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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended FEBRUARY 28, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________________ to __________________
Commission file number 0-72
YORK RESEARCH CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED)
DELAWARE 06-0608633
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
280 PARK AVENUE, SUITE 2700 WEST, NEW YORK, NEW YORK 10017
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (212) 557-6200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $.01 PER SHARE
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(TITLE OF CLASS)
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-affiliates
of the Registrant as of May 10, 1999 was as follows:
Common Stock, $.01 par value - $87,596,518
The aggregate market value of the voting stock held by affiliates and
non-affiliates of the Registrant as of May 10, 1999 was as follows:
Common Stock, $.01 par value - $109,058,954
(Based on a closing price of $7.3125 for the common stock on such date).
The number of shares outstanding of the Registrant's classes of common
stock, as of May 26, 1999:
Common Stock, $.01 par value 14,914,645 shares
Documents incorporated by reference: Part III of this Form 10-K is incorporated
by reference from the Company's Proxy Statement for its 1999 Annual Meeting to
be mailed in June, 1999.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Report, including certain statements in the "Business" and
"Management's Discussion And Analysis of Financial Condition and Results of
Operations" sections, contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. When used in
this Report, the words "believe", "anticipate", "intend", "plan", "seek", "will
be", "expects", "estimates", "projects" and similar expressions identify such
forward-looking statements. Such statements regarding future events and/or the
future financial performance of the Company are subject to certain risks and
uncertainties which could cause actual events or the actual future results of
the Company to differ materially from any forward-looking statements. Certain of
these risks include changes in the markets in which the Company operates, price
volatility, interest rate volatility, construction risks, currency risks (in the
case of offshore projects and procurement), disturbances in the capital markets
which interfere with the Company's ability to finance its projects, changes in
applicable regulations, or change in supply or demand for energy and energy
projects. In light of the significant risks and uncertainties inherent in the
forward-looking statements included herein, the inclusion of such statements
should not be regarded as a representation by the Company or any other person
that the objective and plans of the Company will be achieved.
1
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PART I
ITEM 1 BUSINESS
A. GENERAL
York Research Corporation (together with its subsidiaries, "York", the
"Company" or "we") is a developer, owner and marketer of environmentally
friendly ("Greenenergy") projects and products. Through our subsidiaries,
partnerships, joint ventures and affiliates, we conduct business in two
complementary segments: (i) developing, constructing and operating energy
production facilities, including those that utilize natural gas as fuel to
produce thermal and electric power ("cogeneration"), and renewable energy
projects that convert wind energy into transmittable electric power
(collectively, "Greenpower") and (ii) marketing (purchase and sale) of natural
gas, in wholesale markets, and in limited retail markets ("Energy Marketing").
Within our Greenpower business, we have three currently operating
facilities: in New York City, a 38 Megawatt ("MW") Warbasse cogeneration
facility (the "Warbasse facility") and a 286 MW Brooklyn Navy Yard cogeneration
facility (the "BNY facility"), and in Big Spring, Texas a 34 MW wind energy
facility (the "Big Spring facility"). We are constructing a 215 MW natural gas
fueled power project in the Republic of Trinidad and Tobago (the "Trinidad
project") scheduled for completion by the fall of 1999. In addition, we are
constructing a 6.6 MW wind energy project (the "West Texas project"). Other
power projects, both domestic and international, are in earlier stages of
development.
York's Energy Marketing business has been developed to take advantage
of the evolving deregulation in the energy industries. We participate in the
natural gas market through our 85% owned subsidiary, North American Energy
Conservation, Inc. ("NAEC"). NAEC's natural gas marketing operation is comprised
of wholesale and retail marketing.
York's Greenpower project development strategy is to increase
development activities selectively around the world, giving priority to
negotiated rather than publicly bid opportunities. We believe that the market
for wind energy projects will grow as wind power becomes increasingly
competitive as a source of energy, as a function of its price and
environmental benefits. We intend to retain increased ownership interests in
many of our developed projects rather than receive up-front development fees,
as we have in the past. Our energy marketing strategy seeks to generate
reasonable profit margins while maintaining controlled expansion of our
marketing activities by gradually expanding geographically.
On August 4, 1998, a $150,000,000, 12% portfolio bond financing due
October 30, 2007 was completed. This financing is providing funding for
construction and completion of the Big Spring facility and the Trinidad project,
and other bond related costs, and future development activities. This financing
was underwritten by CS First Boston and is non-recourse to York but is secured
by certain assets and cash flow related to the BNY and Warbasse facilities, as
well as all of the cash flow and assets of the Big Spring facility and Trinidad
project.
All note references are to the Notes to the Consolidated Financial
Statements.
2
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B. GREENPOWER
1. BIG SPRING RENEWABLE ENERGY FACILITY
On October 21, 1997, York acquired 100% of the partnership interests in
New World Power Texas Renewable Energy Limited Partnership, whose significant
asset was a power purchase agreement with Texas Utilities Electric Company (ATU
Electric").
York completed substantial construction and began full commercial
operation of this wind power project in May 1999. The facility has a capacity of
34 MW and includes 46 turbines, including four 1,650 Kilowatt ("kW") wind
turbines ("V-66 turbines").
The TU Electric power purchase agreement has an initial term of 15
years. During the initial term, TU Electric will pay a fixed but escalating
price per kilowatt hour ("kWh") for energy delivered up to a specified maximum.
A balancing account adjusts for variable wind years by allowing any shortfall in
production by the project to be carried forward and credited against excess
production over the life of the power purchase agreement. At the end of the
initial term, TU Electric may extend the power purchase agreement for each of
two 5 year periods. If the power purchase agreement is not extended, the Big
Spring facility may either sell its output to TU Electric at TU Electric's then
avoided costs or market its energy elsewhere. The owner of the project
(currently 100% York) is entitled to accelerated U.S. Federal income tax
depreciation and a 1.7 cents per kWh (escalating) wind production tax credit
over the first 10 years of operation. This credit may be applied to any income
subject to U.S. Federal income taxation. We expect to use this credit to offset
taxable income from Energy Marketing and from other projects.
2. TRINIDAD PROJECT
On February 12, 1998, InnCOGEN Limited ("InnCOGEN"), a wholly owned
indirect Trinidadian subsidiary of York, signed a 30 year power purchase
agreement with Trinidad and Tobago Electricity Commission ("T&TEC"), the
government owned transmission and distribution company, under which T&TEC will
purchase the bulk of the project output. InnCOGEN is constructing a 215 MW
natural gas fueled combustion turbine project for commercial operation by fall
1999. Fixed capacity payments, primarily tied to U.S. inflation rates, will
constitute the majority of project revenues. T&TEC will have the obligation to
supply and pay for fuel for the project, thereby eliminating InnCOGEN's fuel
risk on the project. T&TEC's obligations under the power purchase agreement are
supported by a guarantee of the Trinidad government. The Trinidad project is
also expected to supply energy to several proposed new industrial developments.
Duke/Fluor Daniel is constructing the Trinidad facility under a turnkey
construction contract with a scheduled fall 1999 completion date. The Trinidad
facility will utilize three General Electric turbines.
3
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3. WEST TEXAS RENEWABLE ENERGY PROJECT
On February 26, 1999 a second power purchase agreement was signed with
TU Electric for 6.6 MW of capacity from a wind energy facility to be located on
property adjacent to the Big Spring facility.
The new contract calls for the installation of four V-66 turbines, the
largest in North America. We are developing and constructing and will operate
this second facility, which will be owned by a partnership of York and
Primesouth, Inc. Renewable energy deliveries are expected to commence
approximately June, 1999. The new contract requires TU Electric to buy all of
the power generated by the four V-66 turbines for 15 years plus options for two
additional five year periods, in a similar manner to the Big Spring facility.
Power from the new program will be dedicated for use in Waco, Texas, as part of
a renewable energy program called "TU Renew" being offered to customers of TU
Electric/Lone Star Gas.
4. OTHER GREENPOWER AND RENEWABLE ENERGY PROJECTS UNDER DEVELOPMENT
We have been funding development work on a variety of large and small
potential projects in the United States and internationally. There can be no
assurances that any of these projects will be completed or successful.
5. THE WARBASSE COGENERATION FACILITY
The 38MW combined cycle Warbasse facility, which is owned by
Warbasse-Cogeneration Technologies Partnership L.P. ("WCTP"), supplies all of
the thermal and electric needs of Amalgamated Warbasse Houses, Inc. ("AWH") and
the full capacity requirements of WCTP's 21MW electric power contract with
Consolidated Edison Company of New York, Inc. ("Con Edison"), as dispatched.
York constructed the Warbasse facility and continues to operate it under a
long-term operations and maintenance agreement. See Note 5 for information
regarding transactions between the Company and WCTP.
6. BROOKLYN NAVY YARD COGENERATION FACILITY
Brooklyn Navy Yard Cogeneration Partners, L.P. ("BNYLP"), is owned
equally by a subsidiary of Edison Mission Energy ("Mission"), which is an
indirect wholly owned subsidiary of Edison International, and B-41 Associates
L.P. ("B-41LP") an indirect 74.7% owned subsidiary of York (see Item 1.D). BNYLP
was formed to develop, construct, finance, own and operate the 286 megawatt
natural gas fired combined cycle BNY Facility.
The facility has been operational since 1996 and supplies Con Ed with
both electricity and steam under a 40 year contract. Steam is delivered to Con
Ed's New York City district steam system, the world's largest, through a tunnel
under the East River. The BNY facility currently provides more than 15% of Con
Ed's total steam in New York City. Electric energy delivered represents about 3%
of peak power demand in the service territory. The facility also supplies energy
to the host industrial park and to an adjacent waste water facility.
C. ENERGY MARKETING
NAEC is engaged in the marketing of natural gas in wholesale and retail
markets. NAEC's personnel have been recruited for the most part from utilities,
and their background is in the operational and logistical aspects of energy
marketing and arranging for the efficient transportation of natural gas.
4
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Deregulation in the natural gas business in the United States began
more than ten years ago. While the wholesale supply of natural gas has become a
commodity business, transmission, storage, and seasonality provide opportunities
for profit in selected areas. The wholesale gas business is principally
transacted at market centers, which are locations where several pipelines meet.
Retail deregulation of natural gas is not as complete as in the wholesale
markets.
The wholesale group deals with utilities, producers, and marketing
companies, who buy and sell natural gas daily in order to meet fluctuating
market obligations. NAEC does business over approximately 12 to 15 market
centers mainly in the Northeast United States but also at locations in the
Mid-Atlantic and Gulf of Mexico regions. NAEC has buy/sell commitments with many
suppliers and customers.
The wholesale group also purchases natural gas for NAEC's retail group,
which markets it to industrial and commercial accounts in Western and Central
New York. Currently NAEC has approximately 80 contracts (typically with up to a
one or two year term) with industrial and commercial customers.
D. SUBSIDIARIES, PARTNERSHIPS AND JOINT VENTURES
We conduct a substantial portion of our business through subsidiaries,
partnerships and joint ventures, in some of which affiliates of York have an
interest.
York owns 100% of the outstanding shares of B-41 Management Corp.
("B-41MC"), Cogeneration Technologies, Inc. ("Cogen"), and York Internet Power
Services, Inc., and 85% of the outstanding shares of NAEC.
York and its subsidiaries own 74.7% of B-41LP, the 50% partner in
BNYLP, as a result of the following:
B-41MC holds a 5% general partnership interest in B-41LP.
Cogen holds a 22% limited partnership in B-41LP resulting from
assignment of a 40 MW Power Contract to B-41LP.
York holds a 90% limited partnership interest in York Cogen Partners
L.P. ("YCP"), which in turn holds a 53% limited partnership interest in
B-41LP resulting from assignment of a 90 MW power contract to B-41LP.
RV Associates L.P. ("RVA"), an entity controlled by York's Chairman,
holds a 5% general partnership interest and a 15% limited partnership
interest in B-41LP, resulting from assignment of a 40 MW contract to
B-41LP, assumption of certain partnership liabilities and acceptance of
a reduced share of development fees and reimbursements.
A portion of B-41LP's partnership interest in BNYLP has been pledged as
collateral to unaffiliated third parties to secure certain obligations
of B-41LP.
York, through wholly owned subsidiaries, some of which are offshore,
owns 100% of the Big Spring facility and the Trinidad project.
WCTP is a limited partnership whose 25% general partner is RRR's
Ventures Ltd. ("RRR'S"). York's Chairman is president and a major shareholder in
RRR's. Entities unaffiliated with York or RRR's own an aggregate of 75% limited
partnership interest in WCTP. RRR's also holds a 10% general partnership
interest in YCP.
5
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The West Texas Renewables Limited Partnership is a partnership whose 1%
general partner is a subsidiary of York, and whose 99% limited partner is
Primesouth, Inc.
NAEC is 15% owned by York's Chairman.
E. BACKLOG
We do not currently calculate backlog because the revenue streams are
dependent upon a number of variable factors such as inflation, fuel prices,
electric utility rates and utilizations, and natural gas prices and supply.
F. PATENTS AND TRADEMARKS
We have no patents or trademarks that can be considered material to our
businesses.
G. RESEARCH AND DEVELOPMENT
Since research and development costs are not significant, we do not
account separately for these costs.
H. RAW MATERIALS AND SUPPLIERS
We are not dependent on any single source of supplies or services for
our activities. Certain of the facilities enter into long-term contracts with
suppliers; however alternative sources are typically available.
I. MARKETING
We market our projects and products through a dedicated sales staff,
supplemented by our technical support personnel and management personnel, and by
consultants internationally.
J. EMPLOYEES
As of May 14, 1999, we employed 57 people on a full-time basis. Most of
our executives are technically trained and actively engaged in the project
development and sales areas.
K. COMPETITION
There are many companies with access to greater financial resources
that are active in various aspects our energy business. These companies will
continue to compete in the energy marketplace. We cannot assess the effect of
competition in the future.
L. CUSTOMERS
During Fiscal 1999, substantially all of the services revenues were
derived from WCTP and BNYLP. Each of the power projects is dependent on one
customer, typically a utility, for substantially all of its revenues. Energy
marketing sales were derived from numerous retail customers and utilities. For
Fiscal 1999, two customers accounted for approximately 29% and 13% of total
natural gas revenues, respectively. Each other customer accounted for less than
10% of total revenues. Due to the relatively short-term nature of contracts with
natural gas customers, the loss of one of these customers would have no material
adverse effect on the Company.
6
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M. ENVIRONMENTAL MATTERS
We believe that the various technologies we employ, which provide for
increased efficiency, compared to conventional power generation facilities, are
not environmentally sensitive. The construction of power generation facilities
requires typical environmental impact statements and permitting procedures which
may result in delays. We believe that we are in compliance with federal, state
and local laws involving the protection of the environment. We do not believe
that continued compliance will require any material capital expenditures.
Our facilities are designed to comply with all applicable environmental laws.
N. REGULATION
A subsidiary of the Company has been retained through an operations and
maintenance agreement to operate the Warbasse cogeneration facility in New York,
a qualifying cogeneration facility ("QF") pursuant to the Public Utility
Regulatory Policies Act of 1978 ("PURPA"). The BNY facility in New York has also
obtained QF status.
Cogeneration projects that meet the QF criteria stated in the federal
rules generally are exempt from most of the federal, state and local regulations
that apply to generating facilities which are not QFs. However, the New York
State Public Service Commission ("NYPSC") has determined that it has the
authority to regulate sales of electricity by QFs to retail customers, though
the regulatory regime is less burdensome than that applied to traditional
utilities. Under New York statutes, QFs, like the Warbasse cogeneration
facility, having a maximum generating capacity of less than 80 MW, may
distribute electricity to users located at or near a project site and remain
exempt from NYPSC regulation.
One of the criteria for QF status is that a total of no more than 50
percent of the equity interests may be owned by one or more companies that are
electric utility holding companies under the Public Utility Holding Company Act
of 1935 ("PUHCA"). Under PUHCA, an entity which owns 10 percent or more of the
voting securities of, or otherwise controls an electric utility company, is an
electric utility holding company. An electric utility company is defined in
PUHCA to mean a company that owns or operates physical facilities for the
generation, transmission or distribution of electricity for sale. QFs are
expressly exempt from this definition, and the Company therefore is not a public
utility holding company by virtue of its interests in QFs.
The BNY facility intends to operate as an exempt wholesale generator
("EWG"). An EWG must be engaged exclusively in the business of owning or
operating an eligible facility and selling electricity at wholesale. An eligible
facility is a generating facility that is used solely to produce electricity for
sale at wholesale. An EWG is exempt under PUHCA and the Company would not become
a holding company under PUHCA by virtue of it or one of its subsidiaries or
affiliates holding 10% or more of the voting securities or partnership interests
in the BNY facility.
When operated solely as an EWG, the BNY facility would be subject to
the New York Public Service Law and the jurisdiction of the NYPSC with respect
to matters other than the sale of electricity at wholesale. Assuming that the
NYPSC applies the policies that it has applied to other EWGs in previous cases,
the BNY facility will be required to comply with minimal regulatory requirements
regarding financial and organizational matters. The NYPSC has no jurisdiction
over the rates, terms and conditions of the sale of electricity generated by the
BNY facility and sold to Con Edison and Brooklyn Navy Yard Development Corp. for
resale. Further, to the extent operated solely as an EWG, the BNY facility
operates and maintains a steam plant and would be subject to regulation by the
NYPSC as a steam corporation. The NYPSC has issued a certificate of public
convenience and necessity to the BNY facility as a steam corporation, and has
required that the BNY facility comply with only minimal regulatory requirements
regarding financial and organizational matters.
7
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The Big Spring facility has been self-certified as a QF. The Federal
Energy Regulatory Commission granted EWG status to the Trinidad project. We are
in the process of filing for EWG status for the West Texas Renewable Energy
project.
NATURAL GAS SALES AND MARKETING
NAEC does not own or operate any physical facilities for the
transmission of natural gas. NAEC is not considered a natural gas company, as
that term is defined in the Natural Gas Act of 1938, nor by virtue of its
wholesale and retail marketing of natural gas is it subject to the jurisdiction
of the Federal Energy Regulatory Commission. NAEC sells natural gas in the State
of New York at retail. Based on the existing practice of the NYPSC, the NYPSC's
administrative determinations, and judicial decisions concerning the
applicability of the Public Service Law of the State of New York to gas
marketers, NAEC's retail sales of gas are not subject to the jurisdiction of the
NYPSC.
8
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ITEM 2 PROPERTIES
We lease our facilities. We consider our facilities to be suitable and
adequate for the purposes for which they are used.
<TABLE>
<CAPTION>
Square
Footage Use
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<S> <C> <C>
ENTITY/LOCATION
YORK RESEARCH CORPORATION
280 Park Avenue (1) Office
New York, New York
SUBSIDIARIES
COGENERATION TECHNOLOGIES, INC. (1) Office
280 Park Avenue
New York, New York
NORTH AMERICAN ENERGY CONSERVATION, INC.
100 Clinton Square, Suite 400
126 North Salina Street (2) Office
Syracuse, New York
INNCOGEN LTD.
#10 Marine Villas
Columbus Blvd. (3) Office
West Moorings By the Sea
Trinidad, West Indies
</TABLE>
(1) Total square footage shared by York and Cogen at this location
is 16,700.
(2) Total square footage leased by NAEC at this location is
approximately 12,850, less approximately 4,500 square feet
sublet to three tenants.
(3) Total square footage leased at this location is approximately
2,000 square feet.
In October 1998, we closed our Montreal, Canada location. In addition,
each of the power facilities and projects leases the land on which it is located
from a third party.
ITEM 3 LEGAL PROCEEDINGS
There is no material litigation directly affecting the Company. See
Note 4 as to certain litigation involving BNYLP.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
9
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PART II
MARKET FOR THE REGISTRANTS COMMON STOCK
ITEM 5 AND RELATED SECURITY HOLDER MATTERS
Our common stock is traded on the NASDAQ National Market System under
the symbol "YORK". The following table shows the range of high and low closing
sales prices for the common stock.
<TABLE>
<CAPTION>
High Low
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<S> <C> <C>
FISCAL YEAR 1999
First Quarter 8 6-7/8
Second Quarter 7 4-3/16
Third Quarter 5-1/6 3-1/4
Fourth Quarter 5-5/16 3-3/16
FISCAL YEAR 1998
First Quarter 9-1/4 7
Second Quarter 7-15/16 6
Third Quarter 10 7
Fourth Quarter 8-13/16 7-1/8
</TABLE>
On May 14, 1999, we had 472 holders of record of our common stock. We
have not declared any common stock or cash dividends during the last five years
and have no present intention to declare cash dividends. Pursuant to a covenant
under the portfolio bond financing, York agreed to limit annual cash dividends
to $.01 per share.
10
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ITEM 6 SELECTED FINANCIAL DATA
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
------------------
2/28/99 2/28/98(2) 2/28/97 2/28/96 2/28/95
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Total Revenues $ 972,882 $ 365,132 $ 26,937 $ 14,392 $ 7,524
============= ============= ============= ============= =============
Income from continuing operations
before extraordinary gain $ 4,852 $ 3,507 $ 7,176 $ 4,018 $ 85
============= ============= ============= ============= =============
Net income (loss) ($ 5,990) $ 12,044 $ 7,518 $ 4,018 $ 85
============= ============= ============= ============= =============
Earnings (loss) per share - Basic:
From continuing operations $ 0.34 $ 0.25 $ 0.56 $ 0.34 $ 0.01
============= ============= ============= ============= =============
Total ($ 0.42) $ 0.86 $ 0.59 $ 0.34 $ 0.01
============= ============= ============= ============= =============
Earnings (loss) per share - Diluted:
From continuing operations $ 0.33 $ 0.22 $ 0.47 $ 0.32 $ 0.01
============= ============= ============= ============= =============
Total ($ 0.40) $ 0.77 $ 0.49 $ 0.32 $ 0.01
============= ============= ============= ============= =============
Total assets $ 401,092 $ 134,139 $ 92,669 $ 67,842 $ 58,525
============= ============= ============= ============= =============
Limited recourse long-term
liabilities $ 150,000 $ 0 $ 29,283(1) $ 28,959(1) $ 28,646(1)
============= ============= ============= ============= =============
Other long-term liabilities $ 1,435 $ 942 $ 885 $ 685 $ 638
============= ============= ============= ============= =============
Deferred revenue and other
credits $ 3,114 $ 3,287 $ 3,460 $ 3,460 $ 3,478
============= ============= ============= ============= =============
STOCKHOLDERS' EQUITY $ 64,877 $ 63,747 $ 46,167 $ 32,308 $ 21,749
============= ============= ============= ============= =============
Cash dividends declared
per common share $ 0 $ 0 $ 0 $ 0 $ 0
============= ============= ============= ============= =============
</TABLE>
(1) As restated for an obligation that is recourse to certain of B-41LP's cash
flow and not recourse to the Company. This limited recourse obligation was
settled subsequent to February 28, 1997 (see Note 5).
(2) Includes the net effect of a one time fee of $6 million (see Note 4).
11
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MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7 OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company conducts business in two complementary segments of the
energy industry: (a) Greenpower, which includes developing constructing and
operating Greenenergy production facilities, including those that utilize
natural gas as fuel to produce thermal and electric power ("cogeneration") or
renewable energy projects primarily converting wind energy into transmittable
electric power, and (b) energy marketing, which involves the purchase and sale
of natural gas in the wholesale and retail markets.
Within our Greenpower business, we have three currently operating
facilities: in New York City, a 38MW Warbasse cogeneration facility (the
"Warbasse facility") and a 286MW Brooklyn Navy Yard cogeneration facility (the
"BNY facility"), and in Big Spring, Texas, a 34MW wind energy facility (the "Big
Spring facility"). We are constructing a 215MW natural gas fueled power project
in the Republic of Trinidad and Tobago (the "Trinidad project") scheduled for
completion by the fall of 1999. In addition, we are constructing a 6.6MW wind
energy project (the "West Texas project").
York's Energy Marketing business has been developed to take advantage
of the evolving deregulation in the energy industries. We participate in the
natural gas market through our 85% owned subsidiary, North American Energy
Conservation, Inc. ("NAEC"). NAEC's natural gas marketing operation is comprised
of wholesale and retail marketing.
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
The Company finances initial development of its projects' cash needs
from its own funds. When a project is determined to be feasible, the Company
will generally seek to finance construction through some form of non-recourse
project financing. Once a project is operational, any additional capital
requirements are expected to be met by the operations of the facility. In
addition, the Company may finance future projects through the sale of partial
interests or other financing techniques. For example, construction of the West
Texas project has been financed by a capital contribution of the limited partner
in this project.
General corporate and pre-financing project development needs are and
will be met by the cash flow derived from the power projects, from profits of
the energy marketing segment, and in the future if deemed appropriate from new
debt or equity sources.
NAEC's natural gas marketing business continues to grow and is expected
to continue to be profitable. In order to support that growth, and all of NAEC's
working capital needs, NAEC has a revolving line of credit, currently up to
$25,000,000, with Congress Financial Corp., collateralized by NAEC's receivables
and other assets, and guaranteed by York. This line of credit expires December,
1999. It is our intention to renew or replace this line of credit upon
expiration. The Company has used this credit line principally to support the
electric operations to date, and believes this line of credit and possible
future expansions thereof will be sufficient to support the capital and credit
needs of NAEC.
12
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Although still subject to price, availability and other market
fluctuations, the natural gas marketing business has been deregulated for many
years. The Company uses put and call options, and futures contracts
("Instruments") in various combinations, to hedge physical positions in the
natural gas business. All of these Instruments are settled in the underlying
commodity. The ultimate impact of these Instruments, either positive or
negative, will be determined by the prevailing applicable market price at the
time of settlement.
PORTFOLIO BOND FINANCING
On August 4, 1998, a $150,000,000, 12% portfolio bond financing due
October 30, 2007 was completed. Through the issuance of project notes to a
funding company, this financing provided approximately $102 million toward
construction and completion of the Big Spring and Trinidad projects, funded a
debt service reserve of approximately $15 million, interest during construction
and other costs of approximately $12.25 million, as well as provided
approximately $20.75 million for general corporate purposes and future
development activities. This financing was underwritten by CS First Boston and
is non-recourse to York but is secured by certain assets and cash flow related
to the BNY and Warbasse facilities, as well as all of the cash flow and assets
of the Big Spring and Trinidad projects.
GENERAL
During the year ended February 28, 1999, cash and cash equivalents
increased approximately $12.7 million. Cash used by operating activities of
continuing operations was approximately $1.8 million.
Approximately $16.9 million was used by discontinued operations.
During Fiscal 1999, investing activities used approximately $126.9
million including approximately $79.3 million spent on construction in progress,
and the balance invested in escrow accounts.
During Fiscal 1999, financing activities generated approximately $158.4
million, including net proceeds from the Bond Financing of approximately $142
million, and approximately $18.2 million of proceeds from a line of credit.
As of February 28, 1999, the Company had commitments of approximately
$10.5 million and $12.9 million related to the Big Spring and Trinidad projects,
respectively.
See Note 3 for disclosure of the impact of significant new accounting
pronouncements.
YEAR 2000 COMPLIANCE
In analyzing its Year 2000 problem ("Y2K") exposure, York has
considered the operations of both it and its subsidiaries, as well the
operations of the parties with whom they deal. Based on its review to date, York
does not believe that the issue of computer programs and imbedded computer chips
being unable to distinguish between the year 1900 and the year 2000 will be
material to the Company.
York has evaluated the nature of its contracts, and the contracts of
its subsidiaries. As noted below, the contracts for electricity provide for the
counterparty to make capacity payments representing the bulk of the payments
under the contract, whether or not electricity is delivered. In the case of gas,
there should be alternative methods of delivering gas even if a particular
pipeline system is shut down. As a result, York does not believe that a
contingency plan is necessary, and it does not currently intend to adopt a
formal contingency plan.
13
<PAGE>
As the year 2000 approaches, York and its subsidiaries will be
continuing to monitor their operations, and the operations of their suppliers
and customers, to ascertain whether any unexpected Y2K problems arise. York has
not incurred material Y2K costs to date; and at this point there do not appear
to be any material Y2K costs to be incurred on behalf of York or any of its
subsidiaries.
PROJECTS
The bulk of the revenues from York's power projects are derived from
power purchase agreements with utilities. With the exception of the TU Wind
Power contract, these contracts provide that even if electricity is not
delivered, the project is entitled to receive substantial capacity payments. As
a result, even if the utilities to which York delivers power are unable to
accept the power, the bulk of the payments under these contracts will continue
to be made. With respect to the Wind Power Project, although there are no
capacity payments, that contract specifies minimum payments each year, with
overpayments to be made up by subsequent production. Accordingly, even if there
is an interruption in delivering power in the Wind Project, York does not
believe it will have a material effect on its revenues or operations.
The Big Spring facility was completed in May, 1999. As a result, the
computers used in its operations are Y2K compliant. Construction of the West
Texas Project will be completed prior to June 30, 1999. Accordingly, York does
not anticipate any Y2K problem from construction contractors. In addition, based
on a review of TU Electric's public filings, York does not believe that there
will be a material problem arising out of the failure of TU Electric's systems
to be Y2K compliant.
The Trinidad Project is currently being constructed, and its operations
are Y2K compliant. Based on a review of public filings, the parties providing
construction services to the Trinidad Project, and Palmark, Inc., who will be
providing operating and maintenance services to the Trinidad Project after
construction, do not appear to have material Y2K problems. York has been unable
to ascertain the extent to which the Government of Trinidad will have a Y2K
problem. However, York does not anticipate that any Y2K problem on the part of
the Government of Trinidad, or T&TEC, will have a material effect on the
operations of the Trinidad Project.
The BNY facility and the Warbasse facility have both previously been in
commercial operation. However, based upon a review of their systems, it does not
appear that there will be any material Y2K compliance issues. Based on a review
of public filings of Con Edison, the main customer of each of these Projects,
and Palmark, which provides the BNY facility with operating and maintenance
services, York does not anticipate there will be a material Y2K compliance issue
resulting from Con Edison or Palmark.
York engages in development activities for new projects, and provides
administrative and other services to certain of its subsidiaries. Based on a
review of its systems, it does not appear that there will be any material Y2K
compliance issues.
NAEC
The two principal external computer systems with which NAEC is required
to deal are the gas commodity exchanges, which set prices, and the pipeline
systems. In the event the gas commodity exchanges are inoperable, this will
result in a potential delay in determining the price at which NAEC is selling
gas, but should not result in the loss of any material revenues. With respect to
the pipeline system, a shutdown of the pipeline system could interrupt gas
deliveries. However, NAEC has experience in rerouting gas over alternative
pipeline systems. Accordingly, even if a particular pipeline system shuts down,
NAEC believes that this will result in no more than a possible delay in delivery
of gas by or to NAEC.
14
<PAGE>
Based on a review of NAEC's internal computer systems, York does not
believe that there will be any material Y2K compliance issues. In addition, NAEC
has made inquiries of its material customers and suppliers as to their Y2K
compliance. Based on responses received, NAEC does not believe that its material
customers and suppliers will have any material Y2K compliance issues which could
affect NAEC.
RESULTS OF OPERATIONS
1999 COMPARED TO 1998
Natural gas sales and cost of natural gas increased approximately
$615,298,000 and $602,753,000, respectively, when comparing the year ended
February 28, 1999 to the year ended February 28, 1998. These increments were due
to an increase in the volume of natural gas moved this year versus last year as
part of the overall growth strategy. The increase in gross margin of 1% is due
in part to improved guidelines related to risk management. Accordingly natural
gas operating profit increased to approximately $10.4 million from a loss of
approximately $1.7 in Fiscal 1998. Gross margins on the gas business will be
impacted by changes in unit prices, supply and seasonal factors.
Power project service revenues and cost of power project services
include fuel and other operations and maintenance costs. Revenues decreased
approximately $7,548,000 when comparing year to year. Of this decrease,
$6,000,000 was attributable to a one time fee received by B-41LP in Fiscal 1998
from Mission. This decrease was offset in part by an increase of approximately
$342,000 due to the commencement of revenues in December 1998 from the Big
Spring facility. The balance of the decrease in revenues, as well as the
decrease in cost of power project services, were mainly due to a decrease in
fuel costs as a result of increased efficiency in the Warbasse facility and
generally lower unit costs for fuel.
Selling, general and administrative expenses increased approximately
$3,130,000 when comparing Fiscal 1999 to Fiscal 1998. Of this increase,
approximately $1,664,000 relates to non-cash amortization of certain items as
follows: (1) an increase of approximately $382,000 as a result of the
recognition of the redemption of Class B Warrants relating to litigation, which
commenced in the fourth quarter of Fiscal 1998; (2) an increase of approximately
$631,000 as a result of amortization expense of deferred financing costs due to
the Portfolio Bond Financing; and (3) an increase of approximately $651,000 due
to amortization of the deferred charge resulting from the transfer of a note to
minority interests (see Note 15). In addition to these non-cash expenses,
expenses also increased approximately $1,138,000 when comparing year to year,
due to additional amounts spent on payroll and employee benefits, as a result of
additional personnel and salary increases.
Interest income increased approximately $2,516,000 when comparing
Fiscal 1999 to Fiscal 1998, due to increased levels of cash available for
investment, mostly due to the Bond Financing.
Interest expense increased approximately $6,264,000 when comparing year
to year, primarily as a result of the Bond Financing.
Other income increased approximately $3,296,000 when comparing Fiscal
1999 to Fiscal 1998. The commencement in January 1998 of royalty fees received
by B-41LP from BNYLP accounted for an increase in other income of approximately
$4,683,000. This increase was offset by a decrease of approximately $1,035,000
due to a decrease in general partner fees received by B-41LP from BNYLP, and a
decrease of approximately $273,000 due to legal fees paid as the settlement of a
lawsuit.
15
<PAGE>
As a result of the Company's decision during the quarter ended August 31, 1998
to discontinue the electric marketing business, all electric operations have
been reflected as discontinued operations. Losses from discontinued operations
were approximately $10,842,000, for the year ended February 28, 1999, compared
to approximately $838,000 for the prior year. This discontinuance was due to
unprecedented turmoil in the electric marketing business caused in part by
widely reported failures of certain suppliers to deliver contracted power to a
multitude of utilities and marketers, including NAEC (see Note 16) as well as a
one-time bad debt expense in the quarter ended November 30, 1998 of
approximately $1.3 million.
During Fiscal 1998, the Company recorded an extraordinary gain in
connection with the settlement of its obligations to SBCC.
1998 COMPARED TO 1997
Natural gas sales and cost of natural gas increased approximately
$344,200,000 and $343,000,000, respectively. Fiscal 1998 reflects the first full
year of natural gas revenues, while Fiscal 1997 reflects only four months of
revenues as a result of the acquisition of NAEC on November 1, 1996.
Power project service revenues decreased approximately $6,000,000 as a
result of a number of factors. During Fiscal 1998, B-41LP received a fee of
$6,000,000 from Mission related to the closing of the Brooklyn Navy Yard
long-term project financing (see Note 4). Service revenues - WCTP increased
approximately $1,800,000 due to higher fuel and other operating costs. These
increases in service revenues were offset primarily by decreases due to certain
revenues recognized in Fiscal 1997 but not in Fiscal 1998. A decrease of
$11,000,000 resulted from the recognition of revenues during Fiscal 1997
pursuant to a services agreement between WCTP and RVA and the Company (see Note
15), and a decrease of $2,500,000 resulted from the recognition of revenues
during Fiscal 1997 due to reimbursements by BNYLP for certain engineering costs,
a portion of which had been expensed in prior periods.
Cost of power project services, which include fuel and other operations
and maintenance costs, increased approximately $1,400,000, commensurate with
service revenues from WCTP.
Selling, general and administrative expenses increased approximately
$1,033,000. The inclusion of a full year of expenses for NAEC accounted for an
increase of approximately $1,195,000. Expenses also increased by approximately
$300,000 as a result of recognition of the redemption of Class B Warrants (see
Note 11). These increases were offset by a decrease of approximately $650,000 in
expenditures for consulting and professional fees.
Interest income-WCTP increased approximately $1,020,000 due to the
commencement of interest due on the long-term note receivable from WCTP related
to the transfer of the Warbasse facility on August 1, 1996. Fiscal 1998 reflects
a full year of interest income, while Fiscal 1997 reflects seven months.
Other income increased approximately $1,757,000. The commencement in
December 1996 of general partner fees received by B-41LP from BNYLP accounts for
approximately $1,056,000 of this increase, since Fiscal 1998 reflects a full
year of general partner fees, while Fiscal 1997 reflects only three months. The
balance of the increase was due mainly to the recognition of approximately
$1,078,000 of royalty fees, which commenced in January 1998, and will continue
for four years.
An extraordinary gain of approximately $9,374,000 was recorded in
Fiscal 1998 relating to the settlement of the obligation to SBCC.
16
<PAGE>
ITEM 7A DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
The Company's exposure to market risk for changes in interest rates
relates primarily to the Company's long-term debt obligations and line of
credit.
The Company has no cash flow exposure due to rate changes for long-term
debt obligations. The Company primarily enters into debt obligations to support
general corporate purposes and capital expenditures for projects.
The table below presents principal amounts and related weighted average
interest rates by year of maturity for the Company's cash equivalents, cash in
escrow, notes receivable and debt obligations. The Company's notes receivable
from WCTP bear interest at a variable rate of Libor plus 2% and have no specific
maturity.
<TABLE>
<CAPTION>
YEARS ENDED FEBRUARY 28, FAIR VALUE
------------------------ ----------
(IN THOUSANDS) 2000 2008 TOTAL FEBRUARY 28, 1999
- -------------- ---- ---- ----- -----------------
<S> <C> <C> <C> <C>
Cash equivalents
Variable rate $16,399 -- $16,399 $16,399
Average interest rate 4.5% -- 4.5%
Cash in escrow
Variable rate $47,180 -- $47,180 $47,180
Average interest rate 4.4% -- 4.4%
Notes receivable
Variable rate -- -- $57,331 N/A
Average interest rate -- -- 7.5%
Line of credit
Variable rate $18,151 -- $18,151 $18,151
Average interest rate 8.5% -- 8.5%
Long-term debt
Fixed rate -- $150,000 $150,000 $150,000
Average interest rate -- 12% 12%
</TABLE>
The Company uses put and call options, and futures contracts
("Instruments") in various combinations, to hedge physical positions in the
natural gas business. All of these Instruments are settled in the underlying
commodity. The ultimate impact of these Instruments will be determined by the
prevailing applicable market price at the time of settlement.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Consolidated Financial Statements on Page 22.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9 ON ACCOUNTING AND FINANCIAL DISCLOSURES
None
17
<PAGE>
PART III
Items 10 through 13 are incorporated by reference from the Company's
Proxy Statement for its 1999 Annual Meeting to be mailed in June, 1999.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 14 AND REPORTS ON FORM 8-K
(a) (1) and (a) (2): See Index to Consolidated Financial Statements at Page 22.
(a) (3) Exhibits:
3(a) Certificate of Incorporation of the Company, as amended. (1)
3(a) (I) Certificate of Amendment to the Company's Certificate of
Incorporation as filed with the Secretary of State of the
State of Delaware on May 16, 1988.
3(b) Bylaws of the Company. (1)
4(a) Form of Certificate evidencing Common Stock, $.01 par value
per share, of the Company. (2)
4(b) Trust Indenture, between York Power Funding (Cayman) Limited
and The Bank of New York, as Trustee, dated July 30,
1998. (12)
4(c) Form of 12% Senior Bonds due October 30, 2007 (included in
Exhibit 4(b) hereto). (12)
4(d) Form of 12% Series A Senior Bonds due October 30, 2007
(included in Exhibit 4(b) hereto). (12)
4(e) Exchange and Registration Rights Agreement between York Power
Funding (Cayman) Limited and Credit Suisse First Boston dated
August 4, 1998. (12)
10(o) Agreement for Construction of Additional Capacity, dated May
7, 1990, between Warbasse-Cogeneration Technologies
Partnership, L.P. and York Research Corporation. (3)
10(q) Lease and Energy Sale Agreement, dated December 18, 1989
between the Brooklyn Navy Yard Development Corporation and
Cogeneration Technologies, Inc., a wholly owned subsidiary of
the Company. (4)
10(r) Amended and Restated Limited Partnership Agreement by and
between Mission Energy New York, Inc. and B-41 Associates,
L.P., dated November 1, 1997, with Exhibits thereto. (11)
10(s) Stipulation of Settlement among counsel to plaintiffs in
litigation entitled IN RE YORK RESEARCH CORPORATION SECURITIES
LITIGATION, United States District Court, Southern District of
New York, Master File No. 91 Civ. 5040 (LJF), and counsel for
all defendants therein, dated January 15, 1993, with Exhibits
thereto. (5)
10(t) Final Judgment of Dismissal with Prejudice, IN RE YORK
RESEARCH CORPORATION SECURITIES LITIGATION, United States
District Court, Southern District of New York, Master File No.
91 Civ. 5040 (LJF). (5)
18
<PAGE>
10(u) Amended and Restated Agreement of Limited Partnership of B-41
Associates L.P., dated December 26, 1992. (5)
10(bb) Promissory Note, dated November 17, 1994, made by
Warbasse-Cogeneration Technologies Partnership L.P. payable to
the order of Cogeneration Technologies, Inc. (8)
10(cc) Security Agreement, dated as of November 17, 1994, made by
Warbasse-Cogeneration Technologies Partnership L.P. to
Cogeneration Technologies, Inc. (8)
10(dd) Assignment and Security Agreement, dated as of November 17,
1994, made by Warbasse-Cogeneration Technologies Partnership
L.P. to Cogeneration Technologies, Inc. (8)
10(ee) Intercreditor Agreement, dated as of November 17, 1994, by and
among Tomen Power Corporation, B-41 Associates, L.P.,
Cogeneration Technologies, Inc. and Warbasse-Cogeneration
Technologies Partnership L.P. (8)
10(ff) Restructuring Fee Agreement, dated as of November 17, 1994, by
and among Warbasse-Cogeneration Technologies Partnership L.P.,
B-41 Associates, L.P. and Cogeneration Technologies, Inc. (8)
10(gg) Subordinated Promissory Note, dated as of November 17, 1994,
made by Warbasse-Cogeneration Technologies Partnership L.P.
payable to the order of B-41 Associates, L.P. in the principal
amount of $3,000,000. (8)
10(hh) Subordinated Promissory Note, dated as of November 17, 1994,
made by Warbasse-Cogeneration Technologies Partnership L.P.
payable to the order of Cogeneration Technologies, Inc. in the
principal amount of $3,000,000. (8)
10(ii) Agreement of Limited Partnership of York Cogen Partners,
L.P. (11)
10(jj) Renegotiation and Payment Agreement dated February 28, 1997 by
and between Sanwa Business Credit Corporation and B-41
Associates, L.P. (11)
10(kk) York Partners Reimbursement Agreement (PMNC) dated as of
November 1, 1997, among B-41 Associates, L.P., Brooklyn Navy
Yard Cogeneration Partners, L.P. and Edison Mission Energy.
(11)
10(ll) Amended and Restated Agreement of Limited Partnership of New
World Power Texas Renewable Energy Limited Partnership dated
as of September 29, 1997. (11)
10(mm) Renewable Resource Energy Purchase Agreement between Texas
Utilities Electric Company and New World Power Texas Renewable
Energy Limited Partnership date September 13, 1994, and
Amendment No. 1 thereto dated November 25, 1996, Amendment No.
2 thereto dated February 19, 1997 and Amendment No. 3 thereto
dated August 29, 1997.(11)
10(nn) Wind Turbine Equipment Sales and Installation Contract dated
as of March 31, 1998 between York Research Corporation and
Vestas-American Wind Technology, Inc. (11)
10(oo) Covenant Agreement dated as of August 4, 1998 between York
Research Corporation and The Bank of New York, as Bond
Trustee. (10)
19
<PAGE>
10(pp) Equity Cash Flow Participation Agreement dated as of August 4,
1998 among Brooklyn Navy Yard Power LLC, Warbasse Power I LLC,
Warbasse Power II LLC, New World Power Texas Renewable Energy
Limited Partnership, York T&T Holdings, Inc., and The Bank of
New York, as administrative agent for the benefit of certain
holders. (10).
10(qq) U.S. Project Loan Agreement among Brooklyn Navy Yard Power
LLC, Warbasse Power I LLC, Warbasse Power II LLC, New World
Power Texas Renewable Energy Limited Partnership and York
Power Funding (Cayman) Limited, dated as of August 4, 1998.
10(rr) Trinidad Project Loan Agreement between York Ex International
SRL and York Power Funding (Cayman) Limited, dated as of
August 4, 1998.
10(ss) Trinidad Loan Agreement between InnCOGEN, Limited and York
Holdings (Barbados) SRL, dated as of August 4, 1998.
10(tt) U.S. Deposit and Disbursement Agreement among York Power
Funding (Cayman) Limited, Brooklyn Navy Yard Power LLC,
Warbasse Power I LLC, Warbasse Power II LLC, New World Power
Texas Renewable Energy Limited Partnership and The Bank of New
York, dated as of August 4, 1998.
10(uu) Trinidad Deposit and Disbursement Agreement among York Power
Funding (Cayman) Limited, York Ex International SRL, York
Holdings (Barbados) SRL, InnCOGEN, Limited and The Bank of New
York, dated as of August 4, 1998.
10(vv) U.S. Project Note Pledge Agreement between York Power Funding
(Cayman) Limited and The Bank of New York, dated as of August
4, 1998.
10(ww) Trinidad Project Note Pledge Agreement between York Power
Funding (Cayman) Limited and The Bank of New York, dated as of
August 4, 1998.
10(xx) Trinidad U.S. Pledge Agreement between York Research
Corporation and The Bank of New York, dated as of August 4,
1998.
10(yy) Big Spring Guarantee between New World Power Texas Renewable
Energy Limited Partnership and The Bank of New York, dated as
of August 4, 1998.
10(zz) Brooklyn Navy Yard Guarantee between Brooklyn Navy Yard Power
LLC and The Bank of New York, dated as of August 4, 1998.
10.53 Trinidad Guarantee between York Holdings (Barbados) SRL and
The Bank of New York, dated as of August 4, 1998.
10.54 Warbasse I Guarantee between Warbasse Power I LLC and The Bank
of New York, dated as of August 4, 1998.
10.55 Warbasse II Guarantee between Warbase Power II LLC and The
Bank of New York, dated as of August 4, 1998.
10.56 Collateral Agency and Intercreditor Agreement among York Power
Funding (Cayman) Limited, Brooklyn Navy Yard Power LLC,
Warbasse Power I LLC, Warbasse Power II LLC, New World Power
Texas Renewable Energy Limited Partnership, York Ex
International SRL, York Holdings (Barbados) SRL, InnCOGEN,
Limited and The Bank of New York, dated as of August 4, 1998.
20
<PAGE>
10.57 Assignment and Security Agreement between York Power Funding
(Cayman) Limited and The Bank of New York, dated as of August
4, 1998.
10.58 Agency Agreement among York Power Funding (Cayman) Limited,
Brooklyn Navy Yard Power LLC, Warbasse Power I LLC, Warbasse
Power II LLC and New World Power Texas Renewable Energy
Limited Partnership, dated as of August 4, 1998.
10.59 Employment Agreement dated December 9, 1998, as amended
between the Company and Robert M. Beningson (9).
21 Subsidiaries of the Company
23 Consent of Independent Certified Public Accountants.
(b) Reports on Form 8-K
The following reports on Form 8-K were filed during the quarter ended
February 28, 1999:
None
All other exhibits and financial statement schedules have been omitted
because they have been previously filed or incorporated by reference,
are inapplicable, or the required information is included elsewhere in
the Consolidated Financial Statements or the notes thereto.
(1) Previously filed as an Exhibit, under the corresponding exhibit number,
to the Company's Form 10-K for the fiscal year ended September 30,
1982, Commission file number 0-72, and incorporated herein by
reference.
(2) Previously filed as an Exhibit, under the corresponding exhibit number
with Registration Statement No. 33-13899 on April 30, 1987 and
incorporated herein by reference.
(3) Previously filed as an Exhibit with the Company's Form 10-Q for the
quarter ended June 30, 1990 and incorporated herein by reference.
(4) Previously filed as an Exhibit with the Company's Form 10-K for the
year ended September 30, 1990 and incorporated herein by reference.
(5) Previously filed as an Exhibit with the Company's Form 10-K for the
year ended February 28, 1993 and incorporated herein by reference.
(6) Previously filed as an Exhibit with the Company's Form 10-K for the
year ended February 28, 1994 and incorporated herein by reference.
(7) Previously filed as an Exhibit with the Company's Form 10-Q for the
quarter ended August 31, 1994 and incorporated herein by reference.
(8) Previously filed as an Exhibit with the Company's Form 10-Q for the
quarter ended November 30, 1994 and incorporated herein by reference.
(9) Compensatory arrangement.
(10) Previously filed as an Exhibit with the Company's Form 10-Q for the
quarter ended August 31, 1998, and incorporated herein by reference.
(11) Previously filed as on Exhibit with the Company's Form 10-K for the
year ended February 28, 1998, and incorporated hereinby reference.
(12) Incorporated by reference from Registration Statement 333-68839 filed
by York Power Funding (Cayman) Limited.
21
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page(s)
<S> <C>
York Research Corporation and Consolidated Subsidiaries:
Report of Independent Certified Public Accountants 23
Consolidated Financial Statements:
Consolidated Balance Sheets - February 28, 1999 and 1998 24
Consolidated Statements of Operations for the Years Ended February 28,
1999, February 28, 1998 and February 28,
1997 25
Consolidated Statement of Stockholders' Equity for the
Years Ended February 28, 1999, February 28, 1998 and
February 28, 1997 26
Consolidated Statements of Cash Flows for the
Years Ended February 28, 1999, February 28, 1998
and February 28, 1997 27
Notes to Consolidated Financial Statements 28 through 56
</TABLE>
22
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
York Research Corporation:
We have audited the accompanying consolidated balance sheets of York
Research Corporation and Subsidiaries at February 28, 1999 and 1998, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended February 28, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
York Research Corporation and Subsidiaries at February 28, 1999 and 1998, and
the consolidated results of their operations and their consolidated cash flows
for each of the three years in the period ended February 28, 1999, in conformity
with generally accepted accounting principles.
GRANT THORNTON LLP
New York, New York
May 14, 1999
23
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
February 28, February 28,
1999 1998
-------------- --------------
ASSETS as adjusted (Note 5)
<S> <C> <C>
Current Assets:
Cash and cash equivalents 22,993,285.00 10,254,366.00
Trade accounts receivable 118,527,841.00 47,245,168.00
Income tax refund receivable 1,601,799.00 --
Other receivables - related parties 2,432,913.00 5,314,516.00
Cash in escrow - restricted 13,315,468.00 --
Inventory - natural gas 715,059.00 --
Deferred tax asset 6,836,000.00 1,238,000.00
Other current assets (including advances to employees
of $14,000 and $85,700, respectively) 2,106,303.00 1,158,035.00
Net assets of discontinued operations 3,266,864.00 --
-------------- --------------
Total current assets 171,795,532.00 65,210,085.00
Property, plant and equipment, net 688,451.00 577,058.00
Long-term receivables - WCTP 11,001,027.00 4,905,689.00
Construction in progress 98,399,993.00 2,687,134.00
Cash in escrow - restricted 33,864,069.00 --
Long-term notes receivable - WCTP 57,330,535.00 57,330,535.00
Intangible assets, net 19,821,691.00 1,500,000.00
Other assets (including advances to employees
of $654,825 and $588,250, respectively) 8,190,937.00 1,928,291.00
-------------- --------------
Total assets 401,092,235.00 134,138,792.00
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Natural gas accounts payable 112,789,241.00 44,311,309.00
Line of credit 18,150,727.00 --
Project payables 21,952,531.00 --
Accrued expenses and other payables 13,043,783.00 6,525,118.00
Accrued income taxes -- 88,178.00
Current portion of deferred revenue 1,981,002.00 --
Net liabilities of discontinued operations -- 2,836,675.00
-------------- --------------
Total current liabilities 167,917,284.00 53,761,280.00
Project notes payable 150,000,000.00 --
Other long-term liabilities 1,434,789.00 942,146.00
Deferred revenue and other credits 3,114,000.00 3,287,000.00
Deferred tax liability 11,503,100.00 8,491,100.00
-------------- --------------
Total liabilities 333,969,173.00 66,481,526.00
Minority interest in partnership 2,246,362.00 3,910,709.00
Commitments and contingencies
Stockholders' equity
Common stock, Class A, $.01 par value; authorized 10,000,000
shares; none issued -- --
Common stock, $.01 par value; authorized 50,000,000 shares; issued
15,018,526 and 14,961,438 shares in 1999 and 1998, respectively 150,185.00 149,614.00
Additional paid-in capital 65,866,629.00 65,212,681.00
Accumulated earnings 1,147,719.00 7,137,362.00
-------------- --------------
67,164,533.00 72,499,657.00
Less:
Treasury stock, at cost (123,124 shares) (1,409,401.00) (1,409,401.00)
Notes receivable - sale of common stock (818,981.00) (6,832,938.00)
Deferred compensation - ESOP (59,451.00) (510,761.00)
-------------- --------------
Total stockholders' equity 64,876,700.00 63,746,557.00
-------------- --------------
Total liabilities and stockholders' equity 401,092,235.00 134,138,792.00
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED FEBRUARY 28,
<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ---------------
as adjusted (Note 5) as adjusted (Note 5)
<S> <C> <C> <C>
REVENUES:
Natural gas sales 966,643,445.00 351,345,686.00 7,180,014.00
Power project services 6,238,207.00 13,786,604.00 19,756,615.00
--------------- --------------- ---------------
Total revenues 972,881,652.00 365,132,290.00 26,936,629.00
--------------- --------------- ---------------
COSTS AND EXPENSES:
Cost of natural gas 952,680,916.00 349,927,930.00 6,953,026.00
Cost of power project services 6,007,344.00 7,606,762.00 6,216,115.00
Selling, general and administrative 11,644,939.00 8,515,087.00 7,482,520.00
--------------- --------------- ---------------
Total costs and expenses 970,333,199.00 366,049,779.00 20,651,661.00
--------------- --------------- ---------------
OTHER INCOME (EXPENSES):
Interest income - WCTP 4,343,975.00 4,510,531.00 3,490,122.00
Interest income 2,770,921.00 254,906.00 219,783.00
Interest expense (6,299,994.00) (36,269.00) (588,581.00)
Other income 5,935,575.00 2,639,139.00 882,344.00
Minority interest in partnership (546,766.00) (567,646.00) (176,720.00)
--------------- --------------- ---------------
Total other income 6,203,711.00 6,800,661.00 3,826,948.00
--------------- --------------- ---------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
AND EXTRAORDINARY GAIN 8,752,164.00 5,883,172.00 10,111,916.00
Provision for income taxes 3,900,000.00 2,375,703.00 2,936,244.00
--------------- --------------- ---------------
INCOME FROM CONTINUING OPERATIONS 4,852,164.00 3,507,469.00 7,175,672.00
DISCONTINUED OPERATIONS
Income (loss) from discontinued operations (8,910,641.00) (837,503.00) 342,161.00
Estimated loss on disposal (consisting of actual operating
losses during the phase out period) (1,931,166.00) -- --
--------------- --------------- ---------------
Total income (loss) from discontinued operations (10,841,807.00) (837,503.00) 342,161.00
--------------- --------------- ---------------
Extraordinary gain, net of tax and allocation to minority interest -- 9,373,813.00 --
--------------- --------------- ---------------
NET INCOME (LOSS) ($ 5,989,643) $ 12,043,779 $ 7,517,833
=============== =============== ===============
EARNINGS (LOSS) PER SHARE - BASIC:
Continuing operations $ 0.34 $ 0.25 $ 0.56
Discontinued operations ($ 0.76) ($ 0.06) $ 0.03
Extraordinary gain -- 0.67 --
--------------- --------------- ---------------
Total ($ 0.42) $ 0.86 $ 0.59
=============== =============== ===============
Weighted average number of common shares used in
computing basic earnings per share 14,286,106 14,022,387 12,782,551
=============== =============== ===============
EARNINGS (LOSS) PER SHARE - DILUTED:
Continuing operations $ 0.33 $ 0.22 $ 0.48
Discontinued operations ($ 0.73) ($ 0.05) $ 0.02
Extraordinary gain -- 0.60 --
--------------- --------------- ---------------
Total ($ 0.40) $ 0.77 $ 0.50
=============== =============== ===============
Weighted average number of common shares and common
share equivalents used in computing diluted earnings
per share 14,889,746 15,561,125 15,090,393
=============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED FEBRUARY 28, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------- Additional
Shares Shares Paid-in
Issued Amount Capital
------------- ------------- -------------
<S> <C> <C> <C>
Balance, February 28, 1996, as previously reported 13,329,778.00 133,298.00 54,230,850.00
Add: adjustment for the effect on prior years of
applying retroactively the new accounting for the
SBCC obligation (Note 5) -- -- --
------------- ------------- -------------
Balance, February 28, 1996, as adjusted 13,329,778.00 133,298.00 54,230,850.00
Exercise of options 333,800.00 3,338.00 1,015,350.00
Exercise of warrants 589,726.00 5,897.00 2,743,124.00
Donation of stock 3,000.00 30.00 30,345.00
Cash receipts -- -- --
Deferred compensation accrual -- -- 342,458.00
Tax effect of options and warrants -- -- 1,988,000.00
Net income -- -- --
------------- ------------- -------------
Balance, February 28, 1997 14,256,304.00 142,563.00 60,350,127.00
Exercise of options 117,195.00 1,172.00 340,759.00
Exercise of warrants 587,939.00 5,879.00 3,491,413.00
Deferred compensation accrual -- -- 351,382.00
Tax effect of options and warrants -- -- 654,000.00
ESOP third party loans -- -- 25,000.00
Settlements of notes receivable -- -- --
Net income -- -- --
------------- ------------- -------------
Balance, February 28, 1998 14,961,438.00 149,614.00 65,212,681.00
Exercise of options 51,250.00 513.00 221,394.00
Exercise and issuance of warrants 5,838.00 58.00 157,828.00
Deferred compensation accrual -- -- 226,726.00
Tax effect of options and warrants -- -- 48,000.00
Forgiveness of notes receivable -- -- --
Cash receipts -- -- --
Transfer of note receivable to minority interests -- -- --
Net loss -- -- --
------------- ------------- -------------
Balance, February 28, 1999 15,018,526.00 150,185.00 65,866,629.00
============= ============= =============
<CAPTION>
Accumulated Treasury Notes Deferred
Earnings Stock Receivable Compensation
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Balance, February 28, 1996, as previously reported (11,905,661.00) (706,401.00) (7,539,787.00) (1,384,932.00)
Add adjustment for the effect on prior years of
applying retroactively the new accounting for the
SBCC obligation (Note 5) (518,588.00) -- -- --
------------- ------------- ------------- -------------
Balance, February 28, 1996, as adjusted (12,424,249.00) (706,401.00) (7,539,787.00) (1,384,932.00)
Exercise of options -- -- (420,526.00) --
Exercise of warrants -- -- -- --
Donation of stock -- -- -- --
Cash receipts -- -- -- 450,000.00
Deferred compensation accrual -- -- -- 182,443.00
Tax effect of options and warrants -- -- -- --
Net income 7,517,832.00 -- -- --
------------- ------------- ------------- -------------
Balance, February 28, 1997 (4,906,417.00) (706,401.00) (7,960,313.00) (752,489.00)
Exercise of options -- -- -- --
Exercise of warrants -- -- (262,000.00) --
Deferred compensation accrual -- -- -- 241,728.00
Tax effect of options and warrants -- -- -- --
ESOP third party loans -- -- -- --
Settlements of notes receivable -- (703,000.00) 1,389,375.00 --
Net income 12,043,779.00 -- -- --
------------- ------------- ------------- -------------
Balance, February 28, 1998 7,137,362.00 (1,409,401.00) (6,832,938.00) (510,761.00)
Exercise of options -- -- (57,543.00) --
Exercise and issuance of warrants -- -- -- --
Deferred compensation accrual -- -- -- 451,310.00
Tax effect of options and warrants -- -- -- --
Forgiveness of notes receivable -- -- 100,000.00 --
Cash receipts -- -- 275,000.00 --
Transfer of note receivable to minority interests -- -- 5,696,500.00 --
Net loss (5,989,643.00) -- -- --
------------- ------------- ------------- -------------
Balance, February 28, 1999 1,147,719.00 (1,409,401.00) (818,981.00) (59,451.00)
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED FEBRUARY 28,
<TABLE>
<CAPTION>
1999 1998 1997
-------------- -------------- --------------
as adjusted as adjusted
(Note 5) (Note 5)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income from continuing operations 4,852,164.00 3,507,469.00 7,175,672.00
Adjustments to reconcile net income from continuing operations to
net cash generated by (used in) operating activities:
Depreciation and amortization 1,422,089.00 287,727.00 160,754.00
Deferred taxes (2,586,000.00) (577,000.00) (101,000.00)
Non-cash charges -- 36,375.00 971,391.00
Minority interest in partnership 546,766.00 567,646.00 176,720.00
Common shares and warrants issued for services and donation 120,000.00 -- 30,375.00
Amortization of deferred credits (173,000.00) (1,717,897.00) --
ESOP contribution 678,036.00 593,109.00 524,901.00
Tax benefit of stock options and warrants 48,000.00 654,000.00 1,988,000.00
Loss on disposal of fixed assets 30,788.00 -- --
Changes in operating assets and liabilities:
Increase in receivables (74,496,408.00) (47,096,403.00) (5,158,685.00)
Net (increase) decrease in notes receivable, inventory, other current
assets, and other assets (13,715,061.00) 575,686.00 (3,235,578.00)
Net increase (decrease) in accounts payable, accrued expenses, deferred
revenue and long-term liabilities 83,195,403.00 45,521,935.00 (673,438.00)
Increase (decrease) in accrued taxes (1,689,977.00) (677,320.00) 246,166.00
-------------- -------------- --------------
NET CASH GENERATED BY (USED IN) OPERATING ACTIVITIES OF
CONTINUING OPERATIONS (1,767,200.00) 1,675,327.00 2,105,278.00
-------------- -------------- --------------
NET CASH GENERATED BY (USED IN) OPERATING ACTIVITIES OF
DISCONTINUED OPERATIONS (16,945,346.00) 2,621,161.00 20,172.00
-------------- -------------- --------------
INVESTING ACTIVITIES:
Construction in progress (79,332,880.00) (4,187,134.00) --
Cash in escrow - restricted (124,612,000.00) -- --
Receipts from cash in escrow - restricted 77,432,463.00 -- --
Purchase of machinery and equipment (418,122.00) (222,985.00) (158,995.00)
Purchase of NAEC, net of cash acquired -- -- 128,495.00
-------------- -------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (126,930,539.00) (4,410,119.00) (30,500.00)
-------------- -------------- --------------
FINANCING ACTIVITIES:
Amounts received from ESOP -- -- 450,000.00
Gross proceeds from Bond Financing 150,000,000.00 -- --
Payment of financing costs (7,982,251.00) -- --
Payments on capital leases (52,608.00) (10,006.00) (31,687.00)
Repayment of notes receivable 275,000.00 -- --
Net proceeds from line of credit 18,150,727.00 -- --
Payment of due to SBCC -- (2,750,000.00) (250,000.00)
Proceeds from exercise of stock options and warrants 202,249.00 577,223.00 3,719,573.00
Net change in minority interest in partnership (2,211,113.00) 1,037,754.00 --
-------------- -------------- --------------
NET CASH GENERATED BY (USED IN) FINANCING ACTIVITIES 158,382,004.00 (1,145,029.00) 3,887,886.00
-------------- -------------- --------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 12,738,919.00 (1,258,660.00) 5,982,836.00
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 10,254,366.00 11,513,026.00 5,530,190.00
-------------- -------------- --------------
CASH AND CASH EQUIVALENTS AT END OF YEAR 22,993,285.00 10,254,366.00 11,513,026.00
============== ============== ==============
</TABLE>
SUPPLEMENTAL INFORMATION:
During Fiscal 1999, a non-cash transaction of $5,696,500 occurred as a
result of the transfer of a note receivable from the Chairman of the
Company to the minority interests. In addition, interest of approximately
$4.5 million was paid on the Project notes payable.
During Fiscal 1999, a non-cash transaction of $100,000 occurred as a result
of the forgiveness of a note to a former employee.
During Fiscal 1998, a non-cash transaction of $3,000,000 occurred as a
result of the exercise of 500,000 warrants at $6 per share, and a non-cash
transfer of $1,000,000 of notes receivable to a nonconsolidated affiliate
was recorded. In addition, the Company received a stock payment in lieu of
cash as payment of an advance to an employee of $350,000 and a note
receivable of $389,376.
During Fiscal 1998, an advance distribution of $2,000,000 to RVA in a prior
year was offset against minority interest payable.
During Fiscal 1997, $28,808,535 was reclassified from construction in
process, other long-term receivables-WCTP and payment in-lieu of
performance bond-WCTP to notes receivable-WCTP.
During Fiscal 1997, the Company acquired 85% of the common stock of NAEC
for $1. The fair value of assets acquired was $4,587,849, and liabilities
assumed were $4,960,240.
During Fiscal 1997, a capital lease obligation of $211,060 was incurred
when the Company entered into leases for new equipment.
During Fiscal 1999, 1998 and 1997, the Company received $57,544, $262,000,
and $420,526 of notes receivable - sale of common stock, respectively, for
options exercised.
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS
York Research Corporation ("York" or the "Company") is a developer,
owner and marketer of energy related projects and products through its
subsidiaries, partnerships, joint ventures and affiliates. The Company currently
participates in two complementary segments of the energy business -- Greenpower
project development and services, including cogeneration and wind energy, and
the marketing of natural gas in the wholesale and industrial and commercial
markets.
The principal markets for the Company's products and services currently
are the United States and the Republic of Trinidad and Tobago. Revenues are
principally derived from entities that supply, broker or market energy to
utilities, residential complexes, and industrial concerns.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ significantly from those
estimates.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of York
Research Corporation and its subsidiaries and all majority owned partnerships
and limited liability companies (collectively "York" or the "Company"). All
material intercompany transactions and accounts have been eliminated in
consolidation. The accompanying consolidated financial statements reflect
the Company's former electric marketing business as a discontinued operation
(see Note 16).
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
REVENUE RECOGNITION
The Company recognizes service revenues and energy sales in the period
in which the work is performed or the commodity is delivered. Development fees
received, which are included in service revenues, are either amortized over the
related development period, or recognized as received, based on their nature.
28
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONSTRUCTION IN PROGRESS
Construction in progress includes all costs related to construction
such as sub- contractors, equipment, engineering, professional fees, and other
costs related to the projects under development through February 28, 1999. The
Company follows the policy of capitalizing interest expense as a component of
construction in progress. Interest capitalized amounted to approximately
$4,149,000 for the year ended February 28, 1999. Certain internal costs directly
related to the construction of the power projects, including salaries of certain
employees are capitalized. Such costs amounted to approximately $1,067,000 and
$531,000 for the years ended February 28, 1999, and 1998, respectively.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and are being
depreciated or amortized on the straight-line method over their estimated useful
lives as follows:
-----------------------------------------------
Machinery and equipment 5-10 years
-----------------------------------------------
Furniture and fixtures 5-10 years
-----------------------------------------------
Motor vehicles 3 years
-----------------------------------------------
Leasehold improvements 5-8 years
-----------------------------------------------
INCOME TAXES
The Company utilizes the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes". Under SFAS
No. 109, deferred tax assets or liabilities are computed based on the difference
between the financial statement and income tax bases of assets and liabilities
including any net operating loss and alternative minimum tax credit carry
forwards, using the enacted marginal tax rate. Deferred income tax expense or
benefits are based on the changes in the asset or liability from period to
period. Deferred tax assets are recognized to the extent realization of such
benefits are more likely than not.
LONG-TERM RECEIVABLES AND NOTES RECEIVABLE-WCTP
The realizability of the long-term receivables and notes
receivable-WCTP is evaluated by the Company by review of the present value of
the currently expected future cash flow from the Warbasse facility.
PER SHARE DATA
Basic earnings per share excludes dilution and is computed by dividing
income available to common shareholders by the number of weighted-average common
shares outstanding for the period. Diluted earnings per share reflects the
number of weighted average common shares outstanding plus the potential dilutive
effect of securities or contracts which are in the money and convertible to
common shares, such as options and warrants, unless antidilutive based upon
income (loss) from continuing operations before extraordinary gain. The
following is a reconciliation of the number of shares used in the basic and
diluted computation of earnings per share for the years ended February 28, 1999,
1998 and 1997:
29
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FISCAL 1999 FISCAL 1998 FISCAL 1997
----------- ----------- -----------
<S> <C> <C> <C>
Weighted average number of
common shares outstanding 14,881,280 14,776,882 13,705,557
Average of unreleased ESOP
shares (595,174) (754,495) (923,006)
----------- ----------- -----------
Weighted average number of
common shares outstanding - basic 14,286,106 14,022,387 12,782,551
Dilution (warrants and options) 603,640 1,538,738 2,307,842
----------- ----------- -----------
Weighted average number of common
share and common share equivalents
outstanding - diluted 14,889,746 15,561,125 15,090,393
=========== =========== ===========
</TABLE>
The amounts shown as average of unreleased ESOP shares and dilution
(warrants and options) reflect the averages for the periods presented.
Options and warrants to purchase 3,141,256, 175,000, and 50,000 shares
of common stock were outstanding in Fiscal 1999, 1998, and 1997, respectively,
ranging from $4.50 to $11.00, $9.63 to $11.00, and $10.00 to $11.00,
respectively, but were not included in the computation of diluted earnings per
share because the options' exercise prices were greater than the average market
price of common shares. These options and warrants expire between April 2000 and
December 2008.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, cash in escrow,
accounts and other receivables, accrued expenses, accounts payable and
projects payable approximate fair value, principally because of the short
maturity of these items. The fair value for long-term receivables and notes
receivable-WCTP are not practical to estimate based on the inability to
estimate the exact maturity and cash flows of these receivables (see Note 5
for terms). For minority interest in partnership (see Note 15 for terms),
there is no quoted market price, and a reasonable estimate of fair value
could not be made without incurring excessive costs. The project notes
payable are stated at fair value based on rates and terms currently available
to the Company.
INVENTORY
Inventory consists of natural gas held in storage. The Company accounts
for its natural gas inventory using lower of cost or market, cost being
determined using the average cost method.
CASH IN ESCROW
Included in cash in escrow-restricted, current portion are amounts to
be used to pay construction payables as of February 28, 1999. Included in cash
in escrow-restricted, long term are amounts related to construction of the Big
Spring and Trinidad projects and various reserves.
30
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INTANGIBLE ASSETS
Included in Intangible Assets are deferred financing costs,
finders fees, a power purchase agreement and other costs related to acquisition
and development of the projects. Such costs are being amortized over their
estimated useful lives.
RECLASSIFICATIONS
Certain amounts in the 1998 and 1997 consolidated financial statements
were reclassified to conform to the 1999 presentation.
SIGNIFICANT NEW ACCOUNTING PRONOUNCEMENTS
The American Institute of Certified Public Accountant's Accounting
Standards Executive Committee issued Statement of Position 98-5 (SOP
98-5"), "Reporting on the Costs of Start-Up activities". SOP 98-5 requires that
costs of start-up activities, including organization costs, be expensed as
incurred. Start-up activities are broadly defined and include one-time
activities related to opening a new facility, introducing a new product or
service, conducting business in a new territory, conducting business with a new
class of customer or beneficiary, initiating a new process in an existing
facility, commencing some new operation, and organizing a new entity. SOP 98-5
is generally effective for financial statements for fiscal years beginning after
December 15, 1998, with initial application reported as the cumulative effect of
a change in accounting principle. As of February 28, 1999 total start-up costs
capitalized were not material.
In June 1998, The Financial Accounting Standards Board issued SFAS
133, "Accounting for Derivative Instruments and Hedging Activities," ("SFAS
133") which requires entities to recognize all derivatives in their financial
statements as either assets or liabilities measured at fair value. SFAS 133
also specifies new methods of accounting for hedging transactions, prescribes
the items and transactions that may be hedged, and specifies detailed
criteria to be met to qualify for hedge accounting. SFAS 133 is effective for
fiscal years beginning after June 15, 2000. The Company is currently
evaluating the impact that SFAS 133 will have on the Company's consolidated
financial statements and disclosures.
In December 1998, the Emerging Issues Task Force of the Financial
Accounting Standards Board reached consensus on Issue No. 98-10, "Accounting for
Contracts involved in Energy Trading and Risk Management Activities" ("EITF
98-10"). EITF 98-10 is effective for fiscal years beginning after December 15,
1998 and requires energy trading contracts to be recorded at fair value on the
balance sheet, with the changes in fair value included in earnings. The effect
of initial application of EITF 98-10 will be reported as a cumulative effect of
a change in accounting principle. The Company is currently evaluating the impact
that EITF 98-10 will have on the Company's consolidated financial statements and
disclosures.
4. BROOKLYN NAVY YARD
Brooklyn Navy Yard Cogeneration Partners, L.P. ("BNYLP") is owned
equally by a subsidiary of Edison Mission Energy ("Mission"), which is an
indirect wholly-owned subsidiary of Edison International, and B-41 Associates,
L.P. ("B-41LP"). BNYLP was formed to develop, construct, finance, own and
operate the 286 megawatt ("MW") natural-gas-fired, combined-cycle Brooklyn Navy
Yard ("BNY") facility.
31
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The BNY facility has been operational since 1996 and supplies
Consolidated Edison of New York, Inc. ("Con Ed") with both electricity and
steam under a 40 year contract. Steam is delivered to Con Ed's New York City
district steam system. The facility also supplies energy to the host
industrial park and to an adjacent waste water facility.
B-41LP was formed to more effectively develop and manage the original
partners' investments in the BNY facility. The profit sharing and ownership
percentages in the B-41LP partnership agreement, as amended, are as follows:
(1) RV Associates L.P. ("RVA"), whose limited partner, RRR'S
Ventures Ltd., ("RRR'S") and general partner are controlled by
the Chairman of the Company, is a 5% general partner. B-41
Management Corporation ("B-41MC"), a wholly-owned subsidiary
of York, is also a 5% general partner.
(2) RVA is also a 15% limited partner. RVA contributed a power
purchase agreement totaling 40 MW.
(3) Cogeneration Technologies, Inc. ("Cogen"), a wholly-owned
subsidiary of York, is a 22% limited partner. Cogen
contributed a power purchase agreement totaling 40 MW.
(4) York Cogen Partners L.P. ("YCP") is a 53% limited partner.
RRR'S Ventures Ltd. is the 10% general partner of YCP, and
York is the 90% limited partner in YCP. YCP contributed a
power purchase agreement totaling 90 MW.
For tax purposes, depreciation, operating losses and capital
transactions are subject to other sharing percentages.
The BNYLP partnership agreement, as amended, contains provisions,
among other things, with respect to the allocation of cash flow and tax
depreciation under various circumstances, profits and losses both before and
after Mission's advances have been repaid, management of the Partnership, and
dispute resolution. B-41LP and Mission have amended the partnership agreement
to reflect certain changes pertaining to funding obligations, management, and
operations.
Upon formation of BNYLP, all of the project-related assets, contract
rights, leases or other intangible assets that had been accumulated by the
Company and B-41LP during the pre-joint venture development period, as well as
all related liabilities, were transferred to BNYLP. Although BNYLP accounted for
B-41LP's contribution at an agreed upon initial value of $7,000,000, B-41LP
recorded its investment in BNYLP at the historical carrying value of the assets
contributed of zero. Through February 28, 1999 BNYLP has incurred losses.
Accordingly, since B-41LP accounts for its investment in BNYLP under the equity
method, and has no funding obligations to BNYLP, to date B-41LP has recorded no
losses.
The summarized financial information of BNYLP as of, and for the years
ending December 31, 1998 and 1997, which were audited by a firm other than the
Company's auditors, is as follows:
32
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Current Assets $ 27,622,000 $ 24,992,000
============= =============
Non Current Assets $ 474,820,000 $ 487,916,000
============= =============
Current Liabilities $ 24,603,000 $ 17,499,000
============= =============
Non Current Liabilities $ 500,285,000 $ 501,148,000
============= =============
Partners' Deficiency $ (22,446,000) $ (5,739,000)
============= =============
Total Revenues $ 131,915,000 $ 104,303,000
============= =============
Net Loss $ (16,706,000) $ (26,060,000)
============= =============
</TABLE>
Long-term project financing was completed for the BNY facility on
December 17, 1997 with the sale of $100 million aggregate principal amount of
Senior Secured Bonds Due 2020 and $307 million aggregate principal amount of New
York City Industrial Development Agency Industrial Development Revenue Bonds due
from 2022 to 2036. The Company provided no guarantees with regard to this
financing, and has no obligation to provide funding of any sort. As a result of
this financing, and as compensation for services rendered, the Company received
a fee of $6 million from Mission, which was included in Service Revenues in the
fourth quarter of Fiscal 1998. The Company also expects to receive continuing
general partner and other fees over the 40 year life of the project.
In March 1997, the Company settled all of its obligations related to
this project with a financing entity for $2,750,000, plus other consideration
(see Note 5).
In consideration for certain development services for the BNY
facility performed by the Company, RVA has assumed the obligation for certain
loans from Mission totaling $6,750,000 which are repayable only from amounts
received from third party BNYLP financings or BNY facility operating cash
flow. In addition, RVA has also accepted a reduced share of development fees
and reimbursements.
In prior years, a commission revenue of $3,460,000 was deferred,
which represented one half of the nonrefundable commission deferred until the
equipment upon which the commission was earned was placed in service. In each
of Fiscal 1999 and 1998, $173,000 was recognized. The deferred balance will
be recognized over the remaining estimated useful life of the related
equipment of twenty years.
In accordance with the BNYLP partnership agreement, the Company
provides engineering services for BNYLP. During Fiscal 1999, 1998, and 1997, the
Company recognized revenue from engineering services of approximately $444,000,
$465,000, and $838,000, respectively, which are reflected in service revenues
and cost of services. During Fiscal 1997, the Company also recognized
reimbursements of $2,500,000 for certain engineering and other costs, a portion
of which had been expensed in prior periods. At February 28, 1999 and 1998, the
Company had receivables from BNYLP of approximately $88,000 and $50,000,
respectively, related to engineering services. These amounts are included in
other receivables - related parties and were fully collected subsequent to the
respective year ends.
33
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Commencing December 1, 1996 through December 31, 1997, BNYLP paid
general partner fees to B-41LP equal to 2.5% of gross monthly revenues of the
Brooklyn Navy Yard project. B-41LP in turn paid a general partner fee of 1.25%
of gross monthly revenues to each of B-41MC and RVA. Pursuant to the amended
partnership agreement, the general partner fee was reduced to .5% of gross
revenues for the four years commencing January 1, 1998. In the years ended
February 28, 1999, 1998 and 1997, B-41MC recognized general partner fees of
approximately $320,000, $1,355,000 and $299,000, respectively, with receivables
of approximately $170,000 and $420,000 at February 28, 1999 and 1998,
respectively, which were fully collected subsequent to the respective year ends.
Royalty fees of approximately $5,716,000 and $1,078,000 were recognized during
Fiscal 1999 and 1998, respectively. These royalties, which are equal to 4.5% of
gross revenues, commenced in January 1998, and will continue for four years. RVA
has agreed not to share in these royalties (see Note 15).
In February 1997, the general contractor of the Brooklyn Navy Yard
facility brought an action in California against BNYLP seeking damages of $137
million for amounts owed under the turnkey contract and denying liability under
various claims. BNYLP responded to the complaint, denying all the allegations
contained therein and commenced an action in New York against the general
contractor denying any liability under the turnkey contract and seeking damages
in excess of $13 million pursuant to various counterclaims. In addition, BNYLP
has been named as one of the defendants in another action relating to the
construction activity of the Brooklyn Navy Yard facility. Although it is a
general partner of BNYLP, B-41LP was not served in these complaints and is not a
party to any of the actions. Mission has agreed to indemnify both BNYLP and
B-41LP against any costs resulting from the Contractor's action. B-41LP has
agreed to reimburse Mission for 25% of the excess over $10 million of such
costs, if any, with an aggregate limit of $10 million, payable solely out of
B-41LP's partnership fees and distributions and further limited to $1 million
per year for 1998, 1999 and 2000, and $2 million per year thereafter. As of
February 28, 1999, Mission has not incurred any of the above mentioned costs,
and therefore, no reimbursements have been required.
On August 4, 1998, B41LP's right to receive distributions from BNYLP
was assigned to Brooklyn Navy Yard Power LLC, which is wholly owned by B41LP,
pursuant to the Portfolio Project Bond Financing (See Note 10).
Like other large projects of this nature, the BNY facility is subject
to various risks. There can be no assurance that the facility, although
completed, will operate at sufficient levels to cover all operation and
maintenance expenses and debt service. The Company has no liability for any such
shortfalls, although if the shortfalls occur, they could impact the general
partner and royalty fees mentioned above.
5. WARBASSE PROJECT
The Company, through an operations and maintenance agreement, operates
the Warbasse Facility, supplying on a continuous basis all the thermal and
electric energy needs of the host, Amalgamated Warbasse Houses, Inc., and
supplying up to the full capacity requirements of its electric power contract
with Con Edison, when dispatched. During Fiscal 1999, 1998, and 1997, the
Company recognized approximately $5,500,000, $7,200,000, and $5,400,000,
respectively, for operations and maintenance services revenues, which has been
reflected in service revenues. Cost of services for the same periods was
approximately $5,500,000, $7,200,000, and $5,400,000, respectively.
34
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On July 27, 1994, B-41LP purchased from Sanwa Business Credit Corp.
("SBCC") the note obligation of WCTP to SBCC together with all related
collateral and ancillary rights owned by SBCC. In payment, SBCC would have
received a share of the cash flow (net of royalty and G.P. fees), if any, from
the BNY project. The note obligation of WCTP to B-41LP (the "YCP Note") has been
recorded as a Long-term note receivable - WCTP and has a face value of
$28,522,000, which includes accrued interest. This obligation is payable from a
portion of the net operating cash flow of the Warbasse project. On December 1,
1996, this note was assigned to YCP by B-41LP. The YCP Partnership Agreement was
amended to provide that the amounts received by YCP in respect of the note
obligation shall be distributed 74.7% to York and 25.3% to RRR's, its minority
partner, which are the same distribution percentages as were held by York and
affiliates of RRR's in B-41LP.
In prior years YCP Note had been reflected in the consolidated balance
sheet at an amount equal to the initial obligation to SBCC. The $7,840,000
difference between the face amount of the note and the amount reflected was
to be charged to income over time as principal payments of the long-term note
receivable are made by WCTP.
In March 1997, B-41LP settled all its obligations to SBCC for a cash
payment of $2,750,000. SBCC, in exchange for this cash payment, gave up all its
interest in the future cash flow from the Brooklyn Navy Yard Project and has no
continuing interest in any of the Company's projects or assets. In settling this
obligation, B-41LP caused RVA and its partners to lose tax benefits that RVA
would have been able to utilize. Therefore, the Company compensated RVA for tax
benefits lost by RVA in the total amount of $4 million. The form of this
non-cash transaction with RVA and its partners was the exercise of 500,000
pre-existing warrants at $6 per share for a total of $3,000,000, and the
transfer of $1,000,000 of the Company's note receivable from the Chairman to a
nonconsolidated affiliate. This extinguishment of the SBCC liability resulted in
an extraordinary gain of approximately $9.4 million net of taxes of $7.4 million
and minority interest of approximately $5.8 million.
The Company has revised the accounting for the obligation to SBCC
after reviewing the transaction and discussions with a regulatory authority.
The obligation has been recorded, as of July 1994, in an amount equal to the
face amount of the note receivable, and interest expense is recorded to
reflect annual accretion to the maximum liability of $50,000,000 over 30
years. The consolidated financial statements for prior periods have been
restated to reflect the effect of the revised accounting treatment.
The effect of the adjustments to reflect the revised accounting for the
obligation to SBCC on the accompanying financial statements is as follows:
35
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
AS PREVIOUSLY RECORDED AS ADJUSTED
<S> <C> <C>
FISCAL 1998
Long-term note receivable -WCTP $20,682,000 $28,522,000
Deferred tax liability -long term 5,632,100 8,491,100
Minority interest in partnership-liability 1,927,342 3,910,709
Accumulated earnings 4,139,729 7,137,362
Extraordinary gain 5,552,813 9,373,813
Per share
Basic .40 .67
Diluted .36 .60
Net income 8,222,779 12,043,779
Per share
Basic .59 .86
Diluted .53 .77
FISCAL 1997
Interest expense 14,581 588,581
Minority interest in partnership-expense 321,942 176,720
Provision for income taxes 3,200,000 2,936,244
Net income 7,822,611 7,517,833
Per share
Basic .61 .59
Diluted .52 .50
</TABLE>
On November 17, 1994, the YCP Note was restructured along with other
long-term debt of WCTP. Such other long-term debt of WCTP includes a note
payable to Tomen Power Corporation ("Tomen") and includes a note payable to
Cogen. The three notes will share in the net operating cash flow of WCTP, as
defined, pro rata in proportion to the principal balances of the notes, and
would share proportionately in the collateral of WCTP in the event of a
default. Management expects that all three notes will be paid from the
operations of WCTP, and each note carries an interest rate of LIBOR plus 2%.
In addition, YCP and Cogen will receive a restructuring fee of $3,000,000
each, to be paid the year after the three notes are fully paid.
On August 1, 1996, the Warbasse facility was transferred by Cogen to
WCTP, in exchange for a note receivable of $28,808,535. The note receivable
represents the total construction cost of the facility, plus other amounts owed
by WCTP to the Company. Therefore, the caption Long-term notes receivable-WCTP
on the consolidated balance sheets consists of:
<TABLE>
<S> <C>
YCP Note $28,522,000
Cogen Note 28,808,535
-----------
$57,330,535
-----------
-----------
</TABLE>
On August 4, 1998, the YCP Note was assigned to Warbasse Power II LLC,
a majority owned subsidiary of the Company, and the Cogen Note was assigned to
Warbasse Power I, LLC, a wholly owned subsidiary of the Company, pursuant to the
Portfolio Financing.
Interest income on these notes amounted to approximately $4,344,000,
$4,510,000, and $3,490,000 for Fiscal 1999, 1998, and 1997, respectively.
36
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. RECEIVABLES - RELATED PARTIES
Other receivables - related parties at February 28, 1999 and 1998
consist of the following:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Service and other receivables - WCTP $ 647,934 $3,767,202
Engineering service and general
partner and royalty fee receivables -BNYLP 1,784,979 1,547,314
---------- ----------
Total $2,432,913 $5,314,516
========== ==========
</TABLE>
Included in long-term receivables-WCTP are receivables related to
operations and maintenance services, interest income and certain advances. These
amounts are non-interest bearing.
7. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at February 28, 1999 and 1998 consist of
the following:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Machinery and Equipment $ 1,385,423 $ 1,094,629
Furniture and Fixtures 209,779 254,209
Motor Vehicles 374,573 315,448
Leasehold Improvements 73,608 85,290
----------- -----------
2,043,383 1,749,576
LESS: Accumulated Depreciation and amortization (1,354,932) (1,172,518)
=========== ===========
$ 688,451 $ 577,058
=========== ===========
</TABLE>
8. CONSTRUCTION IN PROGRESS
a) BIG SPRING WIND ENERGY FACILITY
On October 21, 1997, York acquired 100% of the partnership interests
in New World Power Texas Renewable Energy Limited Partnership, whose
significant asset was a 15 year power purchase agreement with Texas Utilities
Electric Company ("TU"), with two five year renewal options. York completed
construction of this windpower facility and achieved full commercial
operation in May 1999. The facility has a capacity of 34 MW and includes 46
turbines, including four 1,650 Kilowatt ("kW") wind turbines. At February 28,
1999, and 1998, the total costs capitalized related to the development and
construction of this project were approximately $29,416,000 and $1,502,000,
respectively, which are included in construction in progress.
b) TRINIDAD POWER PROJECT
On February 12, 1998, InnCOGEN Limited ("InnCOGEN"), a wholly owned
indirect Trinidadian subsidiary of York, signed a 30 year power purchase
agreement with Trinidad and Tobago Electricity Commission ("T&TEC"), the
government owned transmission and distribution company, under which T&TEC will
purchase the bulk of the project output. The Company is constructing a 215MW
natural gas fueled combustion turbine project for commercial operation by Fall,
1999. At February 28, 1999 and 1998, the total costs capitalized that relate to
the development and construction of this project were approximately $68,734,000
and $1,185,000, respectively, which are included in construction in progress.
Duke/Fluor Daniel is constructing the Trinidad facility under a turnkey
construction contract. The Trinidad facility will utilize three General Electric
turbines.
37
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. ACCRUED EXPENSES AND OTHER PAYABLES
Accrued expenses and other payables at February 28, 1999 and 1998
include:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Accounts payable other than natural gas $ 1,107,000 $ 2,392,000
Professional fees 1,206,000 1,190,000
Taxes other than income 1,053,000 780,000
Accrued pension and payroll costs 938,000 907,000
Interest payable to bondholders 6,050,000 0
Other 2,690,000 1,256,000
=========== ===========
Total accrued expenses and other payables $13,044,000 $ 6,525,000
=========== ===========
</TABLE>
10. DEBT OBLIGATIONS
(a) PORTFOLIO PROJECT BOND FINANCING
On August 4, 1998, a $150 million, 12%, portfolio project bond
financing due October 30, 2007 (the "Bond Financing") was completed by York
Power Funding (Cayman) Limited ("the Funding Company"), a special purpose
unaffiliated limited liability company formed for the purpose of issuing the
Bonds. Through the issuance of project notes to the Funding Company,
approximately $102 million of the proceeds of the Bond Financing are being used
to fund the balance of construction costs on the two new power projects. The
remaining $48 million is being used as follows: (a) $15 million was placed in
escrow to fund a debt service reserve fund, (b) $4.5 million was placed in
escrow to fund a contingency reserve subfund, (c) approximately $3.25 million
was placed in escrow to be used to fund interest during the construction period,
and (d) $4.5 million was used to fund financing costs related to the offering,
and (e) $20.75 million was paid to the Company for general corporate purposes
and future development activities.
The terms of the project notes are identical to the terms of the Bonds.
The bond financing is non-recourse to York and collateralized by all of the
assets and future cash flow of the 215MW Trinidad power project, and the 34 MW
Big Spring windpower project and certain assets and cash flow related to the
Brooklyn Navy Yard and Warbasse projects. The book value of the collateralized
assets is approximately $155 million at February 28, 1999. The Trinidad project
is expected to achieve full commercial operation in September 1999, and the Big
Spring Project began generating wind energy in December 1998 with full
commercial operation in May, 1999.
An agreement was entered into as of the closing date of the Bond
Financing whereby 10% in the aggregate of the net equity distributions, if any,
to be received by certain York subsidiaries from the projects that pledged cash
flow or assets as collateral for the Bond Financing will be paid to bondholders.
In addition, York entered into a Covenant Agreement with the Bond Trustee,
whereby York agreed to certain limitations, as long as the Bonds are
outstanding, on incurring new debt, granting of new liens, declaring cash
dividends in excess of $.01 per share, and continuing a business or activity
that incurs net losses, as defined. Pursuant to the Bond Financing, the Funding
Company was obligated to register the bonds. Failure to register the bonds could
result in an additional .5% interest on the bonds and the project notes payable.
38
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As a result of the Bond Financing, approximately $7,982,000 of deferred
financing costs were incurred. These deferred financing costs are being
amortized over the life of the Bond Financing. Amortization through February 28,
1999 was approximately $447,000.
(b) LINE OF CREDIT
North American Energy Conservation, Inc. ("NAEC") has a revolving line
of credit of $25,000,000, which is collateralized by its assets, and further
guaranteed by the Company. The line of credit, which expires in December, 1999,
bears interest at one quarter percent per annum over the prime rate. It is the
Company's intention to renew or replace this line of credit upon expiration. At
February 28, 1999, the loan payable was approximately $18 million. At February
28, 1998, there was no loan amount outstanding. The amount available under this
line of credit is based on net qualified accounts receivable. Under the line of
credit, NAEC is required to meet certain covenants including minimum net worth.
11. STOCKHOLDERS' EQUITY
COMMON STOCK
The Company has authorized 50,000,000 shares of common stock. In
addition, the Company has authorized 10,000,000 shares of Class A common stock,
none of which have been issued. Each Class A common share has one/hundredth of a
vote as compared with the regular common stock and is entitled to a $.20
dividend priority before any dividends are payable on the full voting common
stock.
INCENTIVE STOCK OPTION ("ISO") PLAN
In 1982, the Company authorized 1,400,000 qualified stock options,
which have all been granted. The 1982 Plan expired on April 26, 1992. In
September 1993, the Company adopted the 1993 ISO Plan, authorizing a total of
3,000,000 qualified and nonqualified stock options, of which 2,630,500 qualified
stock options were granted to employees, and 37,400 nonqualified stock options
were granted to two consultants to the Company.
Options granted under both plans may not be granted at a price less
than the fair market value of the common stock on the date of grant (or 110% of
fair market value in the case of persons holding 10% or more of the voting stock
of the Company). Options granted under the stock option plans will expire not
more than ten years from the date of grant.
In Fiscal 1999, 1998, and 1997, the Company granted 1,270,000, 451,500
and 150,000 options, respectively, pursuant to the aforementioned 1993 ISO plan,
to employees of the Company. The exercise price of the options is equal to the
fair market value of the common stock at the date of the grant. These options
vest over five and three year periods.
In September 1998, 470,000 options previously granted to certain
employees were cancelled, and new options were issued at the fair market value
on that date. The new options vest over a five year period.
39
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company has adopted only the disclosure provisions of Financial
Accounting Standard No. 123, Accounting for Stock Based Compensation (FAS 123).
It applies APB Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations in accounting for its plans and does not recognize
compensation expense for its stock based compensation plans. If the Company had
elected to recognize compensation expense based upon the fair value at the grant
date for awards under these plans, consistent with the methodology prescribed by
FAS 123, the Company's net income and income per share would be decreased to the
pro forma amounts indicated below for the year ended February 28, 1999, 1998 and
1997:
<TABLE>
<CAPTION>
AS ADJUSTED
----------------
YEAR ENDED FEBRUARY 28, 1999 (SEE NOTE 5) PROFORMA
- ---------------------------- ------------ --------
<S> <C> <C>
NET INCOME (LOSS):
Income from continuing operations $ 4,852,164 $ 3,718,497
Net loss ($ 5,989,643) ($ 7,123,310)
INCOME (LOSS) PER SHARE:
BASIC:
Income from continuing operations $ 0.34 $ 0.26
Net loss
($ 0.42) ($ 0.50)
DILUTED:
Income from continuing operations $ 0.33 $ 0.25
Net loss
($ 0.40) ($ 0.48)
YEAR ENDED FEBRUARY 28, 1998
NET INCOME:
Income from continuing operations before
extraordinary item $ 3,507,469 $ 2,915,172
Net income $ 12,043,779 $ 11,451,482
INCOME PER SHARE:
BASIC:
Income from continuing operations before
extraordinary item $ 0.25 $ 0.21
Net income $ 0.86 $ 0.82
DILUTED:
Income from continuing operations
extraordinary item $ 0.22 $ 0.19
Net income $ 0.77 $ 0.74
YEAR ENDED FEBRUARY 28, 1997
NET INCOME:
Income from continuing operations $ 7,175,672 $ 7,051,551
Net income $ 7,517,833 $ 7,393,712
INCOME PER SHARE:
BASIC:
Income from continuing operations $ 0.56 $ 0.55
Net income $ 0.59 $ 0.58
DILUTED:
Income from continuing operations $ 0.47 $ 0.46
Net income $ 0.49 $ 0.48
</TABLE>
These pro forma amounts may not be representative of future disclosures
because they do not take into effect pro forma compensation expense related to
grants made before March 1, 1995. The fair value of these options was estimated
at the date of grant using Black-Scholes option-pricing model with the following
weighted-average assumptions for the years ended February 28, 1999, 1998 and
1997:
40
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 28,
-------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Volatility 51% 71% 79%
Risk Free Rate 5.11% 6.77% 6.98%
Expected Life 10 years 10 years 10 years
Forfeiture Rate 0% 8% 33%
</TABLE>
The weighted average fair value of options granted during Fiscal 1999,
1998 and 1997, for which the exercise price equals the market price on the grant
date, was $2.25, $5.61 and $7.64, respectively, and the weighted average
exercise price was $3.31, $6.88 and $8.96, respectively.
Stock option activity during Fiscal 1999, 1998 and 1997 is summarized
below:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
OPTIONS EXERCISE PRICE
------- --------------
<S> <C> <C>
BALANCE, FEBRUARY 28, 1996 1,970,400 $4.36
Granted 150,000 8.96
Exercised (333,800) 3.79
Canceled (40,773) 4.17
-------------
BALANCE, FEBRUARY 28, 1997 1,745,827 4.90
Granted 451,500 6.88
Exercised (154,219) 4.36
Canceled (40,000) 7.44
-------------
BALANCE, FEBRUARY 28, 1998 2,003,108 5.34
Granted 1,270,000 3.31
Exercised (49,850) 4.13
Canceled (690,000) $7.05
-------------
BALANCE, FEBRUARY 28, 1999 2,533,258
=============
</TABLE>
At February 28, 1999, 1998 and 1997, 1,853,125, 1,460,980, and
1,361,313, options, respectively, were exercisable.
The following table summarizes information concerning currently
outstanding and exercisable stock options:
<TABLE>
<CAPTION>
WEIGHTED-
AVERAGE
RANGE OF REMAINING WEIGHTED- WEIGHTED-
EXERCISE PRICES NUMBER CONTRACTUAL AVERAGE NUMBER AVERAGE
OUTSTANDING LIFE (YEARS) EXERCISE PRICE EXERCISABLE EXERCISE PRICE
<S> <C> <C> <C> <C> <C> <C>
$3.00-$4.50 1,930,223 8.14 $3.27 1,302,223 $3.25
$4.51-$6.75 402,235 3.61 $5.17 402,235 $5.17
$6.76-$10.00 200,800 4.63 $7.52 148,667 $7.74
------------- -------------
2,533,258 1,853,125
============= =============
</TABLE>
41
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
WARRANTS
All warrants are exercisable upon grant, although the underlying shares
may not necessarily be registered, and the warrants expire up to ten years from
date of grant. The exercise prices of the warrants are the NASDAQ closing prices
of the Company's common stock at the dates of grant.
The following table summarizes information concerning currently
outstanding stock warrants:
<TABLE>
<CAPTION>
ISSUED YEAR ENDED FEBRUARY 28,
WARRANTS
OUTSTANDING AT
ISSUED TO 1997 1998 1999 FEBRUARY 28, 1999
--------- ---- ---- ---- -----------------
<S> <C> <C> <C> <C>
Robert M. Beningson --- --- --- 1,150,000
Stanley Weinstein --- 20,000 20,000 60,000
Howard Sommer --- 20,000 20,000 40,000
Harvey Schultz --- --- 20,000 20,000
Frederic S. Berman --- --- 20,000 20,000
---------- ---------- ----------- ------------------------
Total Directors --- 40,000 80,000 1,290,000
Other Consultants and
former Directors 20,000 --- 50,000 1,356,211
---------- ---------- ----------- ------------------------
TOTALS 20,000 40,000 130,000 2,646,211
========== ========== =========== ========================
</TABLE>
The above warrants were granted at prices ranging from $3.313 to
$11.00, and expire from April, 2000 through December, 2008. For Fiscal 1999, the
Company recorded an expense of $120,000 relating to the issuance or modification
of warrants issued to consultants.
The Company had outstanding common stock purchase warrants, which were
issued in connection with the settlement of litigation in 1993, as amended. As
of February 28, 1999 and 1998, there were outstanding Class B Warrants
evidencing the right to purchase 131,008 and 131,180 shares, which had the
following attributes: (i) an Exercise Price of $6.15; (ii) the Company had the
right to reduce the Exercise Price at any time; (iii) pursuant to an agreement
dated October 31, 1997, the Company redeemed 10% of outstanding B Warrants in
April, 1998 at $11.50 per warrant, and an additional 10% on April 1, 1999 and
the balance will be redeemed on April 1, 2000 at $11.50 per Warrant share and
(iv) the redemption obligation is secured by a 17.5% limited partnership
interest in BNYLP, held by B-41LP. The Company is accreting the redemption
obligation from the period of the revised settlement through the final
redemption dates. During the years ended February 28, 1999 and 1998, the Company
recorded expenses of approximately $683,000 and $301,000, respectively, relating
to this redemption.
At February 28, 1998, there were also outstanding Class C Warrants
evidencing the right to purchase 91,834 shares at an exercise price of $6.50 per
share, which Warrants expired, and had no redemption provisions.
In connection with the settlement of the shareholder litigation, in
1993, the Company issued Class A Warrants, which were surrendered under a letter
of credit posted by Mission. Total amounts drawn on the letter of credit
amounted to approximately $6.9 million, which will be repaid only from future
operating and financing cash flows of BNYLP.
42
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. EMPLOYEE BENEFIT PLANS
EMPLOYEE SAVINGS PLAN
The Company maintains the York Research Corporation 401(k) Plan
("401(k) Plan"). The 401(k) Plan allows employees of the Company to defer a
portion of their earnings on a pre-tax basis through contributions to the 401(k)
Plan up to limits specified by the IRS. The Company, may at its discretion, make
a contribution to the 401(k) Plan. To date, the Company has elected not to
contribute to the 401(k) plan.
DEFINED BENEFIT PLAN
The Company has a defined benefit pension plan covering substantially
all employees not covered by a collective bargaining agreement. The benefits are
based on years of service and the highest consecutive five years of the
employees' compensation. The Company's funding policy is to contribute annually
the amount necessary to satisfy the Internal Revenue Service's funding
standards. Contributions are intended to provide, not only for benefits
attributed to service to date, but also for those expected to be earned in the
future.
Pension cost for the years ended February 28, 1999, 1998 and 1997
include the following components:
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Service cost - benefits earned
during the current period $ 51,099 $ 33,967 $ 30,756
Interest cost on projected benefit
obligation 94,837 109,857 104,757
Actual return on plan assets (18,436) (38,453) (39,633)
Net amortization and deferral (19,817) (9,966) (4,263)
--------- --------- ---------
Net pension cost $ 107,683 $ 95,405 $ 91,617
========= ========= =========
</TABLE>
For all periods presented, the weighted average discount rate was
8.5% and rate of increase in future compensation levels was 3% which were
used in determining the actuarial present value of the projected benefit
obligation. The expected long-term rate of return on plan assets is 8.5%.
The following tables set forth the plan's benefit obligations and
change in plan assets as of February 28, 1999 and 1998:
43
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year $ 1,115,731 $ 1,292,437
Service cost 51,099 33,967
Interest cost 94,837 109,857
Actuarial gain 150,950 --
Benefits paid (466,878) (320,530)
----------- -----------
Benefit obligation at end of year 945,739 1,115,731
----------- -----------
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year 693,325 860,810
Actual return on plan assets 18,436 38,453
Employer contribution 130,482 114,592
Benefits paid (466,878) (320,530)
----------- -----------
Fair value of plan assets at end of year 375,365 693,325
----------- -----------
Funded status (570,374) (422,406)
Unrecognized net actuarial loss 288,108 102,832
Unrecognized transition amount 82,931 97,440
----------- -----------
Prepaid (accrued) benefit cost ($ 199,335) ($ 222,134)
=========== ===========
</TABLE>
EMPLOYEE STOCK OWNERSHIP PLAN
During 1988, the Company adopted an Employee Stock Ownership Plan
("ESOP") that covers substantially all employees. The Company utilizes the
provisions of Statement of Position 93-6, "Employers' Accounting for Employee
Stock Ownership Plans" ("SOP 93-6"). The following table presents the number of
shares of common stock, which were unregistered at the time and subsequently
registered, the ESOP purchased from the Company, at prices which represented 70%
of the NASDAQ closing prices at the date of purchase:
<TABLE>
<CAPTION>
Purchased in Fiscal Year # Shares Purchased Purchase Price
- ------------------------ ------------------ --------------
<S> <C> <C>
1996 288,500 $ 1,092,219
1993 and prior 3,500,000 13,370,000
----------- -----------
3,788,500 $14,462,219
=========== ===========
</TABLE>
44
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Management believes the valuation represented the fair market value of
the unregistered shares on those dates.
The Company contributed approximately $678,000, $593,000, and $525,000
to the ESOP during Fiscal 1999, 1998, and 1997, respectively. The Company makes
annual contributions to the ESOP as determined by the Board of Directors and
subject to certain limitations dictated by tax regulations.
To purchase the shares from the Company, the ESOP borrowed funds from
the Company. Repayment of these loans has been and is expected from employer
contributions, borrowing by the ESOP from third parties, and by sale of
unreleased ESOP shares to third parties. The Company has recorded all amounts
loaned to the ESOP as deferred compensation, a contra-equity account, and has
included the third party loans to the ESOP in other long-term liabilities.
Certain of the unreleased ESOP shares are used as collateral for a third party
loan to the ESOP.
During the quarter ended August 31, 1993, the ESOP borrowed $1,150,000
from third parties. These funds, along with an additional $12,987,000 generated
through February 28, 1999 by the sale of the Company's stock owned by the ESOP,
were used to repay the demand purchase money loans due to the Company. The
$1,150,000 initially borrowed by the ESOP was included in other long-term
liabilities and as deferred compensation, a contra-equity account, and had a
balance of approximately $601,000 at February 28, 1999 and 1998 as a result of
repayments by the ESOP.
ESOP shares are released and allocated to participant accounts based
upon Company contributions and certain payments made to reduce ESOP debt to the
Company. The Company reports compensation expense as shares are committed to be
released equal to the current market price of the shares, and the shares then
become outstanding for earnings-per-share ("EPS") computations.
A summary of the ESOP shares, at February 28, 1999 and 1998 is as
follows:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Allocated shares 682,667 608,002
Shares released for allocation 139,401 74,665
Unreleased shares 558,129 714,530
---------- ----------
1,380,197 1,397,197
========== ==========
Fair value of unreleased shares $2,511,581 $5,061,711
========== ==========
</TABLE>
13. INCOME TAXES
The provision for income taxes, for each of the three years ended
February 28, 1999 is as follows:
45
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
CURRENT:
FEDERAL $ 722,000 $ 1,264,441 $ 425,735
STATE AND lOCAL 655,000 898,000 587,000
----------- ----------- -----------
1,377,000 2,162,441 1,012,735
----------- ----------- -----------
DEFERRED:
FEDERAL 1,683,000 (475,000) (182,000)
STATE AND lOCAL 897,000 34,262 117,509
FOREIGN (105,000) -- --
----------- ----------- -----------
2,475,000 (440,738) (64,491)
=========== =========== ===========
TAX BENEFITS ALLOCATED DIRECTLY TO
ADDITIONAL PAID-IN CAPITAL:
FEDERAL 34,000 590,000 1,577,000
STATE AND lOCAL 14,000 64,000 411,000
----------- ----------- -----------
48,000 654,000 1,988,000
----------- ----------- -----------
PROVISION $ 3,900,000 $ 2,375,703 $ 2,936,244
=========== =========== ===========
</TABLE>
The Government of Trinidad and Tobago granted InnCOGEN a tax holiday,
which includes relief from corporation income tax for 8 years after September 9,
1999. The Government of Trinidad also allowed InnCOGEN to elect to postpone
income tax depreciation deductions until after the tax holiday.
At February 28, 1999, the Company has a net operating loss
carryforward, for Federal income tax purposes, of $15,271,000 which expires at
February 28, 2019. After carrybacks to the fiscal years ended February 28, 1997
and 1998, the Company has a $11,876,000 alternative minimum tax net operating
loss carryforward, which also expires at February 28, 2019. The difference
between the loss carryforward amounts is attributable to adjustments required in
the alternative minimum tax computation.
The Internal Revenue Service is in the process of examining the York
Research Corporation consolidated Federal income tax return for the fiscal year
ended February 28, 1997. The examination is in a preliminary stage and the
result cannot be determined at this time.
Internal Revenue Code Section 382 places a limitation on the
utilization of carryforwards when an ownership change, as defined in the tax
law, occurs. Generally, an ownership change occurs when there is a greater than
50 percent change in ownership. If such a change should occur, the actual
utilization of carryforwards, for tax purposes, would be limited annually to a
percentage, approximately 5%, of the fair market value of the Company at the
time of such change.
The reconciliation between the effective tax rate and the statutory
Federal income tax rate for each of the three years ended February 28, 1999 is
as follows:
46
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Amount computed using the statutory rate $ 2,976,000 $ 2,000,278 $ 3,438,051
Increase (reduction) in taxes resulting from:
Utilization of Federal loss carryforwards -- -- (1,248,000)
Reduction in valuation allowance for loss
carryforwards -- -- (434,000)
Inputed interest on loans 56,000 (4,000) 153,000
Nondeductible expenses 989,000 391,000 207,000
Canadian subsidiary (1,147,000) 80,000 6,000
Litigation settlement -- -- (45,000)
Intangibles (102,000) 49,000 --
Valuation allowances on other temporary
differences -- (658,000) (522,000)
State and local taxes, net of federal tax
benefit and state loss carryforwards 1,034,000 338,729 736,236
Alternative minimum tax -- 20,000 602,000
Other 94,000 158,696 42,957
----------- ----------- -----------
$ 3,900,000 $ 2,375,703 $ 2,936,244
=========== =========== ===========
</TABLE>
47
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of the net current deferred tax asset and long-term deferred tax
liability, at February 28, 1999 and 1998, are as follows:
<TABLE>
<CAPTION>
CURRENT DEFERRED TAX ASSET 1999 1998
------------ ------------
<S> <C> <C>
Loss carryforwards $ 5,716,000 $ 1,565,000
Credit carryovers 539,000 694,000
Accrued expenses 579,000 247,000
Other 2,000 --
------------ ------------
6,836,000 2,506,000
LESS: valuation allowance -- (903,000)
------------ ------------
Total current deferred tax asset 6,836,000 1,603,000
------------ ------------
CURRENT DEFERRED TAX LIABILITY
Partnership items -- (419,000)
Other -- 54,000
------------ ------------
Total current deferred tax liability -- (365,000)
------------ ------------
Net current deferred tax asset 6,836,000 1,238,000
------------ ------------
LONG-TERM DEFERRED TAX LIABILITY
Long-term note receivable -WCTP (8,491,100) (8,491,100)
Partnership items (488,000) --
Depreciation and amortization (2,524,000) --
------------ ------------
Total long-term deferred tax liability (11,503,100) (8,491,100)
------------ ------------
Net deferred tax liability ($ 4,667,100) ($ 7,253,100)
============ ============
</TABLE>
The $903,000 reduction in the valuation allowance was a result of the
liquidation of York Research Canada, Inc.
The deferred tax asset relating to net operating loss carryforwards for
February 28, 1999 and 1998 include tax benefits of $46,000 and $287,000,
respectively, for stock options and warrants. The $46,000 tax benefit for stock
options and warrants in the fiscal 1999 deferred tax asset was allocated
directly to additional paid-in capital. The $287,000 tax benefit for stock
options and warrant in the 1998 deferred tax asset was allocated to additional
paid-in capital in fiscal 1997.
THE COMPANY PAID INCOME TAXES FOR:
Year ended February 28, 1999 $1,547,000
Year ended February 28, 1998 $1,192,000
Year ended February 28, 1997 $ 608,000
14. LEASE OBLIGATIONS
The Company has a lease for its office space, which expires in 2003. On
July 1, 1998, the Company exercised an option to increase its space to 16,700
square feet.
The Company has entered into land leases (the "Big Spring Project
Leases") with three land owners who own the land on which the Big Spring
facility was constructed and is being operated. Each of the Big Spring Project
Leases has an initial term of 15 years, commencing on the Big Spring Commercial
Operations date, as defined in the leases, and may be extended for two
additional periods of five years each.
48
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company has also entered into a separate Infrastructure Agreement
with one of the land owners which provides for additional rights beyond those
conveyed pursuant to the lease (the "Infrastructure Agreement"). The term of the
Infrastructure Agreement is for twenty-five years, commencing with the
Commercial Operations date, as defined in the agreement.
All rental payments on the leases are calculated as the greater of the
leases' minimum payment or a percentage of the gross revenues derived from the
wind turbines.
In June 1998, InnCOGEN entered into a lease to sublease the land on
which the Trinidad Project is being built. The sublease has an original term of
32 years. The rent is $.40 per square meter per year for the first five years
and $.50 per square meter per year for the second five years. Total square
meters leased is approximately 33,000. Thereafter, the rent is to be adjusted
in five-year intervals based on the consumer price index. However, the rent
cannot be less than the rent for the preceding five-year period or increase by
more than 10%.
In addition, InnCOGEN has entered into a one-year lease agreement for
space expiring in February 1999. The lease contains a provision for InnCOGEN to
renew the lease for an additional year. The lease requires monthly payments of
$4,200.
Total rent expense for operating leases was approximately $776,000 in
Fiscal 1999, $513,000 in Fiscal 1998, and $505,000 in Fiscal 1997.
Future minimum annual rental payments for operating leases having terms
of more than one year at February 28, 1999, are as follows:
<TABLE>
<CAPTION>
OPERATING LEASES
----------------
<S> <C>
2000 $855,000
2001 846,000
2002 844,000
2003 833,000
2004 697,000
Thereafter 2,943,000
---------
Total minimum lease payments $7,018,000
==========
</TABLE>
49
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. RELATED PARTY TRANSACTIONS
In Fiscal 1999, 1998 and 1997, the Company paid Mr. Weinstein $24,000
per year for directors fees, and in each of Fiscal 1999, 1998, and 1997, granted
warrants to purchase 20,000 shares per year of the Company's common stock at
$3.31, $7.31 and $5.44 per share, respectively. During Fiscal 1999 and 1998, the
Company paid Mr. Sommer $24,000 and $10,000, respectively, for directors fees,
and granted warrants to purchase 20,000 shares of the Company's common stock in
each of Fiscal 1999 and 1998 at $3.31 and $7.31 per share, respectively. During
Fiscal 1999, the Company paid $6,000 and $4,000, respectively, to Mr. Schultz
and Mr. Berman, and granted each of them warrants to purchase 20,000 shares of
the Company's common stock at $3.81 and $3.56 per share, respectively.
Mr. Beningson, the Chairman and Chief Executive Officer of the Company,
is President and a major stockholder of RRR'S, which is a 25% general partner of
WCTP, limited partner of RVA, and a 10% general partner of YCP. In Fiscal 1999,
1998 and 1997, RVA was allocated approximately $547,000, $568,000 and $322,000,
respectively, of the interest income on the YCP Note (see Note 5). In Fiscal
1993, RVA received an advance distribution of $2,000,000 from B-41LP, which was
charged against capital, concurrent with the allocation of income during Fiscal
1998.
As discussed in Note 5, WCTP contracted with the Company to procure,
construct, design and place in operation a cogeneration facility. The Company's
Chairman and the Company's Chief Financial Officer are shareholders of the
general partner of WCTP, which receives a general partners fee of 1% of WCTP
revenues and an administrative services payment of 4% of WCTP revenues. In
Fiscal 1999, 1998 and 1997, the general partner of WCTP received from WCTP
approximately $490,600, $529,000 and $480,500, respectively, for general partner
and administrative fees. The Company's Chief Financial Officer received an
aggregate of $85,500, $72,000 and $72,000 in Fiscal 1999, 1998 and 1997
respectively, from RRR'S and WCTP. The limited partners of WCTP are not related
parties to the Company. The general partner may have the potential for
substantial future distributions from WCTP but not until all senior debt has
been paid.
In the year ended February 28, 1997, the Company recorded and
received $11,000,000 of fees for services rendered through February 28, 1997
to WCTP and RVA. This amount was included in power project service revenues.
These fees were recorded pursuant to a services agreement between WCTP, RVA,
CTI and York. The services included ongoing negotiations of consolidation
agreements with Con Edison and Edison Mission Energy, aiding in resolving
various contract issues concerning WCTP's and RVA's power purchase agreements
with Con Edison, and various issues related to the progress of the Brooklyn
Navy Yard facility.
Mr. Beningson was previously the sole shareholder of NAEC. The
Company had an agreement with NAEC which provided for the Company to be
reimbursed for all costs associated with its activities related to NAEC and
the Company received a fee mutually agreed upon based on level of activity.
In Fiscal 1997, prior to acquisition of 85% of the shares of NAEC the Company
recognized approximately $924,000 as reimbursement of its costs.
At February 28, 1998 Mr. Beningson owed the Company $5,971,500 related
to the exercise of warrants and zero on February 28, 1999. On May 31, 1998 the
Chairman paid $275,000 of the long-term note he owed to the Company. Also on May
31, 1998, an agreement was reached to facilitate and maximize the Bond
Financing. The agreement was between the Company, YCP and the minority interests
in YCP and B-41LP. Pursuant to this agreement, the minority interests have
agreed to assign and subordinate their interests in various cash flows from the
Brooklyn Navy Yard and Warbasse facilities to the bondholders.
50
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In addition, the minority interests in B-41LP have agreed as of January
1, 1998 to forego completely their 25.3% interest in the royalty to be received
from the BNY facility. This royalty will continue through December 31, 2001 at a
projected total amount of approximately $24 million, which is approximately $6
million per year.
In exchange, the Company transferred the balance of the note due from
the Chairman of $5,696,500 to a minority interest. This transfer resulted in a
deferred charge on the Company's balance sheet. The deferred charge will be
amortized partially over the life of the Bond Financing, and the balance over
the remaining term of the BNY royalty agreement. Amortization through February
28, 1999 was approximately $651,000.
