (a) - (f); and (g) any other substance which
by any Legal Requirements requires special handling of any federal, state
or local governmental entity in its collection, storage, treatment, or
disposal.
(ii) "Hazardous Materials Contamination" shall mean the contamination
(whether presently existing or hereafter occurring) of the Improvements,
facilities, soil, groundwater, air or other elements on or of the Land by
Hazardous Materials, or the contamination of the buildings, facilities,
soil, groundwater, air or other elements on or of any other property as a
result of Hazardous Materials at any time (whether before or after the date
of this Agreement) emanating from the Land.
(iii) "Unauthorized" shall mean not in compliance with all Legal
Requirements.
(b) Grantor agrees to (i) give notice to Beneficiary immediately upon
Grantor's acquiring knowledge of the presence of any Unauthorized Hazardous
Materials on the Land or of any Hazardous Materials Contamination with a full
description thereof; (ii) promptly comply with any Legal Requirements requiring
the removal, treatment or disposal of such Hazardous Materials or Hazardous
Materials Contamination and provide Beneficiary with satisfactory evidence of
such compliance; and (iii) provide Beneficiary, within thirty (30) days after
demand by Beneficiary, with a bond, letter of credit or other reasonable
financial assurance evidencing to Beneficiary's satisfaction that sufficient
funds are available to pay the reasonably estimated cost of removing, treating
and disposing of such Hazardous Materials or Hazardous Materials Contamination
required by Legal Requirements and discharging any assessments which may be
established on the Land as a result thereof.
(c) If Beneficiary shall ever have reason to believe that there are
Unauthorized Hazardous Materials or Hazardous Contamination affecting any of the
Land, Beneficiary (by its officers, employees and agents) at any time and from
time to
80
time, either prior to or after the occurrence of an Event of Default, may
contract for the services of persons (the "Site Reviewers") to perform
environmental site assessments ("Site Assessments") on the Land for the purpose
of determining whether there exists on the Land any environmental condition
which could result in any liability, cost or expense to the owner, occupier or
operator of such Land or any facility thereon arising under any state, federal
or local law, rule or regulation relating to Hazardous Materials. The Site
Assessments may be performed, at any time or times, upon reasonable notice, and
under reasonable conditions established by Grantor which do not impede the
performance of the Site Assessments. The Site Reviewers are hereby authorized to
enter upon the Property for such purposes. The Site Reviewers are further
authorized to perform both above and below the ground testing for environmental
damage or the presence of Hazardous Materials on the Land and such other tests
on the Property as may be necessary to conduct the Site Assessments in the
reasonable opinion of the Site Reviewers. Grantor will supply to the Site
Reviewers such historical and operational information in its possession
regarding the Property as may be reasonably requested by the Site Reviewers to
facilitate the Site Assessments and will make available for meetings with the
Site Reviewers appropriate personnel having knowledge of such matters. On
request, Beneficiary shall make the results of such Site Assessments fully
available to Grantor, which (prior to an Event of Default) may at its election
participate under reasonable procedures in the direction of such Site
Assessments and the description of tasks of the Site Reviewers. The cost of
performing such Site Assessments to the extent such costs are commercially
reasonable or necessary in order to comply with Legal Requirements, shall be
paid by Grantor upon demand of Beneficiary and any such obligations shall be
secured by the Security Documents.
(d) Regardless of whether any Site Assessments are conducted hereunder, if
any Event of Default shall have occurred and be continuing or any remedies in
respect of the Property are exercised by Beneficiary, Grantor shall defend,
indemnify and hold harmless Beneficiary from any and all liabilities (including
strict liability), actions, demands, penalties, losses, costs or expenses
(including, without limitation, consultants fees, investigation and laboratory
fees, reasonable attorneys' fees, expenses and remedial costs), suits, costs of
any settlement or judgment and claims of any and every kind whatsoever which may
now or in the future be paid, incurred or suffered by or asserted against
Beneficiary by any person or entity or governmental agency for, with respect to,
or as a direct or indirect result of, the presence on or under, or the escape,
seepage, leakage, spillage, discharge, emission or release from the Property of
any
81
Hazardous Materials or any Hazardous Materials Contamination or arise out of or
result from the environmental condition of the Land or the applicability of any
Legal Requirements relating to Hazardous Materials (including, without
limitation, CERCLA or any so-called federal, state or local "Superfund" or
"Superlien" laws, statute, law, ordinance, code, rule, regulation, order or
decree), except for costs and expenses to the extent caused by illegal or
grossly negligent actions by Beneficiary, its officers, employees, and agents.
(e) Beneficiary shall have the right but not the obligation, without in any
way limiting Beneficiary's other rights and remedies, to enter onto the Land or
to take such other actions as it deems necessary or advisable to clean up,
remove, resolve or minimize the impact of, or otherwise deal with, any Hazardous
Materials or Hazardous Materials Contamination on the Land following receipt of
any notice from any person or entity asserting the existence of any Hazardous
Materials or Hazardous Materials Contamination pertaining to the Land or any
part thereof which, if true, could result in an order, notice, suit, imposition
of a lien on the Land or other action and/or which, in Beneficiary's sole
opinion, could jeopardize Beneficiary's security under the Mortgage, provided,
however, that Beneficiary shall not take any action pursuant to this Section
4.39 unless Beneficiary shall have first given Grantor the opportunity to take
such action and Beneficiary has determined in its reasonable discretion that
Grantor is not diligently and prudently proceeding to take such actions. All
reasonable costs and expenses paid or incurred by Beneficiary in the exercise of
any such rights shall be secured by the Security Documents and shall be payable
by Grantor upon demand.
ARTICLE 5 - RIGHTS AND REMEDIES OF TERM LENDERS
5.1 Events of Default,
Each of the following events and occurrences shall constitute an Event of
Default under this Agreement:
(a) Any indebtedness of Borrower evidenced by any of the Loan Instruments
or any reimbursement obligation related to a Letter of Credit is not paid when
due, whether by acceleration or otherwise; provided, however, that if such
payment is made within five (5) Banking Days of the date when due, the failure
to make such payment shall not constitute an event of default.
82
(b) Any covenant by Borrower in this Agreement, any of the other Loan
Instruments or any of the Project Documents (other than Project Documents (xvi)
and (xvii)) is not fully and timely performed, and such failure or violation
shall not be remediable or, if remediable, shall continue unremedied for a
period terminating on the thirtieth (30th) day or such longer period as shall be
determined by Agent in its sole discretion after Borrower knows or reasonably
ought to know of the occurrence thereof or shall continue unremedied for a
period terminating on the twenty-fifth (25th) day after notice of such event of
default by Agent to Borrower, whichever is earlier to occur.
(c) Any statement, representation or warranty by Borrower in this
Agreement, any of the other Loan Instruments, any of the Project Documents, any
Financial Statement or any other writing delivered to Term Lenders or Agent in
connection with the Term Loan is materially false, misleading or erroneous as of
the time made or deemed to be made;
(d) Any event of default, as defined in any other Loan Instrument or in any
of the Project Documents, shall occur, any period permitted therein for the
remedy of such default shall expire, and (i) any such default is not cured or
waived by the other party or parties to such document (provided, that Borrower,
prior to waiving any such default, shall have obtained the consent of Agent,
which consent shall not be unreasonably withheld) and (ii) Borrower shall not
contest such claimed event of default in good faith in appropriate proceedings
with adequate reserves, bonds or other security reasonably satisfactory to Agent
(provided, however, that an event of default under Project Document (iv) shall
not constitute an event of default hereunder unless an event of default also
exists under Project Document a (v)).
(e) The cessation of the operation of the Facility or of related activity
on the Property for more than fifteen (15) consecutive days, or the operation of
the Facility at less than fifty per cent (50%) of Firm Capacity, as defined in
the Turnkey Contract, for more than three hundred (300) days, except for
scheduled maintenance periods, without the written consent of Agent or the
Independent Engineer, such consent not to be unreasonably withheld, other than
due to Uncontrollable Force, as defined in the TUEC Agreement and in the O&M
Contract, for the period provided in each such contract.
(f) Failure of the Facility, Property or Borrower to comply with the Plans,
any applicable Governmental Requirements (unless such nonconformity would not
impair (i) the ability of the Borrower to meet its obligations under this
Agreement or (ii) any of the security interests granted to the Term Lenders
83
under any of the Security Documents) or any Insurance Policy requirements; an
Event of Default under this subsection (f), or under the TUEC Agreement or the
Steam Agreement shall be waived if it is waived by the other parties to such
agreements or such event of default, if remediable, shall tie remedied on or
prior to the thirtieth (30th) day after the Borrower knows or reasonably ought
to know of occurrence thereof, twenty-five (25) days after Agent gives notice of
such event of default, whichever is earlier to occur; or any modification (not
previously approved by the Agent) of any such agreements or requirements which,
in the reasonable judgment of the Agent or the Independent Engineer, has a
material adverse effect on the ability of the Borrower to meet its obligations
under this Agreement or on the compliance by the Facility, the Property, the
Borrower or any other party to any of the Project Documents with such
requirements.
(g) Failure of Borrower to maintain all authorizations, consents,
approvals, registrations, exemptions, permits and licenses with or from
Governmental Authorities which are then necessary for the operation of the
Facility and, if such failure is remediable, remains unremedied beyond the time
period allowed by such Governmental Authority to remedy such failure, or to
maintain the FERC Qualifying Facility Certificate.