In February, 1999, the Company formed West Texas Renewables Limited
Partnership, a partnership in which the Company is a 1% general partner, and
Primesouth, Inc. is a 99% limited partner. The purpose of this partnership is to
build a 6.6 MW wind energy facility, which will be funded by the capital
contribution of Primesouth, Inc.
16. DISCONTINUED OPERATIONS
During the quarter ended August 31, 1998, unprecedented turmoil in the
electric marketing business was caused in part by widely reported failures of
certain suppliers to deliver contracted power to a multitude of utilities and
marketers, including York's subsidiary, NAEC. NAEC and many others were required
to immediately meet existing fixed price commitments. The resulting turmoil
caused prices to immediately increase from normal prices in the range of $30 per
megawatt hour to as much as $7,000 per megawatt hour.
Repercussions from the suppliers' failures caused continuing
instability throughout the summer, as market participants found themselves with
unbalanced portfolios and a shortage of available sources. NAEC met many of its
commitments at substantially increased cost.
As a result, in August 1998, York determined that NAEC should
discontinue the electric marketing business due to the volatility, lack of
liquidity and unacceptable risk parameters. NAEC will continue, however, to meet
existing contract obligations, which extend to December 1999, to its electric
marketing customers and is taking all actions necessary to reduce or eliminate
forward exposure. Operations will cease when all commitments have been met. NAEC
is unable to quantify at this time the impact of liquidating the balance of its
existing portfolio.
The electric marketing operations of NAEC are reflected as discontinued
operations for all periods presented. The operating results of the discontinued
operations are summarized as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 28,
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Revenues $ 242,903,270 $ 137,847,253 $ 19,390,693
------------- ------------- -------------
Income (loss) before tax benefit (17,527,807) (1,405,206) 481,917
------------- ------------- -------------
Tax provision (benefit) (6,686,000) (567,703) 139,756
------------- ------------- -------------
Net income (loss) ($ 10,841,807) ($ 837,503) $ 342,161
------------- ------------- -------------
</TABLE>
51
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Net assets and net liabilities of discontinued operations consist
mainly of trade accounts receivable and trade accounts payable. The losses for
the year ended February 28, 1999 include a one-time charge of approximately $1.3
million related to settlement of a disputed receivable.
The line of credit (See Note 10) was utilized in Fiscal 1999 to solely
finance losses incurred by the discontinued operations. Accordingly interest
expense of approximately $1 million has been allocated to discontinued
operations in Fiscal 1999.
At February 28, 1999, included in net assets from discontinued
operations is a net amount receivable of approximately $3.6 million. NAEC is
suing the debtor to recover the amounts receivable, and NAEC is being
countersued by the debtor for matters relating to the obligation to deliver
power. The Company believes the amounts are fully recoverable, and no additional
amounts are expected to be paid under the countersuit.
17. SEGMENT INFORMATION
The Company adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" during Fiscal 1999.
The Company has two reportable segments: Greenpower and Energy
Marketing.
The Greenpower segment conducts business by developing, constructing
and operating cogeneration and wind energy facilities. The Company operates two
cogeneration facilities in New York City, and owns and operates a wind energy
facility in Big Spring, Texas, which began to generate revenues in Fiscal 1999.
The customers for these projects are major utilities.
The Energy Marketing segment is engaged in the marketing (purchase and
sale) of natural gas in wholesale and retail markets. The wholesale group's
customers are utilities, producers, and marketing companies, who buy and sell
natural gas daily in order to meet fluctuating market obligations. This segment
does business over approximately 12-15 market centers mainly in the Northeast
United States, but also at locations in the Mid-Atlantic and Gulf of Mexico
regions. The retail group markets to industrial and commercial customers in
Western and Central New York.
Intersegment revenues are recorded at cost.
Assets in foreign countries at February 28, 1999 were approximately
$68.7 million, and are located in the Republic of Trinidad and Tobago.
Segment information for continuing operations for the years ended
February 28, 1999, 1998 and 1997 is as follows:
52
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED FEBRUARY 28,
(IN THOUSANDS OF DOLLARS)
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
REVENUES FROM EXTERNAL CUSTOMERS:
Energy Marketing $ 966,644 $ 351,345 $ 7,180
Greenpower 6,238 13,787 19,757
--------- --------- ---------
TOTAL REVENUES $ 972,882 $ 365,132 $ 26,937
========= ========= =========
INTERSEGMENT REVENUES:
Energy Marketing $ 1,186 $ 0 $ 0
--------- --------- ---------
TOTAL INTERSEGMENT REVENUES $ 1,186 $ 0 $ 0
========= ========= =========
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES:
Energy Marketing $ 10,384 ($ 1,667) ($ 1,272)
Greenpower 4,760 11,528 16,517
General corporate expenses (6,392) (3,978) (5,133)
--------- --------- ---------
CONSOLIDATED INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES: $ 8,752 $ 5,883 $ 10,112
========= ========= =========
INTEREST INCOME:
Energy Marketing $ 346 $ 75 $ 28
Greenpower 6,510 4,512 3,495
Corporate 259 178 187
--------- --------- ---------
CONSOLIDATED INTEREST INCOME $ 7,115 $ 4,765 $ 3,710
========= ========= =========
INTEREST EXPENSE:
Energy Marketing $ 23 $ 26 $ 7
Greenpower 6,253 -- 2
Corporate 24 10 580
--------- --------- ---------
CONSOLIDATED INTEREST EXPENSE $ 6,300 $ 36 $ 589
========= ========= =========
DEPRECIATION AND AMORTIZATION:
Energy Marketing $ 137 $ 97 $ 15
Greenpower 1,170 86 87
Corporate 115 105 88
--------- --------- ---------
CONSOLIDATED DEPRECIATION AND AMORTIZATION $ 1,422 $ 288 $ 190
========= ========= =========
TOTAL ASSETS:
Energy Marketing $ 135,969 $ 52,281 $ 8,516
Greenpower 245,392 66,679 70,329
Corporate and discontinued 19,731 15,179 13,824
--------- --------- ---------
CONSOLIDATED TOTAL ASSETS $ 401,092 $ 134,139 $ 92,669
========= ========= =========
CAPITAL EXPENDITURES:
Energy Marketing $ 217 $ 154 $ 225
Greenpower 95,594 4,243 51
Corporate 320 13 94
--------- --------- ---------
CONSOLIDATED CAPITAL EXPENDITURES $ 96,131 $ 4,410 $ 370
========= ========= =========
</TABLE>
53
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of the unaudited quarterly results of
operations for Fiscal 1999 and 1998 and reflect the electric marketing
operations as discontinued (in thousands of dollars except per share
data).
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
---------------------
FISCAL 1999 MAY 31 AUGUST 31 NOVEMBER 30 FEBRUARY 28 FULL YEAR
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total revenues $ 170,023 $ 186,182 $ 233,089 $ 383,588 $ 972,882
=========== =========== =========== =========== ===========
Gross margin 2,205 3,923 1,710 6,355 14,193
=========== =========== =========== =========== ===========
Income (loss) from continuing
operations 1,150 2,076 (286) 1,912 4,852
Loss from discontinued
operations (402) (7,547) (1,249) (1,644) (10,842)
----------- ----------- ----------- ----------- -----------
Net income (loss) 748 (5,471) (1,535) 268 (5,990)
----------- ----------- ----------- ----------- -----------
Earnings (loss) per share - Basic:
Continuing operations $ 0.08 $ 0.14 ($ 0.02) $ 0.14 $ 0.34
Discontinued operations (0.03) (0.59) (0.10) (0.04) (0.76)
----------- ----------- ----------- ----------- -----------
Net $ 0.05 ($ 0.45) ($ 0.12) $ 0.10 ($ 0.42)
=========== =========== =========== =========== ===========
Earnings (loss) per share -
Diluted:
Continuing operations $ 0.07 $ 0.14 ($ 0.02) $ 0.14 $ 0.33
Discontinued operations (0.02) (0.58) (0.09) (0.04) (0.73)
----------- ----------- ----------- ----------- -----------
Net $ 0.05 ($ 0.44) ($ 0.11) $ 0.10 (0.40)
=========== =========== =========== =========== ===========
FISCAL 1998
Total revenues 31,613 56,886 109,843 166,790 365,132
=========== =========== =========== =========== ===========
Gross margin (259) 741 (344) 7,460 7,598
=========== =========== =========== =========== ===========
Income (loss) from continuing
operations (1,238) (412) 486 4,671 3,507
Loss from discontinued
operations (89) (55) (375) (318) (837)
Extraordinary gain, net 9,257 (1) 0 0 117 9,374
----------- ----------- ----------- ----------- -----------
Net income (loss) 7,930 (1) (467) 111 4,470 12,044
=========== =========== =========== =========== ===========
Earnings Per (loss) Share -
Basic:
Continuing operations ($ 0.09) ($ 0.03) $ 0.04 $ 0.33 $ 0.25
Discontinued operations 0.00 (0.01) (0.03) (0.02) (0.06)
Extraordinary gain 0.66 (1) 0.00 0.00 0.01 0.67
----------- ----------- ----------- ----------- -----------
Net $0.57 (1) ($ 0.04) $ 0.01 $ 0.32 $ 0.86
=========== =========== =========== =========== ===========
Earnings (loss) Per Share - Diluted:
Continuing operations ($ 0.08) ($ 0.03) $ 0.03 $ 0.30 $ 0.22
Discontinued operations -- -- (0.03) (0.02) (0.05)
Extraordinary gain 0.59 (1) -- -- 0.01 0.60
----------- ----------- ----------- ----------- -----------
Net $0.51 (1) ($ 0.03) $ 0.00 $ 0.29 $ 0.77
=========== =========== =========== =========== ===========
</TABLE>
(1) Adjusted to reflect the additional extraordinary gain of approximately
$3.8 million resulting from restatement of obligation to SBCC (See Note
5) as follows:
54
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT SHARE DATA)
As Previously Reported As Adjusted
---------------------- -----------
<S> <C> <C>
Extraordinary gain $5,436 $9,257
Net income $4,109 $7,930
Per share basic:
Extraordinary gain $0.39 $0.66
Net income $0.30 $0.57
Per share diluted:
Extraordinary gain $0.35 $0.59
Net income $0.27 $0.51
</TABLE>
19. SIGNIFICANT CUSTOMERS AND CONTRACTS AND COMMITMENTS
Each of the power projects is dependent on one customer, typically a
utility, for substantially all of its revenues.
Energy sales were derived from numerous retail customers and
utilities. Two customers accounted for approximately 29% and 13%,
respectively, of total natural gas revenues during Fiscal 1999 and no
customer accounted for more than 10% of total revenues during Fiscal 1998.
Two utilities accounted for approximately 20% and 15%, respectively, of the
total revenues in Fiscal 1997.
The Company uses put and call options, and futures contracts
("Instruments") in various combinations, to hedge physical positions in natural
gas. All of these Instruments are settled in the underlying commodity. The
ultimate impact of these Instruments will be determined by the prevailing
applicable market price.
York, on behalf of New World Power Texas Renewable Energy Limited
Partnership ("NWP"), entered into a Wind Turbine Equipment Sales and
Installation Contract, dated as of March 31, 1998 (the "Vestas Agreement"), with
Vestas-American Wind Technology, Inc., a California corporation ("Vestas"). Such
agreement was assigned to NWP in August 1998. The Vestas Agreement effectively
subcontracts turbine supply, delivery, erection and commissioning of the Big
Spring facility to Vestas. The total contract amounts to approximately $31
million, which is to be paid in both U.S. dollars and Danish kroner. At
February 28, 1999, approximately $14 million has been paid on the contract.
In connection with the construction of an interconnect facility, NWP
has entered into an agreement with TU Electric for approximately $860,000. An
initial payment of $430,000 was due and paid in July 1998. This agreement has
been guaranteed by York.
York, on behalf of NWP, has entered into several agreements for the
turnkey design and construction of a wind farm substation facility and the
construction of the infrastructure of the Big Spring facility. Such agreements
were assigned to NWP in August 1998. These contracts aggregate $4.5 million and
will be paid based on certain milestones, as defined in the applicable
agreement. At February 28, 1999, approximately $3.8 million has been paid on
these contracts.
55
<PAGE>
YORK RESEARCH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company has entered into an employment agreement with the Chief
Executive Officer, which expires May 2004. Such agreement requires a minimum
annual base salary and sets bonuses tied to pre-tax operating income.
56
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
YORK RESEARCH CORPORATION
- -------------------------
(Registrant)
/s/ ROBERT M. BENINGSON /s/ MICHAEL TRACHTENBERG
- ---------------------------------- ------------------------------
Robert M. Beningson Michael Trachtenberg
President, Chief Executive Officer Executive Vice President;
Chairman of the Board Chief Financial and Accounting
May 26, 1999 Officer; Secretary
May 26, 1999
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant in the capacities and on the dates indicated.
/s/ ROBERT M. BENINGSON /s/ HARVEY W. SCHULTZ
- ---------------------------------- ------------------------------
Robert M. Beningson Harvey W. Schultz
Director Director
May 26, 1999 May 26, 1999
/s/ STANLEY WEINSTEIN /s/ FREDERIC S. BERMAN
- ---------------------------------- ------------------------------
Stanley Weinstein Frederic S. Berman
Director Director
May 26, 1999 May 26, 1999
/s/ HOWARD SOMMER
- ---------------------------------- ------------------------------
Howard Sommer
Director
May 26, 1999
57
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Exhibit 10(qq)
U.S. PROJECT LOAN AGREEMENT
among
BROOKLYN NAVY YARD POWER LLC
WARBASSE POWER I LLC
WARBASSE POWER II LLC
and
NEW WORLD POWER TEXAS RENEWABLE
ENERGY LIMITED PARTNERSHIP
as borrowers
and
YORK POWER FUNDING (CAYMAN) LIMITED,
as lender
Dated as of August 4, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 1
DEFINITIONS; CONSTRUCTION
Section 1.1 DEFINITIONS............................................................................2
Section 1.2 PRINCIPLES OF CONSTRUCTION.............................................................2
ARTICLE 2
DESCRIPTION OF THE U.S. PROJECT LOAN
Section 2.1 ACKNOWLEDGMENTS OF U.S. GUARANTORS; U.S. PROJECT LOAN..................................2
Section 2.2 TERM OF THIS AGREEMENT.................................................................2
Section 2.3 INTEREST...............................................................................2
Section 2.4 PRINCIPAL..............................................................................3
Section 2.5 OBLIGATIONS OF THE U.S. GUARANTORS HEREUNDER UNCONDITIONAL.............................3
Section 2.6 GENERAL TERMS OF PAYMENT...............................................................3
Section 2.7 SECURITY...............................................................................4
Section 2.8 JOINT AND SEVERAL OBLIGATIONS..........................................................4
Section 2.9 PLEDGE OF U.S. PROJECT NOTE............................................................4
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 ORGANIZATION, POWER AND STATUS OF THE U.S. GUARANTORS..................................4
Section 3.2 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND DELIVERY..................................5
Section 3.3 NO CONFLICT............................................................................6
Section 3.4 COMPLIANCE WITH APPLICABLE LAW.........................................................6
Section 3.5 LITIGATION.............................................................................6
Section 3.6 ENVIRONMENTAL MATTERS..................................................................6
Section 3.7 EMPLOYEE BENEFIT PLANS.................................................................6
Section 3.8 BUSINESS OF EACH U.S. GUARANTOR........................................................7
Section 3.9 VALID TITLE............................................................................7
Section 3.10 SECURITY INTERESTS....................................................................7
Section 3.11 UTILITY REGULATION....................................................................8
Section 3.12 INVESTMENT COMPANY ACT................................................................8
Section 3.13 NO DEFAULTS...........................................................................8
Section 3.14 GOVERNMENTAL APPROVALS................................................................8
Section 3.15 MARGIN STOCK..........................................................................9
Section 3.16 TAXES.................................................................................9
Section 3.17 OWNERSHIP OF THE U.S. GUARANTORS......................................................9
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Section 3.18 DISCLOSURE............................................................................9
Section 3.19 REPRESENTATIONS AND WARRANTIES........................................................9
Section 3.20 USE OF PROCEEDS.......................................................................9
Section 3.21 U.S. PROJECT DOCUMENTS...............................................................10
Section 3.22 BIG SPRING PROJECT...................................................................10
ARTICLE 4
COVENANTS AND AGREEMENTS OF THE U.S. GUARANTORS
Section 4.1 PAYMENT OF PRINCIPAL OF AND INTEREST ON THE U.S. PROJECT LOAN.........................10
Section 4.2 REPORTING REQUIREMENTS................................................................10
Section 4.3 MAINTENANCE OF EXISTENCE..............................................................12
Section 4.4 COMPLIANCE WITH LAWS..................................................................12
Section 4.5 GOVERNMENTAL APPROVALS; TITLE.........................................................12
Section 4.6 EXERCISE OF RIGHTS AND PERFORMANCE UNDER TRANSACTION
DOCUMENTS........................................................................13
Section 4.7 ADDITIONAL DOCUMENTS; FILINGS AND RECORDINGS..........................................13
Section 4.8 PAYMENT OF TAXES AND CLAIMS...........................................................13
Section 4.9 BOOKS AND RECORDS.....................................................................14
Section 4.10 [Intentionally Omitted]..............................................................14
Section 4.11 AUDITORS.............................................................................14
Section 4.12 U.S. REVENUE ACCOUNT.................................................................14
Section 4.13 PROJECT IMPLEMENTATION...............................................................14
Section 4.14 INSURANCE............................................................................15
Section 4.15 PERMITTED INDEBTEDNESS...............................................................16
Section 4.16 PERMITTED LIENS......................................................................18
Section 4.17 CONTINGENT LIABILITIES...............................................................19
Section 4.18 NATURE OF BUSINESS...................................................................19
Section 4.19 PROHIBITION ON FUNDAMENTAL CHANGES...................................................19
Section 4.20 SALE OF ASSETS.......................................................................19
Section 4.21 SUBSIDIARIES; ADVANCES, INVESTMENTS AND LOANS........................................19
Section 4.22 TRANSACTIONS WITH AFFILIATES.........................................................19
Section 4.23 RESTRICTED PAYMENTS..................................................................19
Section 4.24 AMENDMENTS TO U.S. PROJECT DOCUMENTS.................................................19
Section 4.25 ASSIGNMENT OF OBLIGATIONS; ADDITIONAL AGREEMENTS.....................................20
Section 4.26 MODIFICATIONS OF FORMATION DOCUMENTS.................................................21
Section 4.27 ABANDONMENT..........................................................................21
Section 4.28 SUBSTANTIAL COMPLETION...............................................................21
Section 4.29 TAXATION.............................................................................21
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 5
DEFAULTS AND REMEDIES
Section 5.1 EVENTS OF DEFAULT DEFINED.............................................................21
Section 5.2 REMEDIES UPON A U.S. PROJECT LOAN EVENT OF DEFAULT....................................25
Section 5.3 CONTINUING LIEN.......................................................................26
Section 5.4 DEFENSE OF ACTIONS....................................................................26
ARTICLE 6
GENERAL TERMS AND CONDITIONS
Section 6.1 NOTICES...............................................................................26
Section 6.2 AMENDMENTS AND WAIVERS................................................................27
Section 6.3 NO WAIVER; REMEDIES CUMULATIVE........................................................27
Section 6.4 SEVERABILITY..........................................................................27
Section 6.5 THIRD PARTY BENEFICIARIES.............................................................27
Section 6.6 U.S. GUARANTORS IN CONTROL............................................................28
Section 6.7 NUMBER AND GENDER.....................................................................28
Section 6.8 SECTION HEADINGS......................................................................28
Section 6.9 GOVERNING LAW; SUBMISSION TO JURISDICTION.............................................28
Section 6.10 LIMITATION OF LIABILITY..............................................................29
Section 6.11 COUNTERPARTS.........................................................................29
Section 6.12 SUCCESSORS AND ASSIGNS...............................................................29
Section 6.13 MAXIMUM INTEREST RATE................................................................29
Section 6.14 ENGLISH LANGUAGE.....................................................................30
Section 6.15 ENTIRE AGREEMENT.....................................................................30
Section 6.16 SURVIVAL.............................................................................30
</TABLE>
Schedule I: Amortization Schedule
Schedule 3.5: Litigation
Schedule 4.17: Permitted Liens
Exhibit A: Form of U.S. Project Note
iii
<PAGE>
U.S. PROJECT LOAN AGREEMENT
This U.S. PROJECT LOAN AGREEMENT, dated as of August 4, 1998 (this
"AGREEMENT") is by and among BROOKLYN NAVY YARD POWER LLC, a Delaware liability
company (the "BNY GUARANTOR"), WARBASSE POWER I LLC, a Delaware limited
liability company ("WARBASSE I"), WARBASSE POWER II LLC, a Delaware limited
liability company ("WARBASSE II", and together with Warbasse I, the "WARBASSE
GUARANTOR"), NEW WORLD POWER TEXAS RENEWABLE ENERGY LIMITED PARTNERSHIP, a
Delaware limited partnership (the "BIG SPRING GUARANTOR" and, together with the
BNY Guarantor and the Warbasse Guarantor the "U.S. GUARANTORS"), as borrowers,
and YORK POWER FUNDING (CAYMAN) LIMITED, a limited liability company
incorporated and existing under the laws of the Cayman Islands ("FUNDING
COMPANY"), as lender.
RECITALS
WHEREAS, Funding Company is a limited liability company established for
the sole purpose of issuing the Securities in its individual capacity as
principal and as agent acting on behalf of the U.S. Guarantors pursuant to the
Indenture and to make loans pursuant to this Agreement;
WHEREAS, Funding Company has simultaneously with the execution and
delivery of this Agreement issued and sold the Initial Securities pursuant to
the Indenture;
WHEREAS, pursuant to this Agreement, Funding Company intends to use a
portion of the proceeds from the issuance and sale of the Initial Securities to
make the U.S. Project Loan to the U.S. Guarantors in the aggregate principal
amount of $50,000,000 the proceeds of which will be used, among other things, to
finance costs associated with the construction, operation and maintenance of the
Big Spring Project; and
WHEREAS, payments of the principal of, premium (if any), interest on
and any other amounts due with respect to the Initial Securities will be
serviced by repayment of the U.S. Project Loan and guaranteed (subject to
certain limitations) by the U.S. Guarantors.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto formally covenant, agree and
bind themselves as follows:
<PAGE>
ARTICLE 1
DEFINITIONS; CONSTRUCTION
Section 1.1 DEFINITIONS. Except as otherwise expressly provided herein
or unless the context otherwise clearly requires, capitalized terms used in this
Agreement shall have the meanings ascribed thereto in APPENDIX A of the
Indenture and APPENDIX A is incorporated by reference herein as if set forth in
full herein.
Section 1.2 PRINCIPLES OF CONSTRUCTION. Except as otherwise expressly
provided herein or unless the context otherwise clearly requires, the principles
of construction set forth in SECTION 1.1 (Definitions; Construction) of the
Indenture shall apply to this Agreement.
ARTICLE 2
DESCRIPTION OF THE U.S. PROJECT LOAN
Section 2.1 ACKNOWLEDGMENTS OF U.S. GUARANTORS; U.S. PROJECT LOAN. The
U.S. Guarantors and Funding Company hereby acknowledge and agree that:
(a) pursuant to this Agreement, Funding Company does hereby lend to the
U.S. Guarantors and the U.S. Guarantors do hereby borrow from Funding Company
funds in the aggregate principal amount of Fifty Million Dollars ($50,000,000)
(the "U.S. PROJECT LOAN") to be evidenced by a promissory note or notes
substantially in the form of EXHIBIT A issued by the U.S. Guarantors in favor of
Funding Company (each such note, including any note issued pursuant to clause
(b) of this SECTION 2.1, a "U.S. PROJECT NOTE"); and
(b) if proceeds from the issuance and sale of any Additional Securities
the proceeds of which must be loaned to the U.S. Guarantors by Funding Company,
the outstanding principal balance of the U.S. Project Loan shall be increased by
the amount of such proceeds and the U.S. Project Loan shall include the loan to
the U.S. Guarantors of such proceeds, as evidenced by a promissory note or notes
substantially in the form of EXHIBIT A to be issued by the U.S. Guarantors in
favor of Funding Company.
Section 2.2 TERM OF THIS AGREEMENT. This Agreement shall remain in full
force and effect from the date hereof until the payment in full of all amounts
due under this Agreement.
Section 2.3 INTEREST. Interest hereunder shall be paid in arrears on
each April 30 and October 30, commencing October 30, 1998, until all principal
hereunder is paid in full. Interest hereunder shall be computed (a) on the basis
of a three hundred sixty (360) day year, consisting of twelve (12) thirty (30)
day months, and (b) at the applicable rates PER ANNUM specified on SCHEDULE I.
2
<PAGE>
Section 2.4 PRINCIPAL.
(a) REGULAR REPAYMENT. (i) the U.S. Guarantors shall repay the U.S.
Project Loan in installments to Funding Company on the dates, at the times and
in the amounts set forth on SCHEDULE I (as the same may be modified (a) pursuant
to SECTION 7.3 (Amendment of Project Loan Agreements or Project Notes) of the
Indenture and (b) to reflect any prepayments made pursuant to clause (b) of this
SECTION 2.4).
(ii) If proceeds from the issuance of any Additional
Securities are loaned to any of the U.S. Guarantors by Funding Company,
principal payments on the additional promissory note or notes issued by the U.S.
Guarantors pursuant to SECTION 2.1(b) (Acknowledgments of U.S. Guarantors; U.S.
Project Loan) shall be payable in scheduled installments which correspond to the
repayment of such Additional Securities.
(b) PREPAYMENT. The U.S. Guarantors shall prepay the U.S. Project Loan
pursuant to SECTION 3.4 (Prepayment of Project Loans) of the Indenture in such
amounts and at such times as may be appropriate to permit Funding Company to
redeem the Securities pursuant to SECTION 3.1 (Redemption at the Option of
Funding Company or the Holders) or SECTION 3.2 (Mandatory Redemption) of the
Indenture. Following such prepayment, the U.S. Guarantors shall furnish the Bond
Trustee, on behalf of Funding Company, an Officer's Certificate setting forth
the amortization schedule for the remaining Securities after giving effect to
such prepayment and corresponding redemption under the Indenture.
(c) The U.S. Guarantors shall prepay the U.S. Project Loan in such
amounts and at such times as may be appropriate to permit Funding Company to
defease the Securities pursuant to SECTION 8.2 (Defeasance) of the Indenture.
Section 2.5 OBLIGATIONS OF THE U.S. GUARANTORS HEREUNDER UNCONDITIONAL.
The obligation of the U.S. Guarantors to make the payments required in SECTION
2.3 (Interest), SECTION 2.4 (Principal) and SECTION 4.29 (Taxation) shall be
absolute and unconditional and the U.S. Guarantors shall not discontinue such
payments for any reason, including, without limitation, any acts or
circumstances that may constitute failure of consideration, eviction or
constructive eviction from any U.S. Project, including commercial frustration of
purpose, or change in Applicable Law. Any U.S. Guarantor may, however, at its
own cost and expense and in its own name or, with the consent of Funding Company
and subject to the provision of certain indemnities as Funding Company may
require, in the name of Funding Company, prosecute or defend any action or
proceeding or take any other action involving third Persons which such U.S.
Guarantor deems reasonably necessary in order to secure or protect its right of
possession, occupancy and use of the applicable U.S. Project.
Section 2.6 GENERAL TERMS OF PAYMENT. (a) All sums payable to Funding
Company hereunder shall be deemed paid to the extent the Collateral Agent shall
apply amounts held by the Depositary Bank to the payment of the principal of,
interest on or any other amounts
3
<PAGE>
due in respect of the U.S. Project Loan and the principal of, premium (if any),
interest on or any other amounts due in respect of the Securities, each in
accordance with the U.S. Depositary Agreement.
(b) Whenever any payment hereunder shall be due, or any calculation
shall be made, on a day which is not a Business Day, the date for payment or
calculation, as the case may be, shall be extended to the next Business Day, and
any interest on any payment shall be payable for such extended time at the rate
set forth therefor.
(c) If no due date is specified for the payment of any amount payable
by the U.S. Guarantors hereunder, such amount shall be due and payable not later
than ten (10) days after receipt by the U.S. Guarantors of a written demand from
Funding Company for payment thereof.
Section 2.7 SECURITY. The obligations of the U.S. Guarantors hereunder
shall be secured as set forth herein and under the Security Documents.
Section 2.8 JOINT AND SEVERAL OBLIGATIONS. The obligations of the U.S.
Guarantors hereunder shall be joint and several with respect to each U.S.
Guarantor.
Section 2.9 PLEDGE OF U.S. PROJECT NOTE. Funding Company shall pledge
the U.S. Project Note to the Collateral Agent, acting on behalf of the Secured
Parties pursuant to the U.S. Project Note Pledge Agreement. The U.S. Guarantors
hereby acknowledge and consent to the granting of such pledge and this SECTION
2.9 shall constitute notice thereof given as of the date of this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
The U.S. Guarantors make the following representations and warranties
to Funding Company, which representations and warranties shall survive the
execution and delivery of this Agreement:
Section 3.1 ORGANIZATION, POWER AND STATUS OF THE U.S. GUARANTORS. (a)
The Big Spring Guarantor (i) is a limited partnership duly organized and validly
existing under the laws of the State of Delaware, (ii) is duly qualified to do
business as a foreign limited partnership in each jurisdiction in which the
character of the properties owned or leased by it or in which the transaction of
its business as presently conducted or as proposed to be conducted makes such
qualification necessary, except where the failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect and (iii) has all
requisite partnership power and authority to own the property and assets owned
by it and to lease the
4
<PAGE>
properties leased by it and to carry on its business as now being conducted and
as proposed to be conducted.
(b) The BNY Guarantor (i) is a limited liability company duly organized
and validly existing under the laws of the State of Delaware, (ii) is duly
qualified to do business as a foreign limited liability company in each
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business as presently conducted or as proposed
to be conducted makes such qualification necessary, except where the failure be
so qualified could not reasonably be expected to result in a Material Adverse
Effect and (iii) has all requisite power and authority to own the properties and
assets owned by it and to lease the properties leased by it and to carry on its
business as now being conducted and as proposed to be conducted.
(c) Each Warbasse Guarantor (i) is a limited liability company duly
organized and validly existing under the laws of the State of Delaware, (ii) is
duly qualified to do business as a foreign limited liability company in each
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business as presently conducted or as proposed
to be conducted makes such qualification necessary, except where the failure to
be so qualified could not reasonably be expected to result in Material Adverse
Effect and (iii) has all requisite power and authority to own the property and
assets owned by it and to lease the properties leased by it and to carry on its
business as now being conducted and as proposed to be conducted.
Section 3.2 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND DELIVERY.
(a) Each U.S. Guarantor has all necessary power and authority to execute,
deliver and perform its obliga tions under this Agreement, the U.S. Project
Note and each other Transaction Document to which any U.S. Guarantor is a
party.
(b) Each U.S. Guarantor has taken all necessary and proper action to
authorize the execution, delivery and performance by it of this Agreement, the
U.S. Project Note and each other Transaction Document to which any U.S.
Guarantor is a party. The execution, delivery and performance of this Agreement,
the U.S. Project Note and each other Transaction Document to which any U.S.
Guarantor is a party does not require the approval or consent of any holder or
trustee of any Indebtedness or other obligations of any U.S. Guarantor which has
not been obtained.
(c) This Agreement, the U.S. Project Note and each other Transaction
Document to which any U.S. Guarantor is a party have been duly executed and
delivered by such U.S. Guarantor and constitute legal, valid and binding
obligations of such U.S. Guarantor, enforceable against such U.S. Guarantor in
accordance with the terms hereof and thereof, except as the enforceability
thereof may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
5
<PAGE>
rights generally and (ii) general equitable principles, regardless of whether
the issue of enforceability is considered in a proceeding in equity or at law.
Section 3.3 NO CONFLICT. Neither the execution, delivery and
performance of this Agreement, the U.S. Project Note or any other Transaction
Document to which any U.S. Guarantor is a party nor the consummation of any of
the transactions contemplated hereby or thereby (a) contravenes or violates any
provision of any Applicable Law to which any U.S. Guarantor or any of its assets
is subject, (b) conflicts with or violates any provision of the Big Spring
Partnership Agreement or any provision of any formation document of any other
U.S. Guarantor or (c) conflicts with or violates, will result in a breach of any
of the terms, covenants, conditions or provisions of, constitutes a default
under, or results in the accelera tion of Indebtedness evidenced by, any
agreement or instrument to which any U.S. Guarantor is a party or by which it or
any of its properties or assets is bound or to which it may be subject, except,
in the case of clauses (a) or (c) immediately above, any such conflict,
violation, breach, default or acceleration which could not reasonably be
expected to result in a Material Adverse Effect, or (d) results in the creation
or imposition of (or the obligation to create or impose) any Lien (other than
U.S. Permitted Project Liens) upon any of the properties or assets of any U.S.
Guarantor.
Section 3.4 COMPLIANCE WITH APPLICABLE LAW. Each U.S. Guarantor has
been and is currently in compliance with all Applicable Laws to which it or any
of its assets is subject, except where failure to comply could not reasonably be
expected to result in a Material Adverse Effect.
Section 3.5 LITIGATION. There are no claims, actions, suits,
investigations or proceed ings at law or in equity (including any Environmental
Claims) or by or before any arbitrator or Governmental Authority now pending
against any of the U.S. Guarantor or, to the best knowledge of any U.S.
Guarantor, threatened against any U.S. Guarantor or any properties, assets or
rights of any U.S. Guarantor that could reasonably be expected to result in a
Material Adverse Effect other than the litigation with respect to the BNY
Guarantor described on SCHEDULE 3.5.
Section 3.6 ENVIRONMENTAL MATTERS. Each U.S. Guarantor has been and is
currently in compliance with all applicable Environmental Laws except where the
failure to comply could not reasonably be expected to have a Material Adverse
Effect. To the best knowledge of each U.S. Guarantor, each U.S. Project is in
compliance with all applicable Environmental Laws and there are no existing
facts, circumstances or conditions which could under any existing applicable
Environmental Law, individually or in the aggregate with all other circumstances
and conditions, reasonably be expected to result in a Material Adverse Effect.
Section 3.7 EMPLOYEE BENEFIT PLANS. No U.S. Guarantor sponsors,
maintains, administers, contributes to, participates in or has any obligation to
contribute to or any liability under, any Plan, nor since the date which is six
(6) years immediately preceding the
6
<PAGE>
Closing Date has any U.S. Guarantor established, sponsored, maintained,
administered, contributed to, participated in or had any obligation to
contribute to or any liability under, any Plan. A Termination Event has not
occurred with respect to any Plan the occurrence of which has resulted in or to
each U.S. Guarantor's best knowledge is reasonably likely to result in a
Material Adverse Effect. No U.S. Guarantor nor any ERISA Affiliate thereof has
failed to make a required contribution or payment to a Multiemployer Plan when
due, the failure of which has resulted in or to such U.S. Guarantor's best
knowledge is reasonably likely to result in a Material Adverse Effect. To the
best of any U.S. Guarantor's knowledge, no accumu lated funding deficiency as
defined in Section 412 of the Code has been incurred nor has any funding waiver
from the Internal Revenue Service been received or requested with respect to any
Pension Plan, nor has any U.S. Guarantor or any ERISA Affiliate thereof failed
to make any contribution or to pay any amount due and owing as required by
Section 412 of the Code, Section 302 of ERISA or the terms of any Pension Plan,
nor has there been any event requiring disclosure under Section 4041(c)(3)(C) or
Section 4063 of ERISA with respect to any Pension Plan, the event or occurrence
of which has resulted in or to any U.S. Guarantor's best knowledge is reasonably
likely to result in a Material Adverse Effect. To any U.S. Guarantor's best
knowledge, each U.S. Guarantor and each ERISA Affiliate thereof have met their
minimum funding requirements under ERISA and the Code with respect to the Plans,
and all benefit liabilities under each Pension Plan are being funded in
accordance with applicable legal requirements and reasonable actuarial
assumptions and methods as set forth in ERISA and the Code. To any U.S.
Guarantor's best knowledge, no material proceeding, claim, lawsuit and/or
investigation exists or is threatened concerning any Pension Plan or
Multiemployer Plan the occurrence of which has resulted in or to any U.S.
Guarantor's best knowledge is reasonably likely to result in a Material Adverse
Effect. No U.S. Guarantor nor to any U.S. Guarantor's best knowledge any ERISA
Affiliate thereof has incurred any liability to the PBGC other than for
insurance premiums with respect to a Pension Plan, the payment of which is not
yet due.
Section 3.8 BUSINESS OF EACH U.S. GUARANTOR. Except as otherwise
permitted in this Agreement and the other Finance Documents, no U.S. Guarantor
is engaged in any business other than the ownership, development, construction,
start-up, operation, maintenance and financing of the applicable U.S. Project,
its rights to receive cash flows from such U.S.
Project and transactions related thereto.
Section 3.9 VALID TITLE. Each U.S. Guarantor is the legal and
beneficial owner of, with good, legal and valid title to, all its properties and
assets free and clear of all Liens other than U.S. Permitted Project Liens.
Section 3.10 SECURITY INTERESTS. (a) The Security Documents to which
each U.S. Guarantor is a party, upon execution and delivery by the parties
thereto, will create valid, and when financing statements in appropriate form
are filed in the recording offices specified therein, perfected, first priority
Liens, subject to Permitted Liens, in all of the Collateral in favor of the
Collateral Agent for the benefit of the Secured Parties.
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(b) No mortgage or financing statement or other instrument or
recordation executed or authorized to be filed by any U.S. Guarantor, or, to any
U.S. Guarantor's best knowledge, by any other Person covering all or any part of
the property or assets of any U.S. Guarantor (including the Collateral) is on
file in any recording office, except such as relate to U.S. Permitted Project
Liens.
Section 3.11 UTILITY REGULATION. (a) No U.S. Guarantor is subject to
regulation by any Governmental Authority under PUHCA as a "holding company," a
"public utility company" or an "affiliate" or a "subsidiary company" of a
"holding company."
(b) Each of the U.S. Projects is a Qualifying Facility.
Section 3.12 INVESTMENT COMPANY ACT. No U.S. Guarantor is, and
following the execution of the U.S. Project Note will not be, an "investment
company" or a company "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended from time to time.
Section 3.13 NO DEFAULTS. (a) No U.S. Project Loan Default or U.S.
Project Loan Event of Default has occurred and is continuing.
(b) No U.S. Guarantor is in default under any U.S. Project Document or
any other Transaction Document to which any U.S. Guarantor is a party except for
defaults which could not reasonably be expected to result in a Material Adverse
Effect.
(c) To the best knowledge of any US. Guarantor, no default exists by
any other party to any U.S. Project Document or any other contract related to
any U.S. Project and no event of force majeure exists under any U.S. Project
Document except for defaults which, in either case, could not reasonably be
expected to result in a Material Adverse Effect.
(d) All amounts available to fund Equity Cash Flows and Note Cash Flows
to the BNY Guarantor and the Warbasse Guarantor have been used for such purpose
and such payments have been in accordance with the scheduled amounts for such
purposes.
Section 3.14 GOVERNMENTAL APPROVALS. All Governmental Approvals which
are required to be obtained by, in the name of or on behalf of any U.S.
Guarantor or, to the knowledge of any U.S. Guarantor, any other party to any
Transaction Document in connec tion with (a) the issuance of the U.S. Project
Note and (b) the execution, delivery and performance by any U.S. Guarantor or
any other party to any Transaction Document of the Transaction Documents have
been duly obtained and are in full force and effect, other than, in each case,
those Governmental Approvals which the failure to so obtain could not reasonably
be expected to result in a Material Adverse Effect.
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Section 3.15 MARGIN STOCK. No U.S. Guarantor is engaged, directly or
indirectly, principally, or as one of its important activities, in the business
of extending, or arranging for the extension of, credit for the purposes of
purchasing or carrying any "margin stock" (as defined in Regulation, T, U or X
of the Board of Governors of the Federal Reserve System). No part of the
proceeds of the U.S. Project Loan will be used for "purchasing" or "carrying"
(as defined in Regulation, T, U or X of the Board of Governors of the Federal
Reserve System) any margin stock or for extending credit to others for the
purpose of purchasing or carrying any margin stock, or for any purpose which
would violate, or cause a violation of, Regulation, T, U or X of the Board of
Governors of the Federal Reserve System.
Section 3.16 TAXES. Each U.S. Guarantor has filed or caused to be filed
all Tax Returns required by Applicable Law to be filed by it, and has paid all
Taxes shown to be due and payable by it on such Tax Returns or any assessments
made against it or any of its properties and all other Taxes, fees or other
charges imposed on it by any Governmental Authority other than Taxes, fees,
assessments or other charges which are not delinquent and remain payable without
penalty or which such U.S. Guarantor is contesting in good faith and for which
such U.S. Guarantor is maintaining adequate reserves (to the extent required by
GAAP) in connection therewith.
Section 3.17 OWNERSHIP OF THE U.S. GUARANTORS. As of the date of this
Agreement, (a) Big Spring Texas Energy Management, Inc. is the sole general
partner of the Big Spring Guarantor, (b) Big Spring Holdings, Inc. is the sole
limited partner of the Big Spring Guarantor, (c) B-41 L.P. is the sole member of
the BNY Guarantor, (d) Cogeneration Technologies, Inc. the sole member of the
Warbasse I and (e) York Cogen Partners, L.P. is the sole member of Warbasse II
Guarantor.
Section 3.18 DISCLOSURE. Each of the Preliminary Offering Circular and
the Final Offering Circular as of its date did not, and the Final Offering
Circular (as the same may have been amended or supplemented) as of the Closing
Date will not, contain any untrue statement of a material fact with respect to
any U.S. Guarantor or omit to state a material fact necessary to make the
statements made therein with respect to any U.S. Guarantor, in light of the
circumstances under which they were made, not misleading.
Section 3.19 REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by any U.S. Guarantor and each of its Affiliates, and to its
knowledge, each other party in any Transaction Document are true and correct,
except to the extent such misrepresentation could not reasonably be expected to
have a Material Adverse Effect.
Section 3.20 USE OF PROCEEDS. All proceeds of the U.S. Project Loan
will be used in accordance with this Agreement and for no other use.
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Section 3.21 U.S. PROJECT DOCUMENTS. The Bond Trustee has received a
complete copy of each U.S. Project Document then in effect (including all
exhibits, schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any).
Section 3.22 BIG SPRING PROJECT. To the best of the Big Spring
Guarantor's knowl edge, the services to be performed, the materials to be
supplied and the easements, licenses and other rights granted or to be granted
to the Big Spring Guarantor pursuant to the terms of the Big Spring Project
Documents provide or will provide the Big Spring Guarantor with all rights and
property interest required to enable the Big Spring Guarantor to obtain all
services, materials or rights (including access) required for the design,
construction, start-up, operation and maintenance of the Big Spring Project,
including the Big Spring Guarantor's full and prompt performance of its
obligations, and full and timely satisfaction of all conditions precedent to the
performance by others of their obligations, under the Big Spring Project
Documents, other than those services, materials or rights that reasonably can be
expected to be obtainable in the ordinary course of business.
ARTICLE 4
COVENANTS AND AGREEMENTS OF THE U.S. GUARANTORS
Each U.S. Guarantor hereby covenants and agrees that from the date of
this Agree ment, it shall faithfully observe and fulfill, and shall cause to be
faithfully observed and fulfilled, each and all of the following covenants until
all amounts due under this Agreement, each U.S. Project Note, the Indenture and
the Securities shall have been indefeasibly paid in full:
Section 4.1 PAYMENT OF PRINCIPAL OF AND INTEREST ON THE U.S. PROJECT
LOAN. The U.S. Guarantors shall promptly pay or cause to be paid the principal
of and interest on each U.S. Project Loan according to the terms hereof.
Section 4.2 REPORTING REQUIREMENTS. Each U.S. Guarantor shall furnish
or cause to be furnished to Funding Company and, in the case of item (i), to
each of the Rating Agencies:
(a) as soon as available and in any event within sixty (60) days after
the end of the first three (3) quarterly accounting periods in each fiscal year
of each U.S. Guarantor (commencing with the quarter ending August 31, 1998) and,
with respect to item (iii) herein, the final quarter of each fiscal year,
Unaudited Financial Statements of each U.S. Guarantor, accompanied by an
Officer's Certificate of each U.S. Guarantor confirming (i) that such Unaudited
Financial Statements fairly present the financial condition and results of
operations of each U.S. Guarantor on the dates and for the periods indicated in
accordance with GAAP (other than with respect to the notes and other normally
recurring year-end adjustments), (ii) that no U.S. Project Default and no U.S.
Project Event of Default has occurred
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and is continuing, or, if such event has occurred, describing the nature thereof
and (iii) the Debt Service Coverage Ratios for the historical three (3) quarters
and the final quarter of such fiscal year together with a reconciliation of each
quarterly Debt Service Coverage Ratio to the annual Debt Service Coverage Ratio;
(b) as soon as available and in any event within one hundred twenty
(120) days after the end of each fiscal year of the U.S. Guarantors (commencing
with the fiscal year ending February 28, 1999) Annual Audited Combined Financial
Statements, accompanied by an audit opinion thereon by the Auditors, which
opinion shall state that (i) the financial statements of the U.S. Guarantor
present fairly, in all material respects, the financial position, results of
operations and cash flows of the U.S. Guarantors at the end of, and for, such
fiscal year in accordance with GAAP, (ii) nothing has come to their attention
that any U.S. Project Default or U.S. Project Event of Default, as they related
to accounting matters, has occurred and is continuing, or, if such event has
occurred, describing the nature thereof and (iii) the annual Debt Service
Coverage Ratio for such fiscal year. In addition, at such time the U.S.
Guarantors furnish the above opinions, the Annual Audited Financial Statements
of the Warbasse Project Company (commencing with the fiscal year ending December
31, 1998) shall also be furnished.
(c) promptly and in any event within five (5) days after an Authorized
Officer of any U.S. Guarantor obtains actual knowledge of any U.S. Project
Default or U.S. Project Event of Default, a written notice describing such U.S.
Project Default or U.S. Project Event of Default and any action being or
proposed to be taken with respect thereto;
(d) all other information reasonably requested by Funding Company to
enable Funding Company to satisfy its obligations under the Indenture;
(e) written notice of any event or condition that could reasonably be
expected to result in a Material Adverse Effect;
(f) notice of any litigation, pending or threatened, against any U.S.
Guarantor of which any U.S. Guarantor has actual knowledge which could
reasonably be expected to result in a Material Adverse Effect;
(g) all reports related to environmental matters in respect of any U.S.
Project;
(h) copies of all material notices delivered in connection with any
U.S. Project Document or otherwise in connection with the U.S. Projects;
(i) with respect to the Big Spring Project, copies of all construction
schedules, construction budgets and Operating Budgets which are approved by the
Independent Engineer (together, periodically, with evidence of compliance
therewith), copies of all bi-monthly reports issued by the Independent Engineer
prior to Substantial Completion of the
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Big Spring Project and each annual report thereafter and monthly operating
reports from the Big Spring Guarantor;
(j) with respect to the Big Spring Project, copies of all change orders
and any document or written notice from the construction contractor requesting
or recommending the initiation of a change order and any other notice,
including, without limitation, notices with respect to the occurrence of a force
majeure event (or event of similar effect) under any U.S. Project Document which
may result in a material increase in project costs; and
(k) promptly upon request, a list of the current balances of each of
the U.S. Deposi tary Accounts.
Section 4.3 MAINTENANCE OF EXISTENCE. Each U.S. Guarantor shall at all
times preserve and maintain in full force and effect (a) its existence as a
limited liability company or limited partnership, as applicable, under the laws
of the applicable jurisdiction, (b) its qualification to do business in each
other jurisdiction in which the character of the properties owned or leased by
it or in which the transaction of its business as conducted or proposed to be
conducted makes such qualification necessary and (c) all of its powers, rights,
privileges and franchises necessary for the transaction of its business as
conducted or proposed to be conducted except, in the case of clauses (b) and (c)
of this SECTION 4.3 where failure to do so could not reasonably be expected to
result in a Material Adverse Effect.
Section 4.4 COMPLIANCE WITH LAWS. Each U.S. Guarantor shall comply with
all Applicable Laws (including Environmental Laws), except where non-compliance
could not reasonably be expected to result in a Material Adverse Effect.
Section 4.5 GOVERNMENTAL APPROVALS; TITLE. (a) The Big Spring Guarantor
shall obtain in a timely manner, maintain in full force and effect (or where
appropriate, renew) and comply with all Governmental Approvals (including,
without limitation, those required under Environmental Laws) required at any
time or advisable (i) in connection with the construction, maintenance,
ownership and good and orderly operation of the Big Spring Project, as currently
conducted and as proposed to be conducted and (ii) to execute and deliver the
Transaction Documents to which it is a party and to perform its obligations
thereunder, unless in each case the failure to so obtain, maintain or comply
with such Governmental Approvals could not reasonably be expected to result in a
Material Adverse Effect.
(b) Each U.S. Guarantor shall preserve and maintain good, valid and
where applica ble, marketable, title to all of its properties and assets subject
to no Liens other than U.S. Permitted Project Liens except where the failure to
do so could not reasonably be expected to have a Material Adverse Effect.
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Section 4.6 EXERCISE OF RIGHTS AND PERFORMANCE UNDER TRANSACTION
DOCUMENTS. (a) Each U.S. Guarantor shall exercise all of its rights under any
Transaction Document to which it is party unless failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
(b) Each U.S. Guarantor shall take all reasonable action within its
control required to ensure that each Transaction Document to which it is a party
is in proper legal form under the respective governing laws selected for such
Transaction Document for the enforcement thereof in such jurisdictions without
further action on the part of Funding Company, the Collateral Agent or the Bond
Trustee.
(c) Each U.S. Guarantor shall perform all of its covenants and
obligations under each Transaction Document to which it is party and take all
necessary action to prevent the termination or cancellation of any Transaction
Document to which it is a party except where such nonperformance or
nonobservance, or the result of such termination or cancellation, could not
reasonably be expected to result in a Material Adverse Effect.
Section 4.7 ADDITIONAL DOCUMENTS; FILINGS AND RECORDINGS. (a) Each U.S.
Guaran tor shall execute and deliver, from time to time as reasonably requested
by Funding Company, the Bond Trustee or the Collateral Agent, at any U.S.
Guarantor's expense, such documents in connection with the rights and remedies
of the Secured Parties granted or provided for by this Agreement or the other
Transaction Documents to which any U.S. Guarantor is a party and to consummate
the transactions contemplated therein.
(b) Each U.S. Guarantor shall, at its own expense, take all reasonable
actions necessary to establish, maintain, protect, perfect and continue the
perfection and priority of the Liens created by the Security Documents and to
protect and enforce its rights and title and the rights and title of the Secured
Parties to the Collateral in such manner and in such places as in the opinion of
counsel to such U.S. Guarantor, the Bond Trustee or the Collateral Agent are
required by Applicable Law in order to fully preserve and protect the rights of
Funding Company, the Collateral Agent or the Bond Trustee thereunder, except
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
Section 4.8 PAYMENT OF TAXES AND CLAIMS. Each U.S. Guarantor shall,
prior to the time penalties shall attach thereto, pay and discharge or cause to
be discharged all Taxes, assessments and governmental charges or levies imposed
upon it, its income or its properties; PROVIDED that no U.S. Guarantor shall be
required to pay any such obligation if (a) such charges are being diligently
contested in good faith by appropriate proceedings, (b) during the period of
such contest the enforcement of any contested item is effectively stayed, and
(c) adequate reserves are established with respect to the contested items (to
the extent required by GAAP).
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Section 4.9 BOOKS AND RECORDS. Each U.S. Guarantor shall keep proper
books of record and account truly and fairly reflecting the financial condition
and results of operations of such U.S. Guarantor in which full, true and correct
entries in conformity with GAAP and all Applicable Laws shall be made of all
dealings and transactions in relation to its business and activities. Upon five
(5) days written notice each U.S. Guarantor shall permit officers and designated
representatives of Funding Company, the Collateral Agent, the Bond Trustee, the
Depositary Bank or any duly authorized agent or representative thereof
(including without limitation, the Independent Engineer) to visit and inspect,
from time to time during normal business hours, any of the properties of such
U.S. Guarantor and to examine and make copies of the books of record and account
of such U.S. Guarantor and discuss the affairs, finances and accounts of such
U.S. Guarantor with, and be advised as to the same by, its officers, all at such
reasonable times and intervals and to such reasonable extent as Funding Company,
the Collateral Agent, the Bond Trustee, Depositary Bank and duly authorized
agent or representa tive thereof (including, without limitation, the Independent
Engineer) may reasonably request.
Section 4.10 [Intentionally Omitted]
Section 4.11 AUDITORS. Each U.S. Guarantor shall retain a nationally
recognized independent accounting firm to act as its auditors and authorize such
firm to communicate directly with Funding Company, the Bond Trustee and the
Collateral Agent.
Section 4.12 U.S. REVENUE ACCOUNT. Each U.S. Guarantor shall take all
actions as may be necessary to cause all Cash Flows of such U.S. Guarantor to be
deposited in the U.S. Revenue Account in accordance with the U.S. Depositary
Agreement and to be disbursed in accordance with the provisions set forth in
ARTICLE 3 (The Accounts) of the U.S. Depositary Agreement.
Section 4.13 PROJECT IMPLEMENTATION. (a) The Big Spring Guarantor shall
operate the Big Spring Project and all other property and rights in accordance
with customary industry practice and maintain the Trinidad Project and other
property in good repair and condition (ordinary wear and tear excepted in
respect thereof).
(b) Without limiting the generality of the preceding clause (a), the
Big Spring Guarantor shall cause the construction of the Big Spring Project to
be prosecuted and completed with due diligence and continuity (except for
interruptions due to any event of force majeure pursuant to any Big Spring
Project Document, which the Big Spring Guarantor shall use its best to
mitigate), in a good and workmanlike manner and in accordance with (i) sound
generally accepted building and engineering practices, (ii) all Governmental
Approvals and Applicable Laws applicable to the Big Spring Project or the Big
Spring Guarantor, (iii) the Big Spring Project Documents and (iv) the
construction budget and construction schedule for the Big Spring Project;
PROVIDED that such budget or schedule shall be amended if the Independent
Engineer delivers a certificate to the Bond Trustee certifying
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that such change is necessary and reasonable and that sufficient funds shall be
available to the Big Spring Guarantor to complete the Big Spring Project in
accordance with such budget and schedule, as amended.
(c) The Big Spring Guarantor shall provide an Operating Budget to the
Independent Engineer sixty (60) days prior to the start of each year subject to
the approval of the Inde pendent Engineer (such approval not to be unreasonably
withheld) and the Big Spring Guarantor shall comply with such budget; PROVIDED
that if such Operating Budget is not approved by the Independent Engineer, then
the prior annual Operating Budget which was so approved shall remain in effect
escalated in accordance with CPI.
(d) The Big Spring Guarantor shall at all times cause the Big Spring
Project to maintain its QF status, unless failure to maintain such status
(i) would not cause a breach under or forfeiture of the pricing or other
material benefits of the U.S. Project Documents or (ii) could not reasonably
be expected to result in a Material Adverse Effect.
(e) The Big Spring Guarantor shall, within six (6) months of the
Closing Date, commence a Phase I Environmental Assessment of the Big Spring
Project Site.
Section 4.14 INSURANCE. (a) The Big Spring Guarantor shall at all times
maintain with responsible and financially sound insurance carriers, and provide
satisfactory evidence of, customary insurance in such amounts (subject to
reasonable and customary deductibles and sublimits) and with terms and
conditions in accordance with standard industry practice and satisfactory to the
Independent Insurance Consultant including, without limitation, business
interruption insurance with respect to the Big Spring Project in a minimum
amount equal to losses resulting from a twelve (12) month interruption with no
more than a one month deductible; PROVIDED that the Big Spring Guarantor shall
be obligated to obtain business interruption insurance as soon as such insurance
is commercially available. All policies of physical damage and business
interruption insurance shall name the Collateral Agent as sole loss payee and
the Collateral Agent shall be named as additional insured under any general
liability, automotive liability, excess liability or other policy similar in
nature in accordance with standard industry practice.
(b) Upon procurement of the insurance required pursuant to this SECTION
4.14, the Big Spring Guarantor shall furnish to the Bond Trustee an Officer's
Certificate of the Big Spring Guarantor indicating procurement of all such
required insurance. Such Officer's Certificate shall identify the underwriters,
the type of insurance, the insurance limits, the risks covered thereby and the
policy term. Upon request by the Bond Trustee, the Big Spring Guarantor shall
promptly furnish to the Bond Trustee copies of all insurance policies, binders
and cover notes or other evidence of such insurance related to the Big Spring
Project.
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(c) Each insurance policy obtained by the Big Spring Guarantor shall
provide for at least ten (10) days' written notice to the Collateral Agent of
cancellation, reduction in amount of coverage or any other material change in
coverage.
(d) The Big Spring Guarantor shall not, directly or indirectly,
terminate, cancel or suspend or permit or consent to any termination,
cancellation or suspension of, or enter into or consent to or permit the
assignment of the rights or obligations of any party to, any insurance policy
obtained by it unless such termination, cancellation, suspension or assignment
of rights and obligations could not reasonably be expected to result in a
Material Adverse Effect. The Big Spring Guarantor shall not, directly or
indirectly, amend, modify, supplement or waive, or permit or consent to the
amendment, modification, supplement or waiver of, any of the provisions of, or
give any consent under, any insurance policy obtained by it (including amending,
reducing or canceling any coverage thereunder), unless such amendment, modifica
tion, supplement or waiver could not reasonably be expected to result in a
Material Adverse Effect.
(e) The provisions of this SECTION 4.14 shall be deemed to be
supplemental to, but not duplicative of, the provisions of any of the Security
Documents that require the maintenance of insurance. In the event that any
insurance whatsoever is purchased, taken or otherwise obtained by the Big Spring
Guarantor with respect to the Big Spring Project otherwise than as required
hereunder or if not properly endorsed to the Collateral Agent as the sole loss
payee or beneficiary or otherwise made upon the terms required in this SECTION
4.14 without limitation of any provision of the Security Documents, such
insurance shall be considered assigned hereunder to the Collateral Agent with
the right of the Collateral Agent to make, settle, comprise and liquidate any
and all claims thereunder, without prejudice to the exercise of any other rights
and remedies that the Collateral Agent may have under any of the Transaction
Documents or under any Applicable Law.
Section 4.15 PERMITTED INDEBTEDNESS. No U.S. Guarantor shall create or
incur or suffer to exist any Indebtedness except the following (collectively,
"U.S. PERMITTED PROJECT INDEBTEDNESS"):
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness incurred pursuant to any Guarantee by a U.S.
Guarantor;
(c) Indebtedness incurred to finance in whole or in part the making of
capital improvements to the Big Spring Project required to maintain compliance
with Applicable Law; PROVIDED that the Independent Engineer shall have certified
to the Bond Trustee that:
(i) (x) an Officer's Certificate of an Authorized
Officer of the Big Spring Guarantor certifying that such Indebtedness
is required to make a capital improvement to such U.S. Project that is
required in order to maintain compliance
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with Applicable Law is reasonable and (y) and that such Indebtedness is
the most effective means of making such capital expenditure and, if
applicable, completing the Big Spring Project; and
(ii) after giving effect to the incurrence of such
Indebtedness, each of the minimum Projected Debt Service Coverage Ratio
and the U.S. Projected Debt Service Coverage Ratio for (A) the next
four consecutive fiscal quarters, commenc ing with the quarter in which
such Indebtedness is to be incurred, taken as one annual period, and
(B) each subsequent fiscal year through the Final Maturity Date for the
Securities, will not be less than 1.2 to 1;
(d) Indebtedness incurred to finance in whole or in part the making of
capital improvements to the Big Spring Project other than those capital
improvements referenced in clause (c) above PROVIDED that:
(i) an Authorized Officer of the Big Spring Guarantor
certifies to the Bond Trustee that no Default or Event of Default has
occurred and is continuing or will occur as a result of the incurrence
of such Indebtedness;
(ii) the Independent Engineer shall have certified to
the Bond Trustee that after giving effect to the incurrence of such
Indebtedness, (x) each of the minimum Projected Debt Service Coverage
Ratio and the U.S. Projected Debt Service Coverage Ratio for (A) the
next four consecutive fiscal quarters commencing with the quarter in
which such Indebtedness is to be incurred, taken as one annual period
and (B) each subsequent fiscal year through the Final Maturity Date for
the Securities, will not be less than 1.5 to 1, and (y) each of the
average Projected Debt Service Coverage Ratio and the U.S. Projected
Debt Service Coverage Ratio for all succeed ing fiscal years until the
Final Maturity Date for the Securities will not be less than 1.55 to 1;
and
(iii) written confirmation from each Rating Agency then
rating the Securities that the incurrence of such Indebtedness will not
result in a Rating Down grade;
(e) Indebtedness incurred to finance in whole or in part the purchase
of any loans made from Edison Mission Energy, or an Affiliate thereof, to B-41
L.P; PROVIDED that:
(i) an Authorized Officer of the BNY Guarantor
certifies to the Bond Trustee that no Default or Event of Default has
occurred and is continuing or will occur as a result of the incurrence
of such Indebtedness;
(ii) the Independent Engineer shall have certified to
the Bond Trustee that after giving effect to the incurrence of such
Indebtedness, (x) each of the
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minimum Projected Debt Service Coverage Ratio and the U.S. Projected
Debt Service Coverage Ratio for (A) the next four consecutive fiscal
quarters commencing with the quarter in which such Indebtedness is to
be incurred, taken as one annual period and (B) each subsequent fiscal
year through the Final Maturity Date for the Securities, will not be
less than 1.5 to 1, and (y) each of the average Projected Debt Service
Coverage Ratio and the U.S. Projected Debt Service Coverage Ratio for
all succeed ing fiscal years until the Final Maturity Date for the
Securities will not be less than 1.55 to 1; and
(iii) written confirmation from each Rating Agency then
rating the Securities that the incurrence of such Indebtedness will not
result in a Rating Downgrade;
(f) Indebtedness in the form of a working capital facility for the
benefit of the Big Spring Project in an aggregate principal amount not to exceed
$2,000,000; PROVIDED that the terms of such facility provide that the aggregate
amount of all loans outstanding thereunder shall be reduced to zero for ten (10)
days;
(g) To the extent such obligations would constitute Indebtedness,
obligations of the U.S. Guarantors under the U.S. Project Documents; and
(h) Indebtedness related to U.S. Permitted Project Liens.
Section 4.16 PERMITTED LIENS. No U.S. Guarantor shall create or suffer
to exist or permit any Lien upon or with respect to any of its properties except
the following (collec tively, "U.S. PERMITTED PROJECT LIENS"):
(a) Liens specifically permitted or required by, or created by, any
Security Document or any Transaction Document;
(b) Liens for Taxes, assessments or governmental charges which are
either not yet due or which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves are established in
accordance with GAAP;
(c) other Liens incidental to the conduct of any U.S. Guarantor's
business or the ownership of properties and assets which were not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than Liens arising by operation of law or statute in the ordinary course
of business), and which do not in the aggregate materially impair the use
thereof in the operation of such U.S. Guarantor's business; and
(d) Liens with respect to the BNY Guarantor and the Big Spring
Guarantor set forth on SCHEDULE 4.16 hereto.
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Section 4.17 CONTINGENT LIABILITIES. No U.S. Guarantor shall
contingently or otherwise be or become liable, directly or indirectly, in
connection with any Guarantee Obligation except for (a) guarantees of Permitted
Funding Debt and (b) endorsements and similar obligations in the ordinary course
of business.
Section 4.18 NATURE OF BUSINESS. No U.S. Guarantor shall engage in any
business other than its existing business and the ownership, development,
acquisition, construction, financing and operation and maintenance of the U.S.
Projects as contemplated by the Transaction Documents.
Section 4.19 PROHIBITION ON FUNDAMENTAL CHANGES. No U.S. Guarantor
shall enter into any transaction of merger or consolidation, change its form of
organization or its business, liquidate, wind-up or dissolve itself (or suffer
any liquidation or dissolution), discontinue its business or purchase or
otherwise acquire all or substantially all of the assets of any other Person,
except, in any such case, as contemplated by the Finance Documents.
Section 4.20 SALE OF ASSETS. No U.S. Guarantor shall sell or transfer
any assets (other than electricity produced by the U.S. Projects) or assign any
rights other than (so long as no Default or Event of Default has occurred and is
continuing) those in the ordinary course of its business for cash equal to the
fair market value of such assets at the time of sale, except, in any such case,
as contemplated by the Finance Documents.
Section 4.21 SUBSIDIARIES; ADVANCES, INVESTMENTS AND LOANS. No U.S.
Guarantor shall form or have any Subsidiaries, make investments, loans or
advances or acquire the stock, obligations or securities of any Person; PROVIDED
that the U.S. Guarantors may invest amounts on deposit in the U.S. Depositary
Accounts, subject to limitations as to term and duration, in Cash Equivalents
and the Warbasse Guarantor may own the Warbasse Notes.
Section 4.22 TRANSACTIONS WITH AFFILIATES. No U.S. Guarantor shall
enter into any transaction or series of related transactions, whether or not in
the ordinary course of business, with any Affiliate of such U.S. Guarantor which
is not on terms and conditions no less favorable as would be obtained in a
comparable arm's-length transaction with a Person other than an Affiliate of
such U.S. Guarantor, except that such U.S. Guarantor may perform its obligations
under and engage in the transactions contemplated by the Transaction Documents.
Section 4.23 RESTRICTED PAYMENTS. No U.S. Guarantor shall make any
Restricted Payments except as permitted under the U.S. Depositary Agreement.
Section 4.24 AMENDMENTS TO U.S. PROJECT DOCUMENTS. Other than with
respect to Permitted Contract Buy-Outs, no U.S. Guarantor (nor any Affiliate
thereof) shall, directly or indirectly, (x) permit the assignment of the rights
and obligations of any party to any U.S. Project Document or (y) terminate,
amend, modify, replace, supplement or waive, or permit
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or consent to the termination, modification, replacement, supplement or waiver
of, any of the provisions of, or give any consent under, any of the U.S. Project
Documents unless (a) such U.S. Guarantor certifies that such assignment,
termination, amendment, modification, replacement, supplement, waiver or consent
could not reasonably be expected to result in a Material Adverse Effect and
(b) in the case of any assignment, termination, amendment, modification,
replacement, supplement, waiver or consent with respect to the BNY PPA, Warbasse
PPA, the Big Spring EPA or any other U.S. Project Document which affects the
Cash Flows to be received by such U.S. Guarantor, in addition to the condition
set forth in (a) above, (i) the Independent Engineer certifies that such
assignment, termination, amendment, modification, replacement, supplement,
waiver or consent could not reasonably be expected to result in a Material
Adverse Effect and (ii) such U.S. Guarantor provides to the Bond Trustee written
confirmation from each Rating Agency then rating the Securities that such
assignment, termination, amendment, modification, replacement, supplement,
waiver or consent will not result in a Ratings Downgrade. Notwithstanding the
foregoing, the Warbasse Guarantor shall not, directly or indirectly, permit the
assignment of the rights and obligations of any party to the Warbasse Notes or
terminate, amend, modify, replace, supplement or waive, or permit or consent to
the termination, modification, replacement, supplement or waiver of, any of the
provisions of, or give any consent under, either of the Warbasse Notes unless
(i) the Warbasse Guarantor certifies that such assignment, termination,
amendment, modification, replacement, supplement, waiver or consent could not
reasonably be expected to result in a Material Adverse Effect and (ii) the
Warbasse Guarantor provides to the Bond Trustee written confirmation from each
Rating Agency then rating the Securities that such assignment, termination,
amendment, modification, replacement, supplement, waiver or consent will not
result in a Ratings Downgrade.
Section 4.25 ASSIGNMENT OF OBLIGATIONS; ADDITIONAL AGREEMENTS. No U.S.
Guarantor shall assign any of its rights or obligations under any Transaction
Document and shall not enter into any additional contract, agreement or
undertaking if the transactions contemplated by such assignment or additional
contract, agreement or undertaking could reasonably be expected to have a
Material Adverse Effect; PROVIDED that a U.S. Guarantor shall be permitted to
assign any of its rights or obligations hereunder if such assignment is
necessary to avoid any adverse tax consequences resulting from a change in
Applicable Law (or the interpretation thereof) and (a) no Default or Event of
Default shall exist and be continuing at such time, (b) the Bond Trustee shall
receive written confirmation from each Rating Agency that such assignment shall
not result in a Ratings Downgrade and (c) the Bond Trustee receives satisfactory
Opinions of Counsel of such U.S. Guarantor stating that (i) such assignment is
enforceable and creates a legal, valid and binding obligation of such U.S.
Guarantor, (ii) such assignment has no adverse consequences upon the rights and
remedies of the Secured Parties with respect to the Collateral and (iii) such
assignment shall have no adverse effects on the tax structure of the transaction
prior to the assignment or upon payments to or from any Project Obligor or
otherwise related to the Securities and each of the Project Notes.
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Section 4.26 MODIFICATIONS OF FORMATION DOCUMENTS. No U.S. Guarantor
shall amend or modify its partnership agreement, certificate of formation,
by-laws or other formation documents or change its fiscal year, except if such
amendment, modification or change which could not reasonably be expected to
result in a Material Adverse Effect.
Section 4.27 ABANDONMENT. The Big Spring Guarantor shall not
voluntarily cease or abandon the development, construction or operation of the
Big Spring Project.
Section 4.28 SUBSTANTIAL COMPLETION. The Big Spring Guarantor shall not
accept Substantial Completion of the Big Spring Project until an Authorized
Officer of the Big Spring Guarantor Independent Engineer shall have delivered to
the Bond Trustee a Comple tion Certificate and the Big Spring Guarantor shall
have received a "Certificate of Readiness for Commercial Operation" from TU
Electric.
Section 4.29 TAXATION. (a) All payments made by any U.S. Guarantor in
respect of the U.S. Project Loan shall be made free and clear of, and without
withholding or deduction for or on account of, any and all Taxes. Each U.S.
Guarantor shall pay such additional amounts as may be necessary to ensure that
the amounts received by Funding Company after such withholding or deduction, if
any, shall equal the respective amounts of principal and interest that would
have been receivable in the absence of such withholding or deduction.
(b) Each U.S. Guarantor shall promptly pay when due any present or
future stamp, court or documentary Taxes or any other excise or property Taxes,
charges or similar levies that arise in any jurisdiction from the execution or
delivery of any U.S. Project Note or any other document referred to herein or
therein, excluding (i) Taxes imposed on or measured by the net income or capital
of Funding Company and (ii) any such Taxes, charges or similar levies imposed by
any jurisdiction other than the United States or the Cayman Islands.
ARTICLE 5
DEFAULTS AND REMEDIES
Section 5.1 EVENTS OF DEFAULT DEFINED. The term "U.S. PROJECT LOAN
EVENT OF DEFAULT", whenever used herein, shall mean any of the following events
(whatever the reason for such event and whether it shall be voluntary or
involuntary or shall come about or be effected by operation of law, or be
pursuant to or in compliance with any Applicable Law), and any such event shall
continue to be a U.S. Project Loan Event of Default if and for so long as it
shall not have been remedied or waived in accordance with the terms of this
Agreement, the Indenture and the Intercreditor Agreement:
(a) The U.S. Guarantors shall fail to pay any principal of, premium
(if any), interest on, or other amounts due in respect of or any other
obligations on the U.S.
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Project Loan when the same becomes due and payable, whether by scheduled
maturity or required prepayment or redemption or by acceleration or otherwise
and such failure continues for ten (10) or more days following the due date
for payment, after application by the Collateral Agent, in accordance with
the U.S. Depositary Agreement, of (x) any amounts in the Debt Service Reserve
Account and (y) any amounts otherwise advanced by the U.S. Guarantors;
(b) any representation or warranty made by any U.S. Guarantor in
this Agreement or in any other Transaction Document to which such U.S.
Guarantor is a party, or any representation, warranty or statement in any
certificate, financial statement or other document furnished to Funding
Company, the Bond Trustee or any other Holder by or on behalf of any U.S.
Guarantor hereunder or thereunder, shall prove to have been untrue or
misleading in any material respect as of the time made, confirmed or
furnished and such fact, event or circumstance that gave rise to such
inaccuracy has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect, and such fact, event or circumstance shall continue
uncured for thirty (30) or more days from the date an Authorized Officer of
such U.S. Guarantor obtains actual knowledge thereof; PROVIDED that if such
U.S. Guarantor commences and diligently pursues efforts to cure such fact,
event or circumstance within such thirty (30) day period and delivers written
notice thereof to the Bond Trustee, such U.S. Guarantor may continue to
effect such cure and such misrepresentation shall not be deemed a "U.S.
Project Loan Event of Default" for an additional ninety (90) days so long as
such U.S. Guarantor is diligently pursuing such cure;
(c) Any U.S. Guarantor shall fail to perform or observe any covenant
or agreement contained in SECTION 4.3 (Maintenance of Existence), SECTION 4.6
(Exercise of Rights Under U.S. Project Documents), SECTION 4.7 (Additional
Documents; Filings and Recordings), SECTION 4.8 (Payment of Taxes and
Claims), SECTION 4.9 (Books and Records), SECTION 4.13 (U.S. Project
Implementation), SECTION 4.14 (Insurance), SECTION 4.15 (Permitted
Indebtedness), SECTION 4.16 (Permitted Liens), SECTION 4.17 (Contingent
Liabilities), SECTION 4.18 (Nature of Business), SECTION 4.19 (Prohibition on
Fundamental Changes), SECTION 4.20 (Sale of Assets), SECTION 4.23 (Restricted
Payments), SECTION 4.24 (Amendments to U.S. Project Documents), SECTION 4.25
(Additional U.S. Project Document), SECTION 4.26 (Modification of Formation
Documents), SECTION 4.27 (Abandonment), SECTION 4.28 (Substantial Completion)
and SECTION 4.29 (Taxation), and such failure shall continue uncured for
thirty (30) or more days from the date an Authorized Officer of any U.S.
Guarantor obtains actual knowledge of such failure;
(d) Any U.S. Guarantor shall fail to perform or observe any of the
other covenants contained in this Agreement or in the other Finance Documents
to which it is party (other than those referred to in clause (c) of this
SECTION 5.1) and such
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failure shall continue uncured for sixty (60) or more days from the date an
Authorized Officer of any U.S. Guarantor obtains actual knowledge of such
failure; PROVIDED that if the U.S. Guarantors commences and diligently
pursues efforts to cure such default within such sixty (60) day period and
delivers written notice thereof to the Bond Trustee, such U.S. Guarantor may
continue to effect such cure of the default and such default shall not be
deemed a "U.S. Project Loan Event of Default" for an additional thirty (30)
days so long as such U.S. Guarantor is diligently pursuing such cure;
(e) Any U.S. Guarantor or any other party to a material U.S. Project
Document shall (i) apply for or consent to the appointment of, or the taking
of possession by, a receiver, custodian, trustee or liquidator of itself or
all or a substan tial part of its property, (ii) admit in writing its
inability or be generally unable to pay its debts as such debts become due,
(iii) make a general assignment for the benefit of its creditors, (iv)
commence a voluntary case under the Federal Bankruptcy Code, (v) file a
petition seeking to take advantage of any other Debtor Relief Law, (vi) fail
to controvert in a timely and appropriate manner, or acquiesce in writing to,
any petition filed against it in an involuntary case under the Federal
Bankruptcy Code or any other Debtor Relief Law or (vii) take any action for
the purpose of effecting any of the foregoing;
(f) a proceeding or case shall be commenced without the application
or consent of any U.S. Guarantor or any other party to a material U.S.
Project Docu ment in any court of competent jurisdiction, seeking (i) its
liquidation, reorganization, dissolution, winding-up or the composition or
readjustment of its debts or (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of any U.S. Guarantor or all or a
substantial part of its property under any Debtor Relief Law, and such
proceeding or case shall continue undismissed, or any order, judgment or
decree approving any of the foregoing shall be entered and continue unstayed
and in effect, for a period of sixty (60) or more consecutive days, or any
order for relief against any U.S. Guarantor or any other party to a material
U.S. Project Document shall be entered in any involuntary case under the
Federal Bankruptcy Code or any other Debtor Relief Law;
(g) one or more final, non-appealable judgments, decrees or orders
shall be entered against any U.S. Guarantor involving in the aggregate a
liability in excess of $5,000,000 (exclusive of judgment amounts fully
covered by insurance or indemnity) or more against any U.S. Guarantor and
shall remain unpaid or unstayed for ninety (90) or more consecutive days
after the entry thereof other than such judgments, decrees or orders
contemplated in the BNY Indemnity Agreement;
(h) Indebtedness of any U.S. Guarantor in excess of $5,000,000
(other than Indebtedness incurred pursuant to this Agreement) shall be
required to be prepaid,
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or shall be declared to be due and payable, other than by regularly scheduled
required repayment, prior to the stated maturity thereof, as a result of the
acceleration of the stated maturity thereof following an event of default
thereunder;
(i) Any U.S. Guarantor shall fail to satisfy its obligations and
payments under its Guarantee;
(j) Any Governmental Approval of any U.S. Guarantor or any party to
a material U.S. Project Document is revoked, terminated, withdrawn or ceases
to be in full force and effect if such revocation, termination, withdrawal or
cessation could reasonably be expected to have a Material Adverse Effect;
PROVIDED that no such event shall be a U.S. Project Loan Event of Default if
within sixty (60) days from the occurrence thereof, (i) such U.S. Guarantor
diligently pursues in good faith and (x) obtains an additional Governmental
Approval in substitution therefor or replacement thereof or (y) causes such
Governmental Approval to be reinstated and (ii) during such sixty (60) day
period no Material Adverse Effect occurs;
(k) Any material U.S. Project Document ceases to be valid and
binding and in full force and effect (other than as permitted hereunder), any
third party thereto denies that it has any liability or obligation under any
U.S. Project Document and such third party ceases performance thereunder, or
any third party fails to perform its material obligations thereunder or makes
any material misrepresentation thereunder, and in each case such cessation,
failure or misrepresentation has resulted or would reasonably be expected to
result in a Material Adverse Effect;
(l) Any U.S. Guarantor or any other party shall fail to perform or
observe any of its covenants or obligations contained in such U.S. Project
Document to which it is a party if such failure shall result in the receipt
of a notice of termination (subject to applicable cure periods) of such U.S.
Project Document or shall otherwise result in a Material Adverse Effect;
(m) Any Security Document related to any Project Collateral related
to any U.S. Project or U.S. Guarantor shall cease to be in full force and
effect or any Lien purported to be granted therein shall cease to be a valid
and perfected Lien in favor of the Collateral Agent for the benefit of the
Secured Parties on any material portion of the Collateral described therein
with the priority purported to be created thereby; PROVIDED that such U.S.
Guarantor shall have ten (10) days to cure any such cessation (if curable) or
to furnish to the Bond Trustee, Collateral Agent or the Depositary Bank all
documents and instruments required to cure any such cessation (if curable);
(n) An Indenture Event of Default shall occur and be continuing; and
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(o) All or a material part of the Trinidad Project is destroyed or
suffers a material actual loss or material damage; PROVIDED that the
occurrence of such an event shall not be a U.S. Project Loan Event of Default
if within thirty (30) days from the occurrence of such event, there exists an
Approved Restoration Plan in respect of the remediation of the damage, loss
or taking giving rise to such event.
Section 5.2 REMEDIES UPON A U.S. PROJECT LOAN EVENT OF DEFAULT. Subject
to the Intercreditor Agreement, if one or more U.S. Project Loan Events of
Default shall have occurred and be continuing, then:
(i) in the case of a U.S. Project Event of Default described
in clause (a), (i) or (n) (with respect to an Indenture Event of
Default under clause (a) of SECTION 5.1 (Events of Default) of the
Indenture) of SECTION 5.1 (Events of Default), upon the written and
unrescinded direction of (A) the One-Third Holders or (B) the Bond
Trustee, notwithstanding the absence of direction from the One-Third
Holders, if in the good faith exercise of its discretion the Bond
Trustee determines that such action is necessary to protect the
interests of the Holders, Funding Company shall declare that portion of
the outstanding principal amount of all U.S. Project Notes, all
interest accrued and unpaid thereon, all premium (if any), all other
amounts payable in respect thereof and all other amounts payable under
this Agreement in each case equal to that portion of such amount
incurred for the benefit of the U.S. Guarantor that has caused such
U.S. Project Event of Default to have occurred and be continuing,, to
be due and payable, whereupon the same shall become immediately due and
payable without presentment, demand, protest or further notice of any
kind, all of which are hereby waived;
(ii) in the case of a U.S. Project Event of Default described
in clause (b), (c), (d), (e), (f), (g), (h), (j), (k), (l), (m), (n)
(except with respect to an Indenture Event of Default under clause (a),
(f) or (g) of SECTION 5.1 (Events of Default) of the Indenture), or
(o) of SECTION 5.1 (Events of Default Defined), upon the written and
unrescinded direction of (A) the Majority Holders or (B) the Bond
Trustee, notwith standing the absence of direction from the Majority
Holders if in the good faith exercise of its discretion the Bond
Trustee determines that such action is necessary to protect the
interests of the Holders, Funding Company shall declare that portion of
the outstanding principal amount of all U.S. Project Notes, all
interest accrued and unpaid thereon, all premium (if any), all other
amounts payable in respect thereof and all other amounts payable under
this Agreement in each case equal to that portion of such amount
incurred for the benefit of the U.S. Guarantor that has caused such
U.S. Project Event of Default to have occurred and be continuing, to be
due and payable, whereupon the same shall become immediately due and
payable without presentment, demand, protest or further notice of any
kind, all of which are hereby waived; and
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(iii) in the case of a U.S. Project Loan Event of Default
described in clause (n) (with respect to an Indenture Event of Default
under clause (f) or (g) of SECTION 5.1 (Events of Default) of the
Indenture) the entire outstanding principal amount of all U.S. Project
Notes, all interest accrued and unpaid thereon, all premium (if any),
all other amounts payable in respect thereof and all other amounts
payable under this Agreement shall automatically become due and payable
without presentment, demand, protest or notice of any kind, all of
which are hereby waived.
Section 5.3 CONTINUING LIEN. (a) The Liens on and security interests in
the Collat eral granted in this Agreement, the Security Documents and the other
Finance Documents to which any U.S. Guarantor is a party secure all Indebtedness
and all obligations of the U.S. Guarantors owed to Funding Company in connection
with the U.S. Project Loan of whatever kind or character, whether now owing,
hereafter arising or hereafter to be performed.
(b) Notwithstanding anything to the contrary in this Agreement, the
Security Documents or the other Finance Documents to which any U.S. Guarantor is
a party, if on the date the principal balance of the Securities is fully paid
(the "PAY-OFF DATE") any other amounts owed by the U.S. Guarantors hereunder
remain to be paid, Funding Company shall not be obligated to release any
collateral remaining subject to the Security Documents, and such collateral
shall continue to secure the payment of such amounts as of the Pay-off Date.
Section 5.4 DEFENSE OF ACTIONS. Subject to the Intercreditor Agreement,
upon the occurrence and during the continuance of a U.S. Project Loan Event of
Default, Funding Company may (but shall not be obligated to) commence, appear in
or defend any action or proceeding purporting to affect the U.S. Project Loan,
the U.S. Project Notes or the respective rights and obligations of Funding
Company and any other Person pursuant to this Agreement, the Security Documents
or any other Finance Document to which any U.S. Guarantor is a party. Funding
Company may (but shall not be obligated to) pay all necessary expenses,
including reasonable attorneys' fees and expenses, incurred in connection with
such proceed ings or actions, which expenses the U.S. Guarantors hereby agree to
repay to Funding Company promptly upon demand.
ARTICLE 6
GENERAL TERMS AND CONDITIONS
Section 6.1 NOTICES. (a) Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be
sufficiently given and shall be deemed given when delivered or mailed by
registered or certified mail, postage prepaid, or sent by overnight delivery or
telecopy to Funding Company, the U.S. Guarantors, the Bond Trustee or the Rating
Agencies at their respective addresses specified on SCHEDULE III to the
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Indenture, or in each case at such other address as shall be designated by such
Person in a written notice to the other parties hereto.
Section 6.2 AMENDMENTS AND WAIVERS. No waiver, amendment, modification
or termination of any provision of this Agreement, or consent to any departure
by any U.S. Guarantor therefrom, shall in any event be effective unless such
waiver, amendment, modifi cation or termination is in writing, is signed by the
parties hereto and is in accordance with the Intercreditor Agreement and SECTION
7.3 (Amendment of Project Loan Agreements or Project Notes) of the Indenture.
Any such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
Section 6.3 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of Funding Company in exercising any right, power or privilege hereunder or
under any other Finance Document and no course of dealing between Funding
Company or any U.S. Guaran tor shall impair any such right, power or privilege
or operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under any other Finance Document preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder or thereunder. The rights, powers and remedies expressly
provided herein or in any other Finance Document are cumulative and not
exclusive of any rights, powers or remedies which Funding Company would
otherwise have, all of which may at the discretion of Funding Company, subject
to the Intercreditor Agreement, be pursued separately, successively or
concurrently against any U.S. Guarantor, the Collateral or any other collateral
securing the obligations of any U.S. Guarantor hereunder. No notice to or demand
on any U.S. Guarantor in any case shall entitle any U.S. Guarantor to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of Funding Company to any other or further action in any
circumstances without notice or demand.
Section 6.4 SEVERABILITY. In case any provision in or obligation under
this Agreement or any U.S. Project Note shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
Section 6.5 THIRD PARTY BENEFICIARIES. Except as provided in SECTION
6.12 (Successors and Assigns), nothing in this Agreement or in any U.S. Project
Note, express or implied, shall give or be construed to give any Person, other
than the parties hereto, the Bond Trustee and the Holders, any benefit or any
legal or equitable right, remedy or claim under this Agreement. Notwithstanding
the preceding sentence, no Holder shall have any right to pursue any remedy
hereunder except pursuant to the Intercreditor Agreement and through the Bond
Trustee as permitted under SECTION 5.5 (Control by Holders) of the Indenture.
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Section 6.6 U.S. GUARANTORS IN CONTROL. In no event shall the rights
and interests of Funding Company or the Bond Trustee under this Agreement and
the other Finance Documents to which any U.S. Guarantor is a party be construed
to give Funding Company or the Bond Trustee, or be deemed to indicate that
Funding Company or the Bond Trustee has, control of the business, management or
properties of any U.S. Guarantor or power over the daily management functions
and operating decisions made by any U.S. Guarantor.
Section 6.7 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.
Section 6.8 SECTION HEADINGS. Captions, section headings and the table
of contents appearing herein are included solely for convenience of reference
and are not intended to affect the interpretation of any provision of this
Agreement.
Section 6.9 GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) This
Agreement is a contract made under the laws of the State of New York of the
United States and shall for all purposes be governed by and construed in
accordance with the laws of such State without regard to the conflict of law
rules thereof (other than Section 5-1401 of the New York General Obligations
Law).
(b) Any legal action or proceeding against any U.S. Guarantor with
respect to this Agreement may be brought in the courts of the State of New York
in the County of New York or of the United States for the Southern District of
New York and, by execution and delivery of this Agreement, each U.S. Guarantor
hereby irrevocably submits and accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each U.S. Guarantor agrees that a judgment, after exhaustion of all
available appeals, in any such action or proceeding shall be conclusive and
binding upon such U.S. Guarantor, and may be enforced in any other jurisdiction
by a suit upon such judgment, a certified copy of which shall be conclusive
evidence of the judgment. Each U.S. Guarantor hereby irrevoca bly designates,
appoints and empowers Corporation Service Company with offices on the date
hereof at 375 Hudson Street, New York, New York 10014-3686, as its designee,
appointee and agent to receive, accept and acknowledge for and on its behalf,
and in respect of its property, service of any and all legal process, summons,
notices and documents which may be served in any such action or proceeding. If
for any reason such designee, appointee and agent shall cease to be available to
act as such, each U.S. Guarantor agrees to designate a new designee, appointee
and agent in New York City on the terms and for the purposes of this provision
satisfactory to the Bond Trustee. Each U.S. Guarantor further irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such U.S. Guarantor at its address referred
to in SECTION 6.1 (Notices), such service to become effective thirty (30) days
after such mailing. Nothing herein shall affect the right of Funding Company to
serve process in any other
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manner permitted by law or to commence legal proceedings or otherwise proceed
against any U.S. Guarantor in any other jurisdiction.
(c) Each U.S. Guarantor hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement or
any other Finance Document brought in the courts referred to in clause (b) above
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(d) WITH REGARD TO THIS AGREEMENT, EACH U.S. GUARANTOR AND FUNDING
COMPANY HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY.
Section 6.10 LIMITATION OF LIABILITY. The obligations of each U.S.
Guarantor or an Affiliate thereof hereunder are solely the corporate obligations
of such U.S. Guarantor and no recourse shall be had against the Sponsor or any
partner, employee, officer, director, incorporator, Affiliate, agent or servant
of such U.S. Guarantor, the Sponsor or an Affiliate thereof (each a
"NON-RECOURSE PERSON") with respect to this Agreement, any of the obligations of
such U.S. Guarantor hereunder or any obligation of such U.S. Guarantor for the
payment of any amount payable hereunder for any claim based on, arising out of
or relating to this Agree ment; PROVIDED, HOWEVER, that nothing in this SECTION
6.10 shall be deemed to affect or diminish (a) the obligations of any such
Non-Recourse Person under any Transaction Document to which it is party, (b) the
rights and remedies of Funding Company against any such Non-Recourse Person
under any Transaction Document to which any such Non-Recourse Person is a party,
(c) the rights and remedies of Funding Company with respect to the Collateral or
(d) the obligations of any such Non-Recourse Person under any Transaction
Document as a result of such Person's fraud or willful misconduct.
Section 6.11 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which, taken together, shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 6.12 SUCCESSORS AND ASSIGNS. All of the covenants, promises and
agreements in this Agreement by or on behalf of any U.S. Guarantor or Funding
Company shall bind and inure to the benefit of their respective successors and
assigns, regardless of whether so expressed, except that no U.S. Guarantor may
assign or transfer all or any part of its rights and obligations under this
Agreement other than with the prior written consent of the Bond Trustee and in
accordance with the Indenture and the Intercreditor Agreement.
Section 6.13 MAXIMUM INTEREST RATE. Notwithstanding any provision to
the contrary contained herein or in any U.S. Project Note, at no time shall any
U.S. Guarantor be obligated or required to pay interest on the principal balance
due hereunder or thereunder at a rate which could be in excess of the maximum
interest rate permitted by law to be
29
<PAGE>
contracted or agreed to be paid. If by the terms hereof or of any U.S. Project
Note, any U.S. Guarantor is at any time required or obligated to pay interest in
excess of such maximum rate, then the rate of interest applicable hereunder or
thereunder shall be deemed to be immediately reduced to such maximum rate and
the interest payable shall be computed at such maximum rate.
Section 6.14 ENGLISH LANGUAGE. All documents to be furnished or
communications to be given or made under this Agreement shall be in the English
language or, if in another language, shall be accompanied by a certified
translation into English, which translation shall be the governing version among
the parties hereto.
Section 6.15 ENTIRE AGREEMENT. This Agreement, together with any other
agreements executed in connection herewith, is intended by the parties hereto as
a final expression of their agreement as to the matters covered hereby and is
intended as a complete and exclusive statement of the terms and conditions
hereof.
Section 6.16 SURVIVAL. The representations and warranties of each U.S.
Guarantor contained herein shall survive the execution and delivery of this
Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
30
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
BROOKLYN NAVY YARD POWER LLC
By: B-41 ASSOCIATES, L.P.,
its Managing Member
By: B-41 MANAGEMENT CORPORATION,
its General Partner
By: /s/ Michael Trachtenberg
-----------------------------
Name : Michael Trachtenberg
Title: Vice President
WARBASSE POWER I LLC
By: COGENERATION TECHNOLOGIES, INC.
its Managing Member
By: /s/ Michael Trachtenberg
-----------------------------
Name: Michael Trachtenberg
Title: Executive Vice President
WARBASSE POWER II LLC
By: YORK COGEN PARTNERS, L.P.
its Managing Member
By: RRR's VENTURES, LTD.
its General Partner
By: /s/ Michael Trachtenberg
-----------------------------
Name: Michael Trachtenberg
Title: Vice President
31
<PAGE>
NEW WORLD POWER TEXAS RENEWABLE
ENERGY LIMITED PARTNERSHIP
By: BIG SPRINGS TEXAS ENERGY MANAGEMENT, INC.
Managing General Partner
By: /s/ Michael Trachtenberg
-----------------------------
Name: Michael Trachtenberg
Title: Vice President
YORK POWER FUNDING (CAYMAN) LIMITED
By: /s/ Michael Trachtenberg
-----------------------------
Name: Martin Couch
Title: Director
<PAGE>
SCHEDULE I
AMORTIZATION OF PRINCIPAL
<TABLE>
<CAPTION>
PRINCIPAL PERCENTAGE OF PRINCIPAL
SCHEDULED PAYMENT DATE AMOUNTS PAYABLE AMOUNTS PAYABLE
<S> <C> <C>
April 30, 2000 $1,350,000 1.35%
October 30, 2000 1,338,000 1.34
April 30, 2001 1,650,000 1.65
October 30, 2001 1,602,000 1.60
April 30, 2002 750,000 0.75
October 30, 2002 717,000 0.72
April 30, 2003 547,000 0.55
October 30, 2003 518,000 0.52
April 30, 2004 1,148,000 1.15
October 30, 2004 1,074,000 1.07
April 30, 2005 1,890,000 1.89
October 30, 2005 1,731,000 1.73
April 30, 2006 757,000 0.76
October 30, 2006 681,000 0.68
April 30, 2007 660,000 0.66
October 30, 2007 83,567,000 83.59
-------
100%
</TABLE>
<PAGE>
U.S. PROJECT LOAN AGREEMENT
SCHEDULE 3.5
LITIGATION
1. Appeal by the Office of Public Utility Counsel of the Public Utility
Commission of Texas Order in Docket No. 15328, APPLICATION OF TEXAS
UTILITIES ELECTRIC COMPANY FOR THE APPROVAL OF RENEWABLE RESOURCES
AGREEMENT WITH NEW WORLD POWER TEXAS RENEWABLE ENERGY LIMITED PARTNERSHIP.
2. In February 1997, the general contractor of the Brooklyn Navy Yard Project
brought an action in California against Brooklyn Navy Yard Cogeneration
Partners, LP ("BNYCP") seeking damages of $137 million for amounts owed
under the turnkey contract and denying liability under various claims.
BNYCP responded to the complaint, denying all the allegations contained
therein and commenced an action in New York against the general contractor
denying any liability under the turnkey contract and seeking damages in
excess of $13 million pursuant to various counterclaims. In addition,
BNYCP has been named as one of the defendants in another action relating to
the construction activity of the Brooklyn Navy Yard Project. Although it
is a general partner of BNYCP, B-41 Associates, L.P. ("B-41") was not
served in these complaints and is not a party to any of the actions. Edison
Mission Energy, Inc. ("Mission") has agreed to indemnify both BNYCP and
B-41 against any costs resulting from the contractor's action. B-41 has
agreed to reimburse Mission for 25% of the excess over $10 million of such
costs, if any, with an aggregate limit of $10 million, payable solely out
of B-41's partnership fees and distributions and further limited to $1
million per year for 1998, 1999 and 2000, and $2 million per year
thereafter.
<PAGE>
U.S. PROJECT LOAN AGREEMENT
SCHEDULE 4.17
PERMITTED LIENS
1. B-41 Associates, L.P. ("York Partners") granted to Edison Mission Energy,
Inc. ("Mission") a security interest in its portion of the (a) certain
general partner fees calculated as a percentage of the gross revenues (the
"General Partner Fees") of Brooklyn Navy Yard Cogeneration Partners, L.P.
("BNYCP") and (b) royalty fees calculated as a percentage of gross
revenues (the "Royalty Fees") of BNYCP, the Royalty Fees and its right to
receive distributions pursuant to the BNYCP Limited Partnership Agreement,
dated as of October 19, 1992, from the general partner interest and a 30%
limited partnership interest in BNYCP (which is the same 30% limited
partnership interest pledged to Mission Energy New York, Inc. to secure
the priority loan), together with the proceeds thereof, to secure its
obligations under the Mission Reimbursement Agreement dated as of
November 1, 1997, among York Partners, BNYCP and Mission. In addition, in
connection with the settlement of certain litigation, York Partners has
granted to third parties a security interest in a 20% limited partnership
interest of which 17.5% is subject to a prior security interest of Mission
and 2.5% is not subject to such prior security interest.
2. The New World Power Texas Renewable Energy Limited Partnership (the "Big
Spring Guarantor") granted to Texas Pacific Land Trust (the "Trust") a
security interest in All Gross Revenues (as defined in Section 3.8.4 of
the Permit and Lease Agreement dated January 19, 1998, between the Big
Spring Guarantor and the Trust).
3. The easements and rights-of-way described in the Original Title Opinion,
dated as of July 16, 1998 and two Original Title Opinions, each dated
July 17, 1998, delivered by McElroy, Sullivan, Ryan & Miller, L.L.P.
<PAGE>
EXHIBIT A
FORM OF U.S. PROJECT LOAN NOTE
US$[__________] [DATE]
For value received, the undersigned, BROOKLYN NAVY YARD POWER
LLC, a Delaware limited liability company (the "BNY GUARANTOR") WARBASSE POWER I
LLC ("WARBASSE I"), a Delaware limited liability company, WARBASSE POWER II LLC
("WARBASSE II" and together with Warbasse I, the "WARBASSE GUARANTOR"), a
Delaware limited liability company, NEW WORLD POWER TEXAS RENEWABLE ENERGY
LIMITED PARTNERSHIP, a Delaware limited partnership (the "BIG SPRING GUARANTOR"
and, together with the BNY Guarantor and the Warbasse Guarantor, the "U.S.
GUARANTORS"), a limited partnership organized and existing under the laws of the
State of Texas, by this promissory note, jointly and severally, promises to pay
to the order of YORK POWER FUNDING (CAYMAN) LIMITED, ("FUNDING COMPANY") a
limited liability company incorporated and existing under the laws of the Cayman
Islands, at the office of The Bank of New York, a bank organized and existing
under the laws of the State of New York, located at [__________________________
___________________], in lawful currency of the United States of America and in
immediately available funds, the principal amount of [__________]
(US$[_________]), or if less, the aggregate unpaid and outstanding principal
amount of this U.S. Project Note advanced by Funding Company to the U.S.
Guarantors pursuant to that certain U.S. Project Loan Agreement, dated as of
[__________] (the "U.S. PROJECT LOAN AGREEMENT"), by and among the U.S.
Guarantors and Funding Company, and as the same may be amended from time to
time, and all other amounts owed by the U.S. Guarantors to Funding Company
hereunder.
This is one of the U.S. Project Notes entered into pursuant to
the U.S. Project Loan Agreement and is entitled to the benefits thereof and is
subject to all terms, provisions and conditions thereof. Capitalized terms used
and not defined herein shall have the meanings set forth in APPENDIX A of that
certain Trust Indenture, dated as of [__________] (the "INDENTURE"), by and
between Funding Company and The Bank of New York, a bank organized and existing
under the laws of the State of New York, as Bond Trustee.
Reference is hereby made to the Indenture and the Security
Documents for the provisions, among others, with respect to the custody and
application of the Collateral, the nature and extent of the security provided
thereunder, the rights, duties and obligations of the U.S. Guarantors and the
rights of the holder of this U.S. Project Note.
The principal amount hereof is payable in accordance with the
U.S. Project Loan Agreement, and such principal amount may be prepaid solely in
accordance with the U.S. Project Loan Agreement.
Exhibit A-1
<PAGE>
Each U.S. Guarantor further agrees to pay, in lawful currency
of the United States of America and in immediately available funds, interest
from the date hereof on the unpaid and outstanding principal amount hereof until
such unpaid and outstanding principal amount shall become due and payable
(whether at stated maturity, by acceleration or otherwise) at the rates of
interest and at the times set forth in the U.S. Project Loan Agree ment, and
each U.S. Guarantor agrees to pay all other amounts due, including, without
limitation, fees and costs, as stated in the U.S. Project Loan Agreement.
Upon the occurrence of any one or more U.S. Project Loan
Events of Default (as defined in SECTION 5.1 (Events of Default Defined)), all
amounts then remaining unpaid under this U.S. Project Note may become or be
declared to be immediately due and payable as provided in the U.S. Project Loan
Agreement, without notice of default, presentment or demand for payment, protest
or notice of nonpayment or dishonor, or notices or demands of any kind, all of
which are expressly waived by each U.S. Guarantor.
The obligations hereunder are subject to the limitations set
forth in SECTION 6.10 (Limitation of Liability) of the U.S. Project Loan
Agreement, the provisions of which are hereby incorporated by reference.
THIS U.S. PROJECT NOTE IS A CONTRACT MADE UNDER THE LAWS OF
THE STATE OF NEW YORK OF THE UNITED STATES OF AMERICA AND SHALL FOR ALL PURPOSES
BE GOVERNED BY AND CONSTRUED IN ACCOR DANCE WITH THE LAWS OF SUCH STATE WITHOUT
REGARD TO THE CONFLICT OF LAW RULES THEREOF (OTHER THAN SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW).
This U.S. Project Note may be executed in any number of
counterparts, all of which, taken together, shall constitute one and the same
instrument and any of the parties hereto may execute this U.S. Project Note by
signing any such counterpart.
Exhibit A-2
<PAGE>
IN WITNESS WHEREOF, each U.S. Guarantor has caused this U.S.
Project Note to be duly executed.
BROOKLYN NAVY YARD POWER LLC
By: B-41 ASSOCIATES, L.P.,
its Managing Member
By: B-41 MANAGEMENT CORPORATION,
its General Partner
By:
--------------------------------
Name:
Title:
WARBASSE POWER I LLC
By: COGENERATION TECHNOLOGIES, INC.
its Managing Member
By:
--------------------------------
Name:
Title:
WARBASSE POWER II LLC
By: YORK COGEN PARTNERS, L.P.
its Managing Member
By: RRR's VENTURES, LTD.
its General Partner
By:
--------------------------------
Name:
Title:
Exhibit A-3
<PAGE>
NEW WORLD POWER TEXAS RENEWABLE
ENERGY LIMITED PARTNERSHIP
By: BIG SPRINGS TEXAS ENERGY MANAGEMENT, INC.
Managing General Partner
By:
--------------------------------
Name:
Title:
Exhibit A-4
<PAGE>
Exhibit 10(rr)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRINIDAD PROJECT LOAN AGREEMENT
among
YORK EX INTERNATIONAL SRL,
as borrower
and
YORK POWER FUNDING (CAYMAN) LIMITED,
as lender
Dated as of August 4, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE 1
DEFINITIONS; CONSTRUCTION
<S> <C>
Section 1.1 DEFINITIONS............................................................................2
Section 1.2 PRINCIPLES OF CONSTRUCTION.............................................................2
ARTICLE 2
DESCRIPTION OF THE TRINIDAD PROJECT LOAN
Section 2.1 ACKNOWLEDGMENTS OF THE TRINIDAD PROJECT BORROWER; TRINIDAD PROJECT
LOAN..............................................................................2
Section 2.2 TERM OF THIS AGREEMENT.................................................................2
Section 2.3 INTEREST................................................................................2
Section 2.4 PRINCIPAL..............................................................................3
Section 2.5 OBLIGATIONS OF THE TRINIDAD PROJECT BORROWER HEREUNDER
UNCONDITIONAL.....................................................................3
Section 2.6 GENERAL TERMS OF PAYMENT...............................................................4
Section 2.7 SECURITY...............................................................................4
Section 2.8 PLEDGE OF TRINIDAD PROJECT NOTE........................................................4
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 ORGANIZATION, POWER AND STATUS OF THE TRINIDAD PROJECT BORROWER........................5
Section 3.2 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND DELIVERY..................................5
Section 3.3 NO CONFLICT............................................................................5
Section 3.4 COMPLIANCE WITH APPLICABLE LAW.........................................................6
Section 3.5 LITIGATION.............................................................................6
Section 3.6 ENVIRONMENTAL MATTERS..................................................................6
Section 3.7 BUSINESS OF THE TRINIDAD PROJECT BORROWER. ...........................................6
Section 3.8 VALID TITLE............................................................................6
Section 3.9 SECURITY INTERESTS.....................................................................6
Section 3.10 UTILITY REGULATION....................................................................7
Section 3.11 INVESTMENT COMPANY ACT................................................................7
Section 3.12 NO DEFAULTS...........................................................................7
Section 3.13 GOVERNMENTAL APPROVALS................................................................7
Section 3.14 MARGIN STOCK..........................................................................8
Section 3.15 TAXES.................................................................................8
Section 3.16 OWNERSHIP OF THE TRINIDAD PROJECT BORROWER............................................8
i
<PAGE>
PAGE
Section 3.17 DISCLOSURE............................................................................8
Section 3.18 REPRESENTATIONS AND WARRANTIES........................................................8
Section 3.19 USE OF PROCEEDS.......................................................................8
Section 3.20 TRINIDAD PROJECT DOCUMENTS............................................................8
ARTICLE 4
COVENANTS AND AGREEMENTS OF THE TRINIDAD PROJECT BORROWER
Section 4.1 PAYMENT OF PRINCIPAL OF AND INTEREST ON THE TRINIDAD PROJECT LOAN......................9
Section 4.2 REPORTING REQUIREMENTS.................................................................9
Section 4.3 MAINTENANCE OF EXISTENCE..............................................................10
Section 4.4 COMPLIANCE WITH LAWS..................................................................10
Section 4.5 GOVERNMENTAL APPROVALS; TITLE.........................................................10
Section 4.6 EXERCISE OF RIGHTS AND PERFORMANCE UNDER TRANSACTION
DOCUMENTS..................................................................................11
Section 4.7 ADDITIONAL DOCUMENTS; FILINGS AND RECORDINGS..........................................11
Section 4.8 PAYMENT OF TAXES AND CLAIMS...........................................................12
Section 4.9 BOOKS AND RECORDS.....................................................................12
Section 4.10 [Intentionally Omitted]..............................................................12
Section 4.11 AUDITORS..............................................................................12
Section 4.12 TRINIDAD REVENUE ACCOUNT..............................................................12
Section 4.13 PROJECT IMPLEMENTATION................................................................12
Section 4.14 PERMITTED INDEBTEDNESS................................................................13
Section 4.15 PERMITTED LIENS.......................................................................14
Section 4.16 CONTINGENT LIABILITIES................................................................14
Section 4.17 NATURE OF BUSINESS....................................................................15
Section 4.18 PROHIBITION ON FUNDAMENTAL CHANGES....................................................15
Section 4.19 SALE OF ASSETS........................................................................15
Section 4.20 SUBSIDIARIES; ADVANCES, INVESTMENTS AND LOANS.........................................15
Section 4.21 TRANSACTIONS WITH AFFILIATES..........................................................15
Section 4.22 RESTRICTED PAYMENTS...................................................................15
Section 4.23 AMENDMENTS TO TRINIDAD PROJECT DOCUMENTS..............................................16
Section 4.24 ASSIGNMENT OF OBLIGATIONS; ADDITIONAL AGREEMENTS......................................16
Section 4.25 MODIFICATIONS OF FORMATION DOCUMENTS..................................................16
Section 4.26 TAXATION..............................................................................17
PAGE
ARTICLE 5
DEFAULTS AND REMEDIES
Section 5.1 EVENTS OF DEFAULT DEFINED.............................................................17
Section 5.2 REMEDIES UPON A TRINIDAD EVENT OF DEFAULT.............................................20
Section 5.3 CONTINUING LIEN.......................................................................21
ii
<PAGE>
Section 5.4 DEFENSE OF ACTIONS....................................................................22
ARTICLE 6
GENERAL TERMS AND CONDITIONS
Section 6.1 NOTICES...............................................................................22
Section 6.2 AMENDMENTS AND WAIVERS................................................................22
Section 6.3 NO WAIVER; REMEDIES CUMULATIVE........................................................22
Section 6.4 SEVERABILITY..........................................................................23
Section 6.5 THIRD PARTY BENEFICIARIES.............................................................23
Section 6.6 TRINIDAD PROJECT BORROWER IN CONTROL..................................................23
Section 6.7 NUMBER AND GENDER.....................................................................23
Section 6.8 SECTION HEADINGS......................................................................23
Section 6.9 GOVERNING LAW; SUBMISSION TO JURISDICTION.............................................23
Section 6.10 LIMITATION OF LIABILITY..............................................................24
Section 6.11 COUNTERPARTS.........................................................................25
Section 6.12 SUCCESSORS AND ASSIGNS...............................................................25
Section 6.13 MAXIMUM INTEREST RATE................................................................25
Section 6.14 ENGLISH LANGUAGE.....................................................................25
Section 6.15 ENTIRE AGREEMENT.....................................................................25
Section 6.16 SURVIVAL.............................................................................26
</TABLE>
Schedule I: Amortization Schedule
Exhibit A: Form of Trinidad Project Note
iii
<PAGE>
TRINIDAD PROJECT LOAN AGREEMENT
This TRINIDAD PROJECT LOAN AGREEMENT, dated as of August 4, 1998 (this
"AGREEMENT") is by and among YORK EX INTERNATIONAL SRL, a Barbados exempt
society with restricted liability (the "TRINIDAD PROJECT BORROWER") and YORK
POWER FUNDING (CAYMAN) LIMITED, a limited liability company incorporated and
existing under the laws of the Cayman Islands ("FUNDING COMPANY"), as lender.
RECITALS
WHEREAS, Funding Company is a limited liability company established for
the sole purpose of issuing the Securities in its individual capacity as
principal and as agent acting on behalf of the U.S. Guarantors pursuant to the
Indenture and to make loans to the Project Borrowers pursuant to the Project
Loan Agreements;
WHEREAS, Funding Company has simultaneously with the execution and
delivery of this Agreement issued and sold the Initial Securities pursuant to
the Indenture;
WHEREAS, pursuant to this Agreement, Funding Company intends to use a
portion of the proceeds from the issuance and sale of the Initial Securities to
make the Trinidad Project Loan to the Trinidad Project Borrower in the aggregate
principal amount of U.S.$100,000,000;
WHEREAS, payments of the principal of, premium (if any), interest on
and any other amounts due with respect to the Initial Securities will be
partially serviced by repayment of the Trinidad Project Loan; and
WHEREAS, payments of the principal of and interest on and any other
amounts due with respect to the Trinidad Project Loan will be guaranteed by the
Trinidad Guarantor.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto formally covenant, agree and
bind themselves as follows:
<PAGE>
ARTICLE 1
DEFINITIONS; CONSTRUCTION
Section 1.1 DEFINITIONS. Except as otherwise expressly provided herein
or unless the context otherwise clearly requires, capitalized terms used in this
Agreement shall have the meanings ascribed thereto in APPENDIX A of the
Indenture and APPENDIX A is incorporated by reference herein as if set forth in
full herein.
Section 1.2 PRINCIPLES OF CONSTRUCTION. Except as otherwise expressly
provided herein or unless the context otherwise clearly requires, the principles
of construction set forth in SECTION 1.1 (Definitions; Construction) of the
Indenture shall apply to this Agreement.
ARTICLE 2
DESCRIPTION OF THE TRINIDAD PROJECT LOAN
Section 2.1 ACKNOWLEDGMENTS OF THE TRINIDAD PROJECT BORROWER; TRINIDAD
PROJECT LOAN. The Trinidad Project Borrower and Funding Company hereby
acknowledges and agrees that:
(a) pursuant to this Agreement, Funding Company does hereby lend to the
Trinidad Project Borrower and the Trinidad Project Borrower does hereby borrow
from Funding Company funds in the aggregate principal amount of One Hundred
Million United States Dollars (U.S. $100,000,000) (the "TRINIDAD PROJECT LOAN")
to be evidenced by a promissory note or notes substantially in the form of
EXHIBIT A issued by the Trinidad Project Borrower in favor of Funding Company
(each such note, including any note issued pursuant to clause (b) of this
SECTION 2.1, a "TRINIDAD PROJECT NOTE"); and
(b) if proceeds from the issuance and sale of any Additional Securities
the proceeds of which must be loaned to the Trinidad Project Borrower by Funding
Company, the outstanding principal balance of the Trinidad Project Loan shall be
increased by the amount of such proceeds and the Trinidad Project Loan shall
include the loan to the Trinidad Project Borrower of such proceeds, as evidenced
by a promissory note or notes substantially in the form of EXHIBIT A to be
issued by the Trinidad Project Borrower in favor of Funding Company.
Section 2.2 TERM OF THIS AGREEMENT. This Agreement shall remain in full
force and effect from the date hereof until the payment in full of all amounts
due under this Agreement.
Section 2.3 INTEREST. Interest hereunder shall be paid in arrears on
each April 30 and October 30, commencing October 30, 1998, until all principal
hereunder is paid in full.
2
<PAGE>
Interest hereunder shall be computed (a) on the basis of a three hundred sixty
(360) day year, consisting of twelve (12) thirty (30) day months, and (b) at the
applicable rates PER ANNUM specified on SCHEDULE I.
Section 2.4 PRINCIPAL.
(a) REGULAR REPAYMENT. (i) The Trinidad Project Borrower shall repay
the Trinidad Project Loan in installments to Funding Company on the dates, at
the times and in the amounts set forth on SCHEDULE I (as the same may be
modified (a) pursuant to SECTION 7.3 (Amendment of Project Loan Agreements or
Project Notes) of the Indenture and (b) to reflect any prepayments made pursuant
to clause (b) of this SECTION 2.4).
(ii) If proceeds from the issuance of any
Additional Securities are loaned to the Trinidad Project Borrower by Funding
Company, principal payments on the additional promissory note or notes issued by
the Trinidad Project Borrower pursuant to SECTION 2.1(B) (Acknowledgments of
Trinidad Project Borrower; Trinidad Project Loan) shall be payable in scheduled
installments which correspond to the repayment of such Additional Securities.
(b) PREPAYMENT. The Trinidad Project Borrower shall prepay the Trinidad
Project Loan pursuant to SECTION 3.4 (Prepayment of Project Loans) of the
Indenture in such amounts and at such times as may be appropriate to permit
Funding Company to redeem the Securities pursuant to SECTION 3.1 (Redemption at
the Option of Funding Company or the Holders) or SECTION 3.2 (Mandatory
Redemption) of the Indenture; PROVIDED that simultaneously there with, if
required to provide for the prepayment of the Trinidad Project Loan, the
Trinidad Project Borrower shall, through its ownership of the Trinidad
Guarantor, cause the Trinidad Obligor to prepay the Trinidad Loan pursuant to
SECTION 2.4(b) (Prepayment) of the Trinidad Loan Agreement. Following such
prepayment, the Trinidad Project Borrower shall furnish the Bond Trustee, on
behalf of Funding Company, an Officer's Certificate setting forth the
amortization schedule for the remaining Securities after giving effect to such
prepayment and corresponding redemption under the Indenture.
(c) The Trinidad Project Borrower shall prepay the Trinidad Project
Loan in such amounts and at such times as may be appropriate to permit Funding
Company to defease the Securities pursuant to SECTION 8.2 (Defeasance) of the
Indenture; PROVIDED that simulta neously therewith, if required to provide for
the prepayment of the Trinidad Project Loan, the Trinidad Project Borrower
shall, through its ownership of the Trinidad Guarantor, cause the Trinidad
Obligor to prepay the Trinidad Loan pursuant to SECTION 2.4(b) (Prepayment) of
the Trinidad Loan Agreement.
Section 2.5 OBLIGATIONS OF THE TRINIDAD PROJECT BORROWER HEREUNDER
UNCONDITIONAL. The obligation of the Trinidad Project Borrower to make the
payments required in SECTION 2.3 (Interest), SECTION 2.4 (Principal) and SECTION
4.26 (Taxation) shall be absolute and
3
<PAGE>
unconditional and the Trinidad Project Borrower shall not discontinue such
payments for any reason, including, without limitation, any acts or
circumstances that may constitute failure of consideration, eviction or
constructive eviction from the Trinidad Project, including commer cial
frustration of purpose, or change in Applicable Law. The Trinidad Project
Borrower may, however, at its own cost and expense and in its own name or, with
the consent of Funding Company and subject to the provision of certain
indemnities as Funding Company may require, in the name of Funding Company,
prosecute or defend any action or proceeding or take any other action involving
third Persons which the Trinidad Project Borrower deems reasonably necessary in
order to secure or protect its right of possession, occupancy and use of the
Trinidad Project.
Section 2.6 GENERAL TERMS OF PAYMENT. (a) All sums payable to Funding
Company hereunder shall be deemed paid to the extent the Collateral Agent shall
apply amounts held by the Depositary Bank to the payment of the principal of,
interest on or any other amounts due in respect of the Trinidad Project Loan and
the principal of, premium (if any), interest on or any other amounts due in
respect of the Securities, each in accordance with the Trinidad Depositary
Agreement.
(b) Whenever any payment hereunder shall be due, or any calculation
shall be made, on a day which is not a Business Day, the date for payment or
calculation, as the case may be, shall be extended to the next Business Day, and
any interest on any payment shall be payable for such extended time at the rate
set forth therefor.
(c) If no due date is specified for the payment of any amount payable
by the Trinidad Project Borrower hereunder, such amount shall be due and payable
not later than ten (10) days after receipt by the Trinidad Project Borrower of a
written demand from Funding Company for payment thereof.
Section 2.7 SECURITY. The obligations of the Trinidad Project Borrower
hereunder shall be secured as set forth herein and under the Security Documents.
Notwithstanding anything to the contrary herein or in any Security Document, the
Trinidad Collateral, or any portion thereof, shall in no event be used to secure
the Securities or any obligation of any U.S. Guarantor.