(h) The Borrower or any other party to any of the Project Documents (other
than Project Documents (xvi) and (xvii)
(1) does not generally pay its debts as they become due or admits in
writing its inability to pay its debts or makes a general
assignment for the benefit of creditors; or
(2) commences any case, proceeding or other action seeking
reorganization, arrangement, adjustment, liquidation, dissolution
or composition of it or its debts under any Debtor Relief Laws;
or
(3) in any involuntary case, proceeding or other action commenced
against it which seeks to have an order for relief entered
against it, as debtor, or seeks reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or its
debts under any Debtor Relief Law, (i) fails to obtain a
dismissal of such case, proceeding or other action within sixty
(60)
84
days of its commencement, or (ii) converts the case from one
chapter of the Federal Bankruptcy Code to another chapter, or
(iii) is the subject of an order for relief; or
(4) conceals, removes or permits to be concealed or removed, any part
of its property, with intent to hinder, delay or defraud its
creditors or any of them, or makes or suffers a transfer of a
substantial portion of its property which would be fraudulent
under any bankruptcy, fraudulent conveyance or similar law; or
makes any transfer of its property to or for the benefit of a
creditor at a time when other creditors similarly situated have
not been paid; or suffers or permits while insolvent, any
creditor to obtain a lien upon any of its property through legal
proceedings which is not vacated within sixty (60) days from the
date thereof; or
(5) has a trustee, receiver, custodian or other similar official
appointed for or take possession of all or any part of its
property or has any court take jurisdiction of any of its
property, which action remains undismissed for a period of sixty
(60) days (except where a shorter period is specified in the
immediately following subparagraph (6)); or
(6) fails to pay or to have stayed any final money judgment rendered
against such person, in an amount which would impair Borrower's
ability to meet its obligations under this Agreement, within
fifteen (15) days of entry of such judgment; or
(7) fails to have discharged within a period of ten (10) days any
attachment, sequestration or similar writ on Borrower (or, if on
any other party, any attachment, sequestration or similar writ in
an amount which would impair Borrower's ability to meet its
obligations under this Agreement) levied upon any property of
such person.
85
Provided, however, that in connection with any party other than
Borrower to any of the Project Documents, the Event of Default
shall be waived if:
(i) such party has fully and continues to fully comply with all
its obligations under such Project Document or provides for
the assumption of its obligations under such Project
Document by a party reasonably acceptable to the Agent
within thirty (30) days of such Event of Default and in
connection with such assumption provides adequate assurance
of future performance of such obligations to Agent or
(ii) Borrower, within thirty (30) days of such event of default,
executes, with a party reasonably acceptable to Agent, a
replacement Project Document, in form and substance
acceptable to Agent.
(i) Title to all or any part of the Property or the Facility (other than
obsolete or worn personal property replaced by adequate substitutes of equal or
greater value than the replaced items when new) shall become vested in any party
other than the party named as owner thereof in the applicable Security Document,
whether by operation of Law or otherwise, unless permitted in this Agreement.
(j) Without the prior written consent of Agent, the Borrower or the owner
of the Property hereafter grants any easement or dedication, files any plat,
declaration or restriction or enters into any lease or sub-lease concerning the
Property for the purposes set forth in the Lease Agreement, which may materially
impair the use of the Property, and such grant, filing, declaration or lease is
not capable of being declared void ab initio, or is not so declared (or remedied
in a manner that is reasonably satisfactory to Agent), within thirty (30) days
from the date Agent gives notice to Borrower to do so.
(k) Abandonment of the Property or the Facility by Borrower.
(1) Failure of the Borrower, Operator, TUEC or Fina, as the case may be, to
maintain the required Insurance Policies; provided that such event of default
shall be waived so long as such Insurance Policy is unavailable through no fault
of Borrower and the coverage afforded under the relevant
86
Insurance Policies is the maximum amount reasonably commercially obtainable
in the insurance market at such time.
(m) Any person obligated to pay any part of the indebtedness evidenced by
any of the Loan Instruments, any party to any of the Project Documents, or the
holder of any lien, security interest or assignment relating to the Property,
the Facility or any other asset of Borrower, institutes foreclosure or other
proceedings for the enforcement of its remedies thereunder and (i) such
proceedings are not dismissed within fifteen (15) days of institution or (ii)
Borrower does not contest such proceedings in good faith through appropriate
procedures and, in the event of (i) or (ii), adequate reserves, bonds or other
security reasonably satisfactory to Agent is not provided.
(n) The priority and effectiveness of the lien and/or the security
interests created by the Security Documents is in any way impaired or
invalidated or any person commences any action to have any Security Document, or
any portion thereof, declared void or voidable, or commences any similar action,
and (i) such action is not dismissed within sixty (60) days or (ii) Borrower
does not contest such proceedings in good faith through appropriate procedures
and, in the event of (i) or (ii), adequate reserves, bonds or other security
reasonably satisfactory to Agent is not provided.
(o) The liquidation, termination, merger or dissolution of Borrower or of
any other party to any of the Project Documents (other than Project Documents
(xvi) and (xvii)), unless, for any such event involving an entity other than
Borrower, Agent is reasonably satisfied within thirty (30) days that such event
will not have a material adverse effect on the Property, Facility or ability of
such party to perform its obligations when due under such agreement.
(p) The termination before maturity, cancellation, modification (excluding
immaterial modifications to ancillary work papers and similar items) or, in the
case of Insurance Policies, non-renewal of any of the Project Documents without
the Agent's prior written consent.
(q) Failure of Borrower to maintain an agent for service of process in the
County of New York, State of New York for more than five (5) days.
5.2 Consequences of Event of Default.
(a) If an Event of Default occurs and has not been remedied during the
applicable grace period, if any, Agent, for the account of the Term Lenders, may
in its sole discretion
87
take all actions necessary to cure such Event of Default, and/or declare, by
giving notice to Borrower, the entire amount of Borrower's obligations to Term
Lenders under this Agreement and the other Loan Instruments to be immediately
due and payable, irrespective of any other provision of such agreements. If an
event of failure or violation constitutes an Event of Default under more than
one of the provisions of Sections 5.1, Agent and Term Lenders may take all
actions and remedies provided in this Section 5.2 upon expiration of the
shortest grace period, if any, provided herein; provided, however, that Agent
and Term Lenders shall exercise their rights under this Section 5.2 in a
commercially reasonable manner, considering, inter alia, the material adverse
consequences of such Event of Default to the Borrower, the Property, the
Facility and the rights of the Agent and Term Lenders hereunder and under the
other Loan Instruments.
(b) In the event that Borrower's obligations shall become due and payable
by acceleration as provided in paragraph (a) above, all sums payable shall, upon
the giving of such notice to Borrower by Agent, become immediately due and
payable without presentment, demand, protest or notice of any kind other than
the notice specifically required by this Section, all other notice being
expressly waived by Borrower, and Term Lenders shall have the right to take all
funds in the Accounts and to otherwise enforce their security interests as
provided herein and in the Security Documents. Borrower shall furthermore
indemnify Agent, the Letter of Credit Bank and Term Lenders for all costs,
expenses and losses resulting from any Event of Default and for all costs,
expenses and losses incurred by them in curing such Event of Default and/or in
proceeding to enforce their lien on and security interest in the collateral
under the Security Documents.
(c) Borrower hereby appoints Agent as the attorney-in-fact of Borrower,
upon the occurrence of an Event of Default and the expiration of the applicable
grace period, if any, with full power of substitution, and in the name of
Borrower, if Agent elects to do so, to: (i) execute all applications and
certificates in the name of Borrower which may be required for operation of the
Facility, (ii) endorse the name of Borrower on any checks or drafts,
representing proceeds of the Insurance Policies, or other checks or instruments
payable to Borrower with respect to the Property or Facility, (iii) do every act
with respect to the operation of the Facility which Borrower may do, and (iv)
prosecute or defend any action or proceeding incident to the Property or
Facility. The power-of-attorney granted hereby is a power coupled with an
interest and irrevocable. Agent and Term Lenders shall have no obligation to
undertake any of the foregoing actions, and if
88
they take any such action they shall have no liability to Borrower for the
sufficiency or adequacy thereof.
(d) Any funds of Term Lenders used for any purpose referred to in this
Article 5 shall constitute a part of the Term Loan secured by the Term Loan
Instruments and shall bear interest at the highest then-applicable Default
Interest Rate.
ARTICLE 6 - AGENT
6.1 Appointment.
Each of the Term Lenders hereby appoints Agent to act as its agent under
this Agreement and to act as collateral agent under the Security Documents as
provided therein, and irrevocably authorizes Agent to take such action on such
Term Lender's behalf under the provisions of this Agreement, the Security
Documents and any other agreements and instruments referred to herein and to
exercise such powers hereunder and thereunder as are specifically delegated to
Agent and such powers as are reasonably incidental thereto. Agent shall exercise
the same care hereunder as it exercises in connection with similar transactions
for its own account in which no other lender participates. In performing its
function and duties hereunder and under the Security Documents Agent shall act
solely as the agent of the Term Lenders and does not assume and shall not be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for the Borrower or any other party to any of the Project Documents.
6.2 Majority Lenders.
Agent will to the extent practicable under the circumstances consult with
the Term Lenders prior to taking action on their behalf under this Agreement and
in acting as their Agent under the Security Documents. Agent will not take any
action contrary to the written direction of the Majority Lenders and will take
any lawful action in accordance with the provisions of this Agreement prescribed
in a written direction of the Majority Lenders. Agent may decline to take any
action except upon the written direction of the Majority Lenders and Agent may
obtain a ratification by the Majority Lenders of any action taken by it under
this Agreement. In each case Agent shall have no liability to Borrower (other
than for gross negligence or willful misconduct) or any of the Term Lenders for
any action taken by it upon the direction of the Majority Lenders or if ratified
by the Majority Lenders, nor shall Agent have any liability for any failure to
act unless Agent has been instructed to act by the Majority Lenders. The action
of the
89
Majority Lenders shall bind all the Term Lenders hereunder, except in respect of
matters specifically requiring consent of or action by all the Term Lenders.
Notwithstanding anything herein to the contrary, Agent need not take any action
on behalf of the Term Lenders unless and until it is indemnified to its
satisfaction for any and all consequences of such action.
6.3 Liability and Credit Appraisal.
Neither Agent, in its capacity as Agent, nor any of its officers,
directors, employees or agents shall be liable for any action taken or omitted
by it or them hereunder, or in connection herewith, except for its or their
gross negligence or willful misconduct. The Agent shall not be responsible for
any recitals, statements, representations or warranties herein or for the
execution, effectiveness, genuineness, validity or enforceability of this
Agreement, the Term Notes, the other Loan Instruments, the Project Documents or
any other document executed in connection herewith, or be required to make any
inquiry concerning the performance or observance by the Borrower of any of the
terms, provisions or conditions of this Agreement, the Term Notes, the other
Loan Instruments or the Project Documents. Each Term Lender represents and
warrants to Agent that it has independently without reliance on the Agent made
its own credit investigation and appraisal of Borrower on the basis of such
documents and information as it has deemed appropriate and that it has entered
into this Agreement on the basis of such independent appraisal, and each Term
Lender represents that it will continue to make its own credit appraisal. The
Term Lenders agree to indemnify and hold Agent harmless from and against any and
all liabilities, damages, penalties, judgments, suits, expenses and other costs
of any kind or nature whatsoever imposed on, incurred by or asserted against
Agent in respect of its obligations hereunder, except for its gross negligence
or willful misconduct.
6.4 Reliance by Agent.
Agent shall be entitled to rely upon any communication or document believed
by it to be genuine and correct and to have been signed, sent or made by the
proper person or persons and to act upon the advice of legal counsel and other
experts selected by it concerning all matters pertaining to this Agreement and
its duties hereunder and shall not be liable to any of the other parties hereto
for any of the consequences of such reliance. Agent may rely for the purposes of
the giving of notice or the disbursement of funds on the name and address of
each Term Lender in Section 7.1 or as notified to Agent pursuant to Section 7.1
hereof.
90
6.5 Other Banking.
Agent, in its capacity as a Term Lender, shall have the same rights, powers
and obligations hereunder as any other Term Lender, specifically including the
right to give or deny consent to any action requiring consent or direction of
the Majority Lenders. Agent and its affiliates may, without liability to account
to any Term Lender, engage in any kind of banking, trust or other business with
Borrower as if it were not such Agent or affiliate. In addition, Agent shall be
entitled to receive from the Borrower its portion of any fee in connection with
this transaction without any liability to account therefor to any of the other
Term Lenders except as Agent may have expressly agreed.
6.6 Payments, Notices and Determinations by Agent.
(a) Agent shall promptly distribute to each of the Term Lenders in like
funds upon receipt each Term Lender's pro rata share of all amounts of principal
and interest, and each Term Lender's pro rata or other agreed share of all fees
and all other amounts received by Agent from Borrower hereunder, or from any
party under the Security Documents, on behalf of the Term Lenders. If at any
time Agent makes available to any Term Lender amounts due from Borrower
hereunder which Borrower fails to make available to Agent, such Term Lender
shall on request forthwith refund such amounts to Agent together with interest
thereon at the rate which is equal to the cost of funds to Agent for such
period.
(b) In the event that any Term Lender shall at any time receive any non pro
rata payment from any source in respect of the Term Loans in violation of the
requirement of this Agreement that Borrower make such payment to Agent, such
Term Lender shall be deemed to have received such payment as agent for and on
behalf of all the Term Lenders and shall immediately advise Agent of the receipt
of such funds and promptly transmit the full amount thereof to Agent for prompt
distribution among all the Term Lenders in accordance with their respective
interests as provided in this Agreement; provided, however, that such Term
Lender shall be deemed not to have received, and Borrower shall be deemed not to
have made to such Term Lender, any payment transmitted to Agent by such Term
Lender pursuant to this Section.
(c) Agent shall promptly notify the Term Lenders by telex of each Interest
Period chosen by Borrower, the Term Loan Interest Rate for each Interest Period
(and the relevant LIBOR, Short Term Rate, Fixed Offered Rate or Federal Funds
Rate), the date of any expected payment and all other notices transmitted by
Borrower. Determinations of interest rates and amounts of
91
interest, Default Interest and other sums due hereunder and under the Term Loan
based upon the provisions of this Agreement and contained in notices from Agent
shall be conclusive and binding on Borrower and the Term Lenders, absent
manifest error in computation or transmission.
(d) Agent will maintain all records as to amount, type and value of
collateral pledged and assigned under the Security Documents. Upon request of
any Term Lender, Agent will give a statement to such Term Lender with respect to
the types and amounts of collateral held pursuant to the Security Documents, and
Agent will give prompt notice of any Event of Default under the Security
Documents of which it obtains knowledge.
(e) It is understood that Agent may not have resort to more than its pro
rata share of the collateral without the consent in writing of all of the Term
Lenders and, in any case, may have no resort to the collateral except as
provided in the Security Documents.
6.7 Successor Agent.
Subject to the appointment and acceptance of a successor Agent as provided
below, Agent may resign at any time either under this Agreement or under the
Security Documents by giving written notice thereof to the Term Lenders and
Borrower, and Agent may be removed at any time with or without cause by the
Majority Lenders. Upon any such resignation or removal, the Majority Lenders
shall have the right to appoint a successor Agent acceptable to Borrower. If no
successor Agent shall have been so appointed by the Majority Lenders and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's notice of resignation or the Majority Lenders' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Term Lenders, appoint one
of the other Term Lenders as successor Agent. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provision of this Article 6 shall
continue in effect for such Agent's benefit in respect of any actions taken or
omitted by it while it was acting as Agent hereunder.
92
ARTICLE 7 - GENERAL TERMS AND CONDITIONS
7.1 Notices.
All notices, demands, requests, and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been given
(i) when presented personally, (ii) when transmitted by telex to the number
specified below and the proper answerback is received, or (iii) three (3)
Banking Days after being deposited in a regularly maintained receptacle for the
United States Postal Service, postage prepaid, registered or certified, return
receipt requested, addressed to the respective party, as the case may be, at the
following addresses, or such other address as any party may from time to time
designate by written notice to the others as herein required. The telecopy
(facsimile) numbers provided below are for the convenience of the parties only.
Transmission by telecopy shall constitute provision of notice under this
Agreement only if receipt thereof is acknowledged by the recipient.
If to Borrower: Power Resources, Inc.
Five Post Oak Boulevard
Suite 1400
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telex:
Telecopy:
If to KOP: Kansallis-0sake-Pankki
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Telex: 424843
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to CS: Credit Suisse
▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Specialty Finance
Telex: 23249
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Term Lenders: To KOP and to CS
93
If to Agent: Credit Suisse
▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Specialty Finance
Telex: 23249
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
7.2 Amendments and Waivers.
No amendment or waiver of any provision of this Agreement nor consent by
Term Lenders or Agent to any departure by Borrower therefrom shall in any event
be effective unless the same shall be in writing and signed by Agent and the
Majority Lenders. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No failure on
the part of Agent and/or the Term Lenders to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof (except as
provided above) nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
7.3 Election of Remedies.
Agent, acting on behalf of all the Term Lenders, shall have all of the
rights and remedies granted in the Loan Instruments and available at law or in
equity, and these same rights and remedies may be pursued separately,
successively or concurrently against Borrower, or any collateral under the Loan
Instruments, at the sole discretion of Agent.
7.4 Severability.
Any provision of this Agreement which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or non-authorization, without
invalidating the remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other jurisdiction.
7.5 Form and Substance.
All documents, certificates insurance policies and other items required
under this Agreement to be executed and/or delivered to Agent or Term Lenders
shall be in form and substance reasonably satisfactory to such party or parties.
94
7.6 Limitation on interest.
All agreements between Borrower and Term Lenders, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of acceleration of the maturity of any
indebtedness governed hereby or otherwise, shall the interest contracted for,
charged or received by Term Lenders exceed the maximum amount permissible under
applicable law. if, from any circumstance whatsoever, interest would otherwise
be payable to Term Lenders in excess of the maximum lawful amount, the interest
payable to Term Lenders shall be reduced to the maximum amount permitted under
applicable law. If from any circumstance the Term Lenders shall ever receive
anything of value deemed interest by applicable law in excess of the maximum
lawful amount, an amount equal to any excessive interest shall be applied to the
reduction of the principal of the Term Loan and not to the payment of interest,
or if such excessive interest exceeds the unpaid balance of principal of the
Term Loan such excess shall be refunded to Borrower. All interest paid or agreed
to be paid to Term Lenders shall, to the extent permitted by applicable law, be
amortized, prorated allocated and spread throughout the full period until
payment in full of the principal of the Term Loan (including the period of any
renewal or extension thereof) so that interest thereon for such full period
shall not exceed the maximum amount permitted by applicable law. This paragraph
shall control all agreements between the Borrower and Term Lenders.
7.7 No Third Party Beneficiary.
This Agreement is for the sole benefit of Agent, Term Lenders and Borrower
and is not for the benefit of any third party.
7.8 Borrower In Control.
In no event shall Agent's or Term Lenders' rights and interests under the
Loan Instruments be construed to give Agent or Term Lenders the right to, or be
deemed to indicate that Agent or Term Lenders are in control of the business,
management or properties of Borrower or have power over the daily management
functions and operating decisions made by Borrower.
7.9 Number and Gender.
Whenever used herein, the singular number shall include the plural and the
plural the singular, and the use of any gender shall be applicable to all
genders.
95
7.10 Captions.
The captions, headings, table of contents and arrangements used in this
Agreement are for convenience only and do not and shall not be deemed to affect,
limit, amplify or modify the terms and provisions hereof.
7.11 Applicable Law and Jurisdiction.
(a) This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of New York.
(b) (i) Borrower hereby expressly and irrevocably agrees and consents that
any legal suit, action or proceeding arising out of or relating to this
Agreement and the transactions contemplated herein may be instituted by Term
Lenders in any State or Federal court sitting in the County of New York, State
of New York, United States of America and, by the execution and delivery of this
Agreement, Borrower expressly waives any objection which it may have now or
hereafter to the laying of the venue or to the jurisdiction of any such suit,
action or proceeding, and irrevocably submits generally and unconditionally to
the jurisdiction of any such court in any such suit, action or proceeding.
(ii) In the case of the courts of the State of New York or of the United
States sitting in the County of New York, New York, Borrower hereby irrevocably
designates, appoints and empowers, The Prentice Hall Corporation System, Inc.
(the "Process Agent", which has consented thereto) with offices on the date
hereof at ▇ ▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or successor
acceptable to the Term Lenders, as agent to receive for and on behalf of
Borrower service of process in the County of New York. Borrower further agrees
that such service of process may be made on Process Agent by personal service of
a copy of the summons and complaint or other legal process in any such legal
suit, action or proceeding on Process Agent, or by any other method of service
provided for under the applicable laws in effect in the County of New York, and
Process Agent is hereby authorized to accept such service for and on behalf of
Borrower, and to admit service with respect thereto.
(iii) Upon service of process being made on Process Agent as aforesaid, a
copy of the summons and complaint or other legal process served shall be mailed
by the Process Agent to Borrower by registered mail, return receipt requested,
at its address referred to in this Article 7, or to such other address as
Borrower may notify Process Agent in writing. Service upon Process Agent as
aforesaid shall be deemed to be
96
personal service on Borrower and shall be legal and binding upon Borrower
for all purposes, notwithstanding any failure of Process Agent to mail
copies of such legal process thereto, or any failure on the part of Borrower
to receive the same.