Section 2.8 PLEDGE OF TRINIDAD PROJECT NOTE. Funding Company shall
pledge each Trinidad Project Note to the Collateral Agent, acting on behalf of
the Secured Parties pursuant to the Trinidad Project Note Pledge Agreement. The
Trinidad Project Borrower hereby acknowledges and consents to the granting of
such pledge and this SECTION 2.8 shall constitute notice thereof given as of the
date of this Agreement.
4
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
The Trinidad Project Borrower make the following representations and
warranties to Funding Company, which representations and warranties shall
survive the execution and delivery of this Agreement:
Section 3.1 ORGANIZATION, POWER AND STATUS OF THE TRINIDAD PROJECT
BORROWER. The Trinidad Project Borrower (i) is an exempt society with restricted
liability duly organized and validly existing under the laws of Barbados, and
(ii) has all requisite power and authority to own the property and assets owned
by it and to carry on its business as now being conducted and as proposed to be
conducted.
Section 3.2 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND DELIVERY. (a)
The Trinidad Project Borrower has all necessary power and authority to execute,
deliver and perform its obligations under this Agreement, the Trinidad Project
Note and each other Transaction Document to which the Trinidad Project Borrower
is a party.
(b) The Trinidad Project Borrower has taken all necessary and proper
action to authorize the execution, delivery and performance by it of this
Agreement, the Trinidad Project Note and each other Transaction Document to
which the Trinidad Project Borrower is a party. The execution, delivery and
performance of this Agreement, the Trinidad Project Note and each other
Transaction Document to which the Trinidad Project Borrower is a party does not
require the approval or consent of any holder or trustee of any Indebtedness or
other obligations of the Trinidad Project Borrower which has not been obtained.
(c) This Agreement, the Trinidad Project Note and each other
Transaction Document to which the Trinidad Project Borrower is a party have been
duly executed and delivered by the Trinidad Project Borrower and constitute
legal, valid and binding obligations of the Trinidad Project Borrower,
enforceable against the Trinidad Project Borrower in accordance with the terms
hereof and thereof, except as the enforceability thereof may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (ii) general
equitable principles, regardless of whether the issue of enforceability is
considered in a proceeding in equity or at law.
Section 3.3 NO CONFLICT. Neither the execution, delivery and
performance of this Agreement, the Trinidad Project Note or any other
Transaction Document to which the Trinidad Project Borrower is a party nor the
consummation of any of the transactions contemplated hereby or thereby (a)
contravenes or violates any provision of any Applicable Law to which the
Trinidad Project Borrower or any of its assets is subject, (b) conflicts with or
violates any provision of any formation document of the Trinidad Project
Borrower or (c)
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conflicts with or violates, will result in a breach of any of the terms,
covenants, conditions or provisions of, constitutes a default under, or results
in the acceleration of Indebtedness evidenced by, any agreement or instrument to
which the Trinidad Project Borrower is a party or by which it or any of its
properties or assets is bound or to which it may be subject, except, in the case
of clauses (a) or (c) immediately above, any such conflict, violation, breach,
default or acceleration which could not reasonably be expected to result in a
Material Adverse Effect, or (d) results in the creation or imposition of (or the
obligation to create or impose) any Lien (other than Trinidad Permitted Project
Liens) upon any of the properties or assets of the Trinidad Project Borrower.
Section 3.4 COMPLIANCE WITH APPLICABLE LAW. The Trinidad Project
Borrower has been and is currently in compliance with all Applicable Laws to
which it or any of its assets is subject, except where failure to comply could
not reasonably be expected to result in a Material Adverse Effect.
Section 3.5 LITIGATION. There are no claims, actions, suits,
investigations or proceed ings at law or in equity (including any Environmental
Claims) or by or before any arbitrator or Governmental Authority now pending
against the Trinidad Project Borrower or, to the best knowledge of the Trinidad
Project Borrower, threatened against the Trinidad Project Borrower or any
properties, assets or rights of the Trinidad Project Borrower that could
reasonably be expected to result in a Material Adverse Effect.
Section 3.6 ENVIRONMENTAL MATTERS. The Trinidad Project Borrower has
been and is currently in compliance with all applicable Environmental Laws
except where the failure to comply could not reasonably be expected to have a
Material Adverse Effect. To the best knowledge of the Trinidad Project Borrower,
the Trinidad Project is in compliance with all applicable Environmental Laws and
there are no existing facts, circumstances or conditions which could under any
existing applicable Environmental Law, individually or in the aggregate with all
other circumstances and conditions, reasonably be expected to result in a
Material Adverse Effect.
Section 3.7 BUSINESS OF THE TRINIDAD PROJECT BORROWER. Except as
otherwise permitted in this Agreement and the other Finance Documents, the
Trinidad Project Borrower is not engaged in any business other than the
financing of the Trinidad Project and transac tions related thereto.
Section 3.8 VALID TITLE. The Trinidad Project Borrower is the legal and
beneficial owner of, with good, legal and valid title to, all its properties and
assets free and clear of all Liens other than Trinidad Permitted Project Liens.
Section 3.9 SECURITY INTERESTS. (a) The Security Documents to which the
Trinidad Project Borrower is a party, upon execution and delivery by the parties
thereto, will create valid, and, when financing statements (or the equivalent)
in appropriate form are filed in the
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recording offices specified therein, perfected, first priority Liens, subject to
Trinidad Permitted Project Liens, in all of the Trinidad Collateral owned by the
Trinidad Project Borrower in favor of the Collateral Agent for the benefit of
the Secured Parties.
(b) No mortgage or financing statement or other instrument or
recordation executed or authorized to be filed by the Trinidad Project Borrower,
or, to the Trinidad Project Borrower's best knowledge, by any other Person
covering all or any part of the property or assets of the Trinidad Project
Borrower (including the Trinidad Collateral) is on file in any recording office,
except such as relate to Trinidad Permitted Project Liens.
Section 3.10 UTILITY REGULATION. The Trinidad Project Borrower is not
subject to regulation by any Governmental Authority under PUHCA as a "holding
company," a "public utility company" or an "affiliate" or a "subsidiary company"
of a "holding company."
Section 3.11 INVESTMENT COMPANY ACT. The Trinidad Project Borrower is
not, and following the execution of the Trinidad Project Note will not be, an
"investment company" or a company "controlled" by an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended from
time to time.
Section 3.12 NO DEFAULTS. (a) No Trinidad Default or Trinidad Event
of Default has occurred and is continuing.
(b) The Trinidad Project Borrower is not in default under any Trinidad
Project Document or any other Transaction Document to which the Trinidad Project
Borrower is a party except for defaults which could not reasonably be expected
to result in a Material Adverse Effect.
(c) To the best knowledge of the Trinidad Project Borrower, no default
exists by any other party to any Trinidad Project Document or any other contract
related to the Trinidad Project and no event of force majeure exists under any
Trinidad Project Document except for defaults which, in either case, could not
reasonably be expected to result in a Material Adverse Effect.
Section 3.13 GOVERNMENTAL APPROVALS. All Governmental Approvals which
are required to be obtained by, in the name of or on behalf of the Trinidad
Project Borrower or, to the knowledge of the Trinidad Project Borrower, any
other party to any Transaction Docu ment in connection with (a) the issuance of
the Trinidad Project Note and (b) the execution, delivery and performance by the
Trinidad Project Borrower or any other party to any Transaction Document of the
Transaction Documents have been duly obtained and are in full force and effect,
other than, in each case, those Governmental Approvals which the failure to so
obtain could not reasonably be expected to result in a Material Adverse Effect.
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Section 3.14 MARGIN STOCK. The Trinidad Project Borrower is not
engaged, directly or indirectly, principally, or as one of its important
activities, in the business of extending, or arranging for the extension of,
credit for the purposes of purchasing or carrying any "margin stock" (as defined
in Regulation, T, U or X of the Board of Governors of the Federal Reserve
System). No part of the proceeds of the Trinidad Project Loan will be used for
"purchasing" or "carrying" (as defined in Regulation, T, U or X of the Board of
Governors of the Federal Reserve System) any margin stock or for extending
credit to others for the purpose of purchasing or carrying any margin stock, or
for any purpose which would violate, or cause a violation of, Regulation, T, U
or X of the Board of Governors of the Federal Reserve System.
Section 3.15 TAXES. The Trinidad Project Borrower has filed or caused
to be filed all Tax Returns required by Applicable Law to be filed by it, and
has paid all Taxes shown to be due and payable by it on such Tax Returns or any
assessments made against it or any of its properties and all other Taxes, fees
or other charges imposed on it by any Governmental Authority other than Taxes,
fees, assessments or other charges which are not delinquent and remain payable
without penalty or which the Trinidad Project Borrower is contesting in good
faith and for which the Trinidad Project Borrower is maintaining adequate
reserves (to the extent required by GAAP) in connection therewith.
Section 3.16 OWNERSHIP OF THE TRINIDAD PROJECT BORROWER. As of the date
of this Agreement, York Holdings (Caymans) LLC and Robert C. Paladino are the
sole members of the Trinidad Project Borrower.
Section 3.17 DISCLOSURE. Each of the Preliminary Offering Circular and
the Final Offering Circular as of its date did not, and the Final Offering
Circular (as the same may have been amended or supplemented) as of the Closing
Date will not, contain any untrue statement of a material fact with respect to
the Trinidad Project Borrower or omit to state a material fact necessary to make
the statements made therein with respect to the Trinidad Project Borrower, in
light of the circumstances under which they were made, not misleading.
Section 3.18 REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by the Trinidad Project Borrower and each of its Affiliates, and
to its knowledge, each other party in any Transaction Document are true and
correct, except to the extent such misrepresentation could not reasonably be
expected to have a Material Adverse Effect.
Section 3.19 USE OF PROCEEDS. All proceeds of the Trinidad Project Loan
will be used in accordance with this Agreement and for no other use.
Section 3.20 TRINIDAD PROJECT DOCUMENTS. The Bond Trustee has received
a complete copy of each Trinidad Project Document then in effect (including all
exhibits, schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any).
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ARTICLE 4
COVENANTS AND AGREEMENTS OF THE TRINIDAD PROJECT BORROWER
The Trinidad Project Borrower hereby covenants and agrees that from the
date of this Agreement, it shall faithfully observe and fulfill, and shall cause
to be faithfully observed and fulfilled, each and all of the following covenants
until all amounts due under this Agreement, each Trinidad Project Note, the
Indenture and the Securities shall have been indefeasibly paid in full:
Section 4.1 PAYMENT OF PRINCIPAL OF AND INTEREST ON THE TRINIDAD
PROJECT LOAN. The Trinidad Project Borrower shall promptly pay or cause to be
paid the principal of and interest on each Trinidad Project Loan according to
the terms hereof.
Section 4.2 REPORTING REQUIREMENTS. The Trinidad Project Borrower
shall furnish or cause to be furnished to Funding Company:
(a) as soon as available and in any event within sixty (60) days after
the end of the first three (3) quarterly accounting periods in each fiscal year
of the Trinidad Project Bor rower (commencing with the quarter ending August 31,
1998) and, with respect to item (iii) herein, the final quarter of each fiscal
year, Unaudited Financial Statements of the Trinidad Project Borrower and the
Trinidad Guarantor, accompanied by an Officer's Certificate of the Trinidad
Project Borrower and the Trinidad Guarantor confirming (i) that such Unaudited
Financial Statements fairly present the financial condition and results of
operations of the Trinidad Project Borrower and the Trinidad Guarantor on the
dates and for the periods indicated in accordance with GAAP (other than with
respect to the notes and other normally recurring year-end adjustments), (ii)
that no Trinidad Default has occurred and no Trinidad Event of Default has
occurred and is continuing, or, if such event has occurred, describing the
nature thereof and (iii) the Debt Service Coverage Ratios for the historical
three (3) quarters and the final quarter of such fiscal year together with a
reconciliation of each quarterly Debt Service Coverage Ratio to the annual Debt
Service Coverage Ratio;
(b) as soon as available and in any event within one hundred twenty
(120) days after the end of each fiscal year of the Trinidad Finance Parties
(commencing with the fiscal year ending February 28, 1999), Annual Audited
Consolidated Financial Statements, accompanied by an audit opinion thereon by
the Auditors, which opinion shall state that (i) the financial statements of the
Trinidad Finance Parties present fairly, in all material respects, the financial
position, results of operations and cash flows of the Trinidad Finance Parties
at the end of, and for, such fiscal year in accordance with GAAP, (ii) nothing
has come to their attention that any Trinidad Default or Trinidad Event of
Default, as they relate to accounting matters, has occurred and is continuing,
or, if such event has occurred, describing the nature thereof and (iii) the
annual Debt Service Coverage Ratio for such fiscal year.
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(c) promptly and in any event within five (5) days after an Authorized
Officer of the Trinidad Project Borrower obtains actual knowledge of any
Trinidad Default or Trinidad Event of Default, a written notice describing such
Trinidad Default or Trinidad Event of Default and any action being or proposed
to be taken with respect thereto;
(d) all other information reasonably requested by Funding Company to
enable Funding Company to satisfy its obligations under the Indenture;
(e) written notice of any event or condition that could reasonably be
expected to result in a Material Adverse Effect;
(f) notice of any litigation, pending or threatened, against the
Trinidad Project Borrower of which it has actual knowledge which could
reasonably be expected to result in a Material Adverse Effect;
(g) copies of all material notices delivered to it by the Trinidad
Guarantor pursuant to any Transaction Document; and
(h) promptly upon request, a list of the current balances of each of
the Trinidad Depositary Accounts.
Section 4.3 MAINTENANCE OF EXISTENCE. The Trinidad Project Borrower
shall at all times preserve and maintain in full force and effect (a) its
existence as an exempt society with restricted liability and (b) all of its
powers, rights, privileges and licenses necessary for the transaction of its
business as conducted or proposed to be conducted except, in the case of this
clause (b) where failure to do so could not reasonably be expected to result in
a Material Adverse Effect.
Section 4.4 COMPLIANCE WITH LAWS. The Trinidad Project Borrower shall
comply with all Applicable Laws (including Environmental Laws), except where
non-compliance could not reasonably be expected to result in a Material Adverse
Effect.
Section 4.5 GOVERNMENTAL APPROVALS; TITLE. (a) The Trinidad Project
Borrower shall, to the extent such action is within its control, cause the
Trinidad Obligor to obtain in a timely manner, maintain in full force and effect
(or where appropriate, renew) and comply with all Governmental Approvals
(including, without limitation, those required under Environmental Laws)
required at any time or advisable (i) in connection with the construction,
maintenance, ownership and good and orderly operation of the Trinidad Project,
as currently conducted and as proposed to be conducted, (ii) for the Trinidad
Project to produce, sell and deliver electricity in accordance with and as
contemplated by the Trinidad Project Documents and (iii) to execute and deliver
the Transaction Documents to which it is a party and to perform its obligations
thereunder, unless in each case the failure to so obtain,
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maintain or comply with such Governmental Approvals could not reasonably be
expected to result in a Material Adverse Effect.
(b) The Trinidad Project Borrower shall preserve and maintain good,
valid and, where applicable, marketable title to all of its properties and
assets subject to no Liens other than Trinidad Permitted Project Liens except
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
Section 4.6 EXERCISE OF RIGHTS AND PERFORMANCE UNDER TRANSACTION
DOCUMENTS. (a) The Trinidad Project Borrower shall exercise all of its rights
under any Transaction Document to which it is party unless failure to do so
could not reasonably be expected to result in a Material Adverse Effect.
(b) The Trinidad Project Borrower shall take all reasonable action
within its control required to ensure that each Transaction Document to which it
is a party is in proper legal form under the respective governing laws selected
for such Transaction Document for the enforcement thereof in such jurisdictions
without further action on the part of Funding Company, the Collateral Agent or
the Bond Trustee.
(c) The Trinidad Project Borrower shall perform all of its covenants
and obligations under each Transaction Document to which it is party and shall
take all necessary action to prevent the termination or cancellation of any
Transaction Document to which it is a party except where such nonperformance or
nonobservance, or the result of such termination or cancellation, could not
reasonably be expected to result in a Material Adverse Effect.
Section 4.7 ADDITIONAL DOCUMENTS; FILINGS AND RECORDINGS. (a) The
Trinidad Project Borrower shall execute and deliver, from time to time as
reasonably requested by Funding Company, the Bond Trustee or the Collateral
Agent, at the Trinidad Project Borrower's expense, such documents in connection
with the rights and remedies of the Secured Parties granted or provided for by
this Agreement or the other Transaction Docu ments to which the Trinidad Project
Borrower is a party and to consummate the transactions contemplated therein.
(b) The Trinidad Project Borrower shall, at its own expense, take all
reasonable actions necessary to establish, maintain, protect, perfect and
continue the perfection and priority of the Liens created by the Trinidad
Security Documents and to protect and enforce its rights and title and the
rights and title of the Secured Parties to the Trinidad Collateral in such
manner and in such places as in the opinion of counsel to the Trinidad Project
Borrower, the Bond Trustee or the Collateral Agent are required by Applicable
Law in order to fully preserve and protect the rights of Funding Company, the
Collateral Agent or the Bond Trustee thereunder, except where the failure to do
so could not reasonably be expected to have a Material Adverse Effect.
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Section 4.8 PAYMENT OF TAXES AND CLAIMS. The Trinidad Project Borrower
shall, prior to the time penalties shall attach thereto, pay and discharge or
cause to be discharged all Taxes, assessments and governmental charges or levies
imposed upon it, its income or its properties; PROVIDED that the Trinidad
Project Borrower shall not be required to pay any such obligation if (a) such
charges are being diligently contested in good faith by appropriate proceedings,
(b) during the period of such contest the enforcement of any contested item is
effectively stayed, and (c) adequate reserves are established with respect to
the contested items (to the extent required by GAAP).
Section 4.9 BOOKS AND RECORDS. The Trinidad Project Borrower shall keep
proper books of record and account truly and fairly reflecting the financial
condition and results of operations of the Trinidad Project Borrower in which
full, true and correct entries in conformity with GAAP and all Applicable Laws
shall be made of all dealings and transactions in relation to its business and
activities. Upon five (5) days written notice, the Trinidad Project Borrower
shall permit officers and designated representatives of Funding Company, the
Collateral Agent, the Bond Trustee, the Depositary Bank or any duly authorized
agent or representative thereof (including without limitation, the Independent
Engineer) to visit and inspect, from time to time during normal business hours,
any of the properties of the Trinidad Project Borrower and to examine and make
copies of the books of record and account of the Trinidad Project Borrower and
discuss the affairs, finances and accounts of the Trinidad Project Borrower
with, and be advised as to the same by, its officers, all at such reasonable
times and intervals and to such reasonable extent as Funding Company, the
Collateral Agent, the Bond Trustee, Depositary Bank and duly authorized agent or
representative thereof (including, without limitation, the Independent Engineer)
may reasonably request.
Section 4.10 [Intentionally Omitted]
Section 4.11 AUDITORS. The Trinidad Project Borrower shall retain a
nationally recognized independent accounting firm in the United States to act as
its auditors and authorize such firm to communicate directly with Funding
Company, the Bond Trustee and the Collateral Agent. The Trinidad Project
Borrower shall also appoint an auditor who is a member of, and holds a
practicing certificate from, the Institute of Chartered Accountants of Barbados.
Section 4.12 TRINIDAD REVENUE ACCOUNT. The Trinidad Project Borrower
shall take all actions as may be necessary to cause all Cash Flows of the
Trinidad Project Borrower or Trinidad Obligor to be deposited in the Trinidad
Revenue Account in accordance with the Trinidad Depositary Agreement and to be
disbursed in accordance with the provisions set forth in ARTICLE 3 (The
Accounts) of the Trinidad Depositary Agreement.
Section 4.13 PROJECT IMPLEMENTATION. The Trinidad Project Borrower
shall, to the extent such action is within its control, cause the Trinidad
Obligor to operate the Trinidad
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Project and all other property and rights in accordance with customary industry
practice and maintain the Trinidad Project and other property in good repair and
condition (ordinary wear and tear excepted in respect thereof).
Section 4.14 PERMITTED INDEBTEDNESS. The Trinidad Project Borrower
shall not create or incur or suffer to exist any Indebtedness except the
following (collectively, "TRINIDAD PERMITTED PROJECT INDEBTEDNESS"):
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness incurred pursuant to the Guarantee by the Trinidad
Guarantor;
(c) Indebtedness incurred to finance in whole or in part the making of
capital improvements to the Trinidad Project required to maintain compliance
with Applicable Law; PROVIDED that the Independent Engineer shall have certified
to the Bond Trustee that:
(i) (x) an Officer's Certificate of an Authorized
Officer of the Trinidad Obligor certifying that such Indebtedness is
required to make a capital improvement to the Trinidad Project that is
required in order to maintain compliance with Applica ble Law is
reasonable and (y) that such Indebtedness is the most effective means
of making such capital expenditure and, if applicable, completing the
Trinidad Project; and
(ii) after giving effect to the incurrence of such
Indebtedness, the minimum Projected Debt Service Coverage Ratio for (A)
the next four consecutive fiscal quarters, commencing with the quarter
in which such Indebtedness is to be incurred, taken as one annual
period, and (B) each subsequent fiscal year through the Final Maturity
Date for the Securities, will not be less than 1.2 to 1;
(d) Indebtedness incurred to finance in whole or in part the making of
capital improvements to the Trinidad Project other than those capital
improvements referenced in clause (c) above PROVIDED that:
(i) an Authorized Officer of the Trinidad Obligor
certifies to the Bond Trustee that no Default or Event of Default has
occurred and is continuing or will occur as a result of the incurrence
of such Indebtedness;
(ii) the Independent Engineer shall have certified to
the Bond Trustee that after giving effect to the incurrence of such
Indebtedness, (x) the minimum Projected Debt Service Coverage Ratio for
(A) the next four consecutive fiscal quarters commencing with the
quarter in which such Indebtedness is to be incurred, taken as one
annual period and (B) each subsequent fiscal year through the Final
Maturity Date for the Securities, will not be less than 1.5 to 1, and
(y) the average
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Projected Debt Service Coverage Ratio for all succeeding fiscal years
until the Final Maturity Date for the Securities will not be less than
1.55 to 1; and
(iii) written confirmation from each Rating Agency
then rating the Securities that the incurrence of such Indebtedness
will not result in a Ratings Downgrade;
(e) Indebtedness in the form of a working capital facility for the
benefit of the Trinidad Project in an aggregate principal amount not to exceed
$3,000,000; PROVIDED that the terms of such facility provide that the aggregate
amount of all loans outstanding thereunder shall be reduced to zero for ten (10)
days in each fiscal year;
(f) To the extent such obligations would constitute Indebtedness,
obligations of the Trinidad Finance Parties under the Trinidad Project
Documents;
(g) Indebtedness related to Trinidad Permitted Project Liens; and
(h) Subordinated Indebtedness from any other Trinidad Finance Party.
Section 4.15 PERMITTED LIENS. The Trinidad Project Borrower shall not
create or suffer to exist or permit any Lien upon or with respect to any of its
properties except the following (collectively, "TRINIDAD PERMITTED PROJECT
LIENS"):
(a) Liens specifically permitted or required by, or created by, any
Security Document or any Transaction Document including, without limitation, the
Trinidad PPA;
(b) Liens for taxes, assessments or governmental charges which are
either not yet due or which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves are established in
accordance with GAAP; and
(c) other Liens incidental to the conduct of the Trinidad Project
Borrower's business or the ownership of properties and assets which were not
incurred in connection with the borrowing of money or the obtaining of advances
or credit (other than Liens arising by operation of law or statute in the
ordinary course of business), and which do not in the aggregate materially
impair the use thereof in the operation of the Trinidad Project Borrower's
business.
Section 4.16 CONTINGENT LIABILITIES. The Trinidad Project Borrower
shall not contingently or otherwise be or become liable, directly or indirectly,
in connection with any Guarantee Obligation except for endorsements and similar
obligations in the ordinary course of business.
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Section 4.17 NATURE OF BUSINESS. The Trinidad Project Borrower shall
not engage in any business other than its existing business including and as
otherwise contemplated by the Transaction Documents.
Section 4.18 PROHIBITION ON FUNDAMENTAL CHANGES. The Trinidad Project
Borrower shall not enter into any transaction of merger or consolidation, change
its form of organization or its business, liquidate, wind-up or dissolve itself
(or suffer any liquidation or dissolution), discontinue its business or purchase
or otherwise acquire all or substantially all of the assets of any other Person,
except, in any such case, as contemplated by the Finance Documents.
Section 4.19 SALE OF ASSETS. The Trinidad Project Borrower shall not
sell or transfer any assets or assign any rights other than (so long as no
Trinidad Default or Trinidad Event of Default has occurred and is continuing)
those in the ordinary course of its business for cash equal to the fair market
value of such assets at the time of sale, except, in any such case, (i) as
contemplated by the Finance Documents or (ii) in connection with the sale of its
interests in the Trinidad Obligor on the terms and conditions set forth in the
Indenture.
Section 4.20 SUBSIDIARIES; ADVANCES, INVESTMENTS AND LOANS. The
Trinidad Project Borrower shall not form or have any Subsidiaries (other than
the Trinidad Guarantor and the Trinidad Obligor), make investments, loans or
advances or acquire the stock, obligations or securities of any Person; PROVIDED
that the Trinidad Project Borrower may invest amounts on deposit in the Trinidad
Depositary Accounts, subject to limitations as to term and duration, in Cash
Equivalents; PROVIDED further that the Trinidad Project Borrower may make loans
to the other Trinidad Finance Parties provided that such loans shall be
Subordinated Indebtedness of such other Trinidad Finance Party; PROVIDED FURTHER
that the Trinidad Project Borrower shall be entitled to receive equity
contributions from and make equity contributions to the Trinidad U.S. Parent,
the Trinidad Cayman Parent, or any other Trinidad Finance Party.
Section 4.21 TRANSACTIONS WITH AFFILIATES. The Trinidad Project
Borrower shall not enter into any transaction or series of related transactions,
whether or not in the ordinary course of business, with any Affiliate of the
Trinidad Project Borrower which is not on terms and conditions no less favorable
as would be obtained in a comparable arm's-length transaction with a Person
other than an Affiliate of the Trinidad Project Borrower, except that the
Trinidad Project Borrower may perform its obligations under and engage in the
transactions contemplated by the Transaction Documents.
Section 4.22 RESTRICTED PAYMENTS. The Trinidad Project Borrower shall
not make any Restricted Payments except as permitted under the Finance
Documents.
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Section 4.23 AMENDMENTS TO TRINIDAD PROJECT DOCUMENTS. Other than with
respect to Permitted Contract Buy-Outs, the Trinidad Project Borrower (nor any
Affiliate thereof) shall not, directly or indirectly, (x) permit the assignment
of the rights and obligations of any party to any Trinidad Project Document or
(y) terminate, amend, modify, replace, supplement or waive, or permit or consent
to the termination, modification, replacement, supplement or waiver of, any of
the provisions of, or give any consent under, any of the Trinidad Project
Documents unless (a) the Trinidad Project Borrower certifies that such
assignment, termination, amendment, modification, replacement, supplement,
waiver or consent could not reasonably be expected to result in a Material
Adverse Effect, and (b) in the case of any assignment, termination, amendment,
modification, replacement, supplement, waiver or consent with respect to the
Trinidad PPA or any other Trinidad Project Document which affects the Cash Flows
to be received by the Trinidad Project Borrower, in addition to the conditions
set forth in clause (a) above, (i) the Independent Engineer certifies that such
assignment, termination, amendment, modification, replacement, supplement,
waiver or consent could not reasonably be expected to result in a Material
Adverse Effect and (ii) the Trinidad Project Borrower provides to the Bond
Trustee written confirmation from each Rating Agency then rating the Securities
that such assignment, termination, amendment, modification, replacement,
supplement, waiver or consent will not result in a Ratings Downgrade.
Section 4.24 ASSIGNMENT OF OBLIGATIONS; ADDITIONAL AGREEMENTS. The
Trinidad Project Borrower shall not assign any of its rights or obligations
under any Transaction Document and shall not enter into any additional contract,
agreement or undertaking if the transactions contemplated by such assignment or
additional contract, agreement or undertaking could reasonably be expected to
have a Material Adverse Effect; PROVIDED that the Trinidad Project Borrower
shall be permitted to assign any of its rights or obligations hereunder if such
assignment is necessary to avoid any adverse tax consequences resulting from a
change in Applicable Law (or the interpretation thereof) and (a) no Default or
Event of Default shall exist and be continuing at such time, (b) the Bond
Trustee shall receive written confirmation from each Rating Agency that such
assignment shall not result in a Ratings Downgrade and (c) the Bond Trustee
receives satisfactory Opinions of Counsel of the Trinidad Project Borrower
stating that (i) such assignment is enforceable and creates a legal, valid and
binding obligation of the Trinidad Project Borrower, (ii) such assignment has no
adverse consequences upon the rights and remedies of the Secured Parties with
respect to the Collateral and (iii) such assignment shall have no adverse
effects on the tax structure of the transaction prior to the assignment or upon
payments to or from any Project Obligor or otherwise related to the Securities
and each of the Project Notes.
Section 4.25 MODIFICATIONS OF FORMATION DOCUMENTS. The Trinidad Project
Borrower shall not amend or modify its articles of organization, certificate of
organization, by-laws or other formation documents or change its fiscal year,
except if such amendment, modification or change which could not reasonably be
expected to result in a Material Adverse Effect.
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<PAGE>
Section 4.26 TAXATION. (a) All payments made by the Trinidad Project
Borrower in respect of the Trinidad Project Loan shall be made free and clear
of, and without withholding or deduction for or on account of, any and all
Taxes. The Trinidad Project Borrower shall pay such additional amounts as may be
necessary to ensure that the amounts received by Funding Company after such
withholding or deduction, if any, shall equal the respective amounts of
principal and interest that would have been receivable in the absence of such
withholding or deduction.
(b) The Trinidad Project Borrower shall promptly pay when due any
present or future stamp, court or documentary Taxes or any other excise or
property Taxes, charges or similar levies that arise in any jurisdiction from
the execution or delivery of the Trinidad Project Note or any other document
referred to herein or therein, excluding (i) Taxes imposed on or measured by the
net income or capital of Funding Company and (ii) any such Taxes, charges or
similar levies imposed by any jurisdiction other than Barbados or Trinidad.
ARTICLE 5
DEFAULTS AND REMEDIES
Section 5.1 EVENTS OF DEFAULT DEFINED. The term "TRINIDAD EVENT OF
DEFAULT," whenever used herein, shall mean any of the following events (whatever
the reason for such event and whether it shall be voluntary or involuntary or
shall come about or be effected by operation of law, or be pursuant to or in
compliance with any Applicable Law), and any such event shall continue to be a
Trinidad Event of Default if and for so long as it shall not have been remedied
or waived in accordance with the terms of this Agreement, the Indenture and the
Intercreditor Agreement:
(a) The Trinidad Project Borrower shall fail to pay any
principal of, premium (if any), interest on, or other amounts due in
respect of or any other obligations on the Trinidad Project Loan when
the same becomes due and payable, whether by sched uled maturity or
required prepayment or redemption or by acceleration or otherwise and
such failure continues for ten (10) or more days following the due date
for payment after application by the Collateral Agent, in accordance
with the Trinidad Depositary Agreement, of (x) any amounts in the Debt
Service Reserve Account and (y) any amounts otherwise advanced by the
Trinidad Project Borrower;
(b) any representation or warranty made by the Trinidad
Project Borrower in this Agreement or in any other Transaction Document
to which the Trinidad Project Borrower is a party, or any
representation, warranty or statement in any certificate, financial
statement or other document furnished to Funding Company, the Bond
Trustee or any other Holder by or on behalf of the Trinidad Project
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<PAGE>
Borrower hereunder or thereunder, shall prove to have been untrue or
misleading in any material respect as of the time made, confirmed or
furnished and such fact, event or circumstance that gave rise to such
inaccuracy has resulted in, or could reasonably be expected to result
in, a Material Adverse Effect, and such fact, event or circumstance
shall continue uncured for thirty (30) or more days from the date an
Authorized Officer of the Trinidad Project Borrower obtains actual
knowledge thereof; PROVIDED that if the Trinidad Project Borrower
commences and diligently pursues efforts to cure such fact, event or
circumstance within such thirty (30) day period and delivers written
notice thereof to the Bond Trustee, the Trinidad Project Borrower may
continue to effect such cure and such misrepresentation shall not be
deemed a "Trinidad Event of Default" for an additional ninety (90) days
so long as the Trinidad Project Borrower is diligently pursuing such
cure;
(c) The Trinidad Project Borrower shall fail to perform or
observe any covenant or agreement contained in SECTION 4.3 (Maintenance
of Existence), SECTION 4.6 (Exercise of Rights and Performance Under
Transaction Documents), SECTION 4.7 (Additional Documents; Filings and
Recordings), SECTION 4.8 (Payment of Taxes and Claims), SECTION 4.9
(Books and Records), SECTION 4.13 (Project Implementation), SECTION
4.14 (Permitted Indebtedness), SECTION 4.15 (Permitted Liens), SECTION
4.16 (Contingent Liabilities), SECTION 4.17 (Nature of Business),
SECTION 4.18 (Prohibition on Fundamental Changes), SECTION 4.19 (Sale
of Assets), SECTION 4.22 (Restricted Payments), SECTION 4.23
(Amendments to Trinidad Project Documents), SECTION 4.24 (Assignment of
Obligations; Additional Agreements), SECTION 4.25 (Modification of
Formation Documents), and SECTION 4.26 (Taxation) and such failure
shall continue uncured for thirty (30) or more days from the date an
Authorized Officer of the Trinidad Project Borrower obtains actual
knowledge of such failure;
(d) The Trinidad Project Borrower shall fail to perform or
observe any of the other covenants contained in this Agreement or in
the other Finance Documents to which it is party (other than those
referred to in clause (c) of this SECTION 5.1) and such failure shall
continue uncured for sixty (60) or more days from the date an
Authorized Officer of the Trinidad Project Borrower obtains actual
knowledge of such failure; PROVIDED that if the Trinidad Project
Borrower commences and diligently pursues efforts to cure such default
within such sixty (60) day period and delivers written notice thereof
to the Bond Trustee, the Trinidad Project Borrower may continue to
effect such cure of the default and such default shall not be deemed a
"Trinidad Event of Default" for an additional thirty (30) days so long
as the Trinidad Project Borrower is diligently pursuing such cure;
(e) The Trinidad Project Borrower or any other party to a
material Trinidad Project Document shall (i) apply for or consent to
the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or all or a
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<PAGE>
substantial part of its property, (ii) admit in writing its inability
or be generally unable to pay its debts as such debts become due, (iii)
make a general assignment for the benefit of its creditors, (iv)
commence a voluntary case under the Federal Bankruptcy Code, (v) file a
petition seeking to take advantage of any other Debtor Relief Law, (vi)
fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under
the Federal Bankruptcy Code or any other Debtor Relief Law or (vii)
take any action for the purpose of effecting any of the foregoing
including, without limitation, commencing a vote of the managers in
connection with any of the foregoing;
(f) a proceeding or case shall be commenced without the
application or consent of the Trinidad Project Borrower or any other
party to a material Trinidad Project Document in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization, dissolution,
winding-up or the composition or readjustment of its debts or (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like
of the Trinidad Project Borrower or all or a substantial part of its
property under any Debtor Relief Law, and such proceeding or case shall
continue undismissed, or any order, judgment or decree approving any of
the foregoing shall be entered and continue unstayed and in effect, for
a period of sixty (60) or more consecutive days, or any order for
relief against the Trinidad Project Borrower or any other party to a
material Trinidad Project Document shall be entered in any involuntary
case under the Federal Bankruptcy Code or any other Debtor Relief Law;
(g) one or more final, non-appealable judgments, decrees or
orders shall be entered against the Trinidad Project Borrower involving
in the aggregate a liability in excess of $5,000,000 (exclusive of
judgment amounts fully covered by insurance or indemnity) or more
against the Trinidad Project Borrower and shall remain unpaid or
unstayed for ninety (90) or more consecutive days after the entry
thereof;
(h) Indebtedness of the Trinidad Project Borrower in excess of
$5,000,000 (other than Indebtedness incurred pursuant to this
Agreement) shall be required to be prepaid, or shall be declared to be
due and payable, other than by regularly scheduled required repayment,
prior to the stated maturity thereof, as a result of the acceleration
of the stated maturity thereof following an event of default
thereunder;
(i) The Governmental Approval of the Trinidad Project Borrower
or any party to a material Trinidad Project Document is revoked,
terminated, withdrawn or ceases to be in full force and effect if such
revocation, termination, withdrawal or cessation could reasonably be
expected to have a Material Adverse Effect; PROVIDED that no such event
shall be a Trinidad Project Event of Default if within sixty (60) days
from the occurrence thereof, (i) the Trinidad Project Borrower
diligently pursues in good faith and (x) obtains an additional
Governmental Approval in substitution therefor or replacement thereof
or (y) causes such Governmental
<PAGE>
Approval to be reinstated and (ii) during such sixty (60) day period
no Material Adverse Effect occurs;
(j) A material Trinidad Project Document ceases to be valid
and binding and in full force and effect (other than as permitted
hereunder), any third party thereto denies that it has any liability or
obligation under any Trinidad Project Document and such third party
ceases performance thereunder, or any third party fails to perform its
material obligations thereunder or make any material misrepresentation
thereunder, and in each case such cessation, failure or
misrepresentation has resulted or would reasonably be expected to
result in a Material Adverse Effect;
(k) The Trinidad Project Borrower or any other party shall
fail to perform or observe any of its covenants or obligations
contained in any Trinidad Project Document to which it is a party if
such failure shall result in the receipt of a notice of termination
(subject to applicable cure periods) of such Trinidad Project Document
or shall otherwise result in a Material Adverse Effect;
(l) Any Security Document related to any Trinidad Collateral
shall cease to be in full force and effect or any Lien purported to be
granted therein shall cease to be a valid and perfected Lien in favor
of the Collateral Agent for the benefit of the Secured Parties on all
or a material portion of the Trinidad Collateral described therein with
the priority purported to be created thereby; PROVIDED that the
Trinidad Project Borrower shall have ten (10) days to cure any such
cessation (if curable) or to furnish to the Bond Trustee, Collateral
Agent or the Depositary Bank all documents and instruments required to
cure any such cessation (if curable);
(m) An Indenture Event of Default shall occur and be
continuing; and
(n) All or a material part of the Trinidad Project is
destroyed or suffers a material actual loss or material damage;
PROVIDED that the occurrence of such an event shall not be a Trinidad
Event of Default if within thirty (30) days from the occurrence of such
event, there exists an Approved Restoration Plan in respect of the
remediation of the damage, loss or taking giving rise to such event.
Section 5.2 REMEDIES UPON A TRINIDAD EVENT OF DEFAULT. Subject to the
Intercreditor Agreement, if one or more Trinidad Events of Default shall have
occurred and be continuing, then:
(i) in the case of a Trinidad Event of Default described in
clause (a) or (m) (relating to an Indenture Event of Default under
clause (a) of SECTION 5.1 (Events of Default) of the Indenture)), upon
the written and unrescinded direction of (A) the One-Third Holders or
(B) the Bond Trustee, notwithstanding the absence of direction from the
One-Third Holders, if in the good faith exercise of its discretion the
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<PAGE>
Bond Trustee determines that such action is necessary to protect the
interests of the Holders, Funding Company shall declare the principal
amount of all Trinidad Project Notes, all interest accrued and unpaid
thereon, all premium (if any), all other amounts payable in respect
thereof and all other amounts payable under this Agreement, to be due
and payable, whereupon the same shall become immediately due and
payable without presentment, demand, protest or further notice of any
kind, all of which are hereby waived;
(ii) in the case of a Trinidad Event of Default described in
clause (b), (c), (d), (g), (h), (i). (j), (k), (l), (m) (except with
respect to an Indenture Event of Default under clause (f) or (g) of
SECTION 5.1 (Events of Default) of the Indenture), or (n) of SECTION
5.1 (Events of Default), upon the written and unrescinded direction of
(A) the Majority Holders or (B) the Bond Trustee, notwithstanding the
absence of direction from the Majority Holders if in the good faith
exercise of its discretion the Bond Trustee determines that such action
is necessary to protect the interests of the Holders, Funding Company
shall declare the outstanding principal amount of all Trinidad Project
Notes, all interest accrued and unpaid thereon, all premium (if any),
all other amounts payable in respect thereof and all other amounts
payable under this Agreement, to be due and payable, whereupon the same
shall become immediately due and payable without presentment, demand,
protest or further notice of any kind, all of which are hereby waived;
and
(iii) in the case of a Trinidad Event of Default described in
clause (e), (f) or (m) (with respect to an Indenture Event of Default
under clause (f) or (g) of SECTION 5.1 (Events of Default) of the
Indenture) the entire outstanding principal amount of all Trinidad
Project Notes, all interest accrued and unpaid thereon, all premium (if
any), all other amounts payable in respect thereof and all other
amounts payable under this Agreement shall automatically become due and
payable without presentment, demand, protest or notice of any kind, all
of which are hereby waived.
Section 5.3 CONTINUING LIEN. (a) The Liens on and security interests in
the Trinidad Collateral granted in this Agreement, the Trinidad Security
Documents and the other Finance Documents to which the Trinidad Project Borrower
is a party secure all Indebtedness and all obligations of the Trinidad Project
Borrower owed to Funding Company in connection with the Trinidad Project Loan of
whatever kind or character, whether now owing, hereafter arising or hereafter to
be performed.
(b) Notwithstanding anything to the contrary in this Agreement, the
Trinidad Security Documents or the other Finance Documents to which the Trinidad
Project Borrower is a party, if on the date the principal balance of the
Securities is fully paid (the "PAY-OFF DATE") any other amounts owed by the
Trinidad Project Borrower hereunder remain to be paid, Funding Company shall not
be obligated to release any Trinidad Collateral remaining
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<PAGE>
subject to the Trinidad Security Documents, and such Trinidad Collateral shall
continue to secure the payment of such amounts as of the Pay-off Date.
Section 5.4 DEFENSE OF ACTIONS. Subject to the Intercreditor Agreement,
upon the occurrence and during the continuance of a Trinidad Event of Default,
Funding Company may (but shall not be obligated to) commence, appear in or
defend any action or proceeding purporting to affect the Trinidad Project Loan,
the Trinidad Project Notes or the respective rights and obligations of Funding
Company and any other Person pursuant to this Agreement, the Trinidad Security
Documents or any other Finance Document to which the Trinidad Project Borrower
is a party. Funding Company 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 the Trinidad
Project Borrower hereby agrees to repay to Funding Company promptly upon demand.
ARTICLE 6
GENERAL TERMS AND CONDITIONS
Section 6.1 NOTICES. (a) Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be
sufficiently given and shall be deemed given when delivered or mailed by
registered or certified mail, postage prepaid, or sent by overnight delivery or
telecopy to Funding Company, the Trinidad Project Borrower, the Bond Trustee or
the Rating Agencies at their respective addresses specified on SCHEDULE III to
the Indenture, or in each case at such other address as shall be designated by
such Person in a written notice to the other parties hereto.
Section 6.2 AMENDMENTS AND WAIVERS. No waiver, amendment, modification
or termination of any provision of this Agreement, or consent to any departure
by the Trinidad Project Borrower therefrom, shall in any event be effective
unless such waiver, amendment, modification or termination is in writing, is
signed by the parties hereto and is in accordance with the Intercreditor
Agreement and SECTION 7.3 (Amendment of Project Loan Agreements or Project
Notes) of the Indenture. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
Section 6.3 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of Funding Company in exercising any right, power or privilege hereunder or
under any other Finance Document and no course of dealing between Funding
Company or the Trinidad Project Borrower shall impair any such right, power or
privilege or operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Finance
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights, powers and
remedies expressly provided herein or in any other Finance Document are
cumulative and not exclusive of any rights, powers or remedies which Funding
Company would
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<PAGE>
otherwise have, all of which may at the discretion of Funding Company, subject
to the Intercreditor Agreement, be pursued separately, successively or
concurrently against the Trinidad Project Borrower, the Collateral or any other
collateral securing the obligations of the Trinidad Project Borrower hereunder.
No notice to or demand on the Trinidad Project Borrower in any case shall
entitle the Trinidad Project Borrower to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of
Funding Company to any other or further action in any circumstances without
notice or demand.
Section 6.4 SEVERABILITY. In case any provision in or obligation under
this Agree ment or any Trinidad Project Note shall be invalid, illegal or
unenforceable in any jurisdic tion, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
Section 6.5 THIRD PARTY BENEFICIARIES. Except as provided in SECTION
6.12 (Successors and Assigns), nothing in this Agreement or in any Trinidad
Project Note, express or implied, shall give or be construed to give any Person,
other than the parties hereto, the Bond Trustee and the Holders, any benefit or
any legal or equitable right, remedy or claim under this Agreement.
Notwithstanding the preceding sentence, no Holder shall have any right to pursue
any remedy hereunder except pursuant to the Intercreditor Agreement and through
the Bond Trustee as permitted under SECTION 5.5 (Control by Holders) of the
Indenture.
Section 6.6 TRINIDAD PROJECT BORROWER IN CONTROL. In no event shall the
rights and interests of Funding Company or the Bond Trustee under this Agreement
and the other Finance Documents to which the Trinidad Project Borrower is a
party be construed to give Funding Company or the Bond Trustee, or be deemed to
indicate that Funding Company or the Bond Trustee has, control of the business,
management or properties of the Trinidad Project Borrower or power over the
daily management functions and operating decisions made by the Trinidad Project
Borrower.
Section 6.7 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.
Section 6.8 SECTION HEADINGS. Captions, section headings and the table
of contents appearing herein are included solely for convenience of reference
and are not intended to affect the interpretation of any provision of this
Agreement.
Section 6.9 GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) This
Agreement is a contract made under the laws of the State of New York of the
United States and shall for all purposes be governed by and construed in
accordance with the laws of such State without
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<PAGE>
regard to the conflict of law rules thereof (other than Section 5-1401 of the
New York General Obligations Law).
(b) Any legal action or proceeding against the Trinidad Project
Borrower with respect to this Agreement may be brought in the courts of the
State of New York in the County of New York or of the United States for the
Southern District of New York and, by execution and delivery of this Agreement,
the Trinidad Project Borrower hereby irrevocably submits and accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. The Trinidad Project Borrower agrees that a judgment,
after exhaustion of all available appeals, in any such action or proceeding
shall be conclusive and binding upon the Trinidad Project Borrower, and may be
enforced in any other jurisdiction by a suit upon such judgment, a certified
copy of which shall be conclusive evidence of the judgment. The Trinidad Project
Borrower hereby irrevocably designates, appoints and empowers Corporation
Service Company with offices on the date hereof at 375 Hudson Street, New York,
New York 10014-3686, as its designee, appointee and agent to receive, accept and
acknowledge for and on its behalf, and in respect of its property, service of
any and all legal process, summons, notices and documents which may be served in
any such action or proceeding. If for any reason such designee, appointee and
agent shall cease to be available to act as such, the Trinidad Project Borrower
agrees to designate a new designee, appointee and agent in New York City on the
terms and for the purposes of this provision satisfactory to the Bond Trustee.
The Trinidad Project Borrower further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to the Trinidad Project Borrower at its address referred to in SECTION
6.1 (Notices), such service to become effective thirty (30) days after such
mailing. Nothing herein shall affect the right of Funding Company to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Trinidad Project Borrower in any other
jurisdiction.
(c) The Trinidad Project Borrower hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Finance Document brought in the courts referred to in
clause (b) above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
(d) WITH REGARD TO THIS AGREEMENT, THE TRINIDAD PROJECT
BORROWER AND FUNDING COMPANY HEREBY WAIVE THE RIGHT TO A TRIAL
BY JURY.
Section 6.10 LIMITATION OF LIABILITY. The obligations of the Trinidad
Project Borrower hereunder are solely the corporate obligations of the Trinidad
Project Borrower and no recourse shall be had against the Sponsor or any
partner, employee, officer, director,
24
<PAGE>
incorporator, Affiliate, agent or servant of the Trinidad Project Borrower, the
Sponsor or any Affiliate thereof (each a "NON-RECOURSE PERSON") with respect to
this Agreement, any of the obligations of the Trinidad Project Borrower
hereunder or any obligation of the Trinidad Project Borrower for the payment of
any amount payable hereunder for any claim based on, arising out of or relating
to this Agreement; PROVIDED, HOWEVER, that nothing in this SECTION 6.10 shall be
deemed to affect or diminish (a) the obligations of any such Non-Recourse Person
under any Transaction Document to which it is party, (b) the rights and remedies
of Funding Company against any such Non-Recourse Person under any Transaction
Document to which any such Non-Recourse Person is a party, (c) the rights and
remedies of Funding Company with respect to the Collateral or (d) the
obligations of any such Non-Recourse Person under any Transaction Document as a
result of such Person's fraud or willful misconduct.
Section 6.11 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which, taken together, shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 6.12 SUCCESSORS AND ASSIGNS. All of the covenants, promises and
agreements in this Agreement by or on behalf of the Trinidad Project Borrower or
Funding Company shall bind and inure to the benefit of their respective
successors and assigns, regardless of whether so expressed, except that the
Trinidad Project Borrower may not assign or transfer all or any part of its
rights and obligations under this Agreement other than with the prior written
consent of the Bond Trustee and in accordance with the Indenture and the
Intercreditor Agreement.
Section 6.13 MAXIMUM INTEREST RATE. Notwithstanding any provision to
the contrary contained herein or in any Trinidad Project Note, at no time shall
the Trinidad Project Borrower be obligated or required to pay interest on the
principal balance due hereunder or thereunder at a rate which could be in excess
of the maximum interest rate permitted by law to be contracted or agreed to be
paid under Applicable Law. If by the terms hereof or of any Trinidad Project
Note, the Trinidad Project Borrower is at any time required or obligated to pay
interest in excess of such maximum rate, then the rate of interest applicable
hereunder or thereunder shall be deemed to be immediately reduced to such
maximum rate and the interest payable shall be computed at such maximum rate.
Section 6.14 ENGLISH LANGUAGE. All documents to be furnished or
communications to be given or made under this Agreement shall be in the English
language or, if in another language, shall be accompanied by a certified
translation into English, which translation shall be the governing version among
the parties hereto.
Section 6.15 ENTIRE AGREEMENT. This Agreement, together with any other
agree ments executed in connection herewith, is intended by the parties hereto
as a final expression
25
<PAGE>
of their agreement as to the matters covered hereby and is intended as
a complete and exclusive statement of the terms and conditions hereof.
Section 6.16 SURVIVAL. The representations and warranties of the
Trinidad Project Borrower contained herein shall survive the execution and
delivery of this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
YORK EX INTERNATIONAL SRL
By: /s/ Robert C. Paladino
----------------------------------
Name: Robert C. Paladino
Title: Vice President
YORK POWER FUNDING (CAYMAN) LIMITED
By: /s/ Martin Couch
----------------------------------
Name: Martin Couch
Title: Director
27
<PAGE>
SCHEDULE I
AMORTIZATION OF PRINCIPAL
<TABLE>
<CAPTION>
Principal Percentage of Principal
SCHEDULED PAYMENT DATE AMOUNTS PAYABLE AMOUNTS PAYABLE
<S> <C> <C>
April 30, 2000 $1,350,000 1.35%
October 30, 2000 1,338,000 1.34
April 30, 2001 1,650,000 1.65
October 30, 2001 1,602,000 1.60
April 30, 2002 750,000 0.75
October 30, 2002 717,000 0.72
April 30, 2003 547,000 0.55
October 30, 2003 518,000 0.52
April 30, 2004 1,148,000 1.15
October 30, 2004 1,074,000 1.07
April 30, 2005 1,890,000 1.89
October 30, 2005 1,731,000 1.73
April 30, 2006 757,000 0.76
October 30, 2006 681,000 0.68
April 30, 2007 660,000 0.66
October 30, 2007 83,567,000 83.59
-----
100%
</TABLE>
<PAGE>
EXHIBIT A
FORM OF TRINIDAD PROJECT NOTE
US$[__________] [DATE]
For value received, the undersigned, YORK EX INTERNATIONAL
SRL, a Barbados exempt society with restricted liability (the "TRINIDAD PROJECT
BORROWER"), by this promissory note promises to pay to the order of York Power
Funding (Cayman) Limited, ("FUNDING COMPANY") a limited liability company
incorporated and existing under the laws of the Cayman Islands, at the office of
The Bank of New York, a bank organized and existing under the laws of the State
of New York, located at [ ], in lawful currency of the United States of America
and in immediately available funds, the principal amount of [__________]
(US$[_________]), or if less, the aggregate unpaid and outstanding principal
amount of this Trinidad Project Note advanced by Funding Company to the Trinidad
Project Borrower pursuant to that certain Trinidad Project Loan Agreement, dated
as of August 4, 1998 (the "TRINIDAD PROJECT LOAN AGREEMENT"), by and among the
Trinidad Project Borrower and Funding Company, and as the same may be amended
from time to time, and all other amounts owed by the Trinidad Project Borrower
to Funding Company hereunder.
This is one of the Trinidad Project Notes entered into
pursuant to the Trinidad Project Loan Agreement and is entitled to the benefits
thereof and is subject to all terms, provisions and conditions thereof.
Capitalized terms used and not defined herein shall have the meanings set forth
in APPENDIX A of that certain Trust Indenture, dated as of August 4, 1998 (the
"INDENTURE"), by and between Funding Company and The Bank of New York, a bank
organized and existing under the laws of the State of New York, as Bond Trustee.
Reference is hereby made to the Indenture and the Security
Documents for the provisions, among others, with respect to the custody and
application of the Collateral, the nature and extent of the security provided
thereunder, the rights, duties and obligations of the Trinidad Project Borrower
and the rights of the holder of this Trinidad Project Note.
The principal amount hereof is payable in accordance with the
Trinidad Project Loan Agreement, and such principal amount may be prepaid solely
in accordance with the Trinidad Project Loan Agreement.
The Trinidad Project Borrower further agrees to pay, in lawful
currency of the United States of America and in immediately available funds,
interest from the date hereof on the unpaid and outstanding principal amount
hereof until such unpaid and outstand ing principal amount shall become due and
payable (whether at stated maturity, by acceleration or otherwise) at the rates
of interest and at the times set forth in the Trinidad Project Loan Agreement,
and the Trinidad Project Borrower agrees to pay all other amounts due,
including, without limitation, fees and costs, as stated in the Trinidad Project
Loan Agreement.
Upon the occurrence of any one or more Trinidad Events of
Default (as defined in SECTION 5.1 (Events of Default Defined)), all amounts
then remaining unpaid under this Trinidad Project Note may become or be declared
to be immediately due and payable as provided in the Trinidad Project Loan
Agreement, without notice of default, presentment or demand for payment, protest
or notice of nonpayment or dishonor, or notices or demands of any kind, all of
which are
Exhibit A-1
<PAGE>
expressly waived by the Trinidad Project Borrower.
The obligations hereunder are subject to the limitations set
forth in SECTION 6.10 (Limitation of Liability) of the Trinidad Project Loan
Agreement, the provisions of which are hereby incorporated by reference.
THIS TRINIDAD PROJECT NOTE IS A CONTRACT MADE UNDER THE LAWS
OF THE STATE OF NEW YORK OF THE UNITED STATES OF AMERICA AND SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE
WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF (OTHER THAN SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW).
This Trinidad Project Note may be executed in any number of
counterparts, all of which, taken together, shall constitute one and the same
instrument and any of the parties hereto may execute this Trinidad Project Note
by signing any such counterpart.
Exhibit A-2
<PAGE>
IN WITNESS WHEREOF, the Trinidad Project Borrower has caused
this Trinidad Project Note to be duly executed.
YORK EX INTERNATIONAL SRL
By:
----------------------------------
Name:
Title:
<PAGE>
Exhibit 10(ss)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRINIDAD LOAN AGREEMENT
among
INNCOGEN, LIMITED,
as borrower
and
YORK HOLDINGS (BARBADOS) SRL,
as lender
Dated as of August 4, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 1
DEFINITIONS; CONSTRUCTION
Section 1.1 DEFINITIONS............................................................................2
Section 1.2 PRINCIPLES OF CONSTRUCTION............................................................16
ARTICLE 2
DESCRIPTION OF THE TRINIDAD LOAN
Section 2.1 ACKNOWLEDGMENTS OF THE TRINIDAD OBLIGOR; TRINIDAD LOAN................................17
Section 2.2 TERM OF THIS AGREEMENT................................................................18
Section 2.3 INTEREST..............................................................................18
Section 2.4 PRINCIPAL.............................................................................18
Section 2.5 OBLIGATIONS OF THE TRINIDAD OBLIGOR HEREUNDER UNCONDITIONAL...........................18
Section 2.6 GENERAL TERMS OF PAYMENT..............................................................19
Section 2.7 SECURITY..............................................................................19
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 ORGANIZATION, POWER AND STATUS OF THE TRINIDAD OBLIGOR................................19
Section 3.2 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND DELIVERY.................................19
Section 3.3 NO CONFLICT...........................................................................20
Section 3.4 COMPLIANCE WITH APPLICABLE LAW........................................................20
Section 3.5 LITIGATION............................................................................20
Section 3.6 ENVIRONMENTAL MATTERS.................................................................21
Section 3.7 BUSINESS OF THE TRINIDAD OBLIGOR. ...................................................21
Section 3.8 VALID TITLE...........................................................................21
Section 3.9 SECURITY INTERESTS....................................................................21
Section 3.10 UTILITY REGULATION...................................................................21
Section 3.11 INVESTMENT COMPANY ACT...............................................................21
Section 3.12 NO DEFAULTS..........................................................................22
Section 3.13 GOVERNMENTAL APPROVALS...............................................................22
Section 3.14 MARGIN STOCK.........................................................................22
Section 3.15 TAXES................................................................................22
Section 3.16 OWNERSHIP OF THE TRINIDAD OBLIGOR....................................................23
Section 3.17 DISCLOSURE...........................................................................23
Section 3.18 REPRESENTATIONS AND WARRANTIES.......................................................23
Section 3.19 USE OF PROCEEDS......................................................................23
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 3.20 TRINIDAD PROJECT DOCUMENTS...........................................................23
Section 3.21 TRINIDAD PROJECT.....................................................................23
ARTICLE 4
COVENANTS AND AGREEMENTS OF THE TRINIDAD OBLIGOR
Section 4.1 PAYMENT OF PRINCIPAL OF AND INTEREST ON THE TRINIDAD LOAN.............................24
Section 4.2 REPORTING REQUIREMENTS................................................................24
Section 4.3 MAINTENANCE OF EXISTENCE..............................................................25
Section 4.4 COMPLIANCE WITH LAWS..................................................................25
Section 4.5 GOVERNMENTAL APPROVALS; TITLE.........................................................26
Section 4.6 EXERCISE OF RIGHTS AND PERFORMANCE UNDER TRANSACTION
DOCUMENTS...........................................................................26
Section 4.7 ADDITIONAL DOCUMENTS; FILINGS AND RECORDINGS..........................................26
Section 4.8 PAYMENT OF TAXES AND CLAIMS...........................................................27
Section 4.9 BOOKS AND RECORDS.....................................................................27
Section 4.10 [Intentionally Omitted]..............................................................27
Section 4.11 AUDITORS.............................................................................27
Section 4.12 TRINIDAD REVENUE ACCOUNT.............................................................28
Section 4.13 PROJECT IMPLEMENTATION...............................................................28
Section 4.14 INSURANCE............................................................................28
Section 4.15 PERMITTED INDEBTEDNESS...............................................................30
Section 4.16 PERMITTED LIENS......................................................................31
Section 4.17 CONTINGENT LIABILITIES...............................................................31
Section 4.18 NATURE OF BUSINESS...................................................................32
Section 4.19 PROHIBITION ON FUNDAMENTAL CHANGES...................................................32
Section 4.20 SALE OF ASSETS.......................................................................32
Section 4.21 SUBSIDIARIES; ADVANCES, INVESTMENTS AND LOANS........................................32
Section 4.22 TRANSACTIONS WITH AFFILIATES.........................................................32
Section 4.23 RESTRICTED PAYMENTS..................................................................32
Section 4.24 AMENDMENTS TO TRINIDAD PROJECT DOCUMENTS.............................................33
Section 4.25 ASSIGNMENT OF OBLIGATIONS; ADDITIONAL AGREEMENTS.....................................33
Section 4.26 MODIFICATIONS OF FORMATION DOCUMENTS.................................................33
Section 4.27 ABANDONMENT..........................................................................34
Section 4.28 SUBSTANTIAL COMPLETION...............................................................34
Section 4.29 TAXATION.............................................................................34
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 5
DEFAULTS AND REMEDIES
Section 5.1 EVENTS OF DEFAULT DEFINED.............................................................34
Section 5.2 REMEDIES UPON A TRINIDAD EVENT OF DEFAULT.............................................37
Section 5.3 CONTINUING LIEN.......................................................................38
Section 5.4 DEFENSE OF ACTIONS....................................................................39
ARTICLE 6
GENERAL TERMS AND CONDITIONS
Section 6.1 NOTICES...............................................................................39
Section 6.2 AMENDMENTS AND WAIVERS................................................................39
Section 6.3 NO WAIVER; REMEDIES CUMULATIVE........................................................39
Section 6.4 SEVERABILITY..........................................................................40
Section 6.5 THIRD PARTY BENEFICIARIES.............................................................40
Section 6.6 TRINIDAD OBLIGOR IN CONTROL...........................................................40
Section 6.7 NUMBER AND GENDER.....................................................................40
Section 6.8 SECTION HEADINGS......................................................................40
Section 6.9 GOVERNING LAW; SUBMISSION TO JURISDICTION.............................................40
Section 6.10 LIMITATION OF LIABILITY..............................................................41
Section 6.11 COUNTERPARTS.........................................................................42
Section 6.12 SUCCESSORS AND ASSIGNS...............................................................42
Section 6.13 MAXIMUM INTEREST RATE................................................................42
Section 6.14 ENGLISH LANGUAGE.....................................................................42
Section 6.15 ENTIRE AGREEMENT.....................................................................42
Section 6.16 SURVIVAL.............................................................................42
</TABLE>
Schedule I: Amortization Schedule
Schedule II: Notices
Exhibit A: Form of Trinidad Completion Certificate
Exhibit B Form of Subordination Provisions
iii
<PAGE>
TRINIDAD LOAN AGREEMENT
This TRINIDAD LOAN AGREEMENT, dated as of August 4, 1998 (this
"AGREEMENT") is by and among INNCOGEN, LIMITED, a limited liability company
incorporated under the laws of the Republic (the "TRINIDAD OBLIGOR") and YORK
HOLDINGS (BARBADOS) SRL, a Barbados society with restricted liability (the
"TRINIDAD GUARANTOR"), as lender.
RECITALS
WHEREAS, pursuant to this Agreement, the Trinidad Guarantor
intends to make the Trinidad Loan to the Trinidad Obligor in the aggregate
principal amount of U.S.$100,000,000 the proceeds of which will be used, among
other things, to finance costs associated with the construction, operation and
maintenance of the Trinidad Project;
WHEREAS, pursuant to this Agreement, the Trinidad Obligor has
agreed to borrow the Trinidad Loan from the Trinidad Guarantor on the terms and
conditions set forth herein and for this Agreement to secure the Trinidad Loan
as herein provided and as primary security therefor;
WHEREAS, the Trinidad Guarantor, the Trinidad Obligor, the
Collateral Agent and certain other parties are entering into the Trinidad
Security Documents, pursuant to which the Collateral Agent, acting on behalf of
the Secured Parties, will obtain a continuing Lien on and perfected security
interest in the Trinidad Collateral;
WHEREAS, the Trinidad Guarantor, the Trinidad Obligor, the
Collateral Agent and certain other parties are entering into the Intercreditor
Agreement appointing the Collateral Agent as collateral agent and setting forth
certain rights and remedies of the Collateral Agent acting on behalf of the
Secured Parties with respect to the Trinidad Collateral; and
WHEREAS, the Collateral Agent has agreed to join this
Agreement to acknowledge and confirm the arrangements set forth herein and that
the Trinidad Mortgage Debenture is to be held by the Collateral Agent as trustee
for the Trinidad Guarantor.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto formally covenant, agree and
bind themselves as follows:
<PAGE>
ARTICLE 1
DEFINITIONS; CONSTRUCTION
Section 1.1 DEFINITIONS. The following terms shall have the following
respective meanings:
"ADDITIONAL SECURITIES" shall mean Securities which are ranked pari
passu with the Securities issued pursuant to the Indenture after the Closing
Date.
"AFFILIATE" shall mean, with respect to a Person, any other Person
that, directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such first Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTS" shall mean audited
consolidated financial statements prepared in accordance with GAAP.
"APPLICABLE LAW" shall mean, with respect to any Person, property or
matter, any of the following applicable thereto: any statute, law, regulation,
ordinance, rule, judgment, rule of common law, order, decree, Governmental
Approval, approval, concession, grant, franchise, license, agreement, directive,
guideline, policy, requirement, or other governmental restriction or any similar
form of decision of, or determination by, or any interpretation or
administration of any of the foregoing, by any Governmental Authority, whether
in effect as of the date of this Agreement or thereafter and in each case as
amended (including, without limitation, any pertaining to land use or zoning
restrictions).
"APPROVED RESTORATION PLAN" shall mean a plan submitted to and approved
by the Independent Engineer which provides for the repair or rebuilding of all
or any portion of the Trinidad Project and which is accompanied by a certificate
of (a) the Independent Engineer certifying that (i) such plan is reasonable and
technically feasible and will restore the Trinidad Project to at least as good
condition or state of repair as it was in prior to such Event of Loss, (ii) the
repair or restoration of the Trinidad Project in accordance with the plan or the
operation of the Trinidad Project following such repair will not violate (x) the
terms of any other Transaction Document or (y) any of the Trinidad Project's
Governmental Approvals, (iii) after taking into consideration the availability
of Loss Proceeds and such other proceeds available for the repair or restoration
of the Trinidad Project, there will be adequate cash flow during the period of
repair or restoration to pay all ongoing expenses, including debt service due on
the Securities, and the Trinidad Obligor's ability to pay such expenses will not
be materially adversely affected following such repair and (iv) the repair or
restoration in accordance with the plan will not materially adversely affect the
construction budget or construction schedule of the Trinidad Project and (b) the
Trinidad Obligor certifying that (i) such plan is reasonable and technically
feasible and will restore the
2
<PAGE>
Trinidad Project to at least as good condition or state of repair as it was in
prior to such Event of Loss and (ii) the repair or restoration of the Trinidad
Project in accordance with the plan or the operation of the Trinidad Project
following such repair will not violate Applicable Law.
"AUDITORS" shall mean Grant Thornton LLP or such other firm of
independent public accountants as the Trinidad Obligor may, with the consent of
the Collateral Agent, from time to time appoint as auditors of the Trinidad
Obligor.
"AUTHORIZED OFFICER" or "AUTHORIZED REPRESENTATIVE" shall mean in the
case of any corporation or limited liability company, the chief executive
officer, the president, the chief financial officer, a vice president, the
treasurer or an assistant treasurer or any director of such corporation or
limited liability company.
"BOND TRUSTEE" shall mean The Bank of New York, its successors and
assigns, in its capacity as trustee under the Indenture.
"BUSINESS DAY" shall mean any day that is not a Saturday, Sunday or
legal holiday in the State of New York or the Republic, or a day on which
banking institutions chartered by the State of New York or the United States are
legally required or authorized to close.
"CASH EQUIVALENTS" shall mean, as to any Person: (a) direct obligations
of the United States, or any agency thereof, (b) obligations fully guaranteed by
the United States or any agency thereof, (c) certificates of deposit or bankers,
acceptances issued by commercial banks (including the Bond Trustee or any of its
Affiliates) organized under the laws of the United States or of any political
subdivision thereof or under the laws of Canada, Japan, Switzerland or any
country that is a member of the European Economic Community having a combined
capital and surplus of at least $250,000,000 and having long-term unsecured debt
securities then rated "A" or better by S&P or "A-2" or better by Moody's (but at
the time of investment not more than $25,000,000 may be invested in such
certificates of deposit from one bank), (d) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clauses (a) and (b) above, entered into with any financial institution meeting
the qualifications specified in clause (c) above, (e) open market commercial
paper of any corporation incorporated or doing business under the laws of the
United States or of any political subdivision thereof having a rating of at
least "A-1" from S&P and "P-1" from Moody's (but at the time of investment not
more than $25,000,000 may be invested in such commercial paper from any one
company), (f) auction rate securities or money market preferred stock having one
of the two highest ratings obtainable from either S&P or Moody's (or, if at any
time neither S&P nor Moody's may be rating such obligations, then from another
nationally recognized rating service acceptable to the Bond Trustee) or (g)
investments in money market funds or money market mutual funds sponsored by any
securities broker dealer of recognized national standing for an Affiliate
thereof), having an investment policy that requires substantially all the
invested assets of
3
<PAGE>
such fund to be invested in investments described in any one or more of the
following clauses having a rating of "A" or better by S&P or "A-2" or better by
Moody's (including money market funds for which the Depositary Bank in its
individual capacity or any of its Affiliates is investment manager or adviser);
PROVIDED that with respect to amounts on deposit in the Trinidad Local Account,
"Cash Equivalents" shall mean time deposits and certificates of deposit, with
maturities of not more than three (3) months from the date of acquisition by
such Person.
"CASH FLOWS" shall mean all Project Revenues, Equity Cash Flows and
Note Cash Flows.
"CASH FLOW AVAILABLE FOR DEBT SERVICE" shall mean the sum of all Cash
Flows less the sum of all Operating and Maintenance Expenses
"CLOSING DATE" shall mean the date of the making of the Trinidad Loan.
"COLLATERAL" shall mean the Trinidad Collateral and all other
collateral held by the Collateral Agent (or its designee) for the benefit of the
Secured Parties.
"COLLATERAL AGENT" shall mean The Bank of New York, its successors and
assigns in its capacity as collateral agent under the Intercreditor Agreement
and the other Finance Documents to which it is a party.
"COMPANIES ACT" shall mean the Companies Act 1995, as amended, of the
laws of the Republic.
"DEBT SERVICE" shall mean, without duplication, all principal,
interest, premium (if any) and other amounts due with respect to the Securities
and all other Permitted Indebtedness.
"DEBT SERVICE COVERAGE RATIO" shall mean for any period the ratio of
(i) Cash Flow Available for Debt Service for such period to (ii) the aggregate
of all Debt Service due during such period.
"DEBT SERVICE RESERVE ACCOUNT" shall mean the Debt Service Reserve
Account established with the Depositary Bank pursuant to the terms of the
Finance Documents.
"DEBT TERMINATION DATE" shall mean the date on which all Finance
Liabilities, other than contingent liabilities and obligations unasserted at
such date, have been paid and satisfied in full and all Finance Commitments have
been terminated.
"DEBTOR RELIEF LAW" shall mean any applicable liquidation, dissolution,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization, readjustment
4
<PAGE>
of debt or similar law affecting the rights or remedies of creditors generally,
as in effect from time to time, including, without limitation, Title 11 of the
United States Code.
"DEPOSITARY BANK" shall mean The Bank of New York, as depositary bank
under the Trinidad Depositary Agreement or any successor thereto pursuant to the
terms thereof.
"ENVIRONMENTAL CLAIM" shall mean any written complaint, order,
citation, decree, demand, judgment or written notice actually received by the
Trinidad Obligor from any Person relating to any matters of Environmental Law
affecting or relating to any activity or operations at any time conducted by the
Trinidad Obligor, including, without limitation:
(a) the existence of any Environmentally Regulated Materials at
the Trinidad Project site in violation of any Environmental
Law;
(b) the release or threatened release of any Environmentally
Regulated Materials generated at the Trinidad Project site in
violation of any Environmental Law;
(c) remediation of any such release of the Trinidad Project site;
and
(d) any violation of any relevant Environmental Law in connection
with the Trinidad Project site.
"ENVIRONMENTAL LAWS" shall mean any and all Laws (as well as
obligations, duties and requirements relating thereto under common law) relating
to: (i) noise, emissions, discharges, spills, releases or threatened releases of
pollutants, contaminants, Environmentally Regulated Materials, materials
containing Environmentally Regulated Materials, or hazardous or toxic materials
or wastes into ambient air, surface water, groundwater, watercourses, publicly
or privately-owned treatment works, drains, sewer systems, wetlands, septic
systems or onto land surface or subsurface strata; (ii) the use, treatment,
storage, disposal, handling, manufacture, processing, distribution,
transportation, or shipment of Environmentally Regulated Materials, materials
containing Environmentally Regulated Materials or hazardous and/or toxic wastes,
materials, products or by-products (or of equipment or apparatus containing
Environmentally Regulated Materials); (iii) pollution or the protection of human
health, the environment or natural resources; or (iv) zoning and land use.
"ENVIRONMENTALLY REGULATED MATERIALS" shall mean (i) hazardous
materials, hazardous wastes, hazardous substances, extremely hazardous wastes,
restricted hazardous wastes, toxic substances, toxic pollutants, contaminants,
pollutants or words of similar import, as used under Environmental Laws and
local counterparts or equivalents; (ii) petroleum and petroleum products
including crude oil and any fractions thereof; (iii) natural gas, synthetic gas
and any mixtures thereof; (iv) radon; (v) any other hazardous,
5
<PAGE>
radioactive, toxic or noxious substance, material, pollutant, or solid, liquid
or gaseous waste; and (vi) any substance that, whether by its nature or its use,
is now or hereafter subject to regulation under any Environmental Law or with
respect to which any Federal, state or local Environmental Law or governmental
agency requires environmental investigation, monitoring or remediation.
"EQUITY CASH FLOW" shall mean, with respect to any Trinidad Finance
Party, the cash flow available to such Person from equity distributions made by
any other Trinidad Finance Party other than such cash flows otherwise required
to be used for Maintenance Expenses or Operating and Maintenance Expenses or
otherwise pursuant to the Finance Documents or Trinidad Project Documents.
"EVENT OF LOSS" shall mean any event of damage, destruction,
condemnation, seizure or appropriation of all or any part of the Trinidad
Project.
"EXPROPRIATION PROCEEDS" shall mean all amounts and proceeds (including
instruments) received in respect of any action to condemn, seize or appropriate
all or any part of the Collateral or the Trinidad Project, after deducting all
reasonable expenses incurred in litigating, arbitrating, compromising, settling
or consenting to the settlement of any claims against the appropriate
Governmental Authority.
"FERC" shall mean the United States Federal Energy Regulatory
Commission, or any successor thereto.
"FINAL MATURITY DATE" shall mean October 30, 2007.
"FINAL OFFERING CIRCULAR" shall mean the confidential offering
circular of Funding Company, dated July 30, 1998, issued with respect to the
Securities.
"FINANCE COMMITMENT" shall mean the commitment pursuant to this
Agreement to provide credit to the Trinidad Obligor.
"FINANCE DOCUMENTS" shall mean, collectively, this Agreement, the
Indenture, the Trinidad Project Loan Agreements, the Trinidad Guarantee, the
Intercreditor Agreement, the Securities, the Trinidad Security Documents, and
all other documents related to any of the foregoing or otherwise related to the
issuance of the Securities.
"FINANCE LIABILITIES" shall mean all Indebtedness, liabilities and
obligations of the Trinidad Obligor (including, but not limited to, principal,
interest, fees, reimbursement obligations, penalties, indemnities and legal and
other expenses, whether due after acceleration or otherwise) to the Trinidad
Guarantor (of whatsoever nature and howsoever evidenced) under or pursuant to
this Agreement, to the extent arising on or prior to the Debt Termination Date,
in each case, direct or indirect, primary or secondary, fixed or
6
<PAGE>
contingent, now or hereafter arising out of or relating to this Agreement; and
also shall mean all interest owed to the Trinidad Guarantor and accrued
following the commencement of a case (whether voluntary or involuntary) under
any Debtor Relief Law with respect to the Trinidad Obligor; PROVIDED that for
purposes of this Agreement, Subordinated Indebtedness among Trinidad Finance
Parties shall not be deemed a Finance Liability.
"FUNDING COMPANY" shall mean York Power Funding (Cayman) Limited, an
exempted limited liability company incorporated and existing under the laws of
the Cayman Islands.
"GAAP" shall mean generally accepted accounting principles as in effect
in the United States from time to time.
"GOVERNMENTAL APPROVALS" means all governmental approvals,
authorizations, consents, decrees, licenses, permits, waivers, privileges,
filings, or franchises with all Governmental Authorities.
"GOVERNMENTAL AUTHORITY" means the government of any federal, state,
municipal or other political subdivision in which the Trinidad Project is
located (or of any other relevant jurisdiction as required herein), and any
other government or political subdivision thereof exercising jurisdiction over
the Trinidad Project or any party to any of the Trinidad Project Documents,
including all agencies and instrumentalities of such governments and political
subdivisions.
"GUARANTEE OBLIGATION" shall mean, with respect to any Person, any
obligation, contingent or otherwise, of such Person directly or indirectly
guaranteeing in any manner any Indebtedness or similar obligation of any other
Person.
"HOLDER" shall mean, with respect to any Security, the Person in whose
name such Security is registered.
"INDEBTEDNESS" of any Person means, at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments
(excluding "deposit only" endorsements on checks payable to the order of such
Person), (iii) all obligations of such Person to pay the deferred purchase price
of property or services (except accounts payable and similar obligations arising
in the ordinary course of business shall not be included as Indebtedness), (iv)
all obligations of such Person as lessee under capital leases to the extent
required to be capitalized on the books of such Person in accordance with GAAP
and (v) all obligations of others of the type referred to in clause (i) through
(iv) above guaranteed by such Person, whether or not secured by a lien or other
security interest on any asset of such Person.
7
<PAGE>
"INDENTURE" shall mean the Trust Indenture, dated as of the Closing
Date, between Funding Company and the Bond Trustee.
"INDENTURE EVENT OF DEFAULT" shall mean any event which constitutes an
"Indenture Event if Default" pursuant to the terms of the Indenture.
"INDEPENDENT ENGINEER" shall mean Stone & Webster Management
Consultants, Inc., its successors and assigns or such other independent engineer
as the Bond Trustee may engage who is reasonably acceptable to the Trinidad
Guarantor.
"INDEPENDENT INSURANCE CONSULTANT" shall mean Lockton Insurance, its
successors and assigns or such other independent insurance consultant as the
Bond Trustee may engage who is reasonably acceptable to the Trinidad Guarantor.
"INSURANCE PROCEEDS" shall mean all proceeds in respect of any property
insurance policy (other than proceeds of business interruption insurance or
delayed opening insurance) covering the Trinidad Project.
"INTERCREDITOR AGREEMENT" shall mean the Collateral Agency and
Intercreditor Agreement, dated as of the Closing Date, among the Project
Obligors, the Bond Trustee, the Collateral Agent, the Depositary Bank and
Funding Company.
"LIEN" shall mean any mortgage, charge, debenture, pledge,
hypothecation, assignment, mandatory deposit arrangement with any Person owning
Indebtedness of such Person, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever which has
the substantial effect of constituting a security interest, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same effect as any of the foregoing and
the filing of any financing statement or similar instrument under the Uniform
Commercial Code or comparable law of any jurisdiction, domestic or foreign.
"LOSS PROCEEDS" shall mean all Insurance Proceeds, Expropriation
Proceeds or other amounts actually received on account of an event which causes
all or a substantial portion of the Trinidad Project to be damaged, destroyed or
rendered unfit for normal use.
"MAINTENANCE EXPENSES" shall mean all expenditures of the Trinidad
Obligor on regularly scheduled (or reasonably anticipated) maintenance of the
Trinidad Project, respectively, in accordance with good utility practice and
vendor and supplier requirements constitution major maintenance (including,
without limitation, teardowns, overhauls, capital improvements, replacements
and/or refurbishments of major components of the Trinidad Project).
8
<PAGE>
"MAINTENANCE RESERVE ACCOUNTS" shall mean the Trinidad Maintenance
Reserve Account or any other maintenance reserve account established with the
Depositary Bank pursuant to the Finance Documents.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (i)
the financial condition, results of operation, business or prospects of Funding
Company or any Project Obligor, (ii) the validity or priority of the Liens on
the Collateral, (iii) the ability of Funding Company to perform its material
obligations under the Indenture, the Securities or any of the other Finance
Documents, (iv) the ability of any Project Obligor to perform its material
obligations under any Finance Document or (v) the ability of any Project Obligor
to perform its material obligations under any Project Document.
"MONTH" shall mean a calendar month.
"MOODY'S" shall mean Moody's Investors Service, Inc., a corporation
organized and existing under the laws of the State of Delaware, its successors
and assigns.
"NON-RECOURSE PERSON" shall have the meaning given to that term in
SECTION 6.10 (Limitation of Liability) of this Agreement.
"NOTE CASH FLOW" shall mean, with respect to the Trinidad Guarantor,
the cash flow available from repayments, whether scheduled or otherwise on the
Trinidad Loan.
"OFFICER'S CERTIFICATE" shall mean, with respect to any Person, a
certificate executed by an Authorized Representative of such Person.
"OPERATING BUDGET" shall mean a budget of Operating and Maintenance
Expenses, and a long-term maintenance program with respect to the Trinidad
Project for any given fiscal year, or part thereof, and prepared on the basis
of estimated requirements, showing such costs by category for such fiscal year.
"OPERATING AND MAINTENANCE EXPENSES" shall mean all amounts disbursed
by or on behalf of a Project Obligor for operation, maintenance, repair, or
improvement of the applicable Project, including, without limitation, premiums
on insurance policies, property and other Taxes, and payments under the relevant
operating and maintenance agreements, leases, royalty and other land use
agreements, and any other payments required under the applicable Transaction
Documents; PROVIDED that "Operating and Maintenance Expenses" shall exclude all
maintenance and other capital expenditures funded from the Maintenance Reserve
Accounts.
"OPINION OF COUNSEL" shall mean a written opinion of counsel for any
Person either expressly referred to herein or otherwise satisfactory to the
Trinidad Guarantor.
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"PAY-OFF DATE" shall have the meaning given to that term in SECTION
5.3(b) of this Agreement.
"PERMITTED CONTRACT BUY-OUT" shall mean a Power Contract Buy-Out with
respect to the Trinidad Project which satisfies the following conditions: (i)
the Trinidad Obligor delivers an Officer's Certificate to the Bond Trustee
certifying that such Power Contract Buy-Out will not result in a Material
Adverse Effect nor will it materially adversely affect the Trinidad Project
throughout the life of the Trinidad PPA, (ii) each Rating Agency then rating the
Securities provides written confirmation to the Bond Trustee that such Power
Contract Buy-Out will not result in a Ratings Downgrade and (iii) the
Independent Engineer certifies to the Bond Trustee that the minimum and average
Projected Debt Service Coverage Ratio for both (x) the next four consecutive
fiscal quarters, commencing with the fiscal quarter in which such Power Contract
Buy-Out occurs, taken as one annual period and (y) each fiscal year through the
Final Maturity Date, will not be less than 1.5 to 1.0 to 1.55 to 1.0,
respectively.
"PERMITTED INDEBTEDNESS" shall mean any Indebtedness permitted to be
incurred by Funding Company, any Trinidad Finance Party or any other Person
pursuant to the terms of the Finance Documents.
"PERMITTED LIENS" shall mean any Lien permitted to be created or
suffered by Funding Company, any Trinidad Finance Party or any other Person
pursuant to the terms of the Finance Documents.
"PERSON" shall mean any individual, sole proprietorship, corporation,
partnership, limited partnership, joint venture, limited liability partnership,
limited liability company, trust, unincorporated association, institution,
Governmental Authority or any other entity; whenever organized.
"PHASE I ENVIRONMENTAL ASSESSMENT" shall mean an initial investigation
of the site conditions of the Trinidad Project prepared by a U.S. nationally
recognized environmental consultant and a report detailing the results thereof.
"POWER CONTRACT BUY-OUT" shall mean any cash payment by an electricity
purchaser or steam purchaser, the effect of which is to result in the
termination or cancellation of, reduce future payments under, or change the term
of, the electricity contract between such purchaser and the Trinidad Obligor.
"PRELIMINARY OFFERING CIRCULAR" shall mean the preliminary confidential
offering circular of Funding Company, dated July 2, 1998, issued with respect to
the Securities.
"PROJECT" shall mean the Trinidad Project or any other independent
power project owned or operated, either directly or indirectly, by a U.S.
Guarantor.
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"PROJECT DOCUMENTS" shall mean any Trinidad Project Document or other
documents and agreements related to the construction, ownership and operations
of the other Projects.
"PROJECT OBLIGORS" shall mean the Trinidad Finance Parties and the U.S.
Guarantors.
"PROJECT REVENUES" shall mean the net revenues or net income calculated
on a cash basis and recognized pursuant to the terms of the relevant Trinidad
Project Documents, including, without limitation, proceeds of any Power Contract
Buy-Out not required to be used to prepay the Trinidad Loan, the proceeds of any
draws with respect to any working capital facility and refunds or returns of any
amounts previously paid for Operation and Maintenance Expenses; PROVIDED that
for purposes of calculating any Debt Service Coverage Ratio, "Project Revenues"
shall not include draws with respect to any working capital facility draws, from
the Trinidad Maintenance Reserve Account or any proceeds of any Power Contract
Buy-Out.
"PROJECTED DEBT SERVICE COVERAGE RATIO" shall mean for any period, on
any date of determination, a projection of the Debt Service Coverage Ratio for
the applicable time period.
"PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
amended.
"RATINGS" shall mean the credit ratings assigned to the Securities by
the Rating Agencies.
"RATING AGENCY" shall mean either of Moody's or S&P or if either shall
cease to rate securities of the type equivalent to the Securities, another
nationally recognized rating agency.
"RATINGS DOWNGRADE" shall mean a lowering or withdrawal by a Rating
Agency of the then current Ratings of the Securities.
"RESTRICTED PAYMENT" shall mean, with respect to any Person, (a) the
declaration or payment of distributions, dividends or any other payment made in
cash, property, obligations or other securities, (b) any payment of the
principal of or interest on any Subordinated Indebtedness or (c) the making of
any loans or advances to any Affiliate (other than Permitted Indebtedness); in
each case from cash, investments, securities or other funds from time to time in
the Trinidad Distribution Account.
"REPUBLIC" shall mean the Republic of Trinidad and Tobago.
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"S&P" shall mean Standard & Poor's Rating Services, a division of
McGraw-Hill Companies, Inc., its successors and assigns.
"SECURED OBLIGATIONS" shall have the meaning set forth in the Trinidad
Mortgage Debenture.
"SECURED PARTIES" shall mean, collectively, the Bond Trustee, the
Collateral Agent, the Depositary Bank, the Holders and, with respect to the
Trinidad Project Loan, Funding Company, and, with respect to the Trinidad Loan,
the Trinidad Guarantor, and any holder of senior indebtedness other than the
Securities or the Trinidad Project Loan and any other Person that becomes a
secured party under any Finance Document.
"SECURITY" or "SECURITIES" shall mean any securities issued pursuant to
the Indenture or any supplement thereto.
"SPONSOR" shall mean York Research Corporation, a Delaware corporation.
"SUBORDINATED INDEBTEDNESS" shall mean Indebtedness of a Trinidad
Finance Party to another Trinidad Finance Party which by its terms is incurred
for the sole purpose of permitting such Trinidad Finance Party to distribute all
its cash flow to another Trinidad Finance Party in order to make payments on the
Trinidad Project Loan or the Trinidad Loan and which is unsecured, unassignable,
subordinated to the Secured Obligations and all other unsubordinated
Indebtedness of such Trinidad Finance Party, payable only from distributions
permitted in accordance with the Trinidad Depositary Agreement and contains
other subordination provisions substantially in the form of EXHIBIT B hereto.
"SUBSIDIARY" shall mean, as to any Person, (i) any corporation more
than fifty percent (50%) of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person and/or one
or more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a fifty percent (50%) equity interest at the time.
"SUBSTANTIAL COMPLETION" shall mean substantial completion and
commercial operation of the Trinidad Project as evidenced by the delivery to the
Bond Trustee of an Officer's Certificate from an Authorized Officer of the
Trinidad Obligor and the Independent Engineer substantially in the form of
EXHIBIT A hereto.
"T&TEC" shall mean the Trinidad and Tobago Electricity Commission.
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"TAX" and "TAXES" shall include all taxes, including without
limitation, income, windfall, profits, gains, franchise, gross receipts,
transfer, license, environmental, customs duty, capital stock, severance, stamp,
payroll, sales, employment, unemployment, disability, use, property,
withholding, excise, production, value added, occupancy and other taxes, duties
or assessments of any nature whatsoever, together with interest, penalties and
additions imposed with respect to such amounts and any interest in respect of
such penalties and additions.
"TAX RETURNS" shall include all returns and reports (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be supplied to a Governmental Authority relating to Taxes.
"TRANSACTION DOCUMENTS" shall mean, individually and collectively, the
Finance Documents and the Project Documents.
"TRINIDAD CAYMAN PARENT" shall mean York Holdings (Caymans) LLC, a
limited liability company incorporated under the laws of the Cayman Islands.
"TRINIDAD CHARGE AND SECURITY AGREEMENT" shall mean the Charge and
Security Agreement, dated as of the Closing Date, among the Trinidad Guarantor,
Ernst & Young Trust Corporation, the Trinidad Obligor and the Collateral Agent.
"TRINIDAD CHARGE AND SECURITY AGREEMENT COLLATERAL" shall have the
meaning given to that term in SECTION 2.1 of the Trinidad Charge and Security
Agreement.
"TRINIDAD COLLATERAL" shall mean (i) the Trinidad Security Agreement
Collateral, (ii) the Trinidad Charge and Security Agreement Collateral, (ii) a
pledge of the equity interest in each of the Trinidad Cayman Parent, the
Trinidad Project Borrower and the Trinidad Guarantor and (iii) any other
collateral set forth in the Trinidad Security Documents.
"TRINIDAD COMPLETION CERTIFICATE" shall have the meaning given to that
term in EXHIBIT A hereto.
"TRINIDAD CPI" shall mean the Index of Real Prices, commonly referred
to as the "consumer price index," published by the Central Statistical Office, a
department of the Ministry of Finance or any successor to the Ministry of
Finance of the Republic.
"TRINIDAD DEFAULT" shall mean an event or condition that, with the
giving of notice, lapse of time or failure to satisfy certain specified
conditions, or any combination thereof, would become a Trinidad Event of
Default.
"TRINIDAD DEPOSITARY ACCOUNTS" shall have the meaning given to that
term in SECTION 2.2 of the Trinidad Depositary Agreement.
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"TRINIDAD DEPOSITARY AGREEMENT" shall mean the Trinidad Deposit and
Disbursement Agreement, dated as of the Closing Date, among Funding Company, the
Trinidad Project Borrower, the Trinidad Guarantor, the Trinidad Obligor, the
Collateral Agent and the Depositary Bank.
"TRINIDAD DISTRIBUTION ACCOUNT" shall mean the Trinidad Distribution
Account established with the Depositary Bank pursuant to the terms of the
Trinidad Depositary Agreement.
"TRINIDAD EES CONTRACT" shall mean the Engineering and Equipment Supply
Contract, dated as of June 26, 1998 between the Trinidad Obligor and Duke/Fluor
Daniel International.
"TRINIDAD EVENT OF DEFAULT" shall have the meaning given to that term
in SECTION 5.1 (Event of Default Defined) of this Agreement.
"TRINIDAD FINANCE PARTIES" shall mean the Trinidad Project Borrower,
the Trinidad Guarantor and the Trinidad Obligor.
"TRINIDAD GOVERNMENT AGREEMENT" shall mean the Government Agreement,
dated as of February 12, 1998 between the Government of the Republic and the
Trinidad Obligor.
"TRINIDAD GUARANTEE" shall mean the Guarantee, dated as of the Closing
Date, between the Trinidad Guarantor, the Bond Trustee and the Collateral Agent
for the benefit of Funding Company.
"TRINIDAD GUARANTOR" shall mean York Holdings (Barbados) SRL, a
Barbados society with restricted liability.
"TRINIDAD LOAN" shall have the meaning given to that term in
SECTION 2.1 hereof.
"TRINIDAD MAINTENANCE RESERVE ACCOUNT" shall mean the Trinidad
Maintenance Reserve Account established with the Depositary Bank pursuant to the
terms of the Trinidad Depositary Agreement.
"TRINIDAD MORTGAGE DEBENTURE" shall mean the Mortgage Debenture, dated
as of the Closing Date, between the Trinidad Obligor and the Collateral Agent.
"TRINIDAD PERMITTED PROJECT INDEBTEDNESS" shall have the meaning given
to that term in SECTION 4.15 (Indebtedness) hereof.
"TRINIDAD PERMITTED PROJECT LIEN" shall have the meaning given to that
term in SECTION 4.16 (Permitted Liens) hereof.
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"TRINIDAD PLEDGE AGREEMENT" shall mean each of (i) the Pledge
Agreement, dated as of the Closing Date, between the Trinidad U.S. Parent and
the Collateral Agent for the benefit of the Secured Parties with respect to the
equity interests in the Trinidad Cayman Parent, (ii) the Pledge Agreement, dated
as of the Closing Date, between the Trinidad Cayman Parent and the Collateral
Agent for the benefit of the Secured Parties with respect to the equity
interests in the Trinidad Project Borrower and (iii) the Pledge Agreement, dated
as of the Closing Date, between the Trinidad Project Borrower and the Collateral
Agent for the benefit of the Secured Parties with respect to the equity
interests in the Trinidad Guarantor.
"TRINIDAD PPA" shall mean the License Agreement and Agreement for Sale
and Purchase of Power, dated as of January 12, 1998, between the Trinidad
Obligor and T&TEC, including all amendments, supplements and modifications
thereto.
"TRINIDAD PROJECT" shall mean the 215 MW natural gas-fired combustion
turbine electric generation facility to be constructed in the Republic and owned
by the Trinidad Obligor.
"TRINIDAD PROJECT DOCUMENTS" shall mean the Trinidad PPA, the Trinidad
Government Agreement, the Trinidad EES Contract, the Trinidad Turnkey
Construction Contract, all third party consents related to any other Trinidad
Project Document and all other energy sales and power contracts, steam supply
agreements, water supply agreements, construction contracts, operation and
maintenance agreement, leases, sub-leases, licences, insurance policies and fuel
supply agreements related to the Trinidad Project.
"TRINIDAD PROJECT BORROWER" shall mean York Ex International SRL, a
Barbados exempt society with restricted liability.
"TRINIDAD PROJECT LOAN" shall mean the loan from Funding Company to the
Trinidad Project Borrower pursuant to the Trinidad Project Loan Agreement.
"TRINIDAD PROJECT LOAN AGREEMENT" shall mean the Trinidad Project Loan
Agreement, dated as of the Closing Date, between Funding Company and the
Trinidad Project Borrower.
"TRINIDAD PROJECT NOTE" shall mean the promissory note or notes issued
by the Trinidad Project Borrower in favor of the Funding Company under the
Trinidad Project Loan Agreement.
"TRINIDAD PROJECT NOTE PLEDGE AGREEMENT" shall mean the Note Pledge
Agreement, dated as of the Closing Date, between Funding Company and the
Collateral Agent.
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"TRINIDAD REVENUE ACCOUNT" shall mean the Trinidad Revenue Account
established with the Depositary Bank pursuant to the terms of the Trinidad
Depositary Agreement.
"TRINIDAD SECURITY AGREEMENT" shall mean (i) the Assignment and
Security Agreement, dated as of the Closing Date, between the Trinidad Project
Borrower and the Collateral Agent and (ii) the Assignment and Security
Agreement, dated of the Closing Date, between the Trinidad Obligor and the
Collateral Agent.
"TRINIDAD SECURITY AGREEMENT COLLATERAL" shall have the meaning given
to that term in SECTION 2.1 of the Trinidad Security Agreements.
"TRINIDAD SECURITY DOCUMENTS" shall mean the Trinidad Security
Agreements, the Trinidad Pledge Agreements, the Trinidad Charge and Security
Agreement, the Trinidad Mortgage Debenture, the Trinidad Project Note Pledge
Agreement and all other security documents securing the obligations of the
Trinidad Finance Parties under the Trinidad Guarantee, the Trinidad Project Note
and the Trinidad Loan.
"TRINIDAD TURNKEY CONSTRUCTION CONTRACT" shall mean the Turnkey
Construction Contract, dated as of June 26, 1998, between the Trinidad Obligor
and Duke/Fluor Daniel International.
"TRINIDAD U.S. PARENT" shall mean York T&T Holding, Inc., a Delaware
corporation.
"UNAUDITED FINANCIAL STATEMENTS" shall mean, for any Person, with
respect to any fiscal period, the unaudited balance sheet of such Person as of
the last day of such fiscal period, the related statements of income and cash
flows for such period and (in the case of any period which does not terminate on
the last day of a fiscal year) for the portion of the fiscal year ending with
the last day of such period, setting forth, in each case, in comparative form,
corresponding unaudited figures from the preceding fiscal year.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code as the
same may, from time to time, be in effect in the State of New York.
"U.S. GUARANTORS" shall mean, individually and collectively, Brooklyn
Navy Yard Power, LLC, Warbasse Power I, LLC, Warbasse Power II, LLC and New
World Power Texas Renewable Energy Limited Partnership.
Section 1.2 PRINCIPLES OF CONSTRUCTION. (a) all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
GAAP;
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(b) all references in this Agreement to designated "Articles,"
"Sections," "Exhibits", and other subdivisions are to the designated Articles,
Sections, Exhibits and other subdivisions of this Agreement;
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision;
(d) unless otherwise expressly specified, any agreement, contract or
document defined or referred to herein shall mean such agreement, contract or
document as in effect as of the date hereof, as the same may thereafter be
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms thereof and of this Agreement and the other Finance
Documents and including any agreement, contract or document in substitution or
replacement of any of the foregoing;
(e) unless the context clearly intends the contrary, pronouns having a
masculine or feminine gender shall be deemed to include the other; and
(f) any reference to any Person shall include its successors and
assigns, and in the case of any Governmental Authority, any Person succeeding to
its functions and capacities.
ARTICLE 2
DESCRIPTION OF THE TRINIDAD LOAN
Section 2.1 ACKNOWLEDGMENTS OF THE TRINIDAD OBLIGOR; TRINIDAD LOAN. The
Trinidad Obligor and the Trinidad Guarantor hereby acknowledge and agree that:
(a) pursuant to this Agreement, the Trinidad Guarantor does hereby lend
to the Trinidad Obligor and the Trinidad Obligor does hereby borrow from the
Trinidad Guarantor funds in the aggregate principal amount of One Hundred
Million United States Dollars (U.S.$100,000,000) (the "TRINIDAD LOAN"); and
(b) proceeds from the issuance and sale of any Additional Securities
that are received by the Trinidad Guarantor must be loaned to the Trinidad
Obligor by the Trinidad Guarantor, pursuant to an amendment, supplemental
agreement to this Agreement or other appropriate documentation containing
substantially identical terms to the terms hereof, and the outstanding principal
balance of the Trinidad Loan shall be increased by the amount of such proceeds
and the Trinidad Loan shall include the loan to the Trinidad Obligor of such
proceeds.
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Section 2.2 TERM OF THIS AGREEMENT. This Agreement shall remain in full
force and effect from the date hereof until the payment in full of all amounts
due under this Agreement.
Section 2.3 INTEREST. No interest shall be paid hereunder until eight
(8) years following the Production Day (as defined in the Trinidad PPA) of the
Trinidad Project at which time interest hereunder shall be paid in arrears on
each April 30 and October 30, commencing October 30, 2007, until all principal
hereunder is paid in full. Interest hereunder shall be computed (a) on the basis
of a three hundred sixty (360) day year, consisting of twelve (12) thirty (30)
day months, and (b) at the applicable rates PER ANNUM specified on SCHEDULE I.
Section 2.4 PRINCIPAL.
(a) REGULAR REPAYMENT. The Trinidad Obligor shall repay to the Trinidad
Guarantor the aggregate principal sum of U.S. $100,000,000 in the installments
on the dates and at the times set forth on SCHEDULE I (as the same may be
modified (i) pursuant to the terms of the other Finance Documents, (ii) to
reflect any prepayments made pursuant to clause (b) of this SECTION 2.4 and
(iii) to reflect increases in the aggregate principal amount of the Trinidad
Loan pursuant to SECTION 2.1(b)).
(b) PREPAYMENT. The Trinidad Obligor shall prepay the Trinidad Loan in
such amounts and at such times as may be appropriate to permit the Trinidad
Guarantor to provide funds to the Trinidad Project Borrower to prepay the
Trinidad Project Loan pursuant to SECTION 2.4(b) (Prepayment) of the Trinidad
Project Loan Agreement or as otherwise may be required by the Trinidad Guarantor
in its sole discretion, to the extent of all Cash Flows received by the Trinidad
Obligor. The Trinidad Obligor shall, on a monthly basis, transfer all available
Cash Flow to the Trinidad Guarantor. All payments made pursuant to this SECTION
2.4(b) shall be reconciled as follows: amounts shall be treated as dividends to
the extent permitted by the Companies Act with the remainder in the form of
prepayment of Indebtedness.
(c) The Trinidad Obligor shall prepay the Trinidad Loan in such amounts
and at such times as may be appropriate to permit the Trinidad Guarantor to
provide funds to the Trinidad Project Borrower to prepay the Trinidad Project
Loan pursuant to SECTION 2.4(c) of the Trinidad Project Loan Agreement.
Section 2.5 OBLIGATIONS OF THE TRINIDAD OBLIGOR HEREUNDER
UNCONDITIONAL. The obligation of the Trinidad Obligor to make the payments
required in SECTION 2.3 (Interest), SECTION 2.4 (Principal) and SECTION 4.29
(Taxation) shall be absolute and unconditional and the Trinidad Obligor shall
not discontinue such payments for any reason, including, without limitation, any
acts or circumstances that may constitute failure of consideration, eviction or
constructive eviction from the Trinidad Project, including commercial
frustration
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of purpose, or change in Applicable Law. The Trinidad Obligor may, however, at
its own cost and expense and in its own name or in the name of the Trinidad
Guarantor, prosecute or defend any action or proceeding or take any other action
involving third Persons which the Trinidad Obligor deems reasonably necessary in
order to secure or protect its right of possession, occupancy and use of the
Trinidad Project.
Section 2.6 GENERAL TERMS OF PAYMENT. (a) All sums payable to the
Trinidad Guarantor hereunder shall be paid in accordance with the Trinidad
Depositary Agreement.
(b) Whenever any payment hereunder shall be due, or any calculation
shall be made, on a day which is not a Business Day, the date for payment or
calculation, as the case may be, shall be extended to the next Business Day, and
any interest on any payment shall be payable for such extended time at the rate
set forth therefor.
(c) If no due date is specified for the payment of any amount payable
by the Trinidad Obligor hereunder, such amount shall be due and payable not
later than ten (10) days after receipt by the Trinidad Obligor of a written
demand from the Trinidad Guarantor for payment thereof.
Section 2.7 SECURITY. The Trinidad Obligor shall execute the Trinidad
Mortgage Debenture, the applicable Trinidad Security Agreement, the Trinidad
Pledge and Security Agreement and all required documents related thereto in
favor of the Collateral Agent, as trustee for and on behalf of the Trinidad
Guarantor, to secure all sums due pursuant to this Agreement, by way of
collateral and/or additional security to that created by this Agreement.
Notwithstanding anything to the contrary herein or in any Trinidad Security
Document, the Trinidad Collateral, or any portion thereof, shall in no event be
used to secure the Securities or any obligation of any U.S. Guarantor.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
The Trinidad Obligor makes the following representations and warranties
to the Trinidad Guarantor, which representations and warranties shall survive
the execution and delivery of this Agreement:
Section 3.1 ORGANIZATION, POWER AND STATUS OF THE TRINIDAD OBLIGOR. The
Trinidad Obligor (i) is a limited liability company duly organized and validly
existing under the laws of the Republic, and (ii) has all requisite power and
authority to own the property and assets owned by it and to lease the properties
leased by it and to carry on its business as now being conducted and as proposed
to be conducted.
Section 3.2 AUTHORIZATION; ENFORCEABILITY; EXECUTION AND DELIVERY. (a)
The Trinidad Obligor has all necessary power and authority to execute, deliver
and perform its
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obligations under this Agreement and each other Transaction Document to which
the Trinidad Obligor is a party.
(b) The Trinidad Obligor has taken all necessary and proper action to
authorize the execution, delivery and performance by it of this Agreement and
each other Transaction Document to which the Trinidad Obligor is a party. The
execution, delivery and performance of this Agreement and each other Transaction
Document to which the Trinidad Obligor is a party does not require the approval
or consent of any holder or trustee of any Indebtedness or other obligations of
the Trinidad Obligor which has not been obtained.
(c) This Agreement and each other Transaction Document to which the
Trinidad Obligor is a party has been duly executed and delivered by the Trinidad
Obligor and constitute legal, valid and binding obligations of the Trinidad
Obligor, enforceable against the Trinidad Obligor in accordance with the terms
hereof and thereof, except as the enforceability hereof and thereof may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws (including any Debtor Relief Law) affecting the enforcement
of creditors' rights generally and (ii) general equitable principles, regardless
of whether the issue of enforceability is considered in a proceeding in equity
or at law.
Section 3.3 NO CONFLICT. Neither the execution, delivery and
performance of this Agreement or any other Transaction Document to which the
Trinidad Obligor is a party nor the consummation of any of the transactions
contemplated hereby or thereby (a) contravenes or violates any provision of any
Applicable Law to which the Trinidad Obligor or any of its assets is subject,
(b) conflicts with or violates any provision of any formation document of the
Trinidad Obligor or (c) conflicts with or violates, will result in a breach of
any of the terms, covenants, conditions or provisions of, constitutes a default
under, or results in the acceleration of Indebtedness evidenced by, any
agreement or instrument to which the Trinidad Obligor is a party or by which it
or any of its properties or assets is bound or to which it may be subject,
except, in the case of clauses (a) or (c) immediately above, any such conflict,
violation, breach, default or acceleration which could not reasonably be
expected to result in a Material Adverse Effect, or (d) results in the creation
or imposition of (or the obligation to create or impose) any Lien (other than
Trinidad Permitted Project Liens) upon any of the properties or assets of the
Trinidad Obligor.
Section 3.4 COMPLIANCE WITH APPLICABLE LAW. The Trinidad Obligor has
been and is currently in compliance with all Applicable Laws to which it or any
of its assets is subject, except where failure to comply could not reasonably be
expected to result in a Material Adverse Effect.
Section 3.5 LITIGATION. There are no claims, actions, suits,
investigations or proceedings at law or in equity (including any Environmental
Claims) or by or before any
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arbitrator or Governmental Authority now pending against the Trinidad Obligor
or, to the best knowledge of the Trinidad Obligor, threatened against the
Trinidad Obligor or any properties, assets or rights of the Trinidad Obligor
that could reasonably be expected to result in a Material Adverse Effect.
Section 3.6 ENVIRONMENTAL MATTERS. The Trinidad Obligor has been and is
currently in compliance with all applicable Environmental Laws except where the
failure to comply could not reasonably be expected to have a Material Adverse
Effect. To the best knowledge of the Trinidad Obligor, the Trinidad Project is
in compliance with all applicable Environmental Laws and there are no existing
facts, circumstances or conditions which could under any existing applicable
Environmental Law, individually or in the aggregate with all other circumstances
and conditions, reasonably be expected to result in a Material Adverse Effect.
Section 3.7 BUSINESS OF THE TRINIDAD OBLIGOR. Except as otherwise
permitted in this Agreement and the other Finance Documents, the Trinidad
Obligor is not engaged in any business other than the ownership, development,
construction, start-up, operation, maintenance and financing of the Trinidad
Project and transactions related thereto.
Section 3.8 VALID TITLE. The Trinidad Obligor is the legal and
beneficial owner or lessee of, with good, legal and valid title to, all its
properties and assets free and clear of all Liens other than Trinidad Permitted
Project Liens.
Section 3.9 SECURITY INTERESTS. (a) The Trinidad Mortgage Debenture and
the other Trinidad Security Documents to which the Trinidad Obligor is a party,
upon execution and delivery by the parties thereto, will create valid, and, when
financing statements (or the equivalent) in appropriate form are filed in the
recording offices specified therein, perfected, first priority Liens, subject to
Permitted Liens, in all of the Trinidad Collateral in favor of the Collateral
Agent for the benefit of the Trinidad Guarantor and the Secured Parties,
respectively.
(b) No mortgage or financing statement or other instrument or
recordation executed or authorized to be filed by the Trinidad Obligor, or, to
the Trinidad Obligor's best knowledge, by any other Person covering all or any
part of the property or assets of the Trinidad Obligor (including the Trinidad
Collateral) is on file in any recording office, except such as relate to
Trinidad Permitted Project Liens.
Section 3.10 UTILITY REGULATION. The Trinidad Obligor is not subject to
regulation by any Governmental Authority under PUHCA as a "holding company," a
"public utility company" or an "affiliate" or a "subsidiary company" of a
"holding company."
Section 3.11 INVESTMENT COMPANY ACT. The Trinidad Obligor is not, and
following the incurrence of the obligations hereunder will not be, an
"investment company"
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or a company "controlled" by an "investment company" as such terms are defined
in the Investment Company Act of 1940, as amended from time to time.
Section 3.12 NO DEFAULTS. (a) No Trinidad Default or Trinidad Event of
Default has occurred and is continuing.
(b) The Trinidad Obligor is not in default under any Trinidad Project
Document or any other Transaction Document to which the Trinidad Obligor is a
party except for defaults which could not reasonably be expected to result in a
Material Adverse Effect.
(c) To the best knowledge of the Trinidad Obligor, no default exists by
any other party to any Trinidad Project Document or any other contract related
to the Trinidad Project and no event of force majeure exists under any Trinidad
Project Document except for defaults which, in either case, could not reasonably
be expected to result in a Material Adverse Effect.
Section 3.13 GOVERNMENTAL APPROVALS. All Governmental Approvals which
are required to be obtained by, in the name of or on behalf of the Trinidad
Obligor or, to the knowledge of the Trinidad Obligor, any other party to any
Trinidad Project Document or other Finance Document in connection with (a) the
incurrence of the obligations hereunder or (b) the execution, delivery and
performance by the Trinidad Obligor or any other party to any Trinidad Project
Document or other Finance Document of the Trinidad Project Document or other
Finance Document have been duly obtained and are in full force and effect other
than, in each case, those Governmental Approvals which the failure to so obtain
could not reasonably be expected to result in a Material Adverse Effect.
Section 3.14 MARGIN STOCK. The Trinidad Obligor is not engaged,
directly or indirectly, principally, or as one of its important activities, in
the business of extending, or arranging for the extension of, credit for the
purposes of purchasing or carrying any "margin stock" (as defined in Regulation,
T, U or X of the Board of Governors of the Federal Reserve System). No part of
the proceeds of the Trinidad Loan will be used for "purchasing" or "carrying"
(as defined in Regulation, T, U or X of the Board of Governors of the Federal
Reserve System) any margin stock or for extending credit to others for the
purpose of purchasing or carrying any margin stock, or for any purpose which
would violate, or cause a violation of, Regulation, T, U or X of the Board of
Governors of the Federal Reserve System.
Section 3.15 TAXES. The Trinidad Obligor has filed or caused to be
filed all Tax Returns required by Applicable Law to be filed by it, and has paid
all Taxes shown to be due and payable by it on such Tax Returns or any
assessments made against it or any of its properties and all other Taxes, fees
or other charges imposed on it by any Governmental Authority other than Taxes,
fees, assessments or other charges which are not delinquent and remain payable
without penalty or which the Trinidad Obligor is contesting in good
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faith and for which the Trinidad Obligor is maintaining adequate reserves (to
the extent required by GAAP) in connection therewith.
Section 3.16 OWNERSHIP OF THE TRINIDAD OBLIGOR. As of the date of this
Agreement, the Trinidad Guarantor and Ernst & Young Trust Corporation are the
sole shareholders of the Trinidad Obligor.
Section 3.17 DISCLOSURE. Each of the Preliminary Offering Circular and
the Final Offering Circular as of its date did not, and the Final Offering
Circular (as the same may have been amended or supplemented) as of the Closing
Date will not, contain any untrue statement of a material fact with respect to
the Trinidad Obligor or omit to state a material fact necessary to make the
statements made therein with respect to the Trinidad Obligor, in light of the
circumstances under which they were made, not misleading.
Section 3.18 REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by the Trinidad Obligor and each of its Affiliates, and to its
knowledge, each other party in any Transaction Document are true and correct,
except to the extent such misrepresentation could not reasonably be expected to
have a Material Adverse Effect.
Section 3.19 USE OF PROCEEDS. All proceeds of the Trinidad Loan will be
used in accordance with this Agreement and for no other use.
Section 3.20 TRINIDAD PROJECT DOCUMENTS. The Collateral Agent has
received a complete copy of each Trinidad Project Document then in effect
(including all exhibits, schedules and disclosure letters referred to therein or
delivered pursuant thereto, if any).
Section 3.21 TRINIDAD PROJECT. To the best of the Trinidad Obligor's
knowledge, the services to be performed, the materials to be supplied and the
easements, licenses and other rights granted or intended to be granted to the
Trinidad Obligor pursuant to the terms of the Trinidad Project Documents and
Governmental Approvals provide or will provide the Trinidad Obligor with the
necessary rights and property interest to enable the Trinidad Obligor to obtain
the necessary services, materials or rights (including access) required for the
design, construction, start-up, operation and maintenance of the Trinidad
Project, including the Trinidad Obligor's full and prompt performance of its
obligations, and full and timely satisfaction of all conditions precedent to the
performance by others of their obligations, under the Trinidad Project
Documents, other than those services, materials or rights that reasonably can be
expected to be obtainable in the ordinary course of business.
ARTICLE 4
COVENANTS AND AGREEMENTS OF THE TRINIDAD OBLIGOR
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The Trinidad Obligor hereby covenants and agrees that from the date of
this Agreement, it shall faithfully observe and fulfill, and shall cause to be
faithfully observed and fulfilled, each and all of the following covenants until
the Debt Termination Date:
Section 4.1 PAYMENT OF PRINCIPAL OF AND INTEREST ON THE TRINIDAD LOAN;
OTHER PAYMENTS. (a) The Trinidad Obligor shall promptly pay or cause to be paid
the principal of and interest on the Trinidad Loan according to the terms
hereof.
(b) The Trinidad Obligor shall make payments to the Trinidad Guarantor
in such amounts and at such times as may be appropriate to permit the Trinidad
Guarantor, directly or indirectly, to make all necessary payments in connection
with the repayment of the Trinidad Loan and related transactions.
Section 4.2 REPORTING REQUIREMENTS. The Trinidad Obligor shall furnish
or cause to be furnished to the Trinidad Guarantor:
(a) as soon as available and in any event within sixty (60) days after
the end of the first three (3) quarterly accounting periods in each fiscal year
of the Trinidad Obligor (commencing with the quarter ending August 31, 1998)
and, with respect to item (iii) herein, the final quarter of each fiscal year,
Unaudited Financial Statements of the Trinidad Obligor, accompanied by an
Officer's Certificate of the Trinidad Obligor confirming (i) that such Unaudited
Financial Statements fairly present the financial condition and results of
operations of the Trinidad Obligor on the dates and for the periods indicated in
accordance with GAAP (other than with respect to the notes and other normally
recurring year-end adjustments), (ii) that no Trinidad Default has occurred and
no Trinidad Event of Default has occurred and is continuing, or, if such event
has occurred, describing the nature thereof and (iii) the Debt Service Coverage
Ratios for the current quarter and the historical three (3) quarters and the
final quarter of such fiscal year together with a reconciliation of each
quarterly Debt Service Coverage Ratio to the annual Debt Service Coverage Ratio;
(b) as soon as available and in any event within one hundred twenty
(120) days after the end of each fiscal year of the Trinidad Obligor (commencing
with the fiscal year ending February 28, 1999), Annual Audited Consolidated
Financial Statements, accompanied by an audit opinion thereon by the Auditors,
which opinion shall state that (i) the financial statements of the Trinidad
Finance Parties present fairly, in all material respects, the financial
position, results of operations and cash flows of the Trinidad Finance Parties
at the end of, and for, such fiscal year in accordance with GAAP, (ii) nothing
has come to their attention that any Trinidad Default or Trinidad Event of
Default, as they relate to accounting matters, has occurred and is continuing,
or, if such event has occurred, describing the nature thereof and (iii) the
annual Debt Service Coverage Ratio for such fiscal year.
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(c) promptly and in any event within five (5) days after an Authorized
Officer of the Trinidad Obligor obtains actual knowledge of any Trinidad Default
or Trinidad Event of Default, a written notice describing such Trinidad Default
or Trinidad Event of Default and any action being or proposed to be taken with
respect thereto;
(d) all other information reasonably requested by the Trinidad
Guarantor;
(e) written notice of any event or condition that could reasonably be
expected to result in a Material Adverse Effect;
(f) notice of any litigation, pending or threatened, against the
Trinidad Obligor of which it has actual knowledge which could reasonably be
expected to result in a Material Adverse Effect;
(g) all reports related to environmental matters in respect of the
Trinidad Project;
(h) copies of all material notices delivered in connection with any
Trinidad Project Document or otherwise in connection with the Trinidad Project;
(i) copies of all construction schedules, construction budgets and
Operating Budgets which are approved by the Independent Engineer (together,
periodically, with evidence of compliance therewith), copies of all bi-monthly
reports issued by the Independent Engineer prior to Substantial Completion of
the Trinidad Project and each annual report thereafter and monthly operating
reports from the Trinidad Obligor; and
(j) copies of all change orders and any document or written notice from
the construction contractor requesting or recommending the initiation of a
change order and any other notice, including, without limitation, notices with
respect to the occurrence of a force majeure event (or event of similar effect)
under any Trinidad Project Document which may result in a material increase in
project costs.