(iv) Borrower agrees that it will at all times continuously maintain an
agent to receive service of process in the County of New York on its behalf with
respect to this Agreement. In the event that for any reason Process Agent or any
successor thereto shall no longer serve as agent for Borrower to receive service
of process in the County of New York on its behalf or shall have changed its
address without notification thereof to Agent or Term Lenders, Borrower will
immediately after having knowledge thereof, irrevocably designate and appoint a
substitute agent and advise Agent and Term Lenders thereof.
(c) Nothing contained in subsection (b) hereof shall preclude Agent,
for the account of Term Lenders, from bringing any legal suit, action or
proceeding arising out of or relating to this Agreement in the courts of any
place where Borrower or any of its property or assets may be found or located.
To the extent permitted by the applicable laws of any such jurisdiction,
Borrower hereby irrevocably submits to the jurisdiction of any such court and
expressly waives, in respect of any such suit, action or proceeding, the
jurisdiction of any court or courts which now or hereafter, by reason of its
present or future domicile, or otherwise, may be available to it.
7.12 Continuing Liability.
Borrower agrees to operate the Facility pursuant to the Plans and in
compliance with all Governmental Requirements, unless such noncompliance would
not impair (i) the ability of the Borrower to meet its obligations under this
Agreement or (ii) any of the security interests granted to the Term Lenders
under any of the Security Documents. If Borrower does not cause the Facility to
be so operated or if the operation thereof is not in such compliance, Term
Lenders shall have the option to operate the Facility so as to remedy such
failure. If Term Lenders elect to operate the Facility or take such other action
as may be necessary to remedy such failure, Borrower promises to pay to Term
Lenders, in addition to any other amounts which may be owing under any of the
Loan Instruments, all sums expended by Term Lenders to operate the Facility in
such manner, and such amounts owing to Term Lenders shall be payable on demand
and shall bear interest at the then-applicable Term Loan Interest Rate. In
addition, if Term Lenders shall advance any funds on behalf of Borrower to any
Governmental Authority to assure such operation of the
97
Facility, Borrower shall pay to Term Lenders all amounts advanced by Term
Lenders for such purpose together with interest on such amount at the
Default Interest Rate, when requested by Term Lenders.
7.13 Certain Calculations.
All calculations of the amount required in the Debt Protection Account,
of the amount required in the Maintenance Reserve Account, of Debt Service
Coverage Ratio, of Discretionary Cash Flow, of Gross Revenues, of Net Revenues,
of Operating Costs, of Projected Gross Revenues, of Projected Net Revenues and
of Projected Operating Costs shall be made by Borrower, in accordance with the
terms of this Agreement, in form and substance satisfactory to Agent. In the
event any such calculation is reasonably rejected by Agent, the Independent
Engineer shall make such calculation in accordance with the provisions of this
Agreement and the relevant definition, for the relevant period. The calculation,
and the assumptions used in making such calculation, of the Independent Engineer
shall be final absent manifest error.
7.14 Continuing Lien.
(a) The liens and security interests granted in the Loan Instruments
secure all indebtedness and all obligations of Borrower owed to Agent and Term
Lenders in connection with the Property, the Facility, the Loan Instruments and
the transactions contemplated herein and therein, of whatever kind or character,
whether now owing, hereafter arising or hereafter to be performed (collectively,
the "Loan Obligations").
(b) The liens and security interest granted in the Loan Instruments
also secure all indebtedness and all obligations of Borrower, Agent and/or Term
Lenders arising under any agreements among or between Borrower, Agent and/or
Term Lenders and any third-party, or any Governmental Authority having
jurisdiction over the Property or the Facility, in connection with the Property,
the Facility, the Loan Instruments and the transactions contemplated herein and
therein, of whatever kind or character, whether now owing, hereafter arising or
hereafter to be performed (collectively, the "Assurance Obligations").
(c) Notwithstanding anything to the contrary in any of the Loan
Instruments, if at the time the principal balance of the Term Loan is fully paid
and no Letters of Credit are outstanding (the "Pay-off Date") any of the Loan
Obligations or Assurance Obligations remains to be paid or performed, Agent and
Term Lenders, subject to paragraph (d) below, shall not be obligated to release
any collateral remaining subject to the
98
Security Documents, and such collateral shall continue to secure the payment
and performance of the Loan Obligations and Assurance Obligations remaining
as of the Pay-off Date.
(d) Agent shall provide to Borrower, within thirty (30) Banking Days of
the Pay-off Date, a list of the Loan Obligations and Assurance Obligations
remaining as of such date, and of the collateral that Agent intends to retain as
security for the payment and performance of such obligations. Borrower may, at
any time thereafter, request release of such collateral and the substitution
thereof with other collateral (the "Other Collateral"). Agent shall timely
accept such substitution provided the Other Collateral is acceptable, in value
and quality, in the reasonable judgment of Agent.
7.15 Consent.
Unless otherwise specified as being within the sole discretion of
Agent, Term Lenders or Borrower, whenever the consent or approval of Agent, Term
Lenders or Borrower is required herein, such consent or approval shall not be
unreasonably withheld or delayed.
7.16 Confidentiality of Information.
(a) Agent and each Term Lender agrees to preserve the confidentiality
of and shall not, without the prior written consent of Borrower, make any
unauthorized use of any written information made available to any of them in
connection with this Agreement, which is marked "Confidential" or "Proprietary"
or is otherwise clearly identified as not to be made public. Agent and each Term
Lender agrees to use its best efforts to preserve the confidentiality of any
other written information made available to it in connection with this Agreement
which is identified as of a proprietary nature. For purposes of this Section
7.16, proprietary information includes but is not limited to (i) the terms of
the Project Documents and Loan Instruments, (ii) all documents, data, drawings,
studies, projections, plans and other information which relates to economic
benefits to Borrower or any party to the Project Documents or costs of design,
construction or operation of the Facility, including, without limitation, the
cost and quantities of fuel and information of the type described in Section 4.9
or 4.11, and (iii) all plans, drawings, documents, studies and other information
relating to design, construction and operation of the Facility.
(b) Borrower acknowledges and agrees that Agent and/or Term Lenders may
disclose such proprietary information to participants or prospective
participants in the Term Loan Commitment. Agent and Term Lenders acknowledge and
agree that
99
such disclosure shall be made only to parties that have executed an
agreement to be bound by the confidentiality obligations set forth herein.
(c) The confidentiality obligations set forth in this Section shall not
apply to any proprietary information that (i) was already known to the receiving
party at the time of its disclosure by the disclosing party, as provable by
prior written records; (ii) is now or may hereafter become part of the public
domain, other than through the failure of the receiving party to fulfill its
obligation hereunder; or (iii) is disclosed to the receiving party by a third
party having no direct or indirect secrecy obligation to the disclosing party
with respect to the disclosed confidential information. Agent and Term Lenders
shall also be free to disclose any such information or data to the extent and
only to the extent (x) required by applicable Law, and (y) during the course of
or in connection with any litigation, governmental investigation, arbitration or
other proceedings based upon or in connection with the subject matter of this
Agreement, including without limitation, the failure of the transactions
contemplated hereby to be consummated.
(d) The obligations of Agent and each Term Lender under this Section
7.16 with respect to confidential information of Borrower, shall expire three
(3) years after the final Term Loan Repayment Date and, with respect to
confidential information of entities other than Borrower, shall expire upon the
expiration of Borrower's confidentiality obligations with respect to such
information.
7.17 Counterparts.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
BORROWER:
POWER RESOURCES, INC.
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
Name: J. ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Financial Officer
100
TERM LENDERS:
KANSALLIS-OSAKE-PANKKI
By: /s/ ▇▇▇▇▇▇ ▇. Toll-▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. Toll-▇▇▇▇
Title: Assistant Vice President
CREDIT SUISSE
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Vice President
By: /s/ ▇▇▇▇▇▇ ▇. Cozihus
---------------------------------
Name: ▇▇▇▇▇▇ ▇. Cozihus
Title: Assistant Vice President
AGENT:
CREDIT SUISSE
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Vice President
By: /s/ ▇▇▇▇▇▇ ▇. Cozihus
---------------------------------
Name: ▇▇▇▇▇▇ ▇. Cozihus
Title: Assistant Vice President
101
Amendment No. 1
Amended and Restated Term Loan Agreement
This Amendment No. 1 ("Amendment No. 1"), entered into as of March 1,
1989, to the Amended and Restated Term Loan Agreement dated December 30, 1988
(the "Amended Term Loan Agreement") among Credit Suisse and Kansallis-Osake-
Pankki as Lenders, Power Resources, Inc. as Borrower, and Credit Suisse as
Agent.
W I T N E S S E T H :
WHEREAS, Agent, Lenders and Borrower have entered into the Amended Term
Loan Agreement; and
WHEREAS, the parties wish to amend certain provisions of the Amended
Term Loan Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the Amended Term Loan Agreement is hereby amended as follows:
1. Section 4.13 is amended to add subsections (c), (d) and (e)
following subsection (b), to read in their entirety as follows:
"(c) Upon the occurrence of a casualty loss affecting the Facility
or a condemnation of the Facility or the Property, the Agent shall
establish a special escrow account in the name of the Borrower, in
trust for the Agent (for the benefit of the Lenders), TUEC and the
Borrower (the "Proceeds Account"). All Proceeds shall be deposited
in the Proceeds Account, and all monies at any time in the Proceeds
Account are hereby irrevocably pledged by Borrower to Agent (for the
benefit of the Lenders) and TUEC. Upon the establishment of the
Proceeds Account, the Borrower shall execute any agreements or
documents reasonably requested by the Agent to grant and perfect a
first-priority security interest in favor of the Agent (for the
benefit of the Lenders) in the monies in the Proceeds Account to
secure all obligations of the Borrower hereunder and under the other
Loan Instruments. Borrower hereby authorizes Agent to make
withdrawals from the Proceeds Account pursuant to
the terms of this Section 4.13. The Agent agrees to provide the
Borrower and TUEC copies of all account statements in regard to the
Proceeds Account. If the Independent Engineer reasonably determines
that a restoration of the Facility or Property is feasible pursuant
to Section 4.13(b) but for a deficiency in the amount of the
Proceeds and the Agent reasonably determines that with additional
funds in the amount of such deficiency the restoration could be
completed in accordance with the provisions of Section 4.13(b), and
if such deficiency is not deposited by the Borrower, then the Agent
shall give TUEC notice of such deficiency, and TUEC shall have the
right within twenty-five (25) days of such notice to offer to
deposit funds into the Proceeds Account to cover such deficiency or
to otherwise insure, in a manner reasonably acceptable to the Agent,
that the amount of such deficiency will be deposited in a timely
manner. If the Agent agrees in its reasonable discretion to accept
such funds, TUEC shall deposit such funds into the Proceeds Account
within thirty (30) days of the notice of deficiency or in the timely
manner referred to above, and upon their deposit such funds shall be
disbursed as Proceeds in accordance with Section 4.13(b) above.
"(d) If Proceeds are not disbursed for the restoration of the
Facility or the Property pursuant to Section 4.13(b) above, the
Agent agrees that, upon payment in full of all amounts owed to the
Agent and the Lenders pursuant to this Agreement and the other Loan
Instruments, the Agent shall disburse to TUEC from any monies
remaining in the Proceeds Account any amounts owed to TUEC pursuant
to the terms of the TUEC Agreement and shall then disburse any
remaining monies to the Borrower.
"(e) All payments to be made to Borrower pursuant to
Section 4.13(b)(v) above shall be made by the Agent after it
disburses to TUEC any amounts owed to TUEC pursuant to the terms of
the TUEC Agreement."
2. Section 7.16 is amended to reletter subsection (d) to become
subsection (e) and to add a new subsection (d), to read in its
entirety as follows:
2
"(d) Notwithstanding anything to the contrary herein, with respect
to the TUEC Agreement the parties hereto agree to comply with the
confidentiality provisions set forth in Sections 16.01, 16.02 and
16.03 of the TUEC Agreement; provided, however, that the parties
hereto shall be permitted to disclose the TUEC Agreement during
the course of or in connection with any litigation, governmental
investigation, arbitration or other proceedings based upon or in
connection with the subject matter of this Agreement, except that in
any such disclosure the parties hereto shall comply with the
requirement under Section 16.03(b) of the TUEC Agreement to use
reasonable efforts to restrict public access to the information
disclosed by way of protective order or otherwise."
Except as specifically provided in this Amendment No. 1, no other
amendments, revisions or changes to the Amended Term Loan Agreement are made or
permitted hereby. All other terms and conditions of the Amended Term Loan
Agreement remain in full force and effect and apply fully to this Amendment
No. 1.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers hereunto duly
authorized as of the date first above written.
BORROWER:
POWER RESOURCES, INC.
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: J. ▇▇▇▇▇▇ ▇▇▇▇▇
Title: CFO
TERM LENDERS:
KANSALLIS-OSAKE-PANKKI
By: /s/ ▇▇▇▇▇▇ ▇. Toll-▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. Toll-▇▇▇▇
Title: Assistant Vice President
3
CREDIT SUISSE
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: DVP
By:
--------------------------------
Name:
Title:
AGENT:
CREDIT SUISSE
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: DVP
By:
--------------------------------
Name:
Title:
NY:7450P
Amendment No. 2
Amended and Restated Term Loan Agreement
This Amendment No. 2 ("Amendment No. 2") to the Amended and Restated
Term Loan Agreement dated as of December 30, 1988, as amended by Amendment No.
1 dated as of March 1, 1989 (the "Amended Term Loan Agreement"), among Credit
Suisse and Kansallis-Osake-Pankki as Term Lenders, Power Resources, Inc. as
Borrower, and Credit Suisse as Agent, is entered into as of April 28 1989.
WITNESSETH:
WHEREAS, Term Lenders, Borrower and Agent have entered into the Amended
Term Loan Agreement; and
WHEREAS, the parties wish to amend certain provisions of the Amended
Term Loan Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the Amended Term Loan Agreement is hereby amended as follows:
1. The definition of the term "Insurance Policies" set out in Article 1
is deleted and replaced with the following definition:
"The term 'Insurance Policies' means the insurance policies
specified in Exhibit N to this Agreement, the insurance policies
specified in Article XIV of the TUEC Agreement, the insurance
policies specified in Article XIII of the Steam Agreement and such
other insurance policies as Agent may reasonably require and are
reasonably commercially available for risks and/or contingencies
that are not covered to the reasonable satisfaction of Agent by
existing policies and are customary for comparable projects of
similar nature and size. All Insurance Policies shall (1) conform to
the relevant provisions of Exhibit N, the TUEC Agreement and/or the
Steam Agreement; (2) be issued by companies and in form and
substance reasonably satisfactory to Agent; (3) have Agent, for the
account of the Term Lenders, named as an additional insured or, if
applicable, a lenders' loss payable (provided, however, that Agent
and
Term Lenders shall be named as beneficiaries of the worker's
compensation policy); and (4) have a provision giving Agent thirty (30)
days' prior notice of cancellation or of material change in the
coverage."
2. The definition of the term "LIBOR" set out in Article 1 is deleted and
replaced with the following definition:
"The term 'LIBOR' means, for each Advance (or where the context so
requires, the aggregate of the Advances then outstanding), for Interest
Periods of one (1), three (3), six (6) and twelve (12) months, as
selected by Borrower, or such other period as requested by Borrower and
approved by Agent, for the principal amount of the Term Loan then
outstanding, the per annum rate of interest at which dollar deposits in
the amount of such outstanding principal amount are, or would be,
offered for such Interest Period in the London interbank market at 11
a.m. London time two (2) Banking Days prior to the commencement of such
Interest Period, as reported in the ▇▇▇▇▇▇'▇ Monitor for such date
under the page code "LIBOR," and in case of variations in rates, the
arithmetic average thereof rounded upward if necessary expressed as a
percentage rounded to five (5) decimal places, calculated by Agent;
provided, however, that if such reported rate is unavailable, "LIBOR"
shall mean, for each Interest Period, for each Advance (or, where the
context so requires, the aggregate of Advances then outstanding), the
per annum rate of interest at which dollar deposits in the amount of
such Advance are, or would be, offered by KOP and CS to prime banks in
the London interbank market at 11 a.m. London time two (2) Banking Days
prior to the commencement of such Interest Period, and in the case of
variations in rates, the weighted average thereof rounded upward if
necessary expressed as a percentage rounded to five (5) decimal places,
calculated by Agent.
3. The definition of the term "O&M Contract" set out in Article 1 is
amended by deleting the date "December 30, 1988" from such definition
and replacing such date with the date "as of September 30, 1988".
2
4. The definition of the term "Required Maintenance Amount" set out in
Article 1 is deleted in its entirety.
5. Section 2.3(l) is deleted in its entirety and is hereby replaced with
the following provision:
"(1) Borrower shall have contracted, in the aggregate, for either (i)
a minimum of 12,800,000 MM BTUs for each remaining year of this
Agreement or (ii) such amount of natural gas as may from time to time be
reasonably deemed necessary by the Co-Managers, after consultation with
Borrower, or as Borrower may reasonably recommend, subject to the
reasonable approval of the Co-Managers in consultation with the
Independent Engineer, to meet in a timely manner all of its obligations
under the TUEC Agreement and this Agreement (the "Base Requirement").
The Base Requirement may be provided from one or more of the following
sources:
"(i) Natural Gas Clearinghouse Inc., pursuant to that certain
contract, dated as of December 11, 1986, by and between Natural Gas
Clearinghouse Inc. and FSOC, as the same has been assigned and may be
amended from time to time (the "Natural Gas Clearinghouse Contract");
"(ii) Certain Qualified gas reserves currently owned or controlled by
FSGC or FSOC and more fully described on Exhibit G hereto, which, if
owned, shall be pledged or, if controlled, shall be dedicated to the
Facility until such time and to the extent necessary to fulfill the
Base Requirement. For purposes of this Section 2.3(l), the term
"Qualified" shall mean such natural gas reserves or natural gas supply
arrangements as are reasonably approved by the Independent Engineer and
the Agent; and
"(iii) Qualified natural gas reserves or natural gas supply
arrangements as and when the same are acquired and/or entered into by
FSGC, a wholly owned subsidiary thereof or an affiliate thereof,
including, without limitation, that certain Purchase and Sale Agreement,
dated November 21, 1986, by and between Borrower and Fina.
"At Borrower's request and expense, the Agent shall promptly release
from dedication any
3
and all of the gas reserves in excess of the Base Requirement ("Excess
Reserves"); provided, however, that all of the gas reserves which
remain subject to dedication will contain sufficient unproduced natural
gas to meet the Base Requirement (as reasonably determined by the
Independent Engineer) after release of the Excess Reserves. Borrower
also shall have the right to substitute from time to time other
leases, agreements and properties, including gas purchase contracts or
other supply arrangements with third parties, for those subject to
dedication, and Agent shall promptly execute a release from dedication
in recordable form of all natural gas produced from or attributable to
such substituted gas reserves; provided, however, that such new gas
reserves shall be Qualified gas reserves; and provided further, that
all of the gas reserves which are subject to dedication will contain
sufficient unproduced natural gas to meet the Base Requirement (as
reasonably determined by the Independent Engineer) after such
substitution is effected. Any interests, leases, agreements and
properties that Borrower proposes for substitution hereunder are
subject to the approval of Independent Engineer and Agent in accordance
with this provision. Such substitution shall occur either by (i)
amendment of currently recorded dedication agreements to reflect such
substitution or (ii) execution of new dedication agreements (in form
and substance reasonably acceptable to Agent and the other parties
thereto) dedicating such new interests, leases, agreements and
properties and filing of such amendment or new dedication agreements in
the counties where the new interests, leases, agreements and properties
are located and filing a release of dedication with respect to the
released gas reserves. Any releases required herein from Agent shall
not be unreasonably delayed.
"All arrangements for the supply of natural gas to the Facility shall
(i) be on terms and conditions reasonably satisfactory to the
Co-Managers, (ii) be sufficient to supply the Facility's Base
Requirement; (iii) include the execution and delivery of transportation
agreements as deemed necessary and reasonably approved by Agent and
Independent Engineer; and (iv) during any given year, provide for
the sale
4
of natural gas at a price not in excess of the annual weighted average
price set forth opposite such year as provided on Exhibit H hereto.