Section 4.3 MAINTENANCE OF EXISTENCE. The Trinidad Obligor shall at all
times preserve and maintain in full force and effect (a) its existence as a
limited liability company incorporated under the laws of the Republic and shall
continue its existence as a limited liability company on or before April 14,
1999 under the Companies Act and (b) all of its powers, rights, privileges and
franchises necessary for the transaction of its business as conducted or
proposed to be conducted except, in the case of this clause (b) where failure to
do so could not reasonably be expected to result in a Material Adverse Effect.
Section 4.4 COMPLIANCE WITH LAWS. The Trinidad Obligor shall comply
with all Applicable Laws (including Environmental Laws), except where
non-compliance could not reasonably be expected to result in a Material Adverse
Effect.
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Section 4.5 GOVERNMENTAL APPROVALS; TITLE. (a) The Trinidad Obligor
shall obtain in a timely manner, maintain in full force and effect (or where
appropriate, renew) and comply with all Governmental Approvals (including,
without limitation, those required under Environmental Laws) required at any
time or advisable (i) in connection with the construction, maintenance,
ownership and good and orderly operation of the Trinidad Project, as currently
conducted and as proposed to be conducted pursuant to the terms of the Trinidad
Project Documents, (ii) for the Trinidad Project to produce, sell and deliver
electricity in accordance with and as contemplated by the Trinidad Project
Documents and (iii) to execute and deliver the Trinidad Project Documents and
the Finance Documents to which it is a party and to perform its obligations
thereunder, unless in each case the failure to so obtain, maintain or comply
with such Governmental Approvals could not reasonably be expected to result in a
Material Adverse Effect.
(b) The Trinidad Obligor shall preserve and maintain good, valid and,
where applicable, marketable title to all of its properties and assets subject
to no Liens other than Trinidad Permitted Project Liens except where the failure
to do so could not reasonably be expected to have a Material Adverse Effect.
Section 4.6 EXERCISE OF RIGHTS AND PERFORMANCE UNDER TRANSACTION
DOCUMENTS. (a) The Trinidad Obligor shall exercise all of its rights under any
Trinidad Project Document or Finance Document to which it is party unless
failure to do so could not reasonably be expected to result in a Material
Adverse Effect.
(b) The Trinidad Obligor shall take all reasonable action within its
control required to ensure that each Trinidad Project Document or Finance
Document to which it is a party is in proper legal form under the respective
governing laws selected for such Trinidad Project Document or Finance Document
for the enforcement thereof in such jurisdictions without further action on the
part of the Trinidad Guarantor or the Collateral Agent.
(c) The Trinidad Obligor shall perform all of its covenants and
obligations under each Trinidad Project Document or Finance Document to which it
is a party and shall take all necessary action to prevent the termination or
cancellation of any Trinidad Project Document or Finance Document to which it is
a party except where such nonperformance or nonobservance, or the result of such
termination or cancellation, could not reasonably be expected to result in a
Material Adverse Effect.
Section 4.7 ADDITIONAL DOCUMENTS; FILINGS AND RECORDINGS. (a) The
Trinidad Obligor shall execute and deliver, from time to time as reasonably
requested by the Trinidad Guarantor or the Collateral Agent, at the Trinidad
Obligor's expense, such documents in connection with the rights and remedies of
the Secured Parties granted or provided for by this Agreement or the other
Trinidad Project Document or Finance Documents to which the Trinidad Obligor is
a party and to consummate the transactions contemplated therein.
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(b) The Trinidad Obligor shall, at its own expense, take all reasonable
actions necessary to establish, maintain, protect, perfect and continue the
perfection and priority of the Liens created by the Trinidad Security Documents
to which it is a party and to protect and enforce its rights and title and the
rights and title of the Secured Parties to the Trinidad Collateral in such
manner and in such places as in the opinion of counsel to the Trinidad Guarantor
or the Collateral Agent are required by Applicable Law in order to fully
preserve and protect the rights of the Trinidad Guarantor and the Collateral
Agent thereunder, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
Section 4.8 PAYMENT OF TAXES AND CLAIMS. The Trinidad Obligor shall,
prior to the time penalties shall attach thereto, pay and discharge or cause to
be discharged all Taxes, assessments and governmental charges or levies imposed
upon it, its income or its properties; PROVIDED that the Trinidad Obligor shall
not be required to pay any such obligation if (a) such charges are being
diligently contested in good faith by appropriate proceedings, (b) during the
period of such contest the enforcement of any contested item is effectively
stayed, and (c) adequate reserves are established with respect to the contested
items (to the extent required by GAAP).
Section 4.9 BOOKS AND RECORDS. The Trinidad Obligor shall keep proper
books of record and account truly and fairly reflecting the financial condition
and results of operations of the Trinidad Obligor in which full, true and
correct entries in conformity with GAAP and all Applicable Laws shall be made of
all dealings and transactions in relation to its business and activities. Upon
five (5) days written notice, the Trinidad Obligor shall permit officers and
designated representatives of the Trinidad Guarantor, the Collateral Agent, the
Depositary Bank or any duly authorized agent or representative thereof
(including without limitation, the Independent Engineer) to visit and inspect,
from time to time during normal business hours, any of the properties of the
Trinidad Obligor and to examine and make copies of the books of record and
account of the Trinidad Obligor and discuss the affairs, finances and accounts
of the Trinidad Obligor with, and be advised as to the same by, its officers,
all at such reasonable times and intervals and to such reasonable extent as the
Trinidad Guarantor, the Collateral Agent, the Depositary Bank and any duly
authorized agent or representative thereof (including, without limitation, the
Independent Engineer) may reasonably request.
Section 4.10 [Intentionally Omitted]
Section 4.11 AUDITORS. The Trinidad Obligor shall retain a U.S.
nationally recognized independent accounting firm in the United States to act as
its auditors and authorize such firm to communicate directly with the Collateral
Agent or other Secured Parties.
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Section 4.12 TRINIDAD REVENUE ACCOUNT. The Trinidad Obligor shall take
all actions as may be necessary to cause all Cash Flows of the Trinidad Obligor
to be deposited in the Trinidad Revenue Account in accordance with the Trinidad
Depositary Agreement and to be disbursed (to the extent required) in accordance
with the provisions set forth in ARTICLE 3 (The Accounts) of the Trinidad
Depositary Agreement.
Section 4.13 PROJECT IMPLEMENTATION. (a) The Trinidad Obligor shall
operate the Trinidad Project and all of its other property and rights in
accordance with customary industry practice and maintain the Trinidad Project
and other property in good repair and condition (ordinary wear and tear excepted
in respect thereof).
(b) Without limiting the generality of the preceding clause (a), the
Trinidad Obligor shall cause the construction of the Trinidad Project to be
prosecuted and completed with due diligence and continuity and in accordance
with the Trinidad EES Contract and the Trinidad Turnkey Construction Contract
(except for interruptions due to any event of force majeure pursuant to any
Trinidad Project Document, which the Trinidad Obligor shall use its best efforts
to mitigate), in a good and workmanlike manner and in accordance with (i) sound
generally accepted building and engineering practices, (ii) all Governmental
Approvals and Applicable Laws applicable to the Trinidad Project or the Trinidad
Obligor, (iii) the Trinidad Project Documents and (iv) the construction budget
and the construction schedule for the Trinidad Project; PROVIDED that such
budget or schedule shall be amended if the Independent Engineer delivers a
certificate to the Bond Trustee certifying that such change is necessary and
reasonable and that sufficient funds shall be available to the Trinidad Obligor
to complete the Trinidad Project in accordance with such budget and schedule, as
amended.
(c) The Trinidad Obligor shall provide an Operating Budget to the
Independent Engineer sixty (60) days prior to the start of each year subject to
the approval of the Independent Engineer (such approval not to be unreasonably
withheld) and the Trinidad Obligor shall comply with such budget; PROVIDED that
if such Operating Budget is not approved by the Independent Engineer, then the
prior annual Operating Budget which was so approved shall remain in effect
escalated in accordance with Trinidad CPI.
(d) The Trinidad Obligor shall, within six (6) Months of the Closing
Date, commence a Phase I Environmental Assessment of the Trinidad Project site.
(e) The Trinidad Obligor shall, within sixty (60) days of the Closing
Date, engage an operator for the Trinidad Project and such operator shall be
approved by the Independent Engineer.
Section 4.14 INSURANCE. (a) The Trinidad Obligor shall at all times
maintain with responsible and financially sound insurance carriers, and provide
satisfactory evidence of, customary insurance in such amounts (subject to
reasonable and customary deductibles and
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sublimits) and with terms and conditions in accordance with standard industry
practice and satisfactory to the Independent Insurance Consultant including,
without limitation, business interruption insurance with respect to the Trinidad
Project in a minimum amount equal to losses resulting from a twelve (12) month
interruption with no more than a one month deductible. All policies of physical
damage and business interruption insurance shall name the Collateral Agent as
sole loss payee and the Collateral Agent shall be named as additional insured
under any general liability, automotive liability, excess liability or other
policy similar in nature in accordance with standard industry practice.
(b) Upon procurement of the insurance required pursuant to this SECTION
4.14, the Trinidad Obligor shall furnish to the Trinidad Guarantor an Officer's
Certificate of the Trinidad Obligor indicating procurement of all such required
insurance. Such Officer's Certificate shall identify the underwriters, the type
of insurance, the insurance limits, the risks covered thereby and the policy
term. Upon request by the Trinidad Guarantor, the Trinidad Obligor shall
promptly furnish to the Trinidad Guarantor copies of all insurance policies,
binders and cover notes or other evidence of such insurance related to the
Trinidad Project.
(c) Each insurance policy obtained by the Trinidad Obligor hereunder
shall provide for at least ten (10) days' written notice to the Collateral Agent
of cancellation, reduction in amount of coverage or any other material change in
coverage.
(d) The Trinidad Obligor shall not, directly or indirectly, terminate,
cancel or suspend or permit or consent to any termination, cancellation or
suspension of, or enter into or consent to or permit the assignment of the
rights or obligations of any party to, any insurance policy obtained by it
hereunder unless such termination, cancellation, suspension or assignment of
rights and obligations could not reasonably be expected to result in a Material
Adverse Effect. The Trinidad Obligor shall not, directly or indirectly, amend,
modify, supplement or waive, or permit or consent to the amendment,
modification, supplement or waiver of, any of the provisions of, or give any
consent under, any insurance policy obtained by it hereunder (including
amending, reducing or canceling any coverage thereunder), unless such amendment,
modification, supplement or waiver could not reasonably be expected to result in
a Material Adverse Effect.
(e) The provisions of this SECTION 4.14 shall be deemed to be
supplemental to, but not duplicative of, the provisions of any of the Trinidad
Security Documents that require the maintenance of insurance. In the event that
any insurance whatsoever is purchased, taken or otherwise obtained by the
Trinidad Obligor with respect to the Trinidad Project otherwise than as required
hereunder or if not properly endorsed to the Collateral Agent as the sole loss
payee or beneficiary or otherwise made upon the terms required in this SECTION
4.14 without limitation of any provision of the Trinidad Security Documents,
such insurance shall be considered assigned hereunder to the Collateral Agent
with the right of the Collateral Agent to make, settle, comprise and liquidate
any and all claims thereunder,
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without prejudice to the exercise of any other rights and remedies that the
Collateral Agent may have under any of the Transaction Documents or under any
Applicable Law.
Section 4.15 PERMITTED INDEBTEDNESS. The Trinidad Obligor shall not
create or incur or suffer to exist any Indebtedness except the following
(collectively, "TRINIDAD PERMITTED PROJECT INDEBTEDNESS"):
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness incurred to finance in whole or in part the making of
capital improvements to the Trinidad Project required to maintain compliance
with Applicable Law; PROVIDED that the Independent Engineer shall have certified
to the Bond Trustee that:
(i) (x) an Officer's Certificate of the Trinidad
Obligor certifying that such Indebtedness is required to make a capital
improvement to the Trinidad Project that is required in order to
maintain compliance with Applicable Law is reasonable and (y) and that
such Indebtedness is the most effective means of making such capital
expenditure and, if applicable, completing the Trinidad Project; and
(ii) after giving effect to the incurrence of such
Indebtedness, the minimum Projected Debt Service Coverage Ratio for (A)
the next four consecutive fiscal quarters, commencing with the quarter
in which such Indebtedness is to be incurred, taken as one annual
period, and (B) each subsequent fiscal year through the Final Maturity
Date for the Securities, will not be less than 1.2 to 1;
(c) Indebtedness incurred to finance in whole or in part the making of
capital improvements to the Trinidad Project other than those capital
improvements referenced in clause (b) above; PROVIDED that:
(i) an Authorized Officer of the Trinidad Obligor
certifies to the Bond Trustee that no default or event of default under
any Finance Document has occurred and is continuing or will occur as a
result of the incurrence of such Indebtedness;
(ii) the Independent Engineer shall have certified to
the Bond Trustee that after giving effect to the incurrence of such
Indebtedness, (x) the minimum Projected Debt Service Coverage Ratio for
(A) the next four consecutive fiscal quarters commencing with the
quarter in which such Indebtedness is to be incurred, taken as one
annual period and (B) each subsequent fiscal year through the Final
Maturity Date for the Securities, will not be less than 1.5 to 1, and
(y) the average Projected Debt Service Coverage Ratio for all
succeeding fiscal years until the Final Maturity Date for the
Securities will not be less than 1.55 to 1; and
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(iii) written confirmation from each Rating Agency
then rating the Securities that the incurrence of such Indebtedness
will not result in a Ratings Downgrade;
(d) Indebtedness in the form of a working capital facility for the
benefit of the Trinidad Project in an aggregate principal amount not to exceed
U.S. $3,000,000; PROVIDED that such amount shall include any Indebtedness
incurred by the Trinidad Project Borrower pursuant SECTION 4.14(d) of the
Trinidad Project Loan Agreement; PROVIDED FURTHER that the terms of such
facility provide that the aggregate amount of all loans outstanding thereunder
shall be reduced to zero for ten (10) days in each fiscal year;
(e) To the extent such obligations would constitute Indebtedness,
obligations of the Trinidad Obligor under the Trinidad Project Documents;
(f) Indebtedness related to Trinidad Permitted Project Liens; and
(h) Subordinated Indebtedness from any other Trinidad Finance Party.
Section 4.16 PERMITTED LIENS. The Trinidad Obligor shall not create or
suffer to exist or permit any Lien upon or with respect to any of its properties
except the following (collectively, "TRINIDAD PERMITTED PROJECT LIENS"):
(a) Liens specifically permitted or required by, or created by, any
Trinidad Security Document, any Trinidad Project Document including, without
limitation, the Trinidad PPA or any other Finance Document;
(b) Liens for Taxes, assessments or governmental charges which are
either not yet due or which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves are established in
accordance with GAAP; and
(c) other Liens incidental to the conduct of the Trinidad Obligor's
business or the ownership of properties and assets which were not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than Liens arising by operation of law or statute in the ordinary course
of business), and which do not in the aggregate materially impair the use
thereof in the operation of the Trinidad Obligor's business.
Section 4.17 CONTINGENT LIABILITIES. The Trinidad Obligor shall not
contingently or otherwise be or become liable, directly or indirectly, in
connection with any Guarantee Obligation except for endorsements and similar
obligations in the ordinary course of business.
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Section 4.18 NATURE OF BUSINESS. The Trinidad Obligor shall not engage
in any business other than its existing business and the ownership, development,
acquisition, construction, financing and operation and maintenance of the
Trinidad Project as contemplated by the Trinidad Project Documents and the
Finance Documents.
Section 4.19 PROHIBITION ON FUNDAMENTAL CHANGES. The Trinidad Obligor
shall not enter into any transaction of merger or consolidation, change its form
of organization or its business, liquidate, wind-up or dissolve itself (or
suffer any liquidation or dissolution), discontinue its business or purchase or
otherwise acquire all or substantially all of the assets of any other Person,
except, in any such case, as contemplated by the Finance Documents.
Section 4.20 SALE OF ASSETS. The Trinidad Obligor shall not sell or
transfer any assets (other than electricity produced by the Trinidad Project) or
assign any rights other than (so long as no Trinidad Default or Trinidad Event
of Default has occurred and is continuing) those in the ordinary course of its
business for cash equal to the fair market value of such assets at the time of
sale, except, in any such case, as contemplated by the Finance Documents.
Section 4.21 SUBSIDIARIES; ADVANCES, INVESTMENTS AND LOANS. The
Trinidad Obligor shall not form or have any Subsidiaries, make investments,
loans or advances or acquire the stock, obligations or securities of any Person;
PROVIDED that the Trinidad Obligor may invest amounts on deposit in the Trinidad
Depositary Accounts, subject to limitations as to term and duration, in Cash
Equivalents; PROVIDED FURTHER that the Trinidad Obligor may make loans to the
other Trinidad Finance Parties provided that such loans shall be Subordinated
Indebtedness of such other Trinidad Finance Party; PROVIDED FURTHER that the
Trinidad Obligor shall be entitled to receive and to make equity contributions
or capital reductions to or from any other Trinidad Finance Party subject to the
terms of the Finance Documents.
Section 4.22 TRANSACTIONS WITH AFFILIATES. The Trinidad Obligor shall
not enter into any transaction or series of related transactions, whether or not
in the ordinary course of business, with any Affiliate of the Trinidad Obligor
which is not on terms and conditions no less favorable as would be obtained in a
comparable arm's-length transaction with a Person other than an Affiliate of the
Trinidad Obligor, except that the Trinidad Obligor may perform its obligations
under and engage in the transactions contemplated by the Trinidad Project
Documents and the Finance Documents and may engage in transactions with the
Sponsor related to the development and construction of the Trinidad Project so
long as such activities are otherwise in accordance with the terms hereof or the
Trinidad Project Documents.
Section 4.23 RESTRICTED PAYMENTS. The Trinidad Obligor shall not make
any Restricted Payments except as permitted under the Finance Documents.
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Section 4.24 AMENDMENTS TO TRINIDAD PROJECT DOCUMENTS. Other than with
respect to Permitted Contract Buy-Outs, the Trinidad Obligor (nor any Affiliate
thereof) shall not, directly or indirectly, (x) permit the assignment of the
rights and obligations of any party to any Trinidad Project Document or (y)
terminate, amend, modify, replace, supplement or waive, or permit or consent to
the termination, modification, replacement, supplement or waiver of, any of the
provisions of, or give any consent under, any of the Trinidad Project Documents
unless (a) the Trinidad Obligor certifies that such assignment, termination,
amendment, modification, replacement, supplement, waiver or consent could not
reasonably be expected to result in a Material Adverse Effect and (b) in the
case of any assignment, termination, amendment, modification, replacement,
supplement, waiver or consent with respect to the Trinidad PPA or any other
Trinidad Project Document which affects the Cash Flows to be received by the
Trinidad Obligor, in addition to the condition set forth in clause (a) above,
(i) the Independent Engineer certifies that such assignment, termination,
amendment, modification, replacement, supplement, waiver or consent could not
reasonably be expected to result in a Material Adverse Effect and (ii) the
Trinidad Obligor provides to the Bond Trustee written confirmation from each
Rating Agency then rating the Securities that such assignment, termination,
amendment, modification, replacement, supplement, waiver or consent will not
result in a Ratings Downgrade.
Section 4.25 ASSIGNMENT OF OBLIGATIONS; ADDITIONAL AGREEMENTS. The
Trinidad Obligor shall not assign any of its rights or obligations under any
Transaction Document to which it is a party and shall not enter into any
additional contract, agreement or undertaking if the transactions contemplated
by such assignment or additional contract, agreement or undertaking could
reasonably be expected to have a Material Adverse Effect; PROVIDED that the
Trinidad Obligor shall be permitted to assign any of its rights or obligations
hereunder if such assignment is necessary to avoid any adverse tax consequences
resulting from a change in Applicable Law (or the interpretation thereof) and
(a) no default or event of default under any Finance Document shall exist and be
continuing at such time, (b) the Bond Trustee shall receive written confirmation
from each Rating Agency that such assignment shall not result in a Ratings
Downgrade and (c) the Bond Trustee receives satisfactory Opinions of Counsel of
the Trinidad Obligor stating that (i) such assignment is enforceable and creates
a legal, valid and binding obligation of the Trinidad Obligor, (ii) such
assignment has no adverse consequences upon the rights and remedies of the
Trinidad Guarantor and the other Secured Parties with respect to the Trinidad
Collateral and (iii) such assignment shall have no adverse effects on the tax
structure of the transaction prior to the assignment or upon payments to or from
any Project Obligor or otherwise related to the Securities and each of the
Finance Documents.
Section 4.26 MODIFICATIONS OF FORMATION DOCUMENTS. The Trinidad Obligor
shall not amend or modify its articles of organization, certificate of
organization, by-laws or other formation documents or change its fiscal year,
except if such amendment, modification or change could not reasonably be
expected to result in a Material Adverse Effect.
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Section 4.27 ABANDONMENT. The Trinidad Obligor shall not voluntarily
cease or abandon the development, construction or operation of the Trinidad
Project.
Section 4.28 SUBSTANTIAL COMPLETION. The Trinidad Obligor shall not
accept Substantial Completion of the Trinidad Project until an Authorized
Officer of the Trinidad Obligor and of the Independent Engineer shall have
delivered to the Bond Trustee the Trinidad Completion Certificate and the
Independent Engineer's certificate in the form set forth in EXHIBIT A hereto and
the Trinidad Obligor shall have received confirmation from T&TEC that the
Trinidad Project shall have achieved "Commercial Operation" in accordance with
the Trinidad PPA.
Section 4.29 TAXATION. (a) All payments made by the Trinidad Obligor in
respect of the Trinidad Loan shall be made free and clear of, and without
withholding or deduction for or on account of, any and all Taxes. The Trinidad
Obligor shall pay such additional amounts as may be necessary to ensure that the
amounts received by the Trinidad Guarantor after such withholding or deduction,
if any, shall equal the respective amounts of principal and interest that would
have been receivable in the absence of such withholding or deduction.
(b) The Trinidad Obligor shall promptly pay when due any present or
future stamp, court or documentary Taxes or any other excise or property Taxes,
charges or similar levies that arise in any jurisdiction from the execution or
delivery of this Agreement, the Trinidad Security Documents or any other
document referred to herein, excluding (i) Taxes imposed on or measured by the
net income or capital of the Trinidad Guarantor and (ii) any such Taxes imposed
by any jurisdiction other than Barbados or the Republic.
ARTICLE 5
DEFAULTS AND REMEDIES
Section 5.1 EVENTS OF DEFAULT DEFINED. The term "TRINIDAD EVENT OF
DEFAULT," whenever used herein, shall mean any of the following events (whatever
the reason for such event and whether it shall be voluntary or involuntary or
shall come about or be effected by operation of law, or be pursuant to or in
compliance with any Applicable Law), and any such event shall continue to be a
Trinidad Event of Default if and for so long as it shall not have been remedied
or waived in accordance with the terms of this Agreement, the Intercreditor
Agreement or any other applicable Finance Document:
(a) (i) The Trinidad Obligor shall fail to pay any principal of,
premium (if any), interest on, or other amounts due in respect of or any other
obligations on the Trinidad Loan when the same becomes due and payable, whether
by scheduled maturity or required prepayment or redemption or by acceleration or
otherwise and such failure continues for
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ten (10) or more days following the due date for payment, or (ii) the Trinidad
Project Borrower shall fail to pay any principal of, premium (if any), interest
on or other amounts due in respect of the Trinidad Project Loan when the same
becomes due and payable, whether by scheduled maturity or required prepayment or
redemption or by acceleration or otherwise and such failure continues for ten
(10) or more days following the due date for payment, in each case, after
application by the Collateral Agent, in accordance with the Trinidad Depositary
Agreement, of (x) any amounts in the Debt Service Reserve Account and (y) any
amounts otherwise advanced by the Trinidad Obligor;
(b) Any representation or warranty made by the Trinidad Obligor in this
Agreement or in any other Transaction Document to which the Trinidad Obligor is
a party, or any representation, warranty or statement in any certificate,
financial statement or other document furnished to the Trinidad Guarantor, the
Collateral Agent or any other Person pursuant to the terms of the Finance
Documents by or on behalf of the Trinidad Obligor hereunder or thereunder, shall
prove to have been untrue or misleading in any material respect as of the time
made, confirmed or furnished and such fact, event or circumstance that gave rise
to such inaccuracy has resulted in, or could reasonably be expected to result
in, a Material Adverse Effect, and such fact, event or circumstance shall
continue uncured for thirty (30) or more days from the date an Authorized
Officer of the Trinidad Obligor obtains actual knowledge thereof; PROVIDED that
if the Trinidad Obligor commences and diligently pursues efforts to cure such
fact, event or circumstance within such thirty (30) day period and delivers
written notice thereof to the Trinidad Guarantor, the Trinidad Obligor may
continue to effect such cure and such misrepresentation shall not be deemed a
"Trinidad Event of Default" for an additional ninety (90) days so long as the
Trinidad Obligor is diligently pursuing such cure;
(c) The Trinidad Obligor shall fail to perform or observe any covenant
or agreement contained in SECTION 4.3 (Maintenance of Existence), SECTION 4.6
(Exercise of Rights and Performance Under Transaction Documents), SECTION 4.7
(Additional Documents; Filings and Recordings), SECTION 4.8 (Payment of Taxes
and Claims), SECTION 4.9 (Books and Records), SECTION 4.13 (Project
Implementation),SECTION 4.14 (Insurance), SECTION 4.15 (Permitted Indebtedness),
SECTION 4.16 (Permitted Liens), SECTION 4.17 (Contingent Liabilities), SECTION
4.18 (Nature of Business), SECTION 4.19 (Prohibition on Fundamental Changes),
SECTION 4.20 (Sale of Assets), SECTION 4.23 (Restricted Payments), SECTION 4.24
(Amendments to Trinidad Project Documents), SECTION 4.25 (Assignment of
Obligations; Additional Agreements), SECTION 4.26 (Modification of Formation
Documents), SECTION 4.27 (Abandonment), SECTION 4.28 (Substantial Completion)
and SECTION 4.29 (Taxation) and such failure shall continue uncured for thirty
(30) or more days from the date an Authorized Officer of the Trinidad Obligor
obtains actual knowledge of such failure;
(d) The Trinidad Obligor shall fail to perform or observe any of the
other covenants contained in this Agreement or in the other Finance Documents to
which it is party (other than those referred to in clause (c) of this SECTION
5.1) and such failure shall
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continue uncured for sixty (60) or more days from the date an Authorized Officer
of the Trinidad Obligor obtains actual knowledge of such failure; PROVIDED that
if the Trinidad Obligor commences and diligently pursues efforts to cure such
default within such sixty (60) day period and delivers written notice thereof to
the Trinidad Guarantor, the Trinidad Obligor may continue to effect such cure of
the default and such default shall not be deemed a "Trinidad Event of Default"
for an additional thirty (30) days so long as the Trinidad Obligor is diligently
pursuing such cure;
(e) The Trinidad Obligor or any other party to a material Trinidad
Project Document shall (i) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or all or a substantial part of its property, (ii) admit in writing its
inability or be generally unable to pay its debts as such debts become due,
(iii) make a general assignment for the benefit of its creditors, (iv) commence
a voluntary case under any Debtor Relief Law, (v) file a petition seeking to
take advantage of any Debtor Relief Law, (vi) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under any Debtor Relief Law or (vii) take any action for the
purpose of effecting any of the foregoing including, without limitation,
commencement of a shareholder vote or the appointment of an independent auditor
in connection with any of the foregoing;
(f) A proceeding or case shall be commenced without the application or
consent of the Trinidad Obligor or any other party to a material Trinidad
Project Document in any court of competent jurisdiction, seeking (i) its
liquidation, reorganization, dissolution, winding-up or the composition or
readjustment of its debts or (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Trinidad Obligor or all or a
substantial part of its property under any Debtor Relief Law, and such
proceeding or case shall continue undismissed, or any order, judgment or decree
approving any of the foregoing shall be entered and continue unstayed and in
effect, for a period of sixty (60) or more consecutive days, or any order for
relief against the Trinidad Obligor or any other party to a material Trinidad
Project Document shall be entered in any involuntary case under any Debtor
Relief Law;
(g) One or more final, non-appealable judgments, decrees or orders
shall be entered against the Trinidad Obligor involving in the aggregate a
liability in excess of U.S. $5,000,000 (exclusive of judgment amounts fully
covered by insurance or indemnity) or more against the Trinidad Obligor and
shall remain unpaid or unstayed for ninety (90) or more consecutive days after
the entry thereof;
(h) Indebtedness of the Trinidad Obligor in excess of U.S. $5,000,000
(other than Indebtedness incurred pursuant to this Agreement) shall be required
to be prepaid, or shall be declared to be due and payable, other than by
regularly scheduled required repayment, prior to the stated maturity thereof, as
a result of the acceleration of the stated maturity thereof following an event
of default thereunder;
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(i) Any Governmental Approval required for the operation of the
Trinidad Project is revoked, terminated, withdrawn or ceases to be in full force
and effect if such revocation, termination, withdrawal or cessation could
reasonably be expected to have a Material Adverse Effect; PROVIDED that no such
event shall be a Trinidad Event of Default if within sixty (60) days from the
occurrence thereof, (i) the Trinidad Obligor diligently pursues in good faith
and (x) obtains an additional Governmental Approval in substitution therefor or
replacement thereof or (y) causes such Governmental Approval to be reinstated
and (ii) during such sixty (60) day period no Material Adverse Effect occurs;
(j) A material Trinidad Project Document ceases to be valid and binding
and in full force and effect (other than as permitted hereunder), any third
party thereto denies that it has any liability or obligation under any Trinidad
Project Document and such third party ceases performance thereunder, or any
third party fails to perform its material obligations thereunder or makes any
material misrepresentation thereunder, and in each case such cessation, failure
or misrepresentation has resulted or would reasonably be expected to result in a
Material Adverse Effect;
(k) The Trinidad Obligor or any other party shall fail to perform or
observe any of its covenants or obligations contained in any Trinidad Project
Document to which it is a party if such failure shall result in the receipt of a
notice of termination (subject to applicable cure periods) of the Trinidad
Project Document or shall otherwise result in a Material Adverse Effect;
(l) Any Trinidad Security Document related to any Trinidad Collateral
shall cease to be in full force and effect or any Lien purported to be granted
therein shall cease to be a valid and perfected Lien in favor of the Collateral
Agent for the benefit of the Trinidad Guarantor or the other Secured Parties on
any material portion of the Trinidad Collateral described therein with the
priority purported to be created thereby; PROVIDED that the Trinidad Obligor
shall have ten (10) days to cure any such cessation (if curable) or to furnish
to the Bond Trustee, Collateral Agent or the Depositary Bank all documents and
instruments required to cure any such cessation (if curable);
(m) An Indenture Event of Default shall occur and be continuing; and
(n) All or a material part of the Trinidad Project is destroyed or
suffers a material actual loss or material damage; PROVIDED that the occurrence
of such an event shall not be a Trinidad Event of Default if within thirty (30)
days from the occurrence of such event, there exists an Approved Restoration
Plan in respect of the remediation of the damage, loss or taking giving rise to
such event.
Section 5.2 REMEDIES UPON A TRINIDAD EVENT OF DEFAULT. Subject to the
Intercreditor Agreement and the Trinidad Guarantee, if one or more Trinidad
Events of Default shall have occurred and be continuing, then:
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(i) in the case of a Trinidad Event of Default
described in clause (a) or (m) (relating to an Indenture Event of
Default under clause (a) of SECTION 5.1 (Events of Default) of the
Indenture) in accordance with SECTION 7(z) of the Trinidad Guarantee,
the Trinidad Guarantor shall declare the outstanding principal amount
of the Trinidad Loan, any interest accrued and unpaid thereon, all
premium (if any), all other amounts payable in respect thereof and all
other amounts payable under this Agreement, to be due and payable,
whereupon the same shall become immediately due and payable without
presentment, demand, protest or further notice of any kind, all of
which are hereby waived;
(ii) in the case of a Trinidad Event of Default
described in clause (b), (c), (d), (g), (h), (i), (j), (k), (l), (m)
(except with respect to an Indenture Event of Default related to
bankruptcy, liquidation or any other similar event), or (n) of SECTION
5.1 (Events of Default Defined), in accordance with SECTION 7(z) of the
Trinidad Guarantee, the Trinidad Guarantor shall declare the
outstanding principal amount of the Trinidad Loan, any interest accrued
and unpaid thereon, all other amounts payable in respect thereof and
all other amounts payable under this Agreement, to be due and payable,
whereupon the same shall become immediately due and payable without
presentment, demand, protest or further notice of any kind, all of
which are hereby waived; and
(iii) in the case of a Trinidad Event of Default
described in clause (e), (f) or (m) (with respect to an Indenture Event
of Default related to bankruptcy, liquidation or any other similar
event) the entire outstanding principal amount of the Trinidad Loan,
any interest accrued and unpaid thereon, all other amounts payable in
respect thereof and all other amounts payable under this Agreement
shall automatically become due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby waived.
Section 5.3 CONTINUING LIEN. (a) The Liens on and security interests in
the Trinidad Collateral granted in this Agreement, the Trinidad Security
Documents and the other Finance Documents to which the Trinidad Obligor is a
party secure all Indebtedness and all obligations of the Trinidad Obligor owed
to the Trinidad Guarantor in connection with the Trinidad Loan of whatever kind
or character, whether now owing, hereafter arising or hereafter to be performed.
(b) Notwithstanding anything to the contrary in this Agreement, the
Trinidad Security Documents or the other Finance Documents to which the Trinidad
Obligor is a party, if on the date the principal balance of the Securities is
fully paid (the "PAY-OFF DATE") any other amounts owed by the Trinidad Obligor
hereunder remain to be paid, the Trinidad Guarantor shall not be obligated to
release any Trinidad Collateral remaining subject to the Trinidad Security
Documents, and such Trinidad Collateral shall continue to secure the payment of
such amounts after the Pay-off Date.
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Section 5.4 DEFENSE OF ACTIONS. Subject to the Intercreditor Agreement,
upon the occurrence and during the continuance of a Trinidad Event of Default,
the Trinidad Guarantor may (but shall not be obligated to) commence, appear in
or defend any action or proceeding purporting to affect the Trinidad Loan, or
the respective rights and obligations of the Trinidad Guarantor and any other
Person pursuant to this Agreement, the Trinidad Security Documents or any other
Finance Document to which the Trinidad Obligor is a party. The Trinidad
Guarantor 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 the Trinidad Obligor hereby agrees
to repay to the Trinidad Guarantor promptly upon demand.
ARTICLE 6
GENERAL TERMS AND CONDITIONS
Section 6.1 NOTICES. (a) Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be
sufficiently given and shall be deemed given when delivered or mailed by
registered or certified mail, postage prepaid, or sent by overnight delivery or
telecopy addressed to the Collateral Agent or any other Person as required
pursuant to the terms of the Finance Documents at their respective addresses
specified on SCHEDULE II hereto, or in each case at such other address as shall
be designated by such Person in a written notice to the other parties hereto.
Section 6.2 AMENDMENTS AND WAIVERS. No waiver, amendment, modification
or termination of any provision of this Agreement, or consent to any departure
by the Trinidad Obligor therefrom, shall in any event be effective unless such
waiver, amendment, modification or termination is in writing, is signed by the
parties hereto and is in accordance with the Intercreditor Agreement. Any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
Section 6.3 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Trinidad Guarantor in exercising any right, power or privilege
hereunder or under any other Finance Document to which the Trinidad Guarantor is
a party or a beneficiary and no course of dealing between the Trinidad Guarantor
or the Trinidad Obligor shall impair any such right, power or privilege or
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or under any other Finance Document to which
the Trinidad Guarantor is a party or a beneficiary preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies expressly provided
herein or in any other Finance Document to which the Trinidad Guarantor is a
party or a beneficiary are cumulative and not exclusive of any rights, powers or
remedies which the Trinidad Guarantor would otherwise have, all of which may at
the discretion of the Trinidad Guarantor, subject to the Intercreditor
Agreement, be pursued separately, successively or
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concurrently against the Trinidad Obligor, the Trinidad Collateral or any other
collateral securing the obligations of the Trinidad Obligor hereunder. No notice
to or demand on the Trinidad Obligor in any case shall entitle the Trinidad
Obligor to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Trinidad Guarantor to
any other or further action in any circumstances without notice or demand.
Section 6.4 SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
Section 6.5 THIRD PARTY BENEFICIARIES. Except as provided in SECTION
6.12 (Successors and Assigns), nothing in this Agreement, express or implied,
shall give or be construed to give any Person, other than the parties hereto,
any benefit or any legal or equitable right, remedy or claim under this
Agreement.
Section 6.6 TRINIDAD OBLIGOR IN CONTROL. In no event shall the rights
and interests of the Trinidad Guarantor under this Agreement and the other
Finance Documents to which the Trinidad Obligor is a party be construed to give
the Trinidad Guarantor, or be deemed to indicate that the Trinidad Guarantor
has, control of the business, management or properties of the Trinidad Obligor
or power over the daily management functions and operating decisions made by the
Trinidad Obligor.
Section 6.7 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.
Section 6.8 SECTION HEADINGS. Captions, section headings and the table
of contents appearing herein are included solely for convenience of reference
and are not intended to affect the interpretation of any provision of this
Agreement.
Section 6.9 GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) This
Agreement is a contract made under the laws of the State of New York of the
United States and shall for all purposes be governed by and construed in
accordance with the laws of such State without regard to the conflict of law
rules thereof (other than Section 5-1401 of the New York General Obligations
Law).
(b) Any legal action or proceeding against the Trinidad Obligor with
respect to this Agreement may be brought in the courts of the State of New York
in the County of New York or of the United States for the Southern District of
New York and, by execution and delivery of this Agreement, the Trinidad Obligor
hereby irrevocably accepts for itself and
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in respect of its property, generally and unconditionally, the jurisdiction of
the aforesaid courts. The Trinidad Obligor agrees that a judgment, after
exhaustion of all available appeals, in any such action or proceeding shall be
conclusive and binding upon the Trinidad Obligor, and may be enforced in any
other jurisdiction by a suit upon such judgment, a certified copy of which shall
be conclusive evidence of the judgment. The Trinidad Obligor hereby irrevocably
designates, appoints and empowers Corporation Services Company with offices on
the date hereof at 375 Hudson Street, New York, New York 10014-3686, as its
designee, appointee and agent to receive, accept and acknowledge for and on its
behalf, and in respect of its property, service of any and all legal process,
summons, notices and documents which may be served in any such action or
proceeding. If for any reason such designee, appointee and agent shall cease to
be available to act as such, the Trinidad Obligor agrees to designate a new
designee, appointee and agent in New York City on the terms and for the purposes
of this provision satisfactory to the Collateral Agent. The Trinidad Obligor
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Trinidad
Obligor at its address referred to in SECTION 6.1 (Notices), such service to
become effective thirty (30) days after such mailing. Nothing herein shall
affect the right of The Trinidad Guarantor to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
the Trinidad Obligor in any other jurisdiction.
(c) The Trinidad Obligor hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement or
any other Finance Document brought in the courts referred to in clause (b) above
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(d) WITH REGARD TO THIS AGREEMENT, THE TRINIDAD OBLIGOR AND THE
TRINIDAD GUARANTOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY.
Section 6.10 LIMITATION OF LIABILITY. The obligations of the Trinidad
Obligor hereunder are solely the corporate obligations of the Trinidad Obligor
and no recourse shall be had against the Sponsor or any partner, employee,
officer, director, incorporator, Affiliate, agent or servant of the Trinidad
Obligor, the Sponsor or any Affiliate thereof (each a "NON-RECOURSE PERSON")
with respect to this Agreement, any of the obligations of the Trinidad Obligor
hereunder or any obligation of the Trinidad Obligor for the payment of any
amount payable hereunder for any claim based on, arising out of or relating to
this Agreement; PROVIDED, HOWEVER, that nothing in this SECTION 6.10 shall be
deemed to affect or diminish (a) the obligations of any such Non-Recourse Person
under any Transaction Document to which it is party, (b) the rights and remedies
of The Trinidad Guarantor
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against any such Non-Recourse Person under any Transaction Document to which any
such Non-Recourse Person is a party, (c) the rights and remedies of the Trinidad
Guarantor with respect to the Trinidad Collateral or (d) the obligations of any
such Non-Recourse Person under any Transaction Document as a result of such
Person's fraud or willful misconduct.
Section 6.11 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which, taken together, shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 6.12 SUCCESSORS AND ASSIGNS. All of the covenants, promises and
agreements in this Agreement by or on behalf of the Trinidad Obligor or the
Trinidad Guarantor shall bind and inure to the benefit of their respective
successors and assigns, regardless of whether so expressed, except that the
Trinidad Obligor may not assign or transfer all or any part of its rights and
obligations under this Agreement other than with the prior written consent of
the Bond Trustee and in accordance with this Agreement and the Intercreditor
Agreement.
Section 6.13 MAXIMUM INTEREST RATE. Notwithstanding any provision to
the contrary contained herein, at no time shall the Trinidad Obligor be
obligated or required to pay interest (whether or not so denominated) on the
principal balance due hereunder at a rate which could be in excess of the
maximum interest rate permitted by law to be contracted or agreed to be paid
under Applicable Law. If by the terms hereof, the Trinidad Obligor is at any
time required or obligated to pay interest in excess of such maximum rate, then
the rate of interest applicable hereunder shall be deemed to be immediately
reduced to such maximum rate and the interest payable shall be computed at such
maximum rate.
Section 6.14 ENGLISH LANGUAGE. All documents to be furnished or
communications to be given or made under this Agreement shall be in the English
language or, if in another language, shall be accompanied by a certified
translation into English, which translation shall be the governing version among
the parties hereto.
Section 6.15 ENTIRE AGREEMENT. This Agreement, together with any other
agreements executed in connection herewith, is intended by the parties hereto as
a final expression of their agreement as to the matters covered hereby and is
intended as a complete and exclusive statement of the terms and conditions
hereof.
Section 6.16 SURVIVAL. The representations and warranties of the
Trinidad Obligor contained herein shall survive the execution and delivery of
this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
YORK HOLDINGS (BARBADOS) SRL
By: /s/ Robert C. Paladino
-----------------------------
Name: Robert C. Paladino
Title: Vice President
INNCOGEN, LIMITED
By: /s/ Robert C. Paladino
-----------------------------
Name: Robert C. Paladino
Title: President
Acknowledged and agreed
with respect to SECTION 2.7
THE BANK OF NEW YORK,
as Collateral Agent
By: /s/ Joseph Ernst
----------------------------------
Name: Joseph Ernst
Title: Vice President
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SCHEDULE II
NOTICES
1. York Power Funding (Cayman) Limited
c/o Queensgate SPV Services, Limited
P.O. Box 1093 GT,
Compass Center
2nd Floor
Crewe Road
Grand Cayman, Cayman Islands
2. InnCOGEN, Limited
#10 Marine Villas
Columbus Boulevard
West Moorings by the Sea
Trinidad, W.I.
3. York Ex International SRL
The Ernst & Young Building
Bush Hill, Bay Street
St. Michael, Barbados
4. York Holdings (Barbados) SRL
The Ernst & Young Building
Bush Hill, Bay Street
St. Michael, Barbados
5. York Holdings (Caymans) LLC
c/o Maples and Calder
P.O. Box 309
George Town, Grand Cayman
Cayman Islands
British West Indies
6. The Bank of New York, as Bond Trustee
101 Barclay Street
New York, New York 10286
Facsimile: (212) 815-5544
Attention: International and Structured Finance
Schedule II-1
<PAGE>
7. The Bank of New York, as Collateral Agent
101 Barclay Street
New York, New York 10286
Facsimile: (212) 815-5544
Attention: International and Structured Finance
8. Moody's Investor Service
99 Church Street
New York, New York
Attention:
9. Standard & Poor's
25 Broadway
New York, New York 10004
Attention: Corporate Ratings
Schedule II-2
<PAGE>
EXHIBIT A
TRINIDAD COMPLETION CERTIFICATE
[Date]
The Bank of New York,
as Bond Trustee
[ ]
Attention: [ ]
Ladies and Gentlemen:
This certificate (the "TRINIDAD COMPLETION CERTIFICATE") is delivered
to you pursuant to SECTION 4.28 of the Trinidad Loan Agreement, dated as of
August , 1998 (the "TRINIDAD LOAN AGREEMENT"), between York Holdings (Barbados)
SRL (the "TRINIDAD GUARANTOR") and InnCOGEN, Limited (the "TRINIDAD OBLIGOR") .
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned thereto in the Trinidad Loan Agreement.
The Trinidad Obligor hereby certifies to the Bond Trustee of the
benefit of the Holders as of the date hereof that:
On and as of the date hereof, Substantial Completion of the Trinidad
Project has occurred and the Trinidad Obligor has received a certificate from
T&TEC confirming that the Commercial Operation Date (as defined in the Trinidad
PPA) for the Trinidad Project has occurred.
[ALTERNATE VERSION. On and as of the date hereof, the Trinidad Project
has been abandoned.]
IN WITNESS WHEREOF, the undersigned has executed this Officer's
Certificate this __ day of ____________, 199_.
INNCOGEN, LIMITED
By:
--------------------------------------
Name:
Title:
Exhibit A-1
<PAGE>
APPENDIX I TO EXHIBIT A
INDEPENDENT ENGINEER'S CERTIFICATE
[Date]
The Bank of New York,
as Bond Trustee
[ ]
Attention: [ ]
InnCOGEN, Limited
[ ]
Attention: [ ]]
Ladies and Gentlemen:
This certificate is delivered to you pursuant to (a) SECTION 4.28 of
the Trinidad Loan Agreement, dated as of August , 1998 (the "TRINIDAD LOAN
AGREEMENT"), between York Holdings (Barbados) SRL (the "TRINIDAD GUARANTOR") and
InnCOGEN, Limited (the "TRINIDAD OBLIGOR") and (b) the certificate to which this
Certificate is attached as APPENDIX I (the "TRINIDAD COMPLETION CERTIFICATE")
delivered by the Trinidad Obligor. Capitalized terms used and not otherwise
defined herein shall have the meanings assigned thereto in the Trinidad Loan
Agreement.
We hereby certify to the Bond Trustee for the benefit of the Holders as
of the date hereof that:
(a) We have reviewed the material and data made available to us by the
Trinidad Obligor with respect to the Trinidad Project [and have
performed such other investigation as is referenced in the
attachment hereto] (the "REVIEW"). Our Review was performed in
accordance with generally accepted engineering and construction
practices and included such investigation and review as we in our
professional capacity deemed necessary or appropriate in the
circumstances and within the scope of our appointment and [insert
customary assumptions and qualifications].
(b) We have discussed matters believed pertinent to this Certificate
with Funding Company and the Trinidad Obligor.
Exhibit A-2
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(c) On the basis of the foregoing Review and on the understanding and
assumption that we have been provided true, correct and complete
information from such other parties as to the matters covered by
this Certificate, and [insert customary assumptions and
qualifications] we confirm that (a) the statements set forth by the
Trinidad Obligor in the Trinidad Completion Certificate are true
and correct and (b)(i) Duke/Fluor Daniel International will be
liable for any items required to be completed pursuant to the
Trinidad EES Contract which have not been completed as of the date
hereof and that all amounts owed by Duke/Fluor Daniel International
pursuant to the Trinidad EES Contract and Duke/Fluor Daniel
International Services pursuant to the Trinidad Turnkey
Construction Contract will be sufficient to complete such items
and (ii) the failure to complete such items will not materially
adversely affect the performance of the Trinidad Project during
the term of the Trinidad PPA.
The person signing this Certificate is a duly qualified
representative of the Independent Engineer and as such is authorized to execute
and deliver this Certificate on behalf of the Independent Engineer.
[NAME OF INDEPENDENT ENGINEER]
By:
------------------------------------------
Name:
Title:
Exhibit A-3
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EXHIBIT B
FORM OF SUBORDINATION PROVISIONS
All capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed thereto in the Trinidad Loan Agreement.
[NAME OF SUBORDINATED LENDER] (together with its successors and
assigns, the "SUBORDINATED LENDER") hereby agrees for the benefit of the Secured
Parties that all [DESCRIBE SUBORDINATED LIABILITIES] (the "SUBORDINATED
OBLIGATIONS") are and shall be junior and subordinate, to the extent and in the
manner set forth hereinafter, in right of payment to the prior infeasible
payment or satisfaction in full of all Secured Obligations. In furtherance
thereof, each of the Secured Parties, the Collateral Agent and the Subordinated
Lender further agrees that:
(a) For all purposes of these subordination provisions, the
Trinidad Guarantor hereby waives all rights it may otherwise have
as a Secured Party pursuant to the terms of the Finance Documents.
(b) (i) The Subordinated Lender shall not ask, demand, sue for,
take or receive from Funding Company or any Project Obligor,
directly or indirectly, in cash or other property or by set-off or
in any other manner (including, without limitation, from or by way
of the Collateral), payment of all or any of the Subordinated
Obligations unless and until the Secured Obligations shall have
been indefeasibly paid or otherwise satisfied in full and except
to the extent of distributions from the Trinidad Distribution
Account under the Trinidad Depositary Agreement. For the purposes
of these provisions, the Secured Obligations shall not be deemed
to have been paid or satisfied in full until those Secured
Obligations shall have been indefeasibly so paid to the Secured
Parties or so otherwise satisfied (after the passage of any
relevant preference periods).
(ii) Upon any distribution of all or any of the assets of
Funding Company or any Project Obligor to creditors of Funding
Company or any Project Obligor upon the dissolution, winding up,
liquidation, arrangement, reorganization or composition of Funding
Company or any Project Obligor, whether in any bankruptcy,
insolvency, arrangement, reorganization, receivership or similar
proceedings or upon an assignment for the benefit of creditors or
any other marshalling of the assets and liabilities of Funding
Company or any Project Obligor or otherwise any payment or
distribution of any kind (whether in cash, property or securities)
which otherwise would be
Exhibit B-1
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payable or deliverable upon or with respect to the Subordinated
Obligations shall be paid or delivered directly to the Collateral
Agent for application (in the case of cash) to, or as collateral
(in the case on non-cash) to, or as collateral (in the case of
non-cash property or securities) for, the payment or prepayment of
the Secured Obligations until the Secured Obligations have been
otherwise satisfied in full.
(iii) Each of the Secured Parties may demand specific
performance of these terms of subordination, whether or not
Funding Company or any Project Obligor shall have complied with
any of the provisions hereof applicable to them at any time when
the Subordinated Lender shall have failed to comply with any of
such provisions applicable to it. The Subordinated Lender hereby
irrevocably waives any defense based on the adequacy of a remedy
at law, which might be asserted as a bar to such remedy of
specific performance.
(iv) So long as any of the Secured Obligations shall
remain unpaid or otherwise unsatisfied, the Subordinated Lender
shall not commence or join with any creditor other than the
Collateral Agent in commencing any proceeding referred to in
subsection (ii) above for the payment of amounts which otherwise
would be payable or deliverable upon or with respect to the
Subordinated Obligations.
(v) Subject to the indefeasible payment or satisfaction
in full of all of the Secured Obligations, the Subordinated Lender
shall be subrogated to the rights of the Secured Parties to
receive payments or distribution of assets of Funding Company or
any Project Obligor on the Finance Liabilities until the
Subordinated Obligations have been satisfied in full.
The foregoing provisions regarding subordination are for the
benefit of the Secured Parties and shall be enforceable by them directly against
the Subordinated Lender, and no Secured Party shall be prejudiced in its right
to enforce subordination of any of the Subordinated Obligations by any act or
failure to act by either Funding Company or any Project Obligor or anyone in
custody of any of their respective assets or property. Notwithstanding anything
to the contrary contained in the foregoing provisions, the Subordinated Lender
may receive distributions in respect of the Subordinated Obligations from
Funding Company or any Project Obligor to the extent that such distributions are
permitted pursuant to the Finance Documents.
(c) So long as any Secured Obligations remain outstanding, the
following provisions shall apply:
Exhibit B-2
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(i) If a Trigger Event (as defined in the Intercreditor
Agreement) shall have occurred and be continuing, the Collateral
Agent, on behalf of the Secured Parties, shall be permitted and is
hereby authorized to take any and all actions to exercise any and
all rights, remedies and options which it may have under the
Trinidad Security Documents or the Intercreditor Agreement.
(ii) The Subordinated Lender hereby waives: (x) notice of
the existence, creation or non-payment of all or any of the
Secured Obligations and (y) to the fullest extent permitted by
law, any right it may have to require the Collateral Agent to
marshall assets.
(d) Subject to the terms of the Intercreditor Agreement, the
Secured Parties may, at any time and from time to time, without
any consent or notice to the Subordinated Lender and without
impairing or releasing the obligations of the Subordinated Lender:
(i) amend in any manner any agreement under which any of the
Finance Liabilities is outstanding in accordance with the terms
thereof; (ii) sell, exchange, release, not perfect and otherwise
deal with any Collateral or other property at any time pledged,
assigned or mortgaged to secure the Finance Liabilities in
accordance with the Trinidad Security Documents; (iii) release
anyone liable in any manner under or in respect of the Finance
Liabilities; (iv) exercise or refrain from exercising any rights
against Funding Company or any Project Obligor and others; and (v)
apply any sums from time to time received to payment or
satisfaction of the Finance Liabilities.
Exhibit B-3
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EXHIBIT 10(tt)
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U.S. DEPOSIT AND DISBURSEMENT AGREEMENT
among
YORK POWER FUNDING (CAYMAN) LIMITED
BROOKLYN NAVY YARD POWER LLC
WARBASSE POWER I LLC
WARBASSE POWER II LLC
NEW WORLD POWER TEXAS RENEWABLE ENERGY
LIMITED PARTNERSHIP
and
THE BANK OF NEW YORK,
as Collateral Agent
and
THE BANK OF NEW YORK,
as Depositary Bank
Dated as of August 4, 1998
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TABLE OF CONTENTS
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ARTICLE 1
DEFINED TERMS AND PRINCIPLES OF CONSTRUCTION
ARTICLE 2
REPORTING REQUIREMENTS; PROCEDURES GOVERNING ACCOUNTS
Section 2.1 PROCEDURES GOVERNING ACCOUNTS .........................................................2
Section 2.2 ESTABLISHMENT OF U.S. DEPOSITARY ACCOUNTS AND SUB-ACCOUNTS.............................4
Section 2.3 SECURITY INTEREST......................................................................4
Section 2.4 TERMINATION............................................................................5
ARTICLE 3
THE ACCOUNTS
Section 3.1 BIG SPRING CONSTRUCTION ACCOUNT........................................................5
Section 3.2 U.S. REVENUE ACCOUNT...................................................................6
Section 3.3 BIG SPRING OPERATING ACCOUNT..........................................................10
Section 3.4 U.S. INTEREST ACCOUNT.................................................................11
Section 3.5 U.S. PRINCIPAL ACCOUNT................................................................11
Section 3.6 DEBT SERVICE RESERVE ACCOUNT..........................................................12
Section 3.7 BIG SPRING MAINTENANCE RESERVE ACCOUNT................................................12
Section 3.8 U.S. LOSS PROCEEDS ACCOUNT............................................................13
Section 3.9 U.S. ADDITIONAL RESERVE ACCOUNT.......................................................15
Section 3.10 BNY SUPPLEMENTAL RESERVE ACCOUNT......................................................15
Section 3.11 U.S. DISTRIBUTION ACCOUNT.............................................................15
Section 3.12 WITHDRAWALS FROM THE U.S. DEPOSITARY ACCOUNTS ON THE DEBT
TERMINATION DATE...................................................................16
Section 3.13 INVESTMENTS...........................................................................17
Section 3.14 RECEIPT OF PROCEEDS...................................................................17
Section 3.15 BENEFIT OF ACCOUNTS...................................................................18
Section 3.16 INFORMATION...........................................................................18
Section 3.17 ACCOUNTS GENERALLY....................................................................18
Section 3.18 DEPOSITARY BANK OBLIGATIONS LIMITED...................................................18
Section 3.19 TRIGGER EVENTS........................................................................19
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ARTICLE 4
THE DEPOSITARY BANK
Section 4.1 APPOINTMENT OF DEPOSITARY BANK, POWERS AND IMMUNITIES.................................19
Section 4.2 RELIANCE BY DEPOSITARY BANK...........................................................20
Section 4.3 COURT ORDERS..........................................................................21
Section 4.4 RESIGNATION OR REMOVAL................................................................21
Section 4.5 EXPENSES; INDEMNIFICATION; FEES.......................................................22
ARTICLE 5
MISCELLANEOUS PROVISIONS
Section 5.1 DIRECTION TO DEPOSITARY BANK..........................................................22
Section 5.2 ACTION BY DEPOSITARY BANK.............................................................23
Section 5.3 BENEFIT OF AGREEMENT..................................................................23
Section 5.4 NOTICES...............................................................................23
Section 5.5 COUNTERPARTS; DESCRIPTIVE.............................................................23
Section 5.6 GOVERNING LAW; SUBMISSION TO JURISDICTION.............................................23
Section 5.7 NO WAIVER; CUMULATIVE REMEDIES........................................................24
Section 5.8 ASSIGNMENT............................................................................25
Section 5.9 TIME OF DAY; ENGLISH LANGUAGE.........................................................25
Section 5.10 BINDING EFFECT........................................................................25
Section 5.11 NOTICE OF ADVERSE CLAIM...............................................................25
Section 5.12 LIMITATION ON FUNDING COMPANY'S LIABILITY.............................................25
Section 5.13 THE COLLATERAL AGENT. ...............................................................25
Schedule 1 U.S. Depositary Accounts
Exhibit A Big Spring Construction Requisition
Exhibit B Non-Budgeted Operating and Maintenance Expense Certificate
Exhibit C Restoration Requisition
</TABLE>
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U.S. DEPOSIT AND DISBURSEMENT AGREEMENT
U.S. DEPOSIT AND DISBURSEMENT AGREEMENT, dated as of August 4, 1998
(this "AGREEMENT"), among YORK POWER FUNDING (CAYMAN) LIMITED, a limited
liability company incorporated under the laws of the Cayman Islands ("FUNDING
COMPANY"), BROOKLYN NAVY YARD POWER LLC, a Delaware limited liability company
(the "BNY GUARANTOR"),WARBASSE POWER I LLC, a Delaware limited liability company
("WARBASSE I"), WARBASSE POWER II LLC, a Delaware limited liability company
("WARBASSE II", and together with Warbasse I, the "WARBASSE GUARANTOR"), NEW
WORLD POWER TEXAS RENEWABLE ENERGY LIMITED PARTNERSHIP, a Texas limited
partnership (the "BIG SPRING GUARANTOR" and, together with the BNY Guarantor and
the Warbasse Guarantor, the "U.S. GUARANTORS"), THE BANK OF NEW YORK, a New York
banking corporation, as collateral agent (in such capacity, together with its
successors in such capacity, the "COLLATERAL AGENT") under the Collateral Agency
and Intercreditor Agreement referred to below for the benefit of the Secured
Parties and THE BANK OF NEW YORK, a New York banking corporation, as the
depositary bank (in such capacity, together with its successors in such
capacity, the "DEPOSITARY BANK") under this Agreement.
W I T N E S S E T H:
WHEREAS, Funding Company is a limited liability company established
for the sole purpose of issuing the Securities in its individual capacity as
principal and as agent acting on behalf of the U.S. Guarantors pursuant to the
Indenture and to make loans to the Project Borrowers pursuant to the Project
Loan Agreements;
WHEREAS, Funding Company has simultaneously with the execution and
delivery of this Agreement issued and sold the Initial Securities pursuant to
the Indenture;
WHEREAS, payments of the principal of, premium (if any), interest on
and any other amounts due with respect to the Initial Securities will be
partially serviced by repayment of the U.S. Project Loans and guaranteed by the
U.S. Guarantors;
WHEREAS, the Collateral Agent, Funding Company and the Project
Obligors are entering into the Security Documents, pursuant to which the
Collateral Agent, acting on behalf of the Secured Parties, will obtain a
continuing Lien on and perfected security interest in the Collateral;
WHEREAS, the Secured Parties and the Project Obligors are entering
into a Collateral Agency and Intercreditor Agreement appointing the Collateral
Agent as collateral agent and setting forth certain rights and remedies of the
Collateral Agent acting on behalf
<PAGE>
of the Secured Parties with respect to the Collateral, including, without
limitation, the U.S. Depositary Accounts established pursuant to this Agreement;
and
WHEREAS, Funding Company and the U.S. Guarantors desire to (a) grant
to the Collateral Agent, acting on behalf of the Secured Parties, a Lien on and
security interest in, among other things, the U.S. Depositary Accounts
established pursuant to this Agreement and (b) the Collateral Agent desires to
appoint the Depositary Bank as depositary bank to hold and administer money
deposited in the various U.S. Depositary Accounts established pursuant to this
Agreement and funded with, among other things, proceeds of certain insurance and
revenues generated by and/or distributed to Funding Company and the U.S.
Guarantors.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINED TERMS AND PRINCIPLES OF CONSTRUCTION
For all purposes of this Agreement, (a) capitalized terms used but not
otherwise defined herein shall have the meanings set forth in APPENDIX A to the
Indenture and (b) the principles of construction set forth in SECTION 1.1
(Definitions; Construction) of the Indenture shall apply.
ARTICLE 2
REPORTING REQUIREMENTS; PROCEDURES GOVERNING ACCOUNTS
Section 2.1 PROCEDURES GOVERNING ACCOUNTS
(a) The Depositary Bank hereby agrees to act as such and to accept all
cash, payments, other amounts (including any instruments in respect thereof) and
Cash Equivalents to be delivered to or held by the Depositary Bank pursuant to
the terms of this Agreement, and to promptly deposit all such amounts and Cash
Equivalents into the U.S. Depositary Accounts established hereunder in
accordance with the terms hereof. The Depositary Bank shall hold and safeguard
the U.S. Depositary Accounts during the term of this Agreement and shall treat
the cash, payments, other amounts and Cash Equivalents, and all rights related
thereto, now or hereafter deposited in or credited to the U.S. Depositary
Accounts as "financial assets" (as defined in Section 8-102(a)(9) of the Revised
UCC), pledged by Funding Company and the U.S. Guarantors to the Collateral Agent
for the benefit of the Secured Parties, to be held by the Depositary Bank,
acting as a "securities intermediary" (as defined in the Revised UCC).
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(b) The U.S. Depositary Accounts and sub-accounts established pursuant
to SECTION 2.2 (Establishment of U.S. Depositary Accounts and Sub-accounts)
shall be in the name of the Collateral Agent, for the benefit of the Secured
Parties, for purposes of granting the Collateral Agent, on behalf of the Secured
Parties, a security interest therein in accordance with the Security Documents.
All amounts and Cash Equivalents from time to time held in each U.S. Depositary
Account shall be (a) registered in the name of the Collateral Agent for the
benefit of the Secured Parties, (b) held in the custody of the Depositary Bank
for the purposes and on the terms set forth in this Agreement and the other
Finance Documents or (c) endorsed to the Collateral Agent or credited to another
account maintained in the name of Collateral Agent. All such amounts shall
constitute a part of the Collateral and shall not constitute payment of any
Indebtedness or any other obligation of Funding Company or any U.S. Guarantor
until applied as hereinafter provided.
(c) Each of Funding Company and the U.S. Guarantors agree that its
rights to amounts and Cash Equivalents held in the U.S. Depositary Accounts are
subject to and controlled by the terms of this Agreement. In no case will any
amounts or Cash Equivalents deposited in or credited to any U.S. Depositary
Accounts be registered in the name of Funding Company or any U.S. Guarantor,
payable to the order of Funding Company or any U.S. Guarantor or specially
endorsed to Funding Company or any U.S. Guarantor except to the extent the
foregoing have been specially endorsed to the Collateral Agent or in blank. Each
of Funding Company and the U.S. Guarantors agree that the U.S. Depositary
Accounts and sub-accounts established hereto, together with the U.S. Depositary
Accounts, shall be the only deposit accounts of Funding Company and each U.S.
Guarantor.
(d) The Depositary Bank hereby agrees that it will comply with
"entitlement orders" (within the meaning of Section 8-102(a)(8) of the Revised
UCC, including, without limitation, any notification to the Depositary Bank
directing transfer or redemption of any securities or other financial assets in
any U.S. Depositary Account) issued by the Collateral Agent and relating to any
U.S. Depositary Account without the requirement of further consent by Funding
Company or any U.S. Guarantor or any other Person. The Depositary Bank hereby
represents that it has not entered into, and, hereby agrees that until the
termination of each of the Finance Documents, it will not enter into, any
agreement with any other Person (other than Funding Company or any U.S.
Guarantor) relating to the U.S. Depositary Accounts (or the amounts and Cash
Equivalents deposited therein or credited thereto) pursuant to which it has
agreed to comply with entitlement orders made by such Person. The Depositary
Bank hereby represents that it has not entered into any other agreement with
Funding Company or any U.S. Guarantor or the Collateral Agent purporting to
limit or condition the obligation of the Depositary Bank to comply with
entitlement orders as set forth in this SECTION 2.1(d). The Collateral Agent
agrees that it shall not issue entitlement orders in any circumstances which are
not permitted by this Agreement, and Funding Company or any U.S. Guarantor shall
have a cause of action against the Collateral Agent for any damages suffered as
a result of the Collateral Agent issuing entitlement orders not authorized by
this Agreement.
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Section 2.2 ESTABLISHMENT OF U.S. DEPOSITARY ACCOUNTS AND SUB-
ACCOUNTS. The Collateral Agent hereby establishes the following U.S. dollar
denominated accounts (the "U.S. DEPOSITARY ACCOUNTS") in the form of
non-interest bearing accounts and sub-accounts thereof, subject to the
provisions of SECTION 3.11 (Investments) (and each such U.S. Depositary Account
or sub-account shall be a "securities account" as such term is defined in
Section 8-501(a) of the Revised UCC), which shall be maintained at all times in
accordance with SECTION 2.1 (Procedures Governing Accounts) until the
termination of this Agreement:
(i) U.S. Revenue Account;
(ii) U.S. Interest Account;
(iii) U.S. Principal Account;
(iv) U.S. Distribution Account;
(v) U.S. Distribution Suspense Account;
(vi) U.S. Loss Proceeds Account;
(vii) U.S. Redemption Account;
(viii) Big Spring Operating Account;
(ix) Big Spring Construction Account with the Contingency Reserve
Subaccount;
(x) Big Spring Maintenance Reserve Account;
(xi) Debt Service Reserve Account;
(xii) BNY Supplemental Reserve Account; and
(xiii) U.S. Additional Reserve Account.
Certain additional sub-accounts within certain of the U.S. Depositary
Accounts may be established and created from time to time in accordance with
this Agreement.
Section 2.3 SECURITY INTEREST. (a) As collateral security for the
prompt and complete payment and performance when due of all its obligations
owing to any Secured Party pursuant to the terms of each Finance Document to
which Funding Company or a U.S. Guarantor is party to, Funding Company and each
U.S. Guarantor have pledged, assigned, hypothecated and transferred to the
Collateral Agent for the benefit of the Secured Parties, and have granted to the
Collateral Agent a Lien on and security interest in and to, and in furtherance
thereof hereby pledges, assigns, hypothecates and transfers to the Depositary
Bank for the benefit of the Secured Parties, and hereby grants to Depositary
Bank a Lien on and security interest in and to (i) each U.S. Depositary Account
and (ii) all cash, investments and securities at any time on deposit in any U.S.
Depositary Account, including all income or gain earned thereon. The Depositary
Bank is the agent of the Collateral Agent for the purpose of receiving payments
contemplated hereunder and for the purpose of perfecting the Lien of the
Collateral Agent for the benefit of the Secured Parties, in and to each U.S.
Depositary Account and all cash, investments and securities and any proceeds
thereof at any time on deposit in each U.S. Depositary Account; PROVIDED that
the
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Depositary Bank shall not be responsible to take any action to perfect such Lien
except through the performance of its express obligations hereunder or upon the
written direction of the Collateral Agent complying with this Agreement. Each
U.S. Depositary Account shall at all times be in the exclusive possession of,
and under the exclusive domain and control of, the Depositary Bank, as agent for
the Collateral Agent.
The Depositary Bank shall not change the name or account number of any
of the foregoing U.S. Depositary Accounts or sub-accounts without giving prior
notification to the Collateral Agent, Funding Company and the U.S. Guarantors.
(b) The Depositary Bank hereby waives any right of set-off or
recoupment that it may have or obtain with respect to the U.S. Depositary
Accounts or any amounts or Cash Equivalents deposited therein or credited
thereto other than any right of set-off or recoupment it may exercise on behalf
of the Secured Parties.
Section 2.4 TERMINATION. The rights and powers granted herein to the
Collateral Agent, granted in order to perfect the Collateral Agent's security
interest in the U.S. Depositary Accounts, are coupled with an interest and will
be affected neither by the bankruptcy of Funding Company or any U.S. Guarantor
nor by the lapse of time. The obligations of the Collateral Agent hereunder
shall continue in effect until the termination of the Intercreditor Agreement
pursuant to SECTION 5.10 (Termination) thereof.
ARTICLE 3
THE ACCOUNTS
Section 3.1 BIG SPRING CONSTRUCTION ACCOUNT. (a) On the Closing Date,
(i) $31,308,0000 shall be delivered to the Depositary Bank and deposited in the
Big Spring Construction Account from the Bond Proceeds and (ii) $4,500,000 shall
be delivered to the Depositary Bank and deposited in the Contingency Reserve
Subaccount from the Bond Proceeds.
(b) Amounts held in the Big Spring Construction Account shall be
applied solely for the payment (or reimbursement to the extent the same have
been previously paid or satisfied) of costs incurred in connection with the
construction of the Big Spring Project ("BIG SPRING CONSTRUCTION EXPENSES"), for
the payment of Big Spring Construction Expenses due and payable or reasonably
expected to be due and payable during the 30-day period following an applicable
Disbursement Date and for the payment of Operating and Maintenance Expenses
incurred prior to Substantial Completion of the Big Spring Project or reasonably
expected to be due and payable during the 30-day period following an applicable
Disbursement Date. All monies withdrawn from the Big Spring Construction Account
shall be withdrawn in accordance with the disbursement procedure hereinafter
described in this SECTION 3.1. If the amounts on deposit in the Big Spring
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Construction Account are insufficient to complete the Big Spring Project or the
Trinidad Project, monies may be withdrawn first from the Contingency Reserve
Subaccount, then from the U.S. Distribution Suspense Account and secondly from
the Debt Service Reserve Account and transferred to the Big Spring Construction
Account in amounts equal to the amount, as certified by the Big Spring Guarantor
or the Trinidad Obligor, as applicable, required to complete the Big Spring
Project or the Trinidad Project, as applicable.
(c) As a condition precedent to any withdrawal and transfer from the
Big Spring Construction Account the Depositary Bank shall have received from an
Authorized Officer of the Big Spring Guarantor and the Independent Engineer,
with respect to each Disbursement Date, a requisition in the form attached
hereto as EXHIBIT A (the "BIG SPRING CONSTRUCTION REQUISITION") within at least
five (5) Business Days prior to such Disbursement Date as set forth therein on
which such withdrawal and transfer is requested to be made.
(d) On the earlier of the Disbursement Date referred to in SECTION
3.1(c), or as soon as possible following receipt of the Big Spring Construction
Requisition, the Depositary Bank shall make payments in accordance with such Big
Spring Construction Requisition.
(e) Following Substantial Completion of the Big Spring Project as
evidenced by an Officer's Certificate of the Big Spring Guarantor delivered to
the Depositary Bank, excess funds, if any, in the Big Spring Construction
Account shall be transferred to the U.S. Revenue Account for distribution to the
other U.S. Depositary Accounts, as provided in SECTION 3.2 (U.S. Revenue
Account). Following Substantial Completion of each of the Big Spring Project and
the Trinidad Project as evidenced by an Officer's Certificate of the Big Spring
Guarantor and the Trinidad Obligor delivered to the Depositary Bank, excess
funds, if any, in the Contingency Reserve Subaccount shall be transferred to the
U.S. Revenue Account for distribution to the other U.S. Depositary Accounts, as
provided in SECTION 3.2 (U.S. Revenue Account).
Section 3.2 U.S. REVENUE ACCOUNT. (a) The following amounts shall be
deposited into the U.S. Revenue Account: (i) all Cash Flows actually received by
the U.S. Guarantors, (ii) all amounts from the Big Spring Construction Account
in accordance with SECTION 3.1 (Big Spring Construction Account), (iii) to the
extent the amount on deposit in the Debt Service Reserve Account equals the Debt
Service Reserve Required Balance, any income from the investment of the monies
in any U.S. Depositary Account pursuant to SECTION 3.13 (Investments), (iv) any
proceeds actually received from the sale of assets by any U.S. Guarantor in
accordance with the terms of the U.S. Project Loan Agreement, (v) all proceeds
actually received from any business interruption insurance actually received
with respect to any U.S. Project, (vi) any proceeds of Additional Securities
issued under SECTION 2.3(d)(iii) (Additional Securities) of the Indenture and
on-lent to any U.S. Guarantor, (vii) all Loss Proceeds not required to be
maintained in the U.S. Loss Proceeds Account
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pursuant to SECTION 3.8 (U.S. Loss Proceeds Account) and (viii) certain amounts
specified hereunder to be withdrawn from other U.S. Depositary Account or
sub-accounts. Each U.S. Guarantor shall instruct all parties at any time paying
material amounts of Cash Flows to such U.S. Guarantor, and shall use all
commercially reasonable efforts to cause all such parties to agree, to make all
payments of such Cash Flows into the U.S. Revenue Account. Each U.S. Guarantor
shall certify to the Collateral Agent and the Depositary Bank, as to the parties
(and to the extent known, the amounts) that will make payments into the U.S.
Revenue Account, and shall promptly notify the Collateral Agent and the
Depositary Bank in writing if it is aware of any refusal or failure by any such
party to make such payments into the U.S. Revenue Account and shall deliver any
and all Cash Flows received by such U.S. Guarantor to the Depositary Bank for
deposit to the U.S. Revenue Account as promptly as possible. Any excess amounts
in any of the U.S. Depositary Accounts will be transferred to the U.S. Revenue
Account on the next Funding Date.
(b) WITHDRAWALS FROM THE U.S. REVENUE ACCOUNT. Provided that no
Trigger Event has occurred and is continuing, Funding Company and each U.S.
Guarantor hereby irrevocably authorize the Depositary Bank, on each Funding
Date, to make withdrawals and transfers of moneys to the extent then available
in the U.S. Revenue Account and not segregated for any specific purpose as
provided in this SECTION 3.2, upon the delivery of an Officer's Certificate of
each U.S. Guarantor to the Depositary Bank at least three (3) Business Days
prior to a scheduled Funding Date setting forth the amounts to be withdrawn,
transferred or segregated pursuant to this clause (b), in the following order of
priority:
(i) FIRST: Withdraw and transfer to the Bond Trustee, the
Collateral Agent and the Depositary Bank the amount set forth in the
Officer's Certificate of each U.S. Guarantor equal to the U.S.
Guarantors' PRO RATA portion of the fees and expenses then due and
payable to each of the Bond Trustee, the Collateral Agent and the
Depositary Bank in accordance with the relative value of the
outstanding U.S. Project Loans as compared to the value of the
outstanding Trinidad Project Loans; PROVIDED, HOWEVER, that if monies
in the U.S. Revenue Account are insufficient on any date to make
payments specified in this clause (i), distribution of monies shall be
made ratably to the specified recipients based on the respective
amounts owed to such recipients;
(ii) SECOND: After making the withdrawals specified in clause
(i), withdraw and transfer (x) to the Big Spring Operating Account the
amount set forth in the Officer's Certificate of the Big Spring
Guarantor or (y) prior to Substantial Completion of the Trinidad
Project, to the Trinidad Operating Account (in accordance with the
Trinidad Depository Agreement) the amount set forth in the Officer's
Certificate of the Trinidad Obligor, in either case to be the amounts
payable for Operating and Maintenance Expenses due and payable at any
time during the Funding Period beginning on such Funding Date, less
the aggregate of the amounts
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previously transferred on any prior Funding Date for Operating and
Maintenance Expenses and not otherwise used as of such date and such
Authorized Officer certifies that the proviso immediately below does
not apply to such withdrawal; PROVIDED that if the cumulative actual
and projected Operating and Maintenance Expenses (other than
royalties, taxes and insurance premiums) in any operating year,
including the amounts set forth in such Officer's Certificate, exceed
the projected Operating and Maintenance Expenses in the applicable
Operating Budget by more than 10%, then no amounts may be withdrawn on
behalf of the Big Spring Guarantor to pay non-budgeted operating costs
unless the Depositary Bank shall have received:
(x) an Officer's Certificate of the Big Spring Guarantor
substantially in the form attached hereto as EXHIBIT B (the
"NON-BUDGETED OPERATING AND MAINTENANCE EXPENSES CERTIFICATE"),
within at least three (3) Business Days prior to such requested
Disbursement Date; or
(y) an Independent Engineer's certificate substantially in the
form attached as APPENDIX I to EXHIBIT B, dated not more than
three (3) Business Days prior to such requested Disbursement
Date;
(iii) THIRD: After making the withdrawals specified in clauses
(i) and (ii), (A) withdraw and transfer to the U.S. Interest Account
the amount set forth in the Officer's Certificate of the U.S.
Guarantors for payment of the sum of (x) one-sixth of the interest due
and payable with respect to the U.S. Project Note on the next
Scheduled Payment Date (unless such Funding Date is also a Scheduled
Payment Date when the amount transferred shall equal the excess of the
total amount of interest due and payable on the U.S. Project Note on
such date less the amounts already transferred to the U.S. Interest
Account for such purpose) and (y) interest due and payable at any time
during the Funding Period commencing on such Funding Date with respect
to the Permitted Indebtedness (other than the Securities and U.S.
Project Note) incurred for the benefit of the U.S. Projects and (B)
withdraw and transfer to the Trinidad Interest Account the excess, if
any, of the amount set forth in the Officer's Certificate of Funding
Company and the Trinidad Project Borrower pursuant to SECTION 3.2(iii)
of the Trinidad Depositary Agreement equal to the amount required to
be deposited into the Trinidad Interest Account with respect to the
Trinidad Project Note and Permitted Indebtedness (other than the
Securities and the Trinidad Project Notes) incurred for the benefit of
the Trinidad Project on such Funding Date less the amounts on deposit
in the Trinidad Revenue Account and available for such purpose;
PROVIDED that any transfers required pursuant to this priority THIRD
which were not made on the prior Funding Date because the amounts in
the U.S. Revenue Account were insufficient to make such transfers
shall also be made as of the current Funding Date unless, with respect
to transfers required
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pursuant to clause (B), the transfer has already been made pursuant to
the terms of SECTION 3.2(iii) of the Trinidad Depositary Agreement;
(iv) FOURTH: After making the withdrawals specified in clauses
(i), (ii) and (iii), (A) withdraw and transfer to the U.S. Principal
Account the amount set forth in the Officer's Certificate of the U.S.
Guarantors for payment of the sum of (x) one-sixth of the principal
and premium, if any, due and payable with respect to the U.S. Project
Note on the next Scheduled Payment Date (unless such Funding Date is
also a Scheduled Payment Date when the amount transferred shall equal
the excess of the total amount of principal and premium, if any, due
and payable on the U.S. Project Note on such date less the amounts
transferred to the U.S. Principal Account for such purpose) and (y)
principal due and payable at any time during the Funding Period
commencing on such Funding Date with respect to the Permitted
Indebtedness (other than the Securities and U.S. Project Note)
incurred for the benefit of the U.S. Projects and (B) withdraw and
transfer to the Trinidad Principal Account the excess, if any, of the
amount set forth in the Officer's Certificate of Funding Company and
the Trinidad Project Borrower pursuant to SECTION 3.2(iv) of the
Trinidad Depositary Agreement equal to the amount required to be
deposited into the Trinidad Principal Account with respect to the
Trinidad Project Note and Permitted Indebtedness (other than the
Securities and the Trinidad Project Notes) incurred for the benefit of
the Trinidad Project on such Funding Date less the amounts on deposit
in the Trinidad Revenue Account and available for such purpose;
PROVIDED that any transfers required pursuant to this priority FOURTH
which were not made on the prior Funding Date because the amounts in
the U.S. Revenue Account were insufficient to make such transfers
shall also be made as of the current Funding Date unless, with respect
to transfers required pursuant to clause (B), the transfer has already
been made pursuant to the terms of SECTION 3.2(iv) of the Trinidad
Depositary Agreement;
(v) FIFTH: After making withdrawals specified in clauses (i),
(ii), (iii) and (iv), withdraw and transfer to the applicable Secured
Parties the amount set forth in the Officer's Certificate of the U.S.
Guarantors for payment of any indemnification expenses or other
amounts heretofore not paid and required to be paid to any of the
Secured Parties, to the extent then due and payable; PROVIDED,
HOWEVER, that if monies in the U.S. Revenue Account are insufficient
on any date to make the payments specified in this clause (v),
distribution of monies shall be made ratably to the specified
recipients based on the respective amounts owed such recipients;
(vi) SIXTH: Following Substantial Completion of the Big Spring
Project, after making the withdrawals and transfers specified in
clauses (i), (ii), (iii), (iv) and (v), withdraw and transfer to the
Big Spring Maintenance Reserve Account an amount equal to the Big
Spring Maintenance Requirement, less amounts already on
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deposit in the Big Spring Maintenance Reserve Account, as set forth in
an Officer's Certificate of the Big Spring Guarantor;
(vii) SEVENTH: After making the withdrawals and transfers
specified in clauses (i), (ii), (iii), (iv), (v) and (vi), withdraw
and transfer to the Debt Service Reserve Account the amount set forth
in the Officer's Certificate of the U.S. Guarantors which is equal to
the excess, if any, of (x) the Debt Service Reserve Required Balance
less (y) the amount determined by the Depositary Bank pursuant to
SECTION 3.6 (Debt Service Reserve Account) to be held in the Debt
Service Reserve Account as of such date, after giving effect to any
withdrawals from the Debt Service Reserve Account made on such date;
PROVIDED that such amount shall be reduced by an amount equal to the
amount transferred to the Debt Service Reserve Account in accordance
with SECTION 3.2(vii) of the Trinidad Depositary Agreement;
(xiii) EIGHTH: After making the withdrawals and transfers
specified in clauses (i), (ii), (iii), (iv), (v), (vi) and (vii), on
any date in which a BNY Indemnity Event has occurred and is
continuing, withdraw and transfer to the BNY Supplemental Reserve
Account $2,000,000 per year until such time as the amount on deposit
in the BNY Supplemental Reserve Account equals the BNY Indemnity
Amount;
(ix) NINTH: After making the withdrawals and transfers specified
in clauses (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii), on any
date after October 30, 2005, transfer to the U.S. Additional Reserve
Account an amount equal to 50% of the amounts remaining on deposit in
the U.S. Revenue Account;
(x) TENTH: After making the withdrawals and transfers specified
in clauses (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) and (ix),
withdraw and transfer to any of the Trinidad Depositary Accounts an
amount, if any, which the U.S. Guarantors determine, in their
reasonable discretion, to be in the best interest of the Trinidad
Project;
(xi) ELEVENTH: After making the withdrawals and transfers
specified in clauses (i), (ii), (iii), (iv), (v), (vi), (vii), (viii),
(ix) and (x), withdraw and transfer to the U.S. Distribution Account
the amount set forth in the Officer's Certificate of the U.S.
Guarantors necessary to pay certain fees due and owing to the general
partner of the Big Spring U.S. Guarantor in accordance with clause (c)
of SECTION 3.11 (U.S. Distribution Account); and
(xii) TWELFTH: After making the withdrawals and transfers
specified in clauses (i), (ii), (iii), (iv), (v), (vi), (vii), (viii),
(ix), (x) and (xi), transfer to the U.S. Distribution Account the
balance, if any, remaining in the U.S. Revenue Account.
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Section 3.3 BIG SPRING OPERATING ACCOUNT. Monies on deposit in the Big
Spring Operating Account shall be used for the payment of Operating and
Maintenance Expenses for the Big Spring Project and, prior to Substantial
Completion of the Trinidad Project, the Trinidad Project. On any date that such
amounts are due and payable and have been requisitioned in accordance with
SECTION 3.2(b)(ii) (Withdrawals from the U.S. Revenue Account), the Depositary
Bank shall withdraw the monies on deposit in the Big Spring Operating Account
and remit such monies to the Persons entitled thereto for the payment of such
Operating and Maintenance Expense.
Section 3.4 U.S. INTEREST ACCOUNT. (a) Monies on deposit in the U.S.
Interest Account shall be used for the payment of interest due and payable on
the U.S. Project Note (without duplication) and Permitted Indebtedness (other
than the Securities and U.S. Project Note) incurred for the benefit of the U.S.
Projects. On any date that such amounts are due and payable and have been
requisitioned in accordance with SECTION 3.2(b)(iii) (Withdrawals from the U.S.
Revenue Account), the Depositary Bank shall, subject to the last proviso of such
SECTION 3.2(b)(iii), withdraw the monies on deposit in the U.S. Interest Account
and remit such monies to the Persons entitled thereto for the payment of such
interest.
(b) If monies in the U.S. Interest Account are insufficient on any
date to make any required interest payment due and payable on the U.S. Project
Note (without duplication) and Permitted Indebtedness (other than the Securities
and the U.S. Project Note) incurred for the benefit of the U.S. Projects, then
the Depositary Bank shall withdraw funds and pay such deficiency from the Debt
Service Reserve Account, the U.S. Distribution Suspense Account and lastly the
Big Spring Maintenance Reserve Account. If an insufficient amount of monies
remains on deposit in the U.S. Interest Account following the transfer in the
preceding sentence, then distribution of monies shall be made ratably to the
Persons entitled thereto.
(c) Funding Company, the U.S. Guarantors, the Collateral Agent and the
Depositary Bank hereby acknowledge that amounts paid by the U.S. Guarantors and
transferred to the U.S. Interest Account pursuant to the terms hereof and
applied by the Depositary Bank for payment of interest owed from time to time on
the Securities shall reduce the amount of interest owed with respect to the U.S.
Project Note by such amount.
Section 3.5 U.S. PRINCIPAL ACCOUNT. (a) Monies on deposit in the U.S.
Principal Account shall be used for the payment of principal and premium (if
any) due and payable on the U.S. Project Note and Permitted Indebtedness (other
than the Securities and U.S. Project Note) incurred for the benefit of the U.S.
Projects. On any date that such amounts are due and payable and have been
requisitioned in accordance with SECTION 3.2(b)(iv) (Withdrawals from the U.S.
Revenue Account), the Depositary Bank shall, subject to the last proviso of such
SECTION 3.2(b)(iv), withdraw the monies on deposit in the U.S.
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Principal Account and remit such monies to the Persons entitled thereto for the
payment of such principal and premium (if any).
(b) If monies in the U.S. Principal Account are insufficient on any
date to make any required principal payment due and payable on the U.S. Project
Note (without duplication) and Permitted Indebtedness (other than the Securities
and the U.S. Project Note) incurred for the benefit of the U.S. Projects, then
the Depositary Bank shall withdraw funds and pay such deficiency from the Debt
Service Reserve Account, the U.S. Distribution Suspense Account and lastly the
Big Spring Maintenance Reserve Account. If an insufficient amount of monies
remains on deposit in the U.S. Principal Account following the transfer in the
preceding sentence, then distribution of monies shall be made ratably to the
Persons entitled thereto.
(c) Funding Company, the U.S. Guarantors, the Collateral Agent and the
Depositary Bank hereby acknowledge that amounts paid by the U.S. Guarantors and
transferred to the U.S. Principal Account pursuant to the terms hereof and
applied by the Depositary Bank for payment of principal and premium (if any)
owed from time to time on the Securities shall reduce the amount of principal
owed with respect to U.S. Project Note by such amount.
Section 3.6 DEBT SERVICE RESERVE ACCOUNT.
(a) On the Closing Date, Funding Company shall deposit an amount in
the Debt Service Reserve Account equal to the Debt Service Reserve Required
Balance.
(b) A determination as to the monies held in the Debt Service Reserve
Account shall be made by Funding Company prior to each Funding Date and
immediately following any withdrawal of amounts in the Debt Service Reserve
Account pursuant to clause (c) below. As soon as practicable after making any
such determination, Funding Company shall deliver to the Depositary Bank and the
Collateral Agent an Officer's Certificate of Funding Company setting forth such
determination, and the Depositary Bank shall confirm such determination.
(c) On any day on which the amounts due with respect to the Securities
have been requisitioned in accordance with SECTION 3.1 (Big Spring Construction
Account) of this Agreement, SECTION 3.1 (Trinidad Construction Account) of the
Trinidad Depositary Agreement or SECTIONS 3.2(b)(iii)-(v) (Withdrawals from the
U.S. Revenue Account) of this Agreement and the amounts withdrawn from the U.S.
Revenue Account, the U.S. Distribution Suspense Account and, if applicable, the
Trinidad Revenue Account and the Trinidad Distribution Suspense Account
allocated thereto are insufficient to pay, in full, all amounts so
requisitioned, the Depositary Bank shall (i) withdraw the monies on deposit in
the Debt Service Reserve Account in an amount equal to the lesser of (x) the
amount necessary to make up such deficiency and (y) the monies on deposit in the
Debt Service Reserve Account
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and (ii) apply such monies to the payment of principal, premium (if any),
interest or other amounts then due with respect to the Securities.
Section 3.7 BIG SPRING MAINTENANCE RESERVE ACCOUNT. After Substantial
Completion of the Big Spring Project, the Big Spring Maintenance Reserve Account
will be funded in an amount equal to the Big Spring Maintenance Requirement, and
amounts held in the Big Spring Maintenance Reserve Account shall be applied to
pay Maintenance Expenses with respect to the Big Spring Project. At least three
(3) Business Days prior to any date on which Maintenance Expenses are due and
payable, the Big Spring Guarantor shall deliver an Officer's Certificate
certifying that such Maintenance Expenses are due and payable and the amount of
such Maintenance Expenses and the Depositary Bank shall, in accordance with the
requirements of the Independent Engineer and upon the written request by the Big
Spring Guarantor, withdraw the monies on deposit in the Big Spring Maintenance
Account in an amount equal to the amount of Maintenance Expenses with respect to
the Big Spring Project then due and remit such monies to the Big Spring
Guarantor for payment of such Maintenance Expenses.
Section 3.8 U.S. LOSS PROCEEDS ACCOUNT.
(a) All Loss Proceeds received directly or indirectly by the Big
Spring Guarantor shall be paid directly into the U.S. Loss Proceeds Account;
PROVIDED that any insurance proceeds related to any delayed opening, business
interruption insurance policies shall be paid directly into the U.S. Revenue
Account. If any Loss Proceeds are received by or on behalf of the Big Spring
Guarantor, such Loss Proceeds shall be received in trust for the Collateral
Agent, segregated from the other funds of the Big Spring Guarantor and
immediately paid to the Collateral Agent for deposit into the U.S. Loss Proceeds
Account or the U.S. Revenue Account, as the case may be. Amounts held in the
U.S. Loss Proceeds Account shall be applied solely for the payment of the costs
of rebuilding, repair or restoration of the Big Spring Project or as otherwise
set forth below.
(b) If an Event of Loss with respect to the Big Spring Project shall
have occurred requiring the payment of Loss Proceeds in excess of $2,000,000 and
the Big Spring Project cannot be repaired, rebuilt or restored in accordance
with an Approved Restoration Plan, then the Depositary Bank shall withdraw and
transfer to the U.S. Redemption Account all such proceeds on deposit in the U.S.
Loss Proceeds Account relating to such Event of Loss for application by the Bond
Trustee to the redemption of the Securities in accordance with SECTION 3.2
(Mandatory Redemption) of the Indenture and, upon such application, the U.S.
Project Loan then required to be prepaid in accordance with SECTION 2.4(b)
(Prepayment) of the U.S. Project Loan Agreement shall be deemed to be prepaid as
well. In the event that the Loss Proceeds received relating to such Event of
Loss do not exceed $2,000,000, then such Loss Proceeds shall be withdrawn from
the U.S. Loss Proceeds Account and deposited in the U.S. Revenue Account.
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(c) If (i) an Event of Loss with respect to the Big Spring Project
shall have occurred requiring the payment of Loss Proceeds and (ii) an Approved
Restoration Plan with respect to such Event of Loss has been received by the
Depositary Bank, the Depositary Bank shall withdraw and pay to the Big Spring
Guarantor, upon satisfaction of the conditions set forth in SECTION 3.8(d) below
and provided that no Project Event of Default has occurred and is continuing,
such proceeds on deposit in the U.S. Loss Proceeds Account relating to such
Event of Loss from time to time in installments sufficient to pay for
restoration as it progresses. In the event there are any amounts on deposit in
the U.S. Loss Proceeds Account relating to such Event of Loss in excess of
$2,000,000 in excess of the amount necessary to effect such restoration, then
the Collateral Agent shall withdraw and transfer to the U.S. Redemption Account
all such excess Loss Proceeds on deposit in the U.S. Loss Proceeds Accounts
relating to such Event of Loss for application by the Bond Trustee to the
redemption of the Securities in accordance with SECTION 3.2 (Mandatory
Redemption) of the Indenture and, upon such application, the U.S. Project Loans
then required to be prepaid in accordance with SECTION 2.4(b) (Prepayment) of
the U.S. Project Loan Agreement shall be deemed to be prepaid as well. In the
event that the excess Loss Proceeds received relating to such Event of Loss do
not exceed $2,000,000, then such excess Loss Proceeds shall be withdrawn from
the U.S. Loss Proceeds Account and deposited in the U.S. Revenue Account.
(d) APPLICATION OF FUNDS TO APPROVED RESTORATION PLAN. Amounts on
deposit in the U.S. Loss Proceeds Account shall be used for restoration of the
Big Spring Project to the extent provided in subsections (b) and (c) above on
the following terms and conditions:
(i) The Depositary Bank, prior to the initial release of such
amounts, receives a copy of the Approved Restoration Plan;
(ii) For the initial release and each subsequent release of such
amounts the Depositary Bank receives an executed Restoration
Requisition in the form of EXHIBIT C hereto (the "RESTORATION
REQUISITION") and an executed Independent Engineer's Certificate in
the form attached thereto.
(iii) The release of such amounts shall be made within five (5)
days after the Depositary Bank receives a proper Restoration
Requisition therefor.
(e) Upon the occurrence of a Power Contract Buy-Out, all proceeds
received by or on behalf of any of the U.S. Guarantors in respect of such Power
Contract Buy-Out shall be deposited into the U.S. Loss Proceeds Account. Such
proceeds in excess of $2,000,000 shall be withdrawn and transferred to the U.S.
Redemption Account for application by the Bond Trustee to the redemption of the
Securities in accordance with the terms of SECTION 3.2 (Mandatory Redemption) of
the Indenture and, upon such application, the U.S. Project Loan then required to
be prepaid in accordance with SECTION 2.4(b)
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(Prepayment) of the U.S. Project Loan Agreement shall be deemed to be prepaid as
well. Any proceeds of any Power Contract Buy-Out not required pursuant to the
Indenture to be used for the redemption of the Securities shall be withdrawn
from the U.S. Loss Proceeds Account and transferred to the U.S. Revenue Account.
(f) All liquidated damages received by the Big Spring Guarantor
pursuant to the Vestas Agreement shall be deposited into the U.S. Loss Proceeds
Account. Such proceeds in excess of $1,000,000 shall be withdrawn and
transferred to the U.S. Redemption Account for application by the Bond Trustee
to the redemption of the Securities in accordance with the terms of SECTION 3.2
(Mandatory Redemption) of the Indenture and, upon such application, the U.S.
Project Loan then required to be prepaid in accordance with SECTION 2.4(b)
(Prepayment) of the U.S. Project Loan Agreement shall be deemed to be prepaid as
well. Any liquidated damages not required pursuant to the Indenture to be used
for the redemption of the Securities shall be withdrawn from the U.S. Loss
Proceeds Account and transferred to the U.S. Revenue Account.
Section 3.9 U.S. ADDITIONAL RESERVE ACCOUNT. Monies on deposit in the
U.S. Additional Reserve Account shall be used for the payment of principal and
interest due on the Securities and the U.S. Project Note (without duplication)
in the event that amounts on deposit in the U.S. Interest Account or U.S.
Principal Account, as applicable, the Debt Service Reserve Account or the U.S.
Distribution Suspense Account are insufficient to make such payments. On any
date that such amounts are due and payable and have been requisitioned in
accordance with SECTION 3.2(b)(iii)-(iv) (Withdrawals from the U.S. Revenue
Account) and the available amounts have been withdrawn and transferred from the
accounts mentioned in the previous sentence, the Depositary Bank shall (i)
withdraw the monies on deposit in the U.S. Additional Reserve Account in an
amount equal to the lesser of (x) the amount necessary to make up such
deficiency and (y) the monies on deposit in the U.S. Additional Reserve Account
and (ii) apply such monies to the payment of principal and interest then due
with respect to the Securities.
Section 3.10 BNY SUPPLEMENTAL RESERVE ACCOUNT. Monies on deposit in
the BNY Supplemental Reserve Account shall be used for the payment of the BNY
Indemnity Amount following the occurrence of a BNY Indemnity Event. At least
three (3) Business Days prior to any date on which the BNY Indemnity Amount
shall be reduced, the BNY Guarantor shall deliver an Officer's Certificate
certifying that the BNY Indemnity Amount will be so reduced, then the Depositary
Bank shall, upon the written request by the BNY Guarantor, withdraw monies on
deposit in the BNY Supplemental Reserve Account in an amount equal to the excess
of amounts on deposit therein less the current BNY Indemnity Amount and transfer
such monies to the U.S. Revenue Account.
Section 3.11 U.S. DISTRIBUTION ACCOUNT. (a) The U.S. Distribution
Account will be funded pursuant to SECTION 3.2(b) (Withdrawals from the U.S.
Revenue Account). At least eight (8) Business Days prior to any Distribution
Date on which the U.S.
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Distribution Conditions are satisfied, the U.S. Guarantors shall deliver an
Officer's Certificate to the Depositary Bank certifying as such, PROVIDED that
the Depositary Bank shall not have received a written objection from the Bond
Trustee or the Collateral Agent within five (5) Business Days prior to such
Distribution Date, then the Depositary Bank shall withdraw and transfer from the
U.S. Distribution Account to the applicable U.S. Guarantors, or as otherwise
directed in writing by such U.S. Guarantors, monies on deposit in the U.S.
Distribution Account for use as distributions or other lawfully permitted uses
thereof.
(b) On any Distribution Date on which any of the U.S. Distribution
Conditions is not satisfied, the Depositary Bank shall withdraw and transfer
from the U.S. Distribution Account to the U.S. Distribution Suspense Account
monies on deposit in the U.S. Distribution Account until such time as the
requirements of clause (a) above are satisfied (other than the requirement
regarding the eight (8) Business Days notice Period) at which time the
Depositary Bank shall withdraw and transfer such monies to the U.S. Distribution
Account for distribution in accordance with the terms thereof; PROVIDED that the
requirement that monies shall only be withdrawn from the U.S. Distribution
Account and transferred to U.S. Guarantors only on a Distribution Date shall not
apply to such monies being withdrawn and transferred to the U.S. Distribution
Account from the U.S. Distribution Suspense Account; and PROVIDED FURTHER that
if monies remain on deposit in the U.S. Distribution Suspense Account and have
not been withdrawn and transferred to the U.S. Distribution Account within
eighteen (18) months after the Scheduled Payment Date on which such monies were
deposited in the U.S. Distribution Suspense Account, then, following the request
of Funding Company or upon their own decision, the Majority Holders may elect
whether or not to use such funds to redeem all or a portion of the Securities in
accordance with SECTION 3.1 of the Indenture. At any time that monies on deposit
in any of the other U.S. Depositary Accounts are not sufficient to make the
payments specified in SECTION 3.1 (Big Spring Construction Account) or SECTION
3.2(b) (Withdrawals from the U.S. Revenue Account) or are not equal to the
required balance of such U.S. Depositary Accounts, then monies on deposit in the
U.S. Distribution Suspense Account shall be withdrawn and transferred to the
U.S. Revenue Account for application in accordance with such SECTION 3.2(b).
(c) At least eight (8) Business Days prior to any Funding Date on
which the U.S. Distribution Conditions are satisfied, the Big Spring Guarantor
shall deliver an Officer's Certificate certifying as such, PROVIDED that the
Depositary Bank shall not have received a written objection from the Bond
Trustee or the Collateral Agent within five (5) Business Days prior to such
Funding Date, the Depositary Bank shall withdraw and transfer from the U.S.
Distribution Account to the Big Spring Guarantor, or as otherwise directed by
the Big Spring Guarantor, monies on deposit in the U.S. Distribution Account for
use for the payment of certain fees due and owing to the general partner of the
Big Spring Guarantor; PROVIDED FURTHER that the certificate of the Independent
Engineer required pursuant to clauses (ii) and (iii) of the definition of the
term "U.S. Distribution Conditions" shall not be
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applicable to transfers made pursuant to this clause (c) on any Funding Date
which is not also a Distribution Date.
Section 3.12 WITHDRAWALS FROM THE U.S. DEPOSITARY ACCOUNTS ON THE DEBT
TERMINATION DATE. Upon the occurrence of the Debt Termination Date and the
termination of the Intercreditor Agreement the Depositary Bank shall withdraw
the balances outstanding in each U.S. Depositary Account and transfer to Funding
Company, or as directed by Funding Company, all remaining amounts in the U.S.
Depositary Accounts; PROVIDED that the Depositary Bank shall have received an
Officer's Certificate from the Collateral Agent authorizing such withdrawal and
transfer.
Section 3.13 INVESTMENTS.
(a) Pending the application of funds in any of the U.S. Depositary
Accounts or sub-accounts in accordance with this ARTICLE 3, such funds may be
invested and reinvested in Cash Equivalents denominated in dollars and
liquidated (at the risk and expense of each U.S. Guarantor), in accordance with
written instructions given to the Depositary Bank by any U.S. Guarantor (except
upon the occurrence and during the continuance of an Event of Default, during
which such funds shall be invested and reinvested in Cash Equivalents with
maturations no longer than a week).
(b) If and when cash is required for disbursement in accordance with
this ARTICLE 3, the Depositary Bank is authorized, to the extent necessary to
make disbursements required pursuant to this ARTICLE 3, to cause Cash
Equivalents to be sold or otherwise liquidated into cash in accordance with
written instructions from any U.S. Guarantor; PROVIDED that in the absence of
timely receipt of such instructions, the Depositary Bank shall sell or otherwise
liquidate Cash Equivalents as it shall, in good faith, deem necessary. The
Depositary Bank shall not be liable for any loss resulting from such liquidation
except to the extent such loss results solely from the gross negligence or
wilful misconduct of the Depositary Bank. All such liquidations shall be binding
on Funding Company and each U.S. Guarantor.
(c) The Depositary Bank shall not be required to take any action with
respect to investing the funds in any U.S. Depositary Account or sub-account in
the absence of written instructions by any U.S. Guarantor. The Collateral Agent
shall not be liable for any loss resulting from any investment in any Cash
Equivalent or the sale or redemption thereof except to the extent such loss
results solely from the gross negligence or willful misconduct of the Depositary
Bank, it being understood and agreed that in no event shall the Depositary Bank
be liable for any loss resulting from any investment, or any sale or redemption
thereof, made in accordance with written instructions received from any U.S.
Guarantor.
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(d) All funds in each and all investments in Cash Equivalents made in
respect thereof, shall be held by the Depositary Bank and the interests of
Funding Company and each U.S. Guarantor therein shall constitute part of the
security subject to the pledge and security interests created by the Security
Documents. All income from the investments in Cash Equivalents shall be included
by the Depositary Bank in the calculation of amounts on deposit in the
applicable U.S. Depositary Account.
Section 3.14 RECEIPT OF PROCEEDS. Funding Company and each U.S.
Guarantor agree that forthwith upon the receipt by it of any Project Revenues,
Equity Cash Flows or Note Cash Flows or any other proceeds related to the
Projects or of any check, draft, note, trade acceptance or other instrument
constituting Project Revenues, Equity Cash Flows or Note Cash Flows or any other
proceeds related to the Projects it will hold the same in precisely the form
received, in trust for the Collateral Agent, and will forthwith, and without any
notice or demand whatsoever, pay, endorse, transfer and deliver the same to the
Depositary Bank.
Section 3.15 BENEFIT OF ACCOUNTS. All right, title and interest in and
to the U.S. Depositary Accounts and the monies in the U.S. Depositary Accounts
and investments made with monies from the U.S. Depositary Accounts shall be
vested in the Collateral Agent for the benefit of the Secured Parties until
payment and performance in full of all of the Secured Obligations and, upon
payment in full of all the Secured Obligations, shall be vested in trust for
each U.S. Guarantor. Amounts deposited in the U.S. Depositary Accounts shall
be applied by the Depositary Bank as provided in this Agreement and the other
Security Documents, as applicable.
Section 3.16 INFORMATION. The Depositary Bank shall (i) (x) on a
monthly basis provide each U.S. Guarantor, the Bond Trustee and each other
Secured Party and (y) within five (5) Business Days after receipt of any written
request by any U.S. Guarantor, the Bond Trustee or any other Secured Party,
provide Funding Company, such U.S. Guarantor, the Bond Trustee or such other
Secured Party, as the case may be, with (a) account balance statements in
respect of each of the U.S. Depositary Accounts and sub-accounts, including all
deposits, withdrawals and transfers from and to such U.S. Depositary Accounts
and sub- accounts and (b) such information as Funding Company, such U.S.
Guarantor, the Bond Trustee or such other Secured Party, as the case may be, may
specify regarding all U.S. Depositary Accounts, Cash Equivalents (including,
without limitation, categories, amounts, maturities and issuers) and any other
investments made by the Collateral Agent pursuant hereto and regarding amounts
available in the U.S. Depositary Accounts and (ii) upon the written request and
at the expense of any U.S. Guarantor, arrange with such U.S. Guarantor for a
mutually convenient time for an Authorized Officer or an Authorized
Representative of such U.S. Guarantor and its auditors to attend the office of
the Depositary Bank to examine and take copies of records relating to and
instruments evidencing the Cash Equivalents and other investments made by the
Depositary Bank pursuant hereto.
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Section 3.17 ACCOUNTS GENERALLY. Except as specifically set forth in
this ARTICLE 3, neither Funding Company nor any U.S. Guarantor shall have any
right of withdrawal in respect of any of the U.S. Depositary Accounts. Neither
Funding Company nor any U.S. Guarantor shall make, attempt to make or consent to
the making of any withdrawal or transfer from any U.S. Depositary Accounts
except in strict adherence to this Agreement. Funding Company and each U.S.
Guarantor acknowledge and agree that dominion and control of each of the U.S.
Depositary Accounts shall at all times reside with the Depositary Bank for the
benefit of the Secured Parties.
Section 3.18 DEPOSITARY BANK OBLIGATIONS LIMITED. The obligations of
the Depositary Bank under this ARTICLE 3 shall be limited to making the
withdrawals, retentions and transfers specified herein; the Depositary Bank
shall have no obligation to Funding Company or any U.S. Guarantor or any third
party to make any payment for which the appropriate U.S. Depositary Account does
not contain sufficient funds.
Section 3.19 TRIGGER EVENTS.
(a) Notwithstanding anything in this Agreement to the contrary, but
subject to the exercise of remedies pursuant to the Intercreditor Agreement,
upon the occurrence of any Trigger Event all amounts on deposit in the U.S.
Depositary Account shall, at the written direction of the Collateral Agent,
acting pursuant to the Intercreditor Agreement, be paid in accordance with the
terms of ARTICLE 4 of the Intercreditor Agreement to the payment of the Secured
Obligations.
ARTICLE 4
THE DEPOSITARY BANK
Section 4.1 APPOINTMENT OF DEPOSITARY BANK, POWERS AND IMMUNITIES.
(a) The Depositary Bank may execute any of its duties under this
Agreement by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining hereto.
(b) The Collateral Agent on behalf of the Secured Parties under the
Intercreditor Agreement hereby appoints the Depositary Bank to act as depositary
bank and "securities intermediary" hereunder with such powers as are expressly
delegated to the Depositary Bank by the terms of this Agreement. The Depositary
Bank shall not have any duties or responsibilities except those expressly set
forth in this Agreement. Without limiting the generality of the foregoing, the
Depositary Bank shall take all actions as the Collateral Agent shall direct it
to perform in accordance with the express provisions of this Agreement or as the
Collateral Agent may otherwise direct it to perform in accordance with the
provisions of this Agreement. Notwithstanding anything to the contrary contained
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herein, the Depositary Bank shall not be required to take any action which is
contrary to this Agreement or Applicable Law. Neither the Depositary Bank nor
any of its Affiliates shall be responsible to any Secured Party for any
recitals, statements, representations or warranties made by Funding Company or
any U.S. Guarantor contained in this Agreement or any other Finance Document or
in any certificate or other document referred to or provided for in, or received
by any Secured Party under the Indenture, this Agreement or any other Finance
Document for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other document referred to or provided for
herein or therein or for any failure by Funding Company or any U.S. Guarantor to
perform its obligations hereunder or thereunder. The Depositary Bank shall not
be required to ascertain or inquire as to the performance by Funding Company or
any U.S. Guarantor of any of its or their obligations under the Indenture, this
Agreement, any other Finance Document or any other document or agreement
contemplated hereby or thereby. The Depositary Bank shall not be (a) required to
initiate or conduct any litigation or collection proceeding hereunder or under
any other Security Document or (b) responsible for any action taken or omitted
to be taken by it hereunder (except for its own gross negligence or willful
misconduct) or in connection with any other Security Document. Except as
otherwise provided under this Agreement, the Depositary Bank shall take action
under this Agreement only as it shall be directed in writing by the Collateral
Agent. Whenever in the administration of this Agreement the Depositary Bank
shall deem it necessary or desirable that a factual matter be proved or
established in connection with the Depositary Bank taking, suffering or omitting
to take any action hereunder, such matter (unless other evidence in respect
thereof is herein specifically prescribed) may be deemed to be conclusively
proved or established by a certificate of any Authorized Officer of the
applicable U.S. Guarantor or the Collateral Agent, if appropriate. The
Depositary Bank shall have the right at any time to seek instructions concerning
the administration of this Agreement from the Collateral Agent or any U.S.
Guarantor or any court of competent jurisdiction. The Depositary Bank shall have
no obligation to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder.
Section 4.2 RELIANCE BY DEPOSITARY BANK. The Depositary Bank shall be
entitled to rely upon and shall not be bound to make any investigation into the
facts or matters stated in any Officer's Certificate of any U.S. Guarantor, the
Independent Engineer, the Collateral Agent or any other notice or other document
(including any cable, telegram, telecopy or telex) believed by it to be genuine
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice or statement of legal counsel, independent accountants and other
experts selected by the Depositary Bank and shall have no liability for its
actions taken thereupon, unless due to the Depositary Bank's willful misconduct
or gross negligence. Without limiting the foregoing, the Depositary Bank shall
be required to make payments to the Secured Parties only as set forth herein.
The Depositary Bank shall be fully justified in failing or refusing to take any
action under this Agreement (i) if such action would, in the reasonable opinion
of the Depositary Bank, be contrary to Applicable Law or the terms of this
Agreement or the Intercreditor Agreement, (ii) if such
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action is not specifically provided for in this Agreement or the Intercreditor
Agreement and it shall not have received any such advice or concurrence of the
Collateral Agent as it deems appropriate or (iii) if, in connection with the
taking of any such action that would constitute an exercise of remedies under
this Agreement or the Intercreditor Agreement (whether such action is or is
intended to be an action of the Depositary Bank or the Collateral Agent), it
shall not first be indemnified to its satisfaction by the Secured Parties (other
than the Bond Trustee (in its individual capacity) or the Collateral Agent (in
its individual capacity) or any other agent or trustee under any of the Finance
Documents (in their respective individual capacities)) against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Depositary Bank shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
the Intercreditor Agreement in accordance with a request of the Collateral Agent
or any U.S. Guarantor, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Secured Parties.
Section 4.3 COURT ORDERS. The Depositary Bank is hereby authorized, in
its exclusive discretion, to obey and comply with all writs, orders, judgments
or decrees issued by any court or administrative agency affecting any money,
documents or things held by the Depositary Bank. The Depositary Bank shall not
be liable to any of the parties hereto or any other Secured Party, their
successors, heirs or personal representatives by reason of the Depositary Bank's
compliance with such writs, orders, judgments or decrees, notwithstanding that
such writ, order, judgment or decree is later reversed, modified, set aside or
vacated.
Section 4.4 RESIGNATION OR REMOVAL. Subject to the appointment and
acceptance of a successor Depositary Bank as provided below, the Depositary Bank
may resign at any time by giving thirty (30) days prior written notice thereof
to the Collateral Agent, the Funding Company and each U.S. Guarantor, PROVIDED
that in the event the Depositary Bank is also the Collateral Agent, it must also
at the same time resign as Collateral Agent. The Depositary Bank may be removed
at any time without cause by the Collateral Agent. Except during the
continuation of a default or event of default under any Finance Document,
Funding Company shall have the right to remove the Depositary Bank upon thirty
(30) days prior written notice to the Secured Parties with or without cause,
effective upon the appointment of a successor Depositary Bank under this SECTION
4.4, which is reasonably acceptable to the Bond Trustee. In the event that the
Depositary Bank shall decline to take any action without first receiving
adequate indemnity from the U.S. Guarantors, the other Secured Parties or the
Collateral Agent, as the case may be and, having received an indemnity, shall
continue to decline to take such action, the Collateral Agent shall be deemed to
have sufficient cause to remove the Depositary Bank. In the event that the
Depositary Bank is also the Bond Trustee, the Collateral Agent shall have the
right to remove the Depositary Bank with or without cause. Upon any such
resignation or removal, the Collateral Agent shall have the right to appoint a
successor Depositary Bank, which Depositary Bank (except during the continuation
of a default or event of default under any Finance Document) shall be reasonably
acceptable to Funding Company. If no successor Depositary Bank shall have
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been appointed by the Collateral Agent and shall have accepted such appointment
within thirty (30) days after the retiring Depositary Bank's giving of notice of
resignation or removal of the retiring Depositary Bank, then (i) the retiring
Depositary Bank may petition a court of competent jurisdiction for the
appointment of a successor Depositary Bank or (ii) the retiring Depositary Bank
may appoint a successor Depositary Bank, which shall be a bank or trust company
reasonably acceptable to the Collateral Agent. Upon the acceptance of any
appointment as Depositary Bank hereunder by the successor Depositary Bank, (a)
such successor Depositary Bank shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Depositary Bank
and the retiring Depositary Bank shall be discharged from its duties and
obligations hereunder and (b) the retiring Depositary Bank shall promptly
transfer all U.S. Depositary Accounts within its possession or control to the
possession or control of the successor Depositary Bank and shall execute and
deliver such notices, instructions and assignments as may be necessary or
desirable to transfer the rights of the Depositary Bank with respect to the
Accounts to the successor Depositary Bank. After the retiring Depositary Bank's
resignation or removal hereunder as Depositary Bank, the provisions of this
ARTICLE 4 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Depositary Bank.
Section 4.5 EXPENSES; INDEMNIFICATION; FEES.
(a) The U.S. Guarantors agree, jointly and severally, to pay or
reimburse all reasonable out-of-pocket expenses of the Depositary Bank
(including reasonable fees and expenses for legal services) in respect of, or
incident to, the execution, administration or enforcement of any of the
provisions of this Agreement or in connection with any amendment, waiver or
consent relating to this Agreement. The obligations contained in this SECTION
4.5 shall survive the termination of this Agreement or the resignation or
removal of the Depositary Bank.
(b) The U.S. Guarantors agree, jointly and severally, to indemnify the
Depositary Bank in its capacity as such, and, in their capacity as such, its
officers, directors, shareholders, controlling persons, employees, agents and
servants (each an "INDEMNIFIED DEPOSITARY BANK PARTY") from and against any and
all claims, losses, liabilities and expenses (including the reasonable fees and
expenses of counsel) arising out of or resulting from this Agreement (including,
without limitation, performance under or enforcement of this Agreement, but
excluding any such claims, losses or liabilities resulting from the Indemnified
Depositary Bank Party's gross negligence or willful misconduct). This indemnity
shall survive the termination of this Agreement, and the resignation or removal
of the Depositary Bank. This indemnity is extended in addition to, and not in
derogation or limitation of, the provisions of SECTION 2.4 (Indemnification
Bankruptcy) of the Intercreditor Agreement.
(c) On the Closing Date, and on each anniversary of the Closing Date
to and including the Debt Termination Date, the U.S. Guarantors shall pay the
Depositary
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Bank an annual fee in an amount mutually agreed on by the U.S. Guarantors and
the Depositary Bank.
ARTICLE 5
MISCELLANEOUS PROVISIONS
Section 5.1 DIRECTION TO DEPOSITARY BANK. Unless otherwise provided
herein, any instruction or direction given to the Depositary Bank with respect
to the transfer, withdrawal, deposit or payment of any funds under this
Agreement shall be in writing and shall state with specificity the dollar
amount, source and disposition of any such funds.
Section 5.2 ACTION BY DEPOSITARY BANK. Notwithstanding any provisions
to the contrary in this Agreement, if any transfer, withdrawal, deposit or
payment of any funds by the Depositary Bank, or any other action to be taken by
the Depositary Bank, under this Agreement is to be made or taken on a day which
is not a Business Day, such transfer, withdrawal, deposit, payment or other
action shall be made or taken on the next Business Day.
Section 5.3 BENEFIT OF AGREEMENT. Nothing in this Agreement, expressed
or implied, shall give or be construed to give to any Person other than the
parties hereto and the Secured Parties any legal or equitable right, remedy or
claim under this Agreement, or under any covenant or provision therein
contained, all such covenants and provisions being for the sole benefit of the
parties hereto and the Secured Parties.
Section 5.4 NOTICES. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be
sufficiently given and shall be deemed given when delivered or mailed by
registered or certified mail, postage prepaid, or by overnight delivery or
telecopy addressed to any Secured Party at the address specified in SECTION 5.4
(Notices) of the Intercreditor Agreement or to any other at its address
specified in a written notice to the Collateral Agent, or at such other address
as shall be designated by any of the foregoing Persons in a written notice to
the parties hereto.
Section 5.5 COUNTERPARTS; DESCRIPTIVE. This Agreement may be executed
in separate counterparts, and by each party separately on a separate
counterpart, and each such counterpart, when so executed and delivered, shall be
an original. Such counterparts shall together constitute but one and the same
instrument. The descriptive headings in this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof.
Section 5.6 GOVERNING LAW; SUBMISSION TO JURISDICTION.
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(a) This Agreement is a contract made under the laws of the State of
New York of the United States and shall for all purposes be governed by and
construed in accordance with the laws of such State without regard to the
conflict of law rules thereof (other than Section 5-1401 of the New York General
Obligations Law). Regardless of any provision in any other Agreement, for
purposes of the UCC, New York shall be deemed to be the Depositary Bank's
location and the U.S. Depositary Accounts (as well as the securities
entitlements related thereto) shall be governed by the laws of the State of New
York, without regard to the conflict of law rules thereof (other than Section
5-1401 of the New York General Obligations Laws).
(b) Any legal action or proceeding against Funding Company or any U.S.
Guarantor with respect to this Agreement may be brought in the courts of the
State of New York in the County of New York or of the United States for the
Southern District of New York and, by execution and delivery of this Agreement,
Funding Company and each U.S. Guarantor hereby irrevocably submits and accepts
for itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Funding Company and each U.S. Guarantor
agree that a judgment, after exhaustion of all available appeals, in any such
action or proceeding shall be conclusive and binding upon Funding Company and
each U.S. Guarantor and may be enforced in any other jurisdiction, by a suit
upon such judgment, a certified copy of which shall be conclusive evidence of
the judgment. Each U.S. Guarantor and Funding Company hereby irrevocably
designates, appoints and empowers Corporation Service Company with offices on
the date hereof at 375 Hudson Street, New York, New York 10014-3686, as its
designee, appointee and agent to receive, accept and acknowledge for and on its
behalf, and in respect of its property, service of any and all legal process,
summons, notices and documents which may be served in any such action or
proceeding. If for any reason such designee, appointee and agent shall cease to
be available to act as such, each U.S. Guarantor agrees to designate a new
designee, appointee and agent in New York City on the terms and for the purposes
of this provision satisfactory to the Bond Trustee. Funding Company and each
U.S. Guarantor irrevocably consent to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to Funding Company and
each U.S. Guarantor at its address referred to in SECTION 5.4 (Notices) hereof,
such service to become effective thirty (30) days after such mailing. Nothing
herein shall affect the right of the Collateral Agent to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against Funding Company and each U.S. Guarantor in any other
jurisdiction.
(c) Funding Company and each U.S. Guarantor hereby irrevocably waive
any objection which it may now or hereafter have to the laying of venue of any
of the aforesaid actions or proceedings arising out of or in connection with
this Agreement or any other Finance Document brought in the courts referred to
in clause (b) above and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum.
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(d) WITH REGARD TO THIS AGREEMENT, FUNDING COMPANY, EACH U.S.
GUARANTOR, THE COLLATERAL AGENT AND THE DEPOSITARY BANK HEREBY WAIVE THE RIGHT
TO A TRIAL BY JURY.
Section 5.7 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise,
and no delay in exercising, any right, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude or require any other or future
exercise thereof or the exercise of any other right, power or privilege. All
rights, powers and remedies granted to any party hereto and all other
agreements, instruments and documents executed in connection with this Agreement
shall be cumulative, may be exercised singly or concurrently and shall not be
exclusive of any rights or remedies provided by law.
Section 5.8 ASSIGNMENT. Funding Company and each U.S. Guarantor hereby
consent to any assignment of this Agreement in whole or in part by any of the
Secured Parties in connection with the assignment of any Secured Obligations or
part thereof in accordance with the terms of the Agreement giving rise to such
Secured Obligations or any other Agreement relating thereto. In the event of any
such assignment or transfer, the term "Secured Party" as used in this Agreement
shall be deemed to mean any such assignee or transferee, as the case may be.
Subject to the first two sentences of this SECTION 5.8 no assignment of this
Agreement may be made by Funding Company or any U.S. Guarantor without the prior
written consent of the Collateral Agent, acting pursuant to the Intercreditor
Agreement.
Section 5.9 TIME OF DAY; ENGLISH LANGUAGE. All references herein to
any time of day shall be deemed to be references to New York City time, and all
notices, instruments and other documents required to be delivered hereunder
shall be in the English language.
Section 5.10 BINDING EFFECT. All of the covenants, warranties,
undertakings and agreements of Funding Company and each U.S. Guarantor hereunder
shall bind Funding Company and each U.S. Guarantor and its successors and
assigns and shall inure to the benefit of the Secured Parties and their
respective successors and assigns.
Section 5.11 NOTICE OF ADVERSE CLAIM. Except for the claims and
interest of the Secured Parties in the U.S. Depositary Accounts, the Collateral
Agent does not know of any claim to, or interest in, the U.S. Depositary
Accounts or in any "financial asset" (as defined in SECTION 8-102(a) of the UCC)
credited thereto; it being understood that the Collateral Agent has not
conducted an independent investigation. If any person asserts any lien,
encumbrance or adverse claim (including any writ, garnishment, judgment, warrant
of attachment, execution or similar process) against the U.S. Depositary
Accounts or in any financial asset carried therein actually known by the
Collateral Agent, the Collateral Agent will promptly notify the Secured Parties,
Funding Company and each U.S. Guarantor thereof.
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Section 5.12 LIMITATION ON FUNDING COMPANY'S LIABILITY.
Notwithstanding anything to the contrary contained herein, the obligations of
Funding Company hereunder are solely the obligations of Funding Company and
payable from, and recourse solely to, Funding Company's interest in the Funding
Collateral following application of the Funding Collateral in or towards the
discharge of the Secured Obligations and the obligations of Funding Company
under each other Transaction Document. No recourse shall be had against any
Non-Recourse Person subject to the exceptions set forth in SECTION 11.11
(Limitation of Liability) of the Indenture.
Section 5.13 THE COLLATERAL AGENT. Each party hereto
acknowledges and agrees that the rights, privileges, benefits, immunities and
duties of the Collateral Agent set forth in the Intercreditor Agreement are
expressly incorporated herein by reference thereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers or representatives
hereunto.
YORK POWER FUNDING (CAYMAN)
LIMITED
By: /s/ Martin Couch
------------------------------
Name: Martin Couch
Title: Director
BROOKLYN NAVY YARD POWER LLC
By: /s/ Michael Trachtenberg
------------------------------
Name: Michael Trachtenberg
Title: Vice President
WARBASSE POWER I LLC
By: /s/ Michael Trachtenberg
------------------------------
Name: Michael Trachtenberg
Title: Executive Vice President
WARBASSE POWER II LLC
By: /s/ Michael Trachtenberg
------------------------------
Name: Michael Trachtenberg
Title: Vice President
NEW WORLD POWER TEXAS RENEWABLE
ENERGY LIMITED PARTNERSHIP
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By: BIG SPRINGS TEXAS ENERGY
MANAGEMENT, INC.,
Managing General Partner
By: /s/ Michael Trachtenberg
------------------------------
Name: Michael Trachtenberg
Title: Vice President
THE BANK OF NEW YORK
as Collateral Agent
By: /s/ Joseph Ernst
------------------------------
Name: Joseph Ernst
Title: Vice President
THE BANK OF NEW YORK
as Depositary Bank
By: /s/ Joseph Ernst
------------------------------
Name: Joseph Ernst
Title: Vice President
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SCHEDULE I
U.S. DEPOSITARY ACCOUNTS
<TABLE>
<CAPTION>
ACCOUNT NAME ACCOUNT NO.
- ------------ -----------
<S> <C>
US Revenue Account 800000
US Interest Amount 800001
US Principal Amount 800002
US Distribution Account 800003
US Distribution Suspense Account 800004
US Loss Proceeds Account 800006
US Redemption Account 800007
Big Spring Operating Account 800008
Big Spring Construction Account 800009
Contingency Reserve Account 800005
Big Spring Maintenance Reserve Account 800010
Debt Serve Reserve Account 800012
BNY Supplemental Reserve Account 800013
US Additional Reserve Account 800011
</TABLE>
29
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EXHIBIT A
BIG SPRING CONSTRUCTION REQUISITION
No. ______
[Date]
The Bank of New York,
as Depositary Bank
[ ]
Attention: [______________]
Ladies and Gentlemen:
This requisition (this "BIG SPRING CONSTRUCTION REQUISITION") is delivered
to you pursuant to SECTION 3.1 of the U.S. Deposit and Disbursement Agreement,
dated as of ________, 1998 (the "AGREEMENT"), by and among York Power Funding
(Cayman) Limited, Brooklyn Navy Yard Power LLC, Warbasse Power I LLC, Warbasse
Power II LLC, New World Power Texas Renewable Energy Limited Partnership (the
"BIG SPRING GUARANTOR"), The Bank of New York, as Collateral Agent and The Bank
of New York as Depositary Bank. Capitalized terms used and not otherwise defined
herein shall have the meanings assigned thereto in the Agreement.
The Big Spring Guarantor hereby certifies to the Depositary Bank for the
benefit of the Secured Parties as of the date hereof that:
1. The aggregate amount requested to be withdrawn from the Big Spring
Construction Account in accordance with this Big Spring Construction
Requisition is $________.
2. The date on which such withdrawals and transfers pursuant to this
Big Spring Construction Requisition are to be made is _______ (the
"DISBURSEMENT DATE")
3. Set forth on Schedule I attached hereto is the name of each Person
to whom any payment is to be made, the aggregate amount incurred on
the Disbursement Date or reasonably expected to be incurred within
the thirty (30) day period following the Disbursement Date by such
Person and a summary description of the work performed, services
rendered, materials, equipment or supplies delivered or any other
purpose for which each payment was or is to be made.
Exhibit A-1
<PAGE>
4. As of the date hereof, no Default or Event of Default has occurred
and is continuing.
5. The Big Spring Guarantor reviewed the work performed, services
rendered and materials, equipment or supplies delivered in
connection with the construction of the Big Spring Project, and
confirm that the construction activities are proceeding in
accordance with the current construction budget and schedule.
NEW WORLD POWER TEXAS
RENEWABLE ENERGY LIMITED
PARTNERSHIP
By: BIG SPRINGS TEXAS ENERGY
MANAGEMENT, INC.,
Managing General Partner
By:
---------------------------
Name:
Title:
Exhibit A-2
<PAGE>
SCHEDULE I TO BIG SPRING CONSTRUCTION REQUISITION
Amount
Name Of Payment Purpose
---- ---------- -------
Exhibit A-3
<PAGE>
APPENDIX I TO EXHIBIT A
INDEPENDENT ENGINEER'S CERTIFICATE
[Date]
The Bank of New York
as Depositary Bank
[ ]
Attention: [ ]
New World Power Texas Renewable
Energy Limited Partnership
[ ]
Attention: [ ]
Ladies and Gentlemen:
This Certificate is delivered to you in connection with (a) SECTION
3.1 of the U.S. Deposit and Disbursement Agreement, dated as of _______, 1998
(the "AGREEMENT"), by and among York Power Funding (Cayman) Limited, Brooklyn
Navy Yard Power LLC, Warbasse Power I LLC, Warbasse Power II LLC, New World
Power Texas Renewable Energy Limited Partnership (the "BIG SPRING GUARANTOR"),
The Bank of New York, as Collateral Agent and The Bank of New York, as
Depositary Bank and (b) the requisition for payment to which this Certificate is
attached as APPENDIX I (the "BIG SPRING CONSTRUCTION REQUISITION") delivered by
the Big Spring Guarantor to the Depositary Bank. Capitalized terms used herein
and not otherwise defined herein shall have the meanings assigned thereto in the
Agreement.
We hereby certify to the Depositary Bank for the benefit of the
Secured Parties as of the date hereof that:
1. We have reviewed the Big Spring Construction Requisition and the
construction costs set forth on SCHEDULE I to the Big Spring
Construction Requisition are due and payable as of the Disbursement
Date or are reasonably anticipated to be incurred during the thirty
(30) day period following the Disbursement Date.
2. We have reviewed the [description of work reviewed] services
rendered and materials, equipment or supplies delivered in
connection with the construction
Exhibit A-4
<PAGE>
of the Big Spring Project, and confirm that the construction
activities are proceeding in accordance with the current construction
budget and schedule and that sufficient funds are on deposit in the
Big Spring Construction Account or shall otherwise be available to the
Big Spring Guarantor to complete the Big Spring Project.
The person signing this Certificate is a duly qualified representative
of the Independent Engineer and as such is authorized to execute this
Certificate on behalf of the Independent Engineer.
Very truly yours,
[NAME OF INDEPENDENT
ENGINEER]
By:
------------------------
Name:
Title:
Exhibit A-5
<PAGE>
EXHIBIT B
NON-BUDGETED OPERATING AND MAINTENANCE COSTS CERTIFICATE
No. _____
[Date]
The Bank of New York,
as Depositary Bank
[____________________]
Attention: [_______________]
Ladies and Gentlemen:
This certificate (the "NON-BUDGETED OPERATING AND MAINTENANCE COSTS
CERTIFICATE") is delivered to you pursuant to SECTION 3.2(b)(ii) of the U.S.
Depositary Agreement, dated as of ___________, 1998 (the "AGREEMENT"), by and
among York Power Funding (Cayman) Limited, Brooklyn Navy Yard Power LLC,
Warbasse Power I, LLC, Warbasse Power II, LLC, New World Power Texas
Renewable Energy Limited Partnership (the "BIG SPRING GUARANTOR"), The Bank
of New York, as Collateral Agent and The Bank of New York, as Depositary
Bank. Capitalized terms used and not otherwise defined herein shall have the
meanings assigned thereto in the Agreement.
The Big Spring Guarantor hereby certifies to the Depositary Bank of
the benefit of the Secured Parties as of the date hereof that:
1. The aggregate amount requested to be withdrawn from the U.S. Revenue
Account in accordance with this Non-Budgeted Operating and Maintenance
Costs Certificate is $_________.
2. The date on which the withdrawals and transfers pursuant to this Non-
Budgeted Operating and Maintenance Costs Certificate are to be made is
_________ (the "DISBURSEMENT DATE").
3. Set forth on Schedule I attached hereto is the name of each Person to
whom any payment is to be made, the aggregate amount due and payable
on the Disbursement Date or reasonably expected to be due and payable
within the thirty (30) day period following the Disbursement Date to
such Person and a summary description of the work performed, services
rendered, materials,
Exhibit B-1
<PAGE>
equipment or supplies delivered or any other purpose for which each
payment was or is to be made.
4. The proceeds withdrawn from the U.S. Revenue Account pursuant to this
Non-Budgeted Operating and Maintenance Expenses Certificate will be
used to pay Operating and Maintenance Expenses which exceed the
projected Operating and Maintenance Expenses in the Operating Budget
of the Big Spring Guarantor by more than ten (10) percent.
5. The Operating and Maintenance Expenses for which payment is requested
under this Non-Budgeted Operating and Maintenance Expenses Certificate
have not been the basis for any prior requisition by the Big Spring
Guarantor.
6. All proceeds of prior requisitions under any Non-Budgeted Operating
and Maintenance Expenses Certificate have been expended or applied
pursuant to the provisions of the U.S. Depositary Agreement.
[7. Attached hereto as Appendix I is an Independent Engineer's Certificate
in respect of this Non-Budgeted Operating and Maintenance Expenses
Certificate.]*
[8. The Operating and Maintenance Expenses for which payment is requested
under this Non-Budgeted Operating and Maintenance Expenses Certificate
are reasonably designed to permit the Big Spring Guarantor to satisfy
its obligations in respect of the U.S. Project Note and maximize its
revenue and net income. A Debt Service Coverage Ratio and a U.S. Debt
Service Coverage Ratio of at least 1.5 to 1.0 will be maintained for
the next 12- month period.]
- --------
* Insert particular clause 7, as applicable.
Exhibit B-2
<PAGE>
NEW WORLD POWER TEXAS
RENEWABLE ENERGY LIMITED
PARTNERSHIP
By: BIG SPRINGS TEXAS ENERGY
MANAGEMENT, INC.,
Managing General Partner
By:
----------------------------
Name:
Title:
Exhibit B-3
<PAGE>
SCHEDULE I TO NON-BUDGETED OPERATING AND MAINTENANCE
EXPENSE CERTIFICATE
Amount
Name Of Payment Purpose
---- ---------- -------
Exhibit B-4
<PAGE>
APPENDIX I TO EXHIBIT B
INDEPENDENT ENGINEER'S CERTIFICATE
[Date]
The Bank of New York,
as Depositary Bank
[____________________]
Attention: [_______________]
New World Power Texas Renewable
Energy Limited Partnership
[_________________________]
Attention: [________]
Ladies and Gentlemen:
This certificate (the "NON-BUDGETED OPERATING AND MAINTENANCE
EXPENSES CERTIFICATE") is delivered to you pursuant to (a) SECTION 3.2(b)(ii)
of the U.S. Depositary Agreement, dated as of ___________, 1998 (the
"AGREEMENT"), by and among York Power Funding (Cayman) Limited, Brooklyn Navy
Yard Power LLC, Warbasse Power I, LLC, Warbasse Power II, LLC, New World
Power Texas Renewable Energy Limited Partnership (the "BIG SPRING
GUARANTOR"), The Bank of New York, as Collateral Agent and The Bank of New
York, as Depositary Bank and (b) the certificate to which this Certificate is
attached as APPENDIX I (the "NON-BUDGETED OPERATING AND MAINTENANCE EXPENSE
CERTIFICATE") delivered by the Big Spring Guarantor to the Depositary Bank.
Capitalized terms used and not otherwise defined herein shall have the
meanings assigned thereto in the Agreement.
We hereby certify to the Depositary Bank of the benefit of the Secured
Parties as of the date hereof that:
1. We have reviewed the Non-Budgeted Operating and Maintenance Expenses
Certificate dated ____________ of the Big Spring Guarantor relating to
the Big Spring Project.
2. Based on our review of the aforementioned information, including
applicable operating and maintenance budgets and plans, inspections
and overhaul reports and elective generation reports and data provided
to us by the Big Spring Guarantor and such other investigation as is
referenced on the Annex
Exhibit B-5
<PAGE>
hereto, and the understanding and assumption that we have been
provided true, correct and complete information, and that we have not
undertaken to verify such information, and [insert customary
exceptions and qualifications] we are of the opinion that, as of the
date hereof:
(a) The operations and maintenance of the Big Spring Project as of the
date hereof have been performed in accordance with generally accepted
engineering and project operations and maintenance practices.
(b) The operations and maintenance expenses set forth on Schedule I to
the Non-Budgeted Operating and Maintenance Expenses Certificate not incurred on
or prior to the Disbursement Date are reasonably anticipated to be incurred
during the thirty (30) day period following the Disbursement Date.
(c) The expenditures described in the Non-Budgeted Operating and
Maintenance Expenses Certificate delivered by the Big Spring Guarantor to the
Depositary Bank are necessary and reasonable.
The person signing this Certificate is a duly qualified representative
of the Independent Engineer and as such is authorized to execute this
Certificate on behalf of the Independent Engineer.
[NAME OF INDEPENDENT ENGINEER]
By:
-----------------------------
Name:
Title:
Exhibit B-6
<PAGE>
EXHIBIT C
RESTORATION REQUISITION
No.____
[Date]
The Bank of New York
as Collateral Agent
[ ]
Attention: [______________]
Ladies and Gentlemen:
This requisition (this "RESTORATION REQUISITION") is delivered to you
pursuant to SECTION 3.7(d) of the U.S. Deposit and Disbursement Agreement, dated
as of ________, 1998 (the "AGREEMENT"), by and among York Power Funding (Cayman)
Limited, Brooklyn Navy Yard Power LLC, Warbasse Power I LLC, Warbasse Power II
LLC, New World Power Texas Renewable Energy Limited Partnership (the "BIG SPRING
GUARANTOR"), The Bank of New York, as Collateral Agent and The Bank of New York,
as Depositary Bank. Capitalized terms used and not otherwise defined herein
shall have the meanings assigned thereto in the Agreement.
The Big Spring Guarantor hereby certifies to the Collateral Agent for the
benefit of the Secured Parties as of the date hereof that:
1. The aggregate amount requested to be withdrawn from the U.S. Loss
Proceeds Account in accordance with this Restoration Requisition is
$_____.
2. The date on which the withdrawals and transfers pursuant to this
Restoration Requisition are to be made is ________ (the "DISBURSEMENT
DATE").
3. Set forth on SCHEDULE I attached hereto is the name of each Person to
whom any payment is to be made with the amount requested pursuant to
item 1, the aggregate amount incurred on or prior to the Disbursement
Date or reasonably expected to be incurred within the thirty (30) day
period following the Disbursement Date by such Person and a summary
description of the work performed, services rendered, materials,
equipment or supplies
Exhibit C-1
<PAGE>
delivered or any other purpose for which each payment was or is to be
made.
4. The proceeds of this Restoration Requisition withdrawn from the U.S.
Loss Proceeds Account will be used to pay the costs of rebuilding,
restoration or repair or the Big Spring Project in accordance with an
Approved Restoration Plan and the budget and payment schedule set
forth in the Approved Restoration Plan, if any.
5. The costs of rebuilding, restoration or repair for which payment is
requested under this Restoration Requisition from the U.S. Loss
Proceeds Account have not been the basis for any prior requisition by
the Big Spring Guarantor.
6. As of the date hereof, the Big Spring Guarantor has not received any
written notice of any lien, right to lien or attachment upon, or
material claim affecting the right of the Big Spring Guarantor to
receive any portion of the amount of this Restoration Requisition
(other than in respect of Permitted Liens), or in the event that the
Big Spring Guarantor has received notice of any such lien,
attachment, or claim (other than a Permitted Lien), such lien
attachment or claim has been released or discharged as of the date
hereof or is expected to be released or discharged upon payment of
the costs for which payment is requested under this Restoration
Requisition.
7. [Insert for final release only] [The restoration has been completed,
(or will be completed upon the expenditure of the funds requested
hereby) and the Big Spring Project as restored conforms in all
material respects to all Applicable Laws and Governmental Approvals].
8. Attached hereto as APPENDIX I is an Independent Engineer's
Certificate in respect of this Restoration Requisition.
Exhibit C-2
<PAGE>
NEW WORLD POWER TEXAS
RENEWABLE ENERGY LIMITED
PARTNERSHIP
By: BIG SPRINGS TEXAS ENERGY
MANAGEMENT, INC.,
Managing General Partner
By:
--------------------------
Name:
Title:
Exhibit C-3
<PAGE>
SCHEDULE I TO RESTORATION REQUISITION
Amount
Name Of Payment Purpose
---- ---------- -------
Exhibit C-4
<PAGE>
APPENDIX I TO EXHIBIT C
INDEPENDENT ENGINEER'S CERTIFICATE
[Date]
The Bank of New York
as Collateral Agent
[ ]
Attention: [ ]
New World Power Texas Renewable
Energy Limited Partnership
Attention: [ ]
Ladies and Gentlemen:
This Certificate is delivered to you in connection with (a) SECTION 3.7(d)
of the U.S. Deposit and Disbursement Agreement, dated as of _______, 1998 (the
"AGREEMENT"), by and among York Power Funding (Cayman) Limited, Brooklyn Navy
Yard Power LLC, Warbasse Power I LLC, Warbasse Power II LLC, New World Power
Texas Renewable Energy Limited Partnership (the "BIG SPRING GUARANTOR"), The
Bank of New York, as Collateral Agent and The Bank of New York, as Depositary
Bank and (b) the requisition for payment to which this Certificate is attached
as APPENDIX I (the "RESTORATION REQUISITION") delivered by the Big Spring
Guarantor to the Collateral Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned thereto in the
Agreement.
We hereby certify to the Collateral Agent for the benefit of the Secured
Parties as of the date hereof that:
1. We have reviewed the material and data made available to us by the Big
Spring Guarantor with respect to [describe rebuilding, repair or
restoration project] and have performed such other investigation as is
referenced in the Annex attached hereto (the "REVIEW"). Our Review was
performed in accordance with generally accepted engineering and
construction practices and included such investigation and review as
we in our professional capacity deemed necessary or appropriate under
the circumstances and within the scope of our appointment. We have
also reviewed the Restoration
Exhibit C-5
<PAGE>
Requisition dated ___________, including any appendices, schedules
and requisitions and/or invoices attached thereto or delivered
therewith.
2. Based on our Review and the understanding and assumption that we have
been provided true, correct and complete information and [insert
customary assumptions and qualifications], we are of the opinion that,
as of the date hereof:
a. The rebuilding, repair and restoration activities and the
progress of the rebuilding, repair and restoration of the Big
Spring Project through the date of this Certificate are
proceeding in a satisfactory manner in accordance with the
Approved Restoration Plan.
b. The restoration costs set forth on SCHEDULE I to the Restoration
Requisition not incurred on or prior to the Disbursement Date
are reasonably anticipated to be incurred during the thirty (30)
day period following the Disbursement Date.
c. The payments made with respect to the Restoration Requisition
are in accordance with the Approved Restoration Plan and budget
and project payment schedule set forth therein, if any.
d. [Insert for final release only] [The restoration has been
completed (or will be completed upon the expenditure of funds
requested in the Restoration Requisition to which this
certificate is attached) and the Big Spring Project as restored
conforms in all material respects to all Applicable Laws and
Governmental Approvals.]
Exhibit C-6
<PAGE>
The person signing this Certificate is a duly qualified representative of
the Independent Engineer and as such is authorized to execute this Certificate
on behalf of the Independent Engineer.
Very truly yours,
[NAME OF INDEPENDENT ENGINEER]
By:
-------------------------------
Name:
Title:
Exhibit C-7
<PAGE>
Exhibit 10(uu)
- --------------------------------------------------------------------------------
TRINIDAD DEPOSIT AND DISBURSEMENT AGREEMENT
among
YORK POWER FUNDING (CAYMAN) LIMITED
YORK EX INTERNATIONAL SRL
YORK HOLDINGS (BARBADOS) SRL
INNCOGEN, LIMITED
and
THE BANK OF NEW YORK,
as Collateral Agent
and
THE BANK OF NEW YORK,
as Depositary Bank
Dated as of August 4, 1998
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
DEFINED TERMS AND PRINCIPLES OF CONSTRUCTION
ARTICLE 2
REPORTING REQUIREMENTS; PROCEDURES GOVERNING ACCOUNTS
Section 2.1 PROCEDURES GOVERNING ACCOUNTS.............................................................2
Section 2.2 ESTABLISHMENT OF TRINIDAD DEPOSITARY ACCOUNTS AND SUB-ACCOUNTS............................4
Section 2.3 SECURITY INTEREST.........................................................................4
Section 2.4 TERMINATION...............................................................................5
ARTICLE 3
THE ACCOUNTS
Section 3.1 TRINIDAD CONSTRUCTION ACCOUNT.............................................................6
Section 3.2 TRINIDAD REVENUE ACCOUNT..................................................................7
Section 3.3 TRINIDAD OPERATING ACCOUNT...............................................................10
Section 3.4 TRINIDAD INTEREST ACCOUNT................................................................11
Section 3.5 TRINIDAD PRINCIPAL ACCOUNT...............................................................11
Section 3.6 TRINIDAD MAINTENANCE RESERVE ACCOUNT.....................................................12
Section 3.7 TRINIDAD LOSS PROCEEDS ACCOUNT...........................................................12
Section 3.8 TRINIDAD ADDITIONAL RESERVE ACCOUNT......................................................14
Section 3.9 TRINIDAD DISTRIBUTION ACCOUNT............................................................14
Section 3.10 WITHDRAWALS FROM THE TRINIDAD DEPOSITARY ACCOUNTS ON THE DEBT TERMINATION DATE...........15
Section 3.11 INVESTMENTS..............................................................................15
Section 3.12 RECEIPT OF PROCEEDS......................................................................16
Section 3.13 BENEFIT OF ACCOUNTS......................................................................17
Section 3.14 INFORMATION..............................................................................17
Section 3.15 ACCOUNTS GENERALLY.......................................................................17
Section 3.16 DEPOSITARY BANK OBLIGATIONS LIMITED......................................................17
Section 3.17 TRIGGER EVENTS...........................................................................18
i
<PAGE>
ARTICLE 4
THE DEPOSITARY BANK
Section 4.1 APPOINTMENT OF DEPOSITARY BANK, POWERS AND IMMUNITIES....................................18
Section 4.2 RELIANCE BY DEPOSITARY BANK..............................................................19
Section 4.3 COURT ORDERS.............................................................................20
Section 4.4 RESIGNATION OR REMOVAL...................................................................20
Section 4.5 EXPENSES; INDEMNIFICATION; FEES..........................................................21
ARTICLE 5
MISCELLANEOUS PROVISIONS
Section 5.1 DIRECTION TO DEPOSITARY BANK.............................................................22
Section 5.2 ACTION BY DEPOSITARY BANK................................................................22
Section 5.3 BENEFIT OF AGREEMENT.....................................................................22
Section 5.4 NOTICES..................................................................................22
Section 5.5 COUNTERPARTS; DESCRIPTIVE................................................................22
Section 5.6 GOVERNING LAW; SUBMISSION TO JURISDICTION................................................22
Section 5.7 NO WAIVER; CUMULATIVE REMEDIES...........................................................24
Section 5.8 ASSIGNMENT...............................................................................24
Section 5.9 TIME OF DAY; ENGLISH LANGUAGE............................................................24
Section 5.10 BINDING EFFECT...........................................................................24
Section 5.11 NOTICE OF ADVERSE CLAIM..................................................................24
Section 5.12 LIMITATION OF FUNDING COMPANY'S LIABILITY................................................25
Section 5.13 THE COLLATERAL AGENT. ..................................................................25
Schedule 1 Trinidad Depositary Accounts
Exhibit A Trinidad Construction Requisition
Exhibit B Non-Budgeted Operating and Maintenance Expense Certificate
Exhibit C Restoration Requisition
</TABLE>
ii
<PAGE>
TRINIDAD DEPOSIT AND DISBURSEMENT AGREEMENT
TRINIDAD DEPOSIT AND DISBURSEMENT AGREEMENT, dated as of
August 4, 1998 (this "AGREEMENT"), among YORK POWER FUNDING (CAYMAN) LIMITED a
limited liability company incorporated under the laws of the Cayman Islands
("FUNDING COMPANY"), YORK EX INTERNATIONAL SRL, a Barbados exempt society with
restricted liability (the "TRINIDAD PROJECT BORROWER"), YORK HOLDINGS (BARBADOS)
SRL, a Barbados society with restricted liability (the "TRINIDAD GUARANTOR"),
INNCOGEN, LIMITED, a Trinidad limited liability company incorporated under the
laws of the Republic (the "TRINIDAD OBLIGOR" and, together with the Trinidad
Project Borrower and the Trinidad Guarantor, the "TRINIDAD FINANCE PARTIES"),
THE BANK OF NEW YORK, a New York banking corporation, as collateral agent (in
such capacity, together with its successors in such capacity, the "COLLATERAL
AGENT") under the Collateral Agency and Intercreditor Agreement referred to
below for the benefit of the Secured Parties and THE BANK OF NEW YORK, a New
York banking corporation, as the depositary bank (in such capacity, together
with its successors in such capacity, the "DEPOSITARY BANK") under this
Agreement.
W I T N E S S E T H:
WHEREAS, Funding Company is a limited liability company
established for the sole purpose of issuing the Securities in its individual
capacity as principal and as agent acting on behalf of the U.S. Guarantors
pursuant to the Indenture and to make loans to the Project Borrowers pursuant to
the Project Loan Agreements;
WHEREAS, Funding Company has simultaneously with the execution
and delivery of this Agreement issued and sold the Initial Securities pursuant
to the Indenture;
WHEREAS, payments of the principal of, premium (if any),
interest on and any other amounts due with respect to the Initial Securities
will be partially serviced by repayment of the Trinidad Project Loan and
guaranteed by the Trinidad Guarantor;
WHEREAS, the Collateral Agent, Funding Company
and the Project Obligors are entering into the Security
Documents, pursuant to which the Collateral Agent, acting on behalf of the
Secured Parties, will obtain a continuing Lien on and perfected security
interest in the Collateral;
WHEREAS, the Secured Parties and the Project Obligors are
entering into a Collateral Agency and Intercreditor Agreement appointing the
Collateral Agent as collateral agent and setting forth certain rights and
remedies of the Collateral Agent acting on behalf
<PAGE>
of the Secured Parties with respect to the Collateral, including, without
limitation, the Trinidad Depositary Accounts established pursuant to this
Agreement; and
WHEREAS, Funding Company and the Trinidad Finance Parties
desire to (a) grant to the Collateral Agent, acting on behalf of the Secured
Parties solely with respect to amounts owed pursuant to the Trinidad Project
Loan Agreement, a Lien on and security interest in, among other things, the
Trinidad Depositary Accounts established pursuant to this Agreement and (b) the
Collateral Agent desires to appoint the Depositary Bank as depositary bank to
hold and administer money deposited in the various Trinidad Depositary Accounts
established pursuant to this Agreement and funded with, among other things,
proceeds of certain insurance and revenues generated by and/or distributed to
Funding Company and the Trinidad Finance Parties.
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto agree as follows:
ARTICLE 1
DEFINED TERMS AND PRINCIPLES OF CONSTRUCTION
For all purposes of this Agreement, (a) capitalized terms used
but not otherwise defined herein shall have the meanings set forth in APPENDIX A
to the Indenture and (b) the principles of construction set forth in SECTION 1.1
(Definitions; Construction) of the Indenture shall apply.
ARTICLE 2
REPORTING REQUIREMENTS; PROCEDURES GOVERNING ACCOUNTS
Section 2.1 PROCEDURES GOVERNING ACCOUNTS.
(a) The Depositary Bank hereby agrees to act as such and to
accept all cash, payments, other amounts (including any instruments in respect
thereof) and Cash Equivalents to be delivered to or held by the Depositary Bank
pursuant to the terms of this Agreement, and to promptly deposit all such
amounts and Cash Equivalents into the Trinidad Depositary Accounts established
hereunder or the Debt Service Reserve Account established under the U.S.
Depositary Agreement in accordance with the terms hereof. The Depositary Bank
shall hold and safeguard the Trinidad Depositary Accounts during the term of
this Agreement and shall treat the cash, payments, other amounts and Cash
Equivalents, and all rights related thereto, now or hereafter deposited in or
credited to the Trinidad Depositary Accounts as "financial assets" (as defined
in Section 8-102(a)(9) of the Revised UCC), pledged by Funding Company and the
Trinidad Finance Parties to the Collateral
2
<PAGE>
Agent for the benefit of the Secured Parties, to be held by the Depositary Bank,
acting as a "securities intermediary" (as defined in the Revised UCC).
(b) The Trinidad Depositary Accounts and sub-accounts
established pursuant to SECTION 2.2 (Establishment of Trinidad Depositary
Accounts and Sub-accounts) shall be in the name of the Collateral Agent, for the
benefit of the Secured Parties, for purposes of granting the Collateral Agent,
on behalf of the Secured Parties, a security interest therein in accordance with
the Security Documents. All amounts and Cash Equivalents from time to time held
in each Trinidad Depositary Account shall be (a) registered in the name of the
Collateral Agent for the benefit of the Secured Parties, (b) held in the custody
of the Depositary Bank for the purposes and on the terms set forth in this
Agreement and the other Finance Documents or (c) endorsed to the Collateral
Agent or credited to another account maintained in the name of Collateral Agent.
All such amounts shall constitute a part of the Collateral and shall not
constitute payment of any Indebtedness or any other obligation of Funding
Company or any Trinidad Finance Party until applied as hereinafter provided.
(c) Each of Funding Company and the Trinidad Finance Parties
agree that its rights to amounts and Cash Equivalents held in the Trinidad
Depositary Accounts are subject to and controlled by the terms of this
Agreement. In no case will any amounts or Cash Equivalents deposited in or
credited to any Trinidad Depositary Accounts be registered in the name of
Funding Company or any Trinidad Finance Party, payable to the order of Funding
Company or any Trinidad Finance Party or specially endorsed to Funding Company
or any Trinidad Finance Party except to the extent the foregoing have been
specially endorsed to the Collateral Agent or in blank. Each of Funding Company
and the Trinidad Finance Parties agree that the Trinidad Depositary Accounts and
sub-accounts established hereto, together with the U.S. Depositary Accounts,
shall be the only deposit accounts of Funding Company and each Trinidad Finance
Party.
(d) The Depositary Bank hereby agrees that it will comply with
"entitlement orders" (within the meaning of Section 8-102(a)(8) of the Revised
UCC, including, without limitation, any notification to the Depositary Bank
directing transfer or redemption of any securities or other financial assets in
any Trinidad Depositary Account) issued by the Collateral Agent and relating to
any Trinidad Depositary Account without the requirement of further consent by
Funding Company or any Trinidad Finance Party or any other Person. The
Depositary Bank hereby represents that it has not entered into, and, hereby
agrees that until the termination of each of the Finance Documents, it will not
enter into, any agreement with any other Person (other than Funding Company or
any Trinidad Finance Party) relating to the Trinidad Depositary Accounts (or the
amounts and Cash Equivalents deposited therein or credited thereto) pursuant to
which it has agreed to comply with entitlement orders made by such Person. The
Depositary Bank hereby represents that it has not entered into any other
agreement with Funding Company or any Trinidad Finance Party or the Collateral
Agent purporting to limit or condition the obligation of the Depositary
3
<PAGE>
Bank to comply with entitlement orders as set forth in this SECTION 2.1(d). The
Collateral Agent agrees that it shall not issue entitlement orders in any
circumstances which are not permitted by this Agreement, and Funding Company or
any Trinidad Finance Party shall have a cause of action against the Collateral
Agent for any damages suffered as a result of the Collateral Agent issuing
entitlement orders not authorized by this Agreement.
Section 2.2 ESTABLISHMENT OF TRINIDAD DEPOSITARY ACCOUNTS AND
SUB-ACCOUNTS. The Collateral Agent hereby establishes the following U.S. Dollar
denominated accounts (the "TRINIDAD DEPOSITARY ACCOUNTS") in the form of
non-interest bearing accounts and sub-accounts thereof, subject to the
provisions of SECTION 3.11 (Investments) (and each such Trinidad Depositary
Account or sub-account shall be a "securities account" as such term is defined
in Section 8-501(a) of the Revised UCC), which shall be maintained at all times
in accordance with SECTION 2.1 (Procedures Governing Accounts) until the
termination of this Agreement:
(i) Trinidad Revenue Account;
(ii) Trinidad Project Borrower Account;
(iii) Trinidad Guarantor Account;
(iv) Trinidad Interest Account;
(v) Trinidad Principal Account;
(vi) Trinidad Distribution Account;
(vii) Trinidad Distribution Suspense Account;
(viii) Trinidad Loss Proceeds Account;
(ix) Trinidad Redemption Account;
(x) Trinidad Operating Account;
(xi) Trinidad Construction Account;
(xii) Trinidad Maintenance Reserve Account; and
(xiii) Trinidad Additional Reserve Account.
Certain additional sub-accounts within certain of the Trinidad
Depositary Accounts may be established and created from time to time in
accordance with this Agreement.
The Trinidad Obligor may also establish a local account in the
Republic of Trinidad and Tobago (the "TRINIDAD LOCAL ACCOUNT") which may be
funded with amounts transferred in accordance with the terms hereof which shall
be included in the definition of "Trinidad Depositary Accounts" for all purposes
of the Finance Documents other than the provisions set forth in SECTION 2.1
(Procedures Governing Accounts) requiring each Trinidad Depositary Account to be
established at the Depositary Bank.
Section 2.3 SECURITY INTEREST. (a) As collateral
security for the prompt and complete payment and performance when due of all its
obligations owing to any Secured Party pursuant to the terms of each Finance
Document to which a Trinidad Finance
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Party is a party to, Funding Company and each Trinidad Finance Party have
pledged, assigned, hypothecated and transferred to the Collateral Agent for
the benefit of the Secured Parties, and have granted to the Collateral Agent
a Lien on and security interest in and to, and in furtherance thereof hereby
pledges, assigns, hypothecates and transfers to the Depositary Bank for the
benefit of the Secured Parties, and hereby grants to Depositary Bank a Lien
on and security interest in and to (i) each Trinidad Depositary Account and
(ii) all cash, investments and securities at any time on deposit in any
Trinidad Depositary Account, including all income or gain earned thereon. The
Depositary Bank is the agent of the Collateral Agent for the purpose of
receiving payments contemplated hereunder and for the purpose of perfecting
the Lien of the Collateral Agent for the benefit of the Secured Parties, in
and to each Trinidad Depositary Account and all cash, investments and
securities and any proceeds thereof at any time on deposit in each Trinidad
Depositary Account; PROVIDED that the Depositary Bank shall not be
responsible to take any action to perfect such Lien except through the
performance of its express obligations hereunder or upon the written
direction of the Collateral Agent complying with this Agreement. Each
Trinidad Depositary Account shall at all times be in the exclusive possession
of, and under the exclusive domain and control of, the Depositary Bank, as
agent for the Collateral Agent.
The Depositary Bank shall not change the name or account
number of any of the foregoing Trinidad Depositary Accounts or sub-accounts
without giving prior notification to the Collateral Agent, Funding Company and
the Trinidad Finance Parties.
(b) The Depositary Bank hereby waives any right of set-off or
recoupment that it may have or obtain with respect to the Trinidad Depositary
Accounts or any amounts or Cash Equivalents deposited therein or credited
thereto other than any right of set-off or recoupment it may exercise on behalf
of the Secured Parties.
Section 2.4 TERMINATION. The rights and powers granted herein
to the Collateral Agent, granted in order to perfect the Collateral Agent's
security interest in the Trinidad Depositary Accounts, are coupled with an
interest and will be affected neither by the bankruptcy of Funding Company or
any Trinidad Finance Party nor by the lapse of time. The obligations of the
Collateral Agent hereunder shall continue in effect until the termination of the
Intercreditor Agreement pursuant to SECTION 5.10 (Termination) thereof.
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ARTICLE 3
THE ACCOUNTS
Section 3.1 TRINIDAD CONSTRUCTION ACCOUNT. (a) On the
Closing Date, $70,850,0000 shall be delivered to the Depositary Bank and
deposited in the Trinidad Construction Account from the Bond Proceeds.
(b) Amounts held in the Trinidad Construction Account shall be
applied solely for the payment (or reimbursement to the extent the same have
been previously paid or satisfied) of costs incurred or to be incurred in
connection with the construction of the Trinidad Project ("TRINIDAD CONSTRUCTION
EXPENSES"), for the payment of Trinidad Construction Expenses due and payable or
reasonably expected to be due and payable during the 30- day period following an
applicable Disbursement Date and for the payment of Operating and Maintenance
Expenses incurred prior to Substantial Completion of the Trinidad Project or
reasonably expected to be due payable during the 30-day period following an
applicable Disbursement Date. All monies withdrawn from the Trinidad
Construction Account shall be withdrawn in accordance with the disbursement
procedure hereinafter described in this SECTION 3.1. If the amounts on deposit
in the Trinidad Construction Account are insufficient to complete the Trinidad
Project, monies may be withdrawn first from the Trinidad Distribution Suspense
Account and secondly from the Debt Service Reserve Account and transferred to
the Trinidad Construction Account in amounts equal to the amount, as certified
by the Trinidad Obligor, necessary to complete with Trinidad Project.
(c) As a condition precedent to any withdrawal and transfer
from the Trinidad Construction Account the Depositary Bank shall have received
from an Authorized Officer of the Trinidad Obligor and the Independent Engineer,
with respect to each Disbursement Date, a requisition in the form attached
hereto as EXHIBIT A (the "TRINIDAD CONSTRUCTION REQUISITION") within at least
five (5) Business Days prior to such Disbursement Date as set forth therein on
which such withdrawal and transfer is requested to be made.
(d) On the earlier of the Disbursement Date referred to in
SECTION 3.1(c), or as soon as possible following receipt of the Trinidad
Construction Requisition, the Depositary Bank shall make payments in accordance
with such Trinidad Construction Requisition.
(e) Following Substantial Completion of the Trinidad Project
as evidenced by an Officer's Certificate of the Trinidad Obligor delivered to
the Depositary Bank, excess funds, if any, in the Trinidad Construction Account
shall be transferred to the Trinidad Revenue Account for distribution to the
other Trinidad Depositary Accounts, as provided in SECTION 3.2 (Trinidad Revenue
Account).
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Section 3.2 TRINIDAD REVENUE ACCOUNT. (a) The following
amounts shall be deposited into the Trinidad Revenue Account: (i) all Cash Flows
actually received by the Trinidad Finance Parties (other than such proceeds
deposited in the Trinidad Local Account as permitted herein); PROVIDED that Cash
Flows initially received by the Trinidad Obligor shall immediately be converted
into U.S. dollars (if necessary) and initially be deposited into the Trinidad
Guarantor Account and immediately and automatically withdrawn therefrom by the
Depositary Bank and transferred to the Trinidad Project Borrower Account and
immediately and automatically withdrawn therefrom by the Depositary Bank and
transferred to the Trinidad Revenue Account, in either case except for such
proceeds deposited in the Trinidad Local Account as permitted herein, (ii) all
amounts from the Trinidad Construction Account in accordance with SECTION 3.1
(Trinidad Construction Account), (iii) to the extent the amount on deposit in
the Debt Service Reserve Account equals the Debt Service Reserve Required
Balance, any income from the investment of the monies in any Trinidad Depositary
Account pursuant to SECTION 3.11 (Investments), (iv) any proceeds actually
received from the sale of assets by any Trinidad Finance Party in accordance
with the terms of the Trinidad Project Loan Agreement or the Trinidad Loan
Agreement, (v) all proceeds actually received from any business interruption
insurance actually received with respect to the Trinidad Project, (vi) any
proceeds of Additional Securities issued under SECTION 2.3(d) (Additional
Securities) of the Indenture and on-lent to any Trinidad Finance Party, (vii)
all Loss Proceeds not required to be maintained in the Trinidad Loss Proceeds
Account pursuant to SECTION 3.7 (Trinidad Loss Proceeds Account) and (viii)
certain amounts specified hereunder to be withdrawn from other Trinidad
Depositary Account or sub-accounts. Each Trinidad Finance Party shall instruct
all parties at any time paying material amounts of Cash Flows to such Trinidad
Finance Party, and shall use all commercially reasonable efforts to cause all
such parties to agree, to make all payments of such Cash Flows into the Trinidad
Revenue Account. Each Trinidad Finance Party shall certify to the Collateral
Agent and the Depositary Bank, as to the parties (and to the extent known, the
amounts) that will make payments into the Trinidad Revenue Account, and shall
promptly notify the Collateral Agent and the Depositary Bank in writing if it is
aware of any refusal or failure by any such party to make such payments into the
Trinidad Revenue Account and shall deliver any and all Cash Flows received by
such Trinidad Finance Party to the Depositary Bank for deposit to the Trinidad
Revenue Account as promptly as possible. Any excess amounts in any of the
Trinidad Depositary Accounts will be transferred to the Trinidad Revenue Account
on the next Funding Date.
(b) WITHDRAWALS FROM THE TRINIDAD REVENUE ACCOUNT. Provided
that no Trigger Event has occurred and is continuing, Funding Company and each
Trinidad Finance Party hereby irrevocably authorize the Depositary Bank, on each
Funding Date, to make withdrawals and transfers of moneys to the extent then
available in the Trinidad Revenue Account and not segregated for any specific
purpose as provided in this SECTION 3.2, upon the delivery of an Officer's
Certificate of the applicable Trinidad Finance Party to the Depositary Bank at
least three (3) Business Days prior to a scheduled Funding Date setting
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forth the amounts to be withdrawn, transferred or segregated pursuant to this
clause (b), in the following order of priority:
(i) FIRST: Withdraw and transfer to the Bond Trustee, the
Collateral Agent and the Depositary Bank the amount set forth in the
Officer's Certificate of the Trinidad Finance Parties equal to the
Trinidad Finance Parties' PRO RATA portion of the fees and expenses
then due and payable to each of the Bond Trustee, the Collateral Agent
and the Depositary Bank in accordance with the relative value of the
outstanding Trinidad Project Loans as compared to the value of the
outstanding U.S. Project Loans; PROVIDED, HOWEVER, that if monies in
the Trinidad Revenue Account are insufficient on any date to make
payments specified in this clause (i), distribution of monies shall be
made ratably to the specified recipients based on the respective
amounts owed to such recipients;
(ii) SECOND: After making the withdrawals specified in clause
(i), withdraw and transfer to the Trinidad Operating Account the amount
set forth in the Officer's Certificate of the Trinidad Obligor to be
the amounts payable for Operating and Maintenance Expenses due and
payable at any time during the next sixty (60) days beginning on such
Funding Date, less (x) the aggregate of the amounts previously
transferred on any prior Funding Date for Operating and Maintenance
Expenses and not otherwise used as of such date and (y) the amounts
currently on deposit in the Trinidad Local Account for such purpose and
such Authorized Officer certifies that the proviso immediately below
does not apply to such withdrawal; PROVIDED that if the cumulative
actual and projected Operating and Maintenance Expenses in any
operating year, including the amounts set forth in such Officer's
Certificate, exceed the projected Operating and Maintenance Expenses in
the applicable Operating Budget by more than 25%, then no amounts may
be withdrawn on behalf of the Trinidad Obligor to pay non-budgeted
operating costs unless the Depositary Bank shall have received:
(x) an Officer's Certificate of the Trinidad Obligor
substantially in the form attached hereto as EXHIBIT B (the
"NON-BUDGETED OPERATING AND MAINTENANCE COSTS CERTIFICATE"),
within at least three (3) Business Days prior to such
requested Disbursement Date; or
(y) an Independent Engineer's certificate substantially in the
form attached as APPENDIX I to EXHIBIT B, dated not more than
three (3) Business Days prior to such requested Disbursement
Date;
(iii) THIRD: After making the withdrawals specified in clauses
(i) and (ii), withdraw and transfer to the Trinidad Interest Account
the amount set forth in the Officer's Certificate of the Trinidad
Finance Parties for payment of the sum of (x) one-sixth of the interest
due and payable with respect to the Trinidad Project
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Note and Trinidad Loan (if any) (without duplication) on the next
Scheduled Payment Date (unless such Funding Date is also a Scheduled
Payment Date when the amount transferred shall equal the excess of the
total amount of interest due and payable on the Trinidad Project Note
and Trinidad Loan (if any) (without duplication) on such date less the
amounts already transferred to the Trinidad Interest Account for such
purpose) and (y) interest due and payable at any time during the
Funding Period commencing on such Funding Date with respect to the
Permitted Indebtedness (other than the Trinidad Project Note and
Trinidad Loan) incurred for the benefit of the Trinidad Project
PROVIDED that any transfers required pursuant to this priority THIRD
which were not made on the prior Funding Date because the amounts in
the Trinidad Revenue Account were insufficient to make such transfers
shall also be made as of the current Funding Date;
(iv) FOURTH: After making the withdrawals specified in clauses
(i), (ii) and (iii), withdraw and transfer to the Trinidad Principal
Account the amount set forth in the Officer's Certificate of the
Trinidad Finance Parties for payment of the sum of (x) one-sixth of
the principal and premium, if any, due and payable with respect to the
Trinidad Project Note and Trinidad Loan (if any) (without duplication)
on the next Scheduled Payment Date (unless such Funding Date is also a
Scheduled Payment Date when the amount transferred shall equal the
excess of the total amount of principal and premium, if any, due and
payable on the Trinidad Project Note and Trinidad Loan (if any)
(without duplication) on such date less the amounts transferred to the
Trinidad Principal Account for such purpose) and (y) principal due and
payable at any time during the Funding Period commencing on such
Funding Date with respect to the Permitted Indebtedness (other than
the Trinidad Project Note and Trinidad Loan) incurred for the benefit
of the Trinidad Project; PROVIDED that any transfers required pursuant
to this priority FOURTH which were not made on the prior Funding Date
because the amounts in the Trinidad Revenue Account were insufficient
to make such transfers shall also be made as of the current Funding
Date;
(v) FIFTH: After making withdrawals specified in clauses (i),
(ii), (iii) and (iv), withdraw and transfer to the applicable Secured
Parties the amount set forth in the Officer's Certificate of the
Trinidad Finance Parties for payment of any indemnification expenses or
other amounts heretofore not paid and required to be paid to any of the
Secured Parties, to the extent then due and payable; PROVIDED, HOWEVER,
that if monies in the Trinidad Revenue Account are insufficient on any
date to make the payments specified in this clause (v), distribution of
monies shall be made ratably to the specified recipients based on the
respective amounts owed such recipients;
(vi) SIXTH: Following Substantial Completion of the Trinidad
Project, after making the withdrawals and transfers specified in
clauses (i), (ii), (iii), (iv) and
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(v), withdraw and transfer to the Trinidad Maintenance Reserve Account
an amount equal to the Trinidad Maintenance Requirement, less amounts
already on deposit in the Trinidad Maintenance Reserve Account, as set
forth in an Officer's Certificate of the Trinidad Obligor;
(vii) SEVENTH: After making the withdrawals and transfers
specified in clauses (i), (ii), (iii), (iv), (v) and (vi), withdraw
and transfer to the Debt Service Reserve Account the amount set forth
in the Officer's Certificate of the Trinidad Finance Parties which is
equal to the excess, if any, of (x) the Debt Service Reserve Required
Balance less (y) the amount determined by the Depositary Bank pursuant
to SECTION 3.6 (Debt Service Reserve Account) of the U.S. Depositary
Agreement to be held in the Debt Service Reserve Account as of such
date, after giving effect to any withdrawals from the Debt Service
Reserve Account made on such date; PROVIDED that such amount shall be
reduced by an amount equal to the amount transferred to the Debt
Service Reserve Account in accordance with SECTION 3.2(vii) of the
U.S. Depositary Agreement;
(viii) EIGHTH: after making the withdrawals and transfers
specified in clauses (i), (ii), (iii), (iv), (v), (vi) and (vii), on
any date after October 30, 2005, transfer to the Trinidad Additional
Reserve Account an amount equal to 50% of the amounts remaining on
deposit in the Trinidad Revenue Account and;
(ix) NINTH: After making the withdrawals and transfers
specified in clauses (i), (ii), (iii), (iv), (v), (vi), (vii) and
(viii), transfer to the Trinidad Distribution Account the balance, if
any, remaining in the Trinidad Revenue Account.
When determining the amounts currently on deposit in any Trinidad Depositary
Account, the Depositary Bank shall include all amounts deposited therein by any
U.S. Guarantor or any other party.
Section 3.3 TRINIDAD OPERATING ACCOUNT. Monies on deposit in
the Trinidad Operating Account shall be used for the payment of Operating and
Maintenance Expenses. Amounts due and payable with respect to Operating and
Maintenance Expenses for the Trinidad Project during the next sixty (60) days
(less amounts already on deposit in the Trinidad Local Account) shall be
transferred to the Trinidad Local Account if so directed by the Trinidad Finance
Parties. On any date that such amounts are due and payable and have been
requisitioned in accordance with SECTION 3.2(b)(ii) (Withdrawals from the
Trinidad Revenue Account), the Depositary Bank shall withdraw the monies on
deposit in the Trinidad Operating Account and remit such monies to either the
Persons entitled thereto for the payment of such Operating and Maintenance
Expense or to the Trinidad Local Account, as directed by the Trinidad Obligor.
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Section 3.4 TRINIDAD INTEREST ACCOUNT. (a) Monies on
deposit in the Trinidad Interest Account shall be used for the payment of
interest due and payable on the Trinidad Project Note and Trinidad Loan (if any
and without duplication) and Permitted Indebtedness (other than the Trinidad
Project Note and Trinidad Loan) incurred for the benefit of the Trinidad
Project. On any date that such amounts are due and payable and have been
requisitioned in accordance with SECTION 3.2(b)(iii) (Withdrawals from the
Trinidad Revenue Account), the Depositary Bank shall, subject to the last
proviso of such SECTION 3.2(b)(iii), withdraw the monies on deposit in the
Trinidad Interest Account and remit such monies to the Persons entitled thereto
for the payment of such interest.
(b) If monies in the Trinidad Interest Account are
insufficient on any date to make any required interest payment due and payable
on the Trinidad Project Note and Trinidad Loan (if any and without duplication)
and Permitted Indebtedness (other than the Trinidad Project Note and Trinidad
Loan) incurred for the benefit of the Trinidad Project, then the Depositary Bank
shall withdraw funds and pay such deficiency from the Debt Service Reserve
Account, the Trinidad Distribution Suspense Account and lastly the Trinidad
Maintenance Reserve Account. If an insufficient amount of monies remains on
deposit in the Trinidad Interest Account following the transfer in the preceding
sentence, then distribution of monies shall be made ratably to the Persons
entitled thereto.
(c) Funding Company, the Trinidad Finance Parties, the
Collateral Agent and the Depositary Bank hereby acknowledge that amounts paid by
the Trinidad Finance Parties and transferred to the Trinidad Interest Account
pursuant to the terms hereof and applied by the Depositary Bank for payment of
interest owed from time to time on the Securities shall reduce the amount of
interest owed with respect to the Trinidad Project Note and Trinidad Loan by
such amount.
Section 3.5 TRINIDAD PRINCIPAL ACCOUNT. (a)
Monies on deposit in the Trinidad Principal Account shall be used for the
payment of principal and premium (if any) due and payable on the Trinidad
Project Note and Trinidad Loan (without duplication) and Permitted Indebtedness
(other than the Trinidad Project Note and Trinidad Loan) incurred for the
benefit of the Trinidad Project. On any date that such amounts are due and
payable and have been requisitioned in accordance with SECTION 3.2(b)(iv)
(Withdrawals from the Trinidad Revenue Account), the Depositary Bank shall,
subject to the last proviso of such SECTION 3.2(b)(iv), withdraw the monies on
deposit in the Trinidad Principal Account and remit such monies to the Persons
entitled thereto for the payment of such principal and premium (if any).
(b) If monies in the Trinidad Principal Account are
insufficient on any date to make any required principal and premium (if any)
payment due and payable on the Trinidad Project Note and Trinidad Loan (without
duplication) and Permitted Indebtedness (other than the Trinidad Project Note
and Trinidad Loan) incurred for the benefit of the Trinidad Project, then the
Depositary Bank shall withdraw funds and pay such deficiency
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from the Debt Service Reserve Account, the Trinidad Distribution Suspense
Account and lastly the Trinidad Maintenance Reserve Account. If an insufficient
amount of monies remains on deposit in the Trinidad Principal Account following
the transfer in the preceding sentence, then distribution of monies shall be
made ratably to the Persons entitled thereto.
(c) Funding Company, the Trinidad Finance Parties, the
Collateral Agent and the Depositary Bank hereby acknowledge that amounts paid by
the Trinidad Finance Parties and transferred to the Trinidad Principal Account
pursuant to the terms hereof and applied by the Depositary Bank for payment of
principal and premium (if any) owed from time to time on the Securities shall
reduce the amount of principal and premium (if any) owed with respect to
Trinidad Project Note and Trinidad Loan (to the extent provided in the Trinidad
Loan Agreement) by such amount.
Section 3.6 TRINIDAD MAINTENANCE RESERVE ACCOUNT. After
Substantial Completion of the Trinidad Project, the Trinidad Maintenance Reserve
Account will be funded in an amount equal to the Trinidad Maintenance
Requirement, and amounts held in the Trinidad Maintenance Account shall be
applied to pay Maintenance Expenses with respect to the Trinidad Project. At
least three (3) Business Days prior to any date on which Maintenance Expenses
are due and payable, the Trinidad Obligor shall deliver an Officer's Certificate
certifying that such Maintenance Expenses are due and payable and the amount of
such Maintenance Expenses and the Depositary Bank shall, in accordance with the
requirements of the Independent Engineer and upon the written request by the
Trinidad Obligor, withdraw the monies on deposit in the Trinidad Maintenance
Reserve Account in an amount equal to the amount of Maintenance Expenses then
due and remit such monies to the Trinidad Obligor for payment of such
Maintenance Expenses.
Section 3.7 TRINIDAD LOSS PROCEEDS ACCOUNT.
(a) All Loss Proceeds received directly or indirectly by the
Trinidad Obligor shall be paid directly into the Trinidad Loss Proceeds Account;
PROVIDED that any insurance proceeds related to any delayed opening or business
interruption insurance policies shall be paid directly into the Trinidad Revenue
Account. If any Loss Proceeds are received by or on behalf of the Trinidad
Obligor, such Loss Proceeds shall be received in trust for the Collateral Agent,
segregated from the other funds of the Trinidad Obligor and immediately paid to
the Collateral Agent for deposit into the Trinidad Loss Proceeds Account or the
Trinidad Revenue Account, as the case may be. Amounts held in the Trinidad Loss
Proceeds Account shall be applied solely for the payment of the costs of
rebuilding, repair or restoration of the Trinidad Project or as otherwise set
forth below.
(b) If an Event of Loss with respect to the Trinidad Project
shall have occurred requiring the payment of Loss Proceeds in excess of
$2,000,000 and the Trinidad Project is not or cannot be repaired, rebuilt or
restored in accordance with an Approved Restoration Plan, then the Depositary
Bank shall withdraw and transfer to the Trinidad
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Redemption Account all such proceeds on deposit in the Trinidad Loss Proceeds
Account relating to such Event of Loss for application by the Bond Trustee to
the redemption of the Securities in accordance with SECTION 3.2 (Mandatory
Redemption) of the Indenture and, upon such application, the Trinidad Project
Loan and Trinidad Loan then required to be prepaid in accordance with SECTION
2.4(b) (Prepayment) of the Trinidad Project Loan Agreement and the Trinidad Loan
Agreement, respectively, shall be deemed to be prepaid as well. In the event
that the Loss Proceeds received relating to such Event of Loss do not exceed
$2,000,000, then such Loss Proceeds shall be withdrawn from the Trinidad Loss
Proceeds Account and deposited in the Trinidad Revenue Account.
(c) If (i) an Event of Loss with respect to the Trinidad
Project shall have occurred requiring the payment of Loss Proceeds and (ii) an
Approved Restoration Plan with respect to such Event of Loss has been received
by the Depositary Bank, the Depositary Bank shall withdraw and pay to the
Trinidad Obligor, upon satisfaction of the conditions set forth in SECTION
3.7(d) below and provided that no Project Event of Default has occurred and is
continuing, such proceeds on deposit in the Trinidad Loss Proceeds Account
relating to such Event of Loss from time to time in installments sufficient to
pay for restoration as it progresses. In the event there are any amounts on
deposit in the Trinidad Loss Proceeds Account relating to such Event of Loss in
excess of $2,000,000 in excess of the amount necessary to effect such
restoration, then the Collateral Agent shall withdraw and transfer to the
Trinidad Redemption Account all such excess Loss Proceeds on deposit in the
Trinidad Loss Proceeds Accounts relating to such Event of Loss for application
by the Bond Trustee to the redemption of the Securities in accordance with
SECTION 3.2 (Mandatory Redemption) of the Indenture and, upon such application,
the Trinidad Project Loans and Trinidad Loans then required to be prepaid in
accordance with SECTION 2.4(b) (Prepayment) of the Trinidad Project Loan
Agreement and the Trinidad Loan Agreement, respectively, shall be deemed to be
prepaid as well. In the event that the excess Loss Proceeds received relating to
such Event of Loss do not exceed $2,000,000, then such excess Loss Proceeds
shall be withdrawn from the Trinidad Loss Proceeds Account and deposited in the
Trinidad Revenue Account.
(d) APPLICATION OF FUNDS TO APPROVED RESTORATION PLAN. Amounts
on deposit in the Trinidad Loss Proceeds Account shall be used for restoration
of the Trinidad Project to the extent provided in subsections (b) and (c) above
on the following terms and conditions:
(i) The Depositary Bank, prior to the initial release of such
amounts, receives a copy of the Approved Restoration Plan;
(ii) For the initial release and each subsequent release of
such amounts the Depositary Bank receives an executed Restoration
Requisition in the form of EXHIBIT C hereto (the "RESTORATION
REQUISITION") and an executed Independent Engineer's Certificate in the
form attached thereto.
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(iii) The release of such amounts shall be made within five
(5) days after the Depositary Bank receives a proper Restoration
Requisition therefor.
(e) Upon the occurrence of an Power Contract Buy-Out, all
proceeds received by or on behalf of any of the Trinidad Finance Parties in
respect of such Power Contract Buy-Out shall be deposited into the Trinidad Loss
Proceeds Account. Such proceeds in excess of $2,000,000 shall be withdrawn and
transferred to the Trinidad Redemption Account for application by the Bond
Trustee to the redemption of the Securities in accordance with the terms of
SECTION 3.2 (Mandatory Redemption) of the Indenture and, upon such application,
the Trinidad Project Loan and Trinidad Loan then required to be prepaid in
accordance with SECTION 2.4(b) (Prepayment) of the Trinidad Project Loan
Agreement and the Trinidad Loan Agreement, respectively, shall be deemed to be
prepaid as well. Any proceeds of any Power Contract Buy-Out not required
pursuant to the Indenture to be used for the redemption of the Securities shall
be withdrawn from the Trinidad Loss Proceeds Account and transferred to the
Trinidad Revenue Account.
(f) All liquidated damages received by the Trinidad Obligor
pursuant to the Trinidad EES Contract or the Trinidad Turnkey Construction
Contract shall be deposited into the Trinidad Loss Proceeds Account. Such
proceeds in excess of $1,000,000 shall be withdrawn and transferred to the
Trinidad Redemption Account for application by the Bond Trustee to the
redemption of the Securities in accordance with the terms of SECTION 3.2
(Mandatory Redemption) of the Indenture and, upon such application, the Trinidad
Project Loan and Trinidad Loan then required to be prepaid in accordance with
SECTION 2.4(b) (Prepayment) of the Trinidad Project Loan Agreement and the
Trinidad Loan Agreement, respectively, shall be deemed to be prepaid as well.
Any liquidated damages not required pursuant to the Indenture to be used for the
redemption of the Securities shall be withdrawn from the Trinidad Loss Proceeds
Account and transferred to the Trinidad Revenue Account.
Section 3.8 TRINIDAD ADDITIONAL RESERVE ACCOUNT. Monies on
deposit in the Trinidad Additional Reserve Account shall be used for the payment
of principal and interest due on the Trinidad Project Loan and Trinidad Loan
(without duplication) in the event that amounts on deposit in the Trinidad
Interest Account or Trinidad Principal Account, as applicable, the Debt Service
Reserve Account or the Trinidad Distribution Suspense Account are insufficient
to make such payments. On any date that such amounts are due and payable and
have been requisitioned in accordance with SECTION 3.2(b)(iii)-(iv) (Withdrawals
from the Trinidad Revenue Account) and the available amounts have been withdrawn
and transferred from the accounts mentioned in the previous sentence, the
Depositary Bank shall (i) withdraw the monies on deposit in the Trinidad
Additional Reserve Account and (ii) apply such monies to the payment of
principal and interest then due with respect to the Trinidad Project Loan and
Trinidad Loan.
Section 3.9 TRINIDAD DISTRIBUTION ACCOUNT. (a) The Trinidad
Distribution Account will be funded pursuant to SECTION 3.2(b) (Withdrawals from
the Trinidad
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Revenue Account). At least eight (8) Business Days prior to any Distribution
Date on which the Trinidad Distribution Conditions are satisfied, the Trinidad
Finance Parties shall deliver an Officer's Certificate to the Depositary Bank
certifying as such, PROVIDED that the Depositary Bank shall not have received a
written objection from the Bond Trustee or the Collateral Agent within five (5)
Business Days prior to such Distribution Date, then the Depositary Bank shall
withdraw and transfer from the Trinidad Distribution Account to the applicable
Trinidad Finance Parties, or as otherwise directed by such Trinidad Finance
Parties, monies on deposit in the Trinidad Distribution Account for use as
distributions or other lawfully permitted uses thereof.
(b) On any Distribution Date on which any of
the Trinidad Distribution Conditions is not satisfied, the Depositary Bank shall
withdraw and transfer from the Trinidad Distribution Account to the Trinidad
Distribution Suspense Account monies on deposit in the Trinidad Distribution
Account until such time as the requirements of clause (a) above are satisfied
(other than the requirement regarding the eight (8) Business Days notice
period), at which time the Depositary Bank shall withdraw and transfer such
monies to the Trinidad Distribution Account for distribution in accordance with
the terms thereof; PROVIDED that the requirement that monies shall only be
withdrawn from the Trinidad Distribution Account and transferred to the Trinidad
Finance Parties only on a Distribution Date shall not apply to such monies being
withdrawn and transferred to the Trinidad Distribution Account from the Trinidad
Distribution Suspense Account; PROVIDED FURTHER that if monies remain on deposit
in the Trinidad Distribution Suspense Account and have not been withdrawn and
transferred to the Trinidad Distribution Account within eighteen (18) months
after the Scheduled Payment Date on which such monies were deposited in the
Trinidad Distribution Suspense Account, then, following the request of Funding
Company or upon their own decision, the Majority Holders may elect whether or
not to use such funds to redeem all or a portion of the Securities in accordance
with SECTION 3.1 of the Indenture. At any time that monies on deposit in any of
the other Trinidad Depositary Accounts are not sufficient to make the payments
specified in SECTION 3.1 (Trinidad Construction Account) or SECTION 3.2(b)
(Withdrawals from the Trinidad Revenue Account) or are not equal to the required
balance of such Trinidad Depositary Accounts, then monies on deposit in the
Trinidad Distribution Suspense Account shall be withdrawn and transferred to the
Trinidad Revenue Account for application in accordance with such SECTION 3.2(b).
Section 3.10 WITHDRAWALS FROM THE TRINIDAD DEPOSITARY ACCOUNTS
ON THE DEBT TERMINATION DATE. Upon the occurrence of the Debt Termination Date
and the termination of the Intercreditor Agreement the Depositary Bank shall
withdraw the balances outstanding in each Trinidad Depositary Account and
transfer to the Trinidad Finance Parties, or as directed by the Trinidad Finance
Parties, all remaining amounts in the Trinidad Depositary Accounts; PROVIDED
that the Depositary Bank shall have received an Officer's Certificate from the
Collateral Agent authorizing such withdrawal and transfer.
Section 3.11 INVESTMENTS.
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(a) Pending the application of funds in any of the Trinidad
Depositary Accounts or sub-accounts in accordance with this ARTICLE 3, such
funds may be invested and reinvested in Cash Equivalents denominated in dollars
and liquidated (at the risk and expense of the Trinidad Finance Parties), in
accordance with written instructions given to the Depositary Bank by the
Trinidad Finance Parties (except upon the occurrence and during the continuance
of an Event of Default, during which such funds shall be invested and reinvested
in Cash Equivalents with maturations no longer than a week).
(b) If and when cash is required for disbursement in
accordance with this ARTICLE 3, the Depositary Bank is authorized, to the extent
necessary to make disbursements required pursuant to this ARTICLE 3, to cause
Cash Equivalents to be sold or otherwise liquidated into cash in accordance with
written instructions from any Trinidad Finance Party; PROVIDED that in the
absence of timely receipt of such instructions, the Depositary Bank shall sell
or otherwise liquidate Cash Equivalents as it shall, in good faith, deem
necessary. The Depositary Bank shall not be liable for any loss resulting from
such liquidation except to the extent such loss results solely from the gross
negligence or wilful misconduct of the Depositary Bank. All such liquidations
shall be binding on Funding Company and each Trinidad Finance Party.
(c) The Depositary Bank shall not be required to take any
action with respect to investing the funds in any Trinidad Depositary Account or
sub-account in the absence of written instructions by any Trinidad Finance
Party. The Depositary Bank shall not be liable for any loss resulting from any
investment in any Cash Equivalent or the sale or redemption thereof except to
the extent such loss results solely from the gross negligence or willful
misconduct of the Depositary Bank, it being understood and agreed that in no
event shall the Depositary Bank be liable for any loss resulting from any
investment, or any sale or redemption thereof, made in accordance with written
instructions received from Depositary Bank or any Trinidad Finance Party.
(d) All funds in each Trinidad Depositary Account and all
investments in Cash Equivalents made in respect thereof, shall be held by the
Depositary Bank and the interests of Funding Company and each Trinidad Finance
Party therein shall constitute part of the security subject to the pledge and
security interests created by the Security Documents. All income from the
investments in Cash Equivalents shall be included by the Depositary Bank in the
calculation of amounts on deposit in the applicable Trinidad Depositary Account.
Section 3.12 RECEIPT OF PROCEEDS. Funding Company and each
Trinidad Finance Party agree that forthwith upon the receipt by it of any
Project Revenues, Equity Cash Flows or Note Cash Flows or any other proceeds
related to the Projects or of any check, draft, note, trade acceptance or other
instrument constituting Project Revenues, Equity Cash Flows or Note Cash Flows
or any other proceeds related to the Projects it will hold the same in precisely
the form received, in trust for the Collateral Agent, and will
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forthwith, and without any notice or demand whatsoever, pay, endorse, transfer
and deliver the same to the Depositary Bank.
Section 3.13 BENEFIT OF ACCOUNTS. All right, title and
interest in and to the Trinidad Depositary Accounts and the monies in the
Trinidad Depositary Accounts and investments made with monies from the Trinidad
Depositary Accounts shall be vested in trust for the Collateral Agent for the
benefit of the Secured Parties until payment and performance in full of all of
the Secured Obligations and, upon payment in full of all the Secured
Obligations, shall be vested in each Trinidad Finance Party. Amounts deposited
in the Trinidad Depositary Accounts shall be applied by the Depositary Bank as
provided in this Agreement and the other Security Documents, as applicable.
Section 3.14 INFORMATION. The Depositary Bank shall (i) (x) on
a monthly basis provide each Trinidad Finance Party, the Bond Trustee and each
other Secured Party and (y) within five (5) Business Days after receipt of any
written request by any Trinidad Finance Party, the Bond Trustee or any other
Secured Party, provide Funding Company, such Trinidad Finance Party, the Bond
Trustee or such other Secured Party, as the case may be, with (a) account
balance statements in respect of each of the Trinidad Depositary Accounts and
sub-accounts, including all deposits, withdrawals and transfers from and to such
Trinidad Depositary Accounts and sub-accounts and (b) such information as
Funding Company, such Trinidad Finance Party, the Bond Trustee or such other
Secured Party, as the case may be, may specify regarding all Trinidad Depositary
Accounts, Cash Equivalents (including, without limitation, categories, amounts,
maturities and issuers) and any other investments made by the Depositary Bank
pursuant hereto and regarding amounts available in the Trinidad Depositary
Accounts and (ii) upon the written request and at the expense of any Trinidad
Finance Party, arrange with such Trinidad Finance Party for a mutually
convenient time for an Authorized Officer or an Authorized Representative of
such Trinidad Finance Party and its auditors to attend the office of the
Depositary Bank to examine and take copies of records relating to and
instruments evidencing the Cash Equivalents and other investments made by the
Collateral Agent pursuant hereto.
Section 3.15 ACCOUNTS GENERALLY. Except as specifically set
forth in this ARTICLE 3, neither Funding Company nor any Trinidad Finance Party
shall have any right of withdrawal in respect of any of the Trinidad Depositary
Accounts. Neither Funding Company nor any Trinidad Finance Party shall make,
attempt to make or consent to the making of any withdrawal or transfer from any
Trinidad Depositary Accounts except in strict adherence to this Agreement.
Funding Company and each Trinidad Finance Party acknowledge and agree that
dominion and control of each of the Trinidad Depositary Accounts shall at all
times reside with the Depositary Bank for the benefit of the Secured Parties.
Section 3.16 DEPOSITARY BANK OBLIGATIONS LIMITED. The
obligations of the Depositary Bank under this ARTICLE 3 shall be limited to
making the withdrawals,
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retentions and transfers specified herein; the Depositary Bank shall have no
obligation to Funding Company or any Trinidad Finance Party or any third party
to make any payment for which the appropriate Trinidad Depositary Account does
not contain sufficient funds.
Section 3.17 TRIGGER EVENTS.
(a) Notwithstanding anything in this Agreement to the
contrary, but subject to the exercise of remedies pursuant to the Intercreditor
Agreement, upon the occurrence of any Trigger Event all amounts on deposit in
the Trinidad Depositary Account shall, at the written direction of the
Collateral Agent, acting pursuant to the Intercreditor Agreement, be paid in
accordance with the terms of ARTICLE 4 of the Intercreditor Agreement to the
payment of the Secured Obligations.
ARTICLE 4
THE DEPOSITARY BANK
Section 4.1 APPOINTMENT OF DEPOSITARY BANK, POWERS AND
IMMUNITIES.
(a) The Depositary Bank may execute any of its duties under
this Agreement by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining hereto.
(b) The Collateral Agent on behalf of the Secured Parties
under the Intercreditor Agreement hereby appoints the Depositary Bank to act as
depositary bank and "securities intermediary" hereunder with such powers as are
expressly delegated to the Depositary Bank by the terms of this Agreement. The
Depositary Bank shall not have any duties or responsibilities except those
expressly set forth in this Agreement. Without limiting the generality of the
foregoing, the Depositary Bank shall take all actions as the Collateral Agent
shall direct it to perform in accordance with the express provisions of this
Agreement or as the Collateral Agent may otherwise direct it to perform in
accordance with the provisions of this Agreement. Notwithstanding anything to
the contrary contained herein, the Depositary Bank shall not be required to take
any action which is contrary to this Agreement or Applicable Law. Neither the
Depositary Bank nor any of its Affiliates shall be responsible to any Secured
Party for any recitals, statements, representations or warranties made by
Funding Company or any Trinidad Finance Party contained in this Agreement or any
other Finance Document or in any certificate or other document referred to or
provided for in, or received by any Secured Party under the Indenture, this
Agreement or any other Finance Document for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
document referred to or provided for herein or therein or for any failure by
Funding Company or any Trinidad Finance Party to perform its obligations
hereunder or thereunder. The Depositary Bank shall not be required to ascertain
or inquire as to the performance by Funding Company or
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any Trinidad Finance Party of any of its or their obligations under the
Indenture, this Agreement, any other Finance Document or any other document or
agreement contemplated hereby or thereby. The Depositary Bank shall not be (a)
required to initiate or conduct any litigation or collection proceeding
hereunder or under any other Security Document or (b) responsible for any action
taken or omitted to be taken by it hereunder (except for its own gross
negligence or willful misconduct) or in connection with any other Security
Document. Except as otherwise provided under this Agreement, the Depositary Bank
shall take action under this Agreement only as it shall be directed in writing
by the Collateral Agent or any Trinidad Finance Party. Whenever in the
administration of this Agreement the Depositary Bank shall deem it necessary or
desirable that a factual matter be proved or established in connection with the
Depositary Bank taking, suffering or omitting to take any action hereunder, such
matter (unless other evidence in respect thereof is herein specifically
prescribed) may be deemed to be conclusively proved or established by a
certificate of any Authorized Officer of the applicable Trinidad Finance Party
or the Collateral Agent, if appropriate. The Depositary Bank shall have the
right at any time to seek instructions concerning the administration of this
Agreement from the Collateral Agent or any court of competent jurisdiction. The
Depositary Bank shall have no obligation to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder.
Section 4.2 RELIANCE BY DEPOSITARY BANK. The Depositary Bank
shall be entitled to rely upon and shall not be bound to make any investigation
into the facts or matters stated in any Officer's Certificate of any Trinidad
Finance Party, the Independent Engineer, the Collateral Agent or any other
notice or other document (including any cable, telegram, telecopy or telex)
believed by it to be genuine and to have been signed or sent by or on behalf of
the proper Person or Persons, and upon advice or statement of legal counsel,
independent accountants and other experts selected by the Depositary Bank and
shall have no liability for its actions taken thereupon, unless due to the
Depositary Bank's willful misconduct or gross negligence. Without limiting the
foregoing, the Depositary Bank shall be required to make payments to the Secured
Parties only as set forth herein. The Depositary Bank shall be fully justified
in failing or refusing to take any action under this Agreement (i) if such
action would, in the reasonable opinion of the Depositary Bank, be contrary to
Applicable Law or the terms of this Agreement or the Intercreditor Agreement,
(ii) if such action is not specifically provided for in this Agreement or the
Intercreditor Agreement and it shall not have received any such advice or
concurrence of the Collateral Agent as it deems appropriate or (iii) if, in
connection with the taking of any such action that would constitute an exercise
of remedies under this Agreement or the Intercreditor Agreement (whether such
action is or is intended to be an action of the Depositary Bank or the
Collateral Agent), it shall not first be indemnified to its satisfaction by the
Secured Parties (other than the Bond Trustee (in its individual capacity) or the
Collateral Agent (in its individual capacity) or any other agent or trustee
under any of the Finance Documents (in their respective individual capacities))
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Depositary Bank shall in
all cases be
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fully protected in acting, or in refraining from acting, under this Agreement or
the Intercreditor Agreement in accordance with a request of the Collateral Agent
or any Trinidad Finance Parties, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Secured Parties.
Section 4.3 COURT ORDERS. The Depositary Bank is hereby
authorized, in its exclusive discretion, to obey and comply with all writs,
orders, judgments or decrees issued by any court or administrative agency
affecting any money, documents or things held by the Depositary Bank. The
Depositary Bank shall not be liable to any of the parties hereto or any other
Secured Party, their successors, heirs or personal representatives by reason of
the Depositary Bank's compliance with such writs, orders, judgments or decrees,
notwithstanding that such writ, order, judgment or decree is later reversed,
modified, set aside or vacated.
Section 4.4 RESIGNATION OR REMOVAL. Subject to the
appointment and acceptance of a successor Depositary Bank as provided below, the
Depositary Bank may resign at any time by giving thirty (30) days prior written
notice thereof to the Collateral Agent, the Funding Company and each Trinidad
Finance Party, PROVIDED that in the event the Depositary Bank is also the
Collateral Agent, it must also at the same time resign as Collateral Agent. The
Depositary Bank may be removed at any time without cause by the Collateral
Agent. Except during the continuation of a default or event of default under any
Finance Document, Funding Company shall have the right to remove the Depositary
Bank upon thirty (30) days prior written notice to the Secured Parties with or
without cause, effective upon the appointment of a successor Depositary Bank
under this SECTION 4.4, which is reasonably acceptable to the Bond Trustee. In
the event that the Depositary Bank shall decline to take any action without
first receiving adequate indemnity from the Trinidad Finance Parties, the other
Secured Parties or the Collateral Agent, as the case may be and, having received
an indemnity, shall continue to decline to take such action, the Collateral
Agent shall be deemed to have sufficient cause to remove the Depositary Bank. In
the event that the Depositary Bank is also the Bond Trustee, the Collateral
Agent shall have the right to remove the Depositary Bank with or without cause.
Upon any such resignation or removal, the Collateral Agent shall have the right
to appoint a successor Depositary Bank, which Depositary Bank (except during the
continuation of a default or event of default under any Finance Document) shall
be reasonably acceptable to Funding Company. If no successor Depositary Bank
shall have been appointed by the Collateral Agent and shall have accepted such
appointment within thirty (30) days after the retiring Depositary Bank's giving
of notice of resignation or removal of the retiring Depositary Bank, then (i)
the retiring Depositary Bank may petition a court of competent jurisdiction for
the appointment of a successor Depositary Bank or (ii) the retiring Depositary
Bank may appoint a successor Depositary Bank, which shall be a bank or trust
company reasonably acceptable to the Collateral Agent. Upon the acceptance of
any appointment as Depositary Bank hereunder by the successor Depositary Bank,
(a) such successor Depositary Bank shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the
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retiring Depositary Bank and the retiring Depositary Bank shall be discharged
from its duties and obligations hereunder and (b) the retiring Depositary Bank
shall promptly transfer all Trinidad Depositary Accounts within its possession
or control to the possession or control of the successor Depositary Bank and
shall execute and deliver such notices, instructions and assignments as may be
necessary or desirable to transfer the rights of the Depositary Bank with
respect to the Accounts to the successor Depositary Bank. After the retiring
Depositary Bank's resignation or removal hereunder as Depositary Bank, the
provisions of this ARTICLE 4 shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as
Depositary Bank.
Section 4.5 EXPENSES; INDEMNIFICATION; FEES.
(a) The Trinidad Finance Parties agree, jointly and severally,
to pay or reimburse all reasonable out-of-pocket expenses of the Depositary Bank
(including reasonable fees and expenses for legal services) in respect of, or
incident to, the execution, administration or enforcement of any of the
provisions of this Agreement or in connection with any amendment, waiver or
consent relating to this Agreement. The obligations contained in this SECTION
4.5 shall survive the termination of this Agreement or the resignation or
removal of the Depositary Bank.
(b) The Trinidad Finance Parties agree, jointly and severally,
to indemnify the Depositary Bank in its capacity as such, and, in their capacity
as such, its officers, directors, shareholders, controlling persons, employees,
agents and servants (each an "INDEMNIFIED DEPOSITARY BANK PARTY") from and
against any and all claims, losses, liabilities and expenses (including the
reasonable fees and expenses of counsel) arising out of or resulting from this
Agreement (including, without limitation, performance under or enforcement of
this Agreement, but excluding any such claims, losses or liabilities resulting
from the Indemnified Depositary Bank Party's gross negligence or willful
misconduct). This indemnity shall survive the termination of this Agreement, and
the resignation or removal of the Depositary Bank. This indemnity is extended in
addition to, and not in derogation or limitation of, the provisions of SECTION
2.4 (Indemnification; Bankruptcy) of the Intercreditor Agreement.
(c) On the Closing Date, and on each anniversary of the
Closing Date to and including the Debt Termination Date, the Trinidad Finance
Parties shall pay the Depositary Bank an annual fee in an amount mutually agreed
on by the Trinidad Finance Parties and the Depositary Bank.
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ARTICLE 5
MISCELLANEOUS PROVISIONS
Section 5.1 DIRECTION TO DEPOSITARY BANK. Unless otherwise
provided herein, any instruction or direction given to the Depositary Bank with
respect to the transfer, withdrawal, deposit or payment of any funds under this
Agreement shall be in writing and shall state with specificity the dollar
amount, source and disposition of any such funds.
Section 5.2 ACTION BY DEPOSITARY BANK. Notwithstanding any
provisions to the contrary in this Agreement, if any transfer, withdrawal,
deposit or payment of any funds by the Depositary Bank, or any other action to
be taken by the Depositary Bank, under this Agreement is to be made or taken on
a day which is not a Business Day, such transfer, withdrawal, deposit, payment
or other action shall be made or taken on the next Business Day.
Section 5.3 BENEFIT OF AGREEMENT. Nothing in this
Agreement, expressed or implied, shall give or be construed to give to any
Person other than the parties hereto and the Secured Parties any legal or
equitable right, remedy or claim under this Agreement, or under any covenant or
provision therein contained, all such covenants and provisions being for the
sole benefit of the parties hereto and the Secured Parties.
Section 5.4 NOTICES. Except as otherwise expressly provided
herein, (a) all notices and other communications provided for hereunder shall be
sufficiently given and shall be deemed given when delivered or mailed by
registered mail, postage prepaid, or sent by overnight delivery or telecopy,
addressed to a party hereto or to any Secured Party at the address specified in
SECTION 5.4 (Notices) of the Intercreditor Agreement or to any other at its
address specified in a written notice to the Collateral Agent, or at such other
address as shall be designated by any of the foregoing Persons in a written
notice to the parties hereto.
Section 5.5 COUNTERPARTS; DESCRIPTIVE. This Agreement
may be executed in separate counterparts, and by each party separately on a
separate counterpart, and each such counterpart, when so executed and delivered,
shall be an original. Such counterparts shall together constitute but one and
the same instrument. The descriptive headings in this Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof.
Section 5.6 GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) This Agreement is a contract made under the laws of the
State of New York of the United States and shall for all purposes be governed by
and construed in accordance with the laws of such State without regard to the
conflict of law rules thereof (other than SECTION 5-1401 of the New York General
Obligations Law). Regardless of any provision in any other Agreement, for
purposes of the UCC, New York shall be deemed to
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be the Depositary Bank's location and the Trinidad Depositary Accounts (as well
as the securities entitlements related thereto) other than the Trinidad Local
Account shall be governed by the laws of the State of New York, without regard
to the conflict of law rules thereof (other than SECTION 5-1401 of the New York
General Obligations Laws).
(b) Any legal action or proceeding against Funding Company or
any Trinidad Finance Party with respect to this Agreement may be brought in the
courts of the State of New York in the County of New York or of the United
States for the Southern District of New York and, by execution and delivery of
this Agreement, Funding Company and each Trinidad Finance Party hereby
irrevocably submits and accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Funding
Company and each Trinidad Finance Party agree that a judgment, after exhaustion
of all available appeals, in any such action or proceeding shall be conclusive
and binding upon Funding Company and each Trinidad Finance Party and may be
enforced in any other jurisdiction, by a suit upon such judgment, a certified
copy of which shall be conclusive evidence of the judgment. Each Trinidad
Finance Party and Funding Company hereby irrevocably designates, appoints and
empowers Corporation Services Company with offices on the date hereof at 375
Hudson Street, New York, New York 10014-3686, as its designee, appointee and
agent to receive, accept and acknowledge for and on its behalf, and in respect
of its property, service of any and all legal process, summons, notices and
documents which may be served in any such action or proceeding. If for any
reason such designee, appointee and agent shall cease to be available to act as
such, each Trinidad Finance Party agrees to designate a new designee, appointee
and agent in New York City on the terms and for the purposes of this provision
satisfactory to the Bond Trustee. Funding Company and each Trinidad Finance
Party irrevocably consent to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to Funding Company and
each Trinidad Finance Party at its address referred to in SECTION 5.4 (Notices)
hereof, such service to become effective thirty (30) days after such mailing.
Nothing herein shall affect the right of the Collateral Agent to serve process
in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against Funding Company and each Trinidad Finance Party in any
other jurisdiction.
(c) Funding Company and each Trinidad Finance Party hereby
irrevocably waive any objection which it may now or hereafter have to the laying
of venue of any of the aforesaid actions or proceedings arising out of or in
connection with this Agreement or any other Finance Document brought in the
courts referred to in clause (b) above and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
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(d) WITH REGARD TO THIS AGREEMENT, FUNDING COMPANY, EACH
TRINIDAD FINANCE PARTY, THE COLLATERAL AGENT AND THE DEPOSITARY BANK HEREBY
WAIVE THE RIGHT TO A TRIAL BY JURY.
Section 5.7 NO WAIVER; CUMULATIVE REMEDIES. No failure to
exercise, and no delay in exercising, any right, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder preclude or require any other or future
exercise thereof or the exercise of any other right, power or privilege. All
rights, powers and remedies granted to any party hereto and all other
agreements, instruments and documents executed in connection with this Agreement
shall be cumulative, may be exercised singly or concurrently and shall not be
exclusive of any rights or remedies provided by law.
Section 5.8 ASSIGNMENT. Funding Company and each Trinidad
Finance Party hereby consent to any assignment of this Agreement in whole or in
part by any of the Secured Parties in connection with the assignment of any
Secured Obligations or part thereof in accordance with the terms of the
Agreement giving rise to such Secured Obligations or any other Agreement
relating thereto. In the event of any such assignment or transfer, the term
"Secured Party" as used in this Agreement shall be deemed to mean any such
assignee or transferee, as the case may be. Subject to the first two sentences
of this SECTION 5.8 no assignment of this Agreement may be made by Funding
Company or any Trinidad Finance Party without the prior written consent of the
Collateral Agent, acting pursuant to the Intercreditor Agreement.
Section 5.9 TIME OF DAY; ENGLISH LANGUAGE. All references
herein to any time of day shall be deemed to be references to New York City
time, and all notices, instruments and other documents required to be delivered
hereunder shall be in the English language.
Section 5.10 BINDING EFFECT. All of the covenants,
warranties, undertakings and agreements of Funding Company and each Trinidad
Finance Party hereunder shall bind Funding Company and each Trinidad Finance
Party and its successors and assigns and shall inure to the benefit of the
Secured Parties and their respective successors and assigns.
Section 5.11 NOTICE OF ADVERSE CLAIM. Except
for the claims and interest of the Secured Parties in the Trinidad Depositary
Accounts, the Collateral Agent does not know of any claim to, or interest in,
the Trinidad Depositary Accounts or in any "financial asset" (as defined in
SECTION 8-102(a) of the UCC) credited thereto; it being understood that the
Collateral Agent has not conducted an independent investigation. If any person
asserts any lien, encumbrance or adverse claim (including any writ, garnishment,
judgment, warrant of attachment, execution or similar process) against the
Trinidad Depositary Accounts or in any financial asset carried therein actually
known by the Collateral
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Agent, the Collateral Agent will promptly notify the Secured Parties, Funding
Company and each Trinidad Finance Party thereof.
Section 5.12 LIMITATION OF FUNDING COMPANY'S LIABILITY.
Notwithstanding anything to the contrary contained herein, the obligations of
Funding Company hereunder are solely the obligations of Funding Company and
payable from, and recourse solely to, the Funding Company's interest in the
Funding Collateral following application of the Funding Company Collateral in or
towards the discharge of the Secured Obligations and the obligations of Funding
Company under each other Transaction Document. No recourse shall be had against
any Non-Recourse Person subject to the exceptions set forth in SECTION 11.11
(Limitation of Liability) of the Indenture.
Section 5.13 THE COLLATERAL AGENT. Each party hereto
acknowledges and agrees that the rights, privileges, benefits, immunities and
duties of the Collateral Agent set forth in the Increditor Agreement are
expressly incorporated herein by reference thereto.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized officers or
representatives hereunto.
YORK POWER FUNDING (CAYMAN) LIMITED
By: /s/ Martin Couch
---------------------------------
Name: Martin Couch
Title: Director
YORK EX INTERNATIONAL SRL
By:/s/ Robert C. Paladino
---------------------------------
Name: Robert C. Paladino
Title: Vice President
YORK HOLDINGS (BARBADOS) SRL
By: /s/ Robert C. Paladino
---------------------------------
Name: Robert C. Paladino
Title: Vice President
INNCOGEN, LIMITED
By: /s/ Robert C. Paladino
---------------------------------
Name: Robert C. Paladino
Title: President
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THE BANK OF NEW YORK
as Collateral Agent
By: /s/ Joseph Ernst
---------------------------------
Name: Joseph Ernst
Title: Vice President
THE BANK OF NEW YORK
as Depositary Bank
By: /s/ Joseph Ernst
---------------------------------
Name: Joseph Ernst
Title: Vice President
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SCHEDULE I
TRINIDAD DEPOSITARY ACCOUNTS
<TABLE>
<CAPTION>
ACCOUNT NAME ACCOUNT NO.
- ------------ -----------
<S> <C>
Trinidad Revenue Account 800014
Trinidad Interest Account 800015
Trinidad Principal Account 800016
Trinidad Distribution Account 800017
Trinidad Distribution Suspense Account 800018
Trinidad Loss Proceeds Account 800019
Trinidad Redemption Account 800020
Trinidad Operating Account 800021
Trinidad Construction Account 800022
Trinidad Maintenance Reserve Account 800023
Trinidad Additional Reserve Account 800024
</TABLE>
-28-
<PAGE>
EXHIBIT A
TRINIDAD CONSTRUCTION REQUISITION
No. ______
[Date]
The Bank of New York,
as Depositary Bank
[__________________________]
Attention: [______________]
Ladies and Gentlemen:
This requisition (this "TRINIDAD CONSTRUCTION REQUISITION") is
delivered to you pursuant to SECTION 3.1 of the Trinidad Deposit and
Disbursement Agreement, dated as of ________, 1998 (the "AGREEMENT"), by and
among York Power Funding (Cayman) Limited, York Ex International SRL, York
Holdings (Barbados) SRL, InnCOGEN, Limited (the "TRINIDAD OBLIGOR"), The Bank of
New York, as Collateral Agent and The Bank of New York as Depositary Bank.
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned thereto in the Agreement.
The Trinidad Obligor hereby certifies to the Depositary Bank for the
benefit of the Secured Parties as of the date hereof that:
1. The aggregate amount requested to be withdrawn
from the Trinidad Construction Account in
accordance with this Trinidad Construction
Requisition is $________.
2. The date on which such withdrawals and transfers pursuant to
this Trinidad Construction Requisition are to be made is
_______ (the "DISBURSEMENT DATE")
3. Set forth on Schedule I attached hereto is the
name of each Person to whom any payment is to
be made, the aggregate amount incurred on the
Disbursement Date or reasonably expected to be
incurred within the thirty (30) day period
following the Disbursement Date by such Person
and a summary description of the work
performed, services rendered, materials,
equipment or supplies delivered or any other
purpose for which each payment was or is to be
made.
4. As of the date hereof, no Default or Event of Default has
occurred and is continuing.
Exhibit A-1
<PAGE>
5. The Trinidad Obligor reviewed the work performed, services
rendered and materials, equipment or supplies delivered in
connection with the construction of the Trinidad Project, and
confirm that the construction activities are proceeding in
accordance with the current construction budget and schedule.
INNCOGEN, LIMITED
By:
------------------------
Name:
Title:
Exhibit A-2
<PAGE>
SCHEDULE I TO TRINIDAD CONSTRUCTION REQUISITION
AMOUNT
NAME OF PAYMENT PURPOSE
---- ---------- -------
Exhibit A-3
<PAGE>
APPENDIX I TO EXHIBIT A
INDEPENDENT ENGINEER'S CERTIFICATE
[Date]
The Bank of New York
as Depositary Bank
[______________________]
Attention: [ ]
InnCOGEN, Limited
[______________________]
Attention: [ ]
Ladies and Gentlemen:
This Certificate is delivered to you in connection with (a)
SECTION 3.1 of the Trinidad Deposit and Disbursement Agreement, dated as of
_______, 1998 (the "AGREEMENT"), by and among York Power Funding (Cayman)
Limited, York Ex International SRL, Trinidad Holdings (Barbados) SRL, InnCOGEN,
Limited (the "TRINIDAD OBLIGOR"), The Bank of New York, as Collateral Agent and
The Bank of New York, as Depositary Bank and (b) the requisition for payment to
which this Certificate is attached as APPENDIX I (the "TRINIDAD CONSTRUCTION
REQUISITION") delivered by the Trinidad Obligor to the Depositary Bank.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned thereto in the Agreement.
We hereby certify to the Depositary Bank for the benefit of
the Secured Parties as of the date hereof that:
1. We have reviewed the Trinidad Construction
Requisition and the construction costs set
forth on SCHEDULE I to the Trinidad
Construction Requisition are due and payable as
of the Disbursement Date or are reasonably
anticipated to be incurred during the thirty
(30) day period following the Disbursement
Date.
2. We have reviewed the [description of work
reviewed], services rendered and materials,
equipment or supplies delivered in connection
with the construction of the Trinidad Project,
and confirm that the construction activities
are proceeding in accordance with the current
construction budget and schedule
Exhibit A-4
<PAGE>
and that sufficient funds are on deposit in the
Trinidad Construction Account or shall otherwise
be available to the Trinidad Obligor to complete
the Trinidad Project.
The person signing this Certificate is a duly qualified
representative of the Independent Engineer and as such is authorized to execute
this Certificate on behalf of the Independent Engineer.
Very truly yours,
[NAME OF INDEPENDENT
ENGINEER]
By:
-------------------------------
Name:
Title:
Exhibit A-5
<PAGE>
EXHIBIT B
NON-BUDGETED OPERATING AND MAINTENANCE COSTS CERTIFICATE
No. _____
[Date]
The Bank of New York,
as Depositary Bank
[______________]
Attention: [______]
Ladies and Gentlemen:
This certificate (the "NON-BUDGETED OPERATING AND
MAINTENANCE COSTS CERTIFICATE") is delivered to you pursuant to SECTION
3.2(b)(ii) of the Trinidad Depositary Agreement, dated as of ___________,
1998 (the "AGREEMENT"), by and among York Power Funding (Cayman) Limited,
York Ex International SRL, York Holdings (Barbados) SRL, InnCOGEN, Limited
(the "TRINIDAD OBLIGOR"), The Bank of New York, as Collateral Agent and The
Bank of New York, as Depositary Bank. Capitalized terms used and not
otherwise defined herein shall have the meanings assigned thereto in the
Agreement.
The Trinidad Obligor hereby certifies to the Depositary Bank
of the benefit of the Secured Parties as of the date hereof that:
1. The aggregate amount requested to be withdrawn from the
Trinidad Revenue Account in accordance with this Non-Budgeted
Operating and Maintenance Costs Certificate is $_________.
2. The date on which the withdrawals and transfers pursuant to
this Non-Budgeted Operating and Maintenance Costs Certificate
are to be made is _________ (the "DISBURSEMENT DATE").
3. Set forth on Schedule I attached hereto is the name of each
Person to whom any payment is to be made, the aggregate
amount due and payable on the Disbursement Date or
reasonably expected to be due and payable within the sixty
(60) day period following the Disbursement Date to such
Person and a summary description of the work performed,
services rendered, materials,
Exhibit B-1
<PAGE>
equipment or supplies delivered or any other purpose for
which each payment was or is to be made.
4. The proceeds withdrawn from the Trinidad Revenue Account
pursuant to this Non-Budgeted Operating and Maintenance
Expenses Certificate will be used to pay Operating and
Maintenance Expenses which exceed the projected Operating
and Maintenance Expenses in the Operating Budget of the
Trinidad Obligor by more than twenty-five (25) percent.
5. The Operating and Maintenance Expenses for which payment is
requested under this Non-Budgeted Operating and Maintenance
Expenses Certificate have not been the basis for any prior
requisition by the Trinidad Obligor.
6. All proceeds of prior requisitions under any Non-Budgeted
Operating and Maintenance Expenses Certificate have been
expended or applied pursuant to the provisions of the Trinidad
Depositary Agreement.
[7. Attached hereto as Appendix I is an Independent Engineer's
Certificate in respect of this Non- Budgeted Operating and
Maintenance Expenses Certificate.]*
[7. The Operating and Maintenance Expenses for which payment is
requested under this Non- Budgeted Operating and Maintenance
Expenses Certificate are reasonably designed to permit the
Trinidad Obligor to satisfy its obligations in respect of
the Trinidad Project Note and maximize its revenue and net
income. A Debt Service Coverage Ratio of at least 1.5 to 1.0
will be maintained for the next 12-month period.]
- ------------------------------
* Insert particular clause 7, as applicable.
Exhibit B-2
<PAGE>
INNCOGEN, LIMITED
By:
-------------------------------
Name:
Title:
Exhibit B-3
<PAGE>
SCHEDULE I TO NON-BUDGETED OPERATING AND MAINTENANCE
COSTS CERTIFICATE
AMOUNT
NAME OF PAYMENT PURPOSE
---- ---------- -------
Exhibit B-4
<PAGE>
APPENDIX I TO EXHIBIT B
INDEPENDENT ENGINEER'S CERTIFICATE
[Date]
The Bank of New York,
as Depositary Bank
[______________________]
Attention: [______________________]
InnCOGEN, Limited
[______________________]
Attention: [______________________]
Ladies and Gentlemen:
This certificate (the "NON-BUDGETED OPERATING AND
MAINTENANCE EXPENSES CERTIFICATE") is delivered to you pursuant to (a)
SECTION 3.2(b)(ii) of the Trinidad Depositary Agreement, dated as of
______________, 1998 (the "AGREEMENT"), by and among York Power Funding
(Cayman) Limited, York Ex International SRL, York Holdings (Barbados) SRL,
InnCOGEN, Limited (the "TRINIDAD OBLIGOR"), The Bank of New York, as
Collateral Agent and The Bank of New York, as Depositary Bank and (b) the
certificate to which this Certificate is attached as APPENDIX I (the
"NON-BUDGETED OPERATING AND MAINTENANCE EXPENSE CERTIFICATE") delivered by
the Trinidad Obligor to the Depositary Bank. Capitalized terms used and not
otherwise defined herein shall have the meanings assigned thereto in the
Agreement.
We hereby certify to the Depositary Bank of the benefit of the
Secured Parties as of the date hereof that:
1. We have reviewed the Non-Budgeted Operating and Maintenance
Expenses Certificate dated ____________ of the Trinidad
Obligor relating to the Trinidad Project.
2. Based on our review of the aforementioned information,
including applicable operating and maintenance budgets and
plans, inspection and overhaul reports and elective
generation reports and data provided to us by the Trinidad
Obligor and such other investigation as is referenced on the
Annex hereto, and the understanding and assumption that we
have been provided true, correct and complete information,
and that we have not undertaken to
Exhibit B-5
<PAGE>
verify such information, and [insert customary exceptions
and qualifications] we are of the opinion that, as of the
date hereof:
(a) The operations and maintenance of the Trinidad Project as
of the date hereof have been performed in accordance with generally accepted
engineering and project operations and maintenance practices.
(b) The operations and maintenance expenses set forth on
Schedule I to the Non-Budgeted Operating and Maintenance Expenses Certificate
not incurred on or prior to the Disbursement Date are reasonably anticipated to
be incurred during the sixty (60) day period following the Disbursement Date.
(c) The expenditures described in the Non-Budgeted Operating
and Maintenance Expenses Certificate delivered by the Trinidad Obligor to the
Depositary Bank
are necessary and reasonable.
The person signing this Certificate is a duly qualified
representative of the Independent Engineer and as such is authorized to execute
this Certificate on behalf of the Independent Engineer.
[NAME OF INDEPENDENT ENGINEER]
By:
-----------------------------------
Name:
Title:
Exhibit B-6
<PAGE>
EXHIBIT C
RESTORATION REQUISITION
No.____
[Date]
The Bank of New York
as Collateral Agent
[__________________________]
Attention: [______________]
Ladies and Gentlemen:
This requisition (this "RESTORATION REQUISITION") is delivered to you
pursuant to SECTION 3.7(d) of the Trinidad Deposit and Disbursement Agreement,
dated as of ________, 1998 (the "AGREEMENT"), by and among York Power Funding
(Cayman) Limited, York Ex International SRL, York Holdings (Barbados) SRL,
InnCOGEN, Limited (the "TRINIDAD OBLIGOR"), The Bank of New York, as Collateral
Agent and The Bank of New York, as Depositary Bank. Capitalized terms used and
not otherwise defined herein shall have the meanings assigned thereto in the
Agreement.
The Trinidad Obligor hereby certifies to the Collateral Agent for the
benefit of the Secured Parties as of the date hereof that:
1. The aggregate amount requested to be withdrawn
from the Trinidad Loss Proceeds Account in
accordance with this Restoration Requisition is
$_____.
2. The date on which the withdrawals and transfers pursuant to
this Restoration Requisition are to be made is ________ (the
"DISBURSEMENT DATE").
3. Set forth on SCHEDULE I attached hereto is the name of each
Person to whom any payment is to be made with the amount
requested pursuant to item 1, the aggregate amount incurred
on or prior to the Disbursement Date or reasonably expected
to be incurred within the thirty (30) day period following
the Disbursement Date by such Person and a summary
description of the work performed, services rendered,
materials, equipment or supplies delivered or any other
purpose for which each payment was or is to be made.
Exhibit C-1
<PAGE>
4. The proceeds of this Restoration Requisition withdrawn from
the Trinidad Loss Proceeds Account will be used to pay the
costs of rebuilding, restoration or repair or the Trinidad
Project in accordance with an Approved Restoration Plan and
the budget and payment schedule set forth in the Approved
Restoration Plan, if any.
5. The costs of rebuilding, restoration or repair for which
payment is requested under this Restoration Requisition from
the Trinidad Loss Proceeds Account have not been the basis for
any prior requisition by the Trinidad Obligor.
6. As of the date hereof, the Trinidad Obligor has not received
any written notice of any lien, right to lien or attachment
upon, or material claim affecting the right of the Trinidad
Obligor to receive any portion of the amount of this
Restoration Requisition (other than in respect of Permitted
Liens), or in the event that the Trinidad Obligor has
received notice of any such lien, attachment, or claim
(other than a Permitted Lien), such lien attachment or claim
has been released or discharged as of the date hereof or is
expected to be released or discharged upon payment of the
costs for which payment is requested under this Restoration
Requisition.
7. [Insert for final release only] [The restoration has been
completed, (or will be completed upon the expenditure of the
funds requested hereby) and the Trinidad Project as restored
conforms in all material respects to all Applicable Laws and
Governmental Approvals].
8. Attached hereto as APPENDIX I is an Independent Engineer's
Certificate in respect of this Restoration Requisition.
Exhibit C-2
<PAGE>
INNCOGEN, LIMITED
By:
-----------------------------------
Name:
Title:
Exhibit C-3
<PAGE>
SCHEDULE I TO RESTORATION REQUISITION
AMOUNT
NAME OF PAYMENT PURPOSE
---- ---------- -------
Exhibit C-4
<PAGE>
APPENDIX I TO EXHIBIT C
INDEPENDENT ENGINEER'S CERTIFICATE
[Date]
The Bank of New York
as Collateral Agent
[________________________]
Attention: [ ]
InnCOGEN, Limited
[____________]
Attention: [ ]
Ladies and Gentlemen:
This Certificate is delivered to you in connection with (a)
SECTION 3.7(d) of the Trinidad Deposit and Disbursement Agreement, dated as of
_______, 1998 (the "AGREEMENT"), by and among York Power Funding (Cayman)
Limited, York Ex International SRL, York Holdings (Barbados) SRL, InnCOGEN,
Limited (the "TRINIDAD OBLIGOR"), The Bank of New York, as Collateral Agent and
The Bank of New York, as Depositary Bank and (b) the requisition for payment to
which this Certificate is attached as APPENDIX I (the "RESTORATION REQUISITION")
delivered by the Trinidad Obligor to the Collateral Agent. Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned
thereto in the Agreement.
We hereby certify to the Collateral Agent for the benefit of
the Secured Parties as of the date hereof that:
1. We have reviewed the material and data made available to us by
the Trinidad Obligor with respect to [describe rebuilding,
repair or restoration project] and have performed such other
investigation as is referenced in the Annex attached hereto
(the "REVIEW"). Our Review was performed in accordance with
generally accepted engineering and construction practices
and included such investigation and review as we in our
professional capacity deemed necessary or appropriate under
the circumstances and within the scope of our appointment.
We have also reviewed the Restoration Requisition dated
______________, including any appendices, schedules and
requisitions and/or invoices attached thereto or delivered
therewith.
Exhibit C-5
<PAGE>
2. Based on our Review and the understanding and assumption that
we have been provided true, correct and complete information
and [insert customary assumptions and qualifications], we are
of the opinion that, as of the date hereof:
a. The rebuilding, repair and restoration activities and
the progress of the rebuilding, repair and
restoration of the Trinidad Project through the date
of this Certificate are proceeding in a satisfactory
manner in accordance with the Approved Restoration
Plan.
b. The restoration costs set forth on SCHEDULE I to the
Restoration Requisition not incurred on or prior to
the Disbursement Date are reasonably anticipated to
be incurred during the thirty (30) day period
following the Disbursement Date.
c. The payments made with respect to the Restoration
Requisition are in accordance with the Approved
Restoration Plan and budget and project payment
schedule set forth therein, if any.
d. [Insert for final release only] [The restoration has
been completed (or will be completed upon the
expenditure of funds requested in the Restoration
Requisition to which this certificate is attached)
and the Trinidad Project as restored conforms in all
material respects to all Applicable Laws and
Governmental Approvals.]
Exhibit C-6
<PAGE>
The person signing this Certificate is a duly qualified
representative of the Independent Engineer and as such is authorized to execute
this Certificate on behalf of the Independent Engineer.
Very truly yours,
[NAME OF INDEPENDENT
ENGINEER]
By:
-------------------------------
Name:
Title:
Exhibit C-7
<PAGE>
EXHIBIT 10(vv)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. PROJECT NOTE PLEDGE AGREEMENT
DATED AS OF AUGUST 4, 1998
BETWEEN
YORK POWER FUNDING (CAYMAN) LIMITED
AND
THE BANK OF NEW YORK, AS COLLATERAL AGENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<S> <C>
RECITALS ................................................................... 1
Section 1. Construction; Definitions ...................................... 2
1.1 Defined Terms ................................................ 2
1.2 Principles of Construction ................................... 2
Section 2. Representations and Warranties ................................. 2
Section 3. Collateral ..................................................... 3
Section 4. Further Assurances; Remedies .................................. 4
4.1 Delivery and Other Perfection ............................... 4
4.2 Other Financing Statements and Liens ........................ 5
4.3 Preservation of Rights ...................................... 5
4.4 U.S. Project Note Collateral ................................ 5
4.5 Events of Default ........................................... 6
4.6 Deficiency .................................................. 7
4.7 Removals .................................................... 7
4.8 Private Sale ................................................ 8
4.9 Application of Proceeds ..................................... 8
4.10 Attorney-in-Fact ............................................ 8
4.11 Perfection .................................................. 8
4.12 Security Interest Absolute .................................. 9
4.13 Bankruptcy Filing, etc ...................................... 9
4.14 Governmental Authority Requirement .......................... 9
4.15 Indemnification ............................................. 9
4.16 Termination ................................................. 10
4.17 Further Assurances .......................................... 10
4.18 Limitation of Liability ..................................... 10
Section 5. Miscellaneous ................................................. 10
5.1 No Waiver ................................................... 10
5.2 Notices ..................................................... 10
5.3 Expenses .................................................... 11
5.4 Amendments .................................................. 11
5.5 Role of Collateral Agent .................................... 11
5.6 Successors and Assigns ...................................... 11
5.7 Headings Descriptive ........................................ 11
5.8 Counterparts ................................................ 12
5.9 Governing Law; Submission to Jurisdiction;
Waiver of Jury Trial ...................................... 12
5.10 No Third Party Beneficiaries ................................ 13
5.11 Reinstatement ............................................... 13
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
5.12 Agents and Attorneys-in-Fact ................................ 13
5.13 Severability ................................................ 13
5.14 Conflicts with the Intercreditor Agreement or Depositary
Agreements ................................................ 13
</TABLE>
ii
<PAGE>
U.S. PROJECT NOTE PLEDGE AGREEMENT (this "AGREEMENT") dated as of August 4,
1998 between YORK POWER FUNDING (CAYMAN) LIMITED, a limited liability company
incorporated under the laws of the Cayman Islands ("FUNDING COMPANY") and THE
BANK OF NEW YORK, a New York banking corporation, as collateral agent for the
benefit of the Secured Parties (together with its successors and assigns in such
capacity, the "COLLATERAL AGENT").
RECITALS
WHEREAS, Funding Company is a limited liability company established
for the sole purpose of issuing the Securities in its individual capacity as
principal and as agent acting on behalf of the U.S. Guarantors pursuant to the
Indenture and to make loans to the Project Borrowers pursuant to the Project
Loan Agreements;
WHEREAS, Funding Company has simultaneously with the execution and
delivery of this Agreement issued and sold the Initial Securities pursuant to
the Indenture;
WHEREAS, payments of the principal of, premium (if any), interest on
and any other amounts due with respect to the Initial Securities will be
partially serviced by repayment of the U.S. Project Loan and guaranteed by the
U.S. Guarantors;
WHEREAS, the Secured Parties, the U.S. Guarantors and certain other
parties are entering into a Collateral Agency and Intercreditor Agreement
appointing the Collateral Agent and setting forth certain rights and remedies of
the Collateral Agent acting on behalf of the Secured Parties with respect to the
Collateral, including, without limitation, the U.S. Depositary Accounts
established pursuant to the U.S. Depositary Agreement;
WHEREAS, Funding Company and the U.S. Guarantors are entering into the
Depositary Agreement in order to, among other things, appoint the Depositary
Bank to hold and administer the proceeds of certain insurance and revenues
generated and distributed to Funding Company and the U.S. Guarantors; and
WHEREAS, it is a condition precedent to the purchase of the Initial
Securities by the Initial Purchaser that Funding Company shall have pledged the
U.S. Project Note Collateral (as defined below) pursuant to, and granted the
assignment and security interests contemplated by, this Agreement.
NOW, THEREFORE, in consideration of the premises and covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Funding Company hereby agrees with
the Collateral Agent for its benefit and for the benefit of the Secured Parties
as follows:
<PAGE>
Section 1. CONSTRUCTION; DEFINITIONS.
1.1 DEFINED TERMS.
(a) For all purposes of this Agreement, capitalized terms used but not
otherwise defined herein shall have the meaning set forth in APPENDIX A to the
Indenture.
(b) The following term shall have the following meaning:
"U.S. PROJECT NOTE COLLATERAL" shall have the meaning set forth in
SECTION 3 hereof.
1.2 PRINCIPLES OF CONSTRUCTION. For all purposes of this Agreement, the
principles of construction set forth in SECTION 1.1 (Definitions; Construction)
of the Indenture shall apply.
Section 2. REPRESENTATIONS AND WARRANTIES. Funding Company represents and
warrants to the Collateral Agent and the other Secured Parties that:
(a) Funding Company is a limited liability company duly incorporated,
validly existing and in good standing under the laws of the Cayman Islands.
(b) Funding Company has all requisite power and authority to execute
and deliver this Agreement and to perform its obligations hereunder.
(c) Funding Company has taken all necessary action on its part to
authorize its execution, delivery and performance of this Agreement.