"Anything in this Section 2.3(l) to the contrary notwithstanding, in
the event that the Independent Engineer reasonably determines that (i)
the arrangements then in place for the supply of natural gas to the
Facility are insufficient to meet the Base Requirement or the
requirements of Section 4.36 or (ii) adjustments of the Base
Requirement pursuant to this Section 2.3(l) or a change in the criteria
for establishing the Base Requirement has rendered the then-existing
arrangements for the supply of gas insufficient to meet the Base
Requirement, Borrower shall within six (6) months from the date of
notice of such determination make any additional arrangements for the
supply of gas as are necessary to meet the Base Requirement or the
requirements of Section 4.36. Such six (6) month grace period will be
available only if the Borrower is able to establish to the Independent
Engineer's reasonable satisfaction that Borrower has made arrangements
assuring the delivery of natural gas to the Facility for a 365-day
period in an amount not less than the amount determined for such period
in calculating the Base Requirement at a price not in excess of that
specified on Exhibit H; and"
6. Section 2.3(n) is hereby renumbered as Section 2.3(m).
7. Section 4.4(b) is deleted in its entirety and is hereby replaced with
the following provision:
"(b) The Agent shall deposit and apply funds in the Maintenance
Reserve Account in accordance with this provision. When requested by
the Borrower, amounts may be withdrawn from the Maintenance Reserve
Account for budgeted and non-discretionary Operating Costs, or any
other reasonable expense in connection with the Property or the
Facility, and deposited in the Special Operating Account. On each Term
Loan Repayment Date, the Agent shall withdraw from the Project Control
Account and deposit into the Maintenance Reserve Account, in accordance
with Section 4.1 hereof, an amount equal to one-fourth (1/4) of the
amount set forth on Exhibit M to this
5
Agreement, as the same may be amended from time to time by the Borrower
with the consent of the Agent and the Independent Engineer, for the
calendar year in which such Term Loan Repayment Date occurs, plus any
amounts previously payable into the Maintenance Reserve Account pursuant
to this provision which were not so deposited, plus any amounts
withdrawn or disbursed from the Maintenance Reserve Account for
non-budgeted Operating Costs."
8. Section 4.9(g) is amended by deleting the word "and" at the end of such
provision, and Section 4.9(h) is renumbered as Section 4.9(i). A new
paragraph is added immediately following Section 4.9(g) reading as
follows:
"(h) not less than forty-five (45) days prior to the commencement of
each Operating Year (as defined in the O&M Contract) beginning with
Operating Year 1996, a dedicated reserve report containing the
following information:
"(1) An itemized list of all properties currently pledged or dedicated
to the satisfaction of the Base Requirement;
"(2) With respect to each property so itemized, the name(s) of the
record-title owner(s) thereof. If such record-title owner is FSOC
or FSGC, then the recording information reflecting such ownership;
if such owner is someone other than FSGC, then a description of
the contractual relationship between such owner and FSGC which
gives rise to the control by FSGC of any gas produced from such
property;
"(3) With respect to each such property, the quantity of proven
reserves (subdivided into proved developed producing, proved
behind pipe, and proved undeveloped categories) assigned thereto
by FSGC's internal or outside reserve engineers; and
"(4) With respect to each property for which proved behind pipe or
proved undeveloped reserves are assigned, a description of FSGC's
development plans for such reserves; and"
6
9. Section 4.15 is deleted in its entirety and is hereby replaced with the
following provision:
"4.15 Compliance with Laws.
"Borrower shall ensure that the Facility is operated and
administered in accordance with all applicable Governmental
Requirements, including without limitation all regulations and statutes
governing environmental matters, unless such non-compliance would not
impair (i) the ability of the Borrower to meet its obligations under
this Agreement, (ii) any of the security interests granted to the Term
Lenders under any of the Security Documents or (iii) the operation of
the Facility in accordance with the performance standards under Article
VIII of the O&M Agreement and in accordance with the TUEC Agreement,
and shall ensure that the FERC Qualifying Facility Certificate is
maintained for the Facility. Borrower shall timely comply with all
applicable Governmental Requirements, unless such non-compliance would
not impair (i) the ability of the Borrower to meet its obligations
under this Agreement, (ii) any of the security interests granted to the
Term Lenders under any of the Security Documents or (iii) the operation
of the Facility in accordance with the performance standards under
Article VIII of the O&M Agreement and in accordance with the TUEC
Agreement, and if available, deliver to Agent evidence thereof, and if
not available, certify to Agent that Borrower is in such compliance.
Borrower assumes full responsibility for the compliance of the Plans
and the Facility with all applicable Governmental Requirements and with
sound and reasonable engineering practices and, notwithstanding any
approvals by Term Lenders, they shall have no obligation or
responsibility whatsoever for the Plans or any other matter incident to
the Property or the design construction, testing, start-up or operation
of the Facility."
10. Section 4.36 is deleted in its entirety and is hereby replaced with the
following provision:
"4.36 Gas Supply Arrangements.
"Borrower shall at all times during the term hereof maintain gas
supply arrangements
7
which are, to the reasonable satisfaction of Term Lenders,
sufficient in form and substance to satisfy the Base Requirement.
Without limiting the foregoing, Borrower acknowledges and agrees that
at any time after the date which is one (1) year prior to the date of
expiration of the Natural Gas Clearinghouse Inc. Contract, or at any
time during which such contract is not in full force and effect, upon
the reasonable recommendation of the Independent Engineer taking into
account any term remaining under the Natural Gas Clearinghouse Contract
and any other existing Qualified gas supply arrangements pursuant to
Section 2.3(l)(iii) above, Term Lenders may require that any portion,
or all, of the gas reserves which are to be utilized under Section
2.3(l)(ii) necessary to supply the gas required by the Facility for a
period of up to two (2) years as determined in calculating the Base
Requirement, at a price not in excess of that specified on Exhibit H,
must be categorized by the Independent Engineer as proved developed
producing reserves."
11. Exhibit D to the Amended Term Loan Agreement is deleted in its entirety
and is replaced with the document attached to this Amendment No. 2
labeled as Exhibit D.
12. The document attached to this Amendment No. 2 labeled as Exhibit N is
incorporated in the Amended Term Loan Agreement as Exhibit N thereto.
Except as specifically provided in this Amendment No. 2, no other
amendments, revisions or changes to the Amended Term Loan Agreement are made or
permitted hereby. All other terms and conditions of the Amended Term Loan
Agreement remain in full force and effect and apply fully to this
Amendment No. 2.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers hereunto duly
authorized as of the date first above written.
BORROWER
POWER RESOURCES, INC.
By: /s/ illegible
----------------------------
Name:
Title: CFO
8
TERM LENDERS
KANSALLIS-OSAKE-PANKKI
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Treasurer
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: First Vice President
CREDIT SUISSE
By: /s/ illegible
------------------------------
Name
Title:
By:
------------------------------
Name
Title:
AGENT
CREDIT SUISSE
By: /s/ illegible
---------------------------------
Name
Title:
By:
-----------------------------------
Name:
Title:
NY:7862P
9
EXHIBIT "D"
SAMPLE CALCULATION OF DEBT SERVICE COVERAGE RATIO
A. Net Revenues
1. Gross Revenues:
-- TUEC Payments
-- Interest
-- Other
Total:
2. Less Operating Costs:
-- O&M Costs
-- Fuel Costs
-- Insurance
-- Taxes
-- Contributions to Maintenance Reserve Account
in accordance with Exhibit M and amounts in payment
of contributions previously payable in accordance
with Exhibit M which were not so deposited
-- Other
Total:
TOTAL NET REVENUES:
B. Debt Service
-- Principal
-- Interest
TOTAL DEBT SERVICE:
FORMULA
A
Debt Service Coverage Ratio = ----
B
EXHIBIT "N"
INSURANCE COVERAGE
(a) Owner shall provide and maintain the following insurance coverages
provided that the required limits may be satisfied by any combination of
primary or excess insurance in Owner's sole discretion:
(i) insurance for so-called "all risk" property damage or
destruction in an amount not less than the cost of replacement of
the Facility;
(ii) boiler and machinery breakdown coverage;
(iii) Comprehensive General Liability Insurance or equivalent form
as offered, including premises-operations, independent contractors,
products-completed operations, broad form property damage including
completed operations, blanket broad form contractual liability, and
blanket explosion, collapse and underground damage (XCU) coverage.
The policy shall contain limits of at least $1,000,000 combined
single limit each occurrence and in the aggregate where applicable;
(iv) Comprehensive Automobile Liability Insurance for all owned,
non-owned and hired automobiles with limits of liability of at
least $1,000,000 combined single limit;
(v) Excess liability insurance or equivalent form as offered
following the terms of the primary insurance set forth in
subsection (a)(iii) and (iv) above, with a combined single limit of
$20,000,000 per occurrence and in the aggregate where applicable;
and
(vi) Worker's Compensation Insurance in accordance with statutory
requirements.
(b) Owner shall provide and maintain the following insurance coverages
covering the operations of the Operator provided that the required limits
may be satisfied by any combination of primary or excess insurance in
Owner's sole discretion:
(i) Comprehensive General Liability Insurance or equivalent form
as offered, including premises-operations, independent
contractors, products-completed operations, broad form property
damage including completed operations, blanket broad form
contractual liability, and blanket explosion, collapse and
underground damage (XCU) coverage. The policy shall contain limits
of at least $1,000,000 combined single limit each occurrence and
in the aggregate where applicable;
(ii) Comprehensive Automobile Liability Insurance for all owned,
non-owned and hired automobiles with limits of liability of at
least $1,000,000 combined single limit;
(iii) Excess liability insurance or equivalent form as offered
following the terms of the primary insurance set forth in
subsections (a)(i) and (ii) above, with a combined single limit of
$20,000,000 per occurrence and in the aggregate where applicable;
and
(iv) Worker's Compensation Insurance in accordance with statutory
requirements.
AMENDMENT NO. 3
Amended and Restated Term Loan Agreement
This Amendment No. 3 ("Amendment No. 3") to the Amended and
Restated Term Loan Agreement dated as of December 30, 1988, as amended by
Amendment No. 1 dated as of March 1, 1989 and Amendment No. 2 dated as of April
28, 1989 (the "Amended Term Loan Agreement"), among Credit Suisse and
Kansallis-Osake-Pankki as Term Lenders, Power Resources Inc. as Borrower, and
Credit Suisse as Agent, is entered into as of June 1, 1990.
WITNESSETH:
WHEREAS, Term Lenders, Borrower and Agent have entered into the
Amended Term Loan Agreement; and
WHEREAS, the parties wish to amend certain provisions of the Amended
Term Loan Agreement as set forth herein;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the Amended Term Loan Agreement is hereby amended as follows:
1. The definition of the term "L/C" set forth in Article 1 is
amended by replacing the words "Section 4.3(g)" with the words "Section
4.3(h)".