(d) The execution, delivery and performance by Funding Company of this
Agreement does not and will not (i) require any consent of the board of
directors or any shareholder of Funding Company or any other Person that
has not been obtained, (ii) violate any Applicable Law, except any such
violation which could not reasonably be expected to have a Material Adverse
Effect, (iii) result in any breach of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or
impose) any Lien (other than the Liens created hereunder) upon any of the
property or assets of Funding Company pursuant to, any of the terms or
provisions of any agreement or instrument to which it is a party or by
which it or any of its property or assets is bound or to which it may be
subject, except for any breaches, defaults, creations or impositions of
Liens, contraventions, violations or conflicts which could not reasonably
be expected to have a Material Adverse Effect or (iv) violate or conflict
with any provision of the Memorandum of Association or Articles of
Association of Funding Company.
2
<PAGE>
(e) This Agreement has been duly executed and delivered by Funding
Company and constitutes the legal, valid and binding obligation of Funding
Company, enforceable against Funding Company in accordance with its terms
except as such enforceability (i) may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws of general applicability affecting the enforcement of
creditors' rights generally and (ii) is subject to applicable general
principles of equity and the effect of public policy (regardless of whether
enforceability is considered in a proceeding in law or equity).
(f) Funding Company is the sole beneficial owner of the U.S. Project
Note Collateral and no Lien exists or will exist upon the U.S. Project Note
Collateral at any time (and no right or option to acquire the same exists
in favor of any other Person), except for Permitted Liens. The pledge and
security interest created by this Agreement constitutes, upon delivery of
the U.S. Project Note Collateral to, and holding by, the Collateral Agent
for the benefit of itself and the other Secured Parties, a first priority
perfected pledge and security interest in and to all of the U.S. Project
Note Collateral.
Section 3. COLLATERAL. As collateral security for the prompt payment in
full and performance when due (whether at stated maturity, by acceleration or
otherwise) of any and all of the Secured Obligations now existing or hereafter
arising, and howsoever evidenced, Funding Company hereby pledges, assigns,
hypothecates, transfers, delivers and grants to the Collateral Agent for the
benefit of the Secured Parties, a Lien on and security interest in all of
Funding Company's rights, title and interests in and to the following property,
whether now existing or hereafter coming into existence (all being collectively
referred to herein as the "U.S. PROJECT NOTE COLLATERAL"):
(a) the U.S. Project Note, including without limitation (i) all rights
of Funding Company to receive moneys due and to become due under or
pursuant to the U.S. Project Note, (ii) all rights of Funding Company to
receive proceeds of insurance, payment and/or performance bond, indemnity,
warranty or guaranty with respect to the U.S. Project Note, (iii) all
claims of Funding Company for damages arising out of or for breach of or
default under the U.S. Project Note and (iv) any security interest in the
Depository Accounts granted to Funding Company by the U.S. Guarantors to
secure payments due under the U.S. Project Note; and
(b) to the extent not included in the foregoing, all proceeds of and to
any of the property of Funding Company described in the preceding clause
(a) and, to the extent related to any property described in said clause or
such proceeds, all books, correspondence, credit files, invoices and other
papers.
3
<PAGE>
Notwithstanding anything herein to the contrary, for purposes of this Agreement,
Funding Company agrees that it shall not be considered a Secured Party hereunder
and the amounts owed to it by the U.S. Guarantors shall not be considered
Secured Obligations.
Section 4. FURTHER ASSURANCES; REMEDIES. In furtherance of the grant of the
pledge and security interest pursuant to SECTION 3 hereof, Funding Company
hereby agrees with the Collateral Agent and each other Secured Party as follows:
4.1 DELIVERY AND OTHER PERFECTION. Funding Company shall:
(a) if any of the property required to be pledged or assigned by
Funding Company under SECTION 3 hereof is received by Funding Company
forthwith either (i) transfer and deliver to the Collateral Agent such
property so received by Funding Company (endorsed in blank and accompanied
by such instruments of assignment and transfer as the Collateral Agent may
reasonably request) all of which thereafter shall be held by the Collateral
Agent, pursuant to the terms of this Agreement and the Intercreditor
Agreement, as part of the U.S. Project Note Collateral or (ii) take such
other action as the Collateral Agent may reasonably request as is necessary
or appropriate to duly record the Lien created hereunder in such property
in said SECTION 3 hereof;
(b) give, execute, deliver, file and/or record any financing statement,
notice, instrument, document, agreement or other papers that may be
necessary or desirable to create, preserve or validate the pledge and
security interest granted pursuant hereto or to enable the Collateral Agent
to exercise and enforce its rights hereunder with respect to such pledge
and security interest, including, without limitation, causing any or all of
the U.S. Project Note Collateral to be transferred of record into the name
of the Collateral Agent or its nominee (and the Collateral Agent agrees
that if any U.S. Project Note Collateral is transferred into its name or
the name of its nominee, the Collateral Agent will thereafter promptly give
to Funding Company, copies of any notices and communications received by it
with respect to the U.S. Project Note Collateral).
(c) keep full and accurate books and records relating to the U.S.
Project Note Collateral, and stamp or otherwise mark such books and records
in such manner as the Collateral Agent may reasonably require in order to
reflect the security interests granted by this Agreement; and
(d) permit representatives of the Collateral Agent, at the expense of
Funding Company and upon five (5) days written notice, at any time during
normal business hours to inspect and make abstracts from its books and
records pertaining to the U.S. Project Note Collateral.
4
<PAGE>
4.2 OTHER FINANCING STATEMENTS AND LIENS.
(a) Other than with respect to Permitted Liens, Funding Company shall
not file or suffer to be on file, or authorize or permit to be filed or to
be on file, in any jurisdiction, any financing statement or like instrument
with respect to the U.S. Project Note Collateral in which the Collateral
Agent is not named as the sole secured party for the benefit of itself and
the other Secured Parties.
(b) Funding Company hereby authorizes the Collateral Agent to file one
or more financing statements, and amendments thereto, relating to all or
any part of the U.S. Project Note Collateral without the signature of
Funding Company where permitted by Applicable Law if necessary or
appropriate to perfect the Liens granted hereunder. Copies of such
statement or amendment thereto shall promptly be delivered to Funding
Company.
4.3 PRESERVATION OF RIGHTS. The Collateral Agent shall not be required to
take steps necessary to preserve any rights against prior parties to any of the
U.S. Project Note Collateral, including, without limitation, making
determinations as to whether, when and how to perfect a security interest in the
U.S. Project Note Collateral.
4.4 U.S. PROJECT NOTE COLLATERAL.
(a) So long as no Trigger Event shall have occurred and be continuing,
Funding Company shall have the right to exercise all rights and powers of
ownership pertaining to the U.S. Project Note Collateral; PROVIDED that
Funding Company agrees that it will not exercise such rights and powers in
any manner that is inconsistent with the terms of this Agreement or any
other Finance Document and the Collateral Agent shall execute and deliver
to Funding Company or cause to be executed and delivered to Funding Company
all such powers of attorney and other orders, and all such instruments,
without recourse, as Funding Company may reasonably request for the purpose
of enabling Funding Company to exercise the rights and powers that it is
entitled to exercise pursuant to this SECTION 4.4(a).
(b) If any Trigger Event shall have occurred and be continuing, then so
long as such Trigger Event shall continue, all payments and other
distributions in respect of the U.S. Project Note Collateral shall be paid
directly to the Collateral Agent and retained by it as part of the U.S.
Project Note Collateral, subject to the terms of this Agreement, and if the
Collateral Agent shall so request in writing, Funding Company agrees to
execute and deliver to the Collateral Agent appropriate additional orders
and documents to that end; PROVIDED that if such Trigger Event is cured,
any such payment or distribution theretofore paid to the Collateral Agent
shall, upon request of Funding Company (except to the extent
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<PAGE>
theretofore applied to the Secured Obligations), be returned by the
Collateral Agent to Funding Company.
(c) After the occurrence and during the continuance of any Trigger
Event, Funding Company shall not take any action to revoke, amend or
supersede any instructions delivered by the Collateral Agent on behalf of
Funding Company to the Guarantors or the Bond Trustee directing the
Guarantors or the Bond Trustee to make payments or other distributions
payable to Funding Company directly to the Collateral Agent.
(d) The exercise by the Collateral Agent of its rights hereunder shall
not constitute an election by the Collateral Agent to retain the U.S.
Project Note Collateral in satisfaction of the Secured Obligations or
affect the Collateral Agent's rights to any other collateral or against
Funding Company or any other Person.
4.5 EVENTS OF DEFAULT. Subject to the Intercreditor Agreement, upon the
occurrence and during the continuance of a Trigger Event.
(a) the Collateral Agent shall have all of the rights and remedies with
respect to the U.S. Project Note Collateral of a secured party under the
Uniform Commercial Code (whether or not said code is in effect in the
jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled under
the Laws in effect in any jurisdiction where any rights and remedies
hereunder may be asserted including, without limitation, the right, to the
maximum extent permitted by Applicable Law, to exercise all voting,
consensual and other powers of ownership pertaining to the U.S. Project
Note Collateral as if the Collateral Agent were the sole and absolute owner
thereof (and Funding Company agrees to take all such action as may be
appropriate to give effect to such right);
(b) the Collateral Agent in its sole discretion may, in its name or in
the name of Funding Company or otherwise, demand, sue for, collect or
receive any money or property at any time payable or receivable on account
of or in exchange for any of the U.S. Project Note Collateral, but shall be
under no obligation to do so; and
(c) the Collateral Agent may, upon ten (10) Business Days prior written
notice to Funding Company of the time and place, with respect to the U.S.
Project Note Collateral or any part thereof, sell, lease, assign or
otherwise dispose of all or any part of such U.S. Project Note Collateral,
at such place or places as the Collateral Agent reasonably deems best, and
for cash or for credit or for future delivery (without thereby assuming any
credit risk), at public or private sale, without demand of performance or
notice of intention to effect any such disposition
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or of the time or place thereof (except such notice as is required above or
by Applicable Law and cannot be waived), and the Collateral Agent or anyone
else may be the purchaser, lessee, assignee or recipient of any or all of
the U.S. Project Note Collateral so disposed of at any public sale (or, to
the extent permitted by Applicable Law, at any private sale) and thereafter
hold the same absolutely, free from any claim or right of whatsoever kind,
including any right of equity or redemption (statutory or otherwise), of
Funding Company, any such demand, notice and right or equity being hereby
expressly waived and released. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
the sale, and such sale may be made at any time or place to which the sale
may be so adjourned. The proceeds of each collection, sale or other
disposition under this SECTION 4.5 shall be applied in accordance with
SECTION 4.9 hereof.
Funding Company recognizes that, by reason of certain prohibitions contained in
the Securities Act and applicable state securities laws, the Collateral Agent
may be compelled, with respect to any sale of all or any part of the U.S.
Project Note Collateral, to limit purchasers to those who will agree, among
other things, to acquire the U.S. Project Note Collateral for their own account,
for investment purposes only and not with a view to the distribution or resale
thereof. Funding Company acknowledges that any such private sales may be at
prices and on terms less favorable to the Collateral Agent than those obtainable
by the Collateral Agent through a public sale without such restrictions, and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that the
Collateral Agent shall have no obligation to engage in public sales and no
obligation to delay the sale of any of the U.S. Project Note Collateral for the
period of time necessary for Funding Company or any issuer thereof to register
it for public sale.
4.6 DEFICIENCY. If the proceeds of sale, collection or other realization of
or upon the U.S. Project Note Collateral pursuant to SECTION 4.5 hereof are
insufficient to cover the reasonable costs and expenses of such realization and
the payment in full of the Secured Obligations, Funding Company shall, subject
to SECTION 4.18, remain liable for any deficiency.
4.7 REMOVALS. Without at least thirty (30) days' prior written notice to
the Collateral Agent, Funding Company shall not (i) maintain any of its books
and records with respect to the U.S. Project Note Collateral at any office or
maintain its principal place of business at any place other than at the address
indicated in SECTION 5.2 hereof or (ii) change its corporate name, or the name
under which it does business, from the name shown on the signature pages hereto.
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4.8 PRIVATE SALE. The Collateral Agent shall not incur any liability as a
result of the sale of the U.S. Project Note Collateral, or any part thereof, at
any private sale pursuant to SECTION 4.5 hereof conducted in a commercially
reasonable manner. To the extent permitted by Applicable Law, Funding Company
hereby waives any claims against the Collateral Agent arising by reason of the
fact that the price at which the U.S. Project Note Collateral may have been sold
at a private sale was less than the price that might have been obtained at a
public sale or was less than the aggregate amount of the Secured Obligations
even if the Collateral Agent accepts the first offer received and does not offer
such U.S. Project Note Collateral to more than one offeree.
4.9 APPLICATION OF PROCEEDS. Except as otherwise expressly provided in the
Intercreditor Agreement, the proceeds of any collection, sale or other
realization of all or any part of the U.S. Project Note Collateral pursuant
hereto, and any other cash at the time held by the Collateral Agent under this
SECTION 4, shall, after the occurrence and during the continuance of a Trigger
Event, be applied by the Collateral Agent in accordance with SECTION 4.3 of the
Intercreditor Agreement.
As used in this SECTION 4, "PROCEEDS" of U.S. Project Note Collateral shall
mean cash, securities and other property realized in respect of, and
distributions in-kind of, U.S. Project Note Collateral, including any thereof
received under any reorganization, liquidation or adjustment of debt of Funding
Company, or any issuer or obligor on any of the U.S. Project Note Collateral.
4.10 ATTORNEY-IN-FACT. Without limiting any rights or powers granted by
this Agreement to the Collateral Agent while no Event of Default has occurred
and is continuing, upon the occurrence and during the continuance of any Event
of Default, the Collateral Agent is hereby appointed the attorney-in-fact of
Funding Company for the purpose of carrying out the provisions of this SECTION 4
and taking any action and executing any instruments that the Collateral Agent
may deem necessary or advisable to accomplish the purposes hereof, which
appointment as attorney-in-fact is irrevocable and coupled with an interest.
Without limiting the generality of the foregoing, so long as the Collateral
Agent shall be entitled under this SECTION 4 to make collections in respect of
the U.S. Project Note Collateral, the Collateral Agent shall have the right and
power (subject to the Intercreditor Agreement and Depositary Agreements) to
receive, endorse and collect all instruments made payable to the order of
Funding Company representing any dividend, payment or other distribution in
respect of the U.S. Project Note Collateral or any part thereof and to give full
discharge for the same.
4.11 PERFECTION. Prior to or concurrently with the execution and delivery
of this Agreement, Funding Company shall deliver to the Collateral Agent the
U.S. Project Note accompanied by undated bond powers duly executed in blank.
8
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4.12 SECURITY INTEREST ABSOLUTE. All the rights of the Collateral Agent
hereunder and the Security Interest and all obligations of Funding Company
hereunder shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any of the Transaction
Documents or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver or any consent to any departure from any of the
Transaction Documents;
(c) any exchange or release of any U.S. Project Note Collateral or any
other collateral, or the non-perfection of any Security Interest, or any
release or amendment or waiver of or consent to or departure from any
guaranty, for all or any of the Secured Obligations;
(d) to the full extent permitted by Law, any other circumstance that
might otherwise constitute a defense available to, or a discharge of,
Funding Company or any third party pledgor; or
(e) the failure by Funding Company to fulfill its obligations under
this Agreement.
4.13 BANKRUPTCY FILING, ETC. Neither Funding Company nor any of its
Affiliates shall commence or join with any other Person (other than the Secured
Parties) in commencing any proceeding against Funding Company under any
bankruptcy, reorganization, liquidation or insolvency law or statute now or
hereafter in effect in any jurisdiction.
4.14 GOVERNMENTAL AUTHORITY REQUIREMENT. Funding Company shall not take or
omit to take (or suffer such taking or omission of) any action (unless ordered
to do so by a competent Governmental Authority having jurisdiction) in respect
of itself and its businesses if, as a consequence directly or indirectly of such
action or omission, Funding Company becomes subject to regulation by any
Governmental Authority as a "public utility," and "electric utility," an
"electric utility holding company," a "public utility company" or a subsidiary
company or affiliate of any of the foregoing under PUHCA, The Federal Power Act
of 1920 or PURPA, or as a "holding company" within the meaning of PUHCA.
4.15 INDEMNIFICATION. The U.S. Guarantors shall, jointly and severally,
defend, indemnify and hold harmless the Collateral Agent and each of the other
Secured Parties (other than Funding Company) and their officers, directors and
employees, from and against any and all costs, expenses, disbursements,
liabilities, obligations, losses, damages, injunctions, judgments, suits,
actions, causes of action, fines, penalties, claims and
9
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demands, of every kind or nature (including, without limitation, reasonable
attorney's fees and expenses) which are occasioned by or result from any (i)
failure by Funding Company to perform any of the terms, agreements or covenants
to be performed by Funding Company under this Agreement and (ii) proceeding or
action brought by the Collateral Agent pursuant to this Agreement or which arise
out of this Agreement except to the extent due to the gross negligence or
willful misconduct of the Collateral Agent.
4.16 TERMINATION. This Agreement shall create a continuing assignment,
pledge and first priority security interest in the U.S. Project Note Collateral
and shall remain in full force for the benefit of the Collateral Agent until the
Debt Termination Date. Upon such Debt Termination Date, (i) the Lien of the
Collateral Agent on the U.S. Project Note Collateral granted hereunder shall
terminate and all of the U.S. Project Note Collateral shall be released without
any further action by the Collateral Agent or any other Person and (ii) the
Collateral Agent shall forthwith cause to be assigned, transferred and
delivered, against receipt but without any recourse, warranty or representation
whatsoever, any remaining U.S. Project Note Collateral and money received in
respect thereof, to or on the order of Funding Company.
4.17 FURTHER ASSURANCES. Funding Company agrees that, from time to time,
Funding Company will execute and deliver such further documents and do such
other acts and things as are necessary or as the Collateral Agent may reasonably
request in order fully to effect the purposes of this Agreement.
4.18 LIMITATION OF LIABILITY. Notwithstanding anything herein to the
contrary, recourse for the Secured Obligations and all liabilities and
obligations arising hereunder shall be limited as provided in SECTION 11.11 of
the Indenture.
Section 5. MISCELLANEOUS.
5.1 NO WAIVER. No failure on the part of the Collateral Agent or any other
Secured Party to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Collateral Agent
or any other Secured Party of any right, power or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
5.2 NOTICES. Except as otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be sufficiently given and
shall be deemed given when delivered or mailed by registered or certified mail,
postage prepaid, or sent by overnight delivery or telecopy, addressed to Funding
Company, the Secured Parties, and the Collateral Agent at their respective
addresses specified on SCHEDULE III to
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the Indenture, or at such other address as shall be designated by such Person in
a written notice to the other parties hereto.
5.3 EXPENSES. Funding Company agrees to reimburse the Collateral Agent for
all reasonable costs and expenses of the Collateral Agent and each of the other
Secured Parties (including, without limitation, the reasonable fees and expenses
of legal counsel) in connection with (i) any Event of Default and any
enforcement or collection proceeding resulting therefrom, including, without
limitation, all manner of participation in or other involvement with (A)
performance by the Collateral Agent of any obligation of Funding Company in
respect of the U.S. Project Note Collateral that Funding Company has failed or
refused to perform, (B) bankruptcy, insolvency, receivership, foreclosure,
winding up or liquidation proceedings, or any actual or attempted sale, or any
exchange, enforcement, collection, compromise or settlement in respect of any of
the U.S. Project Note Collateral, and for the care of the U.S. Project Note
Collateral and defending or asserting rights and claims of the Collateral Agent
in respect thereof, by litigation or otherwise, (C) judicial or regulatory
proceedings and (D) workout, restructuring or other negotiations or proceedings
(whether or not the workout, restructuring or transaction contemplated thereby
is consummated) and (ii) the enforcement of this SECTION 5.3, and all such costs
and expenses shall be Secured Obligations entitled to the benefits of the
collateral security provided pursuant to SECTION 3 hereof.
5.4 AMENDMENTS. The terms of this Agreement may be waived, altered or
amended only by an instrument in writing duly executed by each of Funding
Company and the Collateral Agent (with the consent of the other Secured Parties
pursuant to the Intercreditor Agreement). Any such amendment or waiver shall be
binding upon the Collateral Agent, each holder of any of the Secured Obligations
and Funding Company.
5.5 ROLE OF COLLATERAL AGENT. The rights, duties, liabilities and
immunities of the Collateral Agent and its appointment and replacement hereunder
shall be governed by the Intercreditor Agreement and the terms and provisions of
such are expressly incorporated herein by reference thereto.
5.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the respective successors and assigns of each of Funding
Company and the Collateral Agent (PROVIDED, HOWEVER, that Funding Company shall
not assign or transfer its rights hereunder without the prior written consent of
the Collateral Agent).
5.7 HEADINGS DESCRIPTIVE. The headings of the several Sections and
subsections of this Agreement are for convenience only and shall not in any way
affect the meaning or construction of any provision of this Agreement.
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5.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which, taken together, shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
5.9 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. (a)
This Agreement is a contract made under the laws of the State of New York of the
United States and shall for all purposes be governed by and construed in
accordance with the laws of such State without regard to the conflict of law
rules thereof (other than Section 5-1401 of the New York General Obligations
Law).
(b) Any legal action or proceeding against Funding Company with
respect to this Agreement may be brought in the courts of the State of New York
in the County of New York or of the United States for the Southern District of
New York and, by execution and delivery of this Agreement, Funding Company
hereby irrevocably submits and accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Funding Company agrees that a judgment, after exhaustion of all
available appeals, in any such action or proceeding shall be conclusive and
binding upon Funding Company and may be enforced in any other jurisdiction, by a
suit upon such judgment, a certified copy of which shall be conclusive evidence
of the judgment. Funding Company hereby irrevocably designates, appoints and
empowers Corporation Service Company with offices on the date hereof at 375
Hudson Street, New York, New York 10014-3686, as its designee, appointee and
agent to receive, accept and acknowledge for and on its behalf, and in respect
of its property, service of any and all legal process, summons, notices and
documents which may be served in any such action or proceeding. If for any
reason such designee, appointee and agent shall cease to be available to act as
such, Funding Company agrees to designate a new designee, appointee and agent in
New York City on the terms and for the purposes of this provision satisfactory
to the Bond Trustee. Funding Company irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to Funding Company at its address referred to in SECTION 5.2 such
service to become effective thirty (30) days after such mailing. Nothing herein
shall affect the right of any Secured Party to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
Funding Company in any other jurisdiction.
(c) Funding Company hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Agreement in the courts
referred to in clause (b) above and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
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(d) WITH REGARD TO THIS AGREEMENT, FUNDING COMPANY, EACH SECURED PARTY
AND THE COLLATERAL AGENT HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY.
5.10 NO THIRD PARTY BENEFICIARIES. The agreements of the parties hereto are
solely for the benefit of Funding Company, the Collateral Agent and the other
Secured Parties, and no Person (other than the parties hereto and their
successors and assigns permitted hereunder) shall have any rights hereunder.
5.11 REINSTATEMENT. This Agreement and the Lien created hereunder shall
automatically be reinstated if and to the extent that for any reason any payment
by or on behalf of any of Funding Company in respect of the Secured Obligations
is rescinded or must otherwise be restored by any holder of the Secured
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and Funding Company shall indemnify the Collateral
Agent or demand for all reasonable costs and expenses (including, without
limitation, fees of counsel) incurred by the Collateral Agent in connection with
such recision or restoration.
5.12 AGENTS AND ATTORNEYS-IN-FACT. The Collateral Agent may employ agents
and attorneys-in-fact in connection herewith and shall not be responsible for
the negligence or misconduct (other than the gross negligence and willful
misconduct) of any such agents or attorneys-in-fact selected by it in good
faith.
5.13 SEVERABILITY. If any provision hereof is invalid and unenforceable in
any jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Collateral Agent in order to carry
out the intentions of the parties hereto as nearly as may be possible and (ii)
the invalidity or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any other
jurisdiction.
5.14 CONFLICTS WITH THE INTERCREDITOR AGREEMENT OR DEPOSITARY AGREEMENTS.
Notwithstanding any other provision hereof, in the event of any conflict between
the terms of this Agreement and the Intercreditor Agreement or the Depositary
Agreements, the provisions of the Intercreditor Agreement or the Depositary
Agreements will control.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as a deed by their duly authorized officers, all as of the date
first written above.
YORK POWER FUNDING (CAYMAN) LIMITED
By: /s/ Martin Couch
--------------------------
Name: Martin Couch
Title: Director
In the presence of:
/s/ Robert C. Paladino
--------------------------
Name: Robert C. Paladino
THE BANK OF NEW YORK,
as Collateral Agent
By: /s/ Joseph Ernst
--------------------------
Name: Joseph Ernst
Title: Vice President
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Acknowledged and agreed
with respect to Section 4.15
BROOKLYN NAVY YARD POWER LLC
By: B-41 ASSOCIATES, L.P.,
its Managing Member
By: B-41 Management Corporation,
its General Partner
By: /s/ Michael Trachtenberg
----------------------------------
Name: Michael Trachtenberg
Title: Vice President
WARBASSE POWER I LLC
By: COGENERATION TECHNOLOGIES, INC.
its Managing Member
By: /s/ Michael Trachtenberg
----------------------------------
Name: Michael Trachtenberg
Title: Executive Vice President
15
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WARBASSE POWER II LLC
By: YORK COGEN PARTNERS, L.P.
its Managing Member
By: RRR's VENTURES, LTD.
its General Partner
By: /s/ Michael Trachtenberg
----------------------------------
Name: Michael Trachtenberg
Title: Vice President
NEW WORLD POWER TEXAS RENEWABLE
ENERGY LIMITED PARTNERSHIP
By: BIG SPRINGS TEXAS ENERGY MANAGEMENT, INC.,
Managing General Partner
By: /s/ Michael Trachtenberg
----------------------------------
Name: Michael Trachtenberg
Title: Vice President
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<PAGE>
BOND POWER
FOR VALUE RECEIVED, YORK POWER FUNDING (CAYMAN) LIMITED hereby assigns and
transfers unto _________________________________________ one promissory note of
BROOKLYN NAVY YARD POWER LLC, a Delaware limited liability company, WARBASSE
POWER I LLC, a Delaware limited liability company, WARBASSE POWER II LLC, a
Delaware limited liability company and NEW WORLD POWER TEXAS RENEWABLE ENERGY
LIMITED PARTNERSHIP, a Delaware limited partnership, in the principal amount of
Fifty Million Dollars ($50,000,000), dated________, and does hereby irrevocably
constitute and appoint ________________________ attorney to transfer the said
promissory note with full power of substitution in the premises.
DATED:
--------------
YORK POWER FUNDING (CAYMAN) LIMITED
By: /s/ Martin Couch
--------------------------
Name: Martin Couch
Title: Director
In presence of:
/s/ Robert C. Paladino
- -----------------------
Robert C. Paladino
17
<PAGE>
U.S. PROJECT LOAN NOTE
US$50,000,000 August 4, 1998
For value received, the undersigned, BROOKLYN NAVY YARD POWER LLC, a
Delaware limited liability company (the "BNY GUARANTOR") WARBASSE POWER I LLC
("WARBASSE I"), a Delaware limited liability company, WARBASSE POWER II LLC
("WARBASSE II" and together with Warbasse I, the "WARBASSE GUARANTOR"), a
Delaware limited liability company, NEW WORLD POWER TEXAS RENEWABLE ENERGY
LIMITED PARTNERSHIP, a Delaware limited partnership (the "BIG SPRING
GUARANTOR" and, together with the BNY Guarantor and the Warbasse Guarantor,
the "U.S. GUARANTORS"), a limited partnership organized and existing under
the laws of the State of Texas, by this promissory note, jointly and
severally, promises to pay to the order of YORK POWER FUNDING (CAYMAN)
LIMITED, ("FUNDING COMPANY") a limited liability company incorporated and
existing under the laws of the Cayman Islands, at the office of The Bank of
New York, a bank organized and existing under the laws of the State of New
York, located at 101 Barclay Street, New York, New York 10286, in lawful
currency of the United States of America and in immediately available funds,
the principal amount of FIFTY MILLION DOLLARS (US$50,000,000), or if less,
the aggregate unpaid and outstanding principal amount of this U.S. Project
Note advanced by Funding Company to the U.S. Guarantors pursuant to that
certain U.S. Project Loan Agreement, dated as of August 4, 1998 (the "U.S.
PROJECT LOAN AGREEMENT"), by and among the U.S. Guarantors and Funding
Company, and as the same may be amended from time to time, and all other
amounts owned by the U.S. Guarantors to Funding Company hereunder.
This is one of the U.S. Project Notes entered into pursuant to the U.S.
Project Loan Agreement and is entitled to the benefits thereof and is subject
to all terms, provisions and conditions thereof. Capitalized terms used and
not defined herein shall have the meanings set forth in APPENDIX A of that
certain Trust Indenture, dated as of August 4, 1998 (the "INDENTURE"), by and
between Funding Company and The Bank of New York, a bank organized and
existing under the laws of the State of New York, as Bond Trustee.
Reference is hereby made to the Indenture and the Security Documents for
the provisions, among others, with respect to the custody and application of
the Collateral, the nature and extent of the security provided thereunder,
the rights, duties and obligations of the U.S. Guarantors and the rights of
the holder of this U.S. Project Note.
The principal amount hereof is payable in accordance with the U.S.
Project Loan Agreement, and such principal amount may be prepaid solely in
accordance with the U.S. Project Loan Agreement.
Each U.S. Guarantor further agrees to pay, in lawful currency of the
United States of America and in immediately available funds, interest from
the date hereof on the
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unpaid and outstanding principal amount hereof until such unpaid and
outstanding principal amount shall become due and payable (whether at stated
maturity, by acceleration or otherwise) at the rates of interest and at the
times set forth in the U.S. Project Loan Agreement, and each U.S. Guarantor
agrees to pay all other amounts due, including, without limitation, fees and
costs, as stated in the U.S. Project Loan Agreement
Upon the occurrence of any one or more U.S. Project Loan Events of Default
(as defined in Section 5.1 (Events of Default Defined)), all amounts then
remaining unpaid under this U.S. Project Note may become or be declared to be
immediately due and payable as provided in the U.S. Project Loan Agreement,
without notice of default, presentment or demand for payment, protest or
notice of nonpayment or dishonor, or notices or demands of any kind, all of
which are expressly waived by each U.S. Guarantor.
The obligations hereunder are subject to the limitations set forth in
Section 6.10 (Limitation of Liability) of the U.S. Project Loan Agreement,
the provisions of which are hereby incorporated by reference.
THIS U.S. PROJECT NOTE IS A CONTRACT MADE UNDER THE LAWS OF THE STATE OF
NEW YORK OF THE UNITED STATES OF AMERICA AND SHALL FOR ALL PURPOSES BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE WITHOUT
REGARD TO THE CONFLICT OF LAW RULES THEREOF (OTHER THAN SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW).
This U.S. Project Note may be executed in any number of counterparts, all
of which, taken together, shall constitute one and the same instrument and
any of the parties hereto may execute this U.S. Project Note by signing any
such counterpart.
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<PAGE>
IN WITNESS WHEREOF, each U.S. Guarantor has caused this U.S. Project
Note to be duly executed.
BROOKLYN NAVY YARD POWER LLC
By: B-41 ASSOCIATES, L.P.,
its Managing Member
By: B-41 MANAGEMENT CORPORATION,
its General Partner
By: /s/ Michael Trachtenberg
-----------------------------
Name: Michael Trachtenberg
Title: Vice President
WARBASSE POWER I LLC
By: COGENERATION TECHNOLOGIES, INC.
its Managing Member
By: /s/ Michael Trachtenberg
-----------------------------
Name: Michael Trachtenberg
Title: Executive Vice President
WARBASSE POWER II LLC
By: YORK COGEN PARTNERS, L.P.
its Managing Member
By: RRR'S VENTURES, LTD.
its General Partner
By: /s/ Michael Trachtenberg
-----------------------------
Name: Michael Trachtenberg
Title: Vice President
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NEW WORLD POWER TEXAS RENEWABLE ENERGY
LIMITED PARTNERSHIP
By: BIG SPRINGS TEXAS
ENERGY MANAGEMENT, INC.
Managing General Partner
By: /s/ Michael Trachtenberg
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Name: Michael Trachtenberg
Title: Vice President
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Exhibit 10(ww)
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TRINIDAD PROJECT NOTE PLEDGE AGREEMENT
DATED AS OF AUGUST 4, 1998
BETWEEN
YORK POWER FUNDING (CAYMAN) LIMITED
AND
THE BANK OF NEW YORK, AS COLLATERAL AGENT
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<TABLE>
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<S> <C>
RECITALS ...........................................................................................1
Section 1. Construction; Definitions...............................................................2
1.1 Defined Terms.....................................................................2
1.2 Principles of Construction........................................................2
Section 2. Representations and Warranties..........................................................2
Section 3. Collateral..............................................................................3
Section 4. Further Assurances; Remedies............................................................4
4.1 Delivery and Other Perfection.....................................................4
4.2 Other Financing Statements and Liens..............................................5
4.3 Preservation of Rights............................................................5
4.4 Trinidad Project Note Collateral..................................................5
4.5 Events of Default.................................................................6
4.6 Deficiency........................................................................7
4.7 Removals..........................................................................7
4.8 Private Sale......................................................................8
4.9 Application of Proceeds...........................................................8
4.10 Attorney-in-Fact..................................................................8
4.11 Perfection........................................................................8
4.12 Security Interest Absolute........................................................9
4.13 Bankruptcy Filing, etc............................................................9
4.14 Governmental Authority Requirement................................................9
4.15 Indemnification...................................................................9
4.16 Termination......................................................................10
4.17 Further Assurances...............................................................10
4.18 Limitation of Liability..........................................................10
Section 5. Miscellaneous..........................................................................10
5.1 No Waiver........................................................................10
5.2 Notices..........................................................................10
5.3 Expenses.........................................................................11
5.4 Amendments.......................................................................11
5.5 Role of Collateral Agent.........................................................11
5.6 Successors and Assigns...........................................................11
5.7 Headings Descriptive.............................................................11
5.8 Counterparts.....................................................................12
5.9 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial..................12
5.10 No Third Party Beneficiaries.....................................................13
5.11 Reinstatement....................................................................13
</TABLE>
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5.12 Agents and Attorneys-in-Fact.....................................................13
5.13 Severability.....................................................................13
5.14 Conflicts with the Intercreditor Agreement or Depositary Agreements..............13
</TABLE>
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TRINIDAD PROJECT NOTE PLEDGE AGREEMENT (this "AGREEMENT") dated as of
August 4, 1998 between YORK POWER FUNDING (CAYMAN) LIMITED, a limited liability
company incorporated under the laws of the Cayman Islands ("FUNDING COMPANY")
and THE BANK OF NEW YORK, a New York banking corporation, as collateral agent
for the benefit of the Secured Parties (together with its successors and assigns
in such capacity, the "COLLATERAL AGENT").
RECITALS
WHEREAS, Funding Company is a limited liability company
established for the sole purpose of issuing the Securities in its individual
capacity as principal and as agent acting on behalf of the U.S. Guarantors
pursuant to the Indenture and to make loans to the Project Borrowers pursuant to
the Project Loan Agreements;
WHEREAS, Funding Company has simultaneously with the execution
and delivery of this Agreement issued and sold the Initial Securities pursuant
to the Indenture;
WHEREAS, payments of the principal of, premium (if any),
interest on and any other amounts due with respect to the Initial Securities
will be partially serviced by repayment of the Trinidad Project Loan and
guaranteed by the Trinidad Guarantor;
WHEREAS, the Secured Parties, the Trinidad Finance Parties and
certain other parties are entering into a Collateral Agency and Intercreditor
Agreement appointing the Collateral Agent and setting forth certain rights and
remedies of the Collateral Agent acting on behalf of the Secured Parties with
respect to the Collateral, including, without limitation, the Trinidad
Depositary Accounts established pursuant to the Trinidad Depositary Agreement;
WHEREAS, Funding Company and the Trinidad Finance Parties are
entering into the Trinidad Depositary Agreement in order to, among other things,
appoint the Depositary Bank to hold and administer the proceeds of certain
insurance and revenues generated and distributed to Funding Company and the
Trinidad Finance Parties; and
WHEREAS, it is a condition precedent to the purchase of the
Initial Securities by the Initial Purchaser that Funding Company shall have
pledged the Trinidad Project Note Collateral (as defined below) pursuant to, and
granted the assignment and security interests contemplated by, this Agreement.
NOW, THEREFORE, in consideration of the premises and covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Funding Company hereby agrees with
the Collateral Agent for its benefit and for the benefit of the Secured Parties
as follows:
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Section 1. CONSTRUCTION; DEFINITIONS.
1.1 DEFINED TERMS.
(a) For all purposes of this Agreement, capitalized terms used
but not otherwise defined herein shall have the meaning set forth in APPENDIX A
to the Indenture.
(b) The following term shall have the following meaning:
"TRINIDAD PROJECT NOTE COLLATERAL" shall have the meaning set
forth in SECTION 3 hereof.
1.2 PRINCIPLES OF CONSTRUCTION. For all purposes of this Agreement, the
principles of construction set forth in SECTION 1.1 (Definitions; Construction)
of the Indenture shall apply.
Section 2. REPRESENTATIONS AND WARRANTIES. Funding Company represents
and warrants to the Collateral Agent and the other Secured Parties that:
(a) Funding Company is a limited liability company duly
incorporated, validly existing and in good standing under the laws of
the Cayman Islands.
(b) Funding Company has all requisite power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder.
(c) Funding Company has taken all necessary action on its part
to authorize its execution, delivery and performance of this Agreement.
(d) The execution, delivery and performance by Funding Company
of this Agreement does not and will not (i) require any consent of the
board of directors or any shareholder of Funding Company or any other
Person that has not been obtained, (ii) violate any Applicable Law,
except any such violation which could not reasonably be expected to
have a Material Adverse Effect, (iii) result in any breach of, or
constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien (other than the Liens
created hereunder) upon any of the property or assets of Funding
Company pursuant to, any of the terms or provisions of any agreement or
instrument to which it is a party or by which it or any of its property
or assets is bound or to which it may be subject, except for any
breaches, defaults, creations or impositions of Liens, contraventions,
violations or conflicts which could not reasonably be expected to have
a Material Adverse Effect or (iv) violate or conflict with any
provision of the Memorandum of Association or Articles of Association
of Funding Company.
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(e) This Agreement has been duly executed and delivered by
Funding Company and constitutes the legal, valid and binding obligation
of Funding Company, enforceable against Funding Company in accordance
with its terms except as such enforceability (i) may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws of general
applicability affecting the enforcement of creditors' rights generally
and (ii) is subject to applicable general principles of equity and the
effect of public policy (regardless of whether enforceability is
considered in a proceeding in law or equity).
(f) Funding Company is the sole beneficial owner of the
Trinidad Project Note Collateral and no Lien exists or will exist upon
the Trinidad Project Note Collateral at any time (and no right or
option to acquire the same exists in favor of any other Person), except
for Permitted Liens. The pledge and security interest created by this
Agreement constitutes, upon delivery of the Trinidad Project Note
Collateral to, and holding by, the Collateral Agent for the benefit of
itself and the other Secured Parties, a first priority perfected pledge
and security interest in and to all of the Trinidad Project Note
Collateral.
Section 3. COLLATERAL. As collateral security for the prompt payment in
full and performance when due (whether at stated maturity, by acceleration or
otherwise) of any and all of the Secured Obligations of Funding Company now
existing or hereafter arising, and howsoever evidenced, Funding Company hereby
pledges, assigns, hypothecates, transfers, delivers and grants to the Collateral
Agent for the benefit of the Secured Parties, a Lien on and security interest in
all of Funding Company's rights, title and interests in and to the following
property, whether now existing or hereafter coming into existence (all being
collectively referred to herein as the "TRINIDAD PROJECT NOTE COLLATERAL"):
(a) the Trinidad Project Note, including without limitation
(i) all rights of Funding Company to receive moneys due and to become
due under or pursuant to the Trinidad Project Note, (ii) all rights of
Funding Company to receive proceeds of insurance, payment and/or
performance bond, indemnity, warranty or guaranty with respect to the
Trinidad Project Note, (iii) all claims of Funding Company for damages
arising out of or for breach of or default under the Trinidad Project
Note and (iv) any security interest in the Depositary Accounts granted
to Funding Company by the Trinidad Project Borrower to secure payments
due under the Trinidad Project Note; and
(b) to the extent not included in the foregoing, all proceeds
of and to any of the property of Funding Company described in the
preceding clause (a) and, to the extent related to any property
described in said clause or such proceeds, all books, correspondence,
credit files, invoices and other papers.
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Notwithstanding anything herein to the contrary, for purposes of this
Agreement, Funding Company agrees that it shall not be considered a Secured
Party hereunder and the amounts owed to it by the Trinidad Project Borrower
shall not be considered Secured Obligations.
Section 4. FURTHER ASSURANCES; REMEDIES. In furtherance of the grant of
the pledge and security interest pursuant to SECTION 3 hereof, Funding Company
hereby agrees with the Collateral Agent and each other Secured Party as follows:
4.1 DELIVERY AND OTHER PERFECTION. Funding Company shall:
(a) if any of the property required to be pledged or assigned
by Funding Company under SECTION 3 hereof is received by Funding
Company forthwith either (i) transfer and deliver to the Collateral
Agent such property so received by Funding Company (endorsed in blank
and accompanied by such instruments of assignment and transfer as the
Collateral Agent may reasonably request) all of which thereafter shall
be held by the Collateral Agent, pursuant to the terms of this
Agreement and the Intercreditor Agreement, as part of the Trinidad
Project Note Collateral or (ii) take such other action as the
Collateral Agent may reasonably request as is necessary or appropriate
to duly record the Lien created hereunder in such property in said
SECTION 3 hereof;
(b) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that
may be necessary or desirable to create, preserve or validate the
pledge and security interest granted pursuant hereto or to enable the
Collateral Agent to exercise and enforce its rights hereunder with
respect to such pledge and security interest, including, without
limitation, causing any or all of the Trinidad Project Note Collateral
to be transferred of record into the name of the Collateral Agent or
its nominee (and the Collateral Agent agrees that if any Trinidad
Project Note Collateral is transferred into its name or the name of its
nominee, the Collateral Agent will thereafter promptly give to Funding
Company, copies of any notices and communications received by it with
respect to the Trinidad Project Note Collateral).
(c) keep full and accurate books and records relating to the
Trinidad Project Note Collateral, and stamp or otherwise mark such
books and records in such manner as the Collateral Agent may reasonably
require in order to reflect the security interests granted by this
Agreement; and
(d) permit representatives of the Collateral Agent, at the
expense of Funding Company and upon five (5) days written notice, at
any time during normal business hours to inspect and make abstracts
from its books and records pertaining to the Trinidad Project Note
Collateral.
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4.2 OTHER FINANCING STATEMENTS AND LIENS.
(a) Other than with respect to Permitted Liens, Funding
Company shall not file or suffer to be on file, or authorize or permit
to be filed or to be on file, in any jurisdiction, any financing
statement or like instrument with respect to the Trinidad Project Note
Collateral in which the Collateral Agent is not named as the sole
secured party for the benefit of itself and the other Secured Parties.
(b) Funding Company hereby authorizes the Collateral Agent to
file one or more financing statements, and amendments thereto, relating
to all or any part of the Trinidad Project Note Collateral without the
signature of Funding Company where permitted by Applicable Law if
necessary or appropriate to perfect the Liens granted hereunder. Copies
of such statement or amendment thereto shall promptly be delivered to
Funding Company.
4.3 PRESERVATION OF RIGHTS. The Collateral Agent shall not be required
to take steps necessary to preserve any rights against prior parties to any of
the Trinidad Project Note Collateral, including, without limitation, making
determinations as to whether, when and how to perfect a security interest in the
Trinidad Project Note Collateral.
4.4 TRINIDAD PROJECT NOTE COLLATERAL.
(a) So long as no Trigger Event shall have occurred and be
continuing, Funding Company shall have the right to exercise all
rights and powers of ownership pertaining to the Trinidad Project Note
Collateral; PROVIDED that Funding Company agrees that it will not
exercise such rights and powers in any manner that is inconsistent with
the terms of this Agreement or any other Finance Document and the
Collateral Agent shall execute and deliver to Funding Company or cause
to be executed and delivered to Funding Company all such powers of
attorney and other orders, and all such instruments, without recourse,
as Funding Company may reasonably request for the purpose of enabling
Funding Company to exercise the rights and powers that it is entitled
to exercise pursuant to this SECTION 4.4(a).
(b) If any Trigger Event shall have occurred and be
continuing, then so long as such Trigger Event shall continue, all
payments and other distributions in respect of the Trinidad Project
Note Collateral shall be paid directly to the Collateral Agent and
retained by it as part of the Trinidad Project Note Collateral, subject
to the terms of this Agreement, and if the Collateral Agent shall so
request in writing, Funding Company agrees to execute and deliver to
the Collateral Agent appropriate additional orders and documents to
that end; PROVIDED that if such Trigger Event is cured, any such
payment or distribution theretofore paid to the Collateral Agent shall,
upon request of Funding Company (except to the extent
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theretofore applied to the Secured Obligations), be returned by the
Collateral Agent to Funding Company.
(c) After the occurrence and during the continuance of any
Trigger Event, Funding Company shall not take any action to revoke,
amend or supersede any instructions delivered by the Collateral Agent
on behalf of Funding Company to the Trinidad Guarantor or the Bond
Trustee directing the Trinidad Guarantor or the Bond Trustee to make
payments or other distributions payable to Funding Company directly to
the Collateral Agent.
(d) The exercise by the Collateral Agent of its rights
hereunder shall not constitute an election by the Collateral Agent to
retain the Trinidad Project Note Collateral in satisfaction of the
Secured Obligations or affect the Collateral Agent's rights to any
other collateral or against Funding Company or any other Person.
4.5 EVENTS OF DEFAULT. Subject to the Intercreditor Agreement, upon the
occurrence and during the continuance of a Trigger Event:
(a) the Collateral Agent shall have all of the rights and
remedies with respect to the Trinidad Project Note Collateral of a
secured party under the Uniform Commercial Code (whether or not said
code is in effect in the jurisdiction where the rights and remedies are
asserted) and such additional rights and remedies to which a secured
party is entitled under the Applicable Laws in effect in any
jurisdiction where any rights and remedies hereunder may be asserted
including, without limitation, the right, to the maximum extent
permitted by Applicable Law, to exercise all voting, consensual and
other powers of ownership pertaining to the Trinidad Project Note
Collateral as if the Collateral Agent were the sole and absolute owner
thereof (and Funding Company agrees to take all such action as may be
appropriate to give effect to such right);
(b) the Collateral Agent in its sole discretion may, in its
name or in the name of Funding Company or otherwise, demand, sue for,
collect or receive any money or property at any time payable or
receivable on account of or in ex change for any of the Trinidad
Project Note Collateral, but shall be under no obligation to do so; and
(c) the Collateral Agent may, upon ten (10) Business Days
prior written notice to Funding Company of the time and place, with
respect to the Trinidad Project Note Collateral or any part thereof,
sell, lease, assign or other wise dispose of all or any part of such
Trinidad Project Note Collateral, at such place or places as the
Collateral Agent reasonably deems best, and for cash or for credit or
for future delivery (without thereby assuming any credit risk), at
public
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or private sale, without demand of performance or notice of intention
to effect any such disposition or of the time or place thereof (except
such notice as is required above or by Applicable Law and cannot be
waived), and the Collateral Agent or anyone else may be the purchaser,
lessee, assignee or recipient of any or all of the Trinidad Project
Note Collateral so disposed of at any public sale (or, to the extent
permitted by Applicable Law, at any private sale) and thereafter hold
the same absolutely, free from any claim or right of whatsoever kind,
including any right of equity or redemption (statutory or otherwise),
of Funding Company, any such demand, notice and right or equity being
hereby expressly waived and released. The Collateral Agent may, without
notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time or
place to which the sale may be so adjourned. The proceeds of each
collection, sale or other disposition under this SECTION 4.5 shall be
applied in accordance with SECTION 4.9 hereof.
Funding Company recognizes that, by reason of certain prohibitions contained in
the Securities Act and applicable state securities laws, the Collateral Agent
may be compelled, with respect to any sale of all or any part of the Trinidad
Project Note Collateral, to limit purchasers to those who will agree, among
other things, to acquire the Trinidad Project Note Collateral for their own
account, for investment purposes only and not with a view to the distribution or
resale thereof. Funding Company acknowledges that any such private sales may be
at prices and on terms less favorable to the Collateral Agent than those
obtainable by the Collateral Agent through a public sale without such
restrictions, and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner and that the Collateral Agent shall have no obligation to engage in
public sales and no obligation to delay the sale of any of the Trinidad Project
Note Collateral for the period of time necessary for Funding Company or any
issuer thereof to register it for public sale.
4.6 DEFICIENCY. If the proceeds of sale, collection or other
realization of or upon the Trinidad Project Note Collateral pursuant to SECTION
4.5 hereof are insufficient to cover the reasonable costs and expenses of such
realization and the payment in full of the Secured Obligations, Funding Company
shall, subject to SECTION 4.18, remain liable for any deficiency.
4.7 REMOVALS. Without at least thirty (30) days' prior written notice
to the Collateral Agent, Funding Company shall not (i) maintain any of its books
and records with respect to the Trinidad Project Note Collateral at any office
or maintain its principal place of business at any place other than at the
address indicated in SECTION 5.2 hereof or (ii) change its corporate name, or
the name under which it does business, from the name shown on the signature
pages hereto.
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4.8 PRIVATE SALE. The Collateral Agent shall not incur any liability as
a result of the sale of the Trinidad Project Note Collateral, or any part
thereof, at any private sale pursuant to SECTION 4.5 hereof conducted in a
commercially reasonable manner. To the extent permitted by Applicable Law,
Funding Company hereby waives any claims against the Collateral Agent arising by
reason of the fact that the price at which the Trinidad Project Note Collateral
may have been sold at a private sale was less than the price that might have
been obtained at a public sale or was less than the aggregate amount of the
Secured Obligations even if the Collateral Agent accepts the first offer
received and does not offer such Trinidad Project Note Collateral to more than
one offeree.
4.9 APPLICATION OF PROCEEDS. Except as otherwise expressly provided in
the Intercreditor Agreement, the proceeds of any collection, sale or other
realization of all or any part of the Trinidad Project Note Collateral pursuant
hereto, and any other cash at the time held by the Collateral Agent under this
SECTION 4, shall, after the occurrence and during the continuance of a Trigger
Event, be applied by the Collateral Agent in accordance with SECTION 4.3 of the
Intercreditor Agreement.
As used in this SECTION 4, "PROCEEDS" of Trinidad Project Note
Collateral shall mean cash, securities and other property realized in respect
of, and distributions in-kind of, Trinidad Project Note Collateral, including
any thereof received under any reorganization, liquidation or adjustment of
debt of Funding Company, or any issuer or obligor on any of the Trinidad Project
Note Collateral.
4.10 ATTORNEY-IN-FACT. Without limiting any rights or powers granted by
this Agreement to the Collateral Agent while no Event of Default has occurred
and is continuing, upon the occurrence and during the continuance of any Event
of Default, the Collateral Agent is hereby appointed the attorney-in-fact of
Funding Company for the purpose of carrying out the provisions of this SECTION 4
and taking any action and executing any instruments that the Collateral Agent
may deem necessary or advisable to accomplish the purposes hereof, which
appointment as attorney-in-fact is irrevocable and coupled with an interest.
Without limiting the generality of the foregoing, so long as the Collateral
Agent shall be entitled under this SECTION 4 to make collections in respect of
the Trinidad Project Note Collateral, the Collateral Agent shall have the right
and power (subject to the Intercreditor Agreement and Depositary Agreements) to
receive, endorse and collect all instruments made payable to the order of
Funding Company representing any dividend, payment or other distribution in
respect of the Trinidad Project Note Collateral or any part thereof and to give
full discharge for the same.
4.11 PERFECTION. Prior to or concurrently with the execution and
delivery of this Agreement, Funding Company shall deliver to the Collateral
Agent the Trinidad Project Note accompanied by undated bond powers duly executed
in blank.
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4.12 SECURITY INTEREST ABSOLUTE. All the rights of the Collateral Agent
hereunder and the security interest and all obligations of Funding Company
hereunder shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any of the
Transaction Documents or any other agreement or instrument relating
thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations, or any
other amendment or waiver or any consent to any departure from any of
the Transaction Documents;
(c) any exchange or release of any Trinidad Project Note
Collateral or any other collateral, or the non-perfection of any
Security Interest, or any release or amendment or waiver of or consent
to or departure from any guaranty, for all or any of the Secured
Obligations;
(d) to the full extent permitted by Applicable Law, any other
circumstance that might otherwise constitute a defense available to,
or a discharge of, Funding Company or any third party pledgor; or
(e) the failure by Funding Company to fulfill its obligations
under this Agreement.
4.13 BANKRUPTCY FILING, ETC. Neither Funding Company nor any of its
Affiliates shall commence or join with any other Person (other than the Secured
Parties) in commencing any proceeding against Funding Company under any
bankruptcy, reorganization, liquidation or insolvency law or statute now or
hereafter in effect in any jurisdiction.
4.14 GOVERNMENTAL AUTHORITY REQUIREMENT. Funding Company shall not take
or omit to take (or suffer such taking or omission of) any action (unless
ordered to do so by a competent Governmental Authority having jurisdiction) in
respect of itself and its businesses if, as a consequence directly or indirectly
of such action or omission, Funding Company becomes subject to regulation by any
Governmental Authority as a "public utility," and "electric utility," an
"electric utility holding company," a "public utility company" or a subsidiary
company or affiliate of any of the foregoing under PUHCA, The Federal Power Act
of 1920 or PURPA, or as a "holding company" within the meaning of PUHCA.
4.15 INDEMNIFICATION. The Trinidad Project Borrower shall defend,
indemnify and hold harmless the Collateral Agent and each of the other Secured
Parties (other than Funding Company) and their officers, directors and
employees, from and against any and all costs, expenses, disbursements,
liabilities, obligations, losses, damages, injunctions, judgments, suits,
actions, causes of action, fines, penalties, claims and demands, of every
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kind or nature (including, without limitation, reasonable attorney's fees and
expenses) which are occasioned by or result from any (i) failure by Funding
Company to perform any of the terms, agreements or covenants to be performed by
Funding Company under this Agreement and (ii) proceeding or action brought by
the Collateral Agent pursuant to this Agreement or which arise out of this
Agreement except to the extent due to the gross negligence or willful misconduct
of the Collateral Agent.
4.16 TERMINATION. This Agreement shall create a continuing assignment,
pledge and first priority security interest in the Trinidad Project Note
Collateral and shall remain in full force for the benefit of the Collateral
Agent until the Debt Termination Date. Upon such Debt Termination Date, (i) the
Lien of the Collateral Agent on the Trinidad Project Note Collateral granted
hereunder shall terminate and all of the Trinidad Project Note Collateral shall
be released without any further action by the Collateral Agent or any other
Person and (ii) the Collateral Agent shall forthwith cause to be assigned,
transferred and delivered, against receipt but without any recourse, warranty or
representation whatsoever, any remaining Trinidad Project Note Collateral and
money received in respect thereof, to or on the order of Funding Company.
4.17 FURTHER ASSURANCES. Funding Company agrees that, from time to
time, Funding Company will execute and deliver such further documents and do
such other acts and things as are necessary or as the Collateral Agent may
reasonably request in order fully to effect the purposes of this Agreement.
4.18 LIMITATION OF LIABILITY. Notwithstanding anything herein to the
contrary, recourse for the Secured Obligations and all liabilities and
obligations arising hereunder shall be limited as provided in SECTION 11.11 of
the Indenture.
Section 5. MISCELLANEOUS.
5.1 NO WAIVER. No failure on the part of the Collateral Agent or any
other Secured Party to exercise, and no course of dealing with respect to, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Collateral Agent
or any other Secured Party of any right, power or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
5.2 NOTICES. Except as otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be sufficiently given and
shall be deemed given when delivered or mailed by registered or certified mail,
postage prepaid, or sent by overnight delivery or telecopy, addressed to Funding
Company, the Secured Parties, and the Collateral Agent at their respective
addresses specified on SCHEDULE III to
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the Indenture, or at such other address as shall be designated by such Person in
a written notice to the other parties hereto.
5.3 EXPENSES. Funding Company agrees to reimburse the Collateral Agent
for all reasonable costs and expenses of the Collateral Agent and each of the
other Secured Parties (including, without limitation, the reasonable fees and
expenses of legal counsel) in connection with (i) any Event of Default and any
enforcement or collection proceeding resulting therefrom, including, without
limitation, all manner of participation in or other involvement with (A)
performance by the Collateral Agent of any obligation of Funding Company in
respect of the Trinidad Project Note Collateral that Funding Company has failed
or refused to perform, (B) bankruptcy, insolvency, receivership, foreclosure,
winding up or liquidation proceedings, or any actual or attempted sale, or any
exchange, enforcement, collection, compromise or settlement in respect of any of
the Trinidad Project Note Collateral, and for the care of the Trinidad Project
Note Collateral and defending or asserting rights and claims of the Collateral
Agent in respect thereof, by litigation or otherwise, (C) judicial or regulatory
proceedings and (D) workout, restructuring or other negotiations or proceedings
(whether or not the workout, restructuring or transaction contemplated thereby
is consummated) and (ii) the enforcement of this SECTION 5.3, and all such costs
and expenses shall be Secured Obligations entitled to the benefits of the
collateral security provided pursuant to SECTION 3 hereof.
5.4 AMENDMENTS. The terms of this Agreement may be waived, altered or
amended only by an instrument in writing duly executed by each of Funding
Company and the Collateral Agent (with the consent of the other Secured Parties
pursuant to the Intercreditor Agreement). Any such amendment or waiver shall be
binding upon the Collateral Agent, each holder of any of the Secured Obligations
and Funding Company.
5.5 ROLE OF COLLATERAL AGENT. The rights, duties, liabilities and
immunities of the Collateral Agent and its appointment and replacement hereunder
shall be governed by the Intercreditor Agreement and the terms and provisions of
such are expressly incorporated herein by reference thereto.
5.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of each of Funding
Company and the Collateral Agent (PROVIDED, HOWEVER, that Funding Company shall
not assign or transfer its rights hereunder without the prior written consent of
the Collateral Agent).
5.7 HEADINGS DESCRIPTIVE. The headings of the several Sections and
subsections of this Agreement are for convenience only and shall not in any way
affect the meaning or construction of any provision of this Agreement.
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5.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which, taken together, shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
5.9 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) This Agreement is a contract made under the laws of the State of New York of
the United States and shall for all purposes be governed by and construed in
accordance with the laws of such State without regard to the conflict of law
rules thereof (other than Section 5-1401 of the New York General Obligations
Law).
(b) Any legal action or proceeding against Funding Company
with respect to this Agreement may be brought in the courts of the State of New
York in the County of New York or of the United States District Court for the
Southern District of New York and, by execution and delivery of this Agreement,
Funding Company hereby irrevocably submits and accepts for itself and in respect
of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Funding Company agrees that a judgment, after exhaustion of
all available appeals, in any such action or proceeding shall be conclusive and
binding upon Funding Company and may be enforced in any other jurisdiction, by a
suit upon such judgment, a certified copy of which shall be conclusive evidence
of the judgment. Funding Company hereby irrevocably designates, appoints and
empowers Corporation Service Company with offices on the date hereof at 375
Hudson Street, New York, New York 10014-3686, as its designee, appointee and
agent to receive, accept and acknowledge for and on its behalf, and in respect
of its property, service of any and all legal process, summons, notices and
documents which may be served in any such action or proceeding. If for any
reason such designee, appointee and agent shall cease to be available to act as
such, Funding Company agrees to designate a new designee, appointee and agent in
New York City on the terms and for the purposes of this provision satisfactory
to the Bond Trustee. Funding Company irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to Funding Company at its address referred to in SECTION 5.2 such
service to become effective thirty (30) days after such mailing. Nothing herein
shall affect the right of any Secured Party to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
Funding Company in any other jurisdiction.
(c) Funding Company hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement in the courts referred to in clause (b) above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum.
12
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(d) WITH REGARD TO THIS AGREEMENT, FUNDING COMPANY, EACH
SECURED PARTY AND THE COLLATERAL AGENT HEREBY WAIVE THE RIGHT TO A TRIAL BY
JURY.
5.10 NO THIRD PARTY BENEFICIARIES. The agreements of the parties hereto
are solely for the benefit of Funding Company, the Collateral Agent and the
other Secured Parties, and no Person (other than the parties hereto and their
successors and assigns permitted hereunder) shall have any rights hereunder.
5.11 REINSTATEMENT. This Agreement and the Lien created hereunder shall
automatically be reinstated if and to the extent that for any reason any payment
by or on behalf of any of Funding Company in respect of the Secured Obligations
is rescinded or must otherwise be restored by any holder of the Secured
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and Funding Company shall indemnify the Collateral
Agent or demand for all reasonable costs and expenses (including, without
limitation, fees of counsel) incurred by the Collateral Agent in connection with
such recision or restoration.
5.12 AGENTS AND ATTORNEYS-IN-FACT. The Collateral Agent may employ
agents and attorneys-in-fact in connection herewith and shall not be responsible
for the negligence or misconduct (other than the gross negligence or willful
misconduct) of any such agents or attorneys-in-fact selected by it in good
faith.
5.13 SEVERABILITY. If any provision hereof is invalid and unenforceable
in any jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Collateral Agent in order to carry
out the intentions of the parties hereto as nearly as may be possible and (ii)
the invalidity or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any other
jurisdiction.
5.14 CONFLICTS WITH THE INTERCREDITOR AGREEMENT OR DEPOSITARY
AGREEMENTS. Notwithstanding any other provision hereof, in the event of any
conflict between the terms of this Agreement and the Intercreditor Agreement or
the Depositary Agreements, the provisions of the Intercreditor Agreement or the
Depositary Agreements will control.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as a deed by their duly authorized officers, all
as of the date first written above.
YORK POWER FUNDING (CAYMAN)
LIMITED
By: /s/ Martin Couch
--------------------------------
Name: Martin Couch
Title: Director
In the presence of:
/s/ Robert C. Paladino
-----------------------------------
Name: Robert C. Paladino
THE BANK OF NEW YORK,
as Collateral Agent
By: /s/ Joseph Ernst
--------------------------------
Name: JOSEPH ERNST
Title: VICE PRESIDENT
Acknowledged and agreed
with respect to Section 4.15
YORK EX INTERNATIONAL SRL
By: /S/ Robert C. Paladino
----------------------------
Name: Robert C. Paladino
Title: Vice President
14
<PAGE>
BOND POWER
FOR VALUE RECEIVED, YORK POWER FUNDING (CAYMAN) LIMITED hereby assigns
and transfers unto _________________________________________ one promissory note
of YORK EX INTERNATIONAL SRL, a Barbados exempt society with restricted
liability, in the principal amount of One Hundred Millon Dollars ($100,000,000),
dated August 4, 1998, and does hereby irrevocably constitute and appoint
________________________ attorney to transfer the said promissory note with full
power of substitution in the premises.
DATED:
----------------------
YORK POWER FUNDING (CAYMAN)
LIMITED
By: /S/ Martin Couch
--------------------------------
Name: Martin Couch
Title: Director
In presence of:
- ---------------------
15
<PAGE>
EXHIBIT A
TRINIDAD PROJECT NOTE
US$100,000,000 August 4, 1998
For value received, the undersigned, YORK EX INTERNATIONAL
SRL, a Barbados exempt society with restricted liability (the "TRINIDAD
PROJECT BORROWER"), by this promissory note promises to pay to the order of
York Power Funding (Cayman) Limited, ("FUNDING COMPANY") a limited liability
company incorporated and existing under the laws of the Cayman Islands, at
the office of The Bank of New York, a bank organized and existing under the
laws of the State of New York, located at 101 Barclay Street, New York, New
York 10286, in lawful currency of the United States of America and in
immediately available funds, the principal amount of ONE HUNDRED MILLION
DOLLARS (US$100,000,000), or if less, the aggregate unpaid and outstanding
principal amount of this Trinidad Project Note advanced by Funding Company to
the Trinidad Project Borrower pursuant to that certain Trinidad Project Loan
Agreement, dated as of August 4, 1998 (the "TRINIDAD PROJECT LOAN
AGREEMENT"), by and among the Trinidad Project Borrower and Funding Company,
and as the same may be amended from time to time, and all other amounts owed
by the Trinidad Project Borrower to Funding Company hereunder.
This is one of the Trinidad Project Notes entered into
pursuant to the Trinidad Project Loan Agreement and is entitled to the benefits
thereof and is subject to all terms, provisions and conditions thereof.
Capitalized terms used and not defined herein shall have the meanings set forth
in APPENDIX A of that certain Trust Indenture, dated as of August 4, 1998 (the
"INDENTURE"), by and between Funding Company and The Bank of New York, a bank
organized and existing under the laws of the State of New York, as Bond Trustee.
Reference is hereby made to the Indenture and the Security
Documents for the provisions, among others, with respect to the custody and
application of the Collateral, the nature and extent of the security provided
thereunder, the rights, duties and obligations of the Trinidad Project Borrower
and the rights of the holder of this Trinidad Project Note.
The principal amount hereof is payable in accordance with the
Trinidad Project Loan Agreement, and such principal amount may be prepaid solely
in accordance with the Trinidad Project Loan Agreement.
The Trinidad Project Borrower further agrees to pay, in lawful
currency of the United States of America and in immediately available funds,
interest from the date hereof on the unpaid and outstanding principal amount
hereof until such unpaid and outstand ing principal amount shall become due and
payable (whether at stated maturity, by accelera tion or otherwise) at the rates
of interest and at the times set forth in the Trinidad Project Loan Agreement,
and the Trinidad Project Borrower agrees to pay all other amounts
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due, including, without limitation, fees and costs, as stated in the Trinidad
Project Loan Agreement.
Upon the occurrence of any one or more Trinidad Events of
Default (as defined in SECTION 5.1 (Events of Default Defined)), all amounts
then remaining unpaid under this Trinidad Project Note may become or be declared
to be immediately due and payable as provided in the Trinidad Project Loan
Agreement, without notice of default, presentment or demand for payment, protest
or notice of nonpayment or dishonor, or notices or demands of any kind, all of
which are expressly waived by the Trinidad Project Borrower.
The obligations hereunder are subject to the limitations set
forth in SECTION 6.10 (Limitation of Liability) of the Trinidad Project Loan
Agreement, the provisions of which are hereby incorporated by reference.
THIS TRINIDAD PROJECT NOTE IS A CONTRACT MADE UNDER THE LAWS
OF THE STATE OF NEW YORK OF THE UNITED STATES OF AMERICA AND SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE
WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF (OTHER THAN SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW).
This Trinidad Project Note may be executed in any number of
counterparts, all of which, taken together, shall constitute one and the same
instrument and any of the parties hereto may execute this Trinidad Project Note
by signing any such counterpart.
A-2
<PAGE>
IN WITNESS WHEREOF, the Trinidad Project Borrower has caused
this Trinidad Project Note to be duly executed.
YORK EX INTERNATIONAL SRL
By: Robert C. Paladino
----------------------------------
Name: Robert C. Paladino
Title: Vice President
A-3
<PAGE>
Exhibit 10(xx)
TRINIDAD U.S. PLEDGE AGREEMENT
(PLEDGE OF INTEREST IN YORK T&T HOLDINGS, INC.)
This TRINIDAD U.S. PLEDGE AGREEMENT (this "Pledge Agreement"),
dated as of August 4, 1998, is entered into by YORK RESEARCH CORPORATION, a
Delaware corporation (the "Pledgor"), in favor of THE BANK OF NEW YORK, a New
York banking corporation, as trustee under that certain Indenture described in
the recitals below, and as collateral agent under the Intercreditor Agreement
for the benefit of the Secured Parties (in such capacity, the "Collateral
Agent").
W I T N E S S E T H:
WHEREAS, the Pledgor owns a one hundred percent (100%) equity
interest in York T&T Holdings, Inc., a Delaware corporation (the "Company");
WHEREAS, York Power Funding (Cayman) Limited (the "Funding
Company") is a limited liability company organized under the laws of the Cayman
Islands for the sole purpose of issuing the Securities pursuant to the Indenture
and making loans to the Project Borrowers from the proceeds of such issuance;
WHEREAS, the Funding Company has on the date hereof issued and
sold Securities in the principal amount of $160 million;
WHEREAS, the principal and interest payments on the Securities
will be partially serviced by repayment of a loan made by the Funding Company to
the Trinidad Project Borrower and guaranteed by the Trinidad Guarantor, subject
to the conditions set forth in the Finance Documents;
WHEREAS, the Funding Company will loan $100 million of the
proceeds of issuance of the Securities to the Trinidad Project Borrower, which
will be contributed by the Trinidad Project Borrower to the Trinidad Guarantor
and will be loaned by the Trinidad Guarantor to the Trinidad Obligor pursuant to
the Trinidad Loan Agreement; and
WHEREAS, the Pledgor anticipates benefiting directly and
indirectly from the making of the Trinidad Project Loan by the Funding Company
to the Trinidad Project Borrower pursuant to the Trinidad Project Loan Agreement
and is, therefore, willing to enter into this Pledge Agreement in accordance
with the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Funding
Company to enter into the Trinidad Project Loan Agreement, the parties hereto
hereby agree as follows:
1. DEFINITIONS.
(a) Unless otherwise defined herein, all capitalized
terms shall have the meanings set forth in Appendix A to the Indenture,
which Appendix A is hereby incorporated by reference. All references to
sections, schedules and exhibits in or to this Pledge Agreement are to
<PAGE>
sections, schedules and exhibits in or to this Pledge Agreement, unless
otherwise specified. The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Pledge Agreement shall refer
to this Pledge Agreement as a whole and not to any particular provision
of this Pledge Agreement. For purposes of this Pledge Agreement, all
other terms used herein and not otherwise defined herein which are
defined in Article 9 of the Uniform Commercial Code (as the same may be
in effect in the State of New York or any other applicable
jurisdiction, the "UCC"), shall have their respective meanings as
therein defined.
(b) The following terms used herein shall have the
following meanings:
"Collateral" has the meaning set forth in SECTION 2.1
herein.
"Company" means York T&T Holdings, Inc., a Delaware
corporation.
"Exculpated Parties" has the meaning set forth in
SECTION 21.1 herein.
"Obligations" has the meaning set forth in SECTION
2.2 herein.
"Pledgor" means York Research Corporation, a Delaware
corporation.
"Security Interest" has the meaning set forth in
SECTION 2.1 herein.
"UCC" means Article 9 of the Uniform Commercial Code,
as the same may be in effect in the State of New York or any other
applicable jurisdictions.
2. GRANT OF SECURITY INTEREST.
2.1. COLLATERAL. As security for the prompt and
complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of any and all of the Obligations (as defined below)
now existing or hereafter arising, and howsoever evidenced, the Pledgor hereby
collaterally assigns, conveys, mortgages, pledges, hypothecates and transfers to
the Collateral Agent, and grants and creates a lien on and first priority
security interest (the "Security Interest") in favor of the Collateral Agent,
for the equal and ratable benefit of the Secured Parties, in all right, title
and interest of the Pledgor in, to and under the following, whether now existing
or hereafter acquired (collectively, the "Collateral"):
(a) its seventy-nine percent (79%) equity interest in
the Company, including, without limitation, to the extent assignable or
transferable, all of its right, title and interest as a shareholder to
participate in the operation or management and control of the Company;
(b) all present and future rights of the Pledgor to
receive any payment of money or other distribution or payment arising
out of or in connection with its equity interest in the Company; and
(c) to the extent not otherwise included, all
proceeds, products and accessions of and to any and all of the
foregoing, including, without limitation, "proceeds" as defined in
Section 9-306(1) of the Code, including whatever is received upon any
sale, exchange, collection or other disposition of any of the
Collateral, and any property into which any of the Collateral is
converted, whether cash or non-cash proceeds, and any and all other
amounts paid or payable under or in connection with any of the
Collateral.
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<PAGE>
2.2. OBLIGATIONS. This Pledge Agreement secures, in
accordance with the provisions hereof, the following obligations, now existing
or hereafter arising (collectively, the "Obligations"):
(a) payment and performance of the Company's
obligations, indebtedness, covenants and agreements of the Company
under any of the Finance Documents to which it is a party, including,
without limitation, this Pledge Agreement and any amendments or
supplements thereto, extensions or renewals thereof or replacements
therefor; and
(b) performance of every obligation, covenant and
agreement of the Company contained in any agreement now or hereafter
executed by the Company which recites that the obligations thereunder
are secured by this Pledge Agreement; in each case whether direct or
indirect, joint or several, absolute or contingent, liquidated or
unliquidated, now or hereafter existing, renewed or restructured,
reinstated, created or incurred, and, including, without limitation,
all indebtedness of the Pledgor under any instrument now or hereafter
evidencing or securing any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby
represents and warrants as follows:
3.1. ORGANIZATION AND EXISTENCE. The Company is a
corporation in which the Pledgor owns a one hundred percent (100%) equity
interest. The Pledgor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Pledgor is duly
qualified to do business and is in good standing in each other jurisdiction in
which the character of the properties owned or leased by it or in which the
transaction of its business as presently conducted or proposed to be conducted
makes such qualification necessary or desirable, except when the failure to be
so qualified would not have a Material Adverse Effect. The Pledgor has full
power and authority to own its property and to carry on its business as now
being conducted and as proposed to be conducted.
3.2. AUTHORITY, ENFORCEABILITY. The Pledgor has full
power and authority to enter into and perform this Pledge Agreement and the
entering into and performance of such agreement by the Pledgor has been duly
authorized by all proper and necessary action. Such agreement, when executed and
delivered by the Pledgor and any other party thereto, will constitute the legal,
valid and binding obligation of the Pledgor, enforceable in accordance with its
respective terms, except as enforceability may be limited by bankruptcy or other
laws involving auditors rights or general principles of equity.
3.3. NO CONFLICT. Neither the execution, delivery and
performance of this Pledge Agreement nor of any other Transaction Document to
which the Pledgor is a party nor the consummation of any of the transactions
contemplated hereby or thereby (a) contravenes or violates any provision of any
Applicable Law to which the Pledgor or any of its assets is subject, (b)
conflicts with or is inconsistent with, will result in a breach of any of the
terms, covenants, conditions or provisions of, constitutes a default under, or
results in the acceleration of Indebtedness evidenced by, any agreement or
instrument to which the Pledgor is a party or by which it or any of its
properties or assets is bound or to which it may be subject, except, in the case
of this clause (b), any such conflict, violation, breach, default or
acceleration which could not reasonably be expected to result in a Material
Adverse Effect or (c) results in the creation or imposition of (or the
obligations to create or impose) any Lien upon any of the properties or assets
of the Pledgor.
3.4. TITLE; NO OTHER LIENS. The Pledgor is the legal
and beneficial owner of the Collateral in existence on the date hereof and will
be the sole owner of the Collateral hereafter acquired, free and clear of any
and all Liens or claims of others, and the Pledgor has full power and authority
to
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<PAGE>
grant the liens and security interests in and to the Collateral hereunder.
Except with respect to the Secured Parties and as required under this Pledge
Agreement, no security agreement, financing statement or other public notice
with respect to all or any part of the Collateral is on file or of record in any
public office, and no lien or security interest on or in the Collateral has been
registered in the registration book maintained by the Company in which all
equity interests of the Company are recorded, except such as may have been filed
in favor of Collateral Agent for the benefit of the Secured Parties pursuant to
this Pledge Agreement.
3.5. PERFECTION; REGISTRATION OF LIEN. Financing
statements or other appropriate instruments have been filed or deposited for
filing pursuant to the Code in such public offices as may be necessary to
perfect any Security Interest granted or purported to be granted hereby to the
extent any such Security Interest may be perfected by the filing of a financing
statement. All other action by the Pledgor and, to the Pledgor's knowledge, by
any other Person necessary or desirable to perfect the Security Interest in each
item of the Collateral has been duly taken. Subject to the requirements
contained in the Code with respect to the filing of continuation statements,
this Pledge Agreement constitutes a valid and continuing Lien on and perfected
Security Interest in the Collateral in favor of the Collateral Agent for the
equal and ratable benefit of the Secured Parties, superior and prior to the
rights of all Persons, whether the Collateral subject to the Security Interest
is now owned by the Pledgor or is hereafter acquired.
3.6. NO DEFAULT. The Pledgor is not in default in the
performance, observance or fulfillment of any of the material obligations,
covenants or conditions applicable to the Pledgor contained in any Finance
Document to which it is a party.
3.7. CHIEF EXECUTIVE OFFICE AND PRINCIPAL PLACE OF
BUSINESS. The Pledgor's chief executive office and principal place of business
and the place where the Pledgor's records concerning the Collateral are kept is
York Research Corporation, 280 Park Avenue, Suite 2700W, New York, New York
10017.
4. COVENANTS AND AGREEMENTS. The Pledgor hereby covenants and
agrees that the Pledgor shall faithfully observe and fulfill, and shall cause to
be observed and fulfilled, each and all of the following covenants until the
Debt Termination Date:
4.1. FURTHER ASSURANCES. The Pledgor shall, from time
to time at the Trinidad Guarantor's expense, and upon request by the Collateral
Agent on behalf of the Secured Parties, promptly execute and deliver all further
instruments and documents, and take all further action that may be reasonably
necessary or advisable, or that the Collateral Agent reasonably determines may
be necessary, in order to perfect and protect the Security Interest granted or
purported to be granted hereby or to enable the Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to the Collateral.
4.2. CERTIFICATED INTEREST. If the Pledgor shall
become entitled to receive or shall receive any certificate, instrument, option
or rights, whether as an addition to, in substitution of, or in exchange for the
Collateral or any part thereof, or otherwise, the Pledgor shall accept any such
certificate, instrument, option or rights as the Collateral Agent's agent, shall
hold them in trust for the Collateral Agent, and shall deliver them forthwith to
the Collateral Agent in the exact form received, with the Pledgor's endorsement
when necessary, or accompanied by duly executed instruments of transfer or
assignment in blank or, if requested by the Collateral Agent, an additional
pledge agreement or security agreement executed and delivered by the Pledgor,
all in form and substance satisfactory to the Collateral Agent, to be held by
the Collateral Agent, subject to the terms hereof, as further Collateral for the
Obligations.
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<PAGE>
4.3. CHANGE IN LOCATION, NAME, ETC. The Pledgor may
change the location of its chief executive office, principal place of business
or the office where such records are kept to another location in the United
States after giving the Collateral Agent thirty (30) days' advance written
notice of such change. Without the prior written consent of the Collateral
Agent, the Pledgor shall not adopt any trade name or fictitious business name.
4.4. LIMITATION ON LIENS ON THE COLLATERAL. The
Pledgor shall not create, incur or permit to exist, shall defend the Collateral
now owned or hereafter acquired by it against, and shall take such other action
as is necessary to remove, any Lien or claim on or to the Collateral, and shall
defend the right, title and interest of the Collateral Agent in and to any of
the Collateral against the claims and demands of all Persons whomsoever.
4.5. BANKRUPTCY FILING, ETC. To the maximum extent
permitted by law, the Pledgor shall not authorize or permit the Company (a) to
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to the Company or the Company's
debts under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of the Company or any substantial part of the
Company's property, (b) to consent to any such relief or to the appointment of
or taking possession by any such official in an involuntary case or other
proceeding commenced against the Company or (c) to make a general assignment for
the benefit of the Company's creditors. Neither the Pledgor nor any of its
Affiliates shall commence or join with any other Person (other than the Secured
Parties) in commencing any proceeding against the Company under any bankruptcy,
reorganization, liquidation or insolvency law or statute now or hereafter in
effect in any jurisdiction.
4.6. OBLIGATIONS. The Pledgor acknowledges and agrees
that its rights to receive any payments from the Company, or arising out of or
in connection with the Pledgor's interests in the Company, shall be payable by
the Company only from funds available to the Company upon distributions pursuant
to the Trinidad Depositary Agreement or any other provision of the Indenture
expressly providing for distribution, payment or release of funds to the
Company, and only so long as such distribution, payment or release is made in
accordance with the Trinidad Depositary Agreement and the Indenture. The Pledgor
also agrees that any distributions made by the Company to the Pledgor that do
not comply with the Trinidad Depositary Agreement and the Indenture shall be
restored to the Company by the Pledgor by deposit into an account designated by
the Collateral Agent, promptly upon demand by the Collateral Agent or the
Company or upon the Pledgor becoming aware of receipt of such non-complying
distribution.
4.7. GOVERNMENTAL AUTHORITY REQUIREMENT. The Pledgor
shall not take or omit to take (or suffer such taking or omission of) any action
(unless ordered to do so by a competent Governmental Authority having
jurisdiction) in respect of the Pledgor or the Company and their respective
businesses if, as a consequence directly or indirectly of such action or
omission, the Company or the Pledgor becomes subject to regulation by any
Governmental Authority as a "public utility," an "electric utility," an
"electric utility holding company," a "public utility company" or a subsidiary
company or affiliate of any of the foregoing under PUHCA, FPA or PURPA, or as a
"holding company" within the meaning of PUHCA.
4.8. INDEMNIFICATION. The Pledgor shall defend,
indemnify and hold harmless the Collateral Agent and each of the other Secured
Parties and their officers, directors and employees, from and against any and
all costs, expenses, disbursements, liabilities, obligations, losses, damages,
injunctions, judgments, suits, actions, causes of action, fines, penalties,
claims and demands, of every kind or nature (including, without limitation,
reasonable attorney's fees and expenses) which are occasioned by or result from
any (a) failure by the Pledgor to perform any of the terms, agreements, or
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<PAGE>
covenants to be performed by the Pledgor under this Pledge Agreement and (b)
proceeding or action to enforce brought by the Collateral Agent pursuant to this
Pledge Agreement or which arise out of any such agreement unless due solely to
the gross negligence or willful misconduct of the Collateral Agent. This
indemnity and any other obligations of the Pledgor under any of the Finance
Documents shall be made only against, and shall be limited to the extent of, the
Collateral pledged hereunder.
5. COVENANTS; CASH DIVIDENDS; VOTING RIGHTS. Unless and until
an Event of Default shall have occurred and be continuing, the Pledgor shall be
entitled to (a) receive ordinary cash dividends payable in respect of the
Collateral and (b) exercise (but only in a manner not inconsistent with the
terms hereof and the Finance Documents) the voting power with respect to the
Collateral; PROVIDED, that no vote shall be cast or consent, waiver or
ratification given or action taken which would impair the Collateral or be
inconsistent with or violate any provision of this Pledge Agreement or any of
the Finance Documents. After the occurrence and during the continuance of any
Event of Default, (a) the Pledgor shall not be entitled to receive any dividends
or distributions in respect of the Collateral (whether payable in cash or in
other property and whether ordinary dividends or liquidating or other dividends
or distributions) and if such dividend or distribution is received by the
Pledgor, the same shall be held in trust and promptly delivered to the
Collateral Agent, accompanied by undated, duly executed stock powers endorsed by
the Pledgor in blank or such other instruments of assignment as the Collateral
Agent may request, to be held by it as additional Collateral hereunder and (b)
the Collateral Agent may, at its option, by written notice to the Pledgor, elect
to exercise the voting power with respect to the Collateral.
6. PLEDGOR'S OBLIGATIONS UPON EVENT OF DEFAULT. If an Event of
Default under the Trinidad Project Loan Agreement or the Trinidad Guarantee
shall occur and be continuing (a) all payments received by the Pledgor under or
in connection with any of the Collateral shall be held by the Pledgor in trust
for the Collateral Agent, shall be segregated from other funds of the Pledgor
and shall, forthwith upon receipt by the Pledgor, be turned over to the
Collateral Agent or its designee in the same form as received by the Pledgor
(duly endorsed by the Pledgor to the Collateral Agent, if requested), and (b)
any and all such payments so received by the Collateral Agent or its designee
(whether from the Pledgor or otherwise) may, in the sole discretion of the
Collateral Agent or its designee, be held by the Collateral Agent or such
designee as collateral security for, and/or then or at any time thereafter be
applied, subject only to the relevant provisions of the Intercreditor Agreement
and the Trinidad Depositary Agreement or as otherwise may be required by
Applicable Law, in whole or in part by the Collateral Agent or its designee in
the manner specified in SECTION 8.
7. REMEDIES; RIGHTS UPON EVENT OF DEFAULT. Upon the occurrence
and during the continuance of an Event of Default under the Trinidad Project
Loan Agreement or the Trinidad Guarantee, the Collateral Agent, for the equal
and ratable benefit of and on behalf of the Secured Parties, may, subject to the
provisions of the Intercreditor Agreement and the other Finance Documents, do
one or more of the following:
7.1. declare, without presentment, demand, protest or
notice of any kind, all of which the Pledgor hereby expressly waives, the entire
amount of the Obligations to be immediately due and payable, whereupon all of
such Obligations declared due and payable shall be and become immediately due
and payable; provided, however, if, with respect to the Trinidad Guarantor, an
Event of Default occurs pursuant to Section 5.1(f) of the Trinidad Project Loan
Agreement, then the acceleration provided for in this Section 7.1 shall be
deemed to have been made upon the occurrence of such Event of Default without
declaration or any other action by the Collateral Agent;
7.2. upon notice to the Pledgor, which notice need
not be in writing, make such payments and do such acts as the Collateral Agent
may deem necessary to protect, perfect or continue the perfection of the Secured
Parties' Security Interest in the Collateral, including without limitation,
paying,
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purchasing, contesting or compromising any Lien which is, or purports to
be, prior to or superior to the Security Interest granted hereunder, and
commencing, appearing or otherwise participating in or controlling any action or
proceeding purporting to affect the Secured Parties' Security Interest in or
ownership of the Collateral;
7.3. foreclose on the Collateral as herein provided
or in any manner permitted by law and exercise any and all of the rights and
remedies conferred upon the Secured Parties by the Security Documents either
concurrently or in such order as the Collateral Agent may determine without
affecting the rights or remedies to which the Secured Parties may be entitled
under any Security Document. The Pledgor hereby waives, to the extent permitted
by Applicable Law, notice and judicial hearing in connection with the Collateral
Agent's taking possession or collection, recovery, receipt, appropriation,
repossession, retention, set-off, sale, leasing, conveyance, assignment,
transfer or other disposition of or realization upon any or all of the
Collateral, including, without limitation, any and all prior notice and hearing
for any prejudgment remedy or remedies and any such right which the Pledgor
would otherwise have under the constitution or any statute or other law of the
United States of America or of any state;
7.4. without notice, except as specified below, sell
the Collateral, or any part thereof, in one or more parcels at public or private
sale, at any of the Collateral Agent's offices or elsewhere, at such time or
times, for cash, on credit or for future delivery, and at a commercially
reasonable price or prices and on other commercially reasonable terms. The
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days' notice to the Pledgor of the time and the place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. At any sale of the Collateral, if permitted
by law, the Collateral Agent may bid (which bid may be, in whole or in part, in
the form of cancellation of indebtedness) for the purchase of the Collateral or
any portion thereof for the account of the Collateral Agent on behalf of the
Secured Parties. The Collateral Agent shall not be obligated to make any sale of
the Collateral regardless of notice of sale having been given. The Collateral
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. The Collateral Agent
shall incur no liability as a result of the manner of sale of the Collateral, or
any part thereof, at any private sale conducted in a commercially reasonable
manner. The Pledgor hereby waives, to the extent permitted by Applicable Law,
any claims against the Collateral Agent arising by reason of the fact that the
price at which the Collateral, or any part thereof, may have been sold at a
private sale was less than the price which might have been obtained at public
sale or was less than the aggregate amount of the Obligations, even if the
Collateral Agent accepts the first offer received which the Collateral Agent in
good faith deems to be commercially reasonable under the circumstances and does
not offer the Collateral to more than one offeree. To the full extent permitted
by law, the Pledgor shall have the burden of proving that any such sale of the
Collateral was conducted in a commercially unreasonable manner. To the extent
permitted by law, the Pledgor hereby specifically waives all rights of
redemption, stay or appraisal which it has or may have under any law now
existing or hereafter enacted. The Pledgor authorizes the Collateral Agent, at
any time and from time to time, to execute, in connection with a sale of the
Collateral pursuant to the provisions of this Pledge Agreement, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral;
7.5. upon notice to the Pledgor, register the
Collateral in the name of the Collateral Agent or its nominee as pledgee or
otherwise take such action as the Collateral Agent shall in its sole discretion
deem necessary or desirable with respect to the Collateral, and the Collateral
Agent or its nominee may thereafter, in its sole discretion, without notice,
exercise all voting, consent, managerial and other rights relating to the
Collateral and exercise any and all rights of conversion, exchange, subscription
or any other rights, privileges or options pertaining to the Collateral as if it
were the absolute
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owner thereof, including, without limitation, the right to (a) receive all
permitted distributions, if any, made for the account of the Pledgor and (b)
exchange any and all of the Collateral upon the merger, consolidation,
reorganization, recapitalization or other readjustment of the Company, all
without liability except to account for property actually received by the
Collateral Agent, but the Collateral Agent shall have no duty to exercise any of
the aforesaid rights, privileges or options and shall not be responsible for any
failure to do so or delay in so doing; and
7.6. exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party after default under the
Code.
8. APPLICATION OF PROCEEDS. The net proceeds of any
foreclosure, collection, recovery, receipt, appropriation, realization or sale
of the Collateral shall be applied in the order of priority specified in Section
13 of the Intercreditor Agreement. Any surplus remaining upon the Debt
Termination Date shall be paid to the Pledgor, if it is lawfully entitled to
receive the same or shall be paid to whomsoever a court of competent
jurisdiction may direct.
9. SECURITY INTEREST ABSOLUTE. All the rights of the
Collateral Agent and any of the other Secured Parties hereunder and the Security
Interest and all Obligations of the Pledgor hereunder shall be absolute and
unconditional irrespective of:
9.1. any lack of validity or enforceability of any of
the Transaction Documents or any other agreement or instrument relating thereto;
9.2. any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from any of the
Transaction Documents;
9.3. any exchange or release of any Collateral or any
other collateral, or the non-perfection of any of the Security Interest, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations;
9.4. to the full extent permitted by law, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Pledgor or any third party pledgor; or
9.5. the failure by the Pledgor to fulfill its
Obligations under this Pledge Agreement.
10. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.
10.1. POWERS. The Pledgor hereby irrevocably
constitutes and appoints the Collateral Agent and any officer or agent thereof,
with full power of substitution, as the Pledgor's true and lawful
attorney-in-fact (which appointment as attorney-in-fact shall be coupled with an
interest), with full authority in the place and stead of the Pledgor and in the
name of the Pledgor or otherwise, from time to time upon the occurrence and
during the continuance of any Event of Default under the Trinidad Project Loan
Agreement or the Trinidad Guarantee in the Collateral Agent's discretion, to
take any action and to execute any and all documents and instruments which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Pledge Agreement, without notice to the Pledgor, including, without
limitation:
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(a) to exercise all rights, powers and privileges to
the same extent the Pledgor shall have been entitled in accordance with
Applicable Law, including, without limitation, all voting rights of the
Pledgor as a shareholder of the Company;
(b) to receive, endorse and collect all instruments
made payable to the Pledgor representing any interest payment or other
distribution in respect of the Collateral or any part thereof and to
give full discharge for the same and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Collateral Agent for the purpose of
collecting any and all of such dividends, payments or other
distributions;
(c) to pay or discharge taxes and liens levied or
placed on the Collateral; and
(d) (i) to direct any party liable for any payment in
respect of or arising out of any of the Collateral to make payment of
any and all moneys due or to become due in connection therewith
directly to the Collateral Agent or as the Collateral Agent shall
otherwise direct, (ii) to ask or make demand for, collect, receive
payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising out
of any Collateral, (iii) to commence and prosecute any suits, actions
or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to
enforce any other right in respect of any Collateral, (iv) to defend
any suit, action or proceeding brought against the Pledgor with respect
to any Collateral, (v) to settle, compromise or adjust any suit, action
or proceeding described in clause (iv) above and, in connection
therewith, to give such discharges or releases as the Collateral Agent
acting in good faith may deem appropriate, (vi) generally, to sell,
transfer, pledge and make any agreement with respect to or otherwise
deal with any of the Collateral as fully and completely as though the
Collateral Agent were the absolute owner thereof for all purposes and
(vii) to do, at the Collateral Agent's option and at the Pledgor's
expense, at any time, or from time to time, all acts and things which
the Collateral Agent acting in good faith deems necessary to protect,
preserve or realize upon the Collateral and the Security Interest
granted herein and to effect the intent of this Pledge Agreement, all
as fully and effectively as the Pledgor might do.
10.2. OTHER POWERS. The Pledgor further authorizes
the Collateral Agent, at any time and from time to time (a) to execute, in
connection with any sale provided for hereunder, any endorsements, assignments
or other instruments of conveyance or transfer with respect to the Collateral
and (b) to the full extent permitted by Applicable Law, to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of the Pledgor.
11. COLLATERAL AGENT MAY PERFORM. Upon the occurrence and
during the continuance of an Event of Default under the Trinidad Project Loan
Agreement or the Trinidad Guarantee, the Collateral Agent, without releasing the
Pledgor from any obligation, covenant or condition hereof, itself may make any
payment or perform, or cause the performance of, any such obligation, covenant,
condition or agreement or any other action in such manner and to such extent as
the Collateral Agent may deem necessary to protect, perfect or continue the
perfection of the Secured Parties' Security Interest in the Collateral. Any
costs or expenses incurred by the Collateral Agent in connection with the
foregoing shall be governed by the Indenture and the Financing Documents and
constitute Obligations secured hereby.
12. NO DUTY ON COLLATERAL AGENT'S PART, LIMITATION ON
COLLATERAL AGENT'S OBLIGATIONS.
12.1. NO DUTY ON COLLATERAL AGENT'S PART. The powers
conferred on the Collateral Agent hereunder are solely to protect the Collateral
Agent's interests in the Collateral and shall
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not impose any duty upon it to exercise any such powers. The Collateral Agent
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers.
12.2. LIMITATIONS ON OBLIGATIONS. Without limiting
the effectiveness of SECTION 30 hereof, anything herein to the contrary
notwithstanding, the Pledgor shall remain liable under any Transaction Document
to which it is a party to the extent set forth therein to perform all of its
duties and obligations thereunder, to the same extent as if this Pledge
Agreement had not been executed. The exercise by the Collateral Agent of any of
the rights or remedies hereunder shall not release the Pledgor from any of its
duties or obligations under any Transaction Document to which it is a party. All
of the Collateral is hereby assigned to the Collateral Agent solely as security,
and the Collateral Agent shall have no duty, liability or obligation whatsoever
with respect to any of the Collateral, unless the Collateral Agent so elects in
writing consistent with its rights under this Pledge Agreement.
13. REASONABLE CARE. The Collateral Agent shall exercise the
same degree of care hereunder as it exercises in connection with similar
transactions for its own account. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Collateral Agent accords or would accord collateral held by the
Collateral Agent in similar transactions for its own account. Without limiting
the generality of the foregoing and except as otherwise provided by Applicable
Law, the Collateral Agent shall not be required to marshal any Collateral,
including, without limitation, the Collateral subject to the Security Interest
created hereby and any guaranties of the Obligations, or to resort to any item
of Collateral or guaranties in any particular order. All of the Collateral
Agent's rights hereunder and in respect of such Collateral and guaranties shall
be cumulative and in addition to all other rights, however existing or arising.
To the extent that the Pledgor lawfully may, the Pledgor hereby (a) agrees that
it will not invoke any law relating to the marshalling of the Collateral which
might cause delay in or impede the enforcement of the Collateral Agent's rights
under this Pledge Agreement or under any other instrument evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or guaranteed and (b) irrevocably waives the
benefits of all laws and any and all rights to equity of redemption or other
rights of redemption that it may have in equity or at law with respect to the
Collateral.
14. ROLE OF COLLATERAL AGENT. The rights, duties, liabilities,
protections, benefits and immunities of the Collateral Agent and its appointment
and replacement hereunder shall be governed by the Intercreditor Agreement or
the Indenture, as applicable.
15. WAIVER OF TRIAL BY JURY. WITH REGARD TO THIS PLEDGE
AGREEMENT, EACH OF THE PLEDGOR AND THE COLLATERAL AGENT HEREBY WAIVES THE RIGHTS
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING AND FOR ANY COUNTERCLAIM THEREIN.
16. NOTICES. All notices, demands, requests and other
communications required or permitted hereunder shall be in writing, and shall be
given and deemed to have been given in accordance with Section 6.1 of the
Trinidad Project Loan Agreement and the information set forth immediately below
shall apply to:
If to the Pledgor:
York Research Corporation
280 Park Avenue, Suite 2700W
New York, New York 10017
Attention: Michael Trachtenberg
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<PAGE>
If to the Collateral Agent:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration--
International Finance Unit
17. ABSENCE OF FIDUCIARY RELATION. The Collateral Agent
undertakes to perform or to observe only such of its agreements and obligations
as are specifically set forth in this Pledge Agreement, the Intercreditor
Agreement or any other Transaction Document, and no implied agreements,
covenants or obligations with respect to the Pledgor, any Affiliate of the
Pledgor or any other party to any Transaction Document to which the Pledgor is a
party shall be read into this Pledge Agreement against the Collateral Agent or
any of the Secured Parties; neither the Collateral Agent nor any of the Secured
Parties in its and their capacity as such is a fiduciary of and shall not owe or
be deemed to owe any fiduciary duty to the Pledgor, any Affiliate of the Pledgor
or any other party to any Transaction Document to which the Pledgor is a party,
except as otherwise specifically required by law.
18. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
agreements, representations and warranties made herein shall survive the
execution and delivery of this Pledge Agreement and the other Finance Documents
and repayment of the Obligations, and shall be deemed to be material and to have
been relied upon by the Collateral Agent and any of the other Secured Parties,
regardless of any investigation made by or on behalf of any of the Collateral
Agent and any of the other Secured Parties. Notwithstanding anything in this
Pledge Agreement or implied by law to the contrary, the agreements and
obligations of the Pledgor set forth in SECTION 4.6 shall survive until the Debt
Termination Date or prepayment in full of the Obligations and the termination of
this Pledge Agreement in accordance with SECTION 28 hereof.
19. NO WAIVER; CUMULATIVE REMEDIES. By exercising or failing
to exercise any of its rights, options or elections hereunder (without also
expressly waiving the same in writing), the Collateral Agent, on behalf of the
Secured Parties, shall not be deemed to have waived any breach or default on the
part of the Pledgor or to have released the Pledgor from any of its obligations
secured hereby. No failure on the part of the Collateral Agent to exercise, and
no delay in exercising (without also expressly waiving the same in writing) any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or privilege preclude
any other or further exercise thereof, or the exercise of any other right, power
or privilege. The remedies provided herein are cumulative and not exclusive of
any remedies provided by law. The Collateral Agent, acting on behalf of the
Secured Parties, shall have all of the rights and remedies granted under the
Intercreditor Agreement or any Finance Document, and available at law or in
equity, and these same rights and remedies may be pursued separately,
successively or concurrently against the Pledgor or any Collateral, at the
discretion of the Collateral Agent.
20. SEVERABILITY. Any provision of this Pledge 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. Where provisions of any law or regulation
resulting in such prohibition or unenforceability may be waived they are hereby
waived by the Pledgor and the Collateral Agent to the full extent permitted by
law so that this Pledge Agreement shall be deemed a valid, binding agreement,
and the Security Interest created hereby shall constitute a continuing first
lien on and first perfected security interest in the Collateral, in each case
enforceable in accordance with its terms.
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21. EXCULPATORY PROVISIONS; RELIANCE BY COLLATERAL AGENT.
21.1. EXCULPATORY PROVISIONS. Neither the Collateral
Agent, the Funding Company nor any other Secured Party, nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates (the "Exculpated Parties") shall be liable to the Pledgor for any
action taken or omitted to be taken by it or them under or in connection with
this Pledge Agreement or any other Transaction Document to which the Pledgor is
a party, except for the Exculpated Parties' own gross negligence or willful
misconduct, or responsible in any manner to any Person for any recitals,
statements, representations or warranties made by the Pledgor or any officer
thereof contained in this Pledge Agreement or any other Transaction Document to
which the Pledgor is a party or in any certificate, report, statement or other
document referred to or provided for in, or received by the Collateral Agent,
the Funding Company or any other Secured Party under or in connection with, this
Pledge Agreement or any other Transaction Document to which the Pledgor is a
party or for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Pledge Agreement or any other Transaction Document to which
the Pledgor is a party or for any failure of Pledgor to perform any of the
Obligations. Neither the Collateral Agent, the Funding Company nor any other
Secured Party shall be under any obligation to any Person to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Pledge Agreement or any other Transaction Document to
which the Pledgor is a party, or to inspect the properties or records of the
Pledgor.
21.2. RELIANCE BY COLLATERAL AGENT. The Collateral
Agent shall be entitled to conclusively rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to Pledgor), independent accountants and other experts
selected by the Collateral Agent. The Collateral Agent shall have no obligation
to any Person to act or refrain from acting or exercising any of its rights
under this Pledge Agreement.
22. AMENDMENT. No modification or waiver of any of the
provisions of this Pledge Agreement shall be binding on the Collateral Agent,
except as expressly set forth in a writing duly signed by each party hereto and
delivered by the Collateral Agent and which is otherwise in accordance with
Section 6.2 of the Trinidad Project Loan Agreement.
23. SUCCESSORS AND ASSIGNS. This Pledge Agreement shall be
binding upon and inure to the benefit of the Pledgor and the Collateral Agent
for the benefit of the Secured Parties and their respective successors and
assigns. In the event of any assignment or transfer by the Funding Company or
any other Secured Party of any instrument evidencing all or any part of the
Obligations, the holder of such instrument shall, subject to the Trinidad
Project Loan Agreement and the Trinidad Guarantee, be entitled to the benefits
of this Pledge Agreement.
24. NUMBER AND GENDER. Whenever used in this Pledge Agreement,
the singular number shall include the plural and the plural the singular, and
the use of any gender shall be applicable to all genders.
25. SUBROGATION, ETC. Notwithstanding any payment or payments
made by the Pledgor or the exercise by the Collateral Agent of any of the
remedies provided under this Pledge Agreement or any of the Finance Documents,
the Pledgor shall have no claim (as defined in 11 U.S.C. Section 101(5)) of
subrogation to any of the rights of the Secured Parties against the Company, the
Pledgor or any Collateral or guaranty held by the Secured Parties for the
satisfaction of any of the Obligations, nor shall the Pledgor have any claims
(as defined in 11 U.S.C. Section 101(5)) for reimbursement, indemnity,
exoneration or
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contribution from the Company in respect of payments made by the Pledgor
hereunder. Notwithstanding the foregoing, if any amount shall be paid to the
Pledgor on account of such subrogation, reimbursement, indemnity, exoneration or
contribution rights at any time, such amount shall be held by the Pledgor in
trust for the Secured Parties, segregated from other funds of the Pledgor, and
shall be turned over to the Collateral Agent for the benefit of the Secured
Parties, in the exact form received by the Pledgor (duly endorsed by the Pledgor
to the Collateral Agent for the benefit of the Secured Parties, if required), to
be applied against such amounts in such order as the Collateral Agent may elect.
26. CAPTIONS. The captions, headings and table of contents
used in this Pledge Agreement are for convenience only and do not and shall not
be deemed to affect, limit, amplify or modify the terms and provisions hereof.
27. APPLICABLE LAW; JURISDICTION.
(a) This Pledge Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of
New York applicable to contracts to be wholly performed within such
state.
(b) Any legal action or proceeding against the
Pledgor with respect to this Pledge Agreement may be brought in the
courts of the State of New York in the County of New York or of the
United States for the Southern District of New York and, by execution
and delivery of this Pledge Agreement, the Pledgor hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The Pledgor
agrees that a judgement, after exhaustion of all available appeals, in
any such action or proceeding shall be conclusive and binding the
Pledgor, and may be enforced in any other jurisdiction by a suit upon
such judgment, a certified copy of which shall be conclusive evidence
of the judgement. The Pledgor hereby irrevocably designates, appoints
and empowers Corporation Service Company with offices on the date
hereof at Two World Trade Center, New York, New York 10048-0203, as its
designee, appointee and agent to receive, accept and acknowledge for
and on its behalf, and in respect of its property, service of any and
all legal process, summons, notices and documents which may be served
in any such action or proceeding. If for any reason such designee,
appointee and agent shall cease to be available to act as such, the
Pledgor agrees to designate a new designee, appointee and agent in New
York City on the terms and for the purposes of this provision
satisfactory to the Bond Trustee. The Pledgor further irrevocably
consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the
pledgor at its address set forth in SECTION 16, such service to become
effective 30 days after such mailing. Nothing herein shall affect the
right of the Funding Company to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed
against the Pledgor in any other jurisdiction.
(c) The Pledgor hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid actions or proceedings arising out of or in
connection with this Pledge Agreement or any other Finance Document
brought in the courts referred to in clause (b) above and hereby
further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum.
28. CONTINUING SECURITY INTEREST; TERMINATION. This Pledge
Agreement shall create a continuing assignment, pledge and first priority
Security Interest in the Collateral, and shall remain in full force and effect
for the benefit of the Collateral Agent and the other Secured Parties until the
Debt
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Termination Date. Upon the happening of such event, the Security Interest
granted hereby shall terminate. Upon such termination, the Collateral Agent
shall, upon the request and at the expense of the Pledgor, execute and deliver
to the Pledgor such documents as the Pledgor shall reasonably request to
evidence such termination or expiration.
29. PAYMENTS SET ASIDE. To the extent that the Pledgor or the
Trinidad Guarantor or any other Person on behalf of the Pledgor or the Trinidad
Guarantor makes a payment or payments to the Collateral Agent and/or any other
Secured Party, or the Collateral Agent and/or any other Secured Party enforce
the Security Interests or the Collateral Agent exercises its right of set-off,
and such payment or payments or the proceeds of such enforcement or set-off or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the Obligations or any
part thereof originally intended to be satisfied, and this Pledge Agreement and
all Liens, rights and remedies therefor, shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement or
set-off had not occurred.
30. COUNTERPARTS. This Pledge Agreement may be executed 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.
31. NON-RECOURSE. Notwithstanding any other provision hereof,
the Collateral Agent agrees that its only remedy hereunder shall be to proceed
against the Collateral and that there shall be no recourse to the Pledgor, its
shareholders, officers, directors, employees, partners or agents.
32. CONFLICTS WITH THE INTERCREDITOR AGREEMENT.
Notwithstanding any other provision hereof, in the event of any conflict between
the terms of this Pledge Agreement and the Intercreditor Agreement, the
provisions of the Intercreditor Agreement shall control.
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IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed as of the day and year first written above.
YORK RESEARCH CORPORATION,
a Delaware corporation
By: /s/ Michael Trachtenberg
---------------------------
Name: Michael Trachtenberg
Title: Executive Vice President
THE BANK OF NEW YORK,
as Collateral Agent
By: /s/ Joseph Ernst
---------------------------
Name: Joseph Ernst
Title: Vice President
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Exhibit 10(yy)
BIG SPRING GUARANTEE
This BIG SPRING GUARANTEE (this "Guarantee") is entered into
as of August 4, 1998 by NEW WORLD POWER TEXAS RENEWABLE ENERGY LIMITED
PARTNERSHIP, a Delaware limited partnership (the "Guarantor"), in favor of THE
BANK OF NEW YORK, a New York banking corporation, under that certain Indenture
described in the recitals below, and as Collateral Agent under the Intercreditor
Agreement for the benefit of the Secured Parties (in such capacities, the "Bond
Trustee"). All capitalized terms used herein but not specifically defined shall
have the respective meanings given to such terms in Appendix A to the Indenture,
which Appendix A is hereby incorporated herein by reference as if set forth in
full herein.
W I T N E S S E T H:
WHEREAS, York Power Funding (Cayman) Limited (the "Funding
Company") is a limited liability company organized under the laws of the Cayman
Islands for the sole purpose of issuing the Securities pursuant to the Indenture
and making loans to the Project Borrowers from the proceeds of such issuance;
WHEREAS, the Funding Company has on the date hereof issued and
sold Securities in the principal amount of $150 million;
WHEREAS, the principal and interest payments on the Securities
will be partially serviced by repayment of a loan made by the Funding Company to
the U.S. Guarantors and guaranteed by the U.S. Guarantors subject to the
conditions set forth in the Indenture;
WHEREAS, the net proceeds from the sale of the Securities will
be used for the following purposes: (a) approximately $71 million will be used
by the Trinidad Obligor to finance construction of the Trinidad Project, (b)
approximately $31 million will be used by the Big Spring Guarantor to finance
completion of the Big Spring Project, (c) $15 million will be deposited into the
Debt Service Reserve Account, (d) approximately $8 million will be used to pay
interest during construction and other costs related to the offering of the
Securities and (e) $30 million will be used for general corporate purposes of
the Sponsor; and
WHEREAS, the Guarantor is an affiliate of the Sponsor and the
Funding Company and anticipates benefiting directly and indirectly from the
issuance and sale of the Securities by the Funding Company and, therefore, is
willing to guarantee certain of the obligations of the Funding Company
thereunder in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the above premises and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. (a) As set forth in this Guarantee, the Guarantor, jointly
and severally with the other U.S. Guarantors, guarantees the full
payment of the Guaranteed Obligations (as hereafter defined) when due,
upon maturity, acceleration or otherwise; PROVIDED, HOWEVER, that no
demand under this Guarantee may be made, and no obligation to pay all
or any portion of the Guaranteed Obligations shall exist, unless at the
time such demand shall have been made there
<PAGE>
also shall have occurred and be continuing (a) an Event of Default
under Section 5.1(a) of the U.S. Project Loan Agreement among the U.S.
Guarantors and the Funding Company, (b) an Event of Default under
Section 5.1(a) of the Indenture between the Bond Trustee and the
Funding Company or (c) an Event of Default under this Guarantee.
(b) The Guarantor hereby and unconditionally agrees
that upon any failure by the Funding Company to pay, when due, of any
of the Guaranteed Obligations, the Guarantor will promptly pay the
same. Each and every failure in the payment of any of the Guaranteed
Obligations shall give rise to a separate cause of action under this
Guarantee, and separate suits may be brought against the Guarantor
hereunder as each cause of action arises.
(c) The Guarantor further agrees that this Guarantee
constitutes an absolute, present and continuing guarantee of payment
and not of collection and shall apply to all Guaranteed Obligations
whenever arising and waives any right to require that any resort be had
by the Bond Trustee or the Holders after the failure (after giving
effect to any applicable grace period) by the Funding Company in making
such payment to the Bond Trustee's or the Holder's rights against any
other Person, or any other right or remedy available to the Bond
Trustee or any Holder by contract, Applicable Law or otherwise.
2. Guaranteed Obligations as used herein shall mean all
principal, interest, premium (if any), fees, charges, penalties, expenses,
payments, and all other amounts due on or with respect to the Securities
(collectively, the "Guaranteed Obligations").
3. The liability of the Guarantor under this Guarantee in
respect of the Guaranteed Obligations shall be absolute and unconditional and
shall not be affected or released in any way, irrespective of:
(a) any lack of validity or enforceability of the
Securities, the Indenture, the U.S. Project Loan Agreement or any of
the other Transaction Documents;
(b) any change in the time, manner or place of
payment of, or in any other term of any of the Guaranteed Obligations
or amendment or waiver of, or any consent to any departure from, any
Transaction Document, including, without limitation, any increase in
the Guaranteed Obligations or other obligations of the Funding Company
under the Indenture;
(c) any enforcement of any Transaction Document,
including the taking, holding or sale of any collateral, or any
termination or release of any collateral from the liens created by any
Transaction Document or the non-perfection of any liens created by any
Transaction Document;
(d) the failure by any other U.S. Guarantor to
fulfill its obligations under its Guarantee;
(e) any change, restructuring or termination of the
structure or existence of the Funding Company or any other U.S.
Guarantor;
(f) any Event of Default of the Funding Company under
Section 5.1 of the Indenture; or
-2-
<PAGE>
(g) any Event of Default of the Guarantor under
Section 5.1 of the U.S. Project Loan Agreement.
This Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by the Bond
Trustee or any other Person upon the insolvency, bankruptcy or reorganization of
the Funding Company or the Guarantor, or otherwise, all as though such payment
had not been made.
4. The obligations hereunder are independent of the
obligations of the Funding Company or any other U.S. Guarantor, and a separate
action or actions may be brought and prosecuted against the Guarantor whether
action is brought against either the Funding Company or any other U.S.
Guarantor, or whether either the Funding Company or any other U.S. Guarantor be
joined in any such action or actions, and to the extent permitted by Applicable
Law, the Guarantor waives the benefit of any statute of limitations affecting
its liability hereunder.
5. The Guarantor authorizes the Bond Trustee, acting pursuant
to the Indenture, without notice or demand and without affecting its liability
hereunder, from time to time, whether before or after termination of this
Guarantee, to (a) renew, compromise, extend, accelerate or otherwise change the
time for payment of the obligations of the Funding Company under the Indenture
or any part thereof, (b) take and hold security for the payment of this
Guarantee or the Guaranteed Obligations, and exchange, enforce, waive, release,
fail to perfect, sell, or otherwise dispose of any such security, (c) apply such
security and direct the order or manner of sale thereof and (d) release or
substitute any one or more of the endorsers or guarantors.
6. The Guarantor hereby waives, to the extent permitted by
Applicable Law: (a) promptness, diligence, notice of acceptance and any other
notice with respect to any of the indebtedness or any other obligations under
the Transaction Documents or this Guarantee, (b) any requirement that the Bond
Trustee or any other person protect, secure or insure any lien or any collateral
or other property subject thereto or exhaust any right or take any action
against either the Funding Company or any other Person or any collateral, (c)
any defense arising by reason of any claim or defense based upon an election of
remedies by the Bond Trustee which in any manner impairs, reduces, releases or
otherwise adversely affects its subrogation, contribution or reimbursement
rights or other rights to proceed against either the Funding Company or any
other Person or any collateral, (d) any duty on the part of the Bond Trustee to
disclose to the Guarantor any matter, fact or thing relating to the business,
operation or condition of either the Funding Company or any other party to any
of the Transaction Documents and the Funding Company's assets now known or
hereafter known by the Bond Trustee and (e) all presentments, demands for
performance, notices of non-performance, protests, notices of protest, notices
of dishonor, and notices of acceptance of this Guarantee and of the existence,
creation, or incurrence of new or additional Guaranteed Obligations.
7. The Guarantor hereby irrevocably waives, to the extent
permitted by Applicable Law, any claim or other rights which it may now or
hereafter acquire against the Funding Company, the Guarantor or any other
Guarantor of any or all of the Guaranteed Obligations, whether due or to become
due, voluntary or involuntary, absolute or contingent, liquidated or
unliquidated, determined or undetermined, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution, indemnification,
any right to participate in any claim or remedy of the Bond Trustee against
either the Funding Company or any such Guarantor or any collateral which the
Bond Trustee now has or hereafter acquires, whether or not such claim, remedy or
right arises in equity, or under contract, statute or common law, including
without limitation, the right to take or receive from the Funding Company,
directly or indirectly, in cash or other property or by setoff or in any other
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to the Guarantor in violation of the
-3-
<PAGE>
preceding sentence and the Guaranteed Obligations shall not have been paid in
full, such amount shall be deemed to have been paid by the Guarantor for the
benefit of, and held in trust for the benefit of, the Bond Trustee and shall
forthwith be paid to the Bond Trustee to be credited and applied to the
Guaranteed Obligations, whether matured or unmatured, in accordance with the
terms of the Indenture. The Guarantor acknowledges that it will receive direct
and indirect benefits from the sale of the Securities contemplated by the
Indenture and that the waiver set forth in this Section 7 is knowingly made in
contemplation of such benefits.
8. The Guarantor agrees that, to the extent that either the
Funding Company or the Guarantor makes a payment or payments to the Bond
Trustee, or the Bond Trustee receives any proceeds of Collateral, which payment
or payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential set aside or otherwise required to be repaid to
either the Funding Company, its estate, trustee, receiver or any other party,
including, without limitation, under any bankruptcy law, state or federal law,
common law or equitable cause, then to the extent of such payment or repayment,
the obligation or part thereof which has been paid, reduced or satisfied by such
amount shall be reinstated and continued in full force and effect as of the date
such initial payment, reduction or satisfaction occurred. The Guarantor shall
defend or indemnify the Bond Trustee from and against any and all claims or
losses under this Section 8 (including reasonable attorneys' fees and expenses)
in the defense of any such action or suit.
9. The Guarantor acknowledges and agrees that it shall have
the sole responsibility for obtaining from the Funding Company such information
concerning the Funding Company's financial conditions or business operations as
the Guarantor may require, and that the Bond Trustee has no duty at any time to
disclose to the Guarantor any information relating to the business operations or
financial condition of the Funding Company.
10. To the extent that the waiver set forth in SECTION 7 is or
is deemed to be ineffective or inapplicable, any obligations of the Funding
Company to the Guarantor, now or hereafter existing, are hereby subordinated to
the Guaranteed Obligations. After the occurrence of an Event of Default under
the Indenture, such obligations of the Funding Company to the Guarantor shall be
enforced and performance received by the Guarantor as trustee for the Bond
Trustee and the proceeds thereof shall be paid over to the Bond Trustee on
account of the Guaranteed Obligations, but without reducing or affecting in any
manner the maximum liability of the Guarantor under the other provisions of this
Guarantee.
11. The Bond Trustee may, without notice to the Guarantor and
without affecting the Guarantor's obligations hereunder, assign this Guarantee,
in whole or in part in accordance with the provisions of the Indenture. The
Guarantor agrees that the Bond Trustee may, subject to the provisions of the
Indenture, disclose to any prospective purchaser and any purchaser of all or
part of the Guaranteed Obligations any and all information in the Bond Trustee's
possession concerning the Guarantor, this Guarantee and any security for this
Guarantee.
12. The Guarantor agrees to pay all reasonable attorneys'
expenses and fees and all other fees and expenses which may be incurred by the
Bond Trustee in the enforcement of this Guarantee.
13. The Bond Trustee agrees that no partners, directors,
officers, shareholders or employees or agents of the Guarantor shall in any way
be liable for the payment of the Securities, the U.S. Project Note or any sums
now or hereafter owing under the terms of, or for the performance of any
obligation contained in, this Guarantee.
-4-
<PAGE>
14. No modification or waiver of any of the provisions of this
Guarantee shall be binding on the Bond Trustee, except as expressly set forth in
a writing duly signed and delivered by the Bond Trustee acting pursuant to the
terms or Article 7 of the Indenture.
15. This Guarantee shall be binding upon and inure to the
benefit of the Guarantor and the Bond Trustee for the benefit of the Secured
Parties and their respective successors and assigns; PROVIDED that the Guarantor
shall not assign its rights or the Guaranteed Obligations created under this
Guarantee without the prior written consent of the Bond Trustee.
16. In case any provision of this Guarantee or the Securities
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or the Guaranteed
Obligations, or of such provision or the Guaranteed Obligations in any
jurisdiction, shall not in any way be affected or impaired thereby.
17. This Guarantee shall be governed by and construed
according to the laws of the State of New York.
18. This Guarantee embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof.
19. WITH REGARD TO THIS GUARANTEE, EACH OF THE GUARANTOR AND
THE TRUSTEE HEREBY WAIVES THE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING AND FOR ANY COUNTERCLAIM THEREIN.
20. All notices, demands, requests and other communications
required or permitted hereunder shall be in writing, and shall be given and
deemed to have been given in accordance with Section 11.5 of the Indenture and
the information set forth immediately below shall apply to:
If to the Guarantor:
New World Power Texas Renewable Energy Limited
Partnership
c/o York Research Corporation
280 Park Avenue, Suite 2700W
New York, New York 10017
Attention: Michael Trachtenberg
If to the Bond Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration--
International Finance Unit
21. This Guarantee may be executed in any number of
counterparts, all of which together shall constitute one agreement.
22. The obligations of the Guarantor hereunder are subject to
the limitations set forth in Section 6.10 of the U.S. Project Loan Agreement,
the provisions of which are hereby incorporated by reference.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Guarantee to be duly executed as of the day and year first written above.
NEW WORLD POWER TEXAS RENEWABLE ENERGY LIMITED
PARTNERSHIP, a Delaware limited partnership
By: BIG SPRINGS TEXAS ENERGY MANAGEMENT,
INC., its general partner
By: /s/ Michael Trachtenberg
---------------------------
Name: Michael Trachtenberg
Title: Vice President
THE BANK OF NEW YORK,
as Bond Trustee
By: /s/ Joseph Ernst
---------------------------
Name: Joseph Ernst
Title: Vice President
-6-
<PAGE>
Exhibit 10(zz)
BROOKLYN NAVY YARD GUARANTEE
This BROOKLYN NAVY YARD GUARANTEE (this "Guarantee") is
entered into as of August 4, 1998 by BROOKLYN NAVY YARD POWER LLC, a Delaware
limited liability company (the "Guarantor"), in favor of THE BANK OF NEW YORK, a
New York banking corporation, under that certain Indenture described in the
recitals below, and as Collateral Agent under the Intercreditor Agreement for
the benefit of the Secured Parties (in such capacities, the "Bond Trustee"). All
capitalized terms used herein but not specifically defined shall have the
respective meanings given to such terms in Appendix A to the Indenture, which
Appendix A is hereby incorporated herein by reference as if set forth in full
herein.
W I T N E S S E T H:
WHEREAS, York Power Funding (Cayman) Limited (the "Funding
Company") is a limited liability company organized under the laws of the Cayman
Islands for the sole purpose of issuing the Securities pursuant to the Indenture
and making loans to the Project Borrowers from the proceeds of such issuance;
WHEREAS, the Funding Company has on the date hereof issued and
sold Securities in the principal amount of $150 million;
WHEREAS, the principal and interest payments on the Securities
will be partially serviced by repayment of a loan made by the Funding Company to
the U.S. Guarantors and guaranteed by the U.S. Guarantors subject to the
conditions set forth in the Indenture; and
WHEREAS, the Guarantor is an affiliate of the Sponsor and the
Funding Company and anticipates benefiting directly and indirectly from the
issuance and sale of the Securities by the Funding Company and, therefore, is
willing to guarantee certain of the obligations of the Funding Company
thereunder in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the above premises and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. (a) As set forth in this Guarantee, the Guarantor, jointly
and severally with the other U.S. Guarantors, guarantees the full
payment of the Guaranteed Obligations (as hereafter defined) when due,
upon maturity, acceleration or otherwise; PROVIDED, HOWEVER, that no
demand under this Guarantee may be made, and no obligation to pay all
or any portion of the Guaranteed Obligations shall exist, unless at the
time such demand shall have been made there also shall have occurred
and be continuing (a) an Event of Default under Section 5.1(a) of the
U.S. Project Loan Agreement among the U.S. Guarantors and the Funding
Company, (b) an Event of Default under Section 5.1(a) of the Indenture
between the Bond Trustee and the Funding Company or (c) an Event of
Default under this Guarantee.
(b) The Guarantor hereby and unconditionally agrees
that upon any failure by the Funding Company to pay, when due, of any
of the Guaranteed
<PAGE>
Obligations, the Guarantor will promptly pay the same. Each and every
failure in the payment of any of the Guaranteed Obligations shall give
rise to a separate cause of action under this Guarantee, and separate
suits may be brought against the Guarantor hereunder as each cause of
action arises.
(c) The Guarantor further agrees that this Guarantee
constitutes an absolute, present and continuing guarantee of payment
and not of collection and shall apply to all Guaranteed Obligations
whenever arising and waives any right to require that any resort be had
by the Bond Trustee or the Holders after the failure (after giving
effect to any applicable grace period) by the Funding Company in making
such payment to the Bond Trustee's or the Holder's rights against any
other Person, or any other right or remedy available to the Bond
Trustee or any Holder by contract, Applicable Law or otherwise.
2. Guaranteed Obligations as used herein shall mean all
principal, interest, premium (if any), fees, charges, penalties, expenses,
payments, and all other amounts due on or with respect to the Securities
(collectively, the "Guaranteed Obligations").
3. The liability of the Guarantor under this Guarantee in
respect of the Guaranteed Obligations shall be absolute and unconditional and
shall not be affected or released in any way, irrespective of:
(a) any lack of validity or enforceability of the
Securities, the Indenture, the U.S. Project Loan Agreement or any of
the other Transaction Documents;
(b) any change in the time, manner or place of
payment of, or in any other term of any of the Guaranteed Obligations
or amendment or waiver of, or any consent to any departure from, any
Transaction Document, including, without limitation, any increase in
the Guaranteed Obligations or other obligations of the Funding Company
under the Indenture;
(c) any enforcement of any Transaction Document,
including the taking, holding or sale of any collateral, or any
termination or release of any collateral from the liens created by any
Transaction Document or the non-perfection of any liens created by any
Transaction Document;
(d) the failure by any other U.S. Guarantor to
fulfill its obligations under its Guarantee;
(e) any change, restructuring or termination of the
structure or existence of the Funding Company or any other U.S.
Guarantor;
(f) any Event of Default of the Funding Company under
Section 5.1 of the Indenture; or
(g) any Event of Default of the Guarantor under
Section 5.1 of the U.S. Project Loan Agreement.
This Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by the Bond
Trustee or any other Person upon the insolvency, bankruptcy or reorganization of
the Funding Company or the Guarantor, or otherwise, all as though such payment
had not been made.
4. The obligations hereunder are independent of the
obligations of the Funding Company or any other U.S. Guarantor, and a separate
action or actions may be brought and prosecuted
-2-
<PAGE>
against the Guarantor whether action is brought against either the Funding
Company or any other U.S. Guarantor, or whether either the Funding Company or
any other U.S. Guarantor be joined in any such action or actions, and to the
extent permitted by Applicable Law, the Guarantor waives the benefit of any
statute of limitations affecting its liability hereunder.
5. The Guarantor authorizes the Bond Trustee, acting pursuant
to the Indenture, without notice or demand and without affecting its liability
hereunder, from time to time, whether before or after termination of this
Guarantee, to (a) renew, compromise, extend, accelerate or otherwise change the
time for payment of the obligations of the Funding Company under the Indenture
or any part thereof, (b) take and hold security for the payment of this
Guarantee or the Guaranteed Obligations, and exchange, enforce, waive, release,
fail to perfect, sell, or otherwise dispose of any such security, (c) apply such
security and direct the order or manner of sale thereof and (d) release or
substitute any one or more of the endorsers or guarantors.
6. The Guarantor hereby waives, to the extent permitted by
Applicable Law: (a) promptness, diligence, notice of acceptance and any other
notice with respect to any of the indebtedness or any other obligations under
the Transaction Documents or this Guarantee, (b) any requirement that the Bond
Trustee or any other person protect, secure or insure any lien or any collateral
or other property subject thereto or exhaust any right or take any action
against either the Funding Company or any other Person or any collateral, (c)
any defense arising by reason of any claim or defense based upon an election of
remedies by the Bond Trustee which in any manner impairs, reduces, releases or
otherwise adversely affects its subrogation, contribution or reimbursement
rights or other rights to proceed against either the Funding Company or any
other Person or any collateral, (d) any duty on the part of the Bond Trustee to
disclose to the Guarantor any matter, fact or thing relating to the business,
operation or condition of either the Funding Company or any other party to any
of the Transaction Documents and the Funding Company's assets now known or
hereafter known by the Bond Trustee and (e) all presentments, demands for
performance, notices of non-performance, protests, notices of protest, notices
of dishonor, and notices of acceptance of this Guarantee and of the existence,
creation, or incurrence of new or additional Guaranteed Obligations.
7. The Guarantor hereby irrevocably waives, to the extent
permitted by Applicable Law, any claim or other rights which it may now or
hereafter acquire against the Funding Company, the Guarantor or any other
Guarantor of any or all of the Guaranteed Obligations, whether due or to become
due, voluntary or involuntary, absolute or contingent, liquidated or
unliquidated, determined or undetermined, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution, indemnification,
any right to participate in any claim or remedy of the Bond Trustee against
either the Funding Company or any such Guarantor or any collateral which the
Bond Trustee now has or hereafter acquires, whether or not such claim, remedy or
right arises in equity, or under contract, statute or common law, including
without limitation, the right to take or receive from the Funding Company,
directly or indirectly, in cash or other property or by setoff or in any other
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to the Guarantor in violation of the preceding sentence and
the Guaranteed Obligations shall not have been paid in full, such amount shall
be deemed to have been paid by the Guarantor for the benefit of, and held in
trust for the benefit of, the Bond Trustee and shall forthwith be paid to the
Bond Trustee to be credited and applied to the Guaranteed Obligations, whether
matured or unmatured, in accordance with the terms of the Indenture. The
Guarantor acknowledges that it will receive direct and indirect benefits from
the sale of the Securities contemplated by the Indenture and that the waiver set
forth in this Section 7 is knowingly made in contemplation of such benefits.
8. The Guarantor agrees that, to the extent that either the
Funding Company or the Guarantor makes a payment or payments to the Bond
Trustee, or the Bond Trustee receives any proceeds
-3-
<PAGE>
of Collateral, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential set aside or otherwise
required to be repaid to either the Funding Company, its estate, trustee,
receiver or any other party, including, without limitation, under any bankruptcy
law, state or federal law, common law or equitable cause, then to the extent of
such payment or repayment, the obligation or part thereof which has been paid,
reduced or satisfied by such amount shall be reinstated and continued in full
force and effect as of the date such initial payment, reduction or satisfaction
occurred. The Guarantor shall defend or indemnify the Bond Trustee from and
against any and all claims or losses under this Section 8 (including reasonable
attorneys' fees and expenses) in the defense of any such action or suit.
9. The Guarantor acknowledges and agrees that it shall have
the sole responsibility for obtaining from the Funding Company such information
concerning the Funding Company's financial conditions or business operations as
the Guarantor may require, and that the Bond Trustee has no duty at any time to
disclose to the Guarantor any information relating to the business operations or
financial condition of the Funding Company.
10. To the extent that the waiver set forth in SECTION 7 is or
is deemed to be ineffective or inapplicable, any obligations of the Funding
Company to the Guarantor, now or hereafter existing, are hereby subordinated to
the Guaranteed Obligations. After the occurrence of an Event of Default under
the Indenture, such obligations of the Funding Company to the Guarantor shall be
enforced and performance received by the Guarantor as trustee for the Bond
Trustee and the proceeds thereof shall be paid over to the Bond Trustee on
account of the Guaranteed Obligations, but without reducing or affecting in any
manner the maximum liability of the Guarantor under the other provisions of this
Guarantee.
11. The Bond Trustee may, without notice to the Guarantor and
without affecting the Guarantor's obligations hereunder, assign this Guarantee,
in whole or in part in accordance with the provisions of the Indenture. The
Guarantor agrees that the Bond Trustee may, subject to the provisions of the
Indenture, disclose to any prospective purchaser and any purchaser of all or
part of the Guaranteed Obligations any and all information in the Bond Trustee's
possession concerning the Guarantor, this Guarantee and any security for this
Guarantee.
12. The Guarantor agrees to pay all reasonable attorneys'
expenses and fees and all other fees and expenses which may be incurred by the
Bond Trustee in the enforcement of this Guarantee.
13. The Bond Trustee agrees that no partners, directors,
officers, shareholders or employees or agents of the Guarantor shall in any way
be liable for the payment of the Securities, the U.S. Project Note or any sums
now or hereafter owing under the terms of, or for the performance of any
obligation contained in, this Guarantee.
14. No modification or waiver of any of the provisions of this
Guarantee shall be binding on the Bond Trustee, except as expressly set forth in
a writing duly signed and delivered by the Bond Trustee acting pursuant to the
terms or Article 7 of the Indenture.
15. This Guarantee shall be binding upon and inure to the
benefit of the Guarantor and the Bond Trustee for the benefit of the Secured
Parties and their respective successors and assigns; PROVIDED that the Guarantor
shall not assign its rights or the Guaranteed Obligations created under this
Guarantee without the prior written consent of the Bond Trustee.
-4-
<PAGE>
16. In case any provision of this Guarantee or the Securities
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or the Guaranteed
Obligations, or of such provision or the Guaranteed Obligations in any
jurisdiction, shall not in any way be affected or impaired thereby.
17. This Guarantee shall be governed by and construed
according to the laws of the State of New York.
18. This Guarantee embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof.
19. WITH REGARD TO THIS GUARANTEE, EACH OF THE GUARANTOR AND
THE TRUSTEE HEREBY WAIVES THE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING AND FOR ANY COUNTERCLAIM THEREIN.
20. All notices, demands, requests and other communications
required or permitted hereunder shall be in writing, and shall be given and
deemed to have been given in accordance with Section 11.5 of the Indenture and
the information set forth immediately below shall apply to:
If to the Guarantor:
Brooklyn Navy Yard Power LLC
c/o York Research Corporation
280 Park Avenue, Suite 2700W
New York, New York 10017
Attention: Michael Trachtenberg
If to the Bond Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration--
International Finance Unit
21. This Guarantee may be executed in any number of
counterparts, all of which together shall constitute one agreement.
22. The obligations of the Guarantor hereunder are subject to
the limitations set forth in Section 6.10 of the U.S. Project Loan Agreement,
the provisions of which are hereby incorporated by reference.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Guarantee to be duly executed as of the day and year first written above.
BROOKLYN NAVY YARD POWER LLC,
a Delaware limited liability company
By: B-41 ASSOCIATES, L.P.,
its managing member
By: B-41 MANAGEMENT CORPORATION,
its general partner
By: /s/ Michael Trachtenberg
---------------------------
Name: Michael Trachtenberg
Title: Vice President
THE BANK OF NEW YORK,
as Bond Trustee
By: /s/ Joseph Ernst
---------------------------
Name: Joseph Ernst
Title: Vice President
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<PAGE>
Exhibit 10.53
TRINIDAD GUARANTEE
This TRINIDAD GUARANTEE (this "Guarantee") is entered into as of
August 4, 1998 by YORK HOLDINGS (BARBADOS) SRL, a society with restricted
liability organized in Barbados (the "Guarantor"), in favor of THE BANK OF
NEW YORK, a New York banking corporation, under that certain Indenture described
in the recitals below, and as Collateral Agent under the Intercreditor Agreement
for the benefit of the Secured Parties (in such capacities, the "Collateral
Agent"). All capitalized terms used herein but not specifically defined shall
have the respective meanings given to such terms in Appendix A to the
Indenture, which Appendix A is hereby incorporated herein by reference as if
set forth in full herein.
W I T N E S S E T H:
WHEREAS, York Power Funding (Cayman) Limited (the "Funding Company") is a
limited liability company organized under the laws of the Cayman Islands for
the sole purpose of issuing the Securities pursuant to the Indenture and
making loans to the Project Borrowers from the proceeds of such issuance;
WHEREAS, the Funding Company has on the date hereof issued and sold
Securities in the principal amount of $150 million;
WHEREAS, the principal and interest payments on the Securities will be
partially serviced by repayment of a loan made by the Funding Company to the
Trinidad Project Borrower and guaranteed by the Trinidad Guarantor subject to
the conditions set forth in the Indenture;
WHEREAS, the Funding Company will loan $100 million of the proceeds of
issuance of the Securities to the Trinidad Project Borrower, which will be
contributed by the Trinidad Project Borrower to the Trinidad Guarantor and
will be loaned by the Trinidad Guarantor to the Trinidad Obligor pursuant to
the Trinidad Loan Agreement; and
WHEREAS, the Guarantor is a subsidiary of the Trinidad Project Borrower
and anticipates benefiting directly and indirectly from the Trinidad Project
Loan and, therefore, is willing to guarantee certain of the obligations of
the Trinidad Project Borrower thereunder in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the above premises and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. (a) As set forth in this Guarantee, the Guarantor guarantees the
full payment of the Guaranteed Obligations (as hereafter defined) when due,
upon maturity, acceleration or otherwise; PROVIDED, HOWEVER, that no demand
under this Guarantee may be made, and no obligation to pay all or any portion
of the Guaranteed Obligations shall exist, unless at the time such demand
shall have been made there also shall have occurred and be continuing an
Event of Default under Section 5.1(a) of the Trinidad Project Loan Agreement
between the Trinidad Project Borrower and the Funding Company.
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(b) The Guarantor hereby and unconditionally agrees that upon
any failure by the Trinidad Project Borrower to pay, when due, of any of the
Guaranteed Obligations, the Guarantor will promptly pay the same. Each and
every failure in the payment of any of the Guaranteed Obligations shall give
rise to a separate cause of action under this Guarantee, and separate suits
may be brought against the Guarantor hereunder as each cause of action arises.
(c) The Guarantor further agrees that this Guarantee
constitutes an absolute, present and continuing guarantee of payment and not
of collection and shall apply to all Guaranteed Obligations whenever arising
and waives any right to require that any resort be had by the Funding Company
after the failure (after giving effect to any applicable grace period) by the
Trinidad Project Borrower in making such payment to the Funding Company
rights against any other Person, or any other right or remedy available to
the Funding Company by contract, Applicable Law or otherwise.
2. Guaranteed Obligations as used herein shall mean all principal,
interest, fees, charges, penalties, expenses, payments and all other amounts
due on or with respect to the Trinidad Project Note or otherwise pursuant to
the Trinidad Project Loan Agreement (the "Guaranteed Obligations").
3. The liability of the Guarantor under this Guarantee in respect of
the Guaranteed Obligations shall be absolute and unconditional and shall not
be affected or released in any way, irrespective of:
(a) any lack of validity or enforceability of the Trinidad
Project Loan Agreement, the Trinidad Project Note or any of the other
Transaction Documents;
(b) any change in the time, manner or place of payment of, or
in any other term of any of the Guaranteed Obligations or amendment or waiver
of, or any consent to any departure from, any Transaction Document,
including, without limitation, any increase in the Guaranteed Obligations or
other obligations of the Trinidad Project Borrower under the Trinidad Project
Loan Agreement.
(c) any enforcement of any Transaction Document, including the
taking, holding or sale of any collateral, or any termination or release of
any collateral from the liens created by any Transaction Document or the
non-perfection of any liens created by any Transaction Document;
(d) any change, restructuring or termination of the structure
or existence of the Funding Company or the Trinidad Project Borrower;
(e) any Event of Default of the Funding Company under
Section 5.1 of the Indenture; or
(f) any Event of Default of the Trinidad Project Borrower under
Section 5.1 of the Trinidad Project Loan Agreement.
This Guarantee shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations
is rescinded or must otherwise be returned by the Collateral Agent or any
other Person upon the insolvency, bankruptcy or reorganization of, the
Trinidad Project Borrower or the Guarantor, or otherwise, all as though such
payment had not been made.
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4. The obligations hereunder are independent of the obligations of
the Trinidad Project Borrower, and a separate action or actions may be
brought and prosecuted against the Guarantor whether action is brought
against either the Trinidad Project Borrower, or whether the Trinidad Project
Borrower be joined in any such action or actions, and to the extent permitted
by Applicable Law, the Guarantor waives the benefit of any statute of
limitations affecting its liability hereunder.
5. The Guarantor authorizes the Funding Company or the Bond Trustee,
as applicable, acting pursuant to the Trinidad Project Loan Agreement,
without notice or demand and without affecting its liability hereunder, from
time to time, whether before or after termination of this Guarantee, to (a)
renew, compromise, extend, accelerate or otherwise change the time for
payment of the obligations of the Trinidad Project Borrower under the
Trinidad Project Loan Agreement or any part thereof, (b) take and hold
security for the payment of this Guarantee or the Guaranteed Obligations, and
exchange, enforce, waive, release, fail to perfect, sell, or otherwise
dispose of any such security, (c) apply such security and direct the order or
manner of sale thereof and (d) release or substitute any one or more of the
endorsers or guarantors.
6. The Guarantor makes the following representations and warranties
to the Collateral Agent, which representations and warranties shall survive
the execution and delivery of this Guarantee:
(a) ORGANIZATION, POWER AND STATUS OF THE GUARANTOR. The
Guarantor (i) is a society with restricted liability duly organized and
validly existing under the laws of Barbados and (ii) has all requisite power
and authority to own the property and assets owned by it and to lease the
properties leased by it and to carry on its business as now being conducted
and as proposed to be conducted.
(b) AUTHORIZATION; ENFORCEABILITY; EXECUTION AND DELIVERY.
(i) The Guarantor has all necessary power and authority to
execute, deliver and perform its obligations under this Guarantee and any
other Transaction Document to which the Guarantor is a party.
(ii) The Guarantor has taken all necessary and proper
action to authorize the execution, delivery and performance by it of this
Guarantee and any other Transaction Document to which the Guarantor is a
party. The execution, delivery and performance of this Guarantee and any
other Transaction Document to which the Guarantor is a party does not require
the approval or consent of any holder or trustee of any Indebtedness or other
obligations of the Guarantor which has not been obtained.
(iii) This Guarantee and any other Transaction Document to
which the Guarantor is a party have been duly executed and delivered by the
Guarantor and constitute legal, valid and binding obligations of the
Guarantor, enforceable against the Guarantor in accordance with the terms
hereof and thereof, except as the enforceability hereof or thereof may be
limited by (A) applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights
generally and (B) general equitable principles, regardless of whether the
issue of enforceability is considered in a proceeding in equity or at law.
(c) NO CONFLICT. Neither the execution, delivery and
performance of this Guarantee or any other Transaction Document to which the
Guarantor is a party nor the consummation of any of the transactions
contemplated hereby or thereby (i) contravenes or violates any
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provision of any Applicable Law to which the Guarantor or any of its assets is
subject, (ii) conflicts with or violates any provision of any formation document
of the Guarantor or (iii) conflicts with or violates, will result in a breach of
any of the terms, covenants, conditions or provisions of, constitutes a default
under, or results in the acceleration of Indebtedness evidenced by, any
agreement or instrument to which the Guarantor is a party or by which it or any
of its properties or assets is bound or to which it may be subject, except, in
the case of clause (i) or (iii) immediately above, any such conflict, violation,
breach, default or acceleration which could not reasonably be expected to result
in a Material Adverse Effect, or (iv) results in the creation or imposition of
(or the obligation to create or impose) any Lien (other than Trinidad Permitted
Project Liens) upon any of the properties or assets of the Guarantor.
(d) COMPLIANCE WITH APPLICABLE LAW. The Guarantor has been and
is currently in compliance with all Applicable Laws to which it or any of its
assets is subject, except where failure to comply could not reasonably be
expected to result in a Material Adverse Effect.
(e) LITIGATION. There are no claims, actions, suits,
investigations or proceedings at law or in equity (including any
Environmental Claims) or by or before any arbitrator or Governmental
Authority now pending against the Guarantor or, to the best knowledge of the
Guarantor, threatened against the Guarantor or any properties, assets or
rights of the Guarantor that could reasonably be expected to result in a
Material Adverse Effect.
(f) ENVIRONMENTAL MATTERS. The Guarantor has been and is
currently in compliance with all applicable Environmental Laws except where
the failure to comply could not reasonably be expected to have a Material
Adverse Effect. To the best knowledge of the Guarantor, the Trinidad Project
is in compliance with all applicable Environmental Laws and there are no
existing facts, circumstances or conditions which could under any existing
applicable Environmental Law, individually or in the aggregate with all other
circumstances and conditions, reasonably be expected to result in a Material
Adverse Effect.
(g) BUSINESS OF THE GUARANTOR. Except as otherwise permitted
in this Guarantee and the other Finance Documents, the Guarantor is not
engaged in any business other than the financing of the Trinidad Project and
transactions related thereto.
(h) VALID TITLE. The Guarantor is the legal and beneficial
owner of, with good, legal and valid title to, all its properties and assets
free and clear of all other Liens than Trinidad Permitted Project Liens.
(i) SECURITY INTERESTS.
(i) The Security Documents to which the Guarantor is a
party, upon execution and delivery by the parties thereto, create valid, and,
when financing statements (or the equivalent) in appropriate form are filed
in the recording offices specified therein, perfected, first priority Liens
subject to Trinidad Permitted Project Liens in all of the Trinidad Collateral
owned by the Guarantor in favor of the Collateral Agent for the benefit of
the Secured Parties.
(ii) No mortgage or financing statement or other
instrument or recordation executed or authorized to be filed by the
Guarantor, or, to the Guarantor's best knowledge, by any other Person
covering all or any part of the property or assets of the Guarantor
(including the Trinidad Collateral) is on file in any recording office,
except such as relate to Trinidad Permitted Project Liens.
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(j) UTILITY REGULATION. The Guarantor is not subject to
regulation by the United States Securities and Exchange Commission under
PUHCA as a "holding company," a "public utility company" or an "affiliate" or
a "subsidiary company" of a "holding company."
(k) NO DEFAULTS.
(i) No Trinidad Default or Trinidad Event of Default has
occurred and is continuing.
(ii) The Guarantor is not in default under any Trinidad
Project Document or any other Transaction Document to which the Guarantor is
a party except for defaults which could not reasonably be expected to result
in a Material Adverse Effect.
(iii) To the best knowledge of the Guarantor, no default
exists by any other party to any Trinidad Project Document or any other
contract related to the Trinidad Project and no event of force majeure exists
under any Trinidad Project Document except for defaults which, in either
case, could not reasonably be expected to result in a Material Adverse Effect.
(l) GOVERNMENTAL APPROVALS. All Governmental Approvals which
are required to be obtained by, in the name of or on behalf of the Guarantor
or, to the knowledge of the Guarantor, any other party to any Transaction
Document in connection with the execution, delivery and performance by the
Guarantor or any other party to any Transaction Document of the Transaction
Documents have been duly obtained and are in full force and effect, other
than, in each case, those Governmental Approvals which the failure to so
obtain could not reasonably be expected to result in a Material Adverse
Effect.
(m) MARGIN STOCK. The Guarantor is not engaged, directly or
indirectly, principally, or as one of its important activities, in the
business of extending, or arranging for the extension of, credit for the
purposes of purchasing or carrying any "margin stock" (as defined in
Regulation, T, U or X of the Board of Governors of the Federal Reserve
System).
(n) TAXES. The Guarantor has filed or caused to be filed all
Tax Returns required by Applicable Law to be filed by it, and has paid all
Taxes shown to be due and payable by it on such Tax Returns or any
assessments made against it or any of its properties and all other Taxes,
fees or other charges imposed on it by any Governmental Authority other than
Taxes, fees, assessments or other charges which are not delinquent and remain
payable without penalty or which the Guarantor is contesting in good faith
and for which the Guarantor is maintaining adequate reserves (in accordance
with GAAP) in connection therewith.
(o) OWNERSHIP OF THE GUARANTOR. As of the date of this
Guarantee, the Trinidad Project Borrower and Robert Paladino are the sole
members of the Guarantor.
(p) DISCLOSURE. Each of the Preliminary Offering Circular and
the Final Offering Circular as of its date did not, and the Final Offering
Circular (as the same may have been amended or supplemented) as of the
Closing Date will not, contain any untrue statement of a material fact with
respect to the Guarantor or omit to state a material fact necessary to make
the statements made therein with respect to the Guarantor, in light of the
circumstances under which they were made, not misleading.
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(q) REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by the Guarantor and each of its Affiliates, and to its
knowledge, each other party in any Transaction Document are true and correct,
except to the extent such misrepresentation could not reasonably be expected
to have a Material Adverse Effect.
(r) TRINIDAD PROJECT DOCUMENTS. The Collateral Agent has
received a complete copy of each Trinidad Project Document then in effect
(including all exhibits, schedules and disclosure letters referred to therein
or delivered pursuant thereto, if any).
(s) TRINIDAD PROJECT. To the best of the Guarantor's
knowledge, the services to be performed, the materials to be supplied and the
easements, licenses and other rights granted or to be granted to the Trinidad
Obligor pursuant to the terms of the Trinidad Project Documents provide or
will provide the Trinidad Obligor with all rights and property interest
required to enable the Trinidad Obligor to obtain all services, materials or
rights (including access) required for the design, construction, start-up,
operation and maintenance of the Trinidad Project, including the Trinidad
Obligor's full and prompt performance of its obligations, and full and timely
satisfaction of all conditions precedent to the performance by others of
their obligations, under the Trinidad Project Documents, other than those
services, materials or rights that reasonably can be expected to be
obtainable in the ordinary course of business.
7. The Guarantor hereby covenants and agrees that from the date of this
Guarantee, it shall faithfully observe and fulfill, and shall cause to be
faithfully observed and fulfilled, each and all of the following covenants until
all amounts due under this Guarantee, the Trinidad Project Note and the Trinidad
Project Loan Agreement shall have been indefeasibly paid in full:
(a) REPORTING REQUIREMENTS. The Guarantor shall furnish or
cause to be furnished to the Funding Company and, in the case of item (ix)
set forth below, each of the Rating Agencies:
(i) as soon as available and in any event within sixty
(60) days after the end of the first three (3) quarterly accounting periods
in each fiscal year of the Guarantor (commencing with the quarter ending
August 31, 1998), and, with respect to item (C) herein, the final quarter of
each fiscal year, Unaudited Financial Statements of the Guarantor,
accompanied by an Officer's Certificate of the Guarantor confirming (A) that
such Unaudited Financial Statements fairly present of the financial condition
and results of operations of the Guarantor on the dates and for the periods
indicated in accordance with GAAP (other than with respect to the notes and
other normally recurring year-end adjustments), (B) that no Trinidad Default
has occurred and no Trinidad Event of Default has occurred and is continuing,
or, if such event has occurred, describing the nature thereof and (C) the
Debt Service Coverage Ratios for the historical three (3) quarters and the
final quarter of such fiscal year, together with a reconciliation of each
quarterly Debt Service Coverage Ratio to the annual Debt Service Coverage
Ratio;
(ii) as soon as available and in any event within one
hundred twenty (120) days after the end of each fiscal year of the Trinidad
Finance Parties (commencing with the fiscal year ending February 28, 1999),
Annual Audited Consolidated Financial Statements, accompanied by an audit
opinion thereon by the Auditors, which opinion shall state that (A) said
financial statements of the Trinidad Finance Parties present fairly, in all
material respects, the financial position, results of operations and cash
flows of the Trinidad Finance Parties at the end of, and for, such fiscal
year in accordance with GAAP, (B) nothing has come to their attention that
any Trinidad Default has occurred and no Trinidad Event of Default, as they
relate to
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accounting matters, has occurred and is continuing, or, if such event has
occurred, describing the nature thereof and (C) the Debt Service Coverage
Ratios for such fiscal year;
(iii) promptly and in any event within five (5) days after
an Authorized Officer of the Guarantor obtains actual knowledge of any
Trinidad Default or Trinidad Event of Default, a written notice describing
such Trinidad Default or Trinidad Event of Default and any action being or
proposed to be taken with respect thereto;
(iv) all other information reasonably requested by Funding
Company to enable Funding Company to satisfy its obligations under the
Indenture;
(v) written notice of any event or condition that could
reasonably be expected to result in a Material Adverse Effect;
(vi) notice of any litigation, pending or threatened,
against the Guarantor of which it has actual knowledge, which could
reasonably be expected to result in a Material Adverse Effect;
(vii) all reports related to environmental matters in
respect of the Trinidad Project;
(viii) copies of all material notices delivered to it in
connection with any Trinidad Project Document or otherwise in connection with
the Trinidad Project;
(ix) copies of all construction schedules, construction
budgets and Operating Budgets which are approved by the Independent Engineer
(together, periodically, with evidence of compliance therewith), copies of
all bi-monthly reports issued by the Independent Engineer prior to Completion
of the Trinidad Project and each annual report thereafter and monthly
operating reports from the Trinidad Obligor;
(x) copies of all change orders and any document or
written notice from the construction contractor requesting or recommending
the initiation of a change order and any other notice, including, without
limitation, notices with respect to the occurrence of a force majeure event
(or event of similar effect) under any Trinidad Project Document which may
result in a material increase in Trinidad Project Costs;
(xi) promptly upon request, a list of the current balances
of each of the Trinidad Depositary Accounts; and
(xii) any notice it receives from the Trinidad Obligor
pursuant to the Trinidad Loan Agreement.
(b) MAINTENANCE OF EXISTENCE. The Guarantor shall at all times
preserve and maintain in full force and effect (i) its existence as a society
with restricted liability and (ii) all of its powers, rights, privileges and
licenses necessary for the transaction of its business as conducted or
proposed to be conducted except, in the case of this clause (b) where failure
to do so could not reasonably be expected to result in a Material Adverse
Effect.
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(c) COMPLIANCE WITH LAWS. The Guarantor shall comply with all
Applicable Laws (including Environmental Laws), except where non-compliance
could not reasonably be expected to result in a Material Adverse Effect.
(d) GOVERNMENTAL APPROVALS; TITLE.
(i) The Guarantor shall cause the Trinidad Obligor to
obtain in a timely manner, maintain in full force and effect (or where
appropriate, renew) and comply with all Governmental Approvals (including,
without limitation, those required under Environmental Laws) required at any
time or advisable (A) in connection with the construction, maintenance,
ownership and good and orderly operation of the Trinidad Project, as
currently conducted and as proposed to be conducted, (B) for the Trinidad
Project to produce, sell and deliver electricity in accordance with and as
contemplated by the Trinidad Project Documents and (C) to execute and deliver
the Transaction Documents to which it is a party and to perform its
obligations thereunder, unless in each case the failure to so obtain,
maintain or comply with such Governmental Approvals could not reasonably be
expected to result in a Material Adverse Effect.
(ii) The Guarantor shall preserve and maintain good, valid
and, where applicable, marketable title to all of its properties and assets
subject to no Liens other than Trinidad Permitted Project Liens except where
the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
(e) EXERCISE OF RIGHTS AND PERFORMANCE UNDER TRANSACTION
DOCUMENTS.
(i) The Guarantor shall exercise all of its rights under
any Transaction Document to which it is party unless failure to do so could
not reasonably be expected to result in a Material Adverse Effect.
(ii) The Guarantor shall take all reasonable action within
its control required to ensure that each Transaction Document to which it is
a party is in proper legal form under the respective governing laws selected
for such Transaction Document for the enforcement thereof in such
jurisdictions without further action on the part of Funding Company or the
Collateral Agent.
(iii) The Guarantor shall perform all of its covenants and
obligations under each Transaction Document to which it is party and shall
take all necessary action to prevent the termination or cancellation of any
Transaction Document to which it is a party except where such nonperformance
or nonobservance, or the result of such termination or cancellation, could
not reasonably be expected to result in a Material Adverse Effect.
(f) ADDITIONAL DOCUMENTS; FILINGS AND RECORDINGS.
(i) The Guarantor shall execute and deliver, from time to
time as reasonably requested by Funding Company or the Collateral Agent, at
the Guarantor's expense, such documents in connection with the rights and
remedies of the Secured Parties granted or provided for by this Guarantee or
the other Transaction Documents to which the Guarantor is a party and to
consummate the transactions contemplated therein.
(ii) The Guarantor shall, at its own expense, take all
reasonable actions necessary to establish, maintain, protect, perfect and
continue the perfection and priority
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of the Liens created by the Trinidad Security Documents and to protect and
enforce its rights and title and the rights and title of the Secured Parties
to the Trinidad Collateral in such manner and in such places as in the
opinion of counsel to the Guarantor or the Collateral Agent is required by
Applicable Law in order to fully preserve and protect the rights of Funding
Company or the Collateral Agent, except where the failure to do so could not
reasonably be expected to have as Material Adverse Effect.
(g) PAYMENT OF TAXES AND CLAIMS. The Guarantor shall, prior to
the time penalties shall attach thereto, pay and discharge or cause to be
discharged all Taxes, assessments and governmental charges or levies imposed
upon it, its income or its properties; PROVIDED that the Guarantor shall not
be required to pay any such obligation if (i) such charges are being
diligently contested in good faith by appropriate proceedings, (ii) during
the period of such contest the enforcement of any contested item is
effectively stayed and (iii) adequate reserves are established with respect
to the contested items (in accordance with GAAP).
(h) BOOKS AND RECORDS. The Guarantor shall keep proper books
of record and account truly and fairly reflecting the financial condition and
results of operations of the Guarantor in which full, true and correct
entries in conformity with GAAP and all Applicable Laws shall be made of all
dealings and transactions in relation to its business and activities. Upon
five (5) days written notice, the Guarantor shall permit officers and
designated representatives of Funding Company, the Collateral Agent, the
Depositary Bank and any duly authorized agent or representative thereof
(including without limitation, the Independent Engineer) to visit and
inspect, from time to time during normal business hours, any of the
properties of the Guarantor and to examine and make copies of the books of
record and account of the Guarantor and discuss the affairs, finances and
accounts of the Guarantor with, and be advised as to the same by, its
officers, all at such reasonable times and intervals and to such reasonable
extent as Funding Company, the Collateral Agent, the Depositary Bank and duly
authorized agent or representative thereof (including, without limitation,
the Independent Engineer) may reasonably request.
(i) AUDITORS. The Guarantor shall retain a nationally
recognized independent accounting firm in the United States to act as its
auditors and authorize such firm to communicate directly with Funding Company
and the Collateral Agent. The Guarantor shall also appoint an auditor who is
a member of, and holds a practicing certificate from, the Institute of
Chartered Accountants of Barbados.
(j) TRINIDAD REVENUE ACCOUNT. The Guarantor shall take all
actions as may be necessary to cause all revenues of the Guarantor to be
deposited in the Trinidad Revenue Account in accordance with the Trinidad
Depositary Agreement and to be disbursed in accordance with the provisions
set forth in ARTICLE 3 (The Trinidad Depositary Accounts) of the Trinidad
Depositary Agreement.
(k) PROJECT IMPLEMENTATION. The Guarantor shall, to the extent
such action is within its control, operate the Trinidad Project and all other
property and rights in accordance with good operating procedure and maintain
the Trinidad Project and other property in good repair and condition
(ordinary wear and tear excepted in respect thereof).
(l) PERMITTED INDEBTEDNESS. The Guarantor shall not create or
incur or suffer to exist any Indebtedness except the following:
(i) Indebtedness incurred pursuant to this Guarantee;
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(ii) Indebtedness incurred to finance in whole or in part
the making of capital improvements to the Trinidad Project required to
maintain compliance with Applicable Law; PROVIDED that the Independent
Engineer shall have certified to the Bond Trustee that:
(A) an Officer's Certificate of an Authorized Officer
of the Trinidad Obligor certifying that such Indebtedness is required to make
a capital improvement to the Trinidad Project that is required in order to
maintain compliance with Applicable Law is reasonable and that such
Indebtedness is the most effective means of making such capital expenditure
and, if applicable, completing the Trinidad Project; and
(B) after giving effect to the incurrence of such
Indebtedness, the minimum Projected Debt Service Coverage Ratio for (1) the
next four consecutive fiscal quarters, commencing with the quarter in which
such Indebtedness is to be incurred, taken as one annual period and (2) each
subsequent fiscal year through the Final Maturity Date for the Securities,
will not be less than 1.2 to 1;
(iii) Indebtedness incurred to finance in whole or in part
the making of capital improvements to the Trinidad Project other than those
capital improvements referenced in clause (ii) above PROVIDED that:
(A) an Authorized Officer of the Trinidad Obligor
certifies to the Bond Trustee that no Trinidad Default or Trinidad Event of
Default has occurred and is continuing or will occur as a result of the
incurrence of such Indebtedness;
(B) the Independent Engineer shall have certified to
the Bond Trustee that after giving effect to the incurrence of such
Indebtedness, (1) the minimum Projected Debt Service Coverage Ratio for (x)
the next four consecutive fiscal quarters commencing with the quarter in
which such Indebtedness is to be incurred, taken as one annual period and (y)
each subsequent fiscal year through the Final Maturity Date for the
Securities, will not be less than 1.5 to 1 and (2) the average Projected Debt
Service Coverage Ratio for all succeeding fiscal years until the Final
Maturity Date for the Securities will not be less than 1.55 to 1; and
(C) written confirmation from each Rating Agency then
rating the Securities that the incurrence of such Indebtedness will not
result in a Ratings Downgrade;
(iv) Indebtedness in the form of a working capital
facility for the benefit of the Trinidad Project in an aggregate principal
amount not to exceed $3,000,000; PROVIDED that the terms of such facility
provide that the aggregate amount of all loans outstanding thereunder shall
be reduced to zero for ten (10) days in each fiscal year;
(v) To the extent such obligations would constitute
Indebtedness, obligations of the Trinidad Finance Parties under the Trinidad
Project Documents;
(vi) Indebtedness related to Trinidad Permitted Project
Liens; and
(vii) Subordinated Indebtedness from any other Trinidad
Finance Party.
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(m) PERMITTED LIENS. The Guarantor shall not create or suffer
to exist or permit any Lien upon or with respect to any of its properties
except the following:
(i) Liens specifically permitted or required by, or
created by, any Security Document or any Transaction Document including,
without limitation, the Trinidad PPA;
(ii) Liens for taxes, assessments or governmental charges
which are either not yet due or which are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves are
established in accordance with GAAP; and
(iii) Other Liens incidental to the conduct of the
Guarantor's business or the ownership of properties and assets which were not
incurred in connection with the borrowing of money or the obtaining of
advances or credit (other than Liens arising by operation of law or statute
in the ordinary course of business), and which do not in the aggregate
materially impair the use thereof in the operation of the Guarantor's
business.
(n) CONTINGENT LIABILITIES. The Guarantor shall not
contingently or otherwise be or become liable, directly or indirectly, in
connection with any Guaranteed Obligation except for endorsements and similar
obligations in the ordinary course of business.
(o) NATURE OF BUSINESS. The Guarantor shall not engage in any
business other than its existing business and as otherwise contemplated by
the Transaction Documents.
(p) PROHIBITION ON FUNDAMENTAL CHANGES. The Guarantor shall
not enter into any transaction of merger or consolidation, change its form of
organization or its business, liquidate, wind-up or dissolve itself (or
suffer any liquidation or dissolution), discontinue its business or purchase
or otherwise acquire all or substantially all of the assets of any other
Person, except, in any such case, as contemplated by the Finance Documents.
(q) SALE OF ASSETS. The Guarantor shall not sell or transfer
any assets or assign any rights other than (so long as no Trinidad Default or
Trinidad Event of Default has occurred and is continuing) those in the
ordinary course of its business for cash equal to the fair market value of
such assets at the time of sale, except, in any such case, as contemplated by
the Finance Documents.
(r) SUBSIDIARIES; ADVANCES, INVESTMENTS AND LOANS. The
Guarantor shall not form or have any Subsidiaries (other than the Trinidad
Obligor), make investments, loans or advances or acquire the stock,
obligations or securities of any Person; PROVIDED that the Guarantor may
invest amounts on deposit in the Trinidad Depositary Accounts, subject to
limitations as to term and duration, in Cash Equivalents; PROVIDED FURTHER
that the Guarantor may make loans to the other Trinidad Finance Parties
provided that such loans shall be Subordinated Indebtedness of such other
Trinidad Finance Party; PROVIDED FURTHER that the Guarantor shall be entitled
to receive equity contributions from, and make equity contributions to, the
Trinidad U.S. Parent, the Trinidad Cayman Parent, or any other Trinidad
Finance Party.
(s) TRANSACTIONS WITH AFFILIATES. The Guarantor shall not
enter into any transaction or series of related transactions, whether or not
in the ordinary course of business, with any Affiliate of the Guarantor which
is not on terms and conditions no less favorable as would be obtained in a
comparable arm's-length transaction with a Person other than an Affiliate of
the Guarantor, except that the Guarantor may perform its obligations under
and engage in the transactions contemplated by the Transaction Documents.
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(t) RESTRICTED PAYMENTS. The Guarantor shall not make any
Restricted Payments except as permitted under the Finance Documents.
(u) AMENDMENTS TO TRINIDAD PROJECT DOCUMENTS. Other than with
respect to Permitted Contract Buy-Outs, the Guarantor (nor any Affiliate
thereof) shall not, directly or indirectly, (x) permit the assignment of the
rights and obligations of any party to any Trinidad Project Document or (y)
terminate, amend, modify, replace, supplement or waive, or permit or consent
to the termination, modification, replacement, supplement or waiver of, any
of the provisions of, or give any consent under, any of the Trinidad Project
Documents unless (i) the Guarantor certifies that such assignment,
termination, amendment, modification, replacement, supplement, waiver or
consent could not reasonably be expected to result in a Material Adverse
Effect, in addition to the condition set forth in clause (i) above and (ii)
in the case of any assignment, termination, amendment, modification,
replacement, supplement, waiver or consent with respect to the Trinidad PPA
or any other Trinidad Project Document which affects the revenues to be
received by the Guarantor, (x) the Independent Engineer certifies that such
assignment, termination, amendment, modification, replacement, supplement,
waiver or consent could not reasonably be expected to result in a Material
Adverse Effect and (y) the Guarantor provides to the Bond Trustee written
confirmation from each Rating Agency then rating the Securities that such
assignment, termination, amendment, modification, replacement, supplement,
waiver or consent will not result in a Ratings Downgrade.
(v) ASSIGNMENT OF OBLIGATIONS; ADDITIONAL AGREEMENTS. The
Guarantor shall not assign any of its rights or obligations under any
Transaction Document and shall not enter into any additional contract,
agreement or undertaking if the transactions contemplated by such assignment
or additional contract, agreement or undertaking could reasonably be expected
to have a Material Adverse Effect; PROVIDED that the Guarantor shall be
permitted to assign any of its rights or obligations hereunder if such
assignment is necessary to avoid any adverse tax consequences resulting from
a change in Applicable Law (or the interpretation thereof) and (i) no
Trinidad Default or Trinidad Event of Default shall exist and be continuing
at such time, (ii) the Bond Trustee shall receive written confirmation from
each Rating Agency that such assignment shall not result in a Ratings
Downgrade and (iii) the Bond Trustee receives satisfactory Opinions of
Counsel of the Guarantor stating that (A) such assignment is enforceable and
creates a legal, valid and binding obligation of the Guarantor, (B) such
assignment has no adverse consequences upon the rights and remedies of the
Secured Parties with respect to the Collateral and (C) such assignment shall
have no adverse effects on the tax structure of the transaction prior to the
assignment or upon payments to or from any Project Obligor or otherwise
related to the Securities and each of the Project Notes.
(w) MODIFICATIONS OF FORMATION DOCUMENTS. The Guarantor shall
not amend or modify its articles of organization, certificate of
organization, by-laws or other formation documents or change its fiscal year,
except if such amendment, modification or change which could not reasonably
be expected to result in a Material Adverse Effect.
(x) ABANDONMENT. The Guarantor shall not voluntarily cease or
abandon the development, construction or operation of the Trinidad Project.
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<PAGE>
(y) TAXATION.
(i) All payments made by the Guarantor in respect of the
Trinidad Project Loan shall be made free and clear of, and without
withholding or deduction for or on account of, any and all Taxes. The
Guarantor shall pay such additional amounts as may be necessary to ensure
that the amounts received by the Funding Company after such withholding or
deduction, if any, shall equal the respective amounts of principal and
interest that would have been receivable in the absence of such withholding
or deduction.
(ii) The Guarantor shall promptly pay when due any present
or future stamp, court or documentary Taxes or any other excise or property
Taxes, charges or similar levies that arise in any jurisdiction from the
execution or delivery of the Trinidad Project Note or any other document
referred to herein or therein, excluding (A) Taxes imposed on or measured by
the net income or capital of the Funding Company and (B) any such Taxes,
charges or similar levies imposed by any jurisdiction other than Barbados or
Trinidad.
(z) REMEDIES UPON A TRINIDAD EVENT OF DEFAULT. The Guarantor
shall not exercise its rights pursuant to SECTION 5.2 (Remedies Upon a
Trinidad Event of Default) of the Trinidad Loan Agreement unless:
(i) in the case of an exercise of its rights pursuant to
SECTION 5.2(I), the Guarantor has received the written and unrescinded
direction of (A) the One-Third Holders or (B) the Bond Trustee,
notwithstanding the absence of direction from the One-Third Holders, if in
the good faith exercise of its discretion the Bond Trustee determines that
such action is necessary to protect the interests of the Holders, to do so;
and
(ii) in the case of an exercise of its rights pursuant to
SECTION 5.2(II), the Guarantor has received the written and unrescinded
direction of (A) the Majority Holders or (B) the Bond Trustee,
notwithstanding the absence of direction from the Majority Holders if in the
good faith exercise of its discretion the Bond Trustee determines that such
action is necessary to protect the interests of the Holders to do so.
8. The Guarantor hereby waives, to the extent permitted by
Applicable Law: (a) promptness, diligence, notice of acceptance and any other
notice with respect to any of the indebtedness or any other obligations under
the Transaction Documents or this Guarantee, (b) any requirement that the
Collateral Agent or any other person protect, secure or insure any lien or
any collateral or other property subject thereto or exhaust any right or take
any action against either the Trinidad Project Borrower or any other Person
or any collateral, (c) any defense arising by reason of any claim or defense
based upon an election of remedies by the Funding Company or the Bond Trustee
which in any manner impairs, reduces, releases or otherwise adversely affects
its subrogation, contribution or reimbursement rights or other rights to
proceed against either the Trinidad Project Borrower or any other Person or
any collateral, (d) any duty on the part of the Funding Company or the Bond
Trustee to disclose to the Guarantor any matter, fact or thing relating to
the business, operation or condition of either the Trinidad Project Borrower
or any other party to any of the Transaction Documents and the Trinidad
Project Borrower's assets now known or hereafter known by the Funding Company
or the Bond Trustee and (e) all presentments, demands for performance,
notices of non-performance, protests, notices of protest, notices of
dishonor, and notices of acceptance of this Guarantee and of the existence,
creation, or incurrence of new or additional Guaranteed Obligations.
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9. The Guarantor hereby irrevocably waives, to the extent permitted
by Applicable Law, any claim or other rights which it may now or hereafter
acquire against the Trinidad Project Borrower, whether due or to become due,
voluntary or involuntary, absolute or contingent, liquidated or unliquidated,
determined or undetermined, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution, indemnification, any
right to participate in any claim or remedy of the Funding Company against
the Trinidad Project Borrower or any collateral which the Funding Company now
has or hereafter acquires, whether or not such claim, remedy or right arises
in equity, or under contract, statute or common law, including without
limitation, the right to take or receive from the Trinidad Project Borrower,
directly or indirectly, in cash or other property or by setoff or in any
other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to the Guarantor in violation of the preceding
sentence and the Guaranteed Obligations shall not have been paid in full,
such amount shall be deemed to have been paid by the Guarantor for the
benefit of, and held in trust for the benefit of, the Collateral Agent and
shall forthwith be paid to the Funding Company to be credited and applied to
the Guaranteed Obligations, whether matured or unmatured, in accordance with
the terms of the Trinidad Project Loan Agreement. The Guarantor acknowledges
that it will receive direct and indirect benefits from the incurrence of the
Trinidad Project Loan contemplated by the Trinidad Project Loan Agreement and
that the waiver set forth in this Section 9 is knowingly made in
contemplation of such benefits.
10. The Guarantor agrees that, to the extent that either the
Trinidad Project Borrower or the Guarantor makes a payment or payments to the
Funding Company, or the Collateral Agent receives any proceeds of Collateral,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential set aside or otherwise required to
be repaid to either the Trinidad Project Borrower, its estate, trustee,
receiver or any other party, including, without limitation, under any
bankruptcy law, state or federal law, common law or equitable cause, then to
the extent of such payment or repayment, the obligation or part thereof which
has been paid, reduced or satisfied by such amount shall be reinstated and
continued in full force and effect as of the date such initial payment,
reduction or satisfaction occurred. The Guarantor shall defend or indemnify
the Funding Company from and against any claim or loss under this Section 8
(including reasonable attorneys' fees and expenses) in the defense of any
such action or suit.
11. The Guarantor acknowledges and agrees that it shall have the
sole responsibility for obtaining from the Trinidad Project Borrower such
information concerning the Trinidad Project Borrower's financial conditions
or business operations as the Guarantor may require, and that the Collateral
Agent has no duty at any time to disclose to the Guarantor any information
relating to the business operations or financial condition of the Trinidad
Project Borrower.
12. To the extent that the waiver set forth in SECTION 7 is or is
deemed to be ineffective or inapplicable, any obligations of the Trinidad
Project Borrower to the Guarantor, now or hereafter existing, are hereby
subordinated to the Guaranteed Obligations. If the Collateral Agent so
requests, after the occurrence of an Event of Default under the Trinidad
Project Loan Agreement, such obligations of the Trinidad Project Borrower to
the Guarantor shall be enforced and performance received by the Guarantor as
trustee for the Collateral Agent and the proceeds thereof shall be paid over
to the Collateral Agent on account of the Guaranteed Obligations, but without
reducing or affecting in any manner the maximum liability of the Guarantor
under the other provisions of this Guarantee.
13. The Collateral Agent may, without notice to the Guarantor and
without affecting the Guarantor's obligations hereunder, assign this
Guarantee, in whole or in part in accordance with the provisions of the
Trinidad Project Loan Agreement and the Intercreditor Agreement. The
Guarantor agrees that the Collateral Agent may, subject to the provisions of
the Trinidad Project Loan Agreement, disclose to any prospective purchaser
and any purchaser of all or part of the Guaranteed Obligations any
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and all information in the Collateral Agent's possession concerning the
Guarantor, this Guarantee and any security for this Guarantee.
14. The Guarantor agrees to pay all reasonable attorneys' expenses
and fees and all other fees and expenses which may be incurred by the
Collateral Agent in the enforcement of this Guarantee.
15. The Collateral Agent agrees that no partners, directors,
officers, shareholders or employees or agents of the Guarantor shall in any
way be liable for the payment of the Trinidad Project Note or any sums now or
hereafter owing under the terms of, or for the performance of any obligation
contained in, this Guarantee.
16. No modification or waiver of any of the provisions of this
Guarantee shall be binding on the Collateral Agent, except as expressly set
forth in a writing duly signed and delivered by the Collateral Agent acting
pursuant to the terms of the Intercreditor Agreement.
17. This Guarantee shall be binding upon and inure to the benefit of
the Guarantor and the Collateral Agent for the benefit of the Secured Parties
and their respective successors and assigns; PROVIDED that the Guarantor
shall not assign its rights or the Guaranteed Obligations created under this
Guarantee without the prior written consent of the Collateral Agent.
18. In case any provision of this Guarantee, the Trinidad Project
Loan Agreement or the Trinidad Project Note shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or the Guaranteed Obligations, or of such
provision or the Guaranteed Obligations in any jurisdiction, shall not in any
way be affected or impaired thereby.
19. This Guarantee shall be governed by and construed according to
the laws of the State of New York.
20. This Guarantee embodies the entire agreement and understanding
between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof.
21. WITH REGARD TO THIS GUARANTEE, EACH OF THE GUARANTOR AND THE
COLLATERAL AGENT HEREBY WAIVES THE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING AND FOR ANY COUNTERCLAIM THEREIN.
22. All notices, demands, requests and other communications required
or permitted hereunder shall be in writing, and shall be given and deemed to
have been given in accordance with Section 6.1 of the Trinidad Project Loan
Agreement and the information set forth immediately below shall apply to:
If to the Guarantor:
York Holdings (Barbados) SRL
The Ernst & Young Building
Bush Hill, Bay Street
St. Michael, Barbados
Attention:
----------------------
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If to the Bond Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration--
International Finance Unit
23. This Guarantee may be executed in any number of counterparts,
all of which together shall constitute one agreement.
24. The obligations of the Guarantor hereunder are subject to the
limitations set forth in Section 6.10 of the Trinidad Project Loan Agreement,
the provisions of which are hereby incorporated by reference.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be
duly executed as of the day and year first written above.
YORK HOLDINGS (BARBADOS) SRL,
a society with restricted liability
By: /s/ Robert C. Paladino
---------------------------
Name: Robert C. Paladino
Title: Vice President
THE BANK OF NEW YORK,
as Collateral Agent
By: /s/ Joseph Ernst
---------------------------
Name: Joseph Ernst
Title: Vice President
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<PAGE>
Exhibit 10.54
WARBASSE I GUARANTEE
This WARBASSE I GUARANTEE (this "Guarantee") is entered into
as of August 4, 1998 by WARBASSE POWER I LLC, a Delaware limited liability
company (the "Guarantor"), in favor of THE BANK OF NEW YORK, a New York banking
corporation, under that certain Indenture described in the recitals below, and
as Collateral Agent under the Intercreditor Agreement for the benefit of the
Secured Parties (in such capacities, the "Bond Trustee"). All capitalized terms
used herein but not specifically defined shall have the respective meanings
given to such terms in Appendix A to the Indenture, which Appendix A is hereby
incorporated herein by reference as if set forth in full herein.
W I T N E S S E T H:
WHEREAS, York Power Funding (Cayman) Limited (the "Funding
Company") is a limited liability company organized under the laws of the Cayman
Islands for the sole purpose of issuing the Securities pursuant to the Indenture
and making loans to the Project Borrowers from the proceeds of such issuance;
WHEREAS, the Funding Company has on the date hereof issued and
sold Securities in the principal amount of $150 million;
WHEREAS, the principal and interest payments on the Securities
will be partially serviced by repayment of a loan made by the Funding Company to
the U.S. Guarantors and guaranteed by the U.S. Guarantors subject to the
conditions set forth in the Indenture; and
WHEREAS, the Guarantor is an affiliate of the Sponsor and the
Funding Company and anticipates benefiting directly and indirectly from the
issuance and sale of the Securities by the Funding Company and, therefore, is
willing to guarantee certain of the obligations of the Funding Company
thereunder in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the above premises and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. (a) As set forth in this Guarantee, the Guarantor, jointly
and severally with the other U.S. Guarantors, guarantees the full
payment of the Guaranteed Obligations (as hereafter defined) when due,
upon maturity, acceleration or otherwise; PROVIDED, HOWEVER, that no
demand under this Guarantee may be made, and no obligation to pay all
or any portion of the Guaranteed Obligations shall exist, unless at the
time such demand shall have been made there also shall have occurred
and be continuing (a) an Event of Default under Section 5.1(a) of the
U.S. Project Loan Agreement among the U.S. Guarantors and the Funding
Company, (b) an Event of Default under Section 5.1(a) of the Indenture
between the Bond Trustee and the Funding Company or (c) an Event of
Default under this Guarantee.
(b) The Guarantor hereby and unconditionally agrees
that upon any failure by the Funding Company to pay, when due, of any
of the Guaranteed Obligations, the Guarantor will promptly pay the
same. Each and every failure in the payment of any of the Guaranteed
Obligations shall give rise to a separate cause of action under this
Guarantee, and separate suits may be brought against the Guarantor
hereunder as each cause of action arises.
<PAGE>
(c) The Guarantor further agrees that this Guarantee
constitutes an absolute, present and continuing guarantee of payment
and not of collection and shall apply to all Guaranteed Obligations
whenever arising and waives any right to require that any resort be had
by the Bond Trustee or the Holders after the failure (after giving
effect to any applicable grace period) by the Funding Company in making
such payment to the Bond Trustee's or the Holder's rights against any
other Person, or any other right or remedy available to the Bond
Trustee or any Holder by contract, Applicable Law or otherwise.
2. Guaranteed Obligations as used herein shall mean all
principal, interest, premium (if any), fees, charges, penalties, expenses,
payments, and all other amounts due on or with respect to the Securities
(collectively, the "Guaranteed Obligations").
3. The liability of the Guarantor under this Guarantee in
respect of the Guaranteed Obligations shall be absolute and unconditional and
shall not be affected or released in any way, irrespective of:
(a) any lack of validity or enforceability of the
Securities, the Indenture, the U.S. Project Loan Agreement or any of
the other Transaction Documents;
(b) any change in the time, manner or place of
payment of, or in any other term of any of the Guaranteed Obligations
or amendment or waiver of, or any consent to any departure from, any
Transaction Document, including, without limitation, any increase in
the Guaranteed Obligations or other obligations of the Funding Company
under the Indenture;
(c) any enforcement of any Transaction Document,
including the taking, holding or sale of any collateral, or any
termination or release of any collateral from the liens created by any
Transaction Document or the non-perfection of any liens created by any
Transaction Document;
(d) the failure by any other U.S. Guarantor to
fulfill its obligations under its Guarantee;
(e) any change, restructuring or termination of the
structure or existence of the Funding Company or any other U.S.
Guarantor;
(f) any Event of Default of the Funding Company under
Section 5.1 of the Indenture; or
(g) any Event of Default of the Guarantor under
Section 5.1 of the U.S. Project Loan Agreement.
This Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by the Bond
Trustee or any other Person upon the insolvency, bankruptcy or reorganization of
the Funding Company or the Guarantor, or otherwise, all as though such payment
had not been made.
4. The obligations hereunder are independent of the
obligations of the Funding Company or any other U.S. Guarantor, and a separate
action or actions may be brought and prosecuted against the Guarantor whether
action is brought against either the Funding Company or any other U.S.
Guarantor, or whether either the Funding Company or any other U.S. Guarantor be
joined in any such
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<PAGE>
action or actions, and to the extent permitted by Applicable Law, the Guarantor
waives the benefit of any statute of limitations affecting its liability
hereunder.
5. The Guarantor authorizes the Bond Trustee, acting pursuant
to the Indenture, without notice or demand and without affecting its liability
hereunder, from time to time, whether before or after termination of this
Guarantee, to (a) renew, compromise, extend, accelerate or otherwise change the
time for payment of the obligations of the Funding Company under the Indenture
or any part thereof, (b) take and hold security for the payment of this
Guarantee or the Guaranteed Obligations, and exchange, enforce, waive, release,
fail to perfect, sell, or otherwise dispose of any such security, (c) apply such
security and direct the order or manner of sale thereof and (d) release or
substitute any one or more of the endorsers or guarantors.
6. The Guarantor hereby waives, to the extent permitted by
Applicable Law: (a) promptness, diligence, notice of acceptance and any other
notice with respect to any of the indebtedness or any other obligations under
the Transaction Documents or this Guarantee, (b) any requirement that the Bond
Trustee or any other person protect, secure or insure any lien or any collateral
or other property subject thereto or exhaust any right or take any action
against either the Funding Company or any other Person or any collateral,
(c) any defense arising by reason of any claim or defense based upon an election
of remedies by the Bond Trustee which in any manner impairs, reduces, releases
or otherwise adversely affects its subrogation, contribution or reimbursement
rights or other rights to proceed against either the Funding Company or any
other Person or any collateral, (d) any duty on the part of the Bond Trustee to
disclose to the Guarantor any matter, fact or thing relating to the business,
operation or condition of either the Funding Company or any other party to any
of the Transaction Documents and the Funding Company's assets now known or
hereafter known by the Bond Trustee and (e) all presentments, demands for
performance, notices of non-performance, protests, notices of protest, notices
of dishonor, and notices of acceptance of this Guarantee and of the existence,
creation, or incurrence of new or additional Guaranteed Obligations.
7. The Guarantor hereby irrevocably waives, to the extent
permitted by Applicable Law, any claim or other rights which it may now or
hereafter acquire against the Funding Company, the Guarantor or any other
Guarantor of any or all of the Guaranteed Obligations, whether due or to become
due, voluntary or involuntary, absolute or contingent, liquidated or
unliquidated, determined or undetermined, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution, indemnification,
any right to participate in any claim or remedy of the Bond Trustee against
either the Funding Company or any such Guarantor or any collateral which the
Bond Trustee now has or hereafter acquires, whether or not such claim, remedy or
right arises in equity, or under contract, statute or common law, including
without limitation, the right to take or receive from the Funding Company,
directly or indirectly, in cash or other property or by setoff or in any other
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to the Guarantor in violation of the preceding sentence and
the Guaranteed Obligations shall not have been paid in full, such amount shall
be deemed to have been paid by the Guarantor for the benefit of, and held in
trust for the benefit of, the Bond Trustee and shall forthwith be paid to the
Bond Trustee to be credited and applied to the Guaranteed Obligations, whether
matured or unmatured, in accordance with the terms of the Indenture. The
Guarantor acknowledges that it will receive direct and indirect benefits from
the sale of the Securities contemplated by the Indenture and that the waiver set
forth in this Section 7 is knowingly made in contemplation of such benefits.
8. The Guarantor agrees that, to the extent that either the
Funding Company or the Guarantor makes a payment or payments to the Bond
Trustee, or the Bond Trustee receives any proceeds of Collateral, which payment
or payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential set aside or otherwise required to be repaid to
either the Funding Company,
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<PAGE>
its estate, trustee, receiver or any other party, including, without limitation,
under any bankruptcy law, state or federal law, common law or equitable cause,
then to the extent of such payment or repayment, the obligation or part thereof
which has been paid, reduced or satisfied by such amount shall be reinstated and
continued in full force and effect as of the date such initial payment,
reduction or satisfaction occurred. The Guarantor shall defend or indemnify the
Bond Trustee from and against any and all claims or losses under this Section 8
(including reasonable attorneys' fees and expenses) in the defense of any such
action or suit.
9. The Guarantor acknowledges and agrees that it shall have
the sole responsibility for obtaining from the Funding Company such information
concerning the Funding Company's financial conditions or business operations as
the Guarantor may require, and that the Bond Trustee has no duty at any time to
disclose to the Guarantor any information relating to the business operations or
financial condition of the Funding Company.
10. To the extent that the waiver set forth in SECTION 7 is or
is deemed to be ineffective or inapplicable, any obligations of the Funding
Company to the Guarantor, now or hereafter existing, are hereby subordinated to
the Guaranteed Obligations. After the occurrence of an Event of Default under
the Indenture, such obligations of the Funding Company to the Guarantor shall be
enforced and performance received by the Guarantor as trustee for the Bond
Trustee and the proceeds thereof shall be paid over to the Bond Trustee on
account of the Guaranteed Obligations, but without reducing or affecting in any
manner the maximum liability of the Guarantor under the other provisions of this
Guarantee.
11. The Bond Trustee may, without notice to the Guarantor and
without affecting the Guarantor's obligations hereunder, assign this Guarantee,
in whole or in part in accordance with the provisions of the Indenture. The
Guarantor agrees that the Bond Trustee may, subject to the provisions of the
Indenture, disclose to any prospective purchaser and any purchaser of all or
part of the Guaranteed Obligations any and all information in the Bond Trustee's
possession concerning the Guarantor, this Guarantee and any security for this
Guarantee.
12. The Guarantor agrees to pay all reasonable attorneys'
expenses and fees and all other fees and expenses which may be incurred by the
Bond Trustee in the enforcement of this Guarantee.
13. The Bond Trustee agrees that no partners, directors,
officers, shareholders or employees or agents of the Guarantor shall in any way
be liable for the payment of the Securities, the U.S. Project Note or any sums
now or hereafter owing under the terms of, or for the performance of any
obligation contained in, this Guarantee.
14. No modification or waiver of any of the provisions of this
Guarantee shall be binding on the Bond Trustee, except as expressly set forth in
a writing duly signed and delivered by the Bond Trustee acting pursuant to the
terms of Article 7 of the Indenture.
15. This Guarantee shall be binding upon and inure to the
benefit of the Guarantor and the Bond Trustee for the benefit of the Secured
Parties and their respective successors and assigns; PROVIDED that the Guarantor
shall not assign its rights or the Guaranteed Obligations created under this
Guarantee without the prior written consent of the Bond Trustee.
16. In case any provision of this Guarantee or the Securities
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions
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or the Guaranteed Obligations, or of such provision or the Guaranteed
Obligations in any jurisdiction, shall not in any way be affected or impaired
thereby.
17. This Guarantee shall be governed by and construed
according to the laws of the State of New York.
18. This Guarantee embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof.
19. WITH REGARD TO THIS GUARANTEE, EACH OF THE GUARANTOR AND
THE TRUSTEE HEREBY WAIVES THE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING AND FOR ANY COUNTERCLAIM THEREIN.
20. All notices, demands, requests and other communications
required or permitted hereunder shall be in writing, and shall be given and
deemed to have been given in accordance with Section 11.5 of the Indenture and
the information set forth immediately below shall apply to:
If to the Guarantor:
Warbasse Power I LLC
c/o York Research Corporation
280 Park Avenue, Suite 2700W
New York, New York 10017
Attention: Michael Trachtenberg
If to the Bond Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration--
International Finance Unit
21. This Guarantee may be executed in any number of
counterparts, all of which together shall constitute one agreement.
22. The obligations of the Guarantor hereunder are subject to
the limitations set forth in Section 6.10 of the U.S. Project Loan Agreement,
the provisions of which are hereby incorporated by reference.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Guarantee to be duly executed as of the day and year first written above.
WARBASSE POWER I LLC,
a Delaware limited liability company
By: COGENERATION TECHNOLOGIES, INC.,
its managing member
By: /s/ Michael Trachtenberg
-------------------------------
Name: Michael Trachtenberg
Title: Executive Vice President
THE BANK OF NEW YORK,
as Bond Trustee
By: /s/ Joseph Ernst
---------------------------
Name: Joseph Ernst
Title: Vice President
-6-
<PAGE>
Exhibit 10.55
WARBASSE II GUARANTEE
This WARBASSE II GUARANTEE (this "Guarantee") is entered into
as of August 4, 1998 by WARBASSE POWER II LLC, a Delaware limited liability
company (the "Guarantor"), in favor of THE BANK OF NEW YORK, a New York banking
corporation, under that certain Indenture described in the recitals below, and
as Collateral Agent under the Intercreditor Agreement for the benefit of the
Secured Parties (in such capacities, the "Bond Trustee"). All capitalized terms
used herein but not specifically defined shall have the respective meanings
given to such terms in Appendix A to the Indenture, which Appendix A is hereby
incorporated herein by reference as if set forth in full herein.
W I T N E S S E T H:
WHEREAS, York Power Funding (Cayman) Limited (the "Funding
Company") is a limited liability company organized under the laws of the Cayman
Islands for the sole purpose of issuing the Securities pursuant to the Indenture
and making loans to the Project Borrowers from the proceeds of such issuance;
WHEREAS, the Funding Company has on the date hereof issued and
sold Securities in the principal amount of $150 million;
WHEREAS, the principal and interest payments on the Securities
will be partially serviced by repayment of a loan made by the Funding Company to
the U.S. Guarantors and guaranteed by the U.S. Guarantors subject to the
conditions set forth in the Indenture; and
WHEREAS, the Guarantor is an affiliate of the Sponsor and the
Funding Company and anticipates benefiting directly and indirectly from the
issuance and sale of the Securities by the Funding Company and, therefore, is
willing to guarantee certain of the obligations of the Funding Company
thereunder in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the above premises and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. (a) As set forth in this Guarantee, the Guarantor, jointly
and severally with the other U.S. Guarantors, guarantees the full
payment of the Guaranteed Obligations (as hereafter defined) when due,
upon maturity, acceleration or otherwise; PROVIDED, HOWEVER, that no
demand under this Guarantee may be made, and no obligation to pay all
or any portion of the Guaranteed Obligations shall exist, unless at the
time such demand shall have been made there also shall have occurred
and be continuing (a) an Event of Default under Section 5.1(a) of the
U.S. Project Loan Agreement among the U.S. Guarantors and the Funding
Company, (b) an Event of Default under Section 5.1(a) of the Indenture
between the Bond Trustee and the Funding Company or (c) an Event of
Default under this Guarantee.
(b) The Guarantor hereby and unconditionally agrees
that upon any failure by the Funding Company to pay, when due, of any
of the Guaranteed Obligations, the Guarantor will promptly pay the
same. Each and every failure in the payment of any of the Guaranteed
<PAGE>
Obligations shall give rise to a separate cause of action under this
Guarantee, and separate suits may be brought against the Guarantor
hereunder as each cause of action arises.
(c) The Guarantor further agrees that this Guarantee
constitutes an absolute, present and continuing guarantee of payment
and not of collection and shall apply to all Guaranteed Obligations
whenever arising and waives any right to require that any resort be had
by the Bond Trustee or the Holders after the failure (after giving
effect to any applicable grace period) by the Funding Company in making
such payment to the Bond Trustee's or the Holder's rights against any
other Person, or any other right or remedy available to the Bond
Trustee or any Holder by contract, Applicable Law or otherwise.
2. Guaranteed Obligations as used herein shall mean all
principal, interest, premium (if any), fees, charges, penalties, expenses,
payments, and all other amounts due on or with respect to the Securities
(collectively, the "Guaranteed Obligations").
3. The liability of the Guarantor under this Guarantee in
respect of the Guaranteed Obligations shall be absolute and unconditional and
shall not be affected or released in any way, irrespective of:
(a) any lack of validity or enforceability of the
Securities, the Indenture, the U.S. Project Loan Agreement or any of
the other Transaction Documents;
(b) any change in the time, manner or place of
payment of, or in any other term of any of the Guaranteed Obligations
or amendment or waiver of, or any consent to any departure from, any
Transaction Document, including, without limitation, any increase in
the Guaranteed Obligations or other obligations of the Funding Company
under the Indenture;
(c) any enforcement of any Transaction Document,
including the taking, holding or sale of any collateral, or any
termination or release of any collateral from the liens created by any
Transaction Document or the non-perfection of any liens created by any
Transaction Document;
(d) the failure by any other U.S. Guarantor to
fulfill its obligations under its Guarantee;
(e) any change, restructuring or termination of the
structure or existence of the Funding Company or any other U.S.
Guarantor;
(f) any Event of Default of the Funding Company under
Section 5.1 of the Indenture; or
(g) any Event of Default of the Guarantor under
Section 5.1 of the U.S. Project Loan Agreement.
This Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by the Bond
Trustee or any other Person upon the insolvency, bankruptcy or reorganization of
the Funding Company or the Guarantor, or otherwise, all as though such payment
had not been made.
4. The obligations hereunder are independent of the
obligations of the Funding Company or any other U.S. Guarantor, and a separate
action or actions may be brought and prosecuted
-2-
<PAGE>
against the Guarantor whether action is brought against either the Funding
Company or any other U.S. Guarantor, or whether either the Funding Company or
any other U.S. Guarantor be joined in any such action or actions, and to the
extent permitted by Applicable Law, the Guarantor waives the benefit of any
statute of limitations affecting its liability hereunder.
5. The Guarantor authorizes the Bond Trustee, acting pursuant
to the Indenture, without notice or demand and without affecting its liability
hereunder, from time to time, whether before or after termination of this
Guarantee, to (a) renew, compromise, extend, accelerate or otherwise change the
time for payment of the obligations of the Funding Company under the Indenture
or any part thereof, (b) take and hold security for the payment of this
Guarantee or the Guaranteed Obligations, and exchange, enforce, waive, release,
fail to perfect, sell, or otherwise dispose of any such security, (c) apply such
security and direct the order or manner of sale thereof and (d) release or
substitute any one or more of the endorsers or guarantors.
6. The Guarantor hereby waives, to the extent permitted by
Applicable Law: (a) promptness, diligence, notice of acceptance and any other
notice with respect to any of the indebtedness or any other obligations under
the Transaction Documents or this Guarantee, (b) any requirement that the Bond
Trustee or any other person protect, secure or insure any lien or any collateral
or other property subject thereto or exhaust any right or take any action
against either the Funding Company or any other Person or any collateral,
(c) any defense arising by reason of any claim or defense based upon an election
of remedies by the Bond Trustee which in any manner impairs, reduces, releases
or otherwise adversely affects its subrogation, contribution or reimbursement
rights or other rights to proceed against either the Funding Company or any
other Person or any collateral, (d) any duty on the part of the Bond Trustee to
disclose to the Guarantor any matter, fact or thing relating to the business,
operation or condition of either the Funding Company or any other party to any
of the Transaction Documents and the Funding Company's assets now known or
hereafter known by the Bond Trustee and (e) all presentments, demands for
performance, notices of non-performance, protests, notices of protest, notices
of dishonor, and notices of acceptance of this Guarantee and of the existence,
creation, or incurrence of new or additional Guaranteed Obligations.
7. The Guarantor hereby irrevocably waives, to the extent
permitted by Applicable Law, any claim or other rights which it may now or
hereafter acquire against the Funding Company, the Guarantor or any other
Guarantor of any or all of the Guaranteed Obligations, whether due or to become
due, voluntary or involuntary, absolute or contingent, liquidated or
unliquidated, determined or undetermined, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution, indemnification,
any right to participate in any claim or remedy of the Bond Trustee against
either the Funding Company or any such Guarantor or any collateral which the
Bond Trustee now has or hereafter acquires, whether or not such claim, remedy or
right arises in equity, or under contract, statute or common law, including
without limitation, the right to take or receive from the Funding Company,
directly or indirectly, in cash or other property or by setoff or in any other
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to the Guarantor in violation of the preceding sentence and
the Guaranteed Obligations shall not have been paid in full, such amount shall
be deemed to have been paid by the Guarantor for the benefit of, and held in
trust for the benefit of, the Bond Trustee and shall forthwith be paid to the
Bond Trustee to be credited and applied to the Guaranteed Obligations, whether
matured or unmatured, in accordance with the terms of the Indenture. The
Guarantor acknowledges that it will receive direct and indirect benefits from
the sale of the Securities contemplated by the Indenture and that the waiver set
forth in this Section 7 is knowingly made in contemplation of such benefits.
8. The Guarantor agrees that, to the extent that either the
Funding Company or the Guarantor makes a payment or payments to the Bond
Trustee, or the Bond Trustee receives any proceeds
-3-
<PAGE>
of Collateral, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential set aside or otherwise
required to be repaid to either the Funding Company, its estate, trustee,
receiver or any other party, including, without limitation, under any bankruptcy
law, state or federal law, common law or equitable cause, then to the extent of
such payment or repayment, the obligation or part thereof which has been paid,
reduced or satisfied by such amount shall be reinstated and continued in full
force and effect as of the date such initial payment, reduction or satisfaction
occurred. The Guarantor shall defend or indemnify the Bond Trustee from and
against any and all claims or losses under this Section 8 (including reasonable
attorneys' fees and expenses) in the defense of any such action or suit.
9. The Guarantor acknowledges and agrees that it shall have
the sole responsibility for obtaining from the Funding Company such information
concerning the Funding Company's financial conditions or business operations as
the Guarantor may require, and that the Bond Trustee has no duty at any time to
disclose to the Guarantor any information relating to the business operations or
financial condition of the Funding Company.
10. To the extent that the waiver set forth in SECTION 7 is or
is deemed to be ineffective or inapplicable, any obligations of the Funding
Company to the Guarantor, now or hereafter existing, are hereby subordinated to
the Guaranteed Obligations. After the occurrence of an Event of Default under
the Indenture, such obligations of the Funding Company to the Guarantor shall be
enforced and performance received by the Guarantor as trustee for the Bond
Trustee and the proceeds thereof shall be paid over to the Bond Trustee on
account of the Guaranteed Obligations, but without reducing or affecting in any
manner the maximum liability of the Guarantor under the other provisions of this
Guarantee.
11. The Bond Trustee may, without notice to the Guarantor and
without affecting the Guarantor's obligations hereunder, assign this Guarantee,
in whole or in part in accordance with the provisions of the Indenture. The
Guarantor agrees that the Bond Trustee may, subject to the provisions of the
Indenture, disclose to any prospective purchaser and any purchaser of all or
part of the Guaranteed Obligations any and all information in the Bond Trustee's
possession concerning the Guarantor, this Guarantee and any security for this
Guarantee.
12. The Guarantor agrees to pay all reasonable attorneys'
expenses and fees and all other fees and expenses which may be incurred by the
Bond Trustee in the enforcement of this Guarantee.
13. The Bond Trustee agrees that no partners, directors,
officers, shareholders or employees or agents of the Guarantor shall in any way
be liable for the payment of the Securities, the U.S. Project Note or any sums
now or hereafter owing under the terms of, or for the performance of any
obligation contained in, this Guarantee.
14. No modification or waiver of any of the provisions of this
Guarantee shall be binding on the Bond Trustee, except as expressly set forth in
a writing duly signed and delivered by the Bond Trustee acting pursuant to the
terms of Article 7 of the Indenture.
15. This Guarantee shall be binding upon and inure to the
benefit of the Guarantor and the Bond Trustee for the benefit of the Secured
Parties and their respective successors and assigns; PROVIDED that the Guarantor
shall not assign its rights or the Guaranteed Obligations created under this
Guarantee without the prior written consent of the Bond Trustee.
-4-
<PAGE>
16. In case any provision of this Guarantee or the Securities
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or the Guaranteed
Obligations, or of such provision or the Guaranteed Obligations in any
jurisdiction, shall not in any way be affected or impaired thereby.
17. This Guarantee shall be governed by and construed
according to the laws of the State of New York.
18. This Guarantee embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof.
19. WITH REGARD TO THIS GUARANTEE, EACH OF THE GUARANTOR AND
THE TRUSTEE HEREBY WAIVES THE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING AND FOR ANY COUNTERCLAIM THEREIN.
20. All notices, demands, requests and other communications
required or permitted hereunder shall be in writing, and shall be given and
deemed to have been given in accordance with Section 11.5 of the Indenture and
the information set forth immediately below shall apply to:
If to the Guarantor:
Warbasse Power II LLC
c/o York Research Corporation
280 Park Avenue, Suite 2700W
New York, New York 10017
Attention: Michael Trachtenberg
If to the Bond Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration--
International Finance Unit
21. This Guarantee may be executed in any number of
counterparts, all of which together shall constitute one agreement.
22. The obligations of the Guarantor hereunder are subject to
the limitations set forth in Section 6.10 of the U.S. Project Loan Agreement,
the provisions of which are hereby incorporated by reference.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Guarantee to be duly executed as of the day and year first written above.
WARBASSE POWER II LLC,
a Delaware limited liability company
By: YORK COGEN PARTNERS, L.P.,
its managing member
By: RRR'S VENTURE, LTD.,
its general partner
By: /s/ Michael Trachtenberg
----------------------------
Name: Michael Trachtenberg
Title: Vice President
THE BANK OF NEW YORK,
as Bond Trustee
By: /s/ Joseph Ernst
---------------------------
Name: Joseph Ernst
Title: Vice President
-6-
<PAGE>
Exhibit 10.56
- --------------------------------------------------------------------------------
COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT
Dated as of August 4, 1998
among
YORK POWER FUNDING (CAYMAN) LIMITED
BROOKLYN NAVY YARD POWER LLC
WARBASSE POWER I LLC
WARBASSE POWER II LLC
NEW WORLD POWER TEXAS RENEWABLE ENERGY LIMITED
PARTNERSHIP
YORK EX INTERNATIONAL SRL
YORK HOLDINGS (BARBADOS) SRL
INNCOGEN, LIMITED
THE BANK OF NEW YORK,
as the Bond Trustee,
THE BANK OF NEW YORK,
as the Depositary Bank,
and
THE BANK OF NEW YORK,
as the Collateral Agent
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
DEFINED TERMS; PRINCIPALS OF CONSTRUCTION
Section 1.1 DEFINED TERMS...............................................................2
Section 1.2 PRINCIPLES OF CONSTRUCTION..................................................4
ARTICLE II
COLLATERAL AGENT; RELATIONS
AMONG SECURED PARTIES
Section 2.1 APPOINTMENT AND DUTIES OF COLLATERAL AGENT..................................4
Section 2.2 RIGHTS OF COLLATERAL AGENT..................................................6
Section 2.3 LACK OF RELIANCE ON THE COLLATERAL AGENT....................................8
Section 2.4 INDEMNIFICATION; BANKRUPTCY.................................................9
Section 2.5 RESIGNATION OR REMOVAL OF THE COLLATERAL AGENT.............................10
Section 2.6 DOCUMENTS..................................................................11
Section 2.7 AUTHORIZATION..............................................................11
Section 2.8 ADDITIONAL COLLATERAL AGENTS...............................................12
Section 2.9 POWER OF ATTORNEY FROM SECURED PARTIES.....................................14
Section 2.10 FUNDING COMPANY AS A SECURED PARTY;
TRINIDAD GUARANTOR AS SECURED PARTY.................................................15
Section 2.11 ASSIGNMENT OF RIGHTS, NO ASSUMPTION OF DUTIES..............................15
Section 2.12 EXPERTS AND ADVISERS.......................................................15
Section 2.13 CONCERNING THE COLLATERAL AGENT,
COLLATERAL AGENTS, AND COLLATERAL HELD BY
COLLATERAL AGENTS...................................................................15
ARTICLE III
ADMINISTRATION OF THE COLLATERAL
Section 3.1 ADMINISTRATION OF THE COLLATERAL...........................................16
Section 3.2 PRIORITY OF SECURITY INTERESTS.............................................17
ARTICLE IV
EVENTS OF DEFAULT; TRIGGER EVENTS
Section 4.1 EXERCISE OF RIGHTS.........................................................17
Section 4.2 ACTIONS UPON A TRIGGER EVENT...............................................18
Section 4.3 EXERCISE OF REMEDIES AND APPLICATION OF PROCEEDS...........................19
Section 4.4 RECEIPT OF MONEY OR PROCEEDS...............................................20
Section 4.5 ADDITIONAL SECURED PARTIES.................................................21
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE V
MISCELLANEOUS
Section 5.1 AMENDMENTS.................................................................21
Section 5.2 TRANSFERS..................................................................21
Section 5.3 SEVERABILITY...............................................................22
Section 5.4 NOTICES....................................................................22
Section 5.5 SUCCESSORS AND ASSIGNS.....................................................22
Section 5.6 COUNTERPARTS...............................................................22
Section 5.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL..........................................................................22
Section 5.8 NO IMPAIRMENTS OF OTHER RIGHTS.............................................23
Section 5.9 HEADINGS...................................................................23
Section 5.10 TERMINATION................................................................23
Section 5.11 ENTIRE AGREEMENT...........................................................23
Section 5.12 EXECUTION IN LIEU OF AGENT.................................................24
Section 5.13 CONFLICTS WITH OTHER SECURITY DOCUMENTS....................................24
Section 5.14 SCOPE OF DUTIES; LIMITS ON LIABILITY.......................................24
</TABLE>
Exhibit A Form of Designation Letter
ii
<PAGE>
COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT (this
"AGREEMENT") dated as of August 4, 1998 among YORK POWER FUNDING (CAYMAN)
LIMITED, a limited liability company incorporated under the laws of the Cayman
Islands ("FUNDING COMPANY"), BROOKLYN NAVY YARD POWER LLC, a Delaware limited
liability company (the "BNY GUARANTOR"), WARBASSE POWER I LLC, a Delaware
limited liability company ("WARBASSE I"), WARBASSE POWER II LLC, a Delaware
limited liability company ("WARBASSE II", and together with Warbasse I, the
"WARBASSE GUARANTOR"), NEW WORLD POWER TEXAS RENEWABLE ENERGY LIMITED
PARTNERSHIP, a Delaware limited partnership (the "BIG SPRINGS GUARANTOR"), YORK
EX INTERNATIONAL SRL, a Barbados exempt society with restricted liability (the
"TRINIDAD PROJECT BORROWER"), YORK HOLDINGS (BARBADOS) SRL, a Barbados society
with restricted liability (the "TRINIDAD GUARANTOR"), INNCOGEN, LIMITED, a
Trinidad limited liability company incorporated under the laws of Trinidad (the
"TRINIDAD OBLIGOR") and together with the BNY Guarantor, the Warbasse Guarantor,
the Big Spring Guarantor, the Trinidad Project Borrower and Trinidad Guarantor,
the "PROJECT OBLIGORS"), THE BANK OF NEW YORK, as bond trustee (in such
capacity, together with its successors in such capacity, the "BOND TRUSTEE")
under the Indenture referred to below, THE BANK OF NEW YORK, as collateral agent
(in such capacity, together with its successors in such capacity, the
"COLLATERAL AGENT") under this Agreement for the benefit of the Secured Parties
and THE BANK OF NEW YORK, as the depositary bank (in such capacity, together
with its successors in such capacity, the "DEPOSITARY BANK") under each
Depositary Agreement.
W I T N E S S E T H:
WHEREAS, Funding Company is a limited liability company
established for the sole purpose of issuing the Securities in its individual
capacity as principal and as agent acting on behalf of the U.S. Guarantors
pursuant to the Indenture and to make loans to the Project Borrowers pursuant to
the Project Loan Agreements;
WHEREAS, Funding Company has simultaneously with the execution
and delivery of this Agreement issued and sold the Initial Securities pursuant
to the Indenture;
WHEREAS, payments of the principal of, premium
(if any), interest on and any other amounts due with
respect to the Initial Securities will be serviced by
repayment of the Project Loans and guaranteed (subject to
certain limitations) by the U.S. Guarantors;
WHEREAS, the Collateral Agent, Funding Company and the Project
Obligors are entering into the Security Documents, pursuant to which the
Collateral Agent, acting on behalf of the Secured Parties, will obtain a
continuing Lien on and perfected security interest in the Collateral;
<PAGE>
WHEREAS, Funding Company, the Project Obligors, the Depositary
Bank and the Collateral Agent will enter into the Depositary Agreements in order
to, among other things, appoint the Depositary Bank to hold and administer the
proceeds of certain insurance, revenues generated and loan proceeds received and
distributed to Funding Company and the Project Obligors; and
WHEREAS, the parties hereto desire to enter into this
Agreement to set forth their mutual understanding with respect to (a) the
exercise of certain rights, remedies and options by the respective parties
hereto under the above described documents and (b) the priority of their
respective Security Interests created by the Finance Documents.
NOW, THEREFORE, for and in consideration of the premises and
mutual covenants herein contained, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound, do hereby covenant and agree as
follows:
ARTICLE I
DEFINED TERMS; PRINCIPALS OF CONSTRUCTION
Section 1.1 DEFINED TERMS.
(a) For all purposes of this Agreement, capitalized terms used
but not otherwise defined herein shall have the meaning set forth in APPENDIX A
to the Indenture.
(b) The following terms shall have the following respective
meanings:
"ADDITIONAL COLLATERAL AGENT" shall have the meaning given to
that term in SECTION 2.8(a) (Additional Collateral Agent.)
"AGREEMENT" shall mean this Agreement in its
entirety.
"ARREARAGES" shall have the meaning specified in SECTION 4.4
(Receipt of Money or Proceeds) hereof.
"COLLATERAL AGENT CLAIMS" shall mean all obligations of the
Secured Parties, Funding Company and each Project Obligor now or hereafter
existing, to pay fees, costs and expenses to the Collateral Agent pursuant to
SECTIONS 2.2(e) (Rights of Collateral Agent) and 2.4 (Indemnification;
Bankruptcy) hereof and the other Finance Documents.
2
<PAGE>
"DAMAGES" shall have the meaning specified in SECTION 2.4(b)
(Indemnification; Bankruptcy) hereof.
"DEBT TERMINATION DATE" shall mean the date on which all
Finance Liabilities, other than contingent liabilities and obligations which are
unasserted at such date, have been paid and satisfied in full and all Finance
Commitments have been terminated. Notwithstanding anything herein to the
contrary, the Debt Termination Date shall be deemed to have occurred if the only
Finance Liability and/or Finance Commitment outstanding as of such date is the
Finance Liability and/or Finance Commitment incurred pursuant to that certain
Equity Cash Flow Participation Agreement, dated as of the Closing Date, among
the U.S. Guarantors, the Trinidad U.S. Parent and The Bank of New York, as agent
thereunder on behalf of the Holders.
"DESIGNATION LETTER" shall mean any letter executed and
delivered pursuant to SECTION 4.5 (Additional Secured Parties) hereof and
substantially in the form of EXHIBIT A hereto.
"EVENT OF DEFAULT" shall mean an "event of default" (or
correlative term) under any Finance Document (or any other similar agreement
entered into by Funding Company or any Project Obligor with respect to the
incurrence of Permitted Indebtedness (other than the Securities)).
"FINANCE COMMITMENT" shall mean any commitment pursuant to any
of the Finance Documents (or any other similar agreement entered into by Funding
Company or any Project Obligor with respect to the incurrence of Permitted
Indebtedness (other than the Securities)) to provide credit to Funding Company
or such Project Obligor.
"FINANCE LIABILITIES" shall mean all Indebtedness, liabilities
and obligations of Funding Company and each Project Obligor (including, but not
limited to, principal, interest, fees, reimbursement obligations, penalties,
indemnities and legal and other expenses, whether due after acceleration or
otherwise) to the Secured Parties (of whatsoever nature and howsoever evidenced)
under or pursuant to the Indenture, the Securities, Project Loan Agreements, the
Project Notes, the Guarantees, and any other Finance Document (or any other
similar agreement entered into by Funding Company or any Project Obligor with
respect to the incurrence of Permitted Indebtedness (other than the
Securities)), to the extent arising on or prior to the Debt Termination Date, in
each case, direct or indirect, primary or secondary, fixed or contingent, now or
hereafter arising out of or relating to any such agreements; and also shall mean
all interest owed to the Secured Parties and accrued following the commencement
of a case (whether voluntary or involuntary) under the Federal Bankruptcy Code
with respect to Funding Company or any Project Obligor; PROVIDED that for
purposes of this Agreement, Subordinated Indebtedness among Trinidad Finance
Parties shall not be deemed a Finance Liability.
3
<PAGE>
"FOREIGN COLLATERAL" shall have the meaning
specified in SECTION 2.13 hereof.
"FOREIGN COLLATERAL DOCUMENT" shall have the meaning specified
in SECTION 2.13 hereof.
"INDEMNIFIED PARTY" shall have the meaning specified in
SECTION 2.4 (Indemnification; Bankruptcy) hereof.
"REQUIRED SECURED PARTIES" shall mean, at any time, the
required percentage of Holders set forth in SECTION 5.2 (Remedies Upon an
Indenture Event of Default) of the Indenture or SECTION 5.2 (Remedies Upon a
Project Loan Event of Default) of the Project Loan Agreements.
"SECURITY INTEREST" shall mean any perfected and enforceable
Lien on the Collateral granted to the Collateral Agent pursuant to the
requirements of any applicable Finance Document.
"TRIGGER EVENT" shall mean (i) an "Event of Default" under the
Indenture and an acceleration of the Indebtedness issued thereunder, (ii) an
"Event of Default" under the Project Loan Agreements and an acceleration of all
or a portion of Indebtedness incurred thereunder, (iii) an "Event of Default"
under any other Permitted Indebtedness (other than Subordinated Indebtedness)
instrument and an acceleration of the Indebtedness issued thereunder in an
aggregate principal amount in excess of $5,000,000, (iv) certain Guarantee
Events of Default under any Guarantee, and, in each case, the Collateral Agent
shall have, upon the written direction from the Required Secured Parties,
declared such event to be a Trigger Event.
"TRIGGER EVENT DATE" shall have the meaning set forth in
SECTION 4.3 (a) (Exercise of Remedies and Application of Proceeds) hereof.
Section 1.2 PRINCIPLES OF CONSTRUCTION. For all purposes of
this Agreement, the principles of construction set forth in SECTION 1.1
(Definitions; Construction) of the Indenture shall apply.
ARTICLE II
COLLATERAL AGENT; RELATIONS
AMONG SECURED PARTIES
Section 2.1 APPOINTMENT AND DUTIES OF COLLATERAL AGENT. (a)
Each of the Secured Parties hereby designates and appoints The Bank of New York
to act as the
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Collateral Agent under this Agreement and the other Finance Documents to which
the Collateral Agent is a party, and each of the Secured Parties hereby
authorizes the Collateral Agent to take such actions on its behalf under the
provisions of this Agreement and the other Finance Documents to which the
Collateral Agent is a party and to exercise such powers and perform such duties
as are expressly delegated to the Collateral Agent by the terms of this
Agreement and the other Finance Documents to which the Collateral Agent is a
party, together with such other powers as are reasonably incidental thereto. The
execution of this Agreement by the Collateral Agent shall be deemed an
acceptance by the Collateral Agent of the appointment made under this SECTION
2.1 and an agreement to act as Agent on behalf of the Secured Parties.
Notwithstanding any provision to the contrary elsewhere in this Agreement and
the other Finance Documents to which the Collateral Agent is a party, the
Collateral Agent shall not have any duties or responsibilities, except those
expressly set forth in this Agreement and the other Finance Documents to which
the Collateral Agent is a party, or any fiduciary relationship with any Secured
Party, and no implied covenants, functions or responsibilities shall be read
into this Agreement or any other Finance Document to which the Collateral Agent
is a party or otherwise exist against the Collateral Agent. The Collateral Agent
shall not be obligated to expend or risk its own assets or property in
connection with its administration of this Agreement or its appointment
hereunder.
(b) The Secured Parties hereby authorize the Collateral Agent
to appoint The Bank of New York to act as the Depositary Bank under the
Depositary Agreements. The Secured Parties hereby authorize and empower the
Collateral Agent to remove and replace the Depositary Bank pursuant to the terms
and conditions of SECTION 4.4 (Resignation or Removal) of the Depositary
Agreement and to direct such Depositary Bank according to the terms of this
Agreement and the Depositary Agreements.
(c) Notwithstanding anything to the contrary in this Agreement
or any other Finance Document to which the Collateral Agent is a party, the
Collateral Agent shall not exercise any rights or remedies under this Agreement
(except as set forth in the proviso to SECTION 4.2(b) (Actions Upon a Trigger
Event)) or any other Finance Document to which the Collateral Agent is a party
or give any consent under this Agreement or any other Finance Document to which
the Collateral Agent is a party or enter into any agreement amending, modifying,
supplementing or waiving any provision of this Agreement or any other Finance
Document to which the Collateral Agent is a party unless it shall have been
directed to do so in writing by the Majority Holders; PROVIDED, HOWEVER, that
the Collateral Agent shall consent to the release of Collateral contemplated by
the Finance Documents, and shall enter into any amendments, waivers or
supplements with respect to the Finance Document to which the Collateral Agent
is a party to the extent not inconsistent with the provisions of the other
Finance Documents and which would not result in a Material Adverse Effect (as
evidenced by an Officer's Certificate signed by an Authorized Officer of each
Project Obligor); and PROVIDED FURTHER that the Collateral Agent shall have the
right to amend the Depositary Agreement without having been so
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directed by the Majority Holders solely for the purpose of preserving or
protecting the Lien on and Security Interest in the Depositary Accounts granted
to the Collateral Agent thereunder.
Section 2.2 RIGHTS OF COLLATERAL AGENT. (a) The Collateral
Agent may execute any of its duties under this Agreement or any other Finance
Document to which the Collateral Agent is a party by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties.
(b) Neither the Collateral Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates shall (i) be
liable for any action lawfully taken or omitted to be taken by it under or in
connection with this Agreement or any other Finance Document to which the
Collateral Agent is a party (except for its gross negligence or willful
misconduct) or (ii) be responsible in any manner to any of the Secured Parties
for any recitals, statements, representations or warranties made by Funding
Company or any Project Obligor contained in this Agreement or any other Finance
Document to which the Collateral Agent is a party or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Collateral Agent under or in connection with this Agreement or any other Finance
Document to which the Collateral Agent is a party or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Finance Document to which the Collateral Agent is a party or for any
failure of Funding Company or any Project Obligor to perform its obligations
hereunder or thereunder. The Collateral Agent shall not be under any obligation
to any Secured Party to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Finance Document to which the Collateral Agent is a
party, or to inspect the properties, books or records of Funding Company or any
Project Obligor.
(c) The Collateral Agent and its employees, agents,
attorneys-in-fact, and affiliates shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation reasonably believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice or statements of legal counsel
(including, without limitation, counsel to Funding Company), independent
accountants and other experts selected by the Collateral Agent. In connection
with any request of the Majority Holders or Required Secured Parties, the
Collateral Agent shall be fully protected in relying on a certificate of any
Person, signed by an Authorized Officer of such Person, setting forth the amount
owed by Funding Company or any Project Obligor, to such Person as of the date of
such certificate, which certificate shall state that the Person signing such
certificate is an Authorized Officer of such Person and shall state specifically
the Finance Document and provision thereof pursuant to which the Collateral
Agent is being directed to act. The Collateral Agent shall be entitled to rely,
and shall be fully
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protected in relying on such certificate. The Collateral Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Finance Document to which the Collateral Agent is a party (i) if such
action would, in the reasonable opinion of the Collateral Agent, be contrary to
law or the terms of this Agreement or the other Finance Documents, (ii) if such
action is not specifically provided for in this Agreement or such other Finance
Document and it shall not have received any such advice or concurrence of the
Majority Holders or Required Secured Parties (as applicable) as it deems
appropriate or, (iii) if, in connection with the taking of any such action that
would constitute an exercise of remedies under this Agreement or such other
Finance Document, it shall not first be indemnified to its satisfaction by the
Secured Parties (other than the Bond Trustee (in its individual capacity), the
Collateral Agent (in its individual capacity), the Depositary Bank (in its
individual capacity) or any other Agent or trustee under any of the Finance
Documents (in its individual capacity)) against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Collateral Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other Finance
Document to which the Collateral Agent is a party in accordance with a written
request of the Majority Holders or Required Secured Parties, as applicable (to
the extent that the Majority Holders or Required Secured Parties are expressly
authorized to direct the Collateral Agent to take or refrain from taking such
action), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Secured Parties.
(d) The Collateral Agent shall not be deemed to have actual,
constructive, direct or indirect knowledge or notice of the occurrence of any
Event of Default or Trigger Event unless and until an Authorized Officer of the
Collateral Agent has received a written notice or a certificate from the Secured
Parties, Funding Company or any Project Obligor stating that an Event of Default
or Trigger Event has occurred and describing such event. The Collateral Agent
shall have no obligation whatsoever either prior to or after receiving such
notice or certificate to inquire whether an Event of Default or Trigger Event
has in fact occurred and shall be entitled to rely conclusively, and shall be
fully protected in so relying, on any such notice or certificate so furnished to
it. In the event that the Collateral Agent receives such a notice of or
certificate regarding the occurrence of any Trigger Event, the Collateral Agent
shall give notice thereof to the Secured Parties. The Collateral Agent shall
take such action with respect to such Trigger Event as so requested pursuant to
SECTIONS 4.1 (Exercise of Rights), 4.2 (Actions Upon a Trigger Event) and 4.3
(Exercise of Remedies and Application of Proceeds) hereof. The agreements in
this Section shall survive the payment or satisfaction in full of the Finance
Liabilities and the resignation or removal of the Collateral Agent or the
termination of this Agreement.
(e) Funding Company and the Project Obligors shall pay to the
Collateral Agent upon demand the amount of any and all reasonable out-of-pocket
expenses, including the reasonable fees and expenses of its counsel (and any
local counsel)
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and of any experts, agents (including the Depositary Bank), and
attorneys-in-fact, which the Collateral Agent may incur in connection with (i)
the acceptance or administration of this Agreement and the other Finance
Documents to which the Collateral Agent is a party, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Collateral, (iii) the exercise or enforcement (whether through
negotiations, legal proceedings or otherwise) of any of the rights of the
Collateral Agent or the Secured Parties hereunder or under the other Finance
Documents to which the Collateral Agent is a party or (iv) the failure by
Funding Company or any Project Obligor to perform or observe any of the
provisions hereof or of any of the other Finance Documents to which the
Collateral Agent is a party.
(f) Notwithstanding any other provision of this Agreement to
the contrary, the Collateral Agent shall be under no obligation to take any
action pursuant to any request or direction of any party hereto if it shall
receive conflicting instructions from another party; provided that the
Collateral Agent shall inform such parties of the conflict.
(g) The Collateral Agent shall not be under any obligation to
take any action which is in the discretion of the Collateral Agent pursuant to
this Agreement or in any other Finance Document.
Section 2.3 LACK OF RELIANCE ON THE COLLATERAL AGENT. Each of
the Secured Parties expressly acknowledges that neither the Collateral Agent nor
any of its officers, directors, employees, agents or attorneys-in-fact has made
any representations or warranties to it and that no act by the Collateral Agent
hereinafter taken, including, without limitation, any review of the Projects or
of the affairs of Funding Company or any Project Obligor, shall be deemed to
constitute any representation or warranty by the Collateral Agent to any Secured
Party. Each Secured Party other than the Bond Trustee and the Depositary Bank
represents to the Collateral Agent that it has, independently and without
reliance upon the Collateral Agent or any other Secured Party, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, financial and
other condition and creditworthiness of the Projects and Funding Company and
each Project Obligor. Each Secured Party other than the Bond Trustee and the
Depositary Bank also represents that it will, independently and without reliance
upon the Collateral Agent or any other Secured Party, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition and creditworthiness of the Projects and Funding Company and
each Project Obligor. Except for notices, reports and other documents expressly
required to be furnished to the Secured Parties by the Collateral Agent
hereunder, the Collateral Agent shall not have any duty or responsibility to
provide any Secured Party with any credit or other information concerning the
business, operations, property, financial and other condition or
creditworthiness of
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the Projects, Funding Company or any Project Obligor which may come into the
possession of the Collateral Agent or any of its officers, directors, employees,
agents or attorneys-in-fact.
Section 2.4 INDEMNIFICATION; BANKRUPTCY. (a) The Secured
Parties other than the Bond Trustee and the Depositary Bank jointly and
severally agree to indemnify the Collateral Agent and its agents and
attorneys-in-fact, including, but not limited to, the Depositary Bank, each in
its capacity as such (to the extent not reimbursed by Funding Company or any
Project Obligor and without limiting the obligation of Funding Company and each
Project Obligor to do so), ratably according to the aggregate amounts of their
respective Finance Liabilities on the date the activities giving rise to the
Collateral Agent's demand for indemnification occurred, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time be imposed on, incurred by or asserted against the Collateral Agent in its
capacity as such in any way relating to or arising out of this Agreement or the
other Finance Documents to which the Collateral Agent is a party, or the
performance of its duties as Collateral Agent hereunder or thereunder or any
action taken or omitted by the Collateral Agent in its capacity as such under or
in connection with any of the foregoing (including, but not limited to, any
claim that the Collateral Agent is the owner or operator of any of the Projects
and liable as such pursuant to any Environmental Laws); PROVIDED that the
Secured Parties shall not be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements to the extent that any of the foregoing result
from the Collateral Agent's gross negligence or willful misconduct. The
agreements in this SECTION 2.4(a) shall survive the payment or satisfaction in
full of the Finance Liabilities and the resignation or removal of the Collateral
Agent or the termination of this Agree ment.
(b) Without limiting the obligations of Funding Company and
each Project Obligor under any other Finance Document, Funding Company and each
Project Obligor jointly and severally indemnifies the Collateral Agent (in that
capacity only) and each other Secured Party (in that capacity only) and, in
their capacity as such, their officers, directors, shareholders, controlling
persons, employees, agents and servants (each an "INDEMNIFIED PARTY") from and
against any and all claims, damages, losses, liabilities, obligations,
penalties, actions, causes of action, judgments, suits, costs, expenses or
disbursements (including, without limitation, reasonable attorneys' and
consultants' fees and expenses) (collectively "DAMAGES") of any kind or nature
whatsoever which may at any time be imposed on, incurred by or asserted against
any Indemnified Party (or which may be claimed against any Indemnified Party by
any Person) by reason of, in connection with or in any way relating to or
arising out of any Transaction Document, the Collateral or any other documents
or transactions in connection with or relating thereto (including, without
limitation, Damages in connection with the presence, release or threatened
release of Environmentally Regulated Materials at, on, under, to or from the
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Projects or any disposal sites to which wastes from the Projects have been
taken), unless due to the gross negligence or willful misconduct of such
Indemnified Party. Funding Company and each Project Obligor further shall, upon
demand by any Indemnified Party, jointly and severally pay to such Indemnified
Party all reasonable costs and expenses incurred by such Indemnified Party in
enforcing any rights under any of the Transaction Docu ments, including
reasonable fees and expenses of counsel (including local counsel). The
agreements in this SECTION 2.4(b) shall survive the payment or satisfaction in
full of the Finance Liabilities and the resignation or removal of the Collateral
Agent or the termination of this Agreement.
(c) The Secured Parties hereby agree that, except upon the
written consent of the Majority Holders, to the extent permitted by Applicable
Law, (i) no Secured Party shall authorize Funding Company or any Project Obligor
to commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to Funding Company or any Project
Obligor or debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect in any jurisdiction or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of Funding Company or
any Project Obligor or to consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against Funding Company or any Project Obligor to make a
general assignment for the benefit of any Secured Party or any other creditor of
Funding Company or any Project Obligor, and (ii) none of the Secured Parties
shall commence or join with any other Person (other than upon the written
consent of the Majority Holders) in commencing any proceeding against Funding
Company or any Project Obligor under any bankruptcy, reorganization, liquidation
or insolvency law or statute now or hereafter in effect in any jurisdiction.
Section 2.5 RESIGNATION OR REMOVAL OF THE COLLATERAL
AGENT. The Collateral Agent may resign as Collateral Agent upon thirty (30)
days' notice to the Secured Parties and may be removed at any time with or
without cause upon thirty (30) days' notice by the Majority Holders, with any
such resignation or removal to become effective only upon the appointment of a
successor Collateral Agent under this SECTION 2.5. If no successor Collateral
Agent shall have been so appointed within thirty (30) days, the resigning
Collateral Agent may petition any court of competent jurisdiction for the
appointment of a new Collateral Agent. If the Collateral Agent shall resign or
be removed as Collateral Agent by the Majority Holders then the Majority Holders
shall (and if no such successor shall have been appointed within thirty (30)
days of the Collateral Agent's resignation or removal, the Collateral Agent may)
appoint a successor Agent for the Secured Parties, which successor Agent shall,
unless an Event of Default has occurred and is continuing, be reasonably
acceptable to Funding Company, whereupon such successor Agent shall succeed to
the rights, powers and duties of the Collateral Agent, and the term "Collateral
Agent" shall mean such successor Agent effective upon its appointment, and
except as provided in SECTION 2.4(a) and (b) (Indemnification; Bankruptcy) the
former Collateral Agent's rights, powers and duties as Collateral Agent shall be
terminated,
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without any other or further act or deed on the part of such former Collateral
Agent (except that the resigning Collateral Agent shall deliver all Collateral
then in its possession to the successor Collateral Agent) or any of the other
Secured Parties. After any retiring Collateral Agent's resignation or removal
hereunder as Collateral Agent, the provisions of this Agreement shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Collateral Agent.
Section 2.6 DOCUMENTS. The Collateral Agent will forward
promptly after the Collateral Agent's receipt thereof (and will use its best
efforts to forward within five (5) Business Days of such receipt) to each
Secured Party (a) a copy of each document furnished to the Collateral Agent for
such Secured Party under the Finance Documents and (b) any notice delivered to
the Collateral Agent pursuant to any Third Party Consent. The Collateral Agent
will forward to each Secured Party, promptly upon such Secured Party's written
request therefor, a copy of any other document furnished to the Collateral Agent
under any Finance Document to which the Collateral Agent is a party.
Section 2.7 AUTHORIZATION. (a) The Collateral Agent is hereby
authorized by each Secured Party, for itself and as a Secured Party (i) to
execute, deliver and perform each of the Finance Documents to which the
Collateral Agent and/or the Secured Parties are or are intended to be a party
and (ii) subject to the terms of the Finance Documents, to draw on, or otherwise
act under any letter of credit or guarantee delivered to the Collateral Agent
for the benefit of the Secured Parties and each of the other Secured Parties
agrees to be bound by all the agreements of the Collateral Agent contained in,
and all of the terms and conditions of, the Finance Documents for which the
Collateral Agent is acting as its agent hereunder.
(b) Without the prior written consent of, or direction from,
each of the Secured Parties, the Collateral Agent shall not (i) consent to any
modifi cation, supplement or waiver (other than to cure any ambiguity, defect or
inconsistency, or to make a change which does not materially adversely affect
the legal rights of any Secured Party) under any of the Finance Documents to
which the Collateral Agent is a party, (ii) except as permitted pursuant to
SECTION 2.1(c) (Appointment and Duties of Collateral Agent) hereof, release any
Collateral or otherwise terminate any Lien under any Finance Document (except
that the Collateral Agent may release funds from the Depositary Accounts in
accordance with the terms and provisions of the Depositary Agreement), (iii)
consent to any modification of this SECTION 2.7 or of the definition of Secured
Obligation or Secured Party, (iv) release any letter of credit, guarantee or
other instrument securing the obligations of any Person under any Transaction
Document, (v) consent to any Lien under any Security Document securing
obligations other than Secured Obligations or (iv) consent to any item requiring
the consent of the One Hundred Percent Holders as set forth in SECTION 7.2
(Amendments and Supplements to Indenture With Consent of Holders) of the
Indenture.
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(c) For the avoidance of doubt, nothing in this SECTION 2.7,
of this Agreement or elsewhere in this Agreement (other than SECTION 5.1) or in
any other Finance Document or other Transaction Document shall limit the
obligations of Funding Company or any Project Obligor under any of the
Transaction Documents, including, without limitation, any obligation of Funding
Company or any Project Obligor to obtain any consent or approval of any of the
Secured Parties, obtained or required to be obtained by Funding Company or any
Project Obligor prior to any amendment of, modification or supplement to or
waiver under any Finance Document or other Transaction Document and the
Collateral Agent shall not consent to any amendment of, modification of or
supplement to or waiver under any Finance Document or other Transaction Document
unless and until Funding Company or any Project Obligor shall have first
obtained all such required consents and approvals and provided the Collateral
Agent provides written certification of the same.
Section 2.8 ADDITIONAL COLLATERAL AGENTS. (a) Whenever the
Collateral Agent shall deem it necessary or prudent in order either to conform
to any law of any jurisdiction in which all or any part of the Collateral shall
be situated or to make any claim or bring any suit with respect to the
Collateral, or the Collateral Agent shall have been advised by counsel that it
is so necessary or prudent in the interests of the Secured Parties, the
Collateral Agent shall take such action (including, to the extent required, the
execution and delivery of an agreement supplemental hereto and such other
instruments and agreements) as may be necessary or proper to constitute another
bank or trust company, or one or more Persons approved by the Collateral Agent
and, unless an Event of Default has occurred and is continuing, reasonably
acceptable to Funding Company, either to act as an additional Collateral Agent
of all or any part of the Collateral, jointly with the Collateral Agent, or to
act as a separate Collateral Agent or trustee of all or any part of the
Collateral (any such additional or separate agent or trustee being herein called
an "ADDITIONAL COLLATERAL AGENT"), in any such case with such powers as may be
granted pursuant to such action, and to vest in such bank, trust company or
Person as an Additional Collateral Agent any property, title, right or power of
the Collateral Agent deemed necessary or advisable by the Collateral Agent,
subject to the remaining provisions of this SECTION 2.8. The Collateral Agent
may execute, deliver and perform any deed, conveyance, assignment or other
instrument in writing as may be required by any Additional Collateral Agent for
more fully and certainly vesting in and confirming to it, him or her any
property, title, right or power which by the terms of such agreement
supplemental hereto is expressed to be conveyed or conferred to or upon such
Additional Collateral Agent.
(b) Each Additional Collateral Agent shall, to the extent
permitted by law, be appointed and act, and the Collateral Agent shall act,
subject to the following provisions and conditions:
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(i) all powers, duties, obligations and rights
conferred or imposed upon the Collateral Agent in respect of the
receipt, custody, investment and payment of moneys shall be exercised
solely by the Collateral Agent;
(ii) all other rights, powers, duties and obligations
conferred or imposed upon the Collateral Agent may be conferred or
imposed upon and exercised or performed by the Additional Collateral
Agent jointly with the Collateral Agent, except to the extent that
under any law of any jurisdiction in which any particular act or acts
are to be performed, the Collateral Agent shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to any
part of the Collateral in any such jurisdiction) shall be exercised and
performed by such Additional Collateral Agent;
(iii) no power hereby given to, or with respect to
which it is hereby provided may be exercised by, any such Additional
Collateral Agent shall be exercised hereunder by such Additional
Collateral Agent except jointly with, or with the consent of, the
Collateral Agent unless the Additional Collateral Agent is required to
act independently pursuant to clause (ii) above;
(iv) such Additional Collateral Agent shall act only
upon and to the extent of written instructions from the Collateral
Agent and no other party, and the Additional Collateral Agent shall
not be required to take and shall not be responsible for taking any
action as Additional Collateral Agent under any Security Document or
this Agreement unless it has received such written instructions from
the Collateral Agent unless the Additional Collateral Agent is
required to act independently pursuant to clause (ii) of this
SECTION 2.8; and
(v) the Collateral Agent shall not be personally
liable by reason of any act or omission of any Additional Collateral
Agent hereunder (except for its gross negligence of willful
misconduct), nor shall such Additional Collateral Agent be personally
liable by reason of any act or omission of the Collateral Agent or any
other Additional Collateral Agent hereunder.