2. Section 2.13 is deleted in its entirety and is replaced with the
following:
"2.13 Letters of Credit.
"Notwithstanding any provision of this Agreement to the contrary,
neither the Agent, the Term Lenders nor the Letter of Credit Bank
shall have any obligation under this Agreement to issue or to fund
a Letter of Credit for the benefit of the Borrower. All references
in this Agreement to the terms 'Letter of Credit,' 'Letter of
Credit Bank,' 'LOC Fee,' 'LOC Fronting Fee' and 'LOC Reimbursement
Obligation' (other than those references in this Section 2.13)
shall be deemed to be deleted from this Agreement in their
entirety."
Except as specifically provided in this Amendment No. 3, no other
amendments, revisions or changes to the Amended Term Loan Agreement are made or
permitted hereby. All other terms and conditions of the Amended Term Loan
Agreement remain in full force and effect and apply fully to this Amendment No.
3.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers hereunto duly
authorized as of the date first above written.
BORROWER
POWER RESOURCES, INC.
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: J. ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
TERM LENDERS
KANSALLIS-OSAKE-PANKKI
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Assistant Vice President
CREDIT SUISSE
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title Deputy Vice President
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Assistant Treasurer
AGENT
CREDIT SUISSE
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Deputy Vice President
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Assistant Treasurer
AMENDMENT NO. 4
Amended and Restated Term Loan Agreement
This Amendment No. 4 ("Amendment No. 4") to the Amended and Restated
Term Loan Agreement dated as of December 30, 1988, as amended by Amendment No.
1 dated as of March 1, 1989, Amendment No. 2 dated as of April 28, 1989 and
Amendment No. 3 dated as of June 1, 1990 (the "Amended Term Loan Agreement"),
among Credit Suisse and Kansallis-Osake-Pankki as Term Lenders, Power
Resources, Inc. as Borrower, and Credit Suisse as Agent, is entered into as of
April 15, 1991.
W I T N E S S E T H :
WHEREAS, Term Lenders, Borrower and Agent have entered into the
Amended Term Loan Agreement; and
WHEREAS, the parties wish to amend certain provisions of the Amended
Term Loan Agreement as set forth herein;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the Amended Term Loan Agreement is hereby amended as follows:
1. Article 1 as amended to add the following:
"Standby Facility Commitment Letter.
The term "Standby Facility Commitment Letter" means that certain
Standby Facility Commitment Letter, dated April 15, 1991, between Borrower and
FSOC."
2. Section 4.3(c) is deleted in its entirety and replaced with the
following:
"(c) If the Debt Protection Account does not contain the Debt
Protection Amount, Agent shall withdraw from the Project Control Account and
deposit into the Debt Protection Account on each Term Loan Repayment Date, in
accordance with Section 4.1 hereof, up to sixty-six percent (66%) or, if the
most recently reported Debt Service Coverage Ratio, as calculated pursuant to
Section 4.2 hereof, is below one and one-fifth (1.20), up to one hundred
percent (100%), of the Discretionary Cash Flow of the quarter ending on such
Term Loan Repayment Date, until the Debt Protection Account contains the Debt
Protection Amount; provided, however, that
if Agent withdraws any money from the Debt Protection Account to pay
Debt Service, Operating Costs or any other reasonable expense in
connection with the Property or the Facility, Borrower shall thereafter
deposit into the Debt Protection Account, on each Term Loan Repayment
Date, eighty percent (80%) of the Discretionary Cash Flow of the quarter
ending on such Term Loan Repayment Date, until an amount has been
deposited in the Debt Protection Account which, together with interest
earned on the amount remaining in the Debt Protection Account, is equal
to the withdrawn monies; and thereafter deposit into the Debt
Protection Account on each Term Loan Repayment Date up to sixty-six
percent (66%) or, if the most recently reported Debt Service Coverage
Ratio, as calculated pursuant to Section 4.2 hereof, is below one and
one-fifth (1.20), up to one hundred percent (100%), of the Discretionary
Cash Flow of the quarter ending on such Term Loan Repayment Date until
the Debt Protection Account contains the full Debt Protection Amount;
provided further, that if any calculation of the Debt Service Coverage
Ratio, as calculated pursuant to Section 4.2 hereof, is below one and
one-fifth (1.20), Borrower's Discretionary Cash Flow shall be utilized
as provided in such Section 4.2 prior to making the withdrawals and
transfers required hereunder."
3. Section 4.4(b) is amended by adding the following sentence after
the second sentence thereof:
"When requested by Borrower, amounts shall be withdrawn from the
Maintenance Reserve Account and paid to FSOC in repayment of amounts owing to
FSOC under the Standby Facility Commitment Letter in accordance with the terms
of such Standby Facility Commitment Letter."
4. Section 4.4. is amended to add subsection (g), to read in its
entirety as follows:
"(g) Amounts may be drawn by Borrower pursuant to the Standby
Facility Commitment Letter and may be applied during the term
thereof only for the purpose of providing funds for and to the extent
of any cost overruns incurred in connection with the performance of the
Maintenance Program (as defined on the Standby Facility Commitment
Letter) or to the payment of Borrower's Debt Service obligations,
provided that Agent shall have first applied to the payment of such
Debt Service obligations all funds on deposit in the Debt Protection
Account available for the payment thereof."
2
5. Section 4.17 is deleted in its entirety and replaced with the
following:
"4.17 Other Debt.
Borrower shall not incur any Debt, other than the Debt contemplated
in this Agreement or in the O&M Contract or incurred pursuant to the Standby
Facility Commitment Letter, which, when aggregated with any Debt outstanding
under the Standby Facility Commitment Letter, liens permitted pursuant to
Section 4.10(i) and voluntarily-incurred contingent liabilities not incurred
in the ordinary course of business (and excluding all contractual
obligations incurred in accordance with Section 4.18), exceeds Five Hundred
Thousand dollars ($500,000) in the aggregate at any one time outstanding,
without the prior written consent of Agent; provided, that no such debt may
be incurred unless such debt is fully subordinated to all of Borrower's
obligations under this Agreement and the other Loan Instruments; and
provided further, additional subordinated indebtedness shall be approved by
the Agent if such indebtedness would be incurred on terms and conditions
approved by the Agent, such approval not to be unreasonably withheld or
delayed, and such indebtedness, when aggregated with all other such
subordinated indebtedness of Borrower, would not, in the reasonable opinion
of Agent, impair the ability of the Borrower to perform its obligations
under this Agreement, the other Loan Instruments and the Project
Documents."
Except as specifically provided in this Amendment No. 4, no other
amendments, revisions or changes to the Amended Term Loan Agreement are made
or permitted hereby. All other terms and conditions of the Amended Term Loan
3
Agreement remain in full force and effect and apply fully to this
Amendment No. 4.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers hereunto duly
authorized as of the date first above written.
BORROWER
POWER RESOURCES, INC.
By: /s/ ILLEGIBLE
------------------------------
Name: ILLEGIBLE
Title: EVP-CEO
TERM LENDERS
KANSALLIS-OSAKE-PANKKI
By: /s/ ▇▇▇▇▇▇ ▇. Toll-▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. Toll-▇▇▇▇
Tit1e: Assistant Vice President
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Matacchieri
------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Matacchieri
Title: Assistant Treasurer
CREDIT SUISSE
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Associate
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Associate
4
AGENT
CREDIT SUISSE
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Associate
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Associate
5
AMENDMENT NO. 5 TO AMENDED
AND RESTATED TERM LOAN AGREEMENT
This Amendment No. 5 (this "Amendment") to the Amended and Restated
Term Loan Agreement, dated as of December 30, 1988, as amended by Amendment
No.1, dated as of March 1, 1989, as further amended by Amendment No. 2,
dated as of April 28, 1989, as further amended by Amendment No. 3, dated as
of June 1, 1990 and as further amended by Amendment No. 4, dated as of April
15, 1991 (as so amended, the "Amended Term Loan Agreement"), among Credit
Suisse and ▇▇▇▇▇▇ Bank Ltd, Grand Cayman Branch (formerly Kansallis-Osake-
Pankki) as Term Lenders, the other Term Lenders named therein, Power
Resources, Inc., as Borrower, and Credit Suisse, as Agent, is entered into
as of June 29, 1995.
RECITALS
WHEREAS, Term Lenders, Borrower and Agent have entered into the
Amended Term Loan Agreement;
WHEREAS, the parties wish to amend certain provisions of the Amended
Term Loan Agreement as set forth herein; and
WHEREAS, capitalized terms used but not defined herein shall have the
meanings given to such terms in the Amended Term Loan Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the Amended Term Loan Agreement is hereby amended as follows:
1. Amendment of Certain Definitions. The following definitions
contained in Article I of the Amended Term Loan Agreement are hereby amended
as follows:
a. The definition of "Accounts" is amended so that the existing
definition is deleted in its entirety and replaced with the following:
The term "Accounts" means the Additional Collateral Account, the
Debt Protection Account, the Maintenance Reserve Account, the
Project Control Account, the Special Operating Account and the
Subordinated Fuel Component Account.
b. The definition of "Operating Costs" is amended (i) by adding the
words "(other than the Subordinated Fuel Component)" immediately after the
words "fuel costs" in the sixth line of such definition, and (ii) by adding
the words "or the Subordinated Fuel Component" prior to the period at the
end of the last sentence of such definition.
c. The definition of "Project Documents" is amended so that the
existing subsection (viii) thereof is deleted in its entirety and replaced
with the following:
(viii) Gas Sale and Purchase Agreement, dated June 29, 1995, between
Dreyfus and Borrower (the "Dreyfus Agreement");
Security Agreement dated June 29, 1995 between FSGC and Borrower;
Consent and Agreement dated June 29, 1995, among Dreyfus, Borrower and
Agent; the consent by Westar Transmission Company (formerly Cabot Gas
Supply Corporation), a Delaware corporation, or any successor thereto,
to the assignment and collateral assignment of any gas transportation
arrangements by FSGC and Borrower, respectively; and all other gas
supply arrangements and pledges or dedications of Qualified gas
reserves and substitutes therefor.
d. The definition of "Projected Operating Costs" is amended by
adding the words "(other than the Subordinated Fuel Component)" immediately
after the words "fuel costs" in the sixth line of such definition, and
(ii) by adding the words "or the Subordinated Fuel Component" immediately
prior to the period at the end of the last sentence of such definition.
2. Certain Additional Definitions. The following definitions are
hereby added to Article I of the Amended Term Loan Agreement in appropriate
alphabetical order:
▇. ▇▇▇▇▇▇▇. The term "Dreyfus" means ▇▇▇▇▇ ▇▇▇▇▇▇▇ Natural Gas
Corp., an Oklahoma corporation.
b. Extraordinary Capital Expenditure. The term "Extraordinary
Capital Expenditure" means (i) any unforeseen, necessary capital expenditure
in connection with the operation and maintenance of the Facility not
anticipated in the Operating Budget and not capable of being funded from
funds available in the Maintenance Reserve Account or, if Borrower shall so
direct, any expenditure which, if an appropriate amount were then on deposit
in the Maintenance Reserve Account, could be paid in accordance with
Section 4.4(b) hereof and, (ii) any amounts due and payable to Dreyfus under
the Dreyfus Agreement which result from any period of suspended gas delivery
pursuant to Section 13.2(b) of the Dreyfus Agreement.
c. Subordinated Fuel Component. The term "Subordinated Fuel
Component" means the amount described as the "Subordinated Fuel Component" in
the Gas Supply Agreement, dated December 30, 1988 between FSGC and Borrower, as
amended by Amendment No. 1, dated March 1, 1989, Amendment No. 2, dated May 19,
1989, and Amendment No. 3, dated June 29, 1995.
d. Subordinated Fuel Component Account. The term "Subordinated Fuel
Component Account" means the interest bearing account established by Borrower
with the Agent in accordance with the terms of Section 4.4A of this Agreement.
3. Payment of Subordinated Fuel Component. Section 4.1(f) of the
Amended Term Loan Agreement shall be replaced in its entirety with the
following:
(f) From and after the date of the First Advance, Agent shall, on the
last day of each month, after making the withdrawals specified in
subpart (e) above, withdraw from the
2
Project Control Account, and transfer, in accordance with the terms of
this Agreement and in the following order, (1) into a Maintenance
Reserve Account maintained by Borrower with the Agent (Account No.
▇▇▇▇▇▇▇▇) (the "Maintenance Reserve Account"), any deposits due and
payable on such date, (2) into the Debt Protection Account, any amounts
due and payable on such date, and (3) into the Subordinated Fuel
Component Account, an amount equal to the Subordinated Fuel Component
then due and not yet paid to FSGC.
4. Amendment to Project Control Account. Section 4.1(g) of the Amended
Term Loan Agreement shall be replaced in its entirety with the following:
(g) From and after the date of the First Advance, Agent shall, after
making withdrawals specified in subpart (f) above, withdraw from the
Project Control Account on each Term Loan Repayment Date, and apply in
accordance with the terms of this Agreement and in the following order,
the Debt Service due and payable on such date, and, any deposits to the
Additional Collateral Account due and payable on such date; provided,
however, that if any Letters of Credit issued pursuant to Section 2.13
hereof are outstanding on such Term Loan Repayment Date, the Agent
shall provide for a retainage in the Project Control Account on such
Term Loan Repayment Date of an amount determined by the Agent to be
equal to the LOC Fees accrued as of such date on the borrowing
supported by such Letters of Credit.
5. Subordinated Fuel Component Account. The following new Section 4.4A
is hereby added to the Amended Term Loan Agreement:
4.4A Subordinated Fuel Component Account.
(a) On or prior to the date hereof, Borrower shall open, and shall
thereafter maintain in accordance with the provisions hereof, an
account with the Agent (Account No. ▇▇▇▇▇▇▇▇) for the purpose of
providing for Extraordinary Capital Expenditures in connection with the
operation and maintenance of the Facility, for the purpose of providing
for the payment of Debt Service, and for the purpose of the
replenishment of the Debt Protection Account, in the event Borrower has
insufficient funds available to satisfy any such Extraordinary Capital
Expenditure and Debt Service requirements (the "Subordinated Fuel
Component Account"). Monies in the Subordinated Fuel Component Account
may be invested in Permitted Investments by Borrower.
(b) If, at any time and from time to time, after making the deposits
and withdrawals in the order specified in Section 4.1, the Agent
determines that (A) the Project Control Account does not contain
sufficient funds to make the Debt Service payments required under
Section 4.1(g) and, in accordance with the terms of Section 4.3(b)
hereof, withdraws money from the Debt Protection Account to pay Debt
Service in such amount, determined by Agent, as is necessary to cover
such Debt Service shortfall, or (B) the Debt Protection Account has on
deposit therein an amount which is less than the then applicable Debt
Protection Amount, then, in either such case, to the extent funds are
then on deposit in the Subordinated Fuel Component Account, the Agent
shall withdraw from the Subordinated Fuel Component Account for deposit
into the Debt Protection Account such amount as is necessary to fully
replenish the Debt Protection Account up to the then applicable Debt
3
Protection Amount. If, at any time and from time to time, after making
all applications required pursuant to the preceding sentence and/or as
may otherwise be required to be made pursuant to Section 4.1 hereof,
funds remain on deposit in the Subordinated Fuel Component Account and
the Agent determines that the Project Control Account and the
Maintenance Reserve Account do not contain sufficient funds to satisfy
Extraordinary Capital Expenditure requirements in connection with the
operation and maintenance of the Facility, then, to the extent funds
are then remaining on deposit in the Subordinated Fuel Component
Account, the Agent shall withdraw from the Subordinated Fuel Component
Account such amount, determined by Agent, as is necessary to cover such
Extraordinary Capital Expenditure shortfall and apply such amount to
(or provide such amount to the Borrower for application to) the payment
of such Extraordinary Capital Expenditure shortfall.
(c) So long as no Event of Default (or event that with the passage of
time, the giving of notice or both, would constitute an Event of
Default) has occurred and is continuing, then on the second Term Loan
Repayment Date following October 1, 1995 and on each Term Loan
Repayment Date thereafter, subject to the proviso below in this
paragraph (c), fifty percent (50%) of all funds then on deposit in the
Subordinated Fuel Component Account shall be released to FSGC, or to
such other person as the Agent shall be legally required to make such
delivery, so long as (i) the Debt Service due and payable on the
applicable Term Loan Repayment Date has been paid in full, (ii) the
amount on deposit in the Debt Protection Account is equal to or exceeds
the then applicable Debt Protection Amount, and (iii) all Extraordinary
Capital Expenditure requirements in connection with the operation and
maintenance of the Facility, whether then payable or then identified,
have been satisfied or provided for in full; provided, however, any
such release to FSGC or such other person shall be made only if, and
then only to the extent that, after giving effect to such release, an
amount equal to the aggregate of the Subordinated Fuel Component
otherwise due to FSGC for the immediately preceding three (3) month
period remains on deposit in the Subordinated Fuel Component Account.
(d) Borrower hereby irrevocably authorizes Agent, in Borrower's name
or in Agent's name, to make withdrawals from the Subordinated Fuel
Component Account pursuant to the terms of this Agreement.
(e) Borrower hereby pledges to Agent and the Term Lenders and grants
to them a security interest in the Subordinated Fuel Component Account
and all monies on deposit therein (including the interest paid on such
amount) for the purpose of securing all of Borrower's obligations to
them under this Agreement and under the other Loan Instruments.
(f) At any time when an Event of Default shall have occurred and is
continuing, and the applicable grace period, if any, shall have
expired, Agent may apply any monies in the Subordinated Fuel Component
Account to the payment of Borrower's obligations to the Term Lenders
and Agent in such order of application as the Agent may determine in
its sole discretion. Borrower shall provide Agent with the
authorization necessary to effectuate such transactions. Prompt
notification shall be provided by Agent to Borrower of the exercise of
any such rights.
4
(g) Upon payment in full of all obligations of Borrower to Agent and
the Term Lenders under this Agreement and the other Loan Instruments,
the monies on deposit in the Subordinated Fuel Component Account,
together with the interest paid thereon, if any, will be released to
Borrower, or to such other person as the Agent shall be legally
required to make such delivery.
6. Governing Law. This Amendment shall be governed by and construed
and interpreted in accordance with the laws of the State of New York,
without reference to principles of conflicts of laws (other than Section
5-1401 of the New York General Obligations Law).
7. No Other Amendments. Except as specifically provided in this
Amendment, no other amendments, revisions or changes to the Amended Term
Loan Agreement are made or permitted hereby. All other terms and conditions
of the Amended Term Loan Agreement remain in full force and effect and apply
fully to this Amendment.
8. Paragraph Headings. Paragraph headings have been inserted in this
Amendment as a matter of convenience for reference only and it is agreed
that such paragraph headings are not a part of this Amendment and shall not
be used in the interpretation of any provision of this Amendment.
9. Counterparts. This Amendment may be executed in one or more
duplicate counterparts and when signed by all of the parties listed below
shall constitute a single binding agreement.
10. Amended Term Loan Agreement. From and after the date hereof,
whenever referred to in any Project Document, "Amended Term Loan Agreement"
shall mean the Amended Term Loan Agreement as amended by this Amendment.
5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers hereunto duly
authorized as of the date first written above.
BORROWER:
Power Resources, Inc.,
a Texas corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Senior Vice President
TERM LENDERS:
Credit Suisse
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Member of Senior Management
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Associate
▇▇▇▇▇▇ Bank Ltd, Grand Cayman Branch
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Matacchieri
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Matacchieri
Title: Vice President
6
Bank Austria Aktiengesellschaft
By: /s/ ▇.▇. ▇▇▇▇
------------------------------------
Name: ▇.▇. ▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Assistant Vice President
Union Bank of Bavaria (Bayerische Vereinsbank)
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
Fuji Bank, Limited
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
▇
▇-▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
Union Bank of Bavaria (Bayerische Vereinsbank)
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Assistant Vice President
Fuji Bank, Limited
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
By:
------------------------------------
Name:
Title:
7
Gentra Limited
By: /s/ ▇.▇. ▇▇▇▇▇
------------------------------------
Name: ▇.▇. ▇▇▇▇▇
Title: Director
By: /s/ M.A. ▇▇▇▇▇▇▇▇
------------------------------------
Name: M.A. ▇▇▇▇▇▇▇▇
Title: Director - Credit Management
Agent:
Credit Suisse
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Member of Senior Management
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Associate
8