If at any time the Collateral Agent shall deem it no longer necessary or prudent
in order to conform to any such law or take any such action or shall be advised
by counsel that it is no longer so necessary or prudent in the interest of
Secured Parties, the Collateral Agent shall execute and deliver an agreement
supplemental hereto and all other instruments and agreements necessary or proper
to remove any Additional Collateral Agent.
(c) Any Additional Collateral Agent may at any time by an
instrument in writing constitute the Collateral Agent its Agent or
attorney-in-fact, with full power and authority, to the extent which may be
authorized by law, to do all acts and things and
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exercise all discretion which it is authorized or permitted to do or exercise,
for and in its behalf and in its name. In case any such Additional Collateral
Agent shall die, become incapable of acting, resign or be removed, all the
assets, property, rights, powers, trusts, duties and obligations of such
Additional Collateral Agent, so far as permitted by law, shall vest in and be
exercised by the Collateral Agent, without the appointment of a new successor to
such Additional Collateral Agent unless and until a successor is appointed in
the manner hereinbefore provided.
(d) Any request, approval or consent in writing by the
Collateral Agent to any Additional Collateral Agent shall be sufficient warrant
to such Additional Collateral Agent to take such action as may be so requested,
approved or consented.
(e) Each Additional Collateral Agent appointed pursuant to
this SECTION 2.8 shall be subject to, and shall have the benefits of, the
provisions of this Agreement insofar as they apply to the Collateral Agent.
Section 2.9 POWER OF ATTORNEY FROM SECURED PARTIES. Each
Secured Party hereby gives a power of attorney, coupled with an interest, to the
Collateral Agent, and appoints, makes, constitutes and designates the Collateral
Agent its true and lawful attorney-in-fact, subject to SECTION 2.7
(Authorization), to consent on its behalf (in its capacity as a Secured Party)
under the Transaction Documents to the extent that the consent of such Secured
Party is required thereunder, and to take such actions on its behalf (in its
capacity as a Secured Party) under the provisions of such Transaction Documents
as are reasonably incidental thereto, to execute and deliver in the name of and
on behalf of such Secured Party, or in its own name, as the case may be, all
documents required to be executed by such Secured Party (in its capacity as
such) in connection therewith and to do, take and perform all and every act and
thing whatsoever requisite, proper or necessary to be done, in the exercise of
any of the rights and powers herein granted, as fully to all intents and
purposes as such Secured Party (in its capacity as such) might or could do, with
full power of substitution or revocation, hereby ratifying and confirming all
that said attorney-in-fact, or its substitute or substitutes, shall lawfully do
or cause to be done by virtue of this power of attorney and the rights and
powers herein granted; PROVIDED that the Collateral Agent shall not so consent
or take such other actions other than in accordance with this Agreement and the
Security Documents. This SECTION 2.9 is to be construed and interpreted as a
general power of attorney coupled with an interest. The enumeration of specific
items, rights, acts or powers herein is not intended to, nor does it limit or
restrict, and is not to be construed or interpreted as limiting or restricting,
the general powers herein granted to said attorney-in-fact. The rights, powers
and authority of said attorney-in-fact herein granted shall commence and be in
full force and effect as of the Closing Date, and such rights, powers and
authority shall remain in full force and effect thereafter until the Debt
Termination Date.
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Section 2.10 FUNDING COMPANY AS A SECURED PARTY; TRINIDAD
GUARANTOR AS SECURED PARTY. (a) Funding Company hereby collaterally assigns,
transfers and conveys all of its rights hereunder, either now existing or
hereafter arising, to the Bond Trustee for the benefit of the Holders, as
security for its obligations under the Finance Documents. The Bond Trustee
shall, subject to the terms of the Indenture, be entitled to vote on all matters
under this Agreement in accordance with the direction of the Holders of the
aggregate principal amount of the Outstanding Securities to take action under
the Indenture.
(b) The Trinidad Guarantor hereby collaterally assigns,
transfers and conveys all of its rights as a Secured Party hereunder, either now
existing or hereafter arising, to the Bond Trustee for the benefit of the
Holders, as security for its obligations under the Finance Documents.
Section 2.11 ASSIGNMENT OF RIGHTS, NO ASSUMPTION OF DUTIES.
Anything herein contained to the contrary notwithstanding, (a) each of Funding
Company and any Project Obligor shall remain liable under each of the
Transaction Documents to which it is a party to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Collateral Agent
of any of its rights, remedies or powers hereunder shall neither release Funding
Company nor any Project Obligor from any of its duties or obligations under each
of the Transaction Documents to which it is a party and (c) the Collateral Agent
shall have no obligation or liability under any of the Transaction Documents to
which each of Funding Company and any Project Obligor is a party by reason of or
arising out of this Agreement, nor shall the Collateral Agent be obligated to
perform any of the obligations or duties of Funding Company or any Project
Obligor thereunder or, except as expressly provided herein.
Section 2.12 EXPERTS AND ADVISERS. (a) The Collateral
Agent may employ or retain such counsel, accountants, appraisers or other
experts or advisers as it may reasonably require for the purpose of determining
and discharging its rights and duties hereunder and shall not be responsible for
any misconduct on the part of any such Person.
(b) The Collateral Agent may act and rely and shall be
protected in acting and relying in good faith on the opinion or advice of or
information obtained from any counsel, accountant, appraiser or other expert or
adviser retained or employed by the Collateral Agent in relation to any matter
arising in the administration of the Collateral.
Section 2.13 CONCERNING THE COLLATERAL AGENT, COLLATERAL
AGENTS, AND COLLATERAL HELD BY COLLATERAL AGENTS. The Collateral Agent shall
have no duty to act outside of the United States in respect of any Collateral
located in a jurisdiction other than the United States ("Foreign Collateral")
but shall, at the specific request of the Bond
15
<PAGE>
Trustee, appoint a qualified Additional Collateral Agent in each such
jurisdiction. Such qualified Additional Collateral Agent, the Collateral Agent
and the owner of each item of Foreign Collateral shall, when necessary provided
the same are reasonably acceptable to the Collateral Agent, enter into a
collateral assignment, pledge agreement, mortgage debenture, mortgage or other
security agreement purporting to create a Lien or security interest in such item
of Foreign Collateral (each such assignment or agreement, a "Foreign Collateral
Document") pursuant to which such owner shall purport to grant to such qualified
Additional Collateral Agent a Lien or security interest for the benefit of the
Collateral Agent and the equal and ratable benefit of the Notes. The duties and
responsibilities of the Collateral Agent with respect to any Additional
Collateral Agent and any Collateral are limited to those set forth herein.
ARTICLE III
ADMINISTRATION OF THE COLLATERAL
Section 3.1 ADMINISTRATION OF THE COLLATERAL. (a) The
Collateral Agent shall hold the Collateral and any Lien thereon for the benefit
of the Secured Parties pursuant to the terms of this Agreement, the Security
Documents and any other Finance Document to which the Collateral Agent is a
party. The Collateral Agent shall administer the Collateral in the manner
contemplated by the Security Documents and the other Finance Documents and shall
apply the balances from time to time held in the Funds in the manner provided in
this Agreement, the Depositary Agreements and the other Finance Documents. The
Collateral Agent shall exercise such rights and remedies with respect to the
Collateral as are granted to it under the Security Documents, the other Finance
Documents and Applicable Law. Except as otherwise expressly provided herein, no
Secured Party and no class or classes thereof shall have any right to direct the
Collateral Agent to take any action in respect of the Collateral and no Secured
Party shall have any right to sell, exchange or otherwise deal with any property
at any time pledged, assigned or mortgaged to secure the Secured Obligations or
take action with respect to the Collateral independently of the Collateral
Agent.
(b) The Collateral Agent shall have no responsibility with
respect to the recording, rerecording, filing, or refiling under the laws of any
jurisdiction under this Agreement, the other Finance Documents, or any other
document or statement that may be required or permitted to be recorded,
re-recorded, filed or re-filed under any such laws to perfect or protect the
security interests created by or pursuant to the Security Documents, or the
payment of any fees or taxes in connection therewith.
(c) Beyond the exercise of reasonable care in the custody
thereof, the Collateral Agent shall have no duty as to any Collateral in its
possession or control or in
16
<PAGE>
the possession or control of any Agent or bailee or any income thereon or as to
preservation of rights against prior parties or any other rights pertaining
thereto. The Collateral Agent shall be deemed to have exercised reasonable care
in the custody of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property and
shall not be liable or responsible for any loss or diminution in the value of
any of the Collateral, by reason of the act or omission of any carrier,
forwarding agency or other Agent or bailee selected by the Collateral Agent in
good faith.
Section 3.2 PRIORITY OF SECURITY INTERESTS. (a) Each Secured
Party agrees that the Security Interest of each Secured Party in any Collateral
ranks and shall rank equally in priority with the Security Interest of the other
Secured Parties in the same Collateral. Notwithstanding anything to the contrary
herein or in any Security Document, each Secured Party acknowledges and agrees
that the Trinidad Collateral, or any portion thereof, shall in no event be used
to secure the Securities or any obligation of the U.S. Guarantors.
(b) Notwithstanding anything to the contrary in clause (a),
the priorities specified in this Agreement and in the Depositary Agreements with
respect to (i) the Collateral, (ii) all proceeds of the Collateral (including
without limitation all Loss Proceeds to the extent received by the Collateral
Agent after giving effect to the limitations and deductions permitted under the
Indenture and the Depositary Agreements with respect to such proceeds) and (iii)
all amounts and funds retained in accordance with the Depositary Agreements, in
each case are applicable irrespective of any statement to the contrary in any
Finance Document or any other agreement, the time or order or method of
attachment or perfection of Liens, the time or order of filing of financing
statements, or the giving or failure to give notice of the acquisition or
expected acquisition of purchase money or other security interests and to the
extent not provided for in this Agreement, the rights and priorities of the
Secured Parties shall be determined in accordance with Applicable Law.
ARTICLE IV
EVENTS OF DEFAULT; TRIGGER EVENTS
Section 4.1 EXERCISE OF RIGHTS. So long as any Finance
Liabilities remain outstanding, each of the Secured Parties hereby acknowledges
and agrees as follows:
(a) The Collateral Agent shall administer the Collateral in
the manner contemplated by the Security Documents and this Agreement and only
upon the occurrence and continuance of a Trigger Event (subject to the
requirement that the Collateral Agent shall have received written notice
pursuant to ARTICLE 4.2(a) (Actions Upon a
17
<PAGE>
Trigger Event) hereof), the Collateral Agent shall exercise, upon the written
instruction of, and on behalf of, the Required Secured Parties in accordance
with the terms and provisions of this ARTICLE 4, such rights and remedies with
respect to the Collateral as are granted to it under this Agreement, the
Security Documents and Applicable Law.
(b) No Secured Party and no class or classes of Secured
Parties shall have any right, other than in accordance with the terms and
provisions of this ARTICLE IV, to (i) sell, exchange, release, not perfect and
otherwise deal with any property at any time pledged, assigned or mortgaged to
secure the Finance Liabilities, (ii) exercise or refrain from exercising any
rights to direct the Collateral Agent to take any action in respect of the
Collateral, or (iii) take any other action with respect to the Collateral (A)
independently of the Collateral Agent or (B) other than to direct the Collateral
Agent to take action in accordance with the terms and provisions of this ARTICLE
IV. Subject to SECTION 2.7 (Authorization) hereof, any of the Secured Parties
may, at any time and from time to time (i) amend in any manner any outstanding
Finance Documents to which they are a party in accordance with the terms
thereof, (ii) release anyone liable in any manner under or in respect of such
Secured Party's Finance Liabilities in accordance with the terms of the Finance
Documents to which they are a party and (iii) apply any sums from time to time
received for payment or satisfaction of such Secured Party's Finance Liabilities
except as otherwise provided in SECTION 4.4 (Receipt of Money or Proceeds)
hereof.
(c) Each Secured Party hereby agrees that upon the request of
the Collateral Agent it will give the Collateral Agent notice of the aggregate
amount of outstanding Indebtedness owed by Funding Company and each Project
Obligor to such Secured Party under the applicable Finance Documents and any
other information that the Collateral Agent may reasonably request.
Section 4.2 ACTIONS UPON A TRIGGER EVENT. So long as any
Finance Liability remains outstanding, the following provisions shall apply:
(a) Each Secured Party hereby agrees to give each other
Secured Party and the Collateral Agent written notice of the occurrence of an
Event of Default under such Secured Party's Finance Documents and of the
occurrence of an acceleration under such Secured Party's Finance Documents
wherein such Secured Party's Finance Liabilities have been declared to be or
have automatically become due and payable earlier than the scheduled maturity
thereof and such notice shall set forth the aggregate amount of Finance
Liabilities that have been so accelerated under such Finance Documents, in each
case as soon as practicable after the occurrence thereof; PROVIDED, HOWEVER,
that the failure to provide such notice shall not limit or impair the rights of
the Secured Parties hereunder or under any of the other Finance Documents.
(b) Funding Company and each Project Obligor hereby agree as
security for the obligations of Funding Company or any Project Obligor under all
or any
18
<PAGE>
of the Finance Documents that if a Trigger Event shall have occurred and is
continuing, the Collateral Agent is hereby irrevocably authorized and empowered
to act as the attorney-in-fact for Funding Company and each Project Obligor with
respect to the giving of any instructions or notices under the Depositary
Agreements; PROVIDED, HOWEVER that if a bankruptcy event set forth in the
Indenture or any other Finance Document in respect of Funding Company or any
Project Obligor has caused the Trigger Event, as security for the obligations of
Funding Company or any Project Obligor under all or any of the Finance Documents
the Collateral Agent shall automatically and irrevocably be authorized and
empowered to act as the attorney-in-fact for Funding Company or such Project
Obligor with respect to the giving of such instructions or notices. The
Collateral Agent hereby agrees that, upon the written request of the Required
Secured Parties, it shall give such notices and instructions under the
Depositary Agreements to the Depositary Bank. The Depositary Bank hereby agrees
that it shall accept such notices and instructions from the Collateral Agent.
Section 4.3 EXERCISE OF REMEDIES AND APPLICATION OF PROCEEDS.
Notwithstanding the provisions of ARTICLE III (The Depositary Accounts) of
either Depositary Agreement, so long as any Finance Liability remains
outstanding to more than one Secured Party, the following provisions shall
apply:
(a) If a Trigger Event shall have occurred and be continuing
(subject to the requirement that the Collateral Agent shall have received
written notice pursuant to SECTION 4.2(a) (Actions Upon A Trigger Event)
hereof), upon the written request of the Required Secured Parties, the
Collateral Agent, on behalf of the Secured Parties, shall give the Depositary
Bank a written notice that a Trigger Event has occurred (the date of such
notice, the "TRIGGER EVENT DATE") and direct the Depositary Bank to render an
accounting of the current balance of each Depositary Account and of any other
monies of Funding Company and each Project Obligor administered by such
Depositary Bank. No Secured Party shall be deemed to have knowledge or notice of
the occurrence of any Event of Default until such Secured Party has received a
written notice of such Event of Default from Funding Company or Project Obligor
or any other Person for whom such Secured Party is acting as agent or trustee.
(b) If a Trigger Event shall have occurred and be continuing
(subject to the requirement that the Collateral Agent shall have received
written notice pursuant to SECTION 4.2(a) (Actions Upon A Trigger Event)
hereof), and only in such event, upon the written request of the Required
Secured Parties, the Collateral Agent shall be authorized to take any and all
actions and to exercise any and all rights and remedies and options which it may
have under the Security Documents or which the Required Secured Parties direct
it to take under this Agreement, including realization and foreclosure on the
Collateral; PROVIDED, HOWEVER, that if a bankruptcy event set forth in the
Indenture or any other Finance Document in respect of Funding Company or any
Project Obligor has caused the
19
<PAGE>
Trigger Event, the Collateral Agent shall automatically be authorized to take
such action without the written request of the Required Secured Parties.
(c) The proceeds of any sale, disposition or other realization
or foreclosure by the Collateral Agent upon the Collateral or any portion
thereof pursuant to the Security Documents shall be governed by this SECTION
4.3(c). Any non-cash proceeds resulting from such liquidation of the Collateral
shall be held by the Collateral Agent for the benefit of the Secured Parties
until later sold or otherwise converted into cash, at which time the Collateral
Agent shall apply such cash in accordance with the next sentence of this SECTION
4.3(c). The Collateral Agent shall transfer any cash proceeds net of expenses
resulting from liquidation of the Collateral to the applicable Revenue Account
from which such proceeds shall be distributed by the Depositary Bank in
accordance with the terms and provisions of the applicable Depositary Agreement
in the following order of priority:
(i) to the Bond Trustee, the Collateral
Agent, the Depositary Bank, ratably, an amount equal to all administrative fees,
costs, expenses and any other amounts (whether as a result of indemnification or
otherwise) due and owing to such parties under the Finance Documents and this
Agreement;
(ii) to the applicable Secured Parties,
ratably, an amount equal to the unpaid amount of all Permitted Indebtedness
(other than Subordinated Indebtedness) constituting principal, interest,
premium, if any, and fees due and owing to such Secured Parties by Funding
Company or such Project Obligor;
(iii) to the applicable Secured
Parties, ratably, an amount equal to all other unpaid amounts then due and
payable in respect of all Permitted Indebtedness (other than Subordinated
Indebtedness) owed to such Secured Parties;
(iv) to Funding Company (or its successors
or assigns) or to whomever a court of competent jurisdiction may direct, any
surplus remaining after giving effect to clauses (i), (ii) and (iii) above.
(d) The proceeds of any sale, disposition or other realization
with respect to Collateral held for the benefit of some but not all of the
Secured Parties, if applicable, shall be applied to the payment of obligations
owed to the parties for whose benefit the specific Collateral was held.
Section 4.4 RECEIPT OF MONEY OR PROCEEDS. The Secured
Parties and the Depositary Bank hereby agree that if, at any time during the
term of this Agreement, any Secured Party receives any payment or distribution
of assets of Funding Company or any Project Obligor of any kind or character,
whether monies or cash proceeds resulting from liquidation of the Collateral,
other than in accordance with the terms of this Agreement
20
<PAGE>
and the Depositary Agreements, the Secured Party shall hold such payment or
distribution in trust for the benefit of the Secured Parties and shall
immediately remit such payment or distribution to the Depositary Bank and the
Depositary Bank shall deposit such monies or proceeds in the applicable Revenue
Account for application or distribution, as the case may be, in accordance with
the terms of the applicable Depositary Agreement. If any Secured Party shall
certify in writing to the Collateral Agent that any Permitted Indebtedness in
respect of which such Secured Party is the trustee or Agent has not been paid
when due and after the giving of any applicable notice or the passage of any
applicable grace period (such amount referred to herein as "ARREARAGES"), then
in any such event, and upon the written request of such Secured Party, the
Collateral Agent shall make demand for payment of such Arrearages where such
demand may be made by the terms thereof.
Section 4.5 ADDITIONAL SECURED PARTIES. Each Person replacing
any of the Secured Parties and each Person (or trustee or Agent thereof)
providing Permitted Indebtedness to Funding Company or any Project Obligor
shall, upon execution of a Designation Letter, become a party to this Agreement,
and any person which executes and delivers a counterpart to this Agreement or is
designated as a Secured Party pursuant to the terms of a Designation Letter,
shall become a party hereto, shall be bound by and subject to the terms and
conditions hereof and the covenants, stipulations and agreements contained
herein.
ARTICLE V
MISCELLANEOUS
Section 5.1 AMENDMENTS. No amendment or waiver of any
provision of this Agreement shall be effective unless the same shall be in
writing and signed by each of the Secured Parties, Funding Company, each Project
Obligor and all other parties hereto and any such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it is given. No delay on the part of any Secured Party in the exercise
of any right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial waiver by any Secured Party of any right, power or remedy
preclude any further exercise thereof or the exercise of any other right, power
or remedy.
Section 5.2 TRANSFERS. Any Secured Party may at any time
assign, transfer, grant or sell participations in its rights and interests under
the Security Documents, SUBJECT, HOWEVER, to the restrictions imposed on the
assignment, transfer, grant or sale of participation in the Secured Obligations
owing to such Secured Party pursuant to the agreement giving rise to such
Secured Obligations or any other agreement relating thereto.
21
<PAGE>
Section 5.3 SEVERABILITY. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected and/or impaired
thereby.
Section 5.4 NOTICES. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be
sufficiently given and shall be deemed given when delivered or mailed by
registered certified mail, postage prepaid, or sent by overnight delivery or
telecopy, addressed to Funding Company, the Secured Parties, the Depositary Bank
and the Collateral Agent at their respective addresses specified on SCHEDULE III
to the Indenture or in any Designation Letter, or at such other address as shall
be designated by such Person in a written notice to the other parties hereto.
Section 5.5 SUCCESSORS AND ASSIGNS. All of the covenants,
promises and agreements in this Agreement by or on behalf of the respective
parties hereto shall bind and inure to the benefit of their respective
successors and assigns, regardless of whether so expressed.
Section 5.6 COUNTERPARTS. This Agreement may be executed in
any number of counterparts, all of which, taken together, shall constitute one
and the same instrument and any of the parties hereto may execute this Agreement
by signing any such counterpart.
Section 5.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER
OF JURY TRIAL. (a) This Agreement is a contract made under the laws of the State
of New York of the United States and shall for all purposes be governed by and
construed in accordance with the laws of such State without regard to the
conflict of law rules thereof (other than Section 5-1401 of the New York General
Obligations Law).
(b) Any legal action or proceeding against Funding Company or
any Project Obligor with respect to this Agreement or any other Finance Document
may be brought in the courts of the State of New York in the County of New York
or of the United States for the Southern District of New York and, by execution
and delivery of this Agreement, Funding Company and each Project Obligor hereby
irrevocably submits and accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Funding
Company and each Project Obligor agree that a judgment, after exhaustion of all
available appeals, in any such action or proceeding shall be conclusive and
binding upon Funding Company and each Project Obligor and may be enforced in any
other jurisdiction, by a suit upon such judgment, a certified copy of which
shall be conclusive evidence of the judgment. Funding Company and each Project
Obligor hereby irrevocably designates, appoints and empowers Corporation Service
Company with offices on the date hereof at 375 Hudson Street, New York, New York
10014-3686, as its
22
<PAGE>
designee, appointee and agent to receive, accept and acknowledge for and on its
behalf, and in respect of its property, service of any and all legal process,
summons, notices and documents which may be served in any such action or
proceeding. If for any reason such designee, appointee and Agent shall cease to
be available to act as such, each Project Obligor agrees to designate a new
designee, appointee and agent in New York City on the terms and for the purposes
of this provision satisfactory to the Bond Trustee. Funding Company and each
Project Obligor irrevocably consent to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to Funding Company and
each Project Obligor at its address referred to in SECTION 5.4 (Notices) such
service to become effective thirty (30) days after such mailing. Nothing herein
shall affect the right of any Secured Party to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
Funding Company or any Project Obligor in any other jurisdiction.
(c) Funding Company and each Project Obligor hereby
irrevocably waive any objection which it may now or hereafter have to the laying
of venue of any of the aforesaid actions or proceedings arising out of or in
connection with this Agreement in the courts referred to in clause (b) above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(d) WITH REGARD TO THIS AGREEMENT, FUNDING COMPANY, EACH
PROJECT OBLIGOR, EACH SECURED PARTY, THE COLLATERAL AGENT AND THE DEPOSITARY
BANK HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY.
Section 5.8 NO IMPAIRMENTS OF OTHER RIGHTS. Nothing in this
Agreement is intended or shall be construed to impair, diminish or otherwise
adversely affect any other rights the Secured Parties may have or may obtain
against Funding Company or any Project Obligor.
Section 5.9 HEADINGS. Headings herein are for convenience
only and shall not be relied upon in interpreting or enforcing this Agreement.
Section 5.10 TERMINATION. This Agreement shall remain in full
force and effect until the Debt Termination Date. Following the Debt Termination
Date, SECTIONS 2.4(a) and (b) (Indemnification; Bankruptcy) shall remain in full
force and effect.
Section 5.11 ENTIRE AGREEMENT. This Agreement, including the
documents referred to herein, embodies the entire agreement and understanding of
the parties hereto and supersedes all prior agreements and understandings of the
parties hereto relating to the subject matter herein contained.
23
<PAGE>
Section 5.12 EXECUTION IN LIEU OF AGENT. To the extent that
any of the holders of Permitted Indebtedness incurred subsequent to the date
hereof are not represented by an Agent that is a party to this Agreement, such
holder of such Permitted Indebtedness shall be permitted to execute this
Agreement and the Designation Letter on its own behalf in lieu of any Agent on
its behalf.
Section 5.13 CONFLICTS WITH OTHER SECURITY DOCUMENTS.
Notwithstanding any provision hereof, in the event of any conflict between the
terms of this Agreement and the other Security Documents (other than the
Depositary Agreements), the provisions of this Agreement shall control.
Section 5.14 SCOPE OF DUTIES; LIMITS ON LIABILITY. (a)
Without limiting any other provision hereof, the duties and obligations of the
Collateral Agent shall be determined solely by the express provisions of this
Agreement; the Collateral Agent shall not be liable except for the performance
of such duties and obligations as are specifically set forth herein. Anything in
this Agreement to the contrary notwithstanding, in no event shall the Collateral
Agent be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the
Collateral Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action.
(b) Notwithstanding anything to the contrary contained herein,
the obligations of Funding Company hereunder are solely the obligations of
Funding Company and payable from, and recourse solely to, the Funding Company's
interest in the Funding Company Collateral following application of the Funding
Collateral in or towards the discharge of the Secured Obligations and the
obligations of Funding Company under each other Transaction Document. No
recourse shall be had against any Non-Recourse Person subject to the exceptions
set forth in SECTION 11.11 (Limitation of Liability) in the Indenture.
24
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be duly executed as a deed by their duly authorized officers, all as of the
date first written above.
YORK POWER FUNDING (CAYMAN) LIMITED
By: /s/ Martin Couch
--------------------------------
Name: Martin Couch
Title: Director
In the presence of:
/s/ Robert C. Paladino
-----------------------------------
Name: Robert C. Paladino
BROOKLYN NAVY YARD POWER LLC
By: B-41 ASSOCIATES, L.P.,
its Managing Member
By: B-41 MANAGEMENT CORPORATION
its General Partner
By: /s/ Michael Trachtenberg
--------------------------------
Name: Michael Trachtenberg
Title: Vice President
WARBASSE POWER I LLC
By: COGENERATION TECHNOLOGIES,
INC.
its Managing Member
By: /s/ Michael Trachtenberg
--------------------------------
Name: Michael Trachtenberg
Title: Executive Vice President
25
<PAGE>
WARBASSE POWER II LLC
By: YORK COGEN PARTNERS, L.P.
its Managing Member
By: RRR's VENTURES, LTD.
its General Partner
By: /s/ Michael Trachtenberg
--------------------------------
Name: Michael Trachtenberg
Title: Vice President
NEW WORLD POWER TEXAS RENEWABLE
ENERGY LIMITED PARTNERSHIP
By: BIG SPRINGS TEXAS ENERGY
MANAGEMENT, INC.
Managing General Partner
By: /s/ Michael Trachtenberg
--------------------------------
Name: Michael Trachtenberg
Title: Vice President
YORK EX INTERNATIONAL SRL
By: /s/ Robert C. Paladino
--------------------------------
Name: Robert C. Paladino
Title: Vice President
YORK HOLDINGS (BARBADOS) SRL
By: /s/ Robert C. Paladino
--------------------------------
Name: Robert C. Paladino
Title: Vice President
26
<PAGE>
[seal] INNCOGEN, LIMITED
By: /s/ Robert C. Paladino
--------------------------------
Name: Robert C. Paladino
Title: President
The Common seal of InnCOGEN,
Limited was hereunto affixed
pursuant to a resolution of its
Board of Directors and in
conformity with its Articles of
Association in the presence of:
/s/ Kurt Miller
-----------------------------------
Name: Kurt Miller
THE BANK OF NEW YORK,
as Bond Trustee
By: /s/ Joseph Ernst
--------------------------------
Name: Joseph Ernst
Title: Vice President
THE BANK OF NEW YORK,
as Collateral Agent
By: /s/ Joseph Ernst
--------------------------------
Name: Joseph Ernst
Title: Vice President
THE BANK OF NEW YORK,
as the Depositary Bank
By: /s/ Joseph Ernst
--------------------------------
Name: Joseph Ernst
Title: Vice President
27
<PAGE>
Exhibit A to the
Intercreditor Agreement
FORM OF DESIGNATION LETTER
[Date]
The Bank of New York
[__________________]
Attention: [__________]
Re: York Power Funding (Cayman) Limited
Ladies and Gentlemen:
Reference is made to (i) the Collateral Agency and
Intercreditor Agreement (the "INTERCREDITOR AGREEMENT") dated as of ___________
among York Power Funding (Cayman) Limited ("FUNDING COMPANY"), Brooklyn Navy
Yard Power LLC, Warbasse Power I LLC, Warbasse Power II LLC, New World Power
Texas Renewable Energy Limited Partnership, York Ex International SRL, York
Holdings (Barbados) SRL, InnCOGEN, Limited, the Collateral Agent, the Bond
Trustee, the Depositary Bank and any trustees or agents under any other Finance
Documents and (ii) [Describe New Credit Documents]. Capitalized terms used
herein and not defined herein shall have the meanings set forth in APPENDIX A to
the Indenture (the "INDENTURE") dated as of _________, 1998 between Funding
Company and the Bond Trustee.
The undersigned is the [Bank/Lender][Agent for the [Banks]
[Lenders]] under the [New Credit Document].
The undersigned is delivering this Designation Letter pursuant
to SECTION 4.5 (Additional Secured Parties) of the Intercreditor Agreement in
order to permit the undersigned [and the [Banks][Lenders] under the New Credit
Document] to become Secured Parties under the Intercreditor Agreement and the
other Finance Documents and to benefit from the Collateral under the Finance
Documents in accordance with the terms of the Intercreditor Agreement and the
other Finance Documents.
The undersigned [on behalf of itself and the [Banks][Lenders]]
accedes to and agrees to be bound by all of the terms and provisions of the
Intercreditor Agreement and the other Finance Documents. In furtherance thereof,
the undersigned [on behalf of itself and the [Banks][Lenders] agrees to execute
a counterpart of the Intercreditor Agreement.
<PAGE>
Our address for notices is:
[Insert Information]
Our wire transfer instructions are:
[Insert Information]
We agree that any extensions of credit under the [New Credit
Documents] shall be deposited with the Depositary Bank, to the extent required
by SECTION 3.2 (The Revenue Account) of the applicable Depositary
Agreement.
This Designation Letter may be executed in any number of
counterparts, each executed counterpart constituting an original but all
counterparts together constituting only one instrument.
THIS DESIGNATION LETTER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT
OF LAW RULES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).
[CREDITOR]
By:
-----------------------------------------
Name:
Title:
Consented to by:
THE BANK OF NEW YORK,
as Collateral Agent
By:
----------------------
Name:
Title:
<PAGE>
Exhibit 10.57
ASSIGNMENT AND
SECURITY AGREEMENT
Dated as of August , 1998
by
YORK POWER FUNDING (CAYMAN) LIMITED
to
THE BANK OF NEW YORK,
as Collateral Agent
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I
DEFINITIONS
1.1. Definitions.....................................................................2
ARTICLE II
ASSIGNMENT AND GRANT OF SECURITY INTEREST
2.1. Assignment and Grant of Security Interest.......................................6
2.2. Security Interest Absolute......................................................7
2.3. Power of Attorney...............................................................8
2.4. Inspection and Verification....................................................10
ARTICLE III
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1. Title and Authority............................................................11
3.2. Validity, Perfection and Priority of Lien......................................11
3.3. No Liens; Other Financing Statements...........................................12
3.4. Chief Executive Office; Name; Records..........................................13
3.5. Additional Statements and Schedules............................................13
3.6. Further Actions................................................................13
ARTICLE IV
SPECIAL PROVISIONS CONCERNING INVENTORY AND EQUIPMENT
4.1. Maintenance of Insurance; Protection of Security Interest......................14
4.2. Location of Inventory and Equipment............................................14
4.3. Inventory Records..............................................................14
ARTICLE V
SPECIAL PROVISIONS CONCERNING RECEIVABLES
AND INSTRUMENTS
5.1. Additional Representations and Warranties......................................14
5.2. Maintenance of Records; Legending of Records...................................15
5.3. Modification of Terms; No Payment to Grantor...................................15
5.4. Collection.....................................................................15
5.5. Direction to Account Debtors, Contracting Parties..............................15
5.6. Instruments....................................................................16
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
ARTICLE VI
SPECIAL PROVISIONS CONCERNING CONTRACTS
6.1. Security Interest in Contract Rights...........................................16
6.2. Further Protection.............................................................17
6.3. Liabilities Under Receivables and Contracts....................................17
6.4. Remedies.......................................................................17
ARTICLE VII
REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT
7.1. Remedies; Obtaining the Funding Company Security Agreement Collateral
upon Default...................................................................18
7.2. Remedies; Disposition of the Funding Company Security Agreement
Collateral.....................................................................19
7.3. Waiver.........................................................................20
7.4. No Waiver; Remedies Cumulative.................................................21
7.5. Discontinuance of Proceedings..................................................21
ARTICLE VIII
MISCELLANEOUS
8.1. Notices........................................................................22
8.2. Amendment......................................................................22
8.3. Successors and Assigns.........................................................22
8.4. Survival.......................................................................22
8.5. Section Headings...............................................................23
8.6. Severability...................................................................23
8.7. Grantor's Duties...............................................................23
8.8. Continuing Security Interest...................................................23
8.9. Termination; Release...........................................................23
8.10. Reinstatement.................................................................23
8.11. Counterparts..................................................................24
8.12. Governing Law; Submission to Jurisdiction.....................................24
8.13. Conflict with Intercreditor Agreement.........................................25
8.14. Entire Agreement..............................................................25
8.15. Collateral Agent..............................................................25
</TABLE>
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SCHEDULES
SCHEDULE I - Filing Offices
- ----------
SCHEDULE II - Instruments
- -----------
SCHEDULE III - Copyrights
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SCHEDULE IV - Patents
- ------------
SCHEDULE V - Trademarks
- -----------
SCHEDULE 3.4(A) - Chief Executive Offices
- ---------------
SCHEDULE 4.2 - Locations of Funding Company Security Agreement Collateral
- -------------
</TABLE>
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ASSIGNMENT AND SECURITY AGREEMENT
ASSIGNMENT AND SECURITY AGREEMENT, dated as of August 4, 1998
(this "FUNDING COMPANY SECURITY AGREEMENT"), made by York Power Funding (Cayman)
Limited, a limited liability company incorporated under the laws of the Cayman
Islands (the "GRANTOR") in favor of THE BANK OF NEW YORK, a New York banking
corporation, as collateral agent for the benefit of the Secured Parties (the
"COLLATERAL AGENT").
W I T N E S S E T H:
WHEREAS, Grantor is a limited liability company established
for the sole purpose of issuing the Securities in its individual capacity as
principal and as agent acting on behalf of the U.S. Guarantors pursuant to the
Indenture and to make loans to the Project Borrowers pursuant to the Project
Loan Agreements;
WHEREAS, Grantor has simultaneously with the execution and
delivery of this Agreement issued and sold the Initial Securities pursuant to
the Indenture;
WHEREAS, pursuant to the Trinidad Project Loan Agreement,
Grantor intends to make the Trinidad Project Loan to the Trinidad Project
Borrower and pursuant to the U.S. Project Loan Agreement, Grantor intends to
make the U.S. Project Loan to the U.S.
Guarantors.
WHEREAS, to secure its obligations under the Finance
Documents, the Grantor is entering into this Funding Company Security Agreement
with the Collateral Agent, pursuant to which the Collateral Agent, acting on
behalf of the Secured Parties, will obtain a continuing Lien on and perfected
security interest in the Funding Company Security Agreement Collateral; and
NOW, THEREFORE, in consideration of the premises hereby and
the agreements, provisions and covenants contained herein, the parties hereto
agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS.
(a) For all purposes of this Funding Company Security
Agreement, capitalized terms used but not otherwise defined herein shall have
the meaning set forth in APPENDIX A of the Indenture.
(b) The following terms shall have the following respective
meanings unless the context otherwise requires. Such definitions shall be
equally applicable to the singular and plural forms of the terms defined.
Commercial terms used herein and not otherwise defined shall have the meaning
specified for such terms in the Uniform Commercial Code as in effect in the
State of New York.
"CHATTEL PAPER" shall mean "chattel paper" as such term is
defined in the Uniform Commercial Code as in effect in any relevant
jurisdiction.
"CONTRACT RIGHTS" shall have the meaning specified in SECTION
6.1 (Security Interest in Contract Rights).
"CONTRACTS" shall mean all contracts to which the Grantor now
is, or hereafter will be, bound, or a party, beneficiary or assignee, including
all exhibits, schedules and appendices thereto, and all other instruments,
agreements and documents executed and delivered with respect to such contracts,
and all revenues, rentals, Proceeds and other sums of money due and to become
due from any of the foregoing, as the same may be modified, supplemented or
amended from time to time in accordance with their terms.
"COPYRIGHTS" shall mean all of the following now owned or
hereafter acquired by the Grantor: (a) all copyright rights in any work subject
to the copyright laws of the United States, whether as author, assignee,
transferee or otherwise, and (b) all registrations and applications for
registration of any such copyright in the United States, including
registrations, recordings, supplemental registrations and pending applications
for registration in the United States Copyright Office, including those listed
on SCHEDULE III.
"DOCUMENTS" shall mean "documents" as such term is defined in
the Uniform Commercial Code as in effect in any relevant jurisdiction.
"EQUIPMENT" shall mean all "equipment" (as such term is
defined in the Uniform Commercial Code as in effect in any relevant
jurisdiction), now or hereafter owned or leased by the Grantor and, in any
event, shall include, but shall not be limited
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to, all equipment used in connection with the Site, all machinery, manufacturing
equipment, data processing equipment, computers, tools, office equipment,
appliances, furniture, furnishings, fixtures, spare parts, vehicles, motor
vehicles, and any manuals, instructions, blueprints, computer software and
similar items which relate to the above, and any and all additions,
substitutions and replacements of any of the foregoing, wherever located,
together with all improvements thereon and all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
"EVENT OF DEFAULT" shall mean an "event of default" (or any
correlative term) under SECTION 5.1 (Events of Default) of the Indenture.
"GENERAL INTANGIBLES" shall mean all "general intangibles" (as
such term is defined in the Uniform Commercial Code as in effect in any relevant
jurisdiction) now or hereafter owned by the Grantor and shall include, but not
be limited to, all Trademarks, trademark applications, trademark registrations,
prints, labels, and service marks (whether or not registered), including logos
and/or designs, Copyrights, Patents, patent applications, goodwill of the
Grantor's business symbolized by any of the foregoing, trade secrets, license
rights, license agreements, permits, franchises, and any rights to tax refunds
to which the Grantor are now or hereafter may be entitled.
"INSTRUMENTS" shall mean "instruments" as such term is defined
in the Uniform Commercial Code as in effect in any relevant jurisdiction.
"INVENTORY" shall mean all of the inventory of the Grantor of
every type or description, including all "inventory" as such term is defined in
the Uniform Commercial Code as in effect in any relevant jurisdiction, now owned
or hereafter acquired and wherever located, including without limitation,
whether raw, in process or finished, all materials usable in processing the same
and all documents of title covering any inventory, including but not limited to
work in process, materials used or consumed in the Grantor's business, now owned
or hereafter acquired or manufactured by the Grantor and held for sale in the
ordinary course of its business; all present and future substitutions therefor,
parts and accessories thereof and all additions thereto; and all proceeds
thereof and products of such inventory in any form whatsoever.
"INVENTORY RECORDS" shall mean all books, records and other
property and General Intangibles at any time relating to the Inventory.
"INVESTMENT PROPERTY" shall mean "investment property" as such
term is defined in the Uniform Commercial Code in effect in any relevant
jurisdiction.
"OBLIGATIONS" shall mean all obligations and liabilities of
the Grantor in respect of (a) the principal and premium (if any) of and interest
on the Securities pursuant to the Indenture, (b) all fees payable under this
Agreement or any other Transaction
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Document and (c) all other amounts due and to become due to the Grantor or the
Collateral Agent pursuant to this Funding Company Security Agreement or any
other Transaction Document to which the Grantor is a party, including, without
limitation, (i) expenses, attorneys' fees and accountants' fees chargeable to
the Grantor, indemnities and interest which would accrue on any of the
foregoing, (ii) any and all sums advanced by the Collateral Agent in order to
preserve the Funding Company Security Agreement Collateral or preserve the
Collateral Agent's Security Interest in the Funding Company Security Agreement
Collateral and (iii) in the event of any proceeding for the collection or
enforcement of the Obligations, after an Event of Default shall have occurred
and be continuing, the reasonable expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the Funding
Company Security Agreement Collateral, or of any exercise by the Collateral
Agent of its rights under this Funding Company Security Agreement, together with
reasonable attorneys' fees and court costs related thereto.
"PATENTS" shall mean all of the following now owned or
hereafter acquired by the Grantor: (a) all letters patent of the United States,
all registrations and recordings thereof, and all applications for letters
patent of the United States, including registrations, recordings and pending
applications in the United States Patent and Trademark Office, including those
listed on SCHEDULE IV, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
"PROCEEDS" shall mean "proceeds" as such term is defined in
the Uniform Commercial Code as in effect in any relevant jurisdiction or under
other relevant Law and, in any event, shall include, but shall not be limited
to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Grantor from time to time, and claims for insurance, indemnity,
warranty or guaranty effected or held for the benefit of the Grantor, with
respect to any of the Funding Company Security Agreement Collateral, (ii) any
and all payments (in any form whatsoever) made or due and payable to the Grantor
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Funding Company
Security Agreement Collateral by any Governmental Authority (or any person
acting under color of Governmental Authority) and (iii) any and all other
amounts from time to time paid or payable under or in
connection with any of the Funding Company Security Agreement Collateral.
"RECEIVABLES" shall mean any "account" as such term is defined
in the Uniform Commercial Code as in effect in any relevant jurisdiction and in
any event shall include, but not be limited to, all of the Grantor's rights to
payment for goods (including, without limitation, electricity) sold or leased,
or services performed, by the Grantor, whether now in existence or arising from
time to time hereafter, including, without limitation, rights evidenced by an
account, note, contract, contract rights (including any
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<PAGE>
and all rights to liquidated damage payments), document, chattel paper, or other
evidence of indebtedness or security, together with (i) all security pledged,
assigned, hypothecated or granted to or held by the Grantor to secure the
foregoing, (ii) all of each of the Grantor's right, title and interest in and to
any goods (including, without limitation, electricity), the sale of which gave
rise thereto, (iii) all guarantees, warranties, endorsements, indemnifications
or collateral on, or of, any of the foregoing, (iv) all powers of attorney for
the execution of any evidence of indebtedness or security or other writing in
connection therewith, (v) all books, correspondence, credit files, records,
ledger cards, invoices, and other papers relating thereto, including without
limitation all similar information stored on a magnetic medium or other similar
storage device and other papers and documents in the possession or under the
control of the Grantor or any computer bureau from time to time acting for the
Grantor, (vi) all evidences of the filing of financing statements and other
statements and the registration of other instruments in connection therewith and
amendments thereto, notices to other creditors or the Collateral Agent, and
certificates from filing or other registration officers, (vii) all credit
information, reports and memoranda relating thereto, and (viii) all other
writings related in any way to the foregoing.
"SECURITY INTEREST" shall have the meaning assigned to such
term in SECTION 2.1.
"TRADEMARKS" shall mean all of the following now owned or
hereafter acquired by the Grantor: (a) all trademarks, service marks,
tradenames, corporate names, company names, business names, fictitious business
names, trade styles, trade dress, logos, other source or business identifiers,
designs and general intangibles of like nature, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith, including
registrations and registration applications in the United States Patent and
Trademark Office, any State of the United States or any political subdivision
thereof, and all extensions or renewals thereof, including those listed on
SCHEDULE V, (b) all goodwill associated therewith or symbolized thereby, and (c)
all other assets, rights and interests that uniquely reflect or embody such
goodwill.
ARTICLE II
ASSIGNMENT AND GRANT OF SECURITY INTEREST
SECTION 2.1. ASSIGNMENT AND GRANT OF SECURITY INTEREST. (a) As
security for the prompt and complete payment and performance when due of all of
the Obligations, whether now existing or hereafter arising and however
evidenced, the Grantor hereby grants to the Collateral Agent, for the benefit of
the Secured Parties, a
5
<PAGE>
continuing security interest (the "SECURITY INTEREST"), in all of the Grantor's
right, title and interest in, to and under the following, in each case, whether
now owned or existing or hereafter acquired, arising or created, and wherever
located: (i) all Receivables, (ii) all Documents, (iii) all Equipment, (iv) all
General Intangibles, (v) all Inventory, (vi) all Investment Property, (vii) all
Contracts and Contract Rights, (viii) all cash collateral accounts and
securities accounts established with respect to the Grantor, including, without
limitation, the Depositary Accounts and all checking, savings, deposit or other
accounts of the Grantor and all monies, cash, securities, investment property,
financial assets, insurance policies and instruments deposited, credited or
required to be deposited or credited in such cash collateral, securities or
other account and all security entitlements with respect thereto, now or at any
time hereafter in the possession or under the control of the Grantor or its
bailees and any interest therein, (ix) all Governmental Approvals, PROVIDED that
any Governmental Approval which by its terms or by operation of law would become
void, voidable, terminable or revocable if mortgaged, pledged, charged or
assigned hereunder or if a security interest therein were granted hereunder are
expressly excepted and excluded from the Lien and the terms of this Funding
Company Security Agreement to the extent necessary so as to avoid such voidness,
voidability, terminability or revocability, (x) without limiting the generality
of the foregoing, all other personal property, goods, Instruments, Chattel
Paper, credits, claims, demands, assets, and books and records, customer lists,
ledger cards, credit files, print-outs, and other materials and records
pertaining to any of the foregoing, of the Grantor, whether now existing or
hereafter acquired from time to time, and (xi) any and all additions and
accessions to any of the foregoing, all improvements thereto, all substitutions
and replacements therefor and all products and Proceeds thereof (all of the
above collectively, the "FUNDING COMPANY SECURITY AGREEMENT COLLATERAL"). The
Funding Company Security Agreement Collateral hereunder expressly excludes and
the Security Interest granted thereupon shall not attach to the amount of the
transaction fee paid by the Sponsor to the Grantor and the paid-up share capital
of the Grantor, in an initial aggregate amount equal to US$2000.00. Subject to
Permitted Liens, such Security Interest shall be a first priority security
interest.
(b) The Security Interest granted to the Collateral Agent
pursuant to this Funding Company Security Agreement extends to all Funding
Company Security Agreement Collateral of the kind which is the subject of this
Funding Company Security Agreement which the Grantor may acquire at any time
during the continuation of this Funding Company Security Agreement, whether such
Funding Company Security Agreement Collateral is in transit or in the Grantor's,
the Collateral Agent's, or any other Person's constructive, actual or exclusive
occupancy or possession until the release thereof pursuant to SECTION 8.7
(Termination; Release).
(c) The assignments and security interests under this Funding
Company Security Agreement granted to the Collateral Agent, for the benefit of
the Secured Parties, shall not relieve the Grantor from the performance of any
term, covenant, condition or agreement on the Grantor's part to be performed or
observed under or in
6
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respect of any of the Funding Company Security Agreement Collateral pledged by
it hereunder or from any liability to any Person under or in respect of any of
such Funding Company Security Agreement Collateral or impose any obligation on
the Collateral Agent to perform or observe any such term, covenant, condition or
agreement on the Grantor's part to be so performed or observed or impose any
liability on the Collateral Agent for any act or omission on the part of the
Grantor or for any breach of any representation or warranty on the part of the
Grantor contained in this Funding Company Security Agreement or any Finance
Document, or in respect of the Grantor pledged by it hereunder or made in
connection herewith or therewith. The obligations of the Grantor contained in
this paragraph shall survive the termination of this Funding Company Security
Agreement and the discharge of the Grantor's other obligations hereunder.
(d) This Funding Company Security Agreement shall create a
continuing Security Interest in the Funding Company Security Agreement
Collateral and shall remain in full force and effect until the Debt Termination
Date.
SECTION 2.2. SECURITY INTEREST ABSOLUTE. The Grantor shall not
challenge or question in any proceeding the validity or enforceability of this
Funding Company Security Agreement, as a whole or any term or provision
contained herein or therein or the validity of any Lien or financing statement
in favor of the Collateral Agent created hereunder. To the extent permitted by
Applicable Law, all rights of the Collateral Agent and all security interests
hereunder shall be absolute and unconditional irrespective of:
(a) any invalidity, irregularity or unenforceability of all or
any part of the Obligations, any Transaction Document, or any other agreement or
instrument relating thereto, or any amendment, change or modification of any of
the Transaction Documents;
(b) any impairment, modification, change, exchange, release or
subordination of or limitation on, any liability to, or stay of actions or lien
enforcement proceedings against, the Grantor, its property, or its estate in
bankruptcy resulting from any bankruptcy, arrangement, readjustment,
composition, liquidation, rehabilitation or similar proceeding against or
otherwise involving or affecting the Grantor;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any part of the Obligations, or any other amendment
or waiver of or any consent to any departure from or exercise or non-exercise of
any right under any Transaction Document or any other agreement or instrument
relating thereto;
(d) any change in the time, order or method of attachment or
perfection of Liens or the filing or recording of financing statements or other
Security Documents and irrespective of anything contained in any filing or
agreement to which any Secured Party may now or hereafter be a party;
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<PAGE>
(e) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of, or consent to departure
from, any guaranty for all or any of the Obligations; or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Grantor or any third party pledgor,
guarantor or obligor.
SECTION 2.3. POWER OF ATTORNEY. (a) The Grantor hereby
irrevocably constitutes and appoints the Collateral Agent or any Person, officer
or agent whom the Collateral Agent may designate, as the Grantor's true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of the Grantor and in the name of the Grantor or in its own name, at
the Grantor's cost and expense, to exercise at any time in the Collateral
Agent's discretion all or any of the following powers, which, being coupled with
an interest, shall be irrevocable until the Debt Termination Date:
(i) to receive, take, endorse, sign, assign and deliver,
all in the Collateral Agent's or the Grantor's name, any and
all checks, notes, drafts, and other documents or instruments
relating to the Funding Company Security Agreement Collateral;
(ii) to receive, open and dispose of all mail addressed to
the Grantor and to notify postal authorities to change the
address for delivery thereof to such address as the Collateral
Agent designates;
(iii) to request from account debtors of the Grantor, in
the Grantor's name or that of the Collateral Agent or that of
the Collateral Agent's designee, information concerning the
Receivables and the amounts owing thereon;
(iv) to transmit to account debtors indebted on Receivables
notice of the Collateral Agent's interest therein;
(v) to notify account debtors indebted on Receivables to
make payment directly to the Collateral Agent;
(vi) to take or bring, in the Grantor's name or in the
Collateral Agent's name, all steps, actions, suits or
proceedings deemed by the Collateral Agent to be necessary or
desirable to enforce or effect collection of the Receivables;
8
<PAGE>
(vii) to prepare, sign and file any Uniform Commercial Code
financing statements or file this Funding Company Security
Agreement in the name of the Grantor as debtor;
(viii) if the Grantor shall have failed to do so in a
timely manner, to take or cause to be taken all actions
necessary to perform or comply or cause performance or
compliance with the covenants of the Grantor contained in any
Transaction Document to which the Grantor is party;
(ix) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications, notices and other
documents in connection with any of the Funding Company
Security Agreement Collateral;
(x) to defend any suit, action or proceeding brought
against the Grantor with respect to any of the Funding Company
Security Agreement Collateral;
(xi) to settle, compromise or adjust any suit, action or
proceeding described in the preceding clause (x) and, in
connection therewith, to give such discharges or releases as
the Collateral Agent may deem appropriate;
(xii) generally, to sell or transfer and make any agreement
with respect to or otherwise deal with any of the Funding
Company Security Agreement Collateral as fully and completely
as though the Collateral Agent were the absolute owner thereof
for all purposes, and to do, at the Collateral Agent's option
and the Grantor's expense, at any time, or from time to time,
all acts and things which the Collateral Agent deems necessary
to protect, preserve or realize upon the Funding Company
Security Agreement Collateral and the Liens of the Collateral
Agent thereon;
(xiii) to execute, in connection with any foreclosure, any
endorsements, assignments or other instruments of conveyance
or transfer with respect to the Funding Company Security
Agreement Collateral; and
9
<PAGE>
(xiv) to exercise the Grantor' rights under any Contract in
accordance with SECTION 6.3 (Liabilities Under Receivables and
Contracts) hereof;
PROVIDED, HOWEVER, that the Collateral Agent shall not exercise its powers under
clauses (ii), (vi), (ix), (x), (xi), (xii) or (xiii) unless an Event of Default
has occurred and is continuing and in accordance with SECTION 7.1 (Remedies;
Obtaining the Funding Company Security Agreement Collateral Upon Default) of
this Funding Company Security Agreement.
(b) The Grantor hereby ratifies all that said attorney shall
lawfully do or cause to be done by virtue hereof. The Grantor hereby
acknowledges and agrees that in acting pursuant to this power-of-attorney, the
Collateral Agent shall be acting in its own interest and the Grantor
acknowledges and agrees that the Collateral Agent shall have no fiduciary duties
to the Grantor and the Grantor hereby waives any claims to the rights of a
beneficiary of a fiduciary relationship hereunder.
SECTION 2.4. INSPECTION AND VERIFICATION. The Collateral Agent
and such Persons as the Collateral Agent may reasonably designate shall have the
right, no more often than once each year, unless an Event of Default has
occurred and is continuing, at any reasonable time or times, in each case, upon
ten (10) days' written notice and at the Grantor's own cost and expense, to
inspect the Funding Company Security Agreement Collateral, all records related
thereto (and to make extracts and copies from such records) and the premises
upon which any of the Funding Company Security Agreement Collateral is located,
to discuss the Grantor's affairs with the appropriate officers of the Grantor
and its independent accountants and to verify under reasonable procedures the
validity, amount, quality, quantity, value, condition and status of or any other
matter relating to the Funding Company Security Agreement Collateral, including,
in the case of Receivables or Funding Company Security Agreement Collateral in
the possession of any third party, by contacting account debtors or the third
party possessing such Funding Company Security Agreement Collateral for the
purpose of making such a verification.
ARTICLE III
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Grantor hereby represents, warrants and covenants to the
Collateral Agent, which representations, warranties and covenants shall survive
execution and delivery of this Funding Company Security Agreement, as follows:
SECTION 3.1. TITLE AND AUTHORITY. The Grantor has good and
valid rights in and title to the Funding Company Security Agreement Collateral,
subject to Permitted Liens, with respect to which it has purported to grant a
Security Interest
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hereunder and has full power and authority to grant to the Collateral Agent the
Security Interest in such Funding Company Security Agreement Collateral pursuant
hereto and to execute, deliver and perform its obligations in accordance with
the terms of this Funding Company Security Agreement, without the consent or
approval of any Person other than any consent or approval that has been
obtained.
SECTION 3.2. VALIDITY, PERFECTION AND PRIORITY OF LIEN.
(a) Upon execution and delivery by the parties hereto, this
Funding Company Security Agreement creates in favor of the Collateral Agent, for
the ratable benefit of the Secured Parties, a legal, valid and enforceable
security interest in the Funding Company Security Agreement Collateral, subject
to permitted Liens, and Proceeds thereof owned by the Grantor, and when
financing statements in appropriate form are filed in the offices specified on
SCHEDULE I hereto, the Lien created under this Funding Company Security
Agreement will constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Grantor in such Funding Company Security
Agreement Collateral and the Proceeds thereof where security interests can be
perfected by filing, in each case prior and superior in right to any other
Person, subject to Permitted Liens, except for any variations therefrom that
could not reasonably be expected to result in a Material Adverse Effect.
(b)(i) Fully executed Uniform Commercial Code financing
statements or other appropriate filings, recordings or registrations containing
a description of the Funding Company Security Agreement Collateral have been
delivered to the Collateral Agent for filing in each governmental, municipal or
other office specified in Schedule I hereof, which are all the filings,
recordings and registrations that are necessary to publish notice of and protect
the validity of and to establish a valid and perfected security interest in
favor of the Collateral Agent in respect of all Funding Company Security
Agreement Collateral (other than Fixtures, except Fixtures appurtenant to the
Site) in which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under Applicable Law with respect to the filing
of continuation statements and except that recordation of the Security Interest
in the United States Patent and Trademark Office may be necessary with respect
to Funding Company Security Agreement Collateral consisting of Patents and
Trademarks and recordation of the Security Interest, in addition to registration
of any unregistered copyrights, in the United States Copyright Office may be
necessary with respect to Funding Company Security Agreement Collateral
consisting of Copyrights. The Grantor will pay any applicable filing fees and
related expenses. The Grantor authorizes the Collateral Agent to file any such
financing statements without the signature of the Grantor.
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(ii) The Instruments listed on SCHEDULE II hereto, which, as
of the date hereof, constitute all Instruments of the Grantor, and all other
Chattel Paper have been stamped to indicate the Security Interest of the
Collateral Agent, on behalf of the Secured Parties.
(c) The Grantor shall ensure and warrants that fully executed
Funding Company Security Agreements in the form hereof and containing a
description of all Funding Company Security Agreement Collateral consisting of
Intellectual Property shall have been received and recorded, within three (3)
months after the execution of this Funding Company Security Agreement with
respect to the United States Patents and United States registered Trademarks
(and Patents and Trademarks for which United States registration applications
are pending) and within one (1) month after the execution of this Funding
Company Security Agreement with respect to United States registered Copyrights,
by the United States Patent and Trademark Office and the United States Copyright
Office, as applicable, pursuant to 35 U.S.C. 261, 15 U.S.C. 1060 or 17 U.S.C.
205 and the regulations thereunder, as applicable, to protect the validity of
and to establish a legal, valid and perfected security interest in favor of the
Collateral Agent in respect of all Funding Company Security Agreement Collateral
consisting of Patents, Trademarks and Copyrights in which a security interest
may be perfected by filing, recording or registration in the United States (or
any political subdivision thereof) and its territories and possessions, and no
further or subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than such actions as are necessary to perfect
the Security Interest with respect to any Funding Company Security Agreement
Collateral consisting of Patents, Trademarks and Copyrights (or registration or
application for registration thereof) acquired or developed after the date
hereof.)
SECTION 3.3. NO LIENS; OTHER FINANCING STATEMENTS. (a) Except
for the Lien granted to the Collateral Agent, the Grantor owns and will continue
to own, valid and, if applicable, marketable title in and to each item of the
Funding Company Security Agreement Collateral free and clear of any and all
Liens other than Permitted Liens and the Grantor shall defend the Funding
Company Security Agreement Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein adverse to the
Collateral Agent.
(b) Other than financing statements filed in connection
herewith, there is no financing statement (or similar statement or instrument of
registration under the Laws of any jurisdiction) covering or purporting to cover
any interest of any kind in the Funding Company Security Agreement Collateral.
The Grantor will not execute or authorize any financing statement (or similar
statement or instrument of registration under the law of any jurisdiction) or
statements relating to the Funding Company Security Agreement Collateral to be
filed in any public office, except financing statements filed or to be filed in
respect of and covering the Security Interests granted hereby or pursuant to the
other Security
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Documents to the Collateral Agent by the Grantor and financing statements filed
in respect of and covering Permitted Liens.
SECTION 3.4. CHIEF EXECUTIVE OFFICE; NAME; RECORDS. (a) The
chief executive office and principal place of business of the Grantor is located
c/o Queensgate SPV Services, Limited, P.O. Box 1093 GT, Compass Center, 2nd
Floor, Crewe Road, Grand Cayman, Cayman Islands. The originals of all documents
evidencing all Contracts and Receivables of the Grantor, and the only original
books of accounts and records concerning the Funding Company Security Agreement
Collateral are, and will continue to be, kept at, and controlled and directed
(including, without limitation, for general accounting purposes) from, the chief
executive office of the Grantor as set forth on SCHEDULE 3.4(a), or at such new
location for such chief executive office as the Grantor may establish in
accordance with SECTION 3.4(b).
(b) The Grantor shall not establish a new location for its
chief executive office or change its name or the name under which it presently
conducts its business unless (i) it has given to the Collateral Agent not less
than sixty (60) days' prior written notice of its intention so to do, clearly
describing such new location or specifying such new name, as the case may be,
and providing such other information in connection therewith as the Collateral
Agent may reasonably request, and (ii) with respect to such new location or such
new name, as the case may be, the Grantor shall have taken all action,
satisfactory to the Collateral Agent, to maintain the Security Interest of the
Collateral Agent in the Funding Company Security Agreement Collateral at all
times fully perfected and in full force and effect.
SECTION 3.5. ADDITIONAL STATEMENTS AND SCHEDULES. The Grantor
shall execute and deliver to the Collateral Agent, from time to time, for its
convenience in maintaining a record of the Funding Company Security Agreement
Collateral, such written statements and schedules as the Collateral Agent may
reasonably require, designating, identifying or describing the Funding Company
Security Agreement Collateral.
SECTION 3.6. FURTHER ACTIONS. The Grantor will, at its own
expense, make, execute, endorse, acknowledge, file and/or deliver to the
Collateral Agent or to the appropriate governmental authorities from time to
time such lists, descriptions and designations of its Funding Company Security
Agreement Collateral, warehouse receipts, receipts in the nature of warehouse
receipts, bills of lading, documents of title, vouchers, invoices, schedules,
confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other assurances or
instruments and take such further steps relating to the Funding Company Security
Agreement Collateral and other property or rights covered by the Security
Interest hereby granted by the Grantor, which it or the Collateral Agent deems
reasonably appropriate or advisable to perfect, preserve or protect its Security
Interest in the Funding Company Security Agreement Collateral within seven (7)
days after any request by the Collateral Agent or
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such earlier date as may be required by Applicable Law or necessary to preserve
or protect the Security Interests in the Funding Company Security Agreement
Collateral granted by the Grantor pursuant to this Funding Company Security
Agreement, including the payment of any fees and taxes required in connection
with the execution and delivery of this Funding Company Security Agreement, the
granting of the Lien created hereby and the filing of any financing statements
or other documents in connection herewith.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING INVENTORY AND EQUIPMENT
SECTION 4.1. MAINTENANCE OF INSURANCE; PROTECTION OF SECURITY
INTEREST. The Grantor shall carry with respect to the Funding Company Security
Agreement Collateral and its use such insurance as shall be required under the
Trinidad Project Loan Agreement, the U.S. Project Loan Agreement or any of the
Project Documents.
SECTION 4.2. LOCATION OF INVENTORY AND EQUIPMENT. All
Inventory and Equipment owned on the date hereof by the Grantor is located at
one of the locations on SCHEDULE 4.2 (other than Equipment undergoing repairs).
The Grantor agrees that all Inventory and Equipment now held or subsequently
acquired by it shall be kept at (or shall be in transport to) one of the
locations on SCHEDULE 4.2.
SECTION 4.3. INVENTORY RECORDS. The Grantor shall maintain, at
its own cost and expense, satisfactory and complete Inventory Records.
ARTICLE V
SPECIAL PROVISIONS CONCERNING RECEIVABLES
AND INSTRUMENTS
SECTION 5.1. ADDITIONAL REPRESENTATIONS AND WARRANTIES. As of
the time when each of its Receivables arises, the Grantor shall be deemed to
have represented and warranted that such Receivable and all records, papers and
documents relating thereto (if any) are genuine and in all respects what they
purport to be, and that all papers and documents (if any) relating thereto (i)
will (subject to dispute, return, replacement, settlement or compromise)
represent the genuine, legal, valid and binding obligation of the account debtor
evidencing indebtedness unpaid and owed by such account debtor arising out of
the performance of services or the sale and delivery of the goods listed
therein, or both, (ii) will be the only original writings evidencing and
embodying such obligation of the account debtor named therein (other than copies
created for purposes other than
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general accounting purposes), (iii) will (subject to dispute, return,
replacement, settlement or compromise) evidence true and valid obligations,
enforceable in accordance with their respective terms, not subject to the
fulfillment of any contract or condition whatsoever unless set forth in the
writing and not subject to any defenses, set-offs or counterclaims or stamp or
other taxes, and will not constitute a breach or violation of any Applicable
Laws, and (iv) will be in compliance and will conform with the Security Interest
granted.
SECTION 5.2. MAINTENANCE OF RECORDS; LEGENDING OF RECORDS. The
Grantor will keep and maintain at its own cost and expense satisfactory and
complete records of its Receivables for at least five (5) years from the date on
which the Receivable comes into existence, including, but not limited to,
records of all payments received and all credits granted thereon, and the
Grantor will make the same available to the Collateral Agent for inspection in
accordance with SECTION 2.4. The Grantor shall, at its own cost and expense,
deliver all tangible evidence that the Collateral Agent may request of its
Receivables (including, without limitation, all documents evidencing the
Receivables) and books and records to the Collateral Agent or to its
representatives (copies of which evidence and books and records may be retained
by the Grantor) at any reasonable time during normal business hours upon the
Collateral Agent's demand. The Grantor shall take all reasonable action to
legend the Receivables, Chattel Paper and Contracts, as well as books, records
and documents of the Collateral Agent evidencing or pertaining to the
Receivables with an appropriate reference to the fact that the Receivables and
Contracts have been assigned to the Collateral Agent and that the Collateral
Agent has a security interest therein.
SECTION 5.3. MODIFICATION OF TERMS; NO PAYMENT TO GRANTOR.
After the occurrence of an Event of Default, the Grantor shall not rescind or
cancel any indebtedness evidenced by any Receivable or make any adjustment with
respect thereto, or extend or renew the same, or compromise or settle any
dispute, claim, suit or legal proceeding relating thereto, or sell any
Receivable or interest therein, without the prior written consent of the
Collateral Agent, except in the ordinary course of business. The Grantor will
duly fulfill all obligations on its part to be fulfilled under or in connection
with the Receivables, except where the failure to do so could not reasonably be
expected to result in a Material Adverse Effect and will do nothing to impair
the rights of the Collateral Agent in the Receivables.
SECTION 5.4. COLLECTION. The Grantor shall take all
commercially reasonable actions to cause to be collected from the account
debtors of each of the Receivables, as and when due (including Receivables that
are delinquent, such Receivables to be collected in accordance with customary
commercial collection procedures in the power generation industry), any and all
amounts owing under or on account of such Receivables, and apply forthwith upon
receipt thereof all such amounts as are so collected to the outstanding balance
of such Receivables. The costs and expenses (including
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attorneys' fees) of collection, whether incurred by the Grantor, the Collateral
Agent or any other Person, shall be paid by the Grantor.
SECTION 5.5. DIRECTION TO ACCOUNT DEBTORS, CONTRACTING
PARTIES. (a) After the occurrence of an Event of Default, in accordance with the
Intercreditor Agreement, the Grantor agrees that the Collateral Agent may, at
its option, directly notify the account debtors or obligors with respect to any
Receivables and/or under any Project Document to make payments with respect
thereto directly to it.
(b) Upon the occurrence and during the continuance of an Event
of Default, the Grantor agrees to be bound by any collection, compromise,
forgiveness, extension or other action taken by the Collateral Agent with
respect to the Receivables and/or the Documents. The costs and expenses
(including reasonable attorneys' fees) of collection, whether incurred by the
Grantor, the Collateral Agent or any other Person, shall be paid by the Grantor.
SECTION 5.6. INSTRUMENTS. If any of the Receivables becomes
evidenced by an Instrument, the Grantor shall promptly notify the Collateral
Agent thereof, and within ten (10) days of request by the Collateral Agent
therefor, shall deliver such Instrument to the Collateral Agent appropriately
endorsed to the order of the Collateral Agent as further security hereunder.
Notwithstanding the foregoing, at such time that an Event of Default shall have
occurred and be continuing for at least ten (10) days, or at such time as the
Grantor shall own or acquire any Instruments, the Grantor shall deliver all
Instruments to the Collateral Agent within ten (10) days, appropriately endorsed
to the order of the Collateral Agent as further security hereunder.
ARTICLE VI
SPECIAL PROVISIONS CONCERNING CONTRACTS
SECTION 6.1. SECURITY INTEREST IN CONTRACT RIGHTS. The
Grantor's grant, pursuant to SECTION 2.1 (Assignment and Grant of Security
Interest), to the Collateral Agent, of a security interest in all of its right,
title and interest in and to each and all of the Contracts and the contract
rights thereunder, includes, but is not limited to:
(i) all (A) rights to payment under any Contract and (B)
payments due and to become due under any Contract, in each case
whether as contractual obligations, damages or otherwise;
(ii) all of its claims, rights, powers, or privileges and
remedies under any Contract; and
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(iii) all of its rights under any Contract to make
determinations, to exercise any election (including, but not
limited to, election of remedies) or option or to give or receive
any notice, consent, waiver or approval together with full power
and authority with respect to any Contract to demand, receive,
enforce, or collect any of the foregoing rights or any property
the subject of any of the Contracts, to enforce or execute any
checks, or other instruments or orders, to file any claims and to
take any action which, in the reasonable opinion of the Collateral
Agent, may be necessary or advisable in connection with any of the
foregoing (the Contracts, together with all of the foregoing in
this SECTION 6.1, the "CONTRACT RIGHTS");
PROVIDED, HOWEVER, that, unless an Event of Default shall have occurred and be
continuing, notwithstanding anything else herein to the contrary, the Grantor
may, subject to the terms and provisions of the U.S. Project Loan Agreement and
the Trinidad Project Loan Agreement, exclusively exercise all of its rights,
powers, privileges and remedies under the Contracts, other than the right to
receive monies due or to become due under the Contracts.
SECTION 6.2. FURTHER PROTECTION. Subject to the terms and
conditions of the Intercreditor Agreement, the Grantor warrants and forever
shall defend its title to the Contract Rights against the claims and demands of
any other Person, except those made pursuant to Permitted Liens, and hereby
grants the Collateral Agent full power and authority, upon the occurrence or
during the continuance of an Event of Default, to take all actions as the
Collateral Agent reasonably deems necessary or advisable to effectuate the
provisions set forth in this sentence.
SECTION 6.3. LIABILITIES UNDER RECEIVABLES AND CONTRACTS.
Anything herein to the contrary notwithstanding (including, without limitation,
the grant of any rights to the Collateral Agent), the Grantor shall remain
liable under this Agreement and each of the Receivables and Contracts to observe
and perform all the conditions and obligations to be observed and performed by
it thereunder and under or with respect to the Funding Company Security
Agreement Collateral, all in accordance with the terms of any agreement giving
rise to each such Receivable or Contract. Except as the parties hereto may
otherwise agree, the Collateral Agent shall not have any obligation or liability
under any Receivable (or any agreement giving rise thereto), Contract or with
respect to the Funding Company Security Agreement Collateral by reason of or
arising out of this Funding Company Security Agreement or the receipt by the
Collateral Agent of any payment relating to such Receivable or Contract pursuant
hereto, nor shall the Collateral Agent be obligated in any manner to perform any
of the obligations of the Grantor under or pursuant to any Receivable (or any
agreement giving rise thereto) or under or pursuant to any Contract, to make any
payment, to make any inquiry as to the nature or the
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sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Receivable (or any agreement giving rise
thereto) or under any Contract, to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times.
SECTION 6.4. REMEDIES. Upon the occurrence of any Event of
Default, the Collateral Agent shall have the rights set forth in ARTICLE VII
hereof, and in addition may, subject to the terms of the Intercreditor Agreement
(i) enforce all remedies, rights, powers and privileges of the Grantor under any
or all of the Contracts, (ii) sell or assign any or all of the Contract Rights
which may be sold or assigned at public or private sale upon at least ten (10)
days' prior written notice and/or (iii) substitute itself or any nominee or
trustee in lieu of the Grantor as party to any of the Contracts and to notify
the obligor of any Contract Right (the Grantor hereby agreeing to deliver any
such notice at the request of the Collateral Agent) that all payments and
performance under the relevant Contract shall be made or rendered to the
Collateral Agent or such other Person as the Collateral Agent may designate.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT
SECTION 7.1. REMEDIES; OBTAINING THE FUNDING COMPANY SECURITY
AGREEMENT COLLATERAL UPON DEFAULT. (a) Subject to the terms of the Intercreditor
Agreement and the Trinidad Project Loan Agreement, upon the occurrence and
during the continuance of an Event of Default and after the expiration of any
applicable grace or cure periods, the Collateral Agent, acting pursuant to the
Intercreditor Agreement, shall be entitled to exercise all the rights and
remedies of a secured party under the Uniform Commercial Code as in effect in
any relevant jurisdiction and all rights now or hereafter existing under all
other Applicable Laws to enforce this Funding Company Security Agreement and the
Security Interest contained herein, and, in addition, subject to any Applicable
Laws then in effect, the Collateral Agent may, in addition to its other rights
and remedies hereunder, including without limitation under SECTION 7.2
(Remedies; Disposition of the Funding Company Security Agreement Collateral) and
SECTION 7.5 (Discontinuance of Proceedings) of this Funding Company Security
Agreement, and also the rights of the Collateral Agent under any of the Finance
Documents, do any of the following:
(i) personally, or by agents, trustees or attorneys,
immediately take possession of the Funding Company Security Agreement Collateral
or any part thereof, from the Grantor or any other Person who then has
possession of any part thereof with or without notice or process of law, and for
that purpose may enter upon the Grantor's
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premises or such other Person's premises where any of the Funding Company
Security Agreement Collateral is located and remove the same and use in
connection with such removal any and all services, supplies, aids and other
facilities of the Grantor;
(ii) instruct the obligor or obligors of any agreement,
instrument or other obligation (including, without limitation, the Receivables
and the Contracts) constituting the Funding Company Security Agreement
Collateral to make any payment required by the terms of such instrument or
agreement directly to the Collateral Agent, PROVIDED that such agreement or
instrument permits such payment; and
(iii) take possession of the Funding Company Security
Agreement Collateral or any part thereof, by directing the Grantor in writing to
turn over the same to the Collateral Agent at the Site or, to the extent such
Funding Company Security Agreement Collateral may be moved, to deliver the same
to the Collateral Agent at any other place or places designated by the
Collateral Agent, in which event the Grantor shall, at its own expense, (A)
forthwith turn over the same to the Collateral Agent at one of the locations on
SCHEDULE 4.2 or at such other location as the Grantor may establish in
accordance with SECTION 4.2 (Location of Inventory and Equipment) or cause the
same to be moved to the place or places so designated by the Collateral Agent
and there delivered to the Collateral Agent, as the case may be; (B) store and
keep any Funding Company Security Agreement Collateral so turned over or
delivered to the Collateral Agent at one of the locations on SCHEDULE 4.2 or at
such other location as the Grantor may establish in accordance with SECTION 4.2
(Location of Inventory and Equipment) or at such place or places pending further
action by the Collateral Agent as provided in SECTION 7.2 (Remedies; Disposition
of the Funding Company Security Agreement Collateral) hereof; and (C) while the
Funding Company Security Agreement Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be necessary to protect
the same and to preserve and maintain the Funding Company Security Agreement
Collateral in good condition.
(b) the Grantor's obligation to turn over or deliver the
Funding Company Security Agreement Collateral as set forth above is of the
essence of this Funding Company Security Agreement and, accordingly, upon
application to a court of equity having jurisdiction, the Collateral Agent shall
be entitled to obtain a decree requiring specific performance by the Grantor of
said obligation.
(c) when the Funding Company Security Agreement Collateral is
in the Collateral Agent's possession, (i) the Grantor shall pay (or reimburse
the Collateral Agent on demand for) all reasonable expenses (including the cost
of any insurance and payment of taxes or other charges and attorneys' fees of
the Collateral Agent) incurred in the custody, preservation, use or operation of
the Funding Company Security Agreement Collateral, and the obligation to
reimburse all such expenses shall be secured hereby, and
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(ii) the risk of accidental loss or damage shall be on the Grantor to the extent
of any deficiency in any effective insurance coverage.
(d) the Grantor shall reimburse the Collateral Agent for all
its expenses in connection with the exercise of its rights hereunder, including,
without limitation, all reasonable attorneys' fees and legal expenses incurred
by the Collateral Agent. Expenses of retaking, holding, preparing for sale,
selling or the like shall include the reasonable attorneys' fees and legal
expenses of the Collateral Agent. All such expenses shall be secured hereby.
SECTION 7.2. REMEDIES; DISPOSITION OF THE FUNDING COMPANY
SECURITY AGREEMENT COLLATERAL. Any Funding Company Security Agreement Collateral
repossessed by the Collateral Agent under or pursuant to SECTION 7.1 (Remedies;
Obtaining the Funding Company Security Agreement Collateral upon Default) and
any other Funding Company Security Agreement Collateral, whether or not so
repossessed by the Collateral Agent, may, to the extent permitted by any
Contract terms governing such Funding Company Security Agreement Collateral and
subject to the Intercreditor Agreement, be sold, leased or otherwise disposed of
under one or more contracts or as an entirety, whether by public or private sale
and without the necessity of gathering at the place of sale; the property to be
sold, may be sold in such manner, at such time or times, at such place or places
and on such terms (whether cash or credit, and in the case of credit, without
assumption of future credit risk) as the Collateral Agent may, in compliance
with Applicable Laws, determine to be commercially reasonable. If any Funding
Company Security Agreement Collateral is sold by the Collateral Agent upon
credit or for future delivery, the Collateral Agent shall not be liable for the
failure of the purchaser to pay for the same and in such event the Collateral
Agent may resell the Funding Company Security Agreement Collateral. In no event
shall the Grantor be credited with any part of the proceeds of sale of any
Funding Company Security Agreement Collateral until cash payment thereof has
actually been received by the Collateral Agent. Any of the Funding Company
Security Agreement Collateral may be sold, leased or otherwise disposed of, or
options or contracts may be entered to do so, in the condition in which the same
existed when taken by the Collateral Agent or after any overhaul or repair which
the Collateral Agent shall determine to be commercially reasonable. Any such
disposition shall be made upon not less than ten (10) Business Days' written
notice to the Grantor specifying the time such disposition is to be made and, if
such disposition shall be a public sale, specifying the place of such sale. Any
such sale may be adjourned by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place to
which it was so adjourned. To the extent permitted by Applicable Laws, the
Collateral Agent may itself bid for and become the buyer of the Funding Company
Security Agreement Collateral or any item thereof offered for sale at a public
auction without accountability to the Grantor.
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SECTION 7.3. WAIVER. (a) EXCEPT AS OTHERWISE PROVIDED IN THIS
FUNDING COMPANY SECURITY AGREEMENT, THE GRANTOR HEREBY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, NOTICE OR JUDICIAL HEARING IN CONNECTION WITH THE
COLLATERAL AGENT'S TAKING POSSESSION OR THE FUNDING COMPANY SECURITY AGREEMENT
COLLATERAL AGENT'S DISPOSITION OF ANY OF THE COLLATERAL IN ACCORDANCE WITH THIS
AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH THE GRANTOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, AND THE GRANTOR HEREBY FURTHER WAIVES TO THE EXTENT PERMITTED
BY APPLICABLE LAWS:
(i) all damages occasioned by such taking of possession
except any damages which are finally judicially determined to
have been the direct result of the Collateral Agent's gross
negligence or wilful misconduct;
(ii) all other requirements as to the time, place and terms
of sale or other requirements with respect to the enforcement
of the Collateral Agent's rights hereunder;
(iii) demand of performance or other demand, notice of
intent to demand or accelerate, notice of acceleration,
presentment, protest, advertisement or notice of any kind to
or upon the Grantor or any other Person; and
(iv) all rights of redemption, appraisement, valuation,
stay, extension or moratorium now or hereafter in force under
any Applicable Laws in order to prevent or delay the
enforcement of this Funding Company Security Agreement or the
absolute sale of the Funding Company Security Agreement
Collateral or any portion thereof, and the Grantor, insofar as
it may now or hereafter lawfully do so, hereby waives the
benefit of such Applicable Laws.
(b) Without limiting the generality of the foregoing, the
Grantor hereby: (i) authorizes the Collateral Agent, in its sole discretion and
without notice to or demand upon the Grantor and without otherwise affecting the
obligations of the Grantor hereunder from time to time, to take and hold other
collateral granted to it by any other Person (in addition to the Funding Company
Security Agreement Collateral) for payment of any Obligations, or any part
thereof, and to exchange, enforce or release such other collateral or any part
thereof, and to accept and hold any endorsement or guarantee of payment of
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the Obligations or any part thereof, and to release or substitute any endorser
or guarantor or any other Person granting security for or in any way obligated
upon any Obligations, or any part thereof; and (ii) waives and releases any and
all right to require the Collateral Agent to collect any of the Obligations from
any specific item or items of Funding Company Security Agreement Collateral or
from any other party liable as guarantor or in any other manner in respect of
any of the Obligations or from any collateral (other than the Funding Company
Security Agreement Collateral) for any of the Obligations.
(c) Any sale of, or the grant of options to purchase, or any
other realization upon, any Funding Company Security Agreement Collateral shall,
provided that it is done in accordance with Applicable Laws and this Funding
Company Security Agreement, operate to divest all right, title, interest, claim
and demand, either at law or in equity, of the Grantor therein and thereto, and
shall be a perpetual bar both at law and in equity against the Grantor and
against any and all Persons claiming or attempting to claim the Funding Company
Security Agreement Collateral so sold, optioned or realized upon, or any part
thereof, from, through and under the Grantor.
SECTION 7.4. NO WAIVER; REMEDIES CUMULATIVE. No failure or
delay on the part of the Collateral Agent in exercising any right, remedy, power
or privilege hereunder and no course of dealing between the Grantor and the
Collateral Agent shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. A waiver by the Collateral Agent of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
the Collateral Agent would otherwise have on any future occasion. The rights and
remedies herein expressly provided are cumulative and may be exercised singly or
concurrently and as often and in such order as the Collateral Agent deems
expedient and are not exclusive of any rights or remedies which the Collateral
Agent would otherwise have whether by agreement or now or hereafter existing
under Applicable Laws. No notice to or demand on the Grantor in any case shall
entitle the Grantor to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Collateral Agent to
any other or future action in any circumstances without notice or demand.
SECTION 7.5. DISCONTINUANCE OF PROCEEDINGS. In case the
Collateral Agent, on behalf of the Secured Parties, shall have instituted any
proceeding to enforce any right, power or remedy under this Funding Company
Security Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then, in every such case, subject
to the
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terms of any final non-appealable judgment rendered in any such proceeding, the
Grantor, the Collateral Agent and any other holder of any of the Obligations
shall be restored to their former positions and rights hereunder with respect to
the Funding Company Security Agreement Collateral, subject to the Security
Interest created under this Funding Company Security Agreement, and all rights,
remedies and powers of the Collateral Agent shall continue as if no such
proceeding had been instituted.
SECTION 7.6. APPLICATION OF PROCEEDS; GRANTOR LIABLE FOR
DEFICIENCY. The Collateral Agent shall apply any proceeds from time to time held
by it and the net proceeds of any collection, recovery, receipt, appropriation,
realization or sale with respect to the Funding Company Security Agreement
Collateral in accordance with the Intercreditor Agreement. Any surplus remaining
after payment in full of all of the Obligations shall be paid over to the
Grantor or to whomever may be entitled to receive such surplus. The Grantor
shall be liable for any deficiency remaining after any application of funds
pursuant hereto.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. NOTICES. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be
provided in writing and shall be delivered by hand or overnight courier service,
mailed, or sent by telecopy to the Grantor at its address set forth in SECTION
11.5 (Notices) of the Indenture and the Collateral Agent at 101 Barclay Street,
Floor 21 East, New York, New York 10286, Attention: Corporate Trust
Administration - International Finance Unit or at such other address as shall be
designated by such Person in a written notice to the other party hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Funding Company Security Agreement shall be deemed to
have been given on the date of receipt, if delivered by hand or overnight
courier service or sent by telecopy, or on the date five (5) Business Days after
dispatch by certified or registered mail if mailed, in each case, delivered,
sent or mailed (properly addressed) to such party as provided in this SECTION
8.1 or in accordance with the latest unrevoked direction from such party given
in accordance with this SECTION 8.1.
SECTION 8.2. AMENDMENT. No waiver, amendment, modification or
termination of any provision of this Funding Company Security Agreement, or
consent to any departure by the Grantor therefrom, shall in any event be
effective without the prior written consent of the Collateral Agent, acting
pursuant to SECTION 2.1 of the Intercreditor Agreement, and none of the Funding
Company Security Agreement Collateral shall be released without the written
consent of the Collateral Agent, acting pursuant to SECTION 2.1 of the
Intercreditor Agreement. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
23
<PAGE>
SECTION 8.3. SUCCESSORS AND ASSIGNS. All of the covenants,
promises and agreements in this Funding Company Security Agreement shall be
binding upon and inure to the benefit of the Grantor, the Collateral Agent, all
future holders of the Obligations and their respective successors and assigns,
except that the Grantor may not assign or transfer all or part of its rights or
obligations under this Funding Company Security Agreement without the prior
written consent of the Collateral Agent and in accordance with this Funding
Company Security Agreement.
SECTION 8.4. SURVIVAL. All agreements, statements,
representations and warranties made by the Grantor herein or in any certificate
or other instrument delivered by the Grantor or on its behalf under this Funding
Company Security Agreement shall be considered to have been relied upon by the
Collateral Agent and shall survive the execution and delivery of this Funding
Company Security Agreement and the Transaction Documents regardless of any
investigation made by the Collateral Agent, or on its behalf until the Debt
Termination Date.
SECTION 8.5. SECTION HEADINGS. Captions, section headings and
the table of contents appearing herein are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Funding Company Security Agreement.
SECTION 8.6. SEVERABILITY. In case any provision in or
obligation under this Funding Company Security Agreement shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any jurisdiction, shall not in any way be affected or impaired
thereby.
SECTION 8.7. TERMINATION; RELEASE. Upon the Debt Termination
Date, this Agreement shall terminate, and the Collateral Agent, at the request
and expense of the Grantor and acting in accordance with the terms of the
Intercreditor Agreement, will promptly execute and deliver to the Grantor the
proper instruments (including Uniform Commercial Code termination statements on
form UCC-3) acknowledging the termination of this Funding Company Security
Agreement, and will duly assign, transfer and deliver to the Grantor (without
recourse and without any representation or warranty of any kind) such of the
Funding Company Security Agreement Collateral as may be in the possession of the
Collateral Agent and has not theretofore been disposed of or otherwise applied
or released.
SECTION 8.8. REINSTATEMENT. This Funding Company Security
Agreement shall continue to be effective or be reinstated, as the case may be,
if at any time any amount received by the Collateral Agent in respect of the
Obligations is rescinded or must otherwise be restored or returned by the
Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Grantor or upon the appointment of any
24
<PAGE>
intervenor or conservator of, or trustee or similar official for, the Grantor or
any substantial part of its assets, or upon the entry of an order by a
bankruptcy court avoiding payment of such amount, or otherwise, all as though
such payments had not been made.
SECTION 8.9. COUNTERPARTS. This Funding Company Security
Agreement may be executed in any number of counterparts, all of which, taken
together, shall constitute one and the same instrument and any of the parties
hereto may execute this Funding Company Security Agreement by signing any such
counterpart.
SECTION 8.10. GOVERNING LAW; SUBMISSION TO JURISDICTION. (i)
This Funding Company Security Agreement is a contract made under the laws of the
State of New York of the United States and shall for all purposes be governed by
and construed in accordance with the laws of such State without regard to the
conflict of law rules thereof (other than Section 5-1401 of the New York General
Obligations Law).
(ii) Any legal action or proceeding against the Grantor with
respect to this Funding Company Security Agreement may be brought in the courts
of the State of New York in the County of New York or of the United States for
the Southern District of New York and, by execution and delivery of this
Agreement, the Grantor hereby irrevocably submits and accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The Grantor agrees that a judgment, after exhaustion of all
available appeals, in any such action or proceeding shall be conclusive and
binding upon the Grantor, and may be enforced in any other jurisdiction by a
suit upon such judgment, a certified copy of which shall be conclusive evidence
of the judgment. The Grantor hereby irrevocably designates, appoints and
empowers Corporation Service Company with offices on the date hereof at 375
Hudson Street, New York, New York 10014-3686, as its designee, appointee and
agent to receive, accept and acknowledge for and on its behalf, and in respect
of its property, service of any and all legal process, summons, notices and
documents which may be served in any such action or proceeding. If for any
reason such designee, appointee and agent shall cease to be available to act as
such, the Grantor agrees to designate a new designee, appointee and agent in New
York City on the terms and for the purposes of this provision satisfactory to
the Collateral Agent. The Grantor further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to the Grantor at its address referred to in SECTION 8.1 (Notices),
such service to become effective thirty (30) days after such mailing. Nothing
herein shall affect the right of the Collateral Agent to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Grantor in any other jurisdiction.
(iii) The Grantor hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Funding Company
Security Agreement brought in the
25
<PAGE>
courts referred to in clause (ii) above and hereby further irrevocably waives
and agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
(iv) WITH REGARD TO THIS FUNDING COMPANY SECURITY AGREEMENT, THE
PARTIES HERETO HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY.
SECTION 8.11. CONFLICT WITH INTERCREDITOR AGREEMENT. In case
of a conflict between any provision of this Funding Company Security Agreement
and any provision of the Intercreditor Agreement, the provisions of the
Intercreditor Agreement shall control. No such conflict shall be deemed to exist
merely because this Funding Company Security Agreement imposes greater
obligations on the Grantor than the Intercreditor Agreement.
SECTION 8.12. ENTIRE AGREEMENT. This Funding Company Security
Agreement, together with any other agreement executed in connection herewith, is
intended by the parties as a final expression of their agreement as to the
matters covered hereby and is intended as a complete and exclusive statement of
the terms and conditions thereof.
SECTION 8.13. COLLATERAL AGENT. The rights, duties, benefits,
privileges and protections provided to the Collateral Agent in accordance with
the terms of the Intercreditor Agreement or the Indenture, as applicable, are
expressly incorporated herein by reference thereto.
26
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Funding Company Security Agreement to be duly executed and delivered as a deed
by their duly authorized officers as of the date first above written.
YORK POWER FUNDING (CAYMAN) LIMITED
By: /s/ Martin Couch
----------------------------------------
Name: Martin Couch
Title: Director
THE BANK OF NEW YORK, as Collateral Agent
By: /s/ Joseph Ernst
----------------------------------------
Name: JOSEPH ERNST
Title: VICE PRESIDENT
27
<PAGE>
SCHEDULE I TO
FUNDING COMPANY
SECURITY AGREEMENT
FILING OFFICES
1. Office of the New York Secretary of State
2. New York City Register - New York County
28
<PAGE>
SCHEDULE II TO
FUNDING COMPANY
SECURITY AGREEMENT
INSTRUMENTS
None
29
<PAGE>
SCHEDULE III TO
FUNDING COMPANY
SECURITY AGREEMENT
COPYRIGHTS
None
30
<PAGE>
SCHEDULE IV TO
FUNDING COMPANY
SECURITY AGREEMENT
PATENTS
None
31
<PAGE>
SCHEDULE V TO
FUNDING COMPANY
SECURITY AGREEMENT
TRADEMARKS
None
32
<PAGE>
SCHEDULE 3.4(A) TO
FUNDING COMPANY
SECURITY AGREEMENT
CHIEF EXECUTIVE OFFICES
York Power Funding (Cayman) Limited
c/o Queensgate SPV Services, Limited
P.O. Box 1093 GT,
Compass Center, 2nd Floor
Crewe Road
Grand Cayman, Cayman Islands
33
<PAGE>
SCHEDULE 4.2 TO
FUNDING COMPANY
SECURITY AGREEMENT
LOCATIONS OF FUNDING COMPANY SECURITY AGREEMENT COLLATERAL
c/o Queensgate SPV Services, Limited
P.O. Box 1093 GT,
Compass Center, 2nd Floor
Crewe Road
Grand Cayman, Cayman Islands
34
<PAGE>
Exhibit 10.58
AGENCY AGREEMENT
This Agency Agreement (the "AGREEMENT"), dated as of August
4,1998, among York Power Funding (Cayman) Limited, a limited liability company
incorporated under the laws of the Cayman Islands ("FUNDING COMPANY"), Brooklyn
Navy Yard Power LLC, a Delaware limited liability company (the "BNY GUARANTOR"),
Warbasse Power I LLC, a Delaware limited liability company ("WARBASSE I"),
Warbasse Power II LLC, a Delaware limited liability company ("WARBASSE II" and
together with Warbasse I, the "WARBASSE GUARANTOR"), New World Power Texas
Renewable Energy Limited Partnership, a Delaware limited partnership (the "BIG
SPRING GUARANTOR"and together with the BNY Guarantor and the Warbasse Guarantor,
the "U.S. GUARANTORS").
W I T N E S S E T H :
WHEREAS, Funding Company is a limited liability company
established for the purpose of issuing the Securities (the "SECURITIES")
pursuant to a Trust Indenture (the "INDENTURE") to be entered into between
Funding Company and the Bond Trustee the proceeds of which will be used in part
to make loans to the U.S. Guarantors pursuant to the U.S. Project Loan
Agreement, payments with respect to such loans received by Funding Company will
be paid to the Holders. All terms not otherwise defined herein shall have the
meanings given to such terms in APPENDIX A of the Indenture.
WHEREAS, each of the U.S. Guarantors wishes to have Funding
Company act as agent for each of them in the issuance of the Securities to the
extent of each of the U.S. Guarantors' obligations in respect of the Securities.
WHEREAS, Funding Company wishes to act as agent with respect
to the Securities, on behalf of and for each of the U.S. Guarantors, and
pursuant to the terms and conditions set forth in this Agreement and the
Indenture (Funding Company serving in such capacity, the "Agent").
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the parties hereby agree as follows:
AGREEMENT
1. DESIGNATION. Effective as of the date hereof, each of the
U.S. Guarantors hereby designates Funding Company as its Agent and Funding
Company shall act as nominee of, and Agent for, each of the U.S. Guarantors in
accordance with the terms and conditions set forth in this Agreement. Funding
Company hereby accepts such designation and agrees to serve as Agent for each of
the U.S. Guarantors hereunder and under the Indenture in accordance with the
terms and conditions set forth in this Agreement.
<PAGE>
2. SCOPE OF AGENCY. Funding Company shall, under its own name,
act for the account of each of the U.S. Guarantors as its Agent hereunder and
under the Indenture, solely for the purpose of issuing the Securities to the
extent of the U.S. Guarantors' obligations thereunder, to be paid from payments
made pursuant to the U.S. Project Loan Agreement (including any Additional
Securities issued for the benefit of the U.S. Guarantors pursuant to SECTION 2.3
of the Indenture). Funding Company may also take any other action, in its
capacity as Agent of the U.S. Guarantors, which it deems necessary or
appropriate for the purposes specified herein, including, without limitation,
(i) the offer and sale of the Securities in a public offering or private
placement transaction and (ii) the taking of such actions, the execution and
delivery of such other documents and instruments and the consummation of such
other transactions as may be contemplated by the Finance Documents.
3. LIMITATIONS ON LIABILITY. Notwithstanding anything to the
contrary contained herein, the duties and responsibilities of Funding Company as
Agent under this Agreement are limited to those specifically set forth in this
Agreement and recourse solely to the Funding Company's interest in the Funding
Collateral following application of the Funding Company Collateral in or towards
the discharge of the Secured Obligations and the obligations of Funding Company
under each other Transaction Document, and Funding Company shall have no
liability for any act done or omitted in connection with this Agreement or the
Indenture, except for any failure to exercise at least ordinary care or any
failure to comply with any material Applicable Law. Funding Company, as Agent,
shall not be obligated to ascertain or verify the terms or conditions of any
underlying contract or agreement between any of the U.S. Guarantors and any
third party, nor shall Funding Company, as Agent, be responsible for the
sufficiency, correctness, genuineness or validity of any document deposited with
it hereunder or under the Indenture, or the form or execution of such document,
or the identity, authority or right of any entity executing or depositing such
document.
4. INDEMNITEES AND EXPENSES. Each of the U.S. Guarantors
hereby agrees to pay the costs and expenses of, and to indemnify and hold
harmless, Funding Company in accordance with the provisions set forth in the
Finance Documents as in effect as of the date hereof. No amendment to such
provision or termination of such Agreement shall affect the terms of such
provisions as they apply to this Agreement without the consent of the parties in
accordance with the terms of this Agreement.
5. CONTROVERSIES. If any controversy arises between any of the
U.S. Guarantors and any third Person with respect to the subject matter of this
Agreement, Funding Company, as Agent, shall not be required to determine the
same or take any action, but may await the settlement of the controversy by
written instructions of the U.S. Guarantors satisfactory to it, or by
appropriate legal proceedings, or otherwise.
2
<PAGE>
6. AMENDMENTS/COUNTERPARTS. Any amendment to this Agreement
shall be in writing signed by the parties hereto. This Agreement and any
amendments hereto may be executed in counterparts, each of which so executed
shall be deemed an original, irrespective of the date of its execution and
delivery, and said counterparts together shall constitute one and the same
instrument.
7. NOTICES. All notices, payments, requests, reports,
information and other communications between the parties hereto shall be
addressed in accordance with the addresses set forth on SCHEDULE III to the
Indenture or to such other address as any party may from time to time specify in
writing to the other parties.
8. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
the conflict of law rules thereof (other than Section 5-1401 of the New York
General Obligations Law).
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agency Agreement as of the day and year first above written.
YORK POWER FUNDING (CAYMAN) LIMITED
By: /s/ Martin Couch
---------------------------------------------
Name: Martin Couch
Title: Director
BROOKLYN NAVY YARD POWER LLC
By: B-41 ASSOCIATES, L.P.,
its Managing Member
By: B-41 MANAGEMENT CORPORATION,
its General Partner
By: /s/ Michael Trachtenberg
---------------------------------------------
Name : Michael Trachtenberg
Title: Vice President
WARBASSE POWER I LLC
By: COGENERATION TECHNOLOGIES, INC.
its Managing Member
By: /s/ Michael Trachtenberg
---------------------------------------------
Name: Michael Trachtenberg
Title: Executive Vice President
4
<PAGE>
WARBASSE POWER II LLC
By: YORK COGEN PARTNERS, L.P.
its Managing Member
By: RRR's VENTURES, LTD.
its General Partner
By: /s/ Michael Trachtenberg
---------------------------------------------
Name: Michael Trachtenberg
Title: Vice President
NEW WORLD POWER TEXAS RENEWABLE
ENERGY LIMITED PARTNERSHIP
By: BIG SPRINGS TEXAS ENERGY
MANAGEMENT, INC.
Managing General Partner
By: /s/ Michael Trachtenberg
---------------------------------------------
Name: Michael Trachtenberg
Title: Vice President
5
<PAGE>
Exhibit 10.59
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
First Amendment to Employment Agreement as of February 15,
1999 by and between YORK RESEARCH CORPORATION, a Delaware corporation (the
"Employer") and ROBERT M. BENINGSON (the "Executive").
R E C I T A L S
The Employer and the Executive entered into an Employment
Agreement on December 9, 1998 (the "Agreement").
The Employer and the Executive desire to amend the Agreement
as hereinafter set forth.
NOW, THEREFORE, the Employer and the Executive hereby agree as
follows:
Subparagraph 4.03 of the Agreement is hereby deleted and there
is substituted therefor a new subparagraph 4.03 to read as follows:
4.03 SUPPLEMENTAL BENEFIT. Upon the Executive's
involuntary removal from employment by the Employer by reason of termination,
Disability or death, the Employer shall pay the Executive (or his estate or
personal representative) an annual amount equal to 100% of the Executive's
salary in effect on the date of such removal for an additional period of one
year and 50% thereof for an additional nine years, but in no event after age 80.
Except as amended by this First Amendment, the Agreement shall
continue in full force and effect.
YORK RESEARCH CORPORATION
By: /s/ MICHAEL TRACHTENBERG
------------------------------
Executive Vice President
/s/ ROBERT M. BENINGSON
---------------------------------
ROBERT M. BENINGSON
<PAGE>
EMPLOYMENT AGREEMENT
Employment Agreement dated as of , 1998 by and between YORK
RESEARCH Corporation, a Delaware corporation (the "Employer") and ROBERT M.
BENINGSON (the "Executive").
R E C I T A L S
The Executive is currently employed by the Employer.
The Employer and the Executive desire to provide for the
continued employment of the Executive upon the terms and conditions set forth
herein.
NOW, THEREFORE, effective from and after the date first
written above, the Employer and the Executive hereby agree as follows:
1. EMPLOYMENT. The Employer hereby employs the Executive, and
the Executive accepts such employment and agrees to perform services for the
Employer, for the period and upon the terms and conditions set forth in this
Agreement.
2. TERM. Unless terminated at any earlier date pursuant to the
terms of this Agreement, the terms of the Executive's employment by the Employer
shall be for a period of six (6) years from and after the date hereof, or until
the Executive shall reach his 75th birthday.
3. POSITION AND DUTIES; REMOVAL.
3.01 SERVICE WITH EMPLOYER. At the date of this
Agreement, the Executive holds the positions of Chairman of the Board of
Directors, President and Chief Executive Officer of the Employer. The Executive
agrees to perform such employment duties as the Board of Directors of the
Employer shall from time to time assign to him consistent with his offices as
Chairman of the Board of Directors, President and Chief Executive Officer.
3.02 PERFORMANCE OF DUTIES. The Executive agrees to
serve the Employer faithfully and to the best of his ability and to devote such
of his time, attention and efforts to the business and affairs of the Employer
during the term of this Agreement as shall be necessary to perform his assigned
duties. Employer acknowledges that Executive performs services for a number of
affiliated and non-affiliated business entities, and agrees that the performance
of such services does not interfere with Executive's performance of his duties
hereunder.
3.03 PLACE OF EMPLOYMENT. Unless otherwise mutually
agreed to by the Executive and the Employer, the principal place of employment
of the Executive shall be in the City of New York or within a 50 mile radius
therefrom. It is understood that the performance of the Executive's duties will
require moderate travel outside of that area.
<PAGE>
3.04 REMOVAL. Except as provided in paragraph 5.01
hereof, in the event that the Board of Directors of the Employer shall remove or
Constructively Remove (as hereinafter defined) the Executive as Chairman of the
Board of Directors, President and Chief Executive Officer of the Employer and
shall not appoint the Executive to an office and duties which, in the sole
judgment of the Executive, are comparable or superior to the offices of Chairman
of the Board of Directors, President and Chief Executive Officer, then the
Executive may by notice to the Employer elect to terminate his employment under
this Agreement. Any failure by the Executive to make such election at any time
as to Employer shall not impair the Executive's ability to make such election at
any time in the future. Upon receipt of notice of the Executive's election to
terminate this Agreement pursuant to this section 3.04, the Employer shall (i)
pay to the Executive any amounts earned or accrued but unpaid, computed on a pro
rata basis where appropriate, pursuant to sections 4.02, 4.03 and 4.04, and (ii)
commence making monthly payments to the Executive in, an amount equal to
one-twelfth (1/12) of the greater of (x) the Executive's annual base salary in
effect under section 4.01 as of the date of this Agreement, or (y) the
Executive's annual base salary then in effect under section 4.01. The Employer
shall continue to make such monthly payments until the first to occur of (i) the
expiration of the term set forth in section 2 or (ii) the Executive shall be
unwilling to provide consulting services to the Employer upon request, up to a
maximum of 100 hours per quarter, at places and times reasonably convenient to
both the Employer and the Executive and at no charge by the Executive other than
for reasonable out-of-pocket expenses. For purposes of this paragraph,
"Constructively Remove" shall mean the occurrence of any of the following
events:
(i) the assignment to the Executive of duties
inconsistent with the Executive's positions, duties,
responsibility and status as Chairman of the Board of
Directors, President and Chief Executive Office of the
Employer;
(ii) the failure by the Employer to continue in
effect any benefit or compensation plan, stock acquisition
plan, incentive or bonus plan or insurance plan in which the
Executive is participating at the time (or plans providing the
Executive with substantially equivalent benefits) or the
taking of any action by the Employer which would adversely
affect the Executive's participating in, or materially reduce
the Executive's benefits under, any of such plans;
(iii) the failure by the Employer to obtain, as
specified in section 7, an assumption by any successor to the
Employer of the Employer's obligations under this Agreement;
or
(iv) the assignment to the Executive of duties
inconsistent with the place of employment specified in section
3.03.
-2-
<PAGE>
4. COMPENSATION.
4.01 BASE SALARY. As base compensation for all
services to be rendered by the Executive under this Agreement during the term of
this Agreement, the Employer shall pay to the Executive an annual salary of not
less than $425,000, in installments not less frequently than monthly in
accordance with the Employer's normal payroll procedures and policies. The Board
of Directors of the Employer shall consider increases in the base salary from
time to time.
4.02 INCENTIVE COMPENSATION. In addition to the base
salary described in section 4.01, the Executive shall be paid incentive
compensation in accordance with the following, based upon the pre-tax earnings
of the Employer, beginning with the Employer's fiscal year ending February 28,
1997:
<TABLE>
<CAPTION>
Percentage
Pre-tax Earnings Incentive Payment
---------------- -----------------
<S> <C>
$4 Million to $6 Million 1%
$6 Million to $10 Million 1.5%
$10 Million to $15 Million 2%
Excess of $15 Million 3%
</TABLE>
Incentive Compensation shall be paid to the Executive promptly after
certification by the Employer's independent auditors of Employer's pre-tax
earnings annually.
4.03 SUPPLEMENTAL RETIREMENT BENEFIT. Upon the
Executive's retirement from employment by the Employer, whether voluntary or
involuntary (including by reason of removal, termination or Disability), the
Employer shall pay the Executive (or his estate or personal representative) an
annual amount equal to 100% of the Executive's salary in effect on the date of
such retirement for an additional period of one year and 50% thereof for an
additional nine years, but in no event after age 80.
4.04 OTHER EMPLOYER PLANS. In addition to the base
salary described in section 4.01, the Incentive Compensation described in
section 4.02, and the Supplemental Retirement Benefit described in section 4.03,
the Executive shall be entitled to participate in such bonus, incentive
compensation, stock option and other employee compensation plans as may be
established by the Employer's Board of Directors from time to time for
executive-level employees.
4.05 PARTICIPATION IN BENEFIT PLANS. During the term
of this Agreement, the Executive shall be entitled to receive such medical,
hospitalization, life insurance and other fringe benefits as are provided from
time to time to the Employer's other
-3-
<PAGE>
executive-level employees, to the extent that the Executive's age, position or
other factors qualify him for such fringe benefits.
4.06 EXPENSES. The Employer will pay or reimburse the
Executive for all reasonable and necessary out-of-pocket expenses incurred by
him subject to the presentment of appropriate vouchers in accordance with the
Employer's normal policies for expense verification.
5. TERMINATION.
5.01 GROUNDS FOR TERMINATION. This Agreement shall
terminate prior to the expiration of the term set forth in section 2 and all
obligations of the company shall cease in the event that at any time during such
term the Board of Directors of the Company shall determine that the Executive
has engaged in Wrongful Acts (as hereinafter defined). Notwithstanding any
termination of this Agreement, the Executive, in consideration of his employment
hereunder to the date of such termination, shall remain bound by the provisions
of this Agreement which specifically relate to periods, activities or
obligations upon or subsequent to the termination of the Executive's employment.
For purposes of this paragraph, "Wrongful Acts" means an act or acts
constituting a felony under applicable law (whether or not in connection with
the Executive's duties under this Agreement).
5.02 DEATH OR DISABILITY. In the event of the death
or disability (as defined in section 5.03) of the Executive prior to the
expiration of the term set forth in section 2, the Employer shall pay to the
Executive, or his surviving spouse (i) any amounts earned or accrued but unpaid,
computed on a pro-rata basis where appropriate, pursuant to sections 4.02, 4.03,
4.04 and 4.05 and (ii) monthly payments at the rate in effect under section 4.01
at the date of death or determination of disability until the expiration of one
year from the date of death or determination of disability, and (iii) monthly
payments at fifty (50%) percent of the rate in effect under section 4.01 for an
additional five (5) years.
5.03 "DISABILITY" DEFINED. The Board of Directors of
the Company may determine that the Executive has become "disabled" for purposes
of this Agreement in the event that the Executive shall fail, because of illness
or incapacity, to render services of the character contemplated by this
Agreement for 90 days or more during any period of 180 consecutive days. Any
such determination by the Board of Directors shall be made in good faith after
at least 30 days prior written notice to the Executive. During such 30-day
period, the Executive shall be permitted to make a presentation to the Board of
Directors for its consideration.
6. CHANGE OF CONTROL. In case of a Change of Control of
Employer (hereinafter defined), the Executive, at his sole option, shall have
the right on written notice to Employer, to cease to perform any service
hereunder, but shall nonetheless receive all compensation and other benefits
required to be paid or provided by Employer for the balance of the term hereof
measured from the date of such notice. Payment of such amount shall be made in a
lump sum within 15 days from the date of such notice. A Change of Control shall
be deemed to have occurred if (i) a tender offer shall be made and consummated
for the
-4-
<PAGE>
ownership of 25% or more of the outstanding voting securities of the Employer,
(ii) the Employer shall be merged or consolidated with another corporation and
as a result of such merger or consolidation less than 75% of the outstanding
voting securities of the surviving or resulting corporation shall be owned in
the aggregate by the former shareholders of the Employer, other than affiliates
(within the meaning of the Securities Exchange Act of 1934) of any party to such
merger or consolidation, as the same shall have existed immediately prior to
such merger or consolidation, (iii) the Employer shall sell substantially all of
its assets to another corporation which is not a wholly owned subsidiary, or
(iv) a person, within the meaning of section 3(a)(9) or of section 13(d)(3) (as
in effect on the date hereof) of the Securities Exchange Act of 1934, shall
acquire 25% or more of the outstanding voting securities of the Employer
(whether directly, indirectly, beneficially or of record). For purposes hereof,
ownership of voting securities shall take into account and shall include
ownership as determined by applying the provisions of Rule 13d-3(d)(1)(i) (as in
effect on the date hereof) pursuant to the Securities Exchange Act of 1934.
7. SUCCESSORS. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns. No party to this Agreement may assign any of
its obligations hereunder without the prior written consent of the other. The
Employer may not assign any of its rights hereunder without the prior written
consent of the Executive. The Employer will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Employer, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Employer would be required to perform it if no such succession had taken place.
As used in this Agreement, "Employer" shall mean the Employer and any successor
to its business and/or assets, whether or not such successor executes and
delivers the agreement provided for in this section.
8. ARBITRATION OF DISPUTES. Any disagreement, dispute,
controversy or claim arising out of or relating to this Agreement or the
interpretation hereof or the breach, termination or invalidity hereof shall be
settled exclusively and finally by arbitration conducted in New York City in
accordance with the rules of the American Arbitration Association then
obtaining.
9. MODIFICATION; WAIVER. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in a writing signed by the Executive and the Employer.
10. NOTICE. All notices, requests, demands and all other
communications required or permitted by this Agreement (including, without
limitation, any notice of termination of employment and any notice of an
intention to arbitrate) shall be in writing and shall be deemed to have been
duly given when delivered personally or received by certified or registered
mail, return receipt requested, postage prepaid, at the address of the other
party, as follows:
-5-
<PAGE>
If to the Employer:
York Research Corporation
290 Park Avenue, 2700 West
New York, NY 10017
Attention: Board of Directors
If to the Executive:
Mr. Robert M. Beningson
74 Haviland Road
Stamford, CT 06903
Any party hereto may change its address for purposes of this section by giving
notice to the other parties hereto.
11. SEVERABILITY. If any term or provision of this Agreement
or the application hereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder or this Agreement or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable shall not be affected thereby, and each term
and provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
12. GOVERNING LAW. This Agreement has been executed and
delivered in the State of New York and shall in all respects be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
including all matters of construction, validity and performance.
13. ENTIRE AGREEMENT. This Agreement supersedes any and all
other oral or written agreements or policies made relating to the subject matter
hereof, and constitutes the entire agreement of the parties relating to the
subject matter hereof; provided that this Agreement shall not supersede or limit
in any way the Executive's rights under any insurance or other benefit plans,
programs or arrangements in accordance with their terms.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Employment Agreement as of the date first written above.
YORK RESEARCH CORPORATION
By: /s/ Michael Trachtenberg
------------------------------
Executive Vice President
/s/ Robert M. Beningson
---------------------------------
ROBERT M. BENINGSON
<PAGE>
Exhibit 21
SUBSIDIARIES OF YORK RESEARCH CORPORATION
Set forth below are the names of all subsidiaries of York
Research Corporation ("York") as of April 30, 1999 required to be listed on
Exhibit 21 to York's Annual Report on Form 10-K for the year ended February 28,
1999. Indented companies are direct subsidiaries of the company under which they
are indented.
<TABLE>
<CAPTION>
Percentage
Owned by State of
Immediate Incorporation
Parent or Formation
------ ------------
<S> <C> <C>
York Research Corporation (Parent) N/A Delaware
B-41 Management Corporation 100% Delaware
B-41 Associates L.P. (1) Delaware
Brooklyn Navy Yard Power LLC 100% Delaware
Cogeneration Technologies, Inc. 100% Delaware
Warbasse Power I LLC 100% Delaware
B-41 Associates L.P. (2) Delaware
York Cogen Partners L.P. 90% Delaware
Warbasse Power II LLC 100% Delaware
B-41 Associates L.P. (3) Delaware
FBL Medical Computer
Specialists, Inc. 100% New Jersey
York Internet Power Services, Inc. 100% New York
York Research Canada, Inc. 100% Canada
York Windowpower Corp. 100% Canada
North American Energy Conservation Inc. 85% Delaware
NAEC Energy Services Company, Inc. 100% Delaware
York T&T Holdings, Inc. 100% Delaware
York Holdings (Caymans) L.L.C. 100% Cayman Islands
York Ex International S.R.L. 100% Barbados, B.W.I.
York Holdings (Barbados) S.R.L. 100% Barbados, B.W.I.
InnCOGEN, Limited 100% Republic of
Trinidad & Tobago
Big Spring Holdings, Inc. 100% Delaware
Big Spring Texas Energy Management, Inc. 100% Delaware
New World Power Texas Renewable
Energy L.P. 100% Delaware
York Greek Holdings (Cayman) Limited 100% Cayman Islands
York Mediterranean Energy Limited 50% Cayman Islands
York Aeolean Research Hellas
Single Person Limited Liability Company 100% Greece
York Aeolean Constructive
Single Person Limited Liability Company 100% Greece
<PAGE>
Percentage
Owned by State of
Immediate Incorporation
Parent or Formation
------ ------------
West Texas Renewables Holdings, Inc. 100% Delaware
West Texas Renewables
Limited Partnership 1% Delaware
York Windpower, Inc. 100% Delaware
York Caribbean Windpower LLC 100% Cayman Islands
</TABLE>
(1) 5% of Profits
9.8% of Losses
9.8% of Depreciation
(2) 22% of Profits
1% of Losses
1% of Depreciation
(2) 53% of Profits
1% of Losses
1% of Depreciation
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated May 14, 1999 accompanying the consolidated
financial statements included in the Annual Report of York Research Corporation
and Subsidiaries on Form 10-K for the year ended February 28, 1999. We hereby
consent to the incorporation by reference of said report in the Registration
Statements of York Research on Forms S-3 (File No. 33-36056, effective August
16, 1990; File No. 33-73616, effective November 2, 1994; File No. 33-89418,
effective February 22, 1995; File No. 33-90654, effective April 6, 1995; File
No. 333-10035, effective August 29, 1996; and File No. 333-14151, effective
October 24, 1996) and on Forms S-8 (File No. 33-63730, effective June 3, 1993;
File No. 33-67616, effective August 20, 1993; File No. 33-75850, effective
March 2, 1994; File No. 33-74730, effective July 2, 1994; and File
No. 333-11781, effective September 11, 1996).
GRANT THORNTON LLP
New York, New York
May 14, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS AS OF AND
FOR THE PERIODS ENDED FEBRUARY 28, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> FEB-28-1999
<CASH> 22,993,285
<SECURITIES> 0
<RECEIVABLES> 118,527,841
<ALLOWANCES> 0
<INVENTORY> 715,059
<CURRENT-ASSETS> 171,795,532
<PP&E> 2,043,383
<DEPRECIATION> (1,354,932)
<TOTAL-ASSETS> 401,092,235
<CURRENT-LIABILITIES> 167,917,284
<BONDS> 150,000,000
0
0
<COMMON> 150,185
<OTHER-SE> 64,726,515
<TOTAL-LIABILITY-AND-EQUITY> 401,092,235
<SALES> 966,643,445
<TOTAL-REVENUES> 972,881,652
<CGS> 952,680,916
<TOTAL-COSTS> 958,688,260
<OTHER-EXPENSES> 11,644,939
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,299,994
<INCOME-PRETAX> 8,752,164
<INCOME-TAX> 3,900,000
<INCOME-CONTINUING> 4,852,164
<DISCONTINUED> (10,841,807)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,989,643)
<EPS-BASIC> (0.42)
<EPS-DILUTED> (0.40)
</TABLE>